Ask Slashdot: Do You Still Trust Bitcoin? 631
Nerval's Lobster writes "It hasn't been a great week for Bitcoin. Cruise the Web, and you'll find stories from people who lost thousands (even millions, in some cases) of paper value when the Mt.Gox exchange went offline for still-mysterious reasons. (Rumors have circulated for days about the shutdown, ranging from an epic heist of the Bitcoins under its stewardship, to financial improprieties leading the exchange to the edge of bankruptcy.) But as one Slashdotter pointed out in a previous posting, Mt.Gox isn't Bitcoin (and vice versa), and it's likely that other exchanges will take up the burden of helping manage the currency. Even so, all currencies depend on a certain amount of stability and trust in order to survive, and Bitcoin faces something of a confidence crisis in the wake of this event. So here's the question: do you still trust Bitcoin?"
As Frontalot says (Score:5, Insightful)
"You can't hide secrets from the future with math."
Re:As Frontalot says (Score:5, Insightful)
We all know that most computer systems are insecure. In the past, cracking a computer could only yield things like names, addresses, passwords (hashed and salted, one hopes), confidential files... in short, information. But with Bitcoin, crackers now enjoy the tantalizing possibility of stealing money! That makes Bitcoin exchanges (and, if bitcoin becomes popular, all ordinary PCs with bitcoin wallets) highly attractive hacking targets. So how can we be sure that an exchange won't be hacked? How can we be sure that our PCs won't be hacked? This issue--my inability to know that my coins are secure--has made me reluctant to buy them in the past.
Also, what regulations exist to ensure exchanges are secure? What incentives exist to encourage exchanges to be bulletproof against against hacks (or scams / social engineering)? And finally, how can we know that the exchange itself is entirely legitimate?
And by the way, I'm sure conventional large banks and financial institutions occasionally have hacks too, which reminds me of another difference between bitcoin and traditional money management. The difference is that you can mostly trust traditional institutions to compensate customers for any funds stolen from customer accounts (as long as it wasn't blatantly the customer's fault). To what extent is this assurance available in the bitcoin world?
Re:As Frontalot says (Score:5, Interesting)
how can we be sure that an exchange won't be hacked?
Exactly. We can be sure traditional banks won't be hacked because they are regulated by the government appointed banking regulator.
And if they had loose security that somehow the regulators missed and loose billions in wire-fraud? In most countries the government guarantees your funds to a certain extent. So the question becomes, do you trust your government? (or the government in charge of the foreign currency you are storing).
This is the trouble with bit-coin. All currencies are based on faith. Faith that they will hold value (that the government wont print money), faith that they will be accepted for exchange (again, government mandated for most currencies). With bit-coin, to whom do you place your faith?
Re:As Frontalot says (Score:5, Interesting)
I'm pretty sure the housing bubble of the 2000s, which turned into the bank bust-out of 2008 and the subsequent taxpayer bailout could very accurately be described as "hacking the banks".
It was a process that started in the late 1990's, with Sen Graham's crusade to repeal Glass-Steagal. Even before the bailouts, it was the largest redistribution of wealth upward in all of human history. As a hack, it is one of the most audacious and effective. A pure example of social engineering. And its legacy is nothing short of the creation of a two-tier economy, in which there is one monetary system, one economy for the very elite, and another for the rest of us.
Oh yes, our "traditional banks" were hacked, but good.
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It was a process that started in the late 1990's, with Sen Graham's crusade to repeal Glass-Steagal.
This is probably a red herring, Glass-Steagal wouldn't have stopped the crisis. This is reflected in the fact that Canada doesn't have the equivalent of a Glass-Steagal, but they didn't suffer nearly the collapse that the US did.
I don't mind banks collapsing from doing something stupid, that is part of capitalism. I do mind being forced to pay for it. Paul Volcker had a plan to restructure the banking system to help prevent that, but Obama was already listening to Geithner for some reason. Oh well.
Re:As Frontalot says (Score:5, Informative)
Well, not exactly, but many of us are renting the huts we live in which in 2005, we owned. Plus, the people who managed to hang on to their houses lost a significant portion of their savings in the form of equity when the prices crashed.
Further, six years of near-zero interest rates and $80 billion/month of free money going to banks has eroded our savings. If real inflation (not the adjusted numbers from the government) are near 8%, as many economists estimate, and your savings have netted 0%, you have lost a considerable amount of wealth and the value of your labor.
All this while the economic elite have seen enormous gains in their incomes.
You could continue and look at the social costs of this increasing disparity, which are substantial and include everything from disease rates to depression and family breakdown, but even without taking these externalities into account, the hacking of the banking system (which continues, by the way), has been enormously costly you to and me and the people who matter to you.
