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Government Ban On Bitcoin Would Fail Miserably
February 4, 2013 1:58 AM   Subscribe

Jon Matonis is responding to a blog post which itself is citing a European Central Bank paper on virtual currency(pdf)

Mean while Bitcoin has had a remarkable rally recently, with a market cap of ~$225 Million USD. More charts here. Currently MtGox is the largest USD-BTC exchange(watch it live).

previous
posted by Shit Parade (81 comments total) 7 users marked this as a favorite

 
Bitcoin's engineering is impeccable and its economic design is entirely sound.

Except that they are apparently easy to steal and have the trading functionality of comic books or baseball cards, sure.
posted by Blazecock Pileon at 2:25 AM on February 4, 2013 [18 favorites]


Could someone please explain when and why the average person would want to use Bitcoin?
posted by pracowity at 2:57 AM on February 4, 2013 [6 favorites]


Bitcoiners are some of the lowest scum on the Internet. Loud-mouthed Rand-style liberatarians that are constantly trying to scam each other while asking for handouts. At the same time Bitcoins are useless for anything as no sane business accepts them. 95 percent of Bitcoin trading is with a Bitcoin casino game.

The economic principles behind Bitcoin are stupid (they see deflation as a good thing). Depending how you look at it, it works just like cash, only worse, or just like credit cards, only worse.

The only thing that Bitcoiners are good for is to make fun of their misadventures.
posted by patrick54 at 3:03 AM on February 4, 2013 [16 favorites]


@patrick54 that link gives me a horrible scary Chromium malware warning. :\

But speaking of making fun of bitcoiners...
posted by sixohsix at 3:34 AM on February 4, 2013 [1 favorite]


Bitcoiners are some of the lowest scum on the Internet.
at this point I can't even take all the rage towards them as anything more than an internet slapfight, like some guy elaborating all the reasons he dislikes women who write fanfiction or furries or something
posted by This, of course, alludes to you at 3:41 AM on February 4, 2013 [3 favorites]


@This, there was a really nice long comment in the last bitcoin thread about why, specifically, bitcoiners are ideologically terrible human beings. Sadly I couldn't find it.
posted by sixohsix at 3:46 AM on February 4, 2013 [1 favorite]


Except that they are apparently easy to steal
Information wants to be free cuts both ways. Keeping a handle on data is hard.

and have the trading functionality of comic books or baseball cards, sure.
Huh?
posted by Skorgu at 4:03 AM on February 4, 2013


My favorite Bitcoin story, even moreso than the idiots who sank thousands of dollars into mining rigs, like sank their lives' savings into Bitcoin mining computers, is the guy who bought a bunch of GPUs to mine with and had them in his room. His bedroom in his parents' house. His poorly ventilated bedroom in his parents' house.

Evidently he woke up in the hospital; the heat given off by the GPUs raised the temperature in his room to unsafe levels while he was sleeping, and he suffered mild brain damage as a result of his little endeavor. Fortunately his parents discovered him and brought him to the hospital when they couldn't wake him.

Yes, yes, you and I are too smart or sensible or whatever we'd like to think to fall for this shit. Sure, sure. But there's folks who do fall for it, and harm caused, and not only financially.
posted by Pope Guilty at 4:17 AM on February 4, 2013 [4 favorites]


As long as Ruby on Rails is unhackable, bitcoin will be safe. Mark my words.
posted by maxwelton at 4:35 AM on February 4, 2013 [14 favorites]


Let me try a different word than "holders" - "speculators." It has a wonderful 20C retro ring. The connotations of "speculators" are so negative that I always want to say, "speculators and Jews."
WTF???
posted by brokkr at 4:48 AM on February 4, 2013 [1 favorite]


The “Jews” and “Aryans” thing was a bit messed-up.
posted by acb at 4:58 AM on February 4, 2013 [1 favorite]


The main link on this post is basically just a citation-free opinion piece, not sure why we'd care about this guy's assertions that Bitcoin can't be stopped. He doesn't really offer much of an argument beyond "no, you're wrong".
posted by octothorpe at 5:24 AM on February 4, 2013 [2 favorites]


There's always the option to use bitcoin to buy drugs on Silk Road and get them sent to your favourite enemy. That's one use right there.

Or, alternatively, use bitcoin and scattergun small drugs orders at random across your favourite jurisdiction, to create an - if you will - smokescreen/chaff drop. That's another use, right there.

For everything else, there's Barclaycard.
posted by Devonian at 5:41 AM on February 4, 2013 [1 favorite]


Bitcoin can't be stopped.

And yet - when the "value" went to $0.01, plenty of people stopped "mining".

It seems to me, the way in which money is being made in Bitcoins is taking a %age of the action converting coins to local currencies and being a 3rd party broker.
posted by rough ashlar at 5:57 AM on February 4, 2013 [2 favorites]


Could someone please explain when and why the average person would want to use Bitcoin?

