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Not too big to fail.
February 25, 2014 12:32 AM   Subscribe

Mt Gox, what had been the world's largest bitcoin exchange, seems to have shut down. According to a supposedly leaked document, they're missing 744,000 bitcoins, which even at Bitcoin's current, rapidly falling price, would be worth somewhere around $300 million dollars. A collection of bitcoin businesses and markets have issued a statement.

You can watch the markets panic in real time here.
posted by empath (912 comments total) 45 users marked this as a favorite

 
2014: Year of the Doge.
posted by save alive nothing that breatheth at 12:38 AM on February 25 [67 favorites]


Insert conspiracy theories below.
posted by GallonOfAlan at 12:39 AM on February 25 [2 favorites]


It's hard for me to read more out of that joint statement than "please don't give up on bitcoin, it is our gravy train".

Well that and that it does seem to confirm that Mt. Gox is well and truly fucked. Though honestly by now it was getting pretty hard to imagine a non-fucked outcome for all this.
posted by aubilenon at 12:41 AM on February 25 [6 favorites]


So what you're saying is that this is a really good time to buy BTC?
posted by en forme de poire at 12:44 AM on February 25 [1 favorite]


So what you're saying is that this is a really good time to buy BTC?

Sure. But it's basically gambling, not investing.
posted by empath at 12:49 AM on February 25 [11 favorites]


Empath: Yeah, totally right, gambling. Not like 'playing the markets' at all. Betting on the USD or Gold is still betting (albiet, much better bets, IMHO, than BTC, but the thing is still 'worth' far more than I ever imagined it could).
posted by el io at 12:53 AM on February 25 [3 favorites]


I would petition the govt to bail out that lovely Shiba Inu, but not these guys.
posted by colie at 12:55 AM on February 25 [15 favorites]


Maybe now the currency exchange and commodities price services will finally start listing the actual real-world price of btc instead of the MtGox bizzarro-world price? (I'm looking at you, XE)
posted by anonymisc at 12:56 AM on February 25


I know a guy who, I think, is somehow connected to Mt. Fox here in Japan. He does work for them, though on a consulting basis or something. I think. I'm not sure, because I know if I showed even enough interest to ask him if he's connected to them, he'd take it as a chance to get evangelical about bit coin at me, and I've got more than enough wide-eyed lunacy going on as it is to make it worth asking.
posted by Ghidorah at 1:00 AM on February 25 [3 favorites]


Betting on the USD or Gold is still betting (albiet, much better bets, IMHO, than BTC

Long bitcoin and short gold would have made you a multi-millionaire off of a thousand dollar investment last year.
posted by empath at 1:03 AM on February 25 [6 favorites]


Well, unless you did it on Gox, in which case you have nothing.
posted by empath at 1:04 AM on February 25 [91 favorites]


"So what you're saying is that this is a really good time to buy BTC?"

Wait a couple days and you might get an even better price.

It seems these are the pre-Wright Brothers days of Bitcoin, full of impressive looking flying machines that crash spectacularly. In a year or two, maybe the survivors will have worked out the major problems.
posted by Kevin Street at 1:08 AM on February 25 [10 favorites]


If you invested your time and money in engineering a blockchain malleability exploit you would be a zillionaire by now.
posted by Phssthpok at 1:10 AM on February 25 [16 favorites]


unregulated markets sure are fun!
posted by el io at 1:12 AM on February 25 [24 favorites]


Long bitcoin and short gold would have made you a multi-millionaire off of a thousand dollar investment last year.

That's true of almost every bubble... if you time it perfectly. Hell, that lure is what creates these bubbles in the first place.
posted by aspo at 1:17 AM on February 25 [30 favorites]


It's hard for me to read more out of that joint statement than "please don't give up on bitcoin, it is our gravy train".


Pretty much. The whole exchange and "mining" hardware industry that's arisen to part fools from their money is in full damage control mode.

Maybe if all this cryptocurrency shit goes away I'll be able to buy a new graphics card at a non-outrageous price.
posted by edeezy at 1:20 AM on February 25 [2 favorites]


Wasn't there bet placed here on Metafilter between two members about the value of bitcoin?

On preview. "unregulated markets sure are fun!" [Eh, shelter under a TARP and you'll be fine.]

Stupid question man asking a stupid question - and I read that story about that guy that bought a house - but how redeemable are bitcoin really?
posted by vapidave at 1:23 AM on February 25 [1 favorite]


Buttcoin issues an open letter to Mt. Gox
posted by Blazecock Pileon at 1:25 AM on February 25 [37 favorites]


It's hard for me to read more out of that joint statement than "please don't give up on bitcoin, it is our gravy train".

And that's the general sentiment around the usual Bitcoin haunts today as well - "How dare you release this statement! You don't know it's true! Think of the damage you'll do to the market! Don't you believe in the market? Do you want to kill the market?!?!"

It's almost like...it's almost like they're begging for some kind of regulation of statements of financial news that might cause market distortion, or something?
posted by Jimbob at 1:25 AM on February 25 [58 favorites]


Stupid question man asking a stupid question - and I read that story about that guy that bought a house - but how redeemable are bitcoin really?

It was increasingly difficult as the price ballooned; there was a hilarious series of posts on SA I think about a buy with a bunch of bitcoins trying to unload them when the price got into the high hundreds of dollars. Actually getting money out of the online exchanges took months if you were lucky, so he resorted to 'localbitcoins', a site that would connect people with buyers they could meet IRL in exchange for selling coins at a big discount. As you can imagine it didn't go well.
posted by edeezy at 1:31 AM on February 25


Wired reports on the subject.
posted by el io at 1:31 AM on February 25 [1 favorite]


Maybe if all this cryptocurrency shit goes away I'll be able to buy a new graphics card at a non-outrageous price.

It would be pretty awesome if they all signed up to do Folding@Home or something with their newly-fallow cycles. Not that I think it's likely or anything, just daydreaming.
posted by en forme de poire at 1:31 AM on February 25 [4 favorites]


Buttcoin issues an open letter to Mt. Gox

That made my day.
posted by Jimbob at 1:35 AM on February 25 [1 favorite]


Bitcoin Mining Operating Margin chart. It's pretty cool.
posted by Jimbob at 1:36 AM on February 25 [6 favorites]


Maybe if all this cryptocurrency shit goes away I'll be able to buy a new graphics card at a non-outrageous price.

Nobody has used graphics cards for mining in at least a year.
posted by empath at 1:39 AM on February 25 [2 favorites]


there was a hilarious series of posts on SA I think about a buy with a bunch of bitcoins trying to unload them when the price got into the high hundreds of dollars.

These may be some of the posts you're thinking of.
posted by A Thousand Baited Hooks at 1:41 AM on February 25 [9 favorites]


Oh, and here are some more.
posted by A Thousand Baited Hooks at 1:43 AM on February 25 [6 favorites]


A bargain in Keyhole Downs is always too good to be true.
posted by Blazecock Pileon at 1:45 AM on February 25 [9 favorites]


If the bitcoins were stolen, how could the alleged thief unload them? Doesn't each one have a registry number (or something)? Might be a dumb question, but I just can't get my head wrapped around these things.
posted by double bubble at 1:46 AM on February 25 [2 favorites]


Nobody has used graphics cards for mining in at least a year.

Not for mining bitcoins, but they're still used for other kinds of coins and the card prices reflect that.

These may be some of the posts you're thinking of.

Yes that's it, thanks!
posted by edeezy at 1:47 AM on February 25


If the bitcoins were stolen, how could the alleged thief unload them?

There are mechanisms to launder them, essentially, called "Tumblers" - algorithms that break coins up into lots of bits and trade them around to separate accounts very rapidly, making it difficult to figure out where they came from.
posted by Jimbob at 1:50 AM on February 25 [5 favorites]


If the bitcoins were stolen, how could the alleged thief unload them? Doesn't each one have a registry number (or something)? Might be a dumb question, but I just can't get my head wrapped around these things.

Assuming all of the rumors were accurate, here is the ELI5 version.

The way the bitcoin protocol works is that when a transaction happens, you broadcast it out to the network, then the miners 'confirm' it. Once it's confirmed by a certain number of miners, the transaction is considered complete.

There is a way to generate a transaction id for each transaction to help you track them on the block chain.

But, there is a 'flaw' in the bitcoin protocol that allows anyone to modify a transaction by changing some meaningless extra bits which generates a new transaction id, but that doesn't actually change the actual transaction -- the same wallets spend and receive the bitcoins.

If you introduce this mutated transaction quick enough, your transaction might end up being the approved one, rather than the original one.

All of this is not a fatal flaw in the network except that Mt Gox was using the transaction id only to track their bitcoin transfers, which was causing them to think that transactions which actually had gone through successfully had failed.

Even this wouldn't be that bad if they had people checking the failed transactions by hand so they could see if the money had actually gone through, but apparently they were either automatically retransferring the money or automatically crediting the account again with the bitcoins that they had already sent out after their transactions 'failed'.

Even this wouldn't have been that bad, because at worst it would have drained their 'hot wallet' which should have tipped them off that something was bad, but apparently their cold storage wasn't that cold, and they emptied out everything.
posted by empath at 1:55 AM on February 25 [43 favorites]


schadenfreude coin is through the roof apparently
posted by fullerine at 2:10 AM on February 25 [53 favorites]


schadenfreude coin is through the roof apparently

You can always put your money on it!
posted by Jimbob at 2:27 AM on February 25 [4 favorites]


I wonder how low BTC has to fall before it passes the profitability floor for the most efficient ASIC mining farms out there; ie. the price where the mining rate would yield less income than the electricity cost. It's expected that this will happen eventually as the mining difficulty increases, but a big enough BTC crash might retire them early.

It'll be a real shame when all that specialty hardware becomes useless. Maybe they can be recycled for trace amounts of rare metals or something.
posted by ceribus peribus at 2:35 AM on February 25


I wonder how low BTC has to fall before it passes the profitability floor for the most efficient ASIC mining farms out there; ie. the price where the mining rate would yield less income than the electricity cost. It's expected that this will happen eventually as the mining difficulty increases, but a big enough BTC crash might retire them early.

I'd imagine they'd shift into Dogecoin for a bit.
posted by jaduncan at 2:40 AM on February 25 [1 favorite]


If you can't trust a currency exchange started as a way to trade virtual fantasy nerd cards for other virtual fantasy nerd cards then who can you trust?
posted by Justinian at 2:41 AM on February 25 [43 favorites]


Can't. Asics are highly optimized for bitcoin mining only. Dogecoin uses a different encryption algorithm entirely. You couldn't even use them to generate rainbow tables or something similarly nefarious.
posted by empath at 2:42 AM on February 25 [1 favorite]


a currency exchange started as a way to trade virtual fantasy nerd cards for other virtual fantasy nerd cards

Asics are highly optimized for bitcoin mining only
It's like the perfect storm of facepalming.
Revenge on The Nerds
posted by fullerine at 2:52 AM on February 25 [10 favorites]


Dogecoin uses a different encryption algorithm entirely.

Indeed, Dogecoin (and all Litecoin variants) deliberately use an algorithm (designed to use lots of memory) that they haven't even managed to develop an efficient ASIC to solve.
posted by Jimbob at 2:57 AM on February 25


Wasn't there bet placed here on Metafilter between two members about the value of bitcoin?

This one?

If I were a betting man, I'd bet $1000 worth of BitCoins against your $1000 worth of gold that Bitcoin will seem as irrelevant as Flooz in five years.
posted by JaredSeth at 3:15 AM on February 25 [4 favorites]


Not actually a bet obviously.
posted by JaredSeth at 3:17 AM on February 25 [2 favorites]


I thought about buying coins when the gawker article came out (and would have made a quick $700 if i invested what I had planned), but I backed out when i saw how shady Mt Gox looked. I'd be really worried about letting the money ride there for a while and then getting your account frozen when the market crashes.
posted by empath at 11:19 PM on June 5, 2011 [+] [!]


From the thread, though I was kind of all over the place.
posted by empath at 3:21 AM on February 25 [7 favorites]


For the record, based on the price when Nelson made the comment I linked to above, he could have sold off most of his Bitcoins a few months ago for a hefty 60K profit and still would have had $1000 worth of Bitcoin at the then-current price. There's still a year to go on his "bet" too.
posted by JaredSeth at 3:31 AM on February 25 [3 favorites]


Can't. Asics are highly optimized for bitcoin mining only. Dogecoin uses a different encryption algorithm entirely. You couldn't even use them to generate rainbow tables or something similarly nefarious.

Ouch. It's like a lesson in the evolutionary dangers of over-specialisation.
posted by jaduncan at 3:45 AM on February 25 [2 favorites]


I'm so glad that I skipped the bitcoin fad.
posted by double block and bleed at 3:49 AM on February 25


I would not assume that bitcoin is over. There's too much infrastructure and investment building on the technology. Bitcoin has a market cap in the billions (though how many bitcoins are still actually in circulation is unknown).
posted by empath at 3:54 AM on February 25 [1 favorite]


It'll be a real shame when all that specialty hardware becomes useless.

All that hardware is basically purpose-designed to break password hashes. I think it will find a good home where it has lots to do.

Incidentally, we should all stop using bcrypt() soon.
posted by mhoye at 3:58 AM on February 25 [3 favorites]


Maybe if all this cryptocurrency shit goes away I'll be able to buy a new graphics card at a non-outrageous price.

roffel

Just buy nvidia. The market was so incredibly skewed late last year that i managed to pick up an asus directcu gtx 670 for like $200, when a 280x that would perform at about the same level was like... $500? i don't even know, the prices got way too moronic way too fast. someone listed a 290 for $400 on my local craigslist and their voicemail filled up to the brim within like 10 minutes of it being posted.

That said, i'm REALLY curious to hear what several friends of mine who have(or had) hundreds of BTC have to say. Did they cash some out when it hit 1k like i thought at least one of them might? did they use mt.gox at all? so many questions.
posted by emptythought at 4:03 AM on February 25


I'm skeptical about the 750000 BTC theft claim. The malleability exploit has two features that makes it impossible to lose 3/4th of a million coins without anyone noticing:

1. To pull the scam off, the thief had to contact Mtgox support and say "Hey my transaction never went through". Support then had to manually re-authorize a new transaction. This means it would show up as a big dot on support's radar.

2. When successfully pulled off, the exploit totally messes up Mtgox's internal BTC bookkeeping. It makes the Mtgox software think it has coins that's already gone, which results in a cascade of failed withdrawals and general messy problems. This would not go unnoticed.
posted by ymgve at 4:13 AM on February 25 [1 favorite]


I got into a bit of back-and-forth in memail with someone recently over some comments in the latest "New York is gentrifiying people out" thread; I felt they'd been way too smug towards the people getting priced out, and had implied "they couldn't make it". They suddenly offered me a job - within a year, once their bitcoin-based start-up had gotten a toehold.

I am indeed looking for employment, but I doubt any HR person in the world would find me at fault for turning them down. And laughing uproariously as I did so.
posted by EmpressCallipygos at 4:32 AM on February 25 [4 favorites]


Wasn't there bet placed here on Metafilter between two members about the value of bitcoin?

You may be thinking of this wager, between Jenga, pla, and furiousxgeorge.
posted by amarynth at 4:36 AM on February 25 [1 favorite]


So...The largest unregulated pseudo-currency trading desk suddenly evaporates, taking hundreds of millions of dollars of people's investments with it? Sounds to me like the market working things out on its own without any pesky government interference.
posted by Thorzdad at 4:39 AM on February 25 [42 favorites]


What do you mean, somebody broke in and stole all my tulips! You said this tulip-house was completely secure!
posted by (Arsenio) Hall and (Warren) Oates at 4:41 AM on February 25 [73 favorites]


I have a new idea for currency. Imagine this: pieces of paper, printed with the valued amount on them. The idea is that you could exchange these papers with others, and you could do so completely anonymously. And what if (just spitballing here) but what if you could take them to an institutional lender, for example, deposit the paper currency, and secure it at the institution for later use? Of course, and this is basically a pipe dream, but maybe if it got big enough, you could like, I don't know, have those secured funds insured by larger institutions? Hahaha, this is crazy -- the government maybe?

I don't know, folks, just thinking out loud here.
posted by (Arsenio) Hall and (Warren) Oates at 4:54 AM on February 25 [35 favorites]


It would be pretty awesome if they all signed up to do Folding@Home or something with their newly-fallow cycles. Not that I think it's likely or anything, just daydreaming.

Doubtful. Almost everybody I know who mined bitcoins were the same guys that refused to join Folding/SETI@Home because it would lose them a couple FPS in their favorite game or cost a couple extra cents on their electric bill. I look at the multi-GPU setups they invested hundreds of dollars in and get a good chuckle now. All but one of them chose to ride this one out, and the last guy cashed out just when it looked like he was going to break even.
posted by zombieflanders at 4:55 AM on February 25 [1 favorite]


Looks like the Bitcoin banking industry needs some standards for accounting and security, and an independent auditing process.

The auditors could actually do a better job of it than the auditors who got fooled at MF Global, Sentinel, and PFGBest, etc., if the Bitcoin banks could agree to tighter standards.
posted by surplus at 4:56 AM on February 25 [1 favorite]


Nobody has used graphics cards for mining in at least a year.

I still do. I'm mining right now on my Mac mini's integrated GPU. But it's an exercise in futility. I only do this to get a vague index of relative difficulty. I posted the stats in a previous BTC thread, but IIRC I started out generating .01BTC in about 10 days. I haven't calculated lately, but a few weeks ago the estimated time to generate .01BTC was over a year, assuming no increase in difficulty. And of course difficulty has increased. Just off the top of my head, I'd expect the time has increased to several years, if not more than a decade.

It might be worth noting, a few weeks ago there was an upgrade to MacMiner, and suddenly it is generating zero hashes. I contacted the developer, and this version turns off GPU mining by default, you have to re-enable it in the prefs. So yeah, obviously GPU mining is dead, nobody would actually do it as a practical enterprise.
posted by charlie don't surf at 4:57 AM on February 25


The likely consequences will be larger than this localized financial damage, and we believe that the benefits of keeping MtGox stable and running outweigh the risks. This isn’t about saving MtGox anymore.

Too big to fail.
posted by jeather at 5:04 AM on February 25 [1 favorite]


I just love these EVE Online threads!
posted by srboisvert at 5:12 AM on February 25 [98 favorites]


1. To pull the scam off, the thief had to contact Mtgox support and say "Hey my transaction never went through". Support then had to manually re-authorize a new transaction. This means it would show up as a big dot on support's radar.

According to one of the core developers of bitcoin, that's not the case -- they were automatically timing out transactions and crediting the accounts with the bitcoins.
posted by empath at 5:12 AM on February 25 [6 favorites]


In Soviet Russia, Gox mounts you.
posted by inturnaround at 5:12 AM on February 25 [12 favorites]


So but seriously how am I going to buy my drugs now
posted by ook at 5:14 AM on February 25 [6 favorites]


I'm a bit confused, in the exchanges that are still running, can users sell BTC for traditional currency? Or is that only an option by meeting people IRL and transacting in person?
posted by askmehow at 5:17 AM on February 25


According to one of the core developers of bitcoin, that's not the case -- they were automatically timing out transactions and crediting the accounts with the bitcoins.

That's actually dumber than using bracketless ifs in code that has to be reviewably secure.
posted by Vetinari at 5:18 AM on February 25 [11 favorites]


I'm just enjoying LMFAO. The gullible we shall always have among us.

As I said in the last BTC thread, China was never going to stand for an unregulated way to launder yuan into dollars. Nor the US to launder drug dollars into clean ones. The Chinese Central bank and US drug enforcement actions a few months ago were a signal to any rational speculator to GTFO of BTC.

Gonna bet Mt. Gox is an inside heist, just like Silk Road 2.
posted by spitbull at 5:18 AM on February 25 [4 favorites]


So but seriously how am I going to buy my drugs now

Well, you can do it with cash, or with sexual favors... or, hey...

*furiously scribbling down notes for sexual bitcoins*
posted by (Arsenio) Hall and (Warren) Oates at 5:19 AM on February 25 [2 favorites]


Looks like the Bitcoin banking industry needs some standards for accounting and security, and an independent auditing process.

There's been a suggested technological fix for auditing. Basically they publish a hashed list of all of their accounts and you can verify that your bitcoins are there, though you can't check that everyone's are. I'm sure there's a way to game that, too, though.
posted by empath at 5:19 AM on February 25 [2 favorites]


This is actually quite excellent for Bitcoin. The Bitcoin gods have spoken, and in so speaking that they opened their cavernous maws and swallowed the heretics whole. The collapse of the idiot false god Gox Mountain was not a disaster, but actually a day of reckoning. For it was ever a sin to have ever even considered to exchange glorious divine Bitcoin for filthy pig disgusting fiat currency.