Re:As Frontalot says (Score:4, Insightful)
And believing in bitcoin would make this better?
Re:As Frontalot says (Score:5, Insightful)
Oh, you misunderstand me. I think Bitcoin is a neo-libertarian utopian fantasy, based on the same thing all neo-libertarian philosophy relies, the "If only..."
"If only we had perfect information. If only we had perfect competition. If only we could have a free market that existed outside of government."
The problem is, markets are a function of government. There are no markets in nature. They only exist when there is someone to enforce contracts and guard transactions.
The entire philosophy is a scam perpetrated by the economic elite to draw off the energy of talented young people and make it easier to steal from them, while appealing to their egos. And the easiest people to manipulate via ego are talented young people, and those who see themselves that way.
Bitcoin is an undergrad economics project, writ large, and co-opted by criminals and the elite. I knew it would be co-opted eventually, just didn't think it would happen this quickly. Bitcoins will exist, in some form, until the willingness of those talented young people to part with their wealth is exhausted, which won't take long.
Do you have any idea how many Bitcoins were purchased between $1000 and $800? Wait until the people who bought them there realize that a 50% gain after a 50% loss puts you in the hole.
Re:As Frontalot says (Score:4, Informative)
Well, almost no markets in nature. Chimps exchange sex for meat [wired.co.uk]
Re:As Frontalot says (Score:5, Insightful)
Wait until the people who bought them there realize that a 50% gain after a 50% loss puts you in the hole.
There is also another point *against* Bitcoin. Because it is deflationary by nature, it promotes hoarding of the currency (eg. if Bitcoin is low now, and if you believe in it, just hang on to it until hopefully will gain more value). Current capitalist systems are inflationary, so if you sit on your pile of cash it will decrease value over time, not increase. This gives a huge incentive to invest that money - like deposit in a bank, buy some stock or bonds, do riskier high-return investments, etc. Thats how you increase your capital - you just don't sit on it, you make things happen that will generate profit. And this keeps the world turning, regardless of personal preferences of who's in charge of it. With deflationary currencies, eg. companies don't need to invest to have profit (eg. you would not have Internet, because why spend 300 billion on undersea cables when you can just sit on that money until it increases in value?). And with unregulated currencies, the loan system cannot work reliably - and this is essential to make the world as we know work.
My opinion is, Bitcoin is a ponzi scheme. Even if it gets adopted officially. (Yeah I know, fiat currency isn't that far from a ponzi scheme, either)
Re: As Frontalot says (Score:4, Insightful)
Exactly. I'm sorry, I'm not Mr. I Love and Completely Trust The Government, but reading what some of these folks say is just astounding. The level of fear and suspect is simply irrational. Now, when I say that, they will say I am a sheep or naive or what have you - but as you said, the dollar survived the last crisis, it survived previous issues, and even though it's not as absolutely strong as it once was, it's still the most a secure currency in the civilized world.
I don't know what makes these folks so scared, and the only defense they can give about BitCoin when confronted with it's obvious flaws as a "currency", pointing out the ways in which it is simply an investment scheme, is to try to say "yeah but the dollar is just as bad!" when clearly, it is not. Or they quote you Iceland or Cypress and ignore that the USD is far different than the currency in those places. Desperate attempts at deflection are the only "ammo" they have to retort with because, frankly,I do nt think most of them actually understand it for what it is - a pyramid scheme with a novel twist. While nothing is 100% certain, I know I would feel a hell of a lot more secure with $100,000 in cash in a fireproof safe, or even at a bank, than I would with the same amount in BitCoins sitting in an exchange or even in "cold storage" that's based on untested (and obviously flawed) protocols and trust in a completely unregulated private company in another country (or even our own). It's not even comparable. The value of BitCoin is really based in what someone is willing to pay you in legal tender in exchange for it, otherwise it's worthless. That's the pyramid part - it depends on new folks coming in and willing to buy your existing stock with legal tender which can then be used for goods and services. Without people actively buying into it with real currency, it's utterly useless and has no value.
BitCoin is the result of a lot of supposedly educated folks who are disillusioned with the government and, dare I say, mostly seem to be in their 20's and products of upper income homes who grew up in the 90's during all the "you deserve it!" entitlement trend in child rearing. I'm a product of the 80's, when we were all told we were "special" - but we were also told that we had to work for it and not to expect a free ride. The popularity of BitCoin among these folks is due to the "get rich quick" aspect that they always felt they deserved and believed they had finally found their golden ticket.
Ugh, you know you are getting older when you start to so clearly see the generational differences - every generation has it's quirks, and BitCoin is the manifestation of young smart folks with too much disposable income who think they are smarter than they actually are, and those that haven't taken their winnings and run yet are in for a very, very rude awakening when this all completely collapses and their money is gone.