To buy drugs on Silk Road?
posted by Damienmce at 6:07 AM on February 4, 2013 [3 favorites]


Moldbug is Jewish, but seems to have internalized all the crap his friends believe about Ashkenazi sociogenetics. Although in this specific case he's likely just taking the piss. Carry on...
posted by topynate at 6:22 AM on February 4, 2013


Could someone please explain when and why the average person would want to use Bitcoin?

To buy child pornography on .onion sites.
posted by Pope Guilty at 6:24 AM on February 4, 2013


There are two major problems with Bitcoin as I see it, enough that could completely kill it without any need for outside action:

Problem 1 is the security issue. The designers of Bitcoin did the typical not-my-job handwashing when it came to implementing any sort of useful and usable security for a user's Bitcoin wallet, to the point that there's now a huge theft problem. Unless you really know what you are doing, it is difficult to protect your Bitcoin-denominated assets with anything remotely resembling the security of your conventional USD assets in a commercial bank, or even paper money sitting in a safe in your house. (Heck, even just sitting around in your house somewhere; that at least requires that someone physically come to your house, commit burglary, etc.) Because Bitcoin never "baked in" security as they should have, there's been a horrible attempt to bolt it on after the fact and it's never really worked. (E.g. recommendations to put most of your assets in an offline wallet that you keep encrypted and access only via a computer in a Faraday cage surrounded by pentagrams drawn in virgin's blood, or whatever.) Add to this the fly-by-night nature of Bitcoin "banks", most of which are the shoddiest examples of web programming, done by people whose experience with commercial financial systems and OLTP appears to be nil, and it's not surprising that they turned out to be engines for theft too.

That's the short term problem; it's why nobody I know outside of a few geeks uses Bitcoin, no merchants accept it, etc. Everyone knows the risks of cash, and the risks of electronic payments via credit cards are mitigated and shared among users to minimize the chances of a catastrophic loss for any user or merchant. But with Bitcoin, you never really know if you're going to wake up some morning and have your entire checking account drained. Not good.

Problem 2, which might be more significant in the long term, is that it's not at all apparent that once you get through the initial "mining" period and you start to ascymptotically approach the total number of BTC that are supposed to exist, and enter instead into a steady-state deflationary mode (driven by the slow disappearance of Bitcoins when wallets are destroyed), whether the network will sustain itself on transaction fees. Right now, transaction fees are a negligible part of why most users run nodes; either they do it for ideological / geeky reasons or they do it as a side-effect of mining for BTC. But when that second motivation disappears, it's supposed to be replaced with a small donation-esque surcharge for faster processing of a transaction. How do we know that the amount of palm grease that you'll have to apply to your Bitcoin transaction will be lower than the net surcharge on a Visa or Mastercard transaction, for similar speed of processing? We don't. It's entirely possible -- likely, even -- that Visa or Mastercard know more about transaction processing than the guys who invented Bitcoin, and can offer a better level of service for a similar price to the end user. Visa/MC charge 3-4% because they can, not because that number has any connection to the cost of running a transaction-clearing network; they could presumably do it for much less if they were sufficiently motivated.

That last bit is about the only reason why I find Bitcoin interesting. Even if it fails (and it seems poised to), if it does so in a way that nudges the credit card and other online payment processors towards greater efficiency, then it'll have been a net good.

The entertainment value, of course, is just a bonus.
posted by Kadin2048 at 6:25 AM on February 4, 2013 [6 favorites]


It seems to me, the way in which money is being made in Bitcoins is taking a %age of the action converting coins to local currencies and being a 3rd party broker.

Oh yeah, as ever the real money is not in being a crazy but in being an enabler/exploiter of the crazy.
posted by Pope Guilty at 6:25 AM on February 4, 2013 [2 favorites]


I can't even take all the rage towards [bitcoins] as anything more than an internet slapfight, like some guy elaborating all the reasons he dislikes women who write fanfiction or furries or something

All due respect to furries and fan fic writers, of course, but I think of all three as very similar kinds of hobbies.
posted by octobersurprise at 6:53 AM on February 4, 2013 [2 favorites]


This is the most informative bitcoin piece I have seen. Internet discussion on this topic has a very low signal-to-noise ratio. The guy who is identifiable bought six adderalls off silk road with bitcoin. Technically that is a crime but he can afford a decent lawyer if needed and he lives in a decent zip code where the district attorney ain't a lunatic.
posted by bukvich at 6:56 AM on February 4, 2013 [3 favorites]


I misread the post title as Government Ban On Bacon Would Fail Miserably. Well, duh!
posted by gamera at 7:25 AM on February 4, 2013 [1 favorite]


@rough ashlar,

> It seems to me, the way in which money is being made in Bitcoins is taking a %age of the action converting coins to local currencies and being a 3rd party broker.


