by Sarah Hurst

Bitcoin is here to stay, writes Dominic Frisby, the author of “Bitcoin: the Future of Money?” in the Guardian. I myself despise the way big financial institutions have sucked all the money out of the real economy and benefited from government bailouts while the majority of people get poorer, but I reluctantly have to agree with JP Morgan boss Jamie Dimon, who recently called bitcoin a fraud and promised to fire any trader buying or selling the cryptocurrency.

Bitcoin is the darling of those who see themselves as bucking the system and of the tech world in general. But the idea that we should trust bitcoin as a currency is ludicrous. Even its inventor, known by the pseudonym Satoshi Nakamoto, is anonymous. We should put our trust in anonymous people rather than governments? True, people are getting desperate, but this is just another way to get conned by those in the know.

Since mid-July the price of bitcoin has gone from a low of $1,938 to $4,950 on September 1 and now down again to $3,567. In mid-June 2016 its price was $731. In December 2014 it was $350. Price volatility like this may be fine for stocks, on which traders gamble, but it is not fine for a currency which supporters think will become the reserve currency of the globe, as Frisby says. Imagine if your employer decided to pay you in bitcoin in 2014: at a salary of 10 bitcoin a month you would be getting $3,500, but by now you would be getting the equivalent of $35,670 a month. Do you think your employer would be happy about it? The same goes for any other attempt at using bitcoin for regular transactions.

It is true that all currency is a fiction and relies on trust. But national currencies are backed by governments and their supply is controlled by central banks. Few people understand how cryptocurrencies work, or whether they are being manipulated or exploited by criminals, which they almost certainly are. Those who do understand can try to profit. The rest of us would be fools to get involved.

Dogecoin, monero, zcash, litecoin and dash

The proliferation of new cryptocurrencies doesn’t give cause for optimism. Frisby suggests, “In a few years, just as we have different apps on our phones, so will we have different ‘wallets’ with different currencies: one we might use for tipping (dogecoin), another for transactions we want kept private (monero, zcash) another for fast transactions (litecoin, dash) and so on. It’s all rather Hayekian.”

Um, what? Apart from sounding completely crazy, and impossible to keep track of, has Frisby thought about how little money people actually have? How do we divide up our small amount of money between all these currencies? I’m more concerned about making sure I don’t exceed my overdraft limit. And if you still like the idea, check out deadcoins.com to see the graveyard of many past cryptocurrencies. What happens if your dogecoin wallet suddenly becomes worthless because the currency has died? To whom will you appeal?

I too would like to think there is an escape from the chokehold of the financial system that has enslaved us all to debt. But to me believing in cryptocurrencies is much like believing that Edward Snowden is speaking out for freedom while being protected in Putin’s Russia. Sadly, many apparent escape hatches turn out to be routes into another fraudulent system. What we all really need is more hard cash.