Re: As Frontalot says (Score:5, Insightful)
I think the truest test of whether Bitcoin can be regarded as a currency is: Would you be willing to be paid in it?
I don't speak for everyone, but my answer to that is a resounding no. When I get paid in the old fashioned currency of my land, I have a reasonable expectation that my purchasing power isn't going to vary widly from day to day. What I can buy with my salary today, I will still be able to buy with my salary in a day, or a month, roughly speaking.
The same can't be said of Bitcoin, at least not any time soon. Until then, I won't regard it as a currency.
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In most countries the government guarantees your funds to a certain extent. So the question becomes, do you trust your government? (or the government in charge of the foreign currency you are storing).
I think there's more to it than that. I trust the bank and the government not to both pull a mtgox at the same time. I wouldn't trust the government alone, nor would I trust the bank alone.
Re:As Frontalot says (Score:4, Insightful)
forget hacking: what's to stop an exchange from just closing and keeping all the BTC?
Oh, right
Nothing
Re:As Frontalot says (Score:4, Informative)
Of course there is. The law. Of course, that may not always save your skin, but it doesn't mean there is nothing at all.
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But that's the problem - Bitcoin isn't "real" money. If it were, there would be a huge number of regulations to follow, sinking it as an anonymous currency. However, if it isn't "real" currency, thefts and/or fraud will not be investigated by law enforcement agencies. So, pick what you want: An anonymous currency with no support of law enforcement, or a "real" currency where regulations such as requiring a photo ID to open an account apply.
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Not this again.
There are a number of things that are valuable, even if you personally think there's no reason they should be valuable. Old Magic the Gathering cards, most of the stuff on exhibit in MoMA, pieces of paper with numbers on them from foreign lands, etc. If you steal these things, you're still a thief in the law's eyes.
For that matter, if you steal something which has no market value, but only value to the owner, you're still a thief. Don't go stealing people's family albums.
In some jurisdictions
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forget hacking: what's to stop an exchange from just closing and keeping all the BTC?
Income from tx fees that they will lose when they're out of business? I'd say running an exchange seems quite profitable even without a scam.
And without the exchange you used to run (esp. when you're the last one), you'll have a hard time converting your stolen BTC into something you can use.
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*We can be sure traditional banks won't be hacked because they are regulated by the government appointed banking regulator.* ..actually we can't be sure about that.
do I trust bitcoin? yes(to be what it is).
do I trust exchanges? no.
(and guarantees by government are usually only up to 30-50 000 dollars worth anyways)
but would I trust even the shoddy fly by night exchanges more than say the government of venezuela ? heck yea...
Re:As Frontalot says (Score:4, Interesting)
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In the case of Lincoln's money printing, it was The Long Depression.
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Definition of 'Quantitative Easing'
An unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.
http://www.investopedia.com/terms/q/quantitative-easing.asp
Re:As Frontalot says (Score:5, Insightful)
Gox had an implementation flaw in their transaction reconcilement and a clear lack of auditing. Of course, the only source of this information is Gox. So, that's their version of what happened.
Long before this happened there were complaints about Gox being difficult about withdrawing funds, and speculation that they had been running as a fractional reserve and the run up in price was driving them to insolvency.
Without an independent investigation it's impossible to say what actually happened. That said, both versions point to a problem with one exchange, not with Bitcoin itself, and so far not a problem with any other exchanges.
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by all reports that is what happened. Mt god had a fatal flaw in their version of the bit coin processing software. A flaw which could be used to duplicate and then steal bit coins.
No bitcoins were duplicated. The flaw was that customer withdrew bitcoins, then contacted mt.gox support and claimed that the transaction didn't go through and mt.gox sent him another bitcoins because their transaction tracking was flawed.
Kinda implies (Score:5, Insightful)
that I ever trusted Bitcoin in the first place. I didn't.
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Kinda implies that I ever trusted Bitcoin in the first place. I didn't.
Exactly, that's why the answer to the question is mu [wikipedia.org].
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I trust Bitcoin to hold some value as much as I trust Magic the Gathering cards to (poor MtGoX). Which is to say: more than 0. As long as people are interested, they'll have value, and neither was a passing fad. But I do expect the value to drop a bunch, to where mining may no longer be practical only for new bitcoins. How will bitcoin do when transaction fees become a real thing (if still small)?
Re:Kinda implies (Score:4, Insightful)
What I dislike about bitcoin is that if someone steals your money, you can't get it back even if you catch them. They have the password. Magic The Gathering Online eXchange, was a stupid place to entrust your passwords.