Not that I'm defending bitcoin or anything, but that's also how a lot of money is made in the banking sector.
posted by sixohsix at 7:31 AM on February 4, 2013 [1 favorite]


I fiddle around with bitcoin, "mining" with spare hardware I have sitting around, as a side hobby (to me its no different than burning CPU / GPU cycles for SETI@HOME or Folding@Home and so forth).

It's nice to see that gets me called "some of the lowest scum on the Internet"... Not everyone is spending $30-60K on hardware and giving themselves heatstroke. I threw a couple of super-cheap Radeon cards in a pair of machines I'd been using as VMWare ESXi cluster nodes, and a third in the second PCI-E slot of my gaming machine, and let them churn away.

Yesterday, I got my first mining payout (0.25 BTC) and giggled at the absurdity of all that effort to make the equivalent of five bucks. A month from now I may use the same hardware to goof around with password cracking on a GPU.
posted by mrbill at 7:41 AM on February 4, 2013 [7 favorites]


If bitcoin is so self-sufficient, secure and impervious to attack and manipulation whether its by criminal gangs or governments etc. , why do the creators of bitcoin feel that they have to be so deliberately and elaborately mysteriously anonymous? it makes me think that there are serious critical flaws in bitcoin security or operations that only they know about.
posted by Bwithh at 7:53 AM on February 4, 2013


It all seems pretty harmless to me.

I don't understand how anyone can claim bitcoiners are the "scum of the internet" - thats just trolling.

If you compare the total market cap of Bitcoin with the monetart value of the various "scams" pulled by those in the "legitimate" banking / money sector of western economies in the last few years I think its pretty clear who are the "scum" when it comes to "money" and its not bitcoin.

What were the total profits of Barclays made from the dodgy LIBOR manipulations for example?
posted by mary8nne at 8:04 AM on February 4, 2013 [3 favorites]


I don't understand how anyone can claim bitcoiners are the "scum of the internet" - thats just trolling.

You don't follow them on twitter. I do. They're hilarious.
posted by allen.spaulding at 8:07 AM on February 4, 2013 [2 favorites]


You don't follow them on twitter. I do. They're hilarious.

You follow every single person involved with Bitcoin in one way or another? Again, I don't like being called "scum" because of something I fiddle around with as a hobby now and then.
posted by mrbill at 8:21 AM on February 4, 2013 [2 favorites]


threw a couple of super-cheap Radeon cards in a pair of machines I'd been using as VMWare ESXi cluster nodes, and a third in the second PCI-E slot of my gaming machine, and let them churn away.

Yesterday, I got my first mining payout (0.25 BTC) and giggled at the absurdity of all that effort to make the equivalent of five bucks.


Out of curiosity, how much do you think it cost you in energy and internet access to make that much?
posted by zombieflanders at 8:22 AM on February 4, 2013


I fiddle around with bitcoin, "mining" with spare hardware I have sitting around, as a side hobby (to me its no different than burning CPU / GPU cycles for SETI@HOME or Folding@Home and so forth).

well except that the latter two are of some benefit to society and the former is for buying drugs and child porn
posted by p3on at 8:27 AM on February 4, 2013 [2 favorites]


how much do you think it cost you in energy and internet access to make that much?

Looking at my power company's daily usage reports, as far as power costs I think I'm about breaking even so far. In terms of Internet access, I pay a flat rate every month and it's not metered so that was no additional cost.

I'm not doing this expecting to make a profit. I'm doing it as a hobby because I'm a geek and I find it interesting. If I break even on the additional electricity power expense, I'll be overjoyed.
posted by mrbill at 8:37 AM on February 4, 2013


You follow every single person involved with Bitcoin in one way or another?

No but I do follow Matonis and other "evangelizers" and I love reading their insane conspiracy theories and horrifically terrible analyses. They combine the muddled thinking of doomsday preppers and sovereign citizen movements but as self-stylized cyberpunk futurists who want to be remembered as Randian supermen. And the revolution is always just around the corner.

I generally don't think people are scum (not a particularly insightful analysis) and I don't think the Bitcoin community is overwhelmingly composed of vulnerable people being screwed by avaricious predators. I think it's a shared delusion based on a misunderstanding of economic reality that's mostly harmless - in fact, there may be some social benefit to Matonis' continued devaluing of the Forbes brand.
posted by allen.spaulding at 8:37 AM on February 4, 2013 [4 favorites]


I love reading their insane conspiracy theories and horrifically terrible analyses. They combine the muddled thinking of doomsday preppers and sovereign citizen movements but as self-stylized cyberpunk futurists who want to be remembered as Randian supermen. And the revolution is always just around the corner.