Bitcoin does not exist for your mere "use". Bitcoin does not exist for you to pay rent or your bills or to pay taxes. No, just like the pets I pretend to adopt, Bitcoin exists only to be harvested. For you see, Bitcoin has attained a perfection beyond that of human mathematics. The mere human faculties of reason cannot comprehend the beauty of its geometry.

When my mother screeches through the floorboards that I must get a "real job", I simply shake my massive, spherical head and chuckle. It is all I can do to not honk back, basso profundo, that I am a real job now. For I am no longer a human. I have actually become the very task of harvesting Bitcoin.

However, I no longer actually say this to her, because then she says, "well, if you're not a human, then I guess I can turn this back into a rec room and you can forget about having space in the fridge", and then I'm like whatever, so instead nowadays I just draw a picture of her and write "IS MEAN" underneath.

And so I soldier on, with my sacred mission, harvesting Bitcoin.

At night, when it is cold and lonely, except where I live because my mining rigs actually produce so much heat that I have gone to the hospital with heat stroke, I sometimes wonder what Bitcoin has in store for me. But then I remember that that, too, is a sin, for to wonder is to doubt.

It is not enough that I still believe in Bitcoin. I must become that belief. I must become that which would no longer exist, if Bitcoin were to no longer exist.

I am very close now.

And with each new massive failure of Bitcoin to reliably serve any practical purpose, I am almost there.
posted by Sticherbeast at 5:20 AM on February 25 [135 favorites]


Also, the front page of Buttcoin: "you can't spell bankruptcy without B T C,"
posted by spitbull at 5:21 AM on February 25 [4 favorites]


I'm a bit confused, in the exchanges that are still running, can users sell BTC for traditional currency?

You can get in and out of bitcoins pretty easily with coinbase, but it doesn't work like a market -- they just list the price at any given moment, you place an order and they fill it within a couple of days. Withdrawals take a couple of days, too. If you aren't day trading it works perfectly well-- you'd probably have problems moving large amounts of money in and out because of financial regulations, though. If you want to move BIG money into bit coins, you'd need to invest in one of the big trusts.
posted by empath at 5:22 AM on February 25


Sorry empath, (and thanks for the clarity you're bringing to this discussion!) but how is that not a market?
posted by pompomtom at 5:29 AM on February 25


/goes to actually look at coinbase.
posted by pompomtom at 5:29 AM on February 25


Here's a dude who shot his iphone with a high powered rifle in protest when Apple removed a BTC wallet app from the App Store.

This is a Bitcoin.
posted by spitbull at 5:30 AM on February 25 [1 favorite]


OK, so coinbase is a single market-maker? Is that any different to mtgox (minus the unfortunate unreliability and ridiculable backstory)?
posted by pompomtom at 5:31 AM on February 25


I really like that Mt.Gox was a Magic The Gathering card exchange. It's like finding out Ft. Knox was a pog repository.
posted by stavrogin at 5:31 AM on February 25 [128 favorites]


I have a question to those who want cryptos to fail - what are you doing to make them fail? I know what I am doing, and what many others are doing, to make them succeed. I have seen very few doing anything that looks like a credible effort towards making them fail, and seemingly a lot of expectation that people are going to have some epiphany and cease all this. Winklevoss twins are putting BTC on the "Real" securities markets. DOGE oriented point-of-sale systems are coming. You'd best respect the power of that brand - Doge is like Mickey Mouse but he's not trying to fuck you when you're not looking. What've you got?

So what you're saying is that this is a really good time to buy BTC?


Well, it's cheaper than it was yesterday, and maybe it will rebound as people see the whole thing still functioning. On the other hand, no one in the world really has a goddamn clue as to the proper value of 1 BTC. (The cluelessness itself affecting the value!) A million? A thousand? Ten cents? .05 cents? I basically don't expect my cryptos to hold value more than approximately and for a few days - my 25-50 mBTC in cold storage are pretty much a bet on black to me and mostly I am just spending it as it comes in.

You can have a fine practical crypto with just about any nominal value, as long as the market cap and liquidity allow practical usage - so we quote prices at milliBTC and kiloDOGE.

You could definitely see say that at this point I am more about crypto for the "transfer" bits of money maybe kinda the "unit of account" not so much the "store of value" yet. Time will tell.

I do have one surefire bet for you guys though. Recently some big players came out with the Dogedex, professional tracking the Price of Doge, and longstanding belief was confirmed: 1 DOGE = 1 DOGE, and it's been stable for quite some time.

One of my potential SF reps says "I'm still not sure about this DOGE, I still think it might just be funny money" and I says "You better believe it, and we're gonna be laughing all the way to the bank."
posted by save alive nothing that breatheth at 5:31 AM on February 25 [9 favorites]


Thanks @empath, one more question -who imposes these financial regulations? The government? I thought BTC was outside of their purview.
posted by askmehow at 5:31 AM on February 25


Sorry empath, (and thanks for the clarity you're bringing to this discussion!) but how is that not a market?

It's more like the money changers at train stations and airports.
posted by save alive nothing that breatheth at 5:32 AM on February 25 [1 favorite]


Which is much like a market-maker in the City, surely? They provide a buy price, a sell price, and the spread is therefore obvious? Is the not-market part simply the depth?
posted by pompomtom at 5:34 AM on February 25 [1 favorite]


I thought BTC was outside of their purview.

I find it funny how some supporters and detractors both seem to think the gov't will just throw up its hands and say, "Nope, nothing we can do here!"
posted by save alive nothing that breatheth at 5:34 AM on February 25 [2 favorites]


I have a question to those who want cryptos to fail - what are you doing to make them fail?

This is like asking an atheist what actions they have taken to make God not exist.
posted by (Arsenio) Hall and (Warren) Oates at 5:35 AM on February 25 [103 favorites]


I am the still proud owner of .054 Btc donated by a few fans who couldn't stand PayPal. The amusement value has been worth far more than whatever final RL value my Btc settle at.
posted by localroger at 5:36 AM on February 25 [3 favorites]


The malleability exploit has two features that makes it impossible to lose 3/4th of a million coins without anyone noticing:

You are assuming competence. Why are you assuming competence?

Seeing the incompetent piss away millions? Easy enough when you don't actually have controls in place. Hell, the pros piss away billions.
posted by eriko at 5:37 AM on February 25 [4 favorites]


Doge is like Mickey Mouse but he's not trying to fuck you when you're not looking.

Doge is happy to proudly hump your leg in plain view for all to see.

(I love doge for the same reason I don't love bitcoin: the community around it.)
posted by phooky at 5:38 AM on February 25 [8 favorites]


If I thought I could trust the paper (i.e. exchanges) they're written on, I'd be buying put options on BitCoin up the whazoo. As was said upthread, no way governments will let popular cryptocurrencies trade as they have been for much longer.
posted by Omission at 5:45 AM on February 25 [1 favorite]


I have a question to those who want cryptos to fail - what are you doing to make them fail?

I don't really want Bitcoin to fail but I must confess some bemusement whenever yet another unexpected flaw in the Bitcoin ecosystem is discovered.

It's not necessary to take any positive action to make Bitcoin fail. It will happen without me lifting a finger.
posted by grouse at 5:52 AM on February 25 [3 favorites]


It's not necessary to take any positive action to make Bitcoin fail. It will happen without me lifting a finger.

That is possible - but what are you doing to put down the DOGE?
posted by save alive nothing that breatheth at 5:54 AM on February 25


Basically, when I talk with actual banker VPs, their biggest concern is that the consumer banks will make their own crypto and not play ball with licensing tech/services from me.
posted by save alive nothing that breatheth at 5:55 AM on February 25


That is possible - but what are you doing to put down the DOGE?

Nothing. Doge is too cute for me to even wish for its failure. Wow.
posted by grouse at 5:56 AM on February 25 [6 favorites]


what are you doing to make them fail?

Um, not participating in the bubble?

Or is this a trick question?
posted by spitbull at 5:57 AM on February 25 [17 favorites]


Mt. Gox always sounded to me like a place that Dr. Seuss would have written about.

Would you go with a fox?
Put the fox in a box?
Take a fox in a box to the top of Mount Gox?

posted by jquinby at 6:03 AM on February 25 [14 favorites]


On the other hand, no one in the world really has a goddamn clue as to the proper value of 1 BTC. (The cluelessness itself affecting the value!) A million? A thousand? Ten cents? .05 cents?

actually - I'm not totally sure that's true in that they represent cost of the electricity + capital cost of the ASICs - where you need to make some forecast of the future characteristics of the ASICs in terms of speed and electricity consumption.

That's not quite right - its really the present value of the cost of all future BTC - but you get the idea.

That's assuming you think "crypto-currencies" have some underlying demand.

The logic being if BTC<Cost of Electricity you'll stop mining in the short run. if BTC<Cost of Electricity + capital cost of ASIC you wouldn't reinvest in new mining equipment when the blocks demand more power to solve (I may have butchered that terminology)

If you thought crypto currencies were real you'd be a fool not to buy when their cost of production was greater than market price.

(of course I think they aren't real)
posted by JPD at 6:05 AM on February 25 [1 favorite]


Such Fraud
Much Lax
Very Malfease
Wow
posted by inturnaround at 6:05 AM on February 25 [25 favorites]


Perhaps because I often refer to Magic the gather as Em Tee Gee, I've always sounded out each letter. So I pronouce Mt Gox as Em Tee Gee Oh Ex. Is there a standard pronunciation for it? Or does it even matter anymore?
posted by Twain Device at 6:06 AM on February 25 [1 favorite]


Your fire, sir!
posted by acb at 6:08 AM on February 25 [2 favorites]


I have a question to those who want cryptos to fail - what are you doing to make them fail?

Sitting back and laughing! Don't worry, you're doing much more to help BTC fail than I am.


I really like that Mt.Gox was a Magic The Gathering card exchange. It's like finding out Ft. Knox was a pog repository.

It actually wasn't MTG cards. It was MTG Online cards. Virtual, nonexistent cards. Not even, like, little bits of cardboard. Just worthless bits. The comparison is trivial and not worth making.
posted by Pope Guilty at 6:09 AM on February 25 [12 favorites]


Gonna bet Mt. Gox is an inside heist, just like Silk Road 2.

What is the evidence for this one way or the other?
posted by Reasonably Everything Happens at 6:12 AM on February 25


I have a question to those who want cryptos to fail - what are you doing to make them fail?

I didn't do anything to make dot coms fail in the 90's. I'm not doing anything to make bitcoin fail now.

Also, I don't think that anyone necessarily "wants" them to fail. It's more like, we really don't care either way and are baffled at those who do.
posted by EmpressCallipygos at 6:16 AM on February 25 [15 favorites]


yep indifference and vague amusement aren't remotely the same thing as "wanting something to fail"
posted by JPD at 6:18 AM on February 25 [4 favorites]


I want bitcoin to fail, because the bitcoin "community" is 50% Libertarian assholes and 50% obnoxious nerds who don't know nearly as much as they've invested their self-image in thinking they do.
posted by Pope Guilty at 6:19 AM on February 25 [49 favorites]


But, I mean, I acknowledge that this is one of those situations where I'm kind of a schadenfreude-loving jerk.
posted by Pope Guilty at 6:20 AM on February 25 [40 favorites]


I have a question to those who want cryptos to fail - what are you doing to make them fail?

I don't have to do anything to see crypto fail, least of all when it's being pushed largely by dudes full of macho posturing and hubris with nothing to back it up, who insist on lack of regulation, and seem to have a complete lack of knowledge of the history of economics. Besides, among the major problems with crypto are: (1) that the only people with ironclad crypto capabilities are the exact same people crypto supporters don't want to control it (i.e., large governments with advanced computing and regulatory structures) , and (2) all of the supposed benefits and equalizers are meaningless when it's more dependent on procuring and maintaining pre-existing resources than other currency.
posted by zombieflanders at 6:21 AM on February 25 [11 favorites]


guys what if it turns out the real Bitcoin was friendship?
posted by The Whelk at 6:23 AM on February 25 [127 favorites]


guys what if it turns out the real Bitcoin was friendship?

It was in our hearts all along!
posted by Pope Guilty at 6:24 AM on February 25 [17 favorites]


"You find 3d12 bitcoin and 10d12 copper."
"Ungh. I'll take the copper."
posted by robocop is bleeding at 6:26 AM on February 25 [36 favorites]


Robust!
posted by one more dead town's last parade at 6:27 AM on February 25 [1 favorite]


Wait, how am I going to trade this Force of Will card now?
posted by charred husk at 6:28 AM on February 25 [7 favorites]


...you'd probably have problems moving large amounts of money in and out because of financial regulations, though.

...who imposes these financial regulations? The government? I thought BTC was outside of their purview.


It is outside their purview; the regulations pertain to the transactions and movements of USD currency.

If you want to set up and operate a purely BTC/DOGE exchange where no G10 (or G11, or G20, or G50...) currencies are involved, the Feds will leave you alone. They step in when you try to convert to non-virtual currency.

Because money laundering
posted by ceribus peribus at 6:29 AM on February 25


I have a question to those who want cryptos to fail - what are you doing to make them fail? I know what I am doing, and what many others are doing, to make them succeed. I have seen very few doing anything that looks like a credible effort towards making them fail, and seemingly a lot of expectation that people are going to have some epiphany and cease all this.

In my case, it's less a desire to see them fail than a vague annoyance at the boosterism, wariness over the root scamminess of the concept, and a double wariness that everyone who is heavily involved in it seems to be the sort of person I would make an effort to avoid (libertarians, getrichquickers, and low-level criminals). I feel bad for people who are losing real money through ignorance and false hope, but, then, I spent a lot of the 90s running a store that sold comics telling people who were "investing" to just buy things they liked to read, because that was where the only value was. Often it worked. Bitcoins seem much the same.
posted by GenjiandProust at 6:31 AM on February 25 [12 favorites]


Someone on Hacker News found a bitcoin address that's had roughly 744,000 btc moved through it, over the past couple of years. Just speculation, currently, but that's a lot of money to be moving through one address like that.
posted by Axle at 6:32 AM on February 25 [3 favorites]


the best part about bitcoins is that you get to watch libertarians slowly discover why financial regulations exist to begin with

Or not so slowly.
posted by edheil at 6:32 AM on February 25 [64 favorites]


It was in our hearts all along!

Much like the fatty deposit from too many potato chips?
posted by GenjiandProust at 6:33 AM on February 25 [1 favorite]


Yeah, totally right, gambling. Not like 'playing the markets' at all. Betting on the USD or Gold is still betting

Man bitcoin threads frustrate the crap out of me. Whatever the pros and cons of the currency, I don't understand why the faithful think Bitcoin is inherently virtuous or better than what exists now. "Betting" on the dollar or gold is "betting" in a market with fairly good information. I understand there are giant conspiracies of rich people out there who are actively screwing all of us from black helicopters, but all the same, I'll take my chances in a market where there's a chance of getting close to "perfect information" instead of something that's still so murky. The Bitcoin faithful read, "he could have sold off most of his [thousand dollars of] Bitcoins a few months ago for a hefty 60K profit" and think that's a good thing. It's not. If you think a currency should behave like that, move to Zimbabwe. Enjoy the ride.

I have a question to those who want cryptos to fail - what are you doing to make them fail?

We don't. I can't imagine there's someone in this thread that actively wants Bitcoin to die off. What you're feeling is a reaction to fanboy blindness. The Bitcoin faithful appear to me to be nerds who feel downtrodden, who think their lack of perceived success means the world is out to get them and Bitcoin is going to usher in a Utopia where the nerds beat the jocks and the meritocracy wins out. The problem is the faith in Bitcoin is being actively used to screw those nerds out of their money. Simply buying Bitcoins or starting to harvest them and dump them into an exchange you don't know anything about isn't any smarter than buying lottery tickets. Actually, upon reflection, it's dumber: the lottery prints the odds on the ticket and you can work out the expected value right down to the decimal places.
posted by yerfatma at 6:35 AM on February 25 [28 favorites]


How Much Did You Lose?
posted by empath at 6:38 AM on February 25 [4 favorites]


Bitcoin is going to usher in a Utopia where the nerds beat the jocks and the meritocracy wins out.

It's hilarious that people believe that when the biggest celebrity Bitcoin backers are the Winklevoss twins, jocks par excellence.
posted by grouse at 6:42 AM on February 25 [3 favorites]


The Marc Andreesen article that appeared in the Times a couple weeks ago did convince me of one thing --- solving the double transfer problem is not insignificant, and if bitcoin could gain wide acceptance it could theoretically be a stake in the heart of Visa and MasterCard, and who wouldn't cheer that?

But it seems to me that the forces driving bitcoin to fame, the compelling features that are making people all excited about it, are precisely the ones which make it a terrible store of value and cripple it as a medium of exchange --- its inherent deflationary nature and anonymous, anarchic potential. I don't know if it can ever become mainstream enough to be useful...
posted by Diablevert at 6:43 AM on February 25 [1 favorite]


empath:
How Much Did You Lose?
I love that everyone reporting losses are being tipped Doge out of sympathy.
posted by charred husk at 6:43 AM on February 25 [6 favorites]


( head twist, Zuul voice) There is no Bitcoin only Doge.
posted by The Whelk at 6:46 AM on February 25 [5 favorites]


Re: nerdbertarians

Shit /r/Bitcoin says

posted by Peccable at 6:48 AM on February 25 [11 favorites]


The best dope is on gwern's page where he narrates his adventures buying drugs off silk road with bitcoin. If you haven't seen it in awhile, he has fleshed it out substantially. Link.
posted by bukvich at 6:50 AM on February 25 [4 favorites]


Mt. Gox always sounded to me like a place that Dr. Seuss would have written about.

He did, in "One Fish, Two Fish, Red Fish, Blue Fish" - "I box in yellow Gox box socks". It was my daughter's favorite Dr. Seuss book when she was learning how to read.

To be fair, it's a Gox that the boy is boxing, and not a place.

...and back on subject: I was talking to a co-worker last week about the ridiculousness of trusting a site built originally for trading Magic:The Gather cards with large (or any size) financial transactions. I did not expect it to fail over the weekend.
posted by combinatorial explosion at 6:56 AM on February 25 [2 favorites]


Shit /r/Bitcoin says

Good lord. I'll have to bookmark that and point people to it the next time I see someone waxing on about how logical and clear-of-thought geeks are.
posted by Thorzdad at 6:57 AM on February 25 [2 favorites]


Shit /r/Bitcoin says

Nope, not even on a bet. Not even on a bet in Bitcoin.
posted by yerfatma at 6:59 AM on February 25


Shit /r/Bitcoin says

I can't decide which is my favorite; this:
In the future, women will judge men by the size of their bitcoin wallet.
or this:
You load up your "make it rain bitcoin" app, scan the QR code, and you're ready to make it rain on them hoes.
posted by ChrisTN at 7:01 AM on February 25 [6 favorites]


I'm so glad that I skipped the bitcoin fad.
posted by double block and bleed at 6:49 AM on February 25


Eponysterical, especially after today's announcement.
posted by one more dead town's last parade at 7:03 AM on February 25


Shit /r/Bitcoin says

Why do they think the mafia would drive Fiats?
posted by srboisvert at 7:04 AM on February 25 [2 favorites]


Because they've never talked to another human being?
posted by The Whelk at 7:06 AM on February 25 [6 favorites]


'Pony' botnet steals bitcoins, digital currencies
Trustwave said on Monday that it has found evidence that the operators of a cybercrime ring known as the Pony botnet have stolen some 85 virtual "wallets" that contained bitcoins and other types of digital currencies. The firm said it did not know how much digital currency was contained in the wallets.

"It is the first time we saw such a widespread presence of this type of malware. It was on hundreds of thousands of machines," said Ziv Mador, security research director with Chicago-based Trustwave.

Trustwave said it believes the crime ring is still operating, though it does not know who is running the group. The company said it has disrupted the servers that were controlling machines infected with Pony, but expects the group to launch more attacks on virtual currency users.

A representative for the Bitcoin Foundation, a trade group that promotes adoption of the virtual currency, advised bitcoin users to store their currency offline in a secure location to prevent cyber criminals from stealing them.

"Electronic wallet security continues to improve by leaps and bounds as hardware wallets become available and we start to see software wallets that support multi-signature transactions," said the Bitcoin Foundation's director of public affairs, Jinyoung Lee Englund.

Trustwave's discovery comes after an unrelated cyber attack that spammed bitcoin exchanges earlier this month. That attack prompted at least three online virtual currency traders to halt withdrawals, causing bitcoin's value to plunge 33 percent over three weeks.
posted by zombieflanders at 7:08 AM on February 25 [4 favorites]


I always thought that Bitcoin sounded too good to be true, and quietly smirked at the true believers, but I can't really gloat now after reading this Reddit thread where people are admitting how many coins they (presumably) lost to Mt. Gox:
http://www.reddit.com/r/Bitcoin/comments/1yv26o/gox_horror_story_thread_how_much_did_you_lose/

One guy says he lost over $300k. Wow.