My guess (Score:5, Interesting)
I speculate that the real story behind mT Gox is not the one they are telling us. My guess is that back when bitcoins were worth pennies that Mt Gox needed a bridge loan to cover a shorfall in revenues wrt to expenses. I imagine they gave themselves a loan from their holdings intending to pay it back from downstream revenues. But then bit coin went 10,000 fold in exchange rate and they could never pay back the 400 million that was now due. Their only hope was to either wait for the market price to drop, or to act like a ponzi scheme where they paid demands out of other depositors money. All of which they could do because they controlled the coins. Even if they paid everything back but $4000 of an original bit coin loan, that would now be worth the 400 million they are short. Perhaps they also boofed the maliabile ID too at some point, but they would have easily detected that instantly because their total assets would be different that their total liabilities. Unless of course they already had a deficit in assets that was masking that.
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You know, money is a commodity of value that is used as a medium of exchange.
So there's the difference between bitcoin and national fiat currencies: national fiat currencies have as their commodity the mutual defense of the nation, which in turn makes for more reliable business, and thus profits.
With bitcoin, the valuable commodity is... finding a greater fool. In other words, bitcoin is entirely bubble.
Maybe I'm wrong. Bitcoin's valuable commodity could be laundering. But if that is the case, then I still
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I'm married to my drum kit (Score:5, Funny)
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Never Did Trust it (Score:2, Insightful)
Its a passtime, and a toy. I never did have any trust in it. It seemed ripe for running afoul of governments sooner or later.
The idea of wasting perfectly good electricity creating something of value out of nothing at all never head any of my interest, even when I did manage to buy a book with bitcoin once. (I earned the bitcoin by selling a piece of software that I wrote, so easy come, easy go).
Re:Never Did Trust it (Score:5, Insightful)
> The idea of wasting perfectly good electricity creating something of value out of nothing at all [...]
Don't let De Beers hear you talking like that.
Re:Never Did Trust it (Score:4, Insightful)
sort of like the government printing "real" money. except you are also wasting paper, and ink.
Re: (Score:2, Insightful)
Except the "real" money is backed by the full faith and credit of the government. Many governments aren't very trustworthy, but the US has been generally acceptable in that regard (there's a reason people stuck in bad economies want dollars, and it's not because they like how they look.) Unless you want to carry around your goods and barter for everything, you have to trust somebody to be the middleman.
Re: Never Did Trust it (Score:3, Insightful)
Paper currency is a small fraction of the money supply. The Fed simply presses a button on a computer to create money.
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The idea of wasting perfectly good electricity creating something of value out of nothing at all never head any of my interest
Most products you consume -- things of value that were created out of nothing -- use electricity to do so.
Re:Never Did Trust it (Score:5, Funny)
Most things I consume were created out of water and sunlight.
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Bitcoin will go about how you would expect a neo-libertarian utopian idea to go. Some people will get rich, a lot more will get burned, and most everyone will be left scratching their heads.
And one guy will be hiding in Tokyo, saying, "The check is in the mail."
Objection! (Score:2, Insightful)
I never trusted Bitcoin.
The digital tulip wilts (Score:2)
Only to grow anew in the spring.... ...mark my words.
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i trust nothing (Score:2)
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How are you supposed to buy things from online stores with gold? File off some shavings into an envelope and mail order stuff from online? Are we really going to all carry gold and silver coins in our pockets when we go shopping?
Gold isn't really useful as a currency if it is just sitting in a vault.
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Re:i trust nothing (Score:5, Interesting)
I lost my car now I do almost all my shopping except for groceries on amazon prime. saves a lot of money and here's how:
first, the prices are good. second, there's no casual / impulse purchases. So I need a dishrack? I buy a dishrack. I don't go to bed bath beyond to get a dishrack, then also pick up a paper towel holder, potholder, popcorn maker. that is money in the bank my friend! and I mean a real bank not the fake bitcoin bank.
While we're talking about bitcoins, let me give you an analogy that is how I think of these things. when I was a kid i wouldu buy and sell girlscout cookies. buy, sell, buy, sell. they only come out like twice a year. so when they came out I would buy plenty and stock up. as plenty as i could because my money was liminted. sometimes i would pinch a little from my moms purse to get a few extra boxes.
then i would wait a month or so when they were no longer avaialable, and resell them but at a higher price. see, when they're available then you can buy the same price anywhere so why pay more? but when they're unavaialbe you have to take the asking price or take a poop on the sidewalk.
as i learned more about people's preferences, i started to modulate my prices with the size of my inventory, so i wouldn't get stuck with bad product. cuz they go bad, see? so I had to be careful to juggle product. sometimes when I had old stuff I would go into different neightbordhoods to burn to old coocies off, because i would never see those people again.