I laugh at those sort of people too, but there's only so much of it I can stand. My only interest in Bitcoin is from a geeky/technical angle and as someone who has always been interested in crypto, and alternate uses for graphics cards as compute engines.

The political / crypto-anarchist / doomsday prepper / "fiat money!" people make me wince and shake my head.
posted by mrbill at 8:42 AM on February 4, 2013


Should the US want to shut down Bitcoin the following steps could be taken:
1-Secure consensus between various central banks and the US Fed that Bitcoin had to be shutdown. This get banking regulators around the world to act in unison against the Bitcoin exchanges.
2-Use prosecution and threats of prosecution to go after the developers behind the various Bitcoin apps. Disrupt the pipeline of improvements, bug and security fixes
3-Use the massive compute power available to the US gov to dominate block mining at a scale above the current mining groups. At the same time use legal powers and asset forfiture laws to shutdown other block mining groups.
posted by humanfont at 8:47 AM on February 4, 2013 [5 favorites]


The political / crypto-anarchist / doomsday prepper / "fiat money!" people make me wince and shake my head.

This is why Bitcoin gets the general reaction it gets, though. There's a large group of users like you, the curious or casual hobbyists. Then there's the hard core of libertarian nuts, and that hard core is highly visible and vocal. I know my initial exposure to Bitcoins was due to libertarian users on a forum proclaiming that Bitcoins the beginning of a new era free of fiat currency.
posted by Sangermaine at 8:48 AM on February 4, 2013


Isn't there an easier way to shut down Bitcoin? Why not just make Bitcoin 2?

Just copy the whole thing wholesale n times and set up exchanges to trade them all at parity, thus devaluing them. And then wait for someone to explain why they accept Bitcoin but Bitcoin 2 is useless.
posted by allen.spaulding at 8:54 AM on February 4, 2013


Huh?

If bitcoins were technically a form of currency, you could put them to use, like in a bank to earn a nice return. Instead, bitcoins are like comic books or baseball cards, which are bought and sold in a speculative fashion. Buy low, sell high. Gambling, in other words.
posted by Blazecock Pileon at 9:14 AM on February 4, 2013


I'm kind of morbidly curious why these people think Bitcoin isn't a fiat currency. It's like a Dadaist demonstration of the fiatness of currency: it's a declaration that some Bits are Really Special Bits.

They're supposedly limited, but only in the sense that an artist assures you that his run of prints is limited. Bits are inherently unlimited, so it makes even less sense than declaring that all and only the atoms with 79 protons have inherent worth.
posted by zompist at 9:18 AM on February 4, 2013 [11 favorites]


I laugh at those sort of people too, but there's only so much of it I can stand. My only interest in Bitcoin is from a geeky/technical angle and as someone who has always been interested in crypto, and alternate uses for graphics cards as compute engines.

The political / crypto-anarchist / doomsday prepper / "fiat money!" people make me wince and shake my head.


Has Neal Stephenson said anything about the whole Bitcoin saga? Because to me it reads as some sort of real-world, crowdsourced, fanfic version of the modern setting of Cryptonomicon, where the people who agreed with Andrew Loeb apart from the whole Luddite thing become Epiphyte's biggest customers, and in a fashion not yet determined to be unintentional, have managed to take it over in such a way as to make it unworkable and evangelized in the worst possible fashion.
posted by zombieflanders at 9:25 AM on February 4, 2013


Dried strawberries
posted by Blazecock Pileon at 9:31 AM on February 4, 2013


I misread the post title as Government Ban On Bacon Would Fail Miserably. Well, duh!

Perhaps someone should ask the Saudis how it's working.
posted by acb at 9:39 AM on February 4, 2013 [1 favorite]


Practically, Bitcoin is a near useless hobby experiment with some creepy adherents.

Technically though, Bitcoin is exploring some really useful ideas. The Canadian Mint recently put out a challenge to come up with something similar - digital cash you can transfer between people with protection against fraud, but *without* a central authority. It's a hard problem.
posted by Popular Ethics at 9:53 AM on February 4, 2013


Should the US want to shut down Bitcoin the following steps could be taken

Even if BitCoin was shutdown, a new p2p money transfer system would spring up in its place. It's pretty much the same exact reason why fighting file-sharing never works. As long as it's technically possible to do something on the Internet and a lot of people want to do whatever that thing is you are only ever going to be able to suppress it to some degree rather than completely eliminating it. The core reason why people use BitCoin at all is that normal money transfer methods (like PayPal) either don't work for what they are trying to do or have drawbacks. If you want to buy something illegal for instance in real life you can just use the same government-regulated cash that everyone else uses for normal transactions, whereas online there is no cash-equivalent. As long as the government regulated system doesn't support things that people do, people are going to create a sketchy black-market version to fill that gap. Governments have the choice of either suppressing that activity (like the Drug War) or funneling it into government regulated systems (like legalized gambling).
posted by burnmp3s at 10:08 AM on February 4, 2013 [2 favorites]


I fiddle around with bitcoin, "mining" with spare hardware I have sitting around, as a side hobby (to me its no different than burning CPU / GPU cycles for SETI@HOME or Folding@Home and so forth).

