Bit Coins — a ripoff?
Hi Terry. My 16 year old son just spilled, unknowingly, all about his investments in bit coins. I listened and let him tell me ALL about it. He has gone to try to find bit coin machines(we live in oak lawn and he got a friend to drive him to Mokena-ahhh jez, very far) and I'm pretty nervous about this. He claims that the value has gone up, up, up and has actually sold what he had to another kid from the neighborhood. What do you think of these bit coins? My son is becoming wheeler and dealer and he's making me nervous. He said his friends dad has bit coin ATM machines. I know this kids dad and he has always been a wheeler and dealer and into all the latest schemes. Not a good guy and always trying to make the fast buck. Hard work is the secret to success and not fast money. what's your take on this?
Terry Says
First you need to understand what bitcoin is, and what it isn't. Bitcoin represents a new technology, a secure "distributed ledger" type of transaction that is currently being used by some global banks and even exchanges. Some see Bitcoin as a secure "store of value" -- much as gold has been considered for millennia.
The "price" of Bitcoin is in dollars. Right now the price of Bitcoin has soared in dollar terms. Here's a price chart over the last year:
As you can see, the price has soared. People around the world are seeking a safe "store of value" -- particularly the Chinese, who are seeking to hide money from their government. Guess who else is busy buying bitcoin? Drug dealers! And a lot of speculators. The price has been volatile in the midst of this huge rally.
The real issue is HOW and WHERE you purchase Bitcoin -- and how you get your money back in to dollars, or another currency. And that's where the great potential for fraud exists. Supposedly these "ATMs" accept dollars and give out bitcoins (in ledger form). But who knows? there ARE some legitimate Bitcoin exchanges, and if you want to speculate, that's the place to go to buy and sell. (You're still taking the price risk of a volatile market, but less of a risk of getting your money back.)
I think your son runs a great risk of getting involved with a fraud. He is a minor, and probably not legally responsible. But you are his parent -- and YOUR assets could be on the line if he is sued! The parents of the kid who allegedly "bought" his bitcoin will be looking at your wallet when this comes crashing down. I'd put my foot down, hard, right now.