so i was earning like 40-60% markup on average, sometimes 100% markup. what did I do with the money? I didn't have a bank account. so I took the money down to the comics shop where they weree buying and selling beenie babies. i would buy the safest investments possible, you know just the regular bear nothing fancy. cuz i knew when I made it home I could take them back to cash them in later.
so what happens? I end up with a room full of beenie babies. which is kind of wierd, right? so my sister comes in, and starts tearing the tags off. which I'm like NOOOOOOOOOOO!!!! because that destroys the value, right? so now I have to make a new plan.
i went back to the comics shop, only this time instead of going in the day, I went at night. once there I took all my beenie babies and placed them in a jar outside. coming back the next day, I found that they were gone. plan foiled! went back the following week, but the store had closed. a week later, the bottom fell out of the beenie babie market. now I'm seriously out of money.
long story short, you gotta be careful when entrusting your money to a non-cash instrument.
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then i would wait a month or so when they were no longer avaialable, and resell them but at a higher price. see, when they're available then you can buy the same price anywhere so why pay more? but when they're unavaialbe you have to take the asking price or take a poop on the sidewalk.
Can't I do both?
He didn't say you had to take the asking price xor take a poop on the sidewalk. Common misunderstanding... go right ahead.
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How are you supposed to buy things from online stores with gold? File off some shavings into an envelope and mail order stuff from online? Are we really going to all carry gold and silver coins in our pockets when we go shopping?
Gold isn't really useful as a currency if it is just sitting in a vault.
You don't have to transfer actual gold, you can transfer a note backed by a bank or government that guarantees a fixed amount of gold. Such a note can be exchanged physically, or electronically if it's held by a reputable 3rd party (such as a bank or a government) under an account in one's name.
OH WAIT I JUST DESCRIBED UNITED STATES DOLLARS ON THE GOLD STANDARD
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This is an oft-heard sentiment that is extremely naive to the point of outright stupidity. The use of gold (and silver, and other precious metals) as currency is fraught with difficulty. It turns out that money is a *lot* more complex than most people really fathom. See: http://en.wikipedia.org/wiki/G... [wikipedia.org]
We in the US stopped using gold as currency -- and then removed the US dollar from the gold standard -- because having gold and the dollar be linked causes more problems than it really solves. And as of toda
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so... you trust gold?
Yes, and quite frankly, that was the last time we actually had any real stability behind the USD, when we actually had a gold standard to tie it to.
Now, all we do is back our USD with arrogance and violence. And the gold was gone long ago.
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There is far more stability in USD now than when it was tied to gold. How soon people forget.
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There is far more stability in USD now than when it was tied to gold. How soon people forget.
More likely, geekmux wasn't even born yet, or cognizant of the issues surrounding the removal of USD from the gold standard.
And a poor student of history as well.
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so if I am arrogant and violent I get more gold? how come you didn't tell me that before, you jerk!
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I trust bitcoin itself just fine.... (Score:5, Informative)
Re:I trust bitcoin itself just fine.... (Score:4, Insightful)
I trust bitcoin itself just fine... it's the third party exchanges I don't trust.
Foo.
That's preposterous. It's like saying you trust Dollars just fine, but don't trust the banks...
...
'k, I'll shut up now.
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Not exactly a fair comparison. I only trust banks because they are insured and if they "lose" my money then I will have recourse to recover it. With the online bitcoin exchanges, there is no such thing.
Re:I trust bitcoin itself just fine.... (Score:4, Insightful)
Not exactly a fair comparison. I only trust banks because they are insured and if they "lose" my money then I will have recourse to recover it. With the online bitcoin exchanges, there is no such thing.
2008 should teach you one thing - when the banks screw up, the execs make sure they never have to pay for their poor decision making - they pull the strings and make the representatives they own dance to their tune. It's not that nothing was learned from 1929, something was, it's to make sure the people at the top continue to line their nests and their lackeys in government make sure they can continue to do whatever. The belief that the banks are now all square is an illusion, they've borrowed from the Federal Reserve to pay back the government loans. With the government borrowing like a gambling addict to prop the economy up, one thing was lost - value of the dollar, it's nowhere as strong as it once was, nor buys as much as it did in early 2008.
Eh? (Score:4, Informative)
This is like asking when you stopped beating your wife.
It assumes a positive that for most people doesn't exist.
False choice (Score:2)
Bitcoin was (still is...) an interesting experiment, and I watch it with interest. But trust? C'mon, that's like saying "do you still trust Windows 1.0?"
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Poor choice for analogy since Windows 1.0 was only ever a weak beta. Try 8.0, it's a weak full release with malarkey marketing monkey behind it.