It's nice to see that gets me called "some of the lowest scum on the Internet"


Of course neither you nor anybody are scum for fiddling around with Bitcoins.

"Bitcoiners" refers to the community of Bitcoin evangelists as it expresses itself on the Internet. The political / crypto-anarchist / doomsday prepper / "fiat money!" angle is just the surface there. When you go deeper you find a culture in which the only option for interaction with anybody in any situation is to try to scam and defraud them. (And boast about how it's the victim's own fault.)
posted by patrick54 at 10:24 AM on February 4, 2013


Wow guys, what's with all the FUD?

1) Wallet protections: There are dozens of ways to secure a wallet.dat file, it doesn't need to be baked into the bitcoin protocol. The crazy instructions you've seen are written by paranoids, and are not necessary to simply use it. Bitcoin can be just as secure and convenient as your wallet or purse is.

2) The glibertarians aren't the only people who use Bitcoin, they just got there first and are the loudest and most paranoid. Lots of people are drawn to it because the cryptography is sound, and it has been around enough that a rich and interesting ecosystem has grown up around it.

3) Whether it is a fiat currency is debatable, but it is definitely decentralized and apolitical. The value can't be pegged to any one thing, only market demand for it. It is pretty volatile, since what can be purchased with it is constantly changing.

4) Can only buy drugs? There is a bitcoin ebay called bitmint , Wordpress announced recently that it will be accepting it... but yeah. Turns out it's hard to start an entirely new currency due to network effects.

Anyway, as to TFA, the author has a lot of good points. But unfortunately I have a hard time squaring it with the definition of money laundering. As currently defined, Bitcoin can fall pretty squarely within.
posted by butterstick at 10:29 AM on February 4, 2013 [3 favorites]


Also, one of the unintended consequences is very usefull... small scale ASIC development targeting SHA256. Some serious hardware is on the way, but the ramifications are hard to predict. The Bitcoin protocol should self adjust to it, but we aren't really sure about the impact on price, which has been going up recently.
posted by butterstick at 10:31 AM on February 4, 2013


well except that the latter two are of some benefit to society and the former is for buying drugs

Giving people a way to buy drugs with less fear of having their homes raided and possessions stolen and liberty removed offers a pretty substantial benefit to society. The War on Drugs does far more harm than good, and anything which has a reasonable chance of hastening its inevitable demise is probably worth trying out.
posted by Mars Saxman at 10:44 AM on February 4, 2013 [6 favorites]


Should the US want to shut down Bitcoin the following steps could be taken: [...]

None of those are even necessary; Bitcoins only have value because you can convert them back and forth to USD and other currencies on exchanges. They don't have any intrinsic value in the way that gold or baseball cards or barter goods do, and they're not widespread and widely accepted enough to function as a fiat currency (and I'm unconvinced that fiat currencies work unless they're backed up by force anyway, but that's a different argument). So if you shut down the exchanges or make it functionally impossible for an average user to convert USD/BTC then you have killed Bitcoin in the USD-using world.

It's possible to imagine some sort of "underground" network of BTC/USD exchanges ... the sort of thing where you go to a guy on a street corner and hand him $100, and he gives you a Bitcoin wallet with $100USD worth of BTC on it ... that would be admittedly very hard to stop. But there's nothing that I can imagine that you'd want to use Bitcoins for that you couldn't just obtain directly through such a transaction without the intermediary step of nerd currency.
posted by Kadin2048 at 10:46 AM on February 4, 2013


I'm kind of morbidly curious why these people think Bitcoin isn't a fiat currency.

Depends on how you define "fiat currency". Its value is not set by law, which is one of the characteristics of fiat currency. OTOH, it has no "inherent value", which is another characteristic of fiat currency (although inherent value is a very slippery concept).

It seems like they operate in some middle ground between fiat and commodity based money. This observation is either interesting or stupid. I don't know enough economics to tell.
posted by It's Never Lurgi at 11:31 AM on February 4, 2013


They don't have any intrinsic value in the way that gold or baseball cards or barter goods do

Gold has no intrinsic value other than for its industrial uses. It's only worth what it will buy.
posted by one more dead town's last parade at 12:17 PM on February 4, 2013 [2 favorites]


4) Can only buy drugs? There is a bitcoin ebay called bitmint

With the amount of ebay related scams, I'm sure people are just super excited to use a version with an anonymous, untraceable currency.