(Looks like mine is a dupe; sorry. But still: WOW.)
posted by wenestvedt at 7:09 AM on February 25 [4 favorites]


I have an acquaintance who was just touting the greatness of bitcoin in January. His arguement was something like this: "Bitcoin is going to be worldwide. Everyone is going to use it. Nobody is going to use national currency and Bitcoin is going to take over. I'm buying as many as I can right now."

He didn't see the value in government backed currency (outdated, in his mind) and truly believed this was a perfect market. His insistence on the subject was too torrential and akin to conspiracy theorists for me to put up with, to be honest.
posted by glaucon at 7:12 AM on February 25 [1 favorite]


Why do they think the mafia would drive Fiats?

I'm imagining an alternate universe where Mafiosi are so patriotically Italian that they can be identified by their Fiats, San Pellegrino soda cans, and suits in loud red, white, and green. The best thing is that this is apparently the universe where Bitcoin enthusiasts live
posted by Rustic Etruscan at 7:13 AM on February 25 [18 favorites]


the Pony botnet
the Pony botnet
the Pony botnet
the Pony botnet
the Pony botnet
posted by Sticherbeast at 7:16 AM on February 25 [17 favorites]


So Mt. Gox is living up to the "empty" in its name?
posted by GenjiandProust at 7:17 AM on February 25


I feel sorry for the local trendy donut place that just started to accept bitcoins as payment seriously last fucking Friday. What the hell is the impact going to be there? Will I no longer be able to enjoy cronuts in Durham, NC? CRYPTOLIBERTARIANS RUINED MY BREAKFAST DREAMS
posted by oceanjesse at 7:19 AM on February 25 [5 favorites]


There are people on that r/ thread claiming they lost millions.

Although, presumably they are talking about the nominal value. I'd be more interested in knowing how much they actually invested and lost? E.g. one guy says he invested $8500. That's a lot of cash but not something you can't recover from.
posted by xigxag at 7:20 AM on February 25 [6 favorites]


Something hit me after reading about the guy who was buying drugs on Silk Road with bitcoin -

You know sometimes communities will come up with their own small, local currencies for things? You know, like "Booster Bucks" where you either buy into it with American paper currency or you volunteer someplace and you get a particular quantity of scrip which you can only use at participating stores in town like the local mom-and-pop drug store or the car wash or things like that, but not all stores accept it and it only works inside the community?

I feel like that's what Bitcoin actually is, only the "community" is more far-flung because it's Internet based. And the Bitcoin communities problems are coming from a belief that it's more than just a community-oriented local scrip.
posted by EmpressCallipygos at 7:20 AM on February 25 [20 favorites]


Whatever. As long as dogecoin is OK*, my retirement is secure.

*: And increases in value approximately 500,000-fold
posted by Flunkie at 7:21 AM on February 25 [2 favorites]


I lost hundreds of hours... first the 10 or so hours actually mining 1BTC a few years ago, then the many, many, many more trying to trade it... first turning it from 1BTC to 0.5 BTC... then 0.3 BTC... and finally back up to 0.5 BTC right before the crash.

First it was MCI/WorldCom... now this... on thing for sure... I'm learning how to trade in bubbles... ;-)
posted by MikeWarot at 7:22 AM on February 25 [1 favorite]


A lot of those people in that r/BitCoin thread are talking about having put their kid's college fund or their own life savings into BTC or borrowing money from family to "invest."

I'm not sure how I can muster up true sympathy for such a foolish course of action, but I never like seeing someone's livelihood destroyed even if it stems from their own ignorance.
posted by absalom at 7:23 AM on February 25 [17 favorites]


I have a new idea for currency. Imagine this: pieces of paper, printed with the valued amount on them.

How Cash Would Be Seen by the Media if Invented Today
posted by sparklemotion at 7:23 AM on February 25 [13 favorites]


Isn't the goal in all of these markets to get out while there are still suckers or before the market collapses?
posted by playertobenamedlater at 7:26 AM on February 25 [2 favorites]


So, honest questions, I've followed this with a mild bit of interest, but I seem to have missed a few key details.

Does the disappearance of Mt Gox mean bitcoin is washed up completely? I thought they were just like a transaction broker of sorts. So all the people that had bitcoins stored outside of Mt Gox aren't out any money, correct? (aside from the price hit the value of the coins may take). They can still trade it through whatever other means they have? Or was Mt Gox the only ones who could trade bitcoin?

Followup question would be, how hard/expensive is it for those few retailers who were taking bitcoin as payment to switch those devices to dogecoin (or any other digital currency)? We talking new software, new hardware?
posted by Twain Device at 7:32 AM on February 25


Every one of these bitcoin discussions makes me long for a return to the barter system. You either have a chicken, or you don't. And if you're hungry, you can eat it.
posted by emjaybee at 7:33 AM on February 25 [4 favorites]


Twain Device, right, if you kept your bitcoins outside of Mt. Gox, for example in a local wallet, you're unaffected. I mean, of course you're affected if bitcoins decrease in value, but you're unaffected in the sense that you still have the same number of bitcoins as before, and are still able to send and receive bitcoins.
posted by Flunkie at 7:38 AM on February 25


You either have a chicken, or you don't.
That was before quantum mechanics.
posted by Wolfdog at 7:40 AM on February 25 [25 favorites]


There are people on that r/ thread claiming they lost millions.
Looks like the dude who had 4700 BTC had been trying to get money out of MtGoX since November. After the bug shenanigans last month he bought a bunch for ~100 dollars a pop when it was obvious MtGoX weren't going to give him his money.
posted by fullerine at 7:40 AM on February 25


The impression I get from these threads, and someone more knowledgeable should correct me, is that this is not so much a Bitcoin problem as it is a Mt. Gox problem, and it's only a Bitcoin problem because the high price of BTC on Mt. Gox sort of inflated BTC's profile beyond what it actually deserved.
posted by Elementary Penguin at 7:42 AM on February 25 [1 favorite]


Shit /r/Bitcoin says

God, I can't stop reading. It's a beautiful train wreck.

I just got BANNED from my favorite restaurant for giving them free bitcoins.

I also can't wait to watch today's Keiser Report. Christ, if he's salivating over Bitcoin most of the time, I can't wait to find out what happens today.

Oh shit I can watch it now. No...I'm at work...I can't...

I am forever investing in schadenfreude coin.
posted by Katemonkey at 7:43 AM on February 25 [1 favorite]


A lot of those people in that r/BitCoin thread are talking about having put their kid's college fund or their own life savings into BTC or borrowing money from family to "invest."

And I'd reckon that most if not all of the "life savings" people did so after the meteoric gains had already occurred. They're the fish whose investments financed the early btc millionaires.

Isn't the goal in all of these markets to get out while there are still suckers or before the market collapses?

That's if you believe it's a bubble or scam. A lot of miners are true believers. They really think BTC is eventually going to take over the world or at least be a widely accepted store of value, and there will never be a final collapse. No matter how low the value of a bitcoin drops, there will still be holdouts, just as there are still people who collect Beanie Babies or whatever.

Frankly, I find it hard to believe that the US government, which spent trillions not too long ago to ensure that Iraq would continue to accept dollars, would just sit back and let its currency go unchallenged. Not saying that the US had anything to do with Mt. Gox, but if it happened that the CIA or NSA knew of what was brewing, I doubt they would use their resources to stop the downfall.
posted by xigxag at 7:47 AM on February 25


Yeah, I have about 15 Bitcoin-related tabs open...certainly enough for the day's entertainment here.
posted by malocchio at 7:48 AM on February 25 [2 favorites]


I do like when you can see the lightbulb occasionally sputter to life.

"If only there were some sort of...central authority that could...regulate transactions...and prevent this kind of fraud..."

Like seeing a fish drag itself on land to walk for the first time. Come on, little guy! You can do it!
posted by Ghostride The Whip at 7:48 AM on February 25 [43 favorites]


Mt. Gox updates:

Dear MtGox Customers,

In the event of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

Best regards,
MtGox Team

posted by malocchio at 7:49 AM on February 25 [1 favorite]


In a way it's like a virtual bank run. All those BTC stuck in Mt Gox, which has discovered that it "misplaced" 700k+ BTC and also doesn't have enough money currency USD on hand to make everyone whole.
posted by ceribus peribus at 7:50 AM on February 25 [3 favorites]


The impression I get from these threads, and someone more knowledgeable should correct me, is that this is not so much a Bitcoin problem as it is a Mt. Gox problem, and it's only a Bitcoin problem because the high price of BTC on Mt. Gox sort of inflated BTC's profile beyond what it actually deserved.
That's true, if you didn't have BTC or Fiat on MtGoX you're fine.
In the same way the morning that Bank of America said all their money is gone you'd be fine if you banked with someone else.
posted by fullerine at 7:50 AM on February 25 [2 favorites]


what are you doing to make them fail?

Fedora and buttcoin jokes, mostly.

My city's doucheyist bar now has a bitcoin vending machine, so that's pretty hilarious.
posted by NoraReed at 7:53 AM on February 25 [4 favorites]


the morning that Bank of America said all their money is gone you'd be fine if you banked with someone else.

The lesson of 2007 was that you would be very not fine in this case.
posted by kiltedtaco at 7:53 AM on February 25 [1 favorite]


I just got BANNED from my favorite restaurant for giving them free bitcoins.

What a great story.
posted by grouse at 7:55 AM on February 25 [22 favorites]


They really think BTC is eventually going to take over the world or at least be a widely accepted store of value, and there will never be a final collapse.

Once you've made 200% on your initial investment get out and let it go. Sounds like some of these folks couldn't get their money out for months, which doesn't sound like a great investment vehicle. If there's any truth to not being able to convert your Bitcoins for real money for MONTHS (like some on Reddit are saying) there's no way anyone should have any faith in this nonsense.
posted by playertobenamedlater at 7:56 AM on February 25 [3 favorites]


the morning that Bank of America said all their money is gone you'd be fine if you banked with someone else.

The lesson of 2007 was that you would be very not fine in this case.


thatsthejoke.gif
posted by Elementary Penguin at 7:59 AM on February 25 [13 favorites]


They really think BTC is eventually going to take over the world or at least be a widely accepted store of value, and there will never be a final collapse.

Viz. the top post on /r/bitcoin right now. It's really ... something.

[T]he lesson is not that we ought to seek out "regulation" to save us from the evils and incompetence of man [...] The proper lesson, if I may suggest, is this: We are building a new financial order, and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world. This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow's finance, and we put ourselves at risk in doing so.
posted by uncleozzy at 8:00 AM on February 25 [18 favorites]


Homer: One adult and four children.

Woman: Would you like to buy some Itchy and Scratchy Money?

Homer: What's that?

Woman: Well it's money that's made just for the park. It works just
like regular money, but it's, er..."fun".

Bart: Do it, Dad.

Homer: Well, OK, if it's fun...let's see, uh...I'll take $1100 worth.
posted by Ruthless Bunny at 8:01 AM on February 25 [19 favorites]


Frankly, I find it hard to believe that the US government, which spent trillions not too long ago to ensure that Iraq would continue to accept dollars, would just sit back and let its currency go unchallenged. Not saying that the US had anything to do with Mt. Gox, but if it happened that the CIA or NSA knew of what was brewing, I doubt they would use their resources to stop the downfall.

Bitcoin was never going to replace government-backed currencies. Even if you had every Bitcoin that could ever be mined, and were able to sell them all for the highest price Bitcoin has ever seen, you would only have about $26 billion. That's not a lot.

Also, with the transaction rate limited to ten per second or so, the system can't even handle every person in Manhattan making even one transaction per day.
posted by one more dead town's last parade at 8:01 AM on February 25 [4 favorites]


All those BTC stuck in Mt Gox, which has discovered that it "misplaced" 700k+ BTC and also doesn't have enough money currency USD on hand to make everyone whole.

The "It's a Wonderful Life" parody opportunity is just waiting for the right person to pick it up.
posted by gimonca at 8:02 AM on February 25 [7 favorites]


See the reason why I can't go into forums like this is because I read this:

In the future, women will judge men by the size of their bitcoin wallet.

and want to respond with "The future is now! But I don't think they're judging you like you think."

I am so conflicted by this whole thing. On one hand, the whole thing is basically not that different than something I would normally judge as pure evil, like a payday loan company parting fools with their money. But on the other hand, people who find themselves in a payday loan situation don't stand outside on the corner telling everybody how stupid they are for not supporting their right to pay extremely high interest rates.
posted by MCMikeNamara at 8:02 AM on February 25 [11 favorites]


In a way it's like a virtual bank run.

It's exactly a bank run.

The catch is, most people didn't realize that MtGox was a bank. They thought it was a depository, someplace that just stored their deposits and allowed them to exchange them for other currencies, without loaning them out.

You can't have a destructive run against a depository, because the assets are always there waiting for you to withdraw them. Everyone just goes in and gets what's theirs, and in the end the depository is empty. Bank runs are a problem for loan-making, interest-paying banks which only keep a fraction of deposits in reserve. Or, for depositories that don't actually have all the assets they claim to own.

Hilarious.
posted by Kadin2048 at 8:03 AM on February 25 [15 favorites]


there will never be a final collapse.
There won't be be a final collapse until the pool of naive libertarian nerds has been bled dry, or "never" as they put it.
posted by fullerine at 8:04 AM on February 25 [1 favorite]


One guy says he lost over $300k.

Whenever someone gets their BTC stolen or something like this happens then they always seem to value BTC at the peak. Odd, that.

It actually wasn't MTG cards. It was MTG Online cards. Virtual, nonexistent cards. Not even, like, little bits of cardboard. Just worthless bits.

Whoa now. You can play MTG Online with them. That's not completely worthless.
posted by ODiV at 8:05 AM on February 25 [5 favorites]


Psssst...Wesley Snipes has been released from prison to catch these bad guys. He will recover the lost bitcoins and give their rightful owners bills of exchange for their value. Pass it on.
posted by srboisvert at 8:07 AM on February 25 [6 favorites]


I love that everyone reporting losses are being tipped Doge out of sympathy.

I think you mean "sympathy."
posted by eriko at 8:08 AM on February 25 [3 favorites]


Not to spoil the schadenfreude, but the price is roughly stable for bitcoin standards. So the celebrations of the end of bitcoin may be a bit premature.
posted by dhoe at 8:08 AM on February 25


Whenever someone gets their BTC stolen or something like this happens then they always seem to value BTC at the peak. Odd, that.

See also: housing (or probably any) bubble.
posted by one more dead town's last parade at 8:09 AM on February 25 [2 favorites]


huge massive fluctuations = roughly stable? Where do I sign up?
posted by rebent at 8:09 AM on February 25 [1 favorite]


I heard that if you keep your bitcoins yourself, you need to constantly synchronize your wallet with the network. If that's correct, it sounds like a bit of a pain in the ass.
posted by exogenous at 8:09 AM on February 25


This may be lost on folks who aren't up-to-speed on the Bitcoin market, but the "You can watch the markets panic" link in empath's post shows that Bitcoin is still trading at (as of the time I'm writing this) $530 on Bitstamp and $529 on Bitfinex. The Gox price is $135 per Bitcoin, but I think that reflects the price when trading was halted.

So yes, there has been a run on Mtgox ("just like in Mary Poppins?" my spouse asked. "Yup.") and some of that turmoil has affected the other exchanges.

(On preview, heh, beaten to it.)

Bitcoins held places other than Mtgox are still holding value, albeit not at the stratospheric heights of a few months ago. And the "transaction malleability" problem that apparently was the source of Gox's current trouble -- other exchanges say they're not affected by it, and the Bitcoin developers considered it a known issue that was fixed in the standard implementation of wallet software quite a while ago. As I understand it, Gox was running some custom version that wasn't adequately patched, and they had an unfortunate coincidence of technical and managerial incompetence that landed them where they are now.
posted by QuantumMeruit at 8:11 AM on February 25 [2 favorites]


Woman: Well it's money that's made just for the park. It works just
like regular money, but it's, er..."fun".


Perfect! But the punchline really comes through in the video.
posted by (Arsenio) Hall and (Warren) Oates at 8:11 AM on February 25 [5 favorites]


Honestly from a geopolitical stand-point, the arrival and adoption of crypto-currencies *is* a checkmate

I can't even I just can't it's too much

There won't be be a final collapse until the pool of naive libertarian nerds has been bled dry, or "never" as they put it.

Something something the last libertarian strangled with the entrails of the last goldbug.
posted by feckless fecal fear mongering at 8:12 AM on February 25 [4 favorites]


The "It's a Wonderful Life" parody opportunity is just waiting for the right person to pick it up.

I was thinking of that exact scene!

ERNIE
Don't look now, but there's something funny going on over there at the bank, George, I've never really seen one, but that's got all the earmarks of a run.

Come on, Internet, make it happen. Just like those Downfall videos.
posted by ceribus peribus at 8:13 AM on February 25 [2 favorites]


Not to spoil the schadenfreude, but the price is roughly stable for bitcoing standards. So the celebrations of the end of bitcoin may be a bit premature.

Yeah, to be fair, BTC are still above where they were on Nov 1, 2013.

I heard that if you keep your bitcoins yourself, you need to constantly synchronize your wallet with the network. If that's correct, it sounds like a bit of a pain in the ass.

Yeesh. Why? What happens otherwise? If I were to have BTC, why shouldn't I be able to put them on a physical drive in a safety deposit box?
posted by Sticherbeast at 8:15 AM on February 25


Oh god I thought this was the best

Money is now free from state control. The whole industry is about to be shaken to its knees. The current elites don't stand a chance

but then I kept scrolling down and

I feel sorry for BITCOIN right now. BITCOIN reminds me of Jesus Christ being beaten and tortured.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

and

Gox decided to take the Bitcoin ship down with them [so they] can buy cheap coins to make up for the loss.

I mean do they know anything about how money works? obviously not but fuck seriously

I would work for less [than minimum wage] if the government didn't hold a gun to my head

this twitter is sending me between outright laughter and rage at stupidity it's like being on Evil Spock Universe MDMA
posted by feckless fecal fear mongering at 8:15 AM on February 25 [19 favorites]


Imagine if there was no Obama? Bitcoin would have already been the new world currency and the entire world would be experiencing prosperity.

WHAT UNIVERSE ARE THESE PEOPLE LIVING IN

I know I'm being funny about this but the absolute wilful blindness to reality is just so bizarre.
posted by feckless fecal fear mongering at 8:17 AM on February 25 [9 favorites]


I heard that if you keep your bitcoins yourself, you need to constantly synchronize your wallet with the network. If that's correct, it sounds like a bit of a pain in the ass.

I'm no expert but as far as I'm aware, you only need to sync when you receive the BTC, and again if you want to send them out of the wallet to another address (an exchange or someone else or whatever). In between, you can just keep your wallet.dat file offline. You can also copy the wallet.dat and back it up on an external drive, in Dropbox, as an email attachment, etc.
posted by EndsOfInvention at 8:18 AM on February 25 [3 favorites]


I feel sorry for BITCOIN right now. BITCOIN reminds me of Jesus Christ being beaten and tortured.

I was mining for schadenfreude over at /pol/, and somebody actually made a good point. Somebody claiming to be a security arbs lawyer said that many of the post-Gox reactions sound exactly like what they hear all the time from serial scam victims. Faux contrition for having made poor choices, mixed with the grandiose belief that their suffering was in some way for the greater good. "These people will be scammed again."
posted by Sticherbeast at 8:20 AM on February 25 [14 favorites]


This is a sociology dissertation waiting to be written. Who's game?
posted by ChrisTN at 8:23 AM on February 25 [3 favorites]



Someone on Hacker News found a bitcoin address that's had roughly 744,000 btc moved through it, over the past couple of years. Just speculation, currently, but that's a lot of money to be moving through one address like that.


Maybe the NSA/FBI can help them track this down.
posted by Golden Eternity at 8:25 AM on February 25


Actually, as long as you don't care about trying to cash it out, accepting and trading bitcoin is very easy. Just install the wallet software, create a wallet, and wait. The wallet and its contents are part of the "blockchain" which is moved around by the public network of bitcoin-trading computers. When you want to send bitcoin or see if you're received any, you sync up your software; it tells you what your wallet is now worth (someone else might have added to it!) and at that point you can also send part of it to someone else. Then you can turn off your computer for however long you like.

Just don't lose the password to your wallet, as recovery is completely impossible if you do.
posted by localroger at 8:25 AM on February 25 [2 favorites]


If I were to have BTC, why shouldn't I be able to put them on a physical drive in a safety deposit box?

Google "paper wallet". People "keeping" their Bitcoins with Mtgox or other online exchanges are trusting those services with their coins. You can also use an individual wallet, which has your private keys for your Bitcoin address.