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Poor choice for analogy since Windows 1.0 was only ever a weak beta. Try 8.0, it's a weak full release with malarkey marketing monkey behind it.
I understand what you're saying, (and agree with the assessment of 8.0) but I can't go there. The concept of Bitcoin is interesting, even if the implementation might be lacking. What I was trying to say is that it's too much to expect one to "trust" version 1.0 of anything. (Or in this case, one could argue that it was version .9 or less.)
Still?!? (Score:2, Insightful)
I've never trusted it. If I mine a coin I'll sell it, tout suite!
Only one player (Score:3, Insightful)
Let me answer your question with a question. Do you trust the US Dollar less because of the Leaman Brothers collapse? Trusting or not trusting a currency (virtual, or fiat) based on the actions of one player, regardless of how large, makes no sense. I believe in what Bitcoin is about, I trust it more than I trust the banks and government. I still need fiat money to pay my bills, but would prefer to live without the banks who have already shown to not be trustworthy.
Re:Only one player (Score:4, Insightful)
Let me answer your question with a question. Do you trust the US Dollar less because of the Leaman Brothers collapse? Trusting or not trusting a currency (virtual, or fiat) based on the actions of one player, regardless of how large, makes no sense. I believe in what Bitcoin is about, I trust it more than I trust the banks and government. I still need fiat money to pay my bills, but would prefer to live without the banks who have already shown to not be trustworthy.
*headdesk*
I'm going to say this as simply as I can:
Bitcoin is also fiat currency
There's nothing backing it. Zero, zip, zilch. At least the US dollar is backed by the full faith and credit of the US government, and it's been that way for 40 years. Bitcoin hasn't lasted 10.
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*headdesk*
I'm going to say this as simply as I can:
Bitcoin is also fiat currency
There's nothing backing it. Zero, zip, zilch. At least the US dollar is backed by the full faith and credit of the US government, and it's been that way for 40 years. Bitcoin hasn't lasted 10.
You're being pedantic. In discussion of cryptocurrencies, the term "fiat" is universally used to distinguish cryptocurrency from government-declared currency. Yes, any unbacked currency is technically also fiat, and that includes Bitcoin. But that point is, as I said, excessively pedantic.
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From a fiscal standpoint, they're the same thing. In fact, Bitcoin is worse as it's backed by absolutely nothing.
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but would prefer to live without the banks who have already shown to not be trustworthy.
When was the last time a bank did something squirrelly with your checking or savings account?
This is not a simple question (Score:5, Insightful)
BitCoin, by nature, is as trustworthy as SHA256 which is used by TLS, SSL, PGP, SSH, S/MIME, and IPsec. So the math behind BitCoin is trusted by most of the world whether or not you are aware of that fact.
As a currency it is just as trustworthy as any other imaginary money system. It's value is highly speculative, like the NYSE. Nobody really trusts the NYSE just as you shouldn't trust the value of BitCoin.
That being said, cryptocurrencies have the potential to be more stable than fiat currencies. BitCoin may not be the final solution but behold as we are watching the future of money unfold. History is in the making.
As compared to what..? (Score:4, Insightful)
Do I still trust bitcoin?
How much trust did you have in our financial system circa 2008, right after the financial meltdown?
After you watched the most notorious criminals of our time (a.k.a. bankers) get away with financial genocide and got to keep their jobs and their bonuses, how much trust should you have in the current system? We don't arrest or prosecute financial criminals. We reward them.
Sorry, but bitcoin is no more stable than any other currency. Only the criminals in charge want you to believe it is. And we pay them millions to do so, so might as well STFU about stability. We don't even give a shit about the current system to protect it from crashing again, much less any new ones.
Never trusted bitcoin in the first place. (Score:2)
Several reasons:
1) OK, has anyone - preferably someone with solid crypto/math credentials - ever audited the fscking crypto behind Bitcoin? Anyone? Not that I know of.
2) Even if the basic crypto is sound, what about the wallet software? Surprise, surprise, it seems this is how Mt Gox was attacked... And wasn't a TV talking head wallet hacked after he showed the number on the air? Oooops...
3) Any "market" where the majority of the "product" [businessinsider.com] is owned by a very small group of people [bitcoinexaminer.org] is not a free market - it's
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Several reasons:
1) OK, has anyone - preferably someone with solid crypto/math credentials - ever audited the fscking crypto behind Bitcoin? Anyone? Not that I know of.
The basic crypto behind bitcoin is sha256 it's the same crypto used behind TLS and SSL, PGP, SSH, S/MIME, and IPsec. If sha256 is compromised the fact that your bitcoins are now double spendable is the least of the world's problems.