Giving people a way to buy drugs with less fear of having their homes raided and possessions stolen


Over the weekend, Britain's biggest seller of marijuana on the illegal but very successful online drug-dealing website Silk Road (SR, to those in the know) seems to have cut and run, disappearing from SR with a huge amount of his customer's money. Alarm bells were raised when the seller, known for his reliability, began asking for people to buy his product "FE" – Finalising Early.

This process – which bypasses SR's protection mechanisms – releases the buyer's funds from escrow into the seller's hands before they ship anything. Hardened users of the SR website see this as a huge warning sign, but this seller had one of the best track records on the site. The seller seems to have absconded with several weeks' worth of money; certainly, the administrators of the site have suspended his account.


Anyway, the hate against Bitcoin mostly flows from SA and a lot of it is their usual over the top irrational attacking style. (See also, certain TV shows) That isn't to say the Bitcoin community doesn't have a ton of wide eyed libertarians ready to walk right into any get rich quick scam you put in front of them, but for most users it just seems like a harmless hobby.

I'm pretty sure a goon admitted to writing the heat stroke story but nobody really wanted to hear it. Not gonna try and search through those massive threads over there to unbury it though.
posted by Drinky Die at 12:19 PM on February 4, 2013


it's a declaration that some Bits are Really Special Bits.

That's about the extent of my high school sex education class.
posted by benito.strauss at 1:08 PM on February 4, 2013 [1 favorite]


Drinky Die, the best Goon attack on Bitcoins was when they turned the site into CosbyCoins. And I remember Metafilter wasn't too hot on Bitcoins when they started. They pretty much are only useful for selling drugs, apparently.
posted by Charlemagne In Sweatpants at 1:39 PM on February 4, 2013


Yeah I was around for that. Funny, but definitely irrationally over the top to exploit a vulnerability in a site like that. The Metafilter threads have largely been split with some haters and true believers going at it and your average Mefite going "Well, Bitcoin is kinda neat but seems useless."
posted by Drinky Die at 1:59 PM on February 4, 2013


P2P file sharing is a much easier problem. The value of a p2p file transaction is realized immediately when you get the file. You are copying, not transferring the file; so you don't care if the sender has a copy or others get their own copy. You don't want or need others to know the transfer has happened.

In contrast a p2p currency needs to be able to provide a future value to the recipient; i.e. I can spend it or exchange it for other cash. P2P currency must provide a mechanism to transfer ownership of the "coins", not just make a copy. The mechanism can't allow double spending. There must also be traceability of transfer. One needs to be able to know that the coin is a valid coin and that the sender owns it.

There is also a distribution / network size issue. As long as the torrent has the file you want and you can find the link you get immediate value. Bitcoin needed enough users before the currency had any value. Markets need enough participants to sustain liquidity. A replacement for Bitcoin will have to solve the problem of getting a big enough user base to be useful.

Finally there are laws regarding money laundering, providing material support to terrorists and bank fraud along with international agreements on the same that give prosecutors much bigger weapons to use against key participants in p2p money systems.
posted by humanfont at 2:25 PM on February 4, 2013 [2 favorites]


P2P file sharing is a much easier problem. The value of a p2p file transaction is realized immediately when you get the file. You are copying, not transferring the file; so you don't care if the sender has a copy or others get their own copy. You don't want or need others to know the transfer has happened.

In contrast a p2p currency needs to be able to provide a future value to the recipient; i.e. I can spend it or exchange it for other cash. P2P currency must provide a mechanism to transfer ownership of the "coins", not just make a copy. The mechanism can't allow double spending. There must also be traceability of transfer. One needs to be able to know that the coin is a valid coin and that the sender owns it.


P2P currency has a lot of technical issues but so does file-sharing. I could go through a similar laundry list of all of the challenges that face an illegal file-sharing system, from the difficulty of obtaining and curating the content in the first place to running a distribution system that is resilient to legal takedowns. For example, there are many points in the chain of content in file sharing where people do need to know what exact transactions have happened for various reasons, and those technical requirements are built into BitTorrent and other systems.

There is also a distribution / network size issue. As long as the torrent has the file you want and you can find the link you get immediate value. Bitcoin needed enough users before the currency had any value. Markets need enough participants to sustain liquidity. A replacement for Bitcoin will have to solve the problem of getting a big enough user base to be useful.

Again, in the file-sharing world this is also true and has happened over and over again. Napster goes down and everyone looks for an alternative to Napster. Big trackers go down and everyone looks for a new tracker that does the exact same thing. Once an install base exists using a given technical solution, they can very easily transfer to a new technical solution that serves the same needs. It happens all the time even with services that aren't forcibly shut down, Facebook derives most of its value from being the biggest social network but it only got that way by poaching users from previously popular social networks.
posted by burnmp3s at 4:39 PM on February 4, 2013


it's a shared delusion based on a misunderstanding of economic reality that's mostly harmless

VS the well demonstrated idea that "money" that can be created at a stroke of a pen or bits in a computer are "better" because, well, penstroke! Oh and its better because Austrians hate it.