Once the wallet is set up, there's no need for it to be connected or to sync. But, conversely, if you lose the wallet, your private key is effectively gone (and the coins are lost).

It is possible to have a physical bearer instrument that contains the private key. Casascius bitcoins are/were physical coins, with an address and the private key readable under the hologram. The drawback with paper wallets and the physical bearer instruments, though, is that you have to trust that the maker of the instrument didn't keep a copy of the private key after transferring the coin/paper wallet/bearer instrument to you.
posted by QuantumMeruit at 8:27 AM on February 25 [1 favorite]


The Reddit thread is interesting reading, but it's also a bit abstract for those of us less acquainted with Bitcoin. Mainstream media has focused on the theory behind Bitcoin, but when it comes to concrete details, most of the talk has been that it's a speculation market whose price is constantly moving and players have had difficulty exchanging Bitcoin for dollars. There's also this vague thing about how you can maybe set up your computer to just run idly and make Bitcoin or something. So I'm reading stories that say, "I lost 150 BTC" and I'm not sure what that means, and other stories that say, "I lost $1.2 million" and I'm skeptical.

I guess my point is, if there are journalists skimming for leads or anecdotes, it would be great if you could make an effort to tie these stories to terms that non-Bitcoin people will understand. This is a very insular conversation, which seems somewhat ironic because my understanding is these people want Bitcoin to spread. There does seem to me a difference between someone who invested $20,000 and lost it, versus someone who let his computer "make" a bunch of Bitcoin that are now gone but were once theoretically worth $1 million.
posted by cribcage at 8:28 AM on February 25 [3 favorites]


I just love these EVE Online threads!
posted by srboisvert at 7:12 AM on February 25 [44 favorites −]


Slopes for the slope throne.
posted by DynamiteToast at 8:28 AM on February 25


"These people will be scammed again."

A fool and his money were lucky to get together the first time.

Actually, as long as you don't care about trying to cash it out, accepting and trading bitcoin is very easy.

And miss out on the sweet gains when I need actual money and want to cash in my Bitcoin chips? Surely you jest. The rest of what you described sounds like way too much of a pain in the ass for anyone living life.
posted by playertobenamedlater at 8:29 AM on February 25 [3 favorites]


I always thought that Bitcoin sounded too good to be true, and quietly smirked at the true believers, but I can't really gloat now after reading this Reddit thread where people are admitting how many coins they (presumably) lost to Mt. Gox:

"I had 14342 BTC in mtgox since 2010. When i tried to withdraw them , they asked for verification.

Luckily i have more in cold storage and was unable to touch them until last December since i was in prison."

I don't even
posted by XQUZYPHYR at 8:30 AM on February 25 [5 favorites]


The real question is how many BitCoin Mt. Gox was holding for customers, how many it still has, and what their plan is for redistributing what they have left. The supposed leaked document says 744,408 BTC, or about $370M at current rates (double that before the crisis). I also secondarily fear for the Mt. Gox people's life; not with any specific knowledge, but assassination is a very real thing in the Bitcoin world.

It's also worth noting that this whole debacle started with a awkward design wrinkle in the Bitcoin protocol. When Mt. Gox first blamed this flaw for a potential loss everyone else laughed at them and said it was their shitty code to blame. Which is mostly true, only then suddenly all the other exchanges shut down for a day while some bugs were fixed there too; apparently a lot of people had some issues.

The Mt. Gox announcement page up right now is very strange. The content displayed is boring enough, but the HTML they are initially serving is this weird bit of Javascript code that deobfuscates a string, sets a cookie, and reloads the page. I believe the second page then actually has the content, but I'm not positive. There's nothing really nefarious going on in the Javascript, it's harmless enough. I wonder if Gox set it up this way to be able to force a user to have a cookie before loading the web site in a way that's hard to avoid?

Someone above mentioned my half-joking BTC vs. Gold bet. If that idea pleases you, the Planet Money Bet over Bitcoin covers how to bet on its long term survival, as well as a lot of entertaining and well informed discussion about the currency in general. The bet they end up with is along the lines of "10% of American consumers will use Bitcoin at least once a month in 5 years".

Finally, as long as we're quoting Bitcoin tales of woe from Reddit, the one that really got me was "43 bitcoins. Im a student and that is almost everything i own. I feel like killing myself". The worst thing about financial scams is the way that their victims are so often the people who are most vulnerable.
posted by Nelson at 8:32 AM on February 25 [10 favorites]


Bitcoin was never going to replace government-backed currencies. Even if you had every Bitcoin that could ever be mined, and were able to sell them all for the highest price Bitcoin has ever seen, you would only have about $26 billion. That's not a lot.

True, but you're thinking small. Bitcoin faithful believe that eventually each individual BTC might be worth US$1 million or more. Bitcoins are currently divisible into 100 million pieces called satoshi, so at that rate a satoshi would be equal to a penny and market cap would be ~$21 trillion.

So the celebrations of the end of bitcoin may be a bit premature.

Bitcoin as a security is still alive. Bitcoin as a currency imo is hopeless. To that extent it is per se a fraud.
posted by xigxag at 8:32 AM on February 25 [1 favorite]


There does seem to me a difference between someone who invested $20,000 and lost it, versus someone who let his computer "make" a bunch of Bitcoin that are now gone but were once theoretically worth $1 million.

Well depending on at what point in time the second guy had his computer "make" ("mine") the Bitcoin, and what hardware he used, he may well have spent $20k in total on specialised hardware and electricity bills. On the other hand, he may have mined them a year ago when they were worth $1 each and just used his regular computer hardware and $5 of electricity.
posted by EndsOfInvention at 8:34 AM on February 25 [1 favorite]


Bitcoin faithful believe that eventually each individual BTC might be worth US$1 million or more.

That's just delusional. I'm being serious when I ask this - but how would that even be possible without Zimbabwe level inflation?
posted by playertobenamedlater at 8:35 AM on February 25


If you tap 3 manna and sacrifice a creature you can something something money!!!!
posted by humanfont at 8:36 AM on February 25 [9 favorites]


There does seem to me a difference between someone who invested $20,000 and lost it, versus someone who let his computer "make" a bunch of Bitcoin that are now gone but were once theoretically worth $1 million.

Yeah, but "journalists" don't want to write a story about the second version; it's not sexy enough. See also the way they lost interest in B-R5RB when they discovered that hundreds of thousands of dollars hadn't actually been spent on that fight. Reporting it as a loss of $1 million in Bitcoin makes for a more upworthy article.
posted by ceribus peribus at 8:36 AM on February 25


I can't imagine there's someone in this thread that actively wants Bitcoin to die off.

Well, there's me. But if Bitcoin dies off, somebody will invent something that's more "secure" and "better", and then where will I be?

Also:

fffm: I know I'm being funny about this but the absolute wilful blindness to reality is just so bizarre.

The thing about the Bitcoin universe is that it IS a shared reality to some extent. If only more people would buy in, it could be everyone's reality!
posted by sneebler at 8:37 AM on February 25 [1 favorite]


It's just that we aren't taking the red pill!
posted by MCMikeNamara at 8:38 AM on February 25 [2 favorites]


If I were to have BTC, why shouldn't I be able to put them on a physical drive in a safety deposit box?

Not only can you do that, you can also transfer more money into the address represented by the data in the safe deposit box without having to open it. It does have significant advantages over some other popular forms of currency.

Personally I wouldn't invest so much belief in it as to make a safe deposit box worthwhile. And dogecoin is clearly better.
posted by sfenders at 8:39 AM on February 25


Nelson, I listened to the Planet Money "Bet on Bitcoin" segment when it came out. And maybe because I'm a shibe, I thought that there were ways that it could play out that would make the results not reflect reality. I wonder what the possibility is that in 5 years, some other cryptocurrency might be in (relative) wide use. Bitcoin certainly has the lead out of the gate, but the valuation and scarcity arguments raised in the podcast -- it's a rational decision to hold them instead of spending them -- made a lot of sense to me.

Other altcoins -- scrypt coins to address ASIC miners (at least, in the short-term), proof-of-stake, and other modifications to the basic Bitcoin stuff -- seem to have the potential, too.
posted by QuantumMeruit at 8:43 AM on February 25


The thing that's always puzzled me about Bitcoin is this: if there is, by design, a finite amount of BTC in the universe which can never be increased, why would you ever spend it as currency on anything? Once the mining ceiling is hit, they can only increase in value ad infinitum, right? People losing access to their bitcoins and effectively taking them out of circulation permanently can't help matters.
posted by Bromius at 8:45 AM on February 25 [1 favorite]


This is a good thing for bitcoin because
posted by tonycpsu at 8:46 AM on February 25 [3 favorites]


Bitcoin is like any other ideology. It can never fail, it can only be failed.

All of these cryptocurrencies are trying to recreate the wheel, but by gods, theirs is gonna be ROUND.
posted by fifteen schnitzengruben is my limit at 8:46 AM on February 25 [8 favorites]


The thing about the Bitcoin universe is that it IS a shared reality to some extent. If only more people would buy in, it could be everyone's reality!

That's the Reddit argument too though, isn't it? I have a similar outlook to cribcage, I understand in general how the stuff works, it just doesn't solve a problem for me and everyone yammering about how great it is and how much it really should catch in seem to be prioritizing their own preferences (for anonymity and crypto and whatever other 1337 money reasons) over other peoples'.
posted by jessamyn at 8:46 AM on February 25 [6 favorites]


1 DOGE = 1 DOGE


mind = blown
posted by Ray Walston, Luck Dragon at 8:49 AM on February 25 [4 favorites]


"I had 14342 BTC in mtgox since 2010. When i tried to withdraw them , they asked for verification.

Luckily i have more in cold storage and was unable to touch them until last December since i was in prison."

I don't even
Silk Road dealer probably.
posted by fullerine at 8:50 AM on February 25 [4 favorites]


Actually, as long as you don't care about trying to cash it out, accepting and trading bitcoin is very easy.
(...) what you described sounds like way too much of a pain in the ass for anyone living life.
Oh, it's trivial. I'm no bitcoin fan, but the whole "<sneer>Everything about this is obviously dumb even though I don't really know anything about how it works</sneer>" thing is silly.

You download an installer for a program called a "wallet". You run that installer once. From then on you don't have to do anything at all; the program runs in the background on your computer and takes care of everything that needs to be taken care of, without your intervention. If for some reason at some point you stopped your wallet program from running, you just start it up again, just like you would any other computer program.

You would be wise to back up your wallet's data file once in a while, but that's just as easy as backing up any other file on your computer.
posted by Flunkie at 8:52 AM on February 25 [4 favorites]


link in empath's post shows that Bitcoin is still trading at (as of the time I'm writing this) $530 on Bitstamp and $529 on Bitfinex. The Gox price is $135 per Bitcoin, but I think that reflects the price when trading was halted.


why weren't the techno-ubermenchen arbing that spread the whole way down?
posted by JPD at 8:52 AM on February 25 [4 favorites]


I just get the feeling that it's hard to trust any currency named for a stupid meme. Bitcoin is suffering, perhaps failing, and it at least had a srs bsns name.

Dogecoin, were it founded in 1999, would have been called Dollars Ate My Balls.
posted by inturnaround at 8:54 AM on February 25 [16 favorites]


I say again, the risk that any single bitcoin related site is (a) incompetent or (b) actually a criminal enterprise from the beginning appears to approach 1, where the acceptable level of risk in order to be a viable medium of exchange should approach 0.

Your ability to actually use your bitcoins seems to be inversely proportional to the likelihood of lighting your investment on fire.
posted by T.D. Strange at 8:55 AM on February 25 [2 favorites]


True, but you're thinking small. Bitcoin faithful believe that eventually each individual BTC might be worth US$1 million or more. Bitcoins are currently divisible into 100 million pieces called satoshi, so at that rate a satoshi would be equal to a penny and market cap would be ~$21 trillion.

I'm not being snarky here when I say that I'm not quite following you. We all agree that BTC true believers have unrealistic projections of how valuable and stable BTC will be. However, outside of that circle of true believers, nobody believes in these claims. It doesn't follow that the US government would have any interest in making BTC fail, especially since these cock-ups are already so frequent within the BTC universe.

Besides, wouldn't even the positive intervention of the US government (viz. preventing this last mess) run against the ideological principles held by many of the BTC true believers?

Getting back to mining for schadenfreude on certain websites, I have seen people within the same thread on certain websites blame Jews both for creating BTC (because BTC is a sucker's game) and for causing problems with BTC (because BTC is such a threat).
posted by Sticherbeast at 8:56 AM on February 25 [4 favorites]


In the future, women will judge men by the size of their bitcoin wallet.

I'm still hung up on the fantastic failures of imagination & experience displayed in this sentence.
posted by Rustic Etruscan at 8:57 AM on February 25 [15 favorites]


It really worries me that when major, disruptive events like this happen, the Bitcoin valuation doesn't really change that much. I know the 'true believers' will say that it's because it's stable, but I tend to think that the real reason is that the stuff we see like Mt. Gox is so small it's irrelevant, and the vast majority of the coins are engaged overseas in illegal or shady activity, probably moving currency out of China (but who knows, really).

What I would guess this means for Bitcoin is that when the illegal market moves on (probably because of government crackdowns, but there could be other reasons) the value of Bitcoins will drop like a stone, and all of the 'true believers' here will be able to do absolutely nothing about it, because they were always a tiny irrelevant part of the market.
posted by Mitrovarr at 8:58 AM on February 25 [3 favorites]


This may be way off base but today the analogy of bitcoin to Second life popped in my head.
posted by edgeways at 8:58 AM on February 25


Oh, it's trivial. I'm no bitcoin fan, but the whole "Everything about this is obviously dumb even though I don't really know anything about how it works" thing is silly.

You don't find this the least bit silly?

It is possible to have a physical bearer instrument that contains the private key. Casascius bitcoins are/were physical coins, with an address and the private key readable under the hologram. The drawback with paper wallets and the physical bearer instruments, though, is that you have to trust that the maker of the instrument didn't keep a copy of the private key after transferring the coin/paper wallet/bearer instrument to you.

posted by playertobenamedlater at 9:00 AM on February 25 [1 favorite]


It really worries me that when major, disruptive events like this happen, the Bitcoin valuation doesn't really change that much.

Hasn't it gone down by over a third?
posted by ODiV at 9:00 AM on February 25


The problem with mining for Bitcoin schadenfreude is that it gets exponentially harder to find the next block of schadenfreude as more of the schadenfreude-space is exhausted. This morning I was finding schadenfreude every minute, and now it's taking hours to find each piece.
posted by Elementary Penguin at 9:00 AM on February 25 [69 favorites]


why weren't the techno-ubermenchen arbing that spread the whole way down?

Because that would involve putting money into Mt Gox?
posted by sfenders at 9:01 AM on February 25 [2 favorites]


Weird. I don't understand the schadenfreude here.

I have no stake in Bitcoin, but it's pretty obvious that cryptocurrencies are here to stay, whether in the form of dogecoin, Bitcoin, litecoin, or some other variant. In a few years, these will processes will work themselves out.

What we'll have, as a result, will be different modes of money transfer; an immediate global currency, verifiable ways to transfer money, or to embed messages within the blockchain. I think this will alter a lot of things. Using the failure of Mt. Gox to be skeptical of bitcoin and cryptocurrencies are like using the failure of a bank to be skeptical of all currencies that acquires stability because it is backed by an entity (governments, companies, communities).
posted by suedehead at 9:01 AM on February 25 [3 favorites]


why weren't the techno-ubermenchen arbing that spread the whole way down?

Because they knew there was no way they were ever getting any USD or BTC out of mt gox.
posted by Golden Eternity at 9:02 AM on February 25 [1 favorite]


Kudos to the NYT reporter who found a Mr. Galt to get a quote from about giving up on bitcoins.
posted by straight at 9:03 AM on February 25 [19 favorites]


For me, anyway, the schadenfreude is specific to the mindless cryptocurrency boosterism that MTGOX exemplified. I think cryptocurrency is pretty neat, and look forward to its future as the shameless hucksterism is driven to bankruptcy by people who are in it for money, and not ideology.
posted by Elementary Penguin at 9:04 AM on February 25 [7 favorites]


It really worries me that when major, disruptive events like this happen, the Bitcoin valuation doesn't really change that much.

At some point someone, somewhere had to put actual currency (US dollars, yen, Euros) into these vehicles, right? When these "disappeared" from Mt Gox who cashed them out on the other side? I mean, there are only so many Bitcoin accepting vendors and there's only so much you can spend with those vendors. What I'm not understanding is that, as of today, where could these Bitcoins (or any Bitcoins for that matter) be spent if they weren't cashed out?
posted by playertobenamedlater at 9:06 AM on February 25


I think the schaedenfreude is less about the concept--although the idea of a currency requiring computing time automatically makes it something for the global 1%--and more about the insane fanaticism about a currency that didn't require a central authority and eschewed regulation, leading to a situation where a de facto central authority and problems with the currency and its unregulated mechanisms led to an entirely predictable fleecing of said fanatics.
posted by zombieflanders at 9:09 AM on February 25 [14 favorites]



It really worries me that when major, disruptive events like this happen, the Bitcoin valuation doesn't really change that much. I know the 'true believers' will say that it's because it's stable, but I tend to think that the real reason is that the stuff we see like Mt. Gox is so small it's irrelevant, and the vast majority of the coins are engaged overseas in illegal or shady activity, probably moving currency out of China (but who knows, really).


I'm guessing a large percentage of BTC are held in reserve by a few big players to insure liquidity in crisis like this. It might help their cause to have a more trustworthy public face (like a Bernanke) . Banking is a big confidence game after all.
posted by Golden Eternity at 9:10 AM on February 25


I say again, the risk that any single bitcoin related site is (a) incompetent or (b) actually a criminal enterprise from the beginning appears to approach 1, where the acceptable level of risk in order to be a viable medium of exchange should approach 0.

The funny thing about this mess is that the Bitcoin protocol itself is completely designed around zero trust between all participants in the system. But the protocol only covers actual transactions, not things like banks or markets or anything else, so people are building systems on top of Bitcoin that assume huge amounts of trust. There are probably ways to design virtual banks with auditing and whatnot in a way that doesn't require the level of regulation that currently exists for real banks, but since nobody has really put any effort at all in designing robust systems on top of Bitcoin it's basically just a bunch of random sites any of which could be robbed or could run away with everyone's money at any time.
posted by burnmp3s at 9:10 AM on February 25 [7 favorites]


Here in Den Haag I can order from 142 restaurants in Bitcoin. I count on Bitcoin keeping a reasonable level so I can spend all my coins on Thai food.
posted by dhoe at 9:11 AM on February 25 [3 favorites]


Bitcoin is like any other ideology. It can never fail, it can only be failed.

I think that much of this as it applies to BTC might be bolstered by how the Austrians view economics as an a priori system and not as an empirical science. Let the dullards draw from past experience - we have bold heterodox ideas!
posted by Sticherbeast at 9:13 AM on February 25 [5 favorites]


dhoe: "Here in Den Haag I can order from 142 restaurants in Bitcoin. I count on Bitcoin keeping a reasonable level so I can spend all my coins on Thai food."

Yeah, and it seems like someone counting on a currency to maintain a relatively stable price might want, I don't know, a central authority of some sort whose job it is to maintain a relatively stable price.
posted by tonycpsu at 9:14 AM on February 25 [3 favorites]


So, assume that Mt Gox had a flaw, described above, that caused it to misplace Bitcoins in a repeatable way. To everyone who noticed this, it would be like finding a change machine that gave out five quarters for a dollar. What do you do? You feed in all the bills you have, trade the coins elsewhere for more paper, and repeat as much as you can, until the people that stock the coin machine finally notice.

It it a coincidence then, that Mt Gox had the highest trading volume? That it reported (for a time) the highest BTC prices? They're missing BTC, so maybe someone figured out how to sell them BTC for USD, quickly revoke the BTC, and resell the BTC on another exchange (one which has better accounting) for CNY? Bitcoin advocates should be worried that the exchange value and trading volume have been greatly inflated by this kind of fraud.
posted by ceribus peribus at 9:16 AM on February 25 [7 favorites]


A picture is worth a thousand words.
posted by alms at 9:17 AM on February 25 [5 favorites]


Bitcoin : Beenz :: Dogecoin : Flooz

Thus endeth the lesson.
posted by inturnaround at 9:17 AM on February 25 [2 favorites]


alms: "A picture is worth a thousand words."

Indeed.
posted by tonycpsu at 9:18 AM on February 25 [9 favorites]


I have no axe to grind for or against BTC in specific. But, jeez, c'mon: people who mistake "currency speculation in an unregulated market" for "investment" is a recipe for disaster no matter what the currency is. These are people who thought they were badass gamblers, and now they've found out they're the mark.
posted by tyllwin at 9:19 AM on February 25 [8 favorites]


Here in Den Haag I can order from 142 restaurants in Bitcoin. I count on Bitcoin keeping a reasonable level so I can spend all my coins on Thai food.