2) Even if the basic crypto is sound, what about the wallet software? Surprise, surprise, it seems this is how Mt Gox was attacked... And wasn't a TV talking head wallet hacked after he showed the number on the air? Oooops...
The 'official' wallet software is open source, and is not subject to the sort of transaction malleability that affected MtGox. In short the official software is sound, however, the official wallet software is not designed to handle the volume of transactions that an enterpris
Bitcoin is a hoot (Score:4)
To me, this is an interesting experiment, one that I watch closely. I read about this guy who invested in Bitcoins in the early stages, he paid very little for them, and some years later...he was allegedly a MILLIONAIRE because of his forgotten Bitcoins, yay... All the wannabees who SO wished they had bought Bitcoins back in the early days, just to find out a few months later - that no one really want to recognize Bitcoin as a real valid currency, yes - I'm having a laugh.
History repeating (Score:5, Insightful)
Oh look, a bank-like entity failed and people lost money. Good thing the FDIC is there to--
Oops.
If cryptocurrencies are going to repeat the last 100+ years of economic history, can they hurry up and rediscover monetary policy too?
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Oh look, a bank-like entity failed and people lost money. Good thing the FDIC is there to--
Oops.
If cryptocurrencies are going to repeat the last 100+ years of economic history, can they hurry up and rediscover monetary policy too?
To be fair I don't think that foreign investment accounts are covered under the Federal Deposit Insurance Company either. Or for that matter, there are plenty of charter banks that aren't FDIC insured domestically. Even if MtGox wasn't based in Japan, there's no requirement (except as provided by state law) for a bank to be FDIC insured. In short, if you're worried about your money you probably should have some caveats about putting it into an organization that has no official policy for how it's going to
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Mine mine mine MINE mine mine mine (not yours) MINE mine mine mine. Mine mine. It's MINE. Mine mine mine Mine mine mine MINE mine mine mine (not yours) MINE mine mine mine. Mine mine. MINE. Did you hear me? I said it's MINE. Mine mine mine Mine mine mine MINE mine mine mine (not yours) MINE mine mine mine. Mine mine. I don't have to give anything to anybody else. MINE. Mine mine mine Mine mine mine MINE mine mine mine (not yours) MINE mine mine mine. Mine mine. MINE. Mine mine mine Mine mine mine MINE mine mine mine (not yours) MINE mine mine mine. Mine, mine, MINE. Mine mine mine Mine mine mine MINE mine mine mine (not yours) MINE mine mine mine. ALL MINE!!!!!!
Right, I think we get the idea.
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It's not difficult to troll someone whose entire political-economic philosophy can be summed up as, "Because I don't want to share anything with anyone else, it's wrong for anyone else to share anything, too."
Yes ! (Score:2)
What doesn't kill me, makes me stronger ! this saying surely apply for bitcoin.
This is juste a passing youth crisis, bitcoin will probably recover, the genie is out of the battle and nothing can put it back. Bitcoin will probably correct it's problems and continue it's march toward world domination .... fast !
I've never trusted BitCoin (Score:5, Insightful)
There was money to be made at certain points, sure - and there may be more money to be made in the future. I'm sure some people have done quite well. But that doesn't mean any significant involvement with BitCoin going forward is a good idea.
Trusting "BitCoin" isn't exactly what's important. To invest in or use BitCoins significantly, you'll end up trusting other people - and how do you know to trust those people, especially as the stakes get higher and higher? Banking and securities trading have a web of trust and regulation that's been built out over centuries. There's failure states and scandals, sure, but you have reasonable tools to decide who to trust and how much.
What I see in people's experience with BitCoin is often a long string of red flags - difficulties doing withdrawals and transfers, huge fluctuations in value, varying exchange rates that nobody is able to arbitrage - all met with too few questions and far too much exuberance.
Short answer, yes (Score:2)
I trust that bitcoin will continue to be a currency with value and use until something else comes along that replaces it (and given BitCoins incumbent status as king of the cryptocurency world is I believe, unlikely in the near future. There are a number of 'altcoins' which each seek to improve upon BitCoin's core functionality in some way or another, but none of them have successfully come close to dethroning BTC).
Bitcoin has a lot of functional benefits as a system for transferring value, even if it is
What if? (Score:5, Insightful)
What if you went to an Indian casino, exchanged your dollars for chips, and when you went to leave and cash out your remaining chips, they refused to exchange the chips for dollars, and instead decided to close shop. Would you still trust the dollar?
That's essentially analogous to what this article is asking. Maybe bitcoin has porblems. It's too volatile to be an effective unit of cost. Those are separate issues from the problems Mt. Gox is having.
Even the dollar has problems with corruption and cronyism involving the treasury, the fed, wallstreet, and too big to fail banks, that doesn't mean that an indian casino deciding to steal your money is due to any weakness in the dollar. That's just a business failing to uphold a promise either through theft or incompetence.