(meanwhile over in rumortown: Population meh we have)
a report without any known source - Fedwire has been hacked
posted by rough ashlar at 4:53 PM on February 4, 2013 [1 favorite]


why do the creators of bitcoin feel that they have to be so deliberately and elaborately mysteriously anonymous?

A more interesting question - what are in the packets being "dehashed"? Is someone doing a distributed cracking operation and saying "You! Random user. Here is a bitcoin. (and now another piece of the decryption is done)
posted by rough ashlar at 4:57 PM on February 4, 2013


Once an install base exists using a given technical solution, they can very easily transfer to a new technical solution that serves the same needs

When someone shuts down the tracker or central site; the files still exist. Nothing is lost but the momentary capability to share the files. A government shutdown of Bitcoin would obliterate the millions of dollars.
posted by humanfont at 5:56 PM on February 4, 2013


humanfont: the whole point of bittorrent is that there is no central site and there is no way to shut it down. The network exists as long as people run bittorrent clients.

My understanding is that the same is true of bitcoin: there is no central site, no authority, no big server to shut down. The bitcoin network exists as long as people run it.

I've heard that you can commit forgery if you can supply more computing power than the rest of the network put together. Perhaps this is what the NSA is going to do with their big Utah data center.

Or they can just shut down the exchanges and leave the network intact.
posted by Mars Saxman at 6:17 PM on February 4, 2013


If two or three small companies can have custom ASICs made, imagine what the NSA / government could do if they cared enough to bother.
posted by mrbill at 6:50 PM on February 4, 2013 [1 favorite]


I understand BitTorrent; Bitcoin is different. Bitcoin doesn't have a central sever, but it does rely on the clients all being able to update a common ledger of transaction blocks that gets passed around and "mined" to be locked into the permanent block chain. My shutdown scenario covers some specific attacks likely to wreck the ledger.
posted by humanfont at 7:29 PM on February 4, 2013 [1 favorite]


Woah, woah, the best goon bitcoin attack was when Drone Fragger posted a fake graph showing that Bitcoins were cratering in value and posted about how "Bitcoins are crashing! Sell! Sell!" and the value of Bitcoins dropped 33% in an hour.
posted by Pope Guilty at 8:16 PM on February 4, 2013 [2 favorites]


The total number of Bitcoins that can ever be produced is limited, right? So at some stage there will need to be Bitcoin2. If it works the same way as the original Bitcoin then early adopters have an advantage - the easy numbers can be "mined" more quickly. So if I were someone with the skills and personality necessary to produce a Bitcoin replacement I would spend a month working on that, and the rest of my time mining its coins. When the supply of original Bitcoins runs out I'd be there, ready with my replacement and my willingness to bribe people to adopt it. And then I could just dribble my coins into the market anonymously as if I had the fastest CPU in the world. I suppose I'd have to compete with early adopters, but there's no way anyone can tell whether my numbers were calculated early or after the release date.

Hmm. We don't actually know whether anyone did this with the original Bitcoins, do we?
posted by Joe in Australia at 1:49 AM on February 5, 2013


As an individual Bitcoin becomes more valuable based on scarcity they can be subdivided into increasingly smaller bits. Thus there is no need for Bitcoin 2. Price pressure is deflationary by design. All the early Bitcoin adopters with thousands of coins did pretty well. I know that some of you will say, hey this sounds a lot like a pyramid scheme. The Bitcoin supporters will be very angry if you make that connection and will explain how it totally isn't. Of course this is exactly what every person caught up in a pyramid scheme tells you.
posted by humanfont at 3:27 AM on February 5, 2013 [3 favorites]


All due respect to furries and fan fic writers, of course, but I think of all three as very similar kinds of hobbies.

even the quality of the rage is the same. very 2005-06 "fuckin nazi pedo commie terrorist!!" hysterical stuff.

It's odd that this service seems to be mainly used by college kids trying to buy weed and meth/addy, but it's met with organized groups of dudes hacking sites, doing honest to god attacks, and running full anti-bitcoin websites. You don't get that even with shit like Amway. I don't actually recall seeing full-fledged site takeovers with Scientology. It seems kind of disproportionate.

One of my acquaintances from the Occupy thing we had a while back thinks that it's being helped along/propagandized by x Power-That-Is, whether state-based or private, but I doubt the weirdly disproportionate overkill and hysteria is anything more than another dumb internet thing.