Have the Dutch learned nothing about speculation and investments in ephemeral goods?
posted by zombieflanders at 9:21 AM on February 25 [27 favorites]


(Oops, I missed the last step: then you take your USD (or CNY) and buy some more BTC from some other exchange to "sell" to Mt Gox again. Pay a high price; you can afford it because it'll make you more profit!)
posted by ceribus peribus at 9:22 AM on February 25


I'm guessing a large percentage of BTC are held in reserve by a few big players

That makes sense.

to insure liquidity in crisis like this.

What on earth would make you think that? The thing bitcoiners loathe about fiat currency is the Fed, the power of the central bank to control the money supply. You're not supposed to need one because the supply is self limiting, and from the limited amount I've heard any sign that a large collective or powerful individual is amassing enough bitcoin to control the value has been met with great consternation and anxiety. They don't want there to be a JP Morgan who can call everybody into a room and knock heads together.
posted by Diablevert at 9:24 AM on February 25 [1 favorite]


Kudos to the NYT reporter who found a Mr. Galt to get a quote from about giving up on bitcoins.

But Jeers at the NYT for not begining every article about Mt. Gox by reminding us that it stands for Magic the Gathering Online eXchange.
posted by straight at 9:27 AM on February 25 [17 favorites]


I'm not being snarky here when I say that I'm not quite following you. We all agree that BTC true believers have unrealistic projections of how valuable and stable BTC will be. However, outside of that circle of true believers, nobody believes in these claims. It doesn't follow that the US government would have any interest in making BTC fail, especially since these cock-ups are already so frequent within the BTC universe.

I mean that bitcoin supporters hope that BTC becomes a dominant currency. I'm not saying this will happen, I believe that of course it won't. But in the unlikely event that it does, it would be inimical to the dollar (and other sovereign currencies). Cryptocurrencies in general will become disruptive to the status quo if they move out of the fringes of the economy. That's essentially their reason for being. Consequently, the regime has no compelling interest in seeing them succeed, and they do have a cognizable interest in seeing them fail, even if by benign neglect. Fail as major currencies, I mean. As collectible items/frothy investments/novelties they are pretty harmless.
posted by xigxag at 9:28 AM on February 25 [1 favorite]


I have no stake in Bitcoin, but it's pretty obvious that cryptocurrencies are here to stay, whether in the form of dogecoin, Bitcoin, litecoin, or some other variant. In a few years, these will processes will work themselves out.
(Emphasis mine)

I'm really curious why you say that, because I don't think it's obvious at all.

As long as states exist, being able to pay taxes in it is a big advantage for a currency.
posted by PMdixon at 9:28 AM on February 25 [5 favorites]


If you want to look at how grownups are working with Bitcoin, Coinbase is interesting. It's a US startup backed by top-name VCs Andreessen Horowitz and their primary product is fairly compelling. They make it easy for a merchant to accept Bitcoin. But then they pay the merchant in US dollars instead. So a restaurant in Den Haag or a website like Overstock.com isn't really dealing with Bitcoins at all, just dollars, but Coinbase is using the Bitcoin network to help process payments.

In theory the Coinbase / BTC transaction fees should be lower than credit card fees, although I suspect not yet in practice. But what's really fascinating is Coinbase is setting the exchange rate, effectively operating like a hedge fund speculating on Bitcoin's value. I suspect they aren't trading off that too heavily as a US company, but it does give the company an interesting flavor. If Bitcoin is a real currency, that is. They must be sweating bullets right now.

As for BTC reserves, isn't there still a mysterious 78% of Bitcoin that have never once been traded? Created at the beginning, never seen again? Speculation at the time was that Satoshi was going to cash out big once his currency hit the big time. But that pile of coins was worth $7B at some point, I'd think someone would start cashing it out at that point. And because Bitcoins aren't anonymous, everyone would have noticed. Then again maybe the coins are lost forever because some sysadmin forgot to test that the backups were working.
posted by Nelson at 9:30 AM on February 25 [5 favorites]


Magic the Gathering Online eXchange

O.O
posted by jessamyn at 9:30 AM on February 25 [15 favorites]


I have to admit it's darkly hilarious all these techno-libertarians speculating on an imaginary grey market currency would then place it in a completely unregulated de-facto bank that's unaccountable to anyone, and that you can't easily extract your money from.

It's like, what was the point of having an untraceable cryptocurrency anyway, if you're just going to give it to someone who is really just promising that they probably won't steal it from you?

Did they just miss middle men, graft, drama and inefficiency?
posted by hobo gitano de queretaro at 9:32 AM on February 25 [13 favorites]


But that pile of coins was worth $7B at some point

Maybe $7B in mtgox.
posted by ODiV at 9:32 AM on February 25 [1 favorite]


(If you genuinely want to predict the demise of the state that's cool and all but BTC sorta seems like the least of the implications.)
posted by PMdixon at 9:33 AM on February 25


Nelson:
Created at the beginning, never seen again?
Weren't coins a lot easier to mine back then? Maybe there was a lot of people mining just to try it out and decided it was a waste of time, never bothered to cash out and now don't remember their passwords or have copies or something.
posted by charred husk at 9:34 AM on February 25 [1 favorite]


there was a hilarious series of posts on SA I think about a buy with a bunch of bitcoins trying to unload them when the price got into the high hundreds of dollars.

My favorite is the guy who said he would buy $15,000 worth of bitcoins and showed up wanting to pay for them with a grocery bag full of $50 Amazon gift cards.
posted by straight at 9:36 AM on February 25 [7 favorites]


"I had 14342 BTC in mtgox since 2010. When i tried to withdraw them , they asked for verification.

Luckily i have more in cold storage and was unable to touch them until last December since i was in prison."

I don't even


Read further -- he went to prison on drug charges, but he was set up by his ex-girlfriend (wife?) who wanted him arrested so she could find his other cache of money that he had hidden. Obviously.
posted by inigo2 at 9:38 AM on February 25 [3 favorites]


You don't find this the least bit silly?

I don't even know what that thing you quoted is.

Look, this is how I came to own .054 Btc: I had a request from a fan who wasn't going to send me a donation because he hated PayPal and couldn't be bothered to send a check, so he suggested bitcoin. I figured what the heck. I downloaded the wallet software, ran it once to create the wallet and key, and put the QR code on my website.

That's it.

You don't even have to leave the software running in the background. Every once in awhile I crank it up to see if I've gotten any more donations, but that activity happens entirely in the cloud. If I wanted to use my bitcoin I'd have to crank up the software and tell it to send.

If my computer blows up, as long as I've exported the wallet key I can open it with any other computer running compatible software.

It really isn't complicated. The underlying tech is, and some of the outlying ways of using it are, but at its core trading bitcoins is easier than most methods of trading regular currency.

Now if I wanted to convert my Btc to dollars it would be a little harder; I'd have to create an account with a broker like MtGox (but hopefully more competent and/or honest) and send them the Btc from my wallet software. They're going to want to know who I am and so on because of the money laundering laws affecting the $USD end of the transaction. But if I could find someone willing to sell me something directly that I could afford (it's worth about twelve bucks right now) all I'd have to do is put their wallet code into my wallet software and click send.

If that's too hard for you I wonder how you manage to brush your teeth without tripping over the toothpaste.
posted by localroger at 9:39 AM on February 25 [5 favorites]


The New America Foundation recently held a symposium on cryptotulips cyptocurrencies titled "The New Coin of the Realm?" including the first talk, "Explain it like I'm five".
posted by Pirate-Bartender-Zombie-Monkey at 9:40 AM on February 25 [2 favorites]


Created at the beginning, never seen again?

Probably somewhere in a pile with all the magnetic monopoles, primordial black holes, left mittens and library cards.
posted by xigxag at 9:42 AM on February 25 [3 favorites]


although the idea of a currency requiring computing time automatically makes it something for the global 1%

You're right. Although I don't know anything that is exempt -- gold (requiring mining costs) is automatically for the global 1%; entity-backed currency is generated by the entity, and thus defines the 1% (outside of the sovereign ruling class of the entity). So within a kingdom, depending on your allocation of coins, stamped with the king's seal, you may be the 1% --- but only within the king's realm, and the king comes into power not because the king has a lot of the coins (the king makes the coins, after all), but through other means of power that render the king as a sovereign entity. Replace king with government, company, etc.

I'm really curious why you say that, because I don't think it's obvious at all.
As long as states exist, being able to pay taxes in it is a big advantage for a currency.


Yes on your second point. Which is exactly why, as xigxag states, it's against the interest of all states to not have cryptocurrencies exist.

As for the first point. Cryptocurrency does not have to be backed by the political sovereignty of an entity, but by technological means (solving blockchain malleability is a technological issue (that has myriad social/economic effects, of course); a devalued currency due to a regime change is a political issue.

Solving the technological issue is a way easier one. Bitcoin (and other cryptos) are founded on these technological solutions. Like what burnmp3 points out, Bitcoin doesn't have to rely on trust, which is political; it's the presence of these meta-organizations/exchanges that does, and are then fallible. I expect that the market will self-organize to produce exchanges that are similarly not reliant on trust as well.

As such, the rise of cryptocurrency becomes a technological challenge first (again, because it was borne out of of the technological possibility of using private-public key encryption, and I expect technological problems be solvable, while political challenges which may not be resolved at all. Which is why I think it's inevitable/obvious that cryptocurrency is here to stay.
posted by suedehead at 9:43 AM on February 25 [1 favorite]



to insure liquidity in crises like this.

What on earth would make you think that?


Because a liquidity crisis could turn into a full on crash and do a ton of damage to the viability of the entire enterprise, and they realize that. It doesn't have to be a conspiracy to control the market, just people acting independently and somewhat altruistically to sustain the ecosystem, but there are no laws so conspiracy (and theft as we see here) are fair game as well.
posted by Golden Eternity at 9:45 AM on February 25 [1 favorite]


This is the actual banner ad for the bitcoin reddit. I always thought it was kinda telling.
posted by jbickers at 9:47 AM on February 25 [4 favorites]


Cryptocurrency does not have to be backed by the political sovereignty of an entity, but by technological means (solving blockchain malleability is a technological issue (that has myriad social/economic effects, of course); a devalued currency due to a regime change is a political issue.

Solving the technological issue is a way easier one.


But money is by definition a problem of politics not technology. To the extent that everyone agrees that something is money it is. Technology may provide new reasons for everyone to agree, but it doesn't change the problem.
posted by PMdixon at 9:51 AM on February 25


You're right. Although I don't know anything that is exempt

I was thinking more in the use of crpytocurrency itself. Anybody with poor access to computing resources, which pretty much the entirety of the third world and large swaths of the first and second, can't use crypto. Nominally, at least, crypto was supposed to be a kind of equalizer that did away with all of the institutions around currency. In actuality, though, it has the potential to exaggerate existing problems like income inequality and equitable exchange of goods. For it to replace centralized banking in even one economically powerful nation would be absolutely ruinous to the lives and welfare of most of the world. The fact that not a few proponents either choose to ignore this out of blind devotion, or see this as a desirable outcome, is one of the reasons I find the current boosterism highly distasteful.
posted by zombieflanders at 9:52 AM on February 25 [4 favorites]


If that's too hard for you I wonder how you manage to brush your teeth without tripping over the toothpaste.

Calm down Francis. Nobody said it was hard to follow just that it seemed silly. Not quite to the level of silliness of people not being able to exchange their BTC for actual cash for months, but silly nonetheless.
posted by playertobenamedlater at 9:53 AM on February 25 [5 favorites]


But, I mean, I acknowledge that this is one of those situations where I'm kind of a schadenfreude-loving jerk.

MetaFilter: one of those situations where I'm kind of a schadenfreude-loving jerk.
posted by Celsius1414 at 9:54 AM on February 25 [11 favorites]


My favorite is the guy who said he would buy $15,000 worth of bitcoins and showed up wanting to pay for them with a grocery bag full of $50 Amazon gift cards.

Fucking hell. I'm not sure which is scarier - that this person is a career con artist, or that he's a sincere incompetent.
posted by Sticherbeast at 9:56 AM on February 25 [1 favorite]


Someone made a SSD using blocks on Minecraft. If only I have access to that server, how secure is it to store my Bitcoins in that SSD within my Minecraft world?
We have a winner.

I have no idea what the prize is.
Or the competition.
But that won.
posted by fullerine at 9:59 AM on February 25 [17 favorites]


Nobody said it was hard to follow just that it seemed silly. Not quite to the level of silliness of people not being able to exchange their BTC for actual cash for months, but silly nonetheless.

yeah, this. localroger, I note a lot of qualifiers in your explanation of Bitcoin (if you can find someone to accept it you can use it, you note) and you also speak of the difficulty faced by someone wanting to convert their bitcoin to conventional currency. The difficulty in money-changing, and the difficulty in finding people who will accept bitcoin, seem to hinder its practicality rather a lot.

Which is why it's not the concept of bitcoin itself, or of other alternative currency, which is silly, but rather the zeal with which people have adopted it as an all-sweeping replacement currency. If only a limited number of outlets accept it, and it takes so long to convert it to traditional currency, then why tout it as an all-out replacement for currency right now?

And yet, I note that a current mefi jobs post offers to pay in Bitcoin. Think of bitcoin itself what you will, but I have to raise an eyebrow at the folly of the person who believes that anyone would willingly assume the hassle of converting bitcoin to USD for their salary.
posted by EmpressCallipygos at 10:03 AM on February 25 [3 favorites]


I'm not sure which is scarier - that [the person who tried to buy Bitcoins with Amazon gift cards] is a career con artist, or that he's a sincere incompetent.

My money's on "genius satirist".



"My money" being rendered in US dollars in this instance.
posted by EmpressCallipygos at 10:06 AM on February 25 [2 favorites]


inturnaround: In [insert libertarian utopia here], Gox mounts you.

Worth repeating.
posted by sneebler at 10:10 AM on February 25 [3 favorites]


Pretty much every criticism of Bitcoin applies to traditional currencies as well. Feels fake? What's so real about a piece of linen paper with green ink? You can steal it? It's much easier to steal paper currency or traditional credit card credentials. Too complex? How many people understand how the Fed works, or what happens when their credit card is swiped?

It's only silly until people stop feeling like it's silly.

It's true that the US Dollar has the advantage of the United States government being willing to use its various types of power (financial, political, and indirectly military) to coerce/reassure people into agreeing that its worth something. But fiat currency is just as silly as other types of currency, except that you can count on people with guns to wipe the silly smiles off people's faces if need be. That's certainly a very nice plus for stability, but it's not required for a currency to be "real".

Any currency is worth only as much as what people who use it agree that it's worth.
posted by the jam at 10:14 AM on February 25 [4 favorites]


EmpressC, the original post to which I was replying implied that bitcoin was too complicated for people who "have a life." This is simply not the case; in almost every respect working with bitcoin is easier than working with real currency. Edge cases, such as the danger of getting scammed, the reliability of depositories, and the inconvenience of conversion exist for real currencies too.
posted by localroger at 10:18 AM on February 25


> It's true that the US Dollar has the advantage of the United States government being willing to use its various types of power (financial, political, and indirectly military) to coerce/reassure people into agreeing that its worth something....

If your argument relies on considering the government of the United States to be an ignorable thing, you don't have an argument.
posted by benito.strauss at 10:18 AM on February 25 [25 favorites]


But money is by definition a problem of politics not technology. To the extent that everyone agrees that something is money it is. Technology may provide new reasons for everyone to agree, but it doesn't change the problem.

Well kind of. That's like saying "communication and language is a problem of politics, not technology, so an eavesdroppable telephone is a political problem that has to be solved." It's also solvable through technology.

And yes, money is only money as long as enough people believe it to be money. But the technology makes money trustable, whether it is the material scarcity and verifiable (through density measurements - Archimedes' "Eureka") of precious metals, turned into coin; or the watermarked hologrammed printed 'paper' money, or the technological system that allows each credit card to be swiped.

Hypothetically speaking, the moment that a matter replicator is invented, money in physical form (gold, cash) will be abandoned, since the technology of authentication will no longer apply to physical objects. The destruction of all financial records (ala fight club, which of course is also implausible as the matter replicator, as these records are decentralized, redundant, and backed up) will impede credit cards, etc.

Mt. Gox isn't borne out of a purely political problem. It's that the technological process with which they verified transactions was faulty, so people exploited that. But whatever happens with bitcoins, the fact is that for cryptocurrencies, some of these political problems can be solved through technological means, the same way that surveillance issues could be solved through cryptography. "Can/Could" being the operative words here.
posted by suedehead at 10:21 AM on February 25 [1 favorite]


Have the Dutch learned nothing about speculation and investments in ephemeral goods?

Yes, they got really good at it.
posted by dhoe at 10:23 AM on February 25 [4 favorites]


The Collective Delusion of Bitcoin, speaks to your point @the jam. My problems with advocating for bitcoin is that its volatility makes it silly to use as a currency (nevermind some practical issues with finding places to accept it). Go ahead an invest in it and trade it, but I won't think of it as a currency until its value holds relatively steady compared to fiat currencies.
posted by lownote at 10:23 AM on February 25 [1 favorite]


Any currency is worth only as much as what people who use it agree that it's worth.

It's this kind of sloppy thinking that's the problem. If you honestly think all currencies are a mutually-accepted illusion, currency investments might not be the vehicle for you. I know the US isn't on the gold standard any longer, but that silly piece of paper does say it's backed by the government, so you could always trade it in to them. Not sure what you'd do with your bitcoin.

Seriously: there's nothing wrong with these new attempts at currency. There's everything wrong with the parade of clowns that trail behind declaring it the best thing ever without bothering to know anything about economics.
posted by yerfatma at 10:26 AM on February 25 [10 favorites]


localroger: "Edge cases, such as the danger of getting scammed, the reliability of depositories, and the inconvenience of conversion exist for real currencies too."

But you acknowledge that, for a relatively stable currency like the dollar, those edge cases are much less of an issue than with cryptocurrency, right?
posted by invitapriore at 10:27 AM on February 25


I was thinking more in the use of crpytocurrency itself. Anybody with poor access to computing resources, which pretty much the entirety of the third world and large swaths of the first and second, can't use crypto. Nominally, at least, crypto was supposed to be a kind of equalizer that did away with all of the institutions around currency. In actuality, though, it has the potential to exaggerate existing problems like income inequality and equitable exchange of goods. For it to replace centralized banking in even one economically powerful nation would be absolutely ruinous to the lives and welfare of most of the world. The fact that not a few proponents either choose to ignore this out of blind devotion, or see this as a desirable outcome, is one of the reasons I find the current boosterism highly distasteful.

That's a good point. Although - I think that you would just find exchanges accessible to all, in the same way that currency exchanges are accessible to everyone (with a given transaction fee, of course.)

I don't have access to enough amounts of USD, enough knowledge or bargaining power of the markets, or even the right kind of technological resources to do an efficient exchange from USD into EURO. But this doesn't mean that I can't easily get EURO for my USD - I can go to an exchange.

In the same way, wouldn't someone in a third world country without direct access to computing resources eventually be able to go through a local exchange in order to get things for bitcoin? Bitcoin's decentralized nature means that the barrier to being a local bitcoin exchange is so low (you need a computer) so hopefully transaction fees would decline.

I've gone through land borders between third world countries where grandmas were waving around worn stacks of bills with beat-up calculators and negotiating exchange rates between currencies; I feel like given enough time and acceptance, similar bitcoin exchanges will occur.

Lastly, computing resources is, on the scale of things, easier to acquire in third world countries than, say, more physical infrastructure. Cell networks are available before paved roads and bridges are; I feel like computing resources, especially for something relatively simple like bitcoin usage (not mining), won't be that scarce, and are getting less and less so, rapidly.

Similar systems of money transfer through brokerage exist already: See: Hawala
posted by suedehead at 10:29 AM on February 25 [2 favorites]


I'm done with Bitcoin. It was easy money, but it wasn't worth the (literal) heat.
posted by Elementary Penguin at 10:30 AM on February 25 [8 favorites]


And yet, I note that a current mefi jobs post offers to pay in Bitcoin.

Well, that guy does say "Familiarity with all internet traditions preferred."
posted by straight at 10:30 AM on February 25


It's much easier to steal paper currency or traditional credit card credentials

Six percent of the entire bitcoin supply is unaccounted for today, so it doesn't really seem that hard to steal? An equivalent theft of 6% M0 (US) would be over $200 billion.
posted by malocchio at 10:30 AM on February 25 [3 favorites]


It's true that the US Dollar has the advantage of the United States government being willing to use its various types of power (financial, political, and indirectly military) to coerce/reassure people into agreeing that its worth something. But fiat currency is just as silly as other types of currency, except that you can count on people with guns to wipe the silly smiles off people's faces if need be.