Mt Gox is a financial institution that didn't have it's shit together. Yes it dealt in bitcoins. It also dealt equally in dollars and other currencies (i.e. because it was an exchange). That doesn't mean it the dollar or bitcoin is weak. They still could be, but it's not because of Mt. Gox.
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Bitcoins must be "mined", and there are an effective 21M of them. That's stupid.
Fiat money like the USD is trusted because there's a history of trusting the nation that issues those fiats. In fact, since most dollars are virtual, stored as bit on computers, I wouldn't be surprised if it doesn't all work on one mass halucination.
"Horrors", you say! But humans have been living one hallucinations since they became cognizant, even before the rise of h. sapiens, so I have no problem with a worldwide hallucina
Re:What if? (Score:5, Insightful)
I think you've got your analogy backwards and upside-down. The correct question would be, "Would you still trust the casino chips?"
Bernie (Score:2)
One could ask: after Bernie Madoff how could you ever trust a fund manager again?
At some point Visa or Bank of America will start exchanging bit coins and change very high fees. They will have the same internal controls they use for the rest of their business. We don't need any innovation. The old processes work today and will work in the future. We need some company who knows how to run a transactional financial service to set up a service for bit coins. This does not exist today.
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I would take this a step further. Banks and the money people will adopt the bitcoin protocol and harness it for private use. Then they will discredit (as we see now) bitcoin until the general public thinks of bitcoin as a joke. Then, surprise! You will have JPMcoin. BofAcoin.
The fundamentals are great. It is greed that will determine if the idea of digital currency is to benefit the money people or the common people.
Nothing changed except theory becoming reality (Score:2)
Bitcoin is, by design, unregulated and unregulatable. That gives it strengths - the feds cannot seize your funds effectively, nor can your spending be monitored effectively. But it also gives it weaknesses - namely, the "banks" and other financial institutions are not inspected or insured, meaning they can "fail" rather easily either through mishap or malice.
Anyone who thought that something like this wouldn't happen is a fucking idiot.
But the fact that it could, and did, happen, just means the system is op
It's working quite well (Score:2)
Bitcoin now functions as a wonderful scam perpetuated by electricity retailers, and so far is yielding impressive returns for those investors.
Isn't bitcoin meant to be decentralized ? (Score:2)
If so, how can the fall of a centralization point lead to such a loss
Please excuse my ignorance, but there is something I do not get here...
So far yes (Score:2)
What I don't trust is the servers that people store their coins/cash on. I transfer my BTC and cash in and out as needed. I invested in BTC. I mine BTC. I support BTC.
Anyone who reads any technology sites should know by now that computer systems are woefully unsecured. Why would anyone leave a few million bucks (or 20 for that matter) sitting on someone elses system.
The real irony of the exchanges disappearing is that people want an unregulated currency. Well, guess what comes along with unregulated currenc
Huh? (Score:2)
Saying that MtGox "proves" Bitcoin isn't trustworthy is like saying Bernie Madoff "proved" dollar bills aren't trustworthy.
Conmen trick people into giving them money and then run off with it. That doesn't say anything about the financial value of the currency itself.
Even more so now (Score:2)
Mt. Gox disappearing is good for BTC. From what I've been reading, people who left their money in Mt. Gox accounts have mostly been blaming themselves for trusting an untrustworthy organization. The signs were all over the place that people should pull their money out. And judging by the decline in volume at Mt. Gox, it seems most people did already. And observers need to know that these exchanges are not secure places to keep their money.
Anyone who willingly lets someone they hooked up with over the in
Do I have to answer "yes" or "no"? (Score:2)
This is rather like that old one about are you still beating your wife? [wikipedia.org]
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Bitcoin has been gaining traction for a long time. Did you notice the run from $5 to $1200?
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You believe Lucifer was involved as well? I'm glad I'm not alone in thinking this.
Of course. How else do you think he got down 666 layers in the Abyss?
He's got one hell of a mining machine.
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There is an adage that if something appears too good to be true then it usually is too good to be true. Especially concerned as to the absence of explanation for the Mt.Gox collapse: never a good sign
Mt. Gox collapsed because they had fewer Bitcoins than the sum of all the balances of the accounts.
Imagine if Mt. Gox had 25 BTC, but they had 5 users total with a balance of 10 BTC each. That's a total balance of 50 BTC, which is double what MT. Gox actually has. That's Bad News Bears (Walter Matthau).
Mt. Gox got in that position because the people running it were stupid.
A commonly cited reason is the recent "attack" exploited a flaw in their software. Bitcoin transactions have an ID associated with the