It's kind of hilarious how mad people get when nerds do something that's actually nerdy as opposed to Cory Doctorow nerdy, though.
posted by This, of course, alludes to you at 9:02 AM on February 5, 2013


It's not a government conspiracy. The current membership of Something Awful just really hates libertarians, for the same reason many MeFites do. Some of them write elaborate fan fiction about the demise of libertarian utopias. Some of them hack Bitcoins. I think one of the first anti-Bitcoin sites started on MeFi, though. Are we also in the pocket of the nefarious forces trying to stop the Ron Paul ReLOVEulution?
posted by Charlemagne In Sweatpants at 1:51 PM on February 5, 2013


Amazon has announced its own currency.

For now it's limited to Amazon's app store used with its Kindle tablets.

But there is also speculation the system could extend to other areas of the company's shopping empire.

posted by rough ashlar at 3:04 PM on February 5, 2013


It's all right when Amazon does it because Amazon isn't run by a bunch of gross nerds. My politics are kind of strange!
posted by This, of course, alludes to you at 3:09 PM on February 5, 2013


really hates libertarians, for the same reason many MeFites do.

Because they ain't Democrats? When a Mi-fier claims one should vote for a democrat not on the positions he has taken, but because "he's not the Republican" such shows the moral bankruptcy of those who think that way.

in the pocket of the nefarious forces trying to stop the Ron Paul ReLOVEulution?

That would be be the Republican party, right?
posted by rough ashlar at 3:10 PM on February 5, 2013


Libertarian hate goes way deeper than just not being Democrats. They have a habit of being disruptive in discussions because they have such a different point of view, you can't discuss any individual political topic with them without debating the foundational ideas of libertarianism which gets annoying when you do it over and over.

The Ron Paul obsession is another issue because many are so fanatical for him even though he is not a particularly accomplished politician and he has a serious history of racism his fans don't want to confront.

A portion of the Bitcoin community intersects with a lot of that. They hold fanatical views that are outside the mainstream and (IMO) just plain wrong and they have an inflated view of themselves and the subject of their obsession.
posted by Drinky Die at 3:46 PM on February 5, 2013 [4 favorites]


Amazon has announced its own currency.

Nope. That's no more a currency than Disney Dollars are.
posted by allen.spaulding at 9:03 PM on February 5, 2013 [2 favorites]


Because they ain't Democrats? When a Mi-fier claims one should vote for a democrat not on the positions he has taken, but because "he's not the Republican" such shows the moral bankruptcy of those who think that way.

No, it's called being a mature adult who understands that jumping up and down and stamping one's feet and screaming "BUT I WANT IT I WANT IT I WANT IT!" is not appropriate behavior.
posted by Pope Guilty at 4:40 AM on February 6, 2013 [1 favorite]


Amazon Coins: Clever Monetary Stimulus For The Kindle Fire Content Ecosystem
posted by zombieflanders at 6:10 AM on February 6, 2013


It's all right when Amazon does it because Amazon isn't run by a bunch of gross nerds. My politics are kind of strange!

Are you outraged on behalf of bitcoin, gross nerds, or yourself? I can't tell.
posted by octobersurprise at 6:16 AM on February 6, 2013 [1 favorite]


The flaw in your argument is that Amazon is in fact run by a bunch of gross nerds.
posted by humanfont at 8:53 PM on February 6, 2013


Yes, but they're the cool, economically successful kind!
posted by This, of course, alludes to you at 4:26 AM on February 7, 2013


I hear somebody's built a stock exchange on bitcoin.
posted by jepler at 6:00 PM on February 7, 2013


I hear somebody tried that before. And he ended up being labeled a scammer by the Bitcoin community. I'm sure it works out better this time.

Last Thursday, the Global Bitcoin Stock Exchange, the first and by far the largest securities exchange in the Bitcoin economy, unexpectedly shut down. The principal cause of the shutdown appears to be legal problems. As Nefario wrote in IRC chat[1], “my problem actually is: 1) AML, 2) tax, 3) regulations, in that order.”
posted by Drinky Die at 6:31 PM on February 7, 2013


At least MPEx isn't being run out of the US. There is just no way you can do this sort of stuff in the US's legal environment; the banks do not like competition from upstarts, and law enforcement is more than happy to help them break the backs of anyone who tries. The regulations for anything even vaguely financial, to say nothing of a bank or stock market (!) are not something that a basement startup is going to be able to comply with.

The first step anyone who wants to do this alternate-currency stuff should take is finding a friendly legal jurisdiction to work out of. I've no idea if Romania is that place or not, but it's presumably better than the US in the sense that it can't possibly be much worse.
posted by Kadin2048 at 7:46 PM on February 7, 2013


I don't think they were US based, Nefario mentioned being based in England and China. As I understand it, the AML stuff is hard to dodge because there are international agreements.
posted by Drinky Die at 9:57 PM on February 7, 2013


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