I don't know why people find the fact that the government has a role in the economic system of the country to be so evil that they need to dress up comparisons like this.
posted by kiltedtaco at 10:31 AM on February 25 [13 favorites]


Because a liquidity crisis could turn into a full on crash and do a ton of damage to the viability of the entire enterprise, and they realize that. It doesn't have to be a conspiracy to control the market, just people acting independently and somewhat altruistically to sustain the ecosystem, but there are no laws so conspiracy (and theft as we see here) are fair game as well.

I totally agree with out that liquidity crises are bad and probably many of the big players in the bitcoin world realize that. But the fact that liquidity crises are bad hasn't stopped them from happening in the real world, and it's usually taken the power of a central bank to stop one.

Central banks control the money supply and are backed by the full faith and credit of their governments. Annonymous bitcoin horders don't and aren't. I tend to think the emergence of any cabal of large holders who could conceivably control the money supply would be actively resisted by the bitcoin community, though could be wrong about that and even if I was right that doesn't mean it couldn't happen.

One of the very few exceptions in which a private individual was able to perform the kind of rescue you're thinking of was J.P. Morgan in 1907 --- but the thing is, the reason it worked is that everybody knew who JP Morgan was and that he was loaded. Can there possibly be such a widely known and respected figure, in bitcoin? Certainly I don't see one about now....you can't operate annonymously from the shadows and simultaneously get people to trust you'll pay 'em back enough to be a market-maker.
posted by Diablevert at 10:33 AM on February 25 [2 favorites]


It's only silly until people stop feeling like it's silly.

Exactly. And since most people currently think Bitcoins are silly, they are silly.
posted by straight at 10:35 AM on February 25 [17 favorites]


> If you honestly think all currencies are a mutually-accepted illusion, currency investments might not be the vehicle for you.

Something can be mutually accepted, and not an illusion. Language is very real and holds a lot of importance and concrete impact, yet it only exists because we mutually accept the definitions of words to be what they are.

It's true that the US Dollar has the advantage of the United States government being willing to use its various types of power (financial, political, and indirectly military) to coerce/reassure people into agreeing that its worth something. But fiat currency is just as silly as other types of currency, except that you can count on people with guns to wipe the silly smiles off people's faces if need be.

> If your argument relies on considering the government of the United States to be an ignorable thing, you don't have an argument.

But this is true. Any currency is backed by a sovereign that uses its power to back the value of the currency. And the fact that the validity of the US government's currency is directly related to the political/military power and subsequent stability of the US government in no way implies that US dollars have 'no meaning' or 'no value' or are 'fake'.

There's less of a direct causal relationship between a currency and the government's use of force as the jam mentions. And I don't think that the jam was trying to devalue the dollar because it's "only" backed by the US government. The point is the power of an entity is the founding requirement for a currency, backed by that entity, controlled through the taxes paid in that currency back to the entity.
posted by suedehead at 10:37 AM on February 25 [1 favorite]


so washpost was reading into the html comment on mt gox's homepage about it being acquired ..
posted by k5.user at 10:39 AM on February 25 [2 favorites]


The thing about the "men with guns" rhetoric is that, yeah, the foundation of the state is a monopoly on violence, but unless you're an anarchist it's strange that that fact only bothers you in the context of a discussion about cryptocurrency.
posted by invitapriore at 10:41 AM on February 25 [16 favorites]


EmpressC, the original post to which I was replying implied that bitcoin was too complicated for people who "have a life." This is simply not the case; in almost every respect working with bitcoin is easier than working with real currency.

Explain to me how receiving money in bitcoin and converting it to USD in order to pay my rent is easier than just receiving money in USD from the beginning.
posted by EmpressCallipygos at 10:41 AM on February 25 [9 favorites]


Though on second thought, the jam, there is something in your comment. It was hard to notice it behind your arguing about the point that all forms of currency are arbitrary, which might shock the family around the Thanksgiving dinner table, but I'm pretty sure most of the people here are aware of.

Let's tweak your statement a bit, and say "all currencies are human inventions". They are not created by god, or the ineluctable result of scientific principles. They exist through convention, and derive their value from people consenting to them — like you said. So what makes one currency better than another at being currency? I'd say 1) ability to be exchanged, and 2) ability to hold value are the key criteria.

Based on these standards, your comments about the U.S. government show why the U.S. dollar is a much better currency than bitcoins. It's not to say that dollars are perfect, or they will last forever, or that no other forms of currency will ever arise, just that right now dollars are much better.
posted by benito.strauss at 10:44 AM on February 25 [5 favorites]


I thought Bitcoin and the like were purposely created to keep people distracted while the elimination of physical currency took place. Looking at the people who’re invested it would seem like it. All the same people who would be up in arms about losing paper money, but someone’s waving a shiny thing in front of them.

I have a new idea for currency. Imagine this: pieces of paper, printed with the valued amount on them.

Not computery enough. How uncool are you? Maybe if I had an app that could turn the paper into pictures of the paper on my phone, send that to the barista, who could then print new paper from his phone. Then it would be cool.
posted by bongo_x at 10:47 AM on February 25 [3 favorites]


But whatever happens with bitcoins, the fact is that for cryptocurrencies, some of these political problems can be solved through technological means, the same way that surveillance issues could be solved through cryptography.

But it's very unclear to me that there is any sizable set of people, for whom whatever advantages cryptocurrency has over fiat money aren't outweighed by just the liquidity risk introduced by lack of a central bank. And I am pretty sure lack of a central bank is a key piece of this decentralized currency thing.
posted by PMdixon at 10:48 AM on February 25 [1 favorite]


Ha. suedehead, I should have shown new comments before hitting post.

I do thing the jam was making the "it's all arbitrary dude" argument. The statement about the U.S. government was followed by a "But...". I think we both agree, it's better followed by "Yes, exactly".
posted by benito.strauss at 10:51 AM on February 25


ahem, DUNNING-KRUGERRANDS.

Sorry, some schadenfreude stuck in my throat. All better now.
posted by ivan ivanych samovar at 10:52 AM on February 25 [23 favorites]


some of these political problems can be solved through technological means

That's a provocative phrase, thanks for writing it. One of the greatest problems with the tech industry is the way we are arrogant in thinking there are technological solutions for all social problems. Sometimes technical solutions exist, for sure. I'm not so sure there's a technological solution for replacing property law. Also I'd argue the existing financial systems of the world are technological solutions; central banks are technology.

I also worry about the brittleness of technological solutions. Human systems have a lot of resilience; software, not so much. One very mild bug may well have destroyed $500M of value at Mt. Gox, or rather allowed it to be untraceably stolen. And Satoshi help the faithful if there's some more fundamental bug or flaw in the Bitcoin protocols. There's a non-zero chance that all of Bitcoin could evaporate at any moment because some clever coder finds a hack.
posted by Nelson at 10:54 AM on February 25 [6 favorites]


So what you're saying is that this is a really good time to buy BTC?

BTW, this was supposed to be sarcasm; sorry if anyone was confused.
posted by en forme de poire at 10:56 AM on February 25 [1 favorite]


ahem, DUNNING-KRUGERRANDS.

Fedoral Reserve Notes
posted by ODiV at 11:00 AM on February 25 [44 favorites]


Fedoral Reserve Notes

In the dystopian future of unregulated fiscal policy, "tipping" has a whole new meaning...m'lady.
posted by zombieflanders at 11:02 AM on February 25 [24 favorites]


LOL it just occurred to me we are witnessing a Bubble Wrap.
posted by spitbull at 11:02 AM on February 25


if daytime TV has taught me anything it's that now is an excellent time to buy gold
posted by The Whelk at 11:03 AM on February 25 [7 favorites]


> there are only so many Bitcoin accepting vendors

And some of those might not really be accepting BTC, but accepting dollars from Andreessen Horowitz's suckers.

buttcoin explains
posted by morganw at 11:04 AM on February 25


Sorry I haven't scoured the whole thread, but I'm curious about how they lost the coins. Is this explanation a valid, if simplistic, description?
posted by benito.strauss at 11:11 AM on February 25


I get the schadenfreude and grar targeted at the techno-libertarians. There's certainly a lot of fodder for that. But beyond the schadenfreude and grar, why are folks so quick to discount the actual potential that this is really a disruptive technology?

From the January 24, 2014 report by PwC ("Digital Disruptor: How Bitcoin is Driving Digital Innovation in Entertainment, Media and Communications"):

Bitcoin’s value proposition includes global, peer-to peer money transfers, nearly anonymous payments, low transfer fees and higher-level security protocols based on open standards. Four organizations face increased challenges if Bitcoin continues as a brand and becomes a global currency: Banks, governments, payment processors and payment gateways.

And from former United States Treasury Secretary and Federal Reserve Chair candidate Larry Summers (yes, the Harvard presdient who resigned) published today:

Bitcoin "“has the potential to be a very, very important development... Very serious economists thought that the Internet was going to be no more important than the fax machine so I’m not willing to dismiss Bitcoin. At the same time, I do think it’s important to recognize that it can’t and won’t flourish as a way of avoiding legal protections..."

Metafilter is replete with stories about how evil Paypal is. It's not the techno libertarian Paulist scenario that /r/Bitcoin fanatics talk about, but a technology that's disruptive to Paypal and allows for lower-fee microtransactions for purchases of virtual and non-virtual goods, and on social media -- why isn't that a huge deal by itself?

If a traditional retailer can save a percentage point in payment processor fees, how big of a deal is that? It's awesome to take, say, a Square reader and accept a credit card payment with your iPhone or Android device, but there are entities that take cuts of fees at every step of the way. Cryptocurrency is disruptive to that model of business.

So yes, right now if I want to order a pizza, it's easier for me to use dollars. And if I want to send money to a friend, a check or a Paypal gift is probably easier (given several assumptions). But just because it's hard now doesn't mean that it'll always be that way (just like we've seen with, say, downloads of music and movies).

I totally get the poking at the techno liberarians, but that vision about the future of cryptocurrency isn't necessarily reflective of why there's so much real VC money being poured into this stuff.
posted by QuantumMeruit at 11:19 AM on February 25 [4 favorites]


buttcoin

So these are like ass pennies?
posted by Big_B at 11:21 AM on February 25 [12 favorites]


As long as there's no regulation or authority, currencies like bitcoin will fail. I think that's the point of laughing.
posted by MisantropicPainforest at 11:21 AM on February 25


So these are like ass pennies?

Think smaller, and more legs.
posted by Blazecock Pileon at 11:22 AM on February 25 [2 favorites]


But there's a difference between a payment system and a currency.
posted by PMdixon at 11:22 AM on February 25 [7 favorites]


benito.strauss: yes, the Buttcoin explanation of the Mt. Gox bug is more or less technically accurate. Here's another source on it. What no one knows yet is how many coins Mt. Gox lost through it, or even how many they claimed to have lost. Also unanswered is how some sort of internal auditing wasn't verifying balances regularly to catch lossage through flaws like this.

Think smaller, and more legs.

So really more like hamstercash.
posted by Nelson at 11:22 AM on February 25 [2 favorites]


I seem to remember there were a series of fairly large cash-out transactions on other exchanges over the past 6 months or so. At the time, they were seen as signs of the legitimacy of the market and fed its growth. Now I wonder if it wasn't just the thieves (who, let's be honest, almost certainly were Mt. Gox insiders) trying to cash out as much as possible before the big lie about the state of the exchange became untenable.
posted by feloniousmonk at 11:23 AM on February 25 [1 favorite]


Big_B:
So these are like ass pennies?
That's exactly what some people referred to the Dogecoin tips as in the referenced Reddit thread above.
posted by charred husk at 11:23 AM on February 25


Any currency is backed by a sovereign that uses its power to back the value of the currency. And the fact that the validity of the US government's currency is directly related to the political/military power and subsequent stability of the US government

Robert Mugabe has been president of Zimbabwe since 1988. If the value of a currency is simply whether one thinks the regime will stay in power, you're going to have to show some more of your work for me to mark this answer as correct.
posted by yerfatma at 11:23 AM on February 25 [3 favorites]


I get the schadenfreude and grar targeted at the techno-libertarians.

Do you though? Most of these folks actively despise the idea of being "regulated" by the agencies of a democratic society, which is most of the appeal of unregulated currencies.

Those who loudly insist they wish to opt out of social contracts (of which the agreement to use a shared currency backed by the faith and credit of our collective economic activity is a major one) should not be surprised when they are standing outside the city walls begging to be allowed back in for a bite to eat.
posted by spitbull at 11:24 AM on February 25 [15 favorites]


(Arsenio) Hall and (Warren) Oates: "What do you mean, somebody broke in and stole all my tulips! You said this tulip-house was completely secure!"

Are you sure you didn't mean lupins?
posted by BigHeartedGuy at 11:24 AM on February 25 [1 favorite]


If a traditional retailer can save a percentage point in payment processor fees, how big of a deal is that? It's awesome to take, say, a Square reader and accept a credit card payment with your iPhone or Android device, but there are entities that take cuts of fees at every step of the way. Cryptocurrency is disruptive to that model of business.

The only works if the fees stay low and trust can be established. If cryptocurrency gets any traction in the US do you think that continues? I don't.
posted by playertobenamedlater at 11:27 AM on February 25


I was considering a sockpuppet named dunningkrugerrandpaulsimonsays. Really regretting not investing that $5 back when BTC first topped $1000.
posted by [expletive deleted] at 11:28 AM on February 25 [6 favorites]


Serious questions: why would you pay for something like a meal in BitCoins now if you think the coins will only continue to go up in value? Gladly paying for a hamburger today with something that will be worth $100USD next Tuesday doesn't seem like a very good decision. If you think the value of the coins has maxed out, and it's "safe" to start spending them, why would you not cash out?
posted by JohnLewis at 11:29 AM on February 25 [3 favorites]


What is the evidence for this one way or the other?
posted by Reasonably Everything Happens


Occam's razor. Silk Road (1 and 2) both asked users to trust a business run by anonymous criminals to complete felonious transactions. Yeah, I suppose both SR1 and SR2 could have been beset by technical problems, just like Mt. Gox, that made them innocent victims of thefts of tens of millions of dollars worth of their customers' (and presumably suppliers') money.

But since at least the SR sites were run by proudly criminal agents, it amazes me that anyone is surprised to discover massive "thefts" for which there is no recourse at these "businesses."

I am hypothesizing of course. It's entirely possible Mt. Gox is an example of honest total incompetence and lack of basic financial accounting standards. After all, they are such a venerable and long established business and their procedures were so transparent.

LOL.
posted by spitbull at 11:30 AM on February 25 [1 favorite]


JohnLewis:
why would you pay for something like a meal in BitCoins now if you think the coins will only continue to go up in value?
The items you're buying should be adjusted in price for the current value of Bitcoins, I assume. So of you pay .01 BC for something today and the value of BC doubles then the item should cost .005 BC tomorrow. You still have your item that is worth the same amount.
posted by charred husk at 11:31 AM on February 25


Serious questions: why would you pay for something like a meal in BitCoins now if you think the coins will only continue to go up in value? Gladly paying for a hamburger today with something that will be worth $100USD next Tuesday doesn't seem like a very good decision. If you think the value of the coins has maxed out, and it's "safe" to start spending them, why would you not cash out?

The logic is the exact reason why deflation does so much violence to a country.
posted by MisantropicPainforest at 11:32 AM on February 25 [10 favorites]


If Bitcoin went away, what would happen to Buttcoin? Maybe it's time to start seriously talking about the government bailing out Bitcoiners.
posted by Blazecock Pileon at 11:33 AM on February 25


1 DOGE = 1 DOGE

Tautologe.
posted by sparkletone at 11:34 AM on February 25 [18 favorites]


But beyond the schadenfreude and grar, why are folks so quick to discount the actual potential that this is really a disruptive technology?

Yeah, why aren't you folks more upbeat about yet another way for rich people to avoid having to pay anything for the infrastructure that they reap the benefits of?
posted by straight at 11:36 AM on February 25 [11 favorites]


The only works if the fees stay low and trust can be established. If cryptocurrency gets any traction in the US do you think that continues? I don't.

There's trust -- and regulation, and insurance -- built into our current system. If this is about making the payment processors take a haircut, what percentage discount on the purchase of goods would you, as a consumer, need to see to start using the new technology?

When I was growing up, my folks made a lot of everyday purchases with cash. The convenience of credit cards and some other benefits of the system made them change. It's not inconceivable to me that crytocurrency will have the same effect, long-term.

why would you pay for something like a meal in BitCoins now if you think the coins will only continue to go up in value?

Yeah, that was one of the counterarguments in the Planet Money "Bet on Bitcoin" segment. Dogecoin has inflation (theoretically) built into its architecture so the pressure to just squirrel the coins away isn't (theoretically) as high.

I don't disagree that these are big questions. But whether these issues can be solved -- and how the problems we're seeing today might effect the industry -- go beyond "hurf durf magic Internet money hahaha".
posted by QuantumMeruit at 11:37 AM on February 25 [1 favorite]


I understand the deflationary pressures. I guess my question should have been better stated as: are vendors who accept BitCoin tied into the system enough that their prices are changing in response to the volatility inherent in BC right now? Are they listing prices in BC, or are they listing prices in $ or Euros and relying on the processor to do conversion?
posted by JohnLewis at 11:39 AM on February 25


The only works if the fees stay low and trust can be established. If cryptocurrency gets any traction in the US do you think that continues? I don't.

Establishing trust is the tough nut. But I think the incentives are set up right to keep the fees low, if I understand correctly --- right now the bitcoin miners are being paid in newly generated coins, but as the supply of fresh coins dries up they get the transaction fees instead. So instead if having a handful of credit card companies with a chokehold over transaction fees, instead you have thousands of independent miners competing to be the one that solves the puzzle. That should be enough competition to keep fees low, in theory.

I may be wrong about how that's supposed to work, though.
posted by Diablevert at 11:40 AM on February 25


Rustic Etruscan: "I'm imagining an alternate universe where Mafiosi are so patriotically Italian that they can be identified by their Fiats, San Pellegrino soda cans, and suits in loud red, white, and green. The best thing is that this is apparently the universe where Bitcoin enthusiasts live"

I'd think the Mafia would be driving Alfas or Maseratis.
posted by Mitheral at 11:41 AM on February 25 [1 favorite]


I have zero interest in ever obtaining a bitcoin, but I really like the academics and history making potential of all this. It FEELS like the sort of thing that people will be writing about for a long time.
posted by Twain Device at 11:45 AM on February 25 [1 favorite]


JohnLewis, on thuisbezord.nl, which allows you to order at 5000 Dutch restaurants in Bitcoin, the prices are in Euro. At checkout it's just another payment option.
posted by dhoe at 11:45 AM on February 25


So instead if having a handful of credit card companies with a chokehold over transaction fees, instead you have thousands of independent miners competing to be the one that solves the puzzle. That should be enough competition to keep fees low, in theory.

That doesn't sound the least bit convoluted. Can you expand on this a bit?
posted by playertobenamedlater at 11:47 AM on February 25


1 DOGE = 1 DOGE

Such A = A.
Much Objectivism.
Very Rand.
So Forum 2000.
Wow.
posted by Joey Michaels at 11:48 AM on February 25 [21 favorites]


I guess my question should have been better stated as: are vendors who accept BitCoin tied into the system enough that their prices are changing in response to the volatility inherent in BC right now? Are they listing prices in BC, or are they listing prices in $ or Euros and relying on the processor to do conversion?

Tiger Direct quotes prices in dollars. At checkout time, when you want to pay with Bitcoin, it converts the price to Bitcoin, and you have 15 minutes to complete your transaction by submitting your Bitcoin payment.

The merchant (Tiger Direct) doesn't bear the risk of fluctuations. The purchaser knows exactly how much they are paying at the time the purchase is made and the payment is sent. The payment processor (Bitpay, I think), is theoretically either carrying that risk, or is immediately converting the Bitcoin to US dollars. I've read that they use automated trading bots that make this profitable for them at every step of the way.

The "buy a hamburger with Dogecoin" or the Etsy shops that take Bitcoin/Dogecoin/whatever are definitely more ad hoc. Given the exchange rate fluctuations, I can't see how it makes sense to quote long-ish term prices in anything other than fiat, and then convert to the cryptocurrency at the time the payment is made.

But just because that's the way it works today, and that's the way that it makes sense for it to be today, that doesn't mean that's how it's going to continue to be as the technology matures, and trust models evolve.
posted by QuantumMeruit at 11:49 AM on February 25 [1 favorite]


Great idea for a script: a bookish luddite bears an uncanny resemblance to the founder of an underground online exchange. He is targeted for assassination by angry geeks/criminals after his doppelgänger absconds with everyone's digital payments!



Doris! Get me Krasinski's people on the line! If you can't get him, get Segel!

Or Stiller, if you have to!
posted by TheWhiteSkull at 11:49 AM on February 25


Very serious economists thought that the Internet was going to be no more important than the fax machine so I’m not willing to dismiss Bitcoin.

They laughed at Galileo, too. Therefore, we'd be fools not to invest our life savings in comic books.
posted by The Tensor at 11:50 AM on February 25 [13 favorites]


Cryptocurrencies will no doubt improve and find a reliable use, but BTC will never take off so long as it carries its an-cap baggage.
posted by Sticherbeast at 11:55 AM on February 25 [1 favorite]


But you acknowledge that, for a relatively stable currency like the dollar, those edge cases are much less of an issue than with cryptocurrency, right?

Oh of course. I thought I was clear that I was talking about the use of the currency as a currency, not its place in the wider world which has much less to do with the technology behind it. Bitcoin is extremely easy to use. If you're a British fan of my writing it's much easier for you to send me Btc than $USD, even if you have $USD on hand, which you probably wouldn't.

But it's a tremendous pain to convert ANY currency into ANY other, and harder to move most of those currencies around even after doing the conversion, than it is to move Btc. Far from being "too difficult for anyone with a life" setting up to receive Btc donations was much easier than setting up to accept USD donations via PayPal. It would be easier to send that Btc to someone else, even overseas, than to send them USD if they wanted it. That's what I mean by "easy to use."

Now if I wanted to convert those Btc to dollars, that's not an issue with using Btc, that's an issue with converting between one currency and another. All currencies have issues with that, Btc moreso than most for obvious reasons. But if you're a member of a group that is happy using Btc as a standard, it's much easier to use than regular money.
posted by localroger at 11:56 AM on February 25 [1 favorite]


I can sort of get behind Bitcoin becoming a viable payment transfer mechanism, sort of a universally adopted credit card that lets anyone issue themselves their own card/identity and enables low cost international transactions, in Bitcoin, with any willing counterparty.

But contemplating Bitcoin becoming an actual currency, or displacing them altogether, means undermining or discarding all of the societal benefits a nation with sound monetary policy enjoys, and encouraging all of the drawbacks of adopting a universal, worldwide currency. So this aspect really boils down to the advantages and disadvantages of having a single global currency, which is getting out of my area of expertise. You could start by looking at the difficulties the EU experienced with monetary unification.
posted by ceribus peribus at 11:57 AM on February 25 [1 favorite]


This thread has actually given me a great idea for QuantumCoin, a key feature of which would be that it ordinarily exists in a superposition of exchange rates. The ValueForm™ only collapses when you try to purchase something with it.

Oh wait I think I just reinvented bitcoin.
posted by Wolfdog at 12:00 PM on February 25 [8 favorites]


Are you sure you didn't mean lupins?

He's the one who stole your tulips.
posted by Holy Zarquon's Singing Fish at 12:00 PM on February 25 [3 favorites]


Also apropos of payment systems: Google Wallet could definitely be the PayPal killer.
posted by PMdixon at 12:00 PM on February 25


Now if I wanted to convert those Btc to dollars, that's not an issue with using Btc, that's an issue with converting between one currency and another. All currencies have issues with that, Btc moreso than most for obvious reasons.

However I think that other national currencies have an easier time of it by dint of being recognized as currencies by global banks.

But if you're a member of a group that is happy using Btc as a standard, it's much easier to use than regular money.

that's a mighty big "if", there, is the point I think the skeptics are trying to make.
posted by EmpressCallipygos at 12:01 PM on February 25 [3 favorites]


Any currency is backed by a sovereign that uses its power to back the value of the currency. And the fact that the validity of the US government's currency is directly related to the political/military power and subsequent stability of the US government
Robert Mugabe has been president of Zimbabwe since 1988. If the value of a currency is simply whether one thinks the regime will stay in power, you're going to have to show some more of your work for me to mark this answer as correct.
You seem to have equated "the political/military power and subsequent stability of the US government" with "simply whether one thinks the regime will stay in power", and nothing more, for whatever "the regime" may be (even in pathological cases).

The political and military power of Robert Mugabe is utterly dwarfed by the political and military power of the government of the United States. And even ignoring that, frankly I'd bet any number of bitcoins on the USA staying in power longer than Robert Mugabe will, despite the fact that he's been in power for two whole decades and change. Honestly, it seems kind of weird to reduce a claim about the stability and the political and military power of (specifically) the United States to a claim that the value of any currency is simply a function of how long you expect the government in question to stay in power.
posted by Flunkie at 12:01 PM on February 25 [1 favorite]


But if you're a member of a group that is happy using Btc as a standard, it's much easier to use than regular money.

Aren't you working with a bit of an artificially constructed set here, though? I am a member of a group that is happy using USD as a standard, and I find it quite easy to use. I haven't encountered the problem you described with PayPal because I have no need for PayPal donations. In other words, isn't the presumption twofold: that a person belongs to a group happy using Bitcoin as its standard, and that person also needs to do things with currency that are problematic with [USD/EUR/etc] in a way that Bitcoin avoids?

Just trying to understand. Currency studies are well outside my areas of expertise.
posted by cribcage at 12:19 PM on February 25


Also apropos of payment systems: Google Wallet could definitely be the PayPal killer.

I'm surprised at how little-known the feature where you can literally just email money without fees is. It seems like it should have been a game changer from day one.
posted by jason_steakums at 12:22 PM on February 25 [2 favorites]


The items you're buying should be adjusted in price for the current value of Bitcoins, I assume. So of you pay .01 BC for something today and the value of BC doubles then the item should cost .005 BC tomorrow. You still have your item that is worth the same amount.

And by the way, this notion that the price of the good will adjust with deflation doesn't really address the pernicious effect of deflation, since you've still spent "currency"* that would be worth much more later. In other words, it doesn't help you if the BC price of a burger decreases if what you spent last month for the same burger would have bought you a house today had you only held it (or used U$D).

*not judgmental scare quotes, just trying to cover more use cases.
posted by JohnLewis at 12:25 PM on February 25 [1 favorite]


Favorite theory -- Mt Gox is deliberately trying to crush the value of BTC, because their primarily liability is in BTC. If BTC drops $100 in USD, the cost of them drops $75 million. Get BTC to $1 USD, and MtGox could repurchase the missing BTC for less than a million.
posted by eriko at 12:31 PM on February 25 [4 favorites]


That doesn't sound the least bit convoluted. Can you expand on this a bit?

With the caveat that I am fuzzy on this myself....right now, when you buy something at a store and pay with a credit/debit card, the credit card company charges the merchant a fee of approximately 2% of the purchase price to process that transaction --- verify that the card number you’ve given is real and that you have the money/credit available in your account. This is a pretty steep fee, really --- lots of retail business run on sub-5% margins; this is why you sometimes see signs at gas stations offering a cheaper price per gallon if you pay in cash. But merchants generally have to suck it up and pay it because Visa/Mastercard are basically a duopoly and have enormous market power.

With bitcoin, when you go to pay for something, it’s the bitcoin network has to verify that the coin you’ve given is real and that you have the money available. It does this by using encryption to record transactions in a public ledger. This activity --- encoding and decoding transactions and recording them in the ledger --- is bitcoin mining. At present, whichever miner successfully solves the puzzle for a given “page” (blockchain) of the public ledger gets rewarded with brand-new bitcoins. However, the set of bitcoins is finite and as they dry up, recording new transactions in the ledger will require paying a transaction fee --- the same way that getting Mastercard to verify your credit card costs a transaction fee.

However, while there’s only a handful of credit card companies, there are thousands of miners. Just like Visa and Mastercard can set their price for processing a transaction, so will each of the miners. But because thousands of miners will be competing against each other, this should drive down prices.

How that works on a practical level in regards to the bitcoin processing software I’m honestly not sure, and I’m afraid I don’t have time to do a deep dive on it today. But that’s the gist.

Incidentally, it’s this aspect of bitcoin which seems to have gotten people like Marc Andreesen excited, as I mentioned upthread. Something which can effectively force price competition on transaction fees – cutting Mastercard and Visa off from their 2%, IOW --- could have tremendous impact on the economy. Or think of stuff like Western Union --- them suckers charge 8,9,10% for international wire transfer, and remittances home from immigrants are a multi-billion dollar industry across the world.
posted by Diablevert at 12:33 PM on February 25 [7 favorites]


If you're a British fan of my writing it's much easier for you to send me Btc than $USD, even if you have $USD on hand

Britain has this service called the Royal Mail that might interest you.
posted by straight at 12:34 PM on February 25


Central banks control the money supply and are backed by the full faith and credit of their governments. Annonymous bitcoin horders don't and aren't.

I'm not sure if they need to be; they just need to be able to absorb a big sell-off sufficiently enough to keep prices stable and restore confidence. They would be market makers, but with a far bigger stake in sustaining stability due to their large holdings and place in the BTC community.

I tend to think the emergence of any cabal of large holders who could conceivably control the money supply would be actively resisted by the bitcoin community, though could be wrong about that and even if I was right that doesn't mean it couldn't happen.

There already appears to be significant collaboration amongst "bitcoin executives:"

Coinbase, Blockchain.info and other high-profile Bitcoin industry executives: ‘MtGox is insolvent’

Maybe it wouldn't be a bad idea for these guys to hire some sort of chairperson with greater experience in economics and finance who could help tackle BTC fraud and stability problems. Come to think of it, Bernanke might be the perfect candidate. He is an expert on financial crises, has already bailed out Wall Street, has held the USD steady through rough waters, and he might have a bit of time on his hands.
posted by Golden Eternity at 12:34 PM on February 25


I just uninstalled the bitcoin software, because I realized that the database (blockchain?) was taking up 2.8 gigabytes on my harddrive.

That's 0.0068 or so bitcoins that I got from a free trial thingy lost forever.
posted by T.D. Strange at 12:40 PM on February 25 [1 favorite]


I'm not sure if they need to be; they just need to be able to absorb a big sell-off sufficiently enough to keep prices stable and restore confidence. They would be market makers, but with a far bigger stake in sustaining stability due to their large holdings and place in the BTC community.

So basically we have to reenact the monetary history of the long 19th century, except In Cyberspace?
posted by PMdixon at 12:41 PM on February 25 [4 favorites]


All of this talk about low bitcoin fees ignores the fact that most transactions are ignored by the miners unless you add in an incentive for them to process the fees.

So if you want a transaction that gets processed in any time at all (also keeping in mind that because BTC can't be verified in anything like a reasonable time frame, 10 minutes AT BEST), you have to pay out. The more you pay, the faster (for some value of fast) your transaction gets verified. So there would be some incentive for people to get into BTC so they can take even more vig in transaction fees than are currently allowed.

In addition, having a hard time picturing anybody who wants to wait 10-90 minutes for their receipt to be verified before walking off with their frozen pizza. Given that online transactions need to be measured in seconds if you want any repeat business, they have a pretty big performance hurdle that they just inherently can't overcome due to the distributed nature of the blockchain.
posted by fifteen schnitzengruben is my limit at 12:42 PM on February 25 [13 favorites]


the pernicious effect of deflation

An unexpected shift from inflation to deflation does damage to the economy. But "deflation" is not in itself as scary as some people seem to think. If bitcoin took over everything and a gradual, predictable, and stable rate of deflation was the result, it would not be a problem in the long run. You still have to buy breakfast today, even if you're pretty sure the same food will be available in a year for a lower price. Computer hardware was consistently falling in price for much of the last few decades, so much that you could reliably expect to get a better deal if you waited six months before buying that new hard drive. People still bought them, the market didn't shut down. People can get used to it, just as we are now used to continuous inflation.

Not that it matters much for now. There's nothing stable or predictable about the current exchange rates for bitcoin even compared to less cryptographically sophisticated and notoriously unstable currencies like the US dollar which routinely goes up and down by 30% compared to other major currencies over the years since they abandoned the gold standard. Bitcoin is at an inherently very unstable place, still not yet being really widely used. Lots of potential for rapid growth, and also a fair chance of fading away to nothing as the cryptocurrency fad passes on, or everyone realises the inherent superiority of dogecoin, the Internet's favourite dog-based currency that has something to do with the moon I think, or whatever.

There might be other macro-economic disadvantages to not having anyone controlling monetary policy, if you were trying to run a whole economy on bitcoin for some reason, but it's a little beside the point when nobody's really sure whether a the exchange rate is more likely to be $1200 or $300 a year from now. Eventually it will mature and stabilise somewhere, I guess. Seems a long way off.
posted by sfenders at 12:43 PM on February 25


I'm not sure if they need to be; they just need to be able to absorb a big sell-off sufficiently enough to keep prices stable and restore confidence. They would be market makers, but with a far bigger stake in sustaining stability due to their large holdings and place in the BTC community.

Fact-checking my own earlier remark to you led to me reading the Wiki article on the Panic of 1907; it was highly instructive on this point, and a fun article to boot. I mentioned to Morgan before --- but actually reading up on the crisis, while Morgan was a central player and committed huge funds to the crisis, far more important was his ability to arm-twist dozens of CEO, bank presidents and the Secretary of the Treasury into coughing up their own funds. And he nearly failed at several junctures. Buying into a panic (aka a liquidity crisis) is no joke, and I remain unconvinced about any group of private individuals being able to do it without a central bank's ability to say "yes, we will keep lending money no matter what". By definition you can't do that with bitcoin.

'Tis a strange beast, though, to be sure, I could be wrong.
posted by Diablevert at 12:46 PM on February 25 [4 favorites]


It turns out there's a significant difference between having a lot of money and being able to make as much as you want.
posted by PMdixon at 12:49 PM on February 25


> Are you sure you didn't mean lupins?

He's the one who stole your tulips.


"Tulipcoin" as an alternative currency has been independent;y reinvented three times.

I'm going to propose Metacoin - the alternative currency backed by creating other alternative currencies.
posted by sebastienbailard at 12:50 PM on February 25 [7 favorites]


sfenders: But "deflation" is not in itself as scary as some people seem to think.

Any kind of significant rate of deflation is poison for the economy, because it will make it more profitable to hoard money than to invest it. It's not buying breakfast that is the problem; it's long-term investments. In fact I would say that a low degree of inflation is actually a feature of our system, not a bug; it's bad for everyone when companies and people hoard currency, but inflation makes that a really bad idea, so you see less of it.
posted by Mitrovarr at 12:52 PM on February 25 [10 favorites]


I just uninstalled the bitcoin software, because I realized that the database (blockchain?) was taking up 2.8 gigabytes on my harddrive.

That's 0.0068 or so bitcoins that I got from a free trial thingy lost forever.
I realize you're probably just being sarcastic, but I don't think it's true that you've lost your bitcoins forever.

The 2.8 gig thing you're talking about is easily replaceable, and it's not what makes your bitcoins your bitcoins. There's a file called "wallet.dat", or something like that, which is what really links "you" to "your bitcoins". It is much, much smaller than the 2.8 gig thing you're talking about. I doubt that uninstalling deleted that file.

So you could just back up that (small) file; if you ever want to use those bitcoins, just download and install the wallet application again, and point it at that wallet.dat instead of a new one.
posted by Flunkie at 1:00 PM on February 25 [1 favorite]


Also, having the prices of a single type of a commodity, like computers getting cheaper, is not deflation.
posted by MisantropicPainforest at 1:07 PM on February 25 [4 favorites]


The political and military power of Robert Mugabe is utterly dwarfed by the political and military power of the government of the United States.

So a currency is now a value of the perceived future power of the government rather than a reflection of the stability and the strength of the economy?

Honestly, it seems kind of weird to reduce a claim about the stability and the political and military power of (specifically) the United States to a claim that the value of any currency is simply a function of how long you expect the government in question to stay in power.

What's the difference between "stability" and "how long you expect the government in question to stay in power"?
posted by yerfatma at 1:09 PM on February 25


that [being a member of a group that operates in Btc]'s a mighty big "if"

Not really. I had no trouble accepting a donation I wouldn't have gotten anyway in Btc on the off chance it might ever be useful. The original post I replied to -- and the ONLY point I have been trying to make here -- is that that post, which claimed that even installing the wallet software and futzing with it was too complicated for someone "with a life," is simply wrong. Installing the software and conducting Btc transactions is easier than using other currencies.

Finding others who will accept those transactions is a different and totally unrelated matter. If you'd rather join PayPal, give them all your personal info, deal with the risk that they will freeze or seize your funds, and so on, I can deal with that too, but if you'd rather send me Btc it was very trivial and easy for me to arrange to do that. For me to use those Btc at one of the businesses that take it natively would be equally simple and easy.

It's not an ease of use problem that the currency itself is wildly variable, hard to convert, or unregulated. It's a lot easier to transfer Btc than to transfer USD. When I was given a choice between receiving $nonzero_amount Btc and zero USD, the effort of setting up the wallet software to receive the Btc was certainly worthwhile even though I "have a life."
posted by localroger at 1:21 PM on February 25 [1 favorite]


yerfatma, your line of questioning (both in your most recent comment and your previous) really seems confrontationally "gotcha", and ignoring that not very sensible, so this will likely be my last reply to you:
So a currency is now a value of the perceived future power of the government rather than a reflection of the stability and the strength of the economy?
Similarly to your last post, you're taking a statement that talks about multiple factors and you're acting as if it talks about one single factor.
Honestly, it seems kind of weird to reduce a claim about the stability and the political and military power of (specifically) the United States to a claim that the value of any currency is simply a function of how long you expect the government in question to stay in power.
What's the difference between "stability" and "how long you expect the government in question to stay in power"?
This is really a weird one here. I didn't imply any difference; in fact I more or less used one to mean the other. I honestly don't see how you arrived at the opposite reading. But in any case:

I did not say that it seems kind of weird to reduce a claim about stability to a claim about how long you expect the government to stay in power.

I said, and I'll explicitly bold parts that you genuinely seem to be either ignoring or not to have noticed, that it seems kind of weird to reduce a claim about the stability and the political and military power of (specifically) the United States to a claim that the value of any currency is simply a function of how long you expect the government in question to stay in power.
posted by Flunkie at 1:23 PM on February 25 [1 favorite]


It's a lot easier to transfer Btc than to transfer USD.

Does the US not have an equivalent to the Interac email money transfer?
posted by ODiV at 1:25 PM on February 25 [1 favorite]


Finding others who will accept those transactions is a different and totally unrelated matter. If you'd rather join PayPal, give them all your personal info, deal with the risk that they will freeze or seize your funds, and so on, I can deal with that too, but if you'd rather send me Btc it was very trivial and easy for me to arrange to do that.

Don't you have to give all your personal info to a Bitcoin exchange in order to convert the coins to IRL money? And, as we can see again this week, there is certainly a not-inconsequential amount of risk dealing with Bitcoin exchanges, including the complete loss (or theft) of your stored monies.
posted by Celsius1414 at 1:31 PM on February 25


Does the US not have an equivalent to the Interac email money transfer?

No, it doesn't, because it has more than six banks.
posted by one more dead town's last parade at 1:31 PM on February 25 [4 favorites]


No, it doesn't, because it has more than six banks.

*Glance at watch*

Well, it's early yet.
posted by Holy Zarquon's Singing Fish at 1:32 PM on February 25 [1 favorite]


Any kind of significant rate of deflation is poison for the economy, because it will make it more profitable to hoard money than to invest it.

Which is why dogecoin is interesting in their decision to make it an inflationary cryptocurrency.
posted by suedehead at 1:33 PM on February 25 [1 favorite]


>>If you're a British fan of my writing it's much easier for you to send me Btc than $USD, even if you have $USD on hand

Britain has this service called the Royal Mail that might interest you.


So you think it's easier for a Brit to go to a bank (paying transport costs if not in walking distance), withdraw some dollars (paying commission), go to a post office to buy stamps (again with the transport), post the dollars (taking the inherent risk of putting cash in the post), than it is to open their BTC client, copy and paste in the sending address, enter the wallet password, and click Send?
posted by EndsOfInvention at 1:34 PM on February 25 [2 favorites]


But it's a tremendous pain to convert ANY currency into ANY other

Or, you know, not. Within ten minutes' walk of my apartment are at least half a dozen branches of various banks. While it's true that I probably can't walk in to the bank down the street and exchange, say, pounds sterling for rupees, I would be flabbergasted if I couldn't walk into the bigger branches under financial headquarters on Bay Street (15 mins) and do so.

Online it's even easier.

But the point is: I can convert $currency1 to $currency2 relatively easily. The transaction is extremely fast. With BTC, that is fundamentally not the case.
posted by feckless fecal fear mongering at 1:37 PM on February 25 [1 favorite]


So (reasonably tech literature, you're posting here) bitcoin detractors can't figure out how to work a wallet? This is literally "I cannot install and open an Android app from the Google play store."
posted by save alive nothing that breatheth at 1:38 PM on February 25


Well I can't; I don't own a smart phone.
posted by Mitheral at 1:40 PM on February 25 [4 favorites]


Read closer, its not about being unable to figure things out, its about, how easy is it?
posted by MisantropicPainforest at 1:40 PM on February 25 [1 favorite]


I like to box.
How I like to box!
So, every day, I box a Gox.
In yellow socks I box my Gox.
I box in yellow Gox box socks.

--Dr. Seuss, "One Fish, Two Fish, Red Fish, Blue Fish"

Can't read this thread without thinking of this.
posted by zardoz at 1:43 PM on February 25 [1 favorite]


No, it doesn't, because it has more than six banks.

Ah, yes, that makes sense, thanks. Those email money transfers are pretty convenient though.
posted by ODiV at 1:44 PM on February 25


So (reasonably tech literature, you're posting here) bitcoin detractors can't figure out how to work a wallet? This is literally "I cannot install and open an Android app from the Google play store."

You're countering an argument no one is really making, for one. And repeated attempts to portray people concerned about the policies and mechanisms of Bitcoin as a bunch of "herf derf wut r smrtfone?" types is exactly the kind of immaturity that defines the stereotypical Bitcoin evangelist.
posted by zombieflanders at 1:45 PM on February 25 [13 favorites]


So you think it's easier for a Brit to go to a bank (paying transport costs if not in walking distance), withdraw some dollars (paying commission), go to a post office to buy stamps (again with the transport), post the dollars (taking the inherent risk of putting cash in the post), than it is to open their BTC client, copy and paste in the sending address, enter the wallet password, and click Send?

He said even if the British person already had dollars on hand. And, yes I'll wager most people in the UK could much more quickly and easily put some cash in the mail than get a BTC client installed, set up an account, buy Bitcoins, and send them. And I'll also wager that your favorite author is more likely to get something she can actually use if you mail her cash than send her Bitcoins (even given the risks of mailing cash).
posted by straight at 1:45 PM on February 25


1. Google Play Store- Xcoin wallet
2. Install
3. Open
4. Functioning wallet, your qr code and addr on screen. Press camera button to read qr. Standard UI for send, do nothing for receive.
5. On first startup, must wait some minutes for sync before sending. Received funds invisible until sync.

5 is the trickiest...
posted by save alive nothing that breatheth at 1:45 PM on February 25


Yeah, if I already have bitcoins, it's easy for me to send them to somebody else who is okay with using bitcoins. If somebody on either side of the transaction wants to bring state-issued currency into the equation, either by exchanging the original cash for bitcoins or by cashing them out for "real" money after the transfer, things get less friendly in a hurry.
posted by Holy Zarquon's Singing Fish at 1:46 PM on February 25 [4 favorites]


1. Google Play Store- Xcoin wallet
2. Install
3. Open
4. Functioning wallet, your qr code and addr on screen. Press camera button to read qr. Standard UI for send, do nothing for receive.
5. On first startup, must wait some minutes for sync before sending. Received funds invisible until sync.

5 is the trickiest...


So, more cumbersome than how people exchange dollars?
posted by MisantropicPainforest at 1:51 PM on February 25


But "deflation" is not in itself as scary as some people seem to think. If bitcoin took over everything and a gradual, predictable, and stable rate of deflation was the result, it would not be a problem in the long run.

I'll admit that I'm at the limit of my theoretical knowledge with this, but I'm pretty sure you've got this wrong. You're talking about deflation in one part of an economy, or even in one class of products, and analogizing to the economy as a whole. The issue isn't "how can I spend my computer dollars when I know they will go father in a year?" It's, "the money that buys me a computer now will buy me a house next year." These are two very different sets of issues and raise two very different sets of concerns, at least it seems so to me, even if they both fall under the banner of "deflation."
posted by JohnLewis at 1:52 PM on February 25 [1 favorite]


I've always thought bitcoin's fundamental flaw was that too many wankers thought they were going to be driving Bentleys on a $100 investment. It's become so speculative as to virtually eliminate its legitimacy as a transactional currency. I may be naive, but I can't buy into the usefulness of a currency that can swing 50+ percentage points on a dime... especially one that can't be exchanged for "real" money in a dependable or timely manner.

Bitcoin (or any crypto-currency) should resemble cash, not a wild-ass hedge fund. Perhaps inflationary crypto can stem the "investors".
posted by pleem at 1:55 PM on February 25 [6 favorites]


Any kind of significant rate of deflation is poison for the economy, because it will make it more profitable to hoard money than to invest it. It's not buying breakfast that is the problem; it's long-term investments.

Long-term investments today already need to provide returns above the rate of inflation to be profitable, don't they? People who hoard large amounts of money don't typically keep it in cash. Would they not still have similarly suitable instruments for hoarding if expected inflation were slightly negative? Long-term interest rates might be lower but they'd still have to be positive.

It seems complicated enough that it's hard to imagine being entirely convinced that low and stable deflation would have bad consequences until someone tries it and sees them, which surely hasn't been done since long before the financial systems of the world grew so weird as they are today. Japan was said to have suffered from deflation recently, but it certainly wasn't due to inadequate money supply, may have been more a symptom than a cause of any real economic dysfunction associated, and it was very small in magnitude for all but a few years -- closer to zero inflation I would say on average, rather than negative. And if long-term investment is a primary concern, it might plausibly take longer than ten years for all the effects of a shift from positive to zero inflation to play out.

Anyway, I'm sure bitcoin-fancying economists been over it all before somewhere... but on searching the Internet I'm not finding anything too convincing either way.

Given that it's unlikely that bitcoin is going to completely replace any major currencies in the lifetime of anyone here now, it does seem like its deflationary nature is problematic due to Gresham's Law. It'll have to maintain a big lead over its competitors in features or transaction costs, in order to fight its natural tendency to disappear. Then in the long run either it will make substantial changes or it will die -- either to a new crypto-currency competitor or to an improved payments system that it forces the established money handlers to build.
posted by sfenders at 1:55 PM on February 25


The original post I replied to -- and the ONLY point I have been trying to make here -- is that that post, which claimed that even installing the wallet software and futzing with it was too complicated for someone "with a life," is simply wrong. Installing the software and conducting Btc transactions is easier than using other currencies. Finding others who will accept those transactions is a different and totally unrelated matter.


And the only point we have been tyring to make is that finding others who will accept those transactions is the aspect of bitcoin which is complicated for people who "have a life".

Look - I don't want to collect money just to roll around in it like Scrooge McDuck. Like most people, I need to collect money because I need to turn around and use it to pay bills. And the overwhelming majority of my creditors do not accept Bitcoin as legal tender.

That is what the person you are addressing was getting at when they were referring to Bitcoin as being too complicated for someone "with a life". They weren't talking about the fucking iPhone software ap, they were talking about using Bitcoin in real-life financial transactions. Right now, the only thing I can use Bitcoin for are mad-money things, from what I've seen - books, clothes, music, maybe the occasional restaurant. If I had no other financial concerns but the desire to treat myself to books and music and dinners out, Bitcoin would be fine - but the bulk of my money needs to go to things like my landlord, my utility companies, and paying off loans.

And the reason that that is the bulk of my financial needs is because, so to speak, I "have a life."
posted by EmpressCallipygos at 1:58 PM on February 25 [19 favorites]


I didn't imply any difference; in fact I more or less used one to mean the other.

Sorry if you took it as a "Gotcha": you were answering a question I posed in response to someone else's assertion so I assumed you were agreeing with the original post.
posted by yerfatma at 2:00 PM on February 25


Would they not still have similarly suitable instruments for hoarding if expected inflation were slightly negative?

Yes. It is called "cash". Many people argue that the current malaise of the global economy is in part spurred by the fact that, we're it not for the concerted action of central banks around the world, the global economy would be experiencing negative interest rates. The evidence for this, in part, is that corporations have been hoarding cash and providing stock buybacks; Apple has $150 billion or so.
posted by Diablevert at 2:03 PM on February 25 [2 favorites]


sebastienbailard: "I'm going to propose Metacoin - the alternative currency backed by creating other alternative currencies."

Face value is $5 same as in town. Backed by favorites.
posted by chavenet at 2:05 PM on February 25 [3 favorites]


But it's a tremendous pain to convert ANY currency into ANY other

Or, you know, not. Within ten minutes' walk of my apartment are at least half a dozen branches of various banks.


I think that was true back in the day when banks were (theoretically) friendly local businesses that were open about 20 hours a week. Now the "local" bank is a multi-national conglomerate that makes their employees work on holidays and until 7pm for my "convenience", but when I come back from a trip and try to convert foreign currency to US dollars they pull out a three-ring binder, compare the bills to their reference picture and then tell me either they'll offer me $0.77 on the dollar or that they won't take the money because the denomination is too small and it comes from a country where counterfeit money is common. Because, you know, I went on a honeymoon to print Bahamian bank notes all the live long day.
posted by yerfatma at 2:06 PM on February 25 [3 favorites]


MisanthropicPainforest and zombieflanders, the original thing that playertobenamedlater said to start this off is that working with bitcoin was "way too much of a pain in the ass for anyone living life." That is what a lot of people are responding too. And at least in my personal view, I would say the steps save alive nothing that breatheth are less of a pain in the ass than that original standard.

I am about as far from a bitcoin booster as you can find, but this disucssion seems to be more about talking past each other and ignoring context as hard as possible to score points.

This collapse does make me wonder if a bitcoin (or other altcoin) exchange could apply for SIPC or FDIC insurance. It would obviously go against the unregulated ethos, but it might be something to get regular type folks using your service.

I think there is probably a place for cryptocurrency as a medium of exchange at some point in the future, I think we are going to take a lot of iterations to get there. And the true long-term winner probably won't have a bunch of deflationary libertarian economics baked into it.
posted by grandsham at 2:08 PM on February 25 [1 favorite]


Maybe it wouldn't be a bad idea for these guys to hire some sort of chairperson

How about a whole Bitcoin Foundation? Why, you could put the CEO of the biggest Bitcoin exchange on its board!

One great thing about the digital age is the speed at which hucksterism evolves. It took decades for the collusion of banks and railroads in the US to develop, for instance. But that was so 19th century; in the 21st century it takes just weeks.
posted by Nelson at 2:18 PM on February 25 [3 favorites]


FWIW, the New York Department of Financial Services has been making some noise about regulations. Benjamin Lasky, the Superintendent there, did a Reddit AMA last week.

SecondMarket is an exchange looking to launch. Its CEO said: "This exchange will launch as a regulated entity”.
posted by QuantumMeruit at 2:20 PM on February 25


yerfatma: this is an accurate representation of when I tried to exchange 15 dollars canadian at the local branch of my smallish Texas bank. Intense scrutiny of the bills that took almost 20 minutes, then a 75 cent exchange rate (the going rate was almost 90 cents) plus a 10 dollar exchange fee (plus I would have to wait a week for it to be deposited in my account).

Needless to say I declined.

Admittedly somewhere specialized like Travelex would be easier, but currency exchange places in general (including and especially BTC/altcoin ones) just give me the feeling of constantly being involved in some serious multi-faceted grift.
posted by grandsham at 2:24 PM on February 25


What Does Mt. Gox Say? [to the tune of what does the fox say]
posted by morganw at 2:26 PM on February 25 [3 favorites]


The evidence for this, in part, is that corporations have been hoarding cash and providing stock buybacks; Apple has $150 billion or so.

Yeah my argument is not that the rate of inflation can't have some effect on this sort of thing for all the usual reasons, it's that it's the sudden deviation from established expectations that makes the difference, not the absolute level of inflation. And we did have a fairly substantial drop in the observed rate of inflation recently in Apple's home country, so yes that might be some part, small or large, of the explanation for them not finding anything better to do with all that money. But 95% of that $150 billion of "cash" is not actually cash, it's cash equivalents, short-term marketable securities, and long-term marketable securities. If their hoard was 8% cash instead of ~5%, would that make the overall hoarding of cash-equivalents any better or worse? And is there any way of knowing whether there would be even so large a change as that in a world of long-term expected deflation? You'd need a model sophisticated and abstract enough to be very fallible, I'd think.
posted by sfenders at 2:29 PM on February 25


Long-term interest rates might be lower but they'd still have to be positive.

Why:

a) Would they have to be positive?

b) Would they have to exist?
posted by PMdixon at 2:43 PM on February 25


I think there is probably a place for cryptocurrency as a medium of exchange at some point in the future, I think we are going to take a lot of iterations to get there. And the true long-term winner probably won't have a bunch of deflationary libertarian economics baked into it.

I think there is a point to be made that financial regulation is a significant drag on the economy and often ineffectual. The great promise of "cryptocurrency" it seems to me, is if it it could somehow reduce the need for financial regulation and oversite by eliminating fraud and abuse technologically. It could allow for smaller, more effective government. But this is just dreaming, probably. Otherwise, it is just a way to make anonymous on-line cash transactions - which is useful enough I guess.
posted by Golden Eternity at 2:43 PM on February 25


The great promise of "cryptocurrency" it seems to me, is if it it could somehow reduce the need for financial regulation and oversite by eliminating fraud and abuse technologically.

Welp.
posted by en forme de poire at 2:46 PM on February 25 [10 favorites]


The great promise of "cryptocurrency" it seems to me, is if it it could somehow reduce the need for financial regulation and oversite by eliminating fraud and abuse technologically.

I'm just going to leave this Calvin & Hobbes here.
posted by PMdixon at 2:48 PM on February 25 [6 favorites]


the speed at which hucksterism evolves

This. The willingness of so many people who don't trust "government" to trust anonymous and unknown and felonious people is stunning. Most BTC fans I know are not completely cultist libertarians, although some drift that way. But the combination of cynicism and naiveté is distinctive. As if homo economicus, freed from the state, has no predilection for prevarication.

Fucking vervet monkeys lie to each other, and they know 12 words.
posted by spitbull at 2:55 PM on February 25 [15 favorites]


But the combination of cynicism and naiveté is distinctive.

I think there's sort of a generic quality to thinking of oneself as an "insider" of some special sort that makes people turn off their basic evaluative skills when the right shibboleths are demonstrated.
posted by PMdixon at 2:58 PM on February 25 [7 favorites]


Why: a) Would they have to be positive?

Because if they weren't, they wouldn't exist. I guess it does put a fairly tight limit on how far below zero inflation you could have without really big changes, but still in the case of the glorious bitcoin future we can presume it's far enough in the future that the population of the earth has stabilized and begun to decline as it eventually must, and so there might not be such a great need for ever-increasing supplies of money to go around, and thus a sufficiently slight rate of deflation.

b) Would they have to exist?

If not the world would be a different place, but people have imagined it before.
Why does anything exist in the first place? I have heard it said that love is all you really need, maybe it's true.
posted by sfenders at 3:01 PM on February 25


Don't you have to give all your personal info to a Bitcoin exchange in order to convert the coins to IRL money?

Yes, because of the USD end of the transaction. That's also true of most of the places that might convert rupees or kroner for you.

However, if I were in Manhattan I could go to that bakery that's taking bitcoin and buy a cronut without revealing anything about myself.
posted by localroger at 3:01 PM on February 25


Oh, and how easy is it to use? I am now the proud owner of 0.135 Btc because someone else made a donation today -- while my computer wasn't even on.
posted by localroger at 3:02 PM on February 25


But the combination of cynicism and naiveté is distinctive.

A combination which is also almost definitionally common amongst marks. It is very easy to trick somebody who thinks they're smarter than everybody else, especially if they feel the need to prove it.
posted by Sticherbeast at 3:03 PM on February 25 [17 favorites]


localroger: that's not how easy it is to use, that's how easy it is to get. I have a bitcoin - an evangelist gave me one of these when they were 'worth' about 9USD/1BTC. It was easy to get (someone handed it to me), but it's certainly harder to spend it.
posted by el io at 3:14 PM on February 25


localroger,
Honestly, your posting in this thread seems like you are somehow personally threatened by other people not wanting to bother with joining the Bitcoin market. I really do not understand why you feel that another persons criticism of Bitcoin or cryptocurrencies somehow seems to be something you wish you defend as if it were a slight to your person.

I mean, you obviously see the problems that are happening in the crypto-currency markets, right? I don't think anyone is saying that you, personally, are a fool for utilizing Bitcoins. We are saying that there are a lot of cheerleaders for Bitcoin who appear to ignore the fact that it is a speculation market, not a fully functional currency, and not something that will replace the local government backed currencies of the world any time soon.

I mean, good on you for being willing to be a pioneer in utilizing this new and rather amazing use of math and technology. But please understand that for most of us who really do not want to use Bitcoins as a medium for exchange, we are not luddites or technophobes. We really just don't feel that the hassle of using yet another online service is worth the effort. Some of us also see the activities of the Bitcoin market and the primary uses for the currency as something that will not last and is not worth the time or effort of trying to do our own due diligence. And that is the one thing that a lot of people seem to handwave away. There are risks to trying to use Bitcoin or crypto-currencies for everything. And those risks outweigh the convenience or ease to which you and many proponents seem to be trumpeting.
posted by daq at 3:19 PM on February 25 [9 favorites]


the idea of a currency requiring computing time automatically makes it something for the global 1%
The global 20%, currently rising at 6% per year.
posted by roystgnr at 3:21 PM on February 25 [2 favorites]


but it's certainly harder to spend it.

Well there aren't a lot of places taking it, but there are a few. I don't quite have enough to seriously go shopping at overstock, although if I had had a whole bitcoin I probably would have last month. The thing is, despite the goings on at Mt. Gox there are other exchange portals, and it's probably more straightforward to arrange a reasonably sized conversion through one of them than it would be in most places to turn that 137 physical pesos you returned with from Mexico back into USD.

on preview -- daq:

I have no stake at all in the whole Bitcoin fiasco, except for a few donations worth at the moment about $17, which I can certainly afford to lose. My beef is with the original and totally false statement that the technology is hard to use. No, it isn't. In fact the developers have gone to a great deal of effort in that regard. If you are not engaged in large-scale speculation or mining the day to day practice of directly trading Btc is in every way simpler than the practice of exchanging USD.

This has nothing to do with whether the Btc currency is stable, useful, or resting on grifters all the way down, or convertible to other less $undesirable currencies. Of course there are major problems with that and I have not invested *ANYTHING* in Btc myself; it is highly likely that my entire wallet consists of donations I'd have not received at all had I insisted on USD via PayPal. Under that circumstance, receiving the Btc and potentially spending them on a coffee are both extremely simple.
posted by localroger at 3:25 PM on February 25 [3 favorites]


I think there is a point to be made that financial regulation is a significant drag on the economy and often ineffectual.

That's kind of like saying that brakes are a significant drag on speed, and that they don't even work when you don't deploy them. Good financial regulations aren't a "drag," they ensure that economic activity doesn't happen in an uncontrolled manner; and if they're ineffectual, it's certainly not because there's something inherently delusional about the idea of having rules in the first place, but because people always seem to find ways to ignore, evade, and completely subvert specific regulations and regulatory institutions themselves. So in that sense, I can see where the frustration comes from. But we shouldn't abandon regulation simply because regulatory capture happens any more than we should abandon private property because theft is possible.

The great promise of "cryptocurrency" it seems to me, is if it it could somehow reduce the need for financial regulation and oversite by eliminating fraud and abuse technologically. It could allow for smaller, more effective government.

That promise is illusory, though. The same human capacities that make regulatory capture possible make the manipulation of cryptocurrency inevitable. What immutable principle would prevent it? Currency and finance are social institutions, human institutions. This is why gold is so appealing to people, too: it gives the illusion of pure value, uncompromised by the complexity and susceptibility to manipulation that inheres, in fact, in value itself. There's no such thing as value existing independently of evaluation, and evaluation is permanently, inextricably tied to processes of social and institutional contingency. Until we have Banksian AI, we have to have institutions.

But this is just dreaming, probably. Otherwise, it is just a way to make anonymous on-line cash transactions - which is useful enough I guess.

I think those dreams are good ones to strive for, honestly, but at the same time I think two important things have to be kept in mind:

1. Government and its institutions are both imperfect and necessary.
2. Technology shouldn't be expected to solve complex, social/institutional problems like regulatory capture. If it eventually can, that would be fantastic, but we have to recognize that the terrain where the social and the technological meet is vastly more complex, orders of magnitude more complex, than people might like to believe, especially engineers and coders.
posted by clockzero at 3:27 PM on February 25 [20 favorites]


The Economist: Mt. Gone. "Bitcoin enthusiasts, who often seem to operate within a Steve-Jobs-like reality-distortion field, were quick to distance themselves from Mt Gox".
posted by Nelson at 3:27 PM on February 25


Nobody is arguing that the technology is hard to use. They're arguing that until you can pay your rent, your water bill, and your taxes with bitcoin, then bitcoin itself is inherently hard to use.
posted by KathrynT at 3:29 PM on February 25 [7 favorites]


Can someone give me a quick primer on dogecoin? That is, I know the basics, but:

a) Are they mineable by individuals, or is that period over
b) How much are they worth (or is that even a valid question--are there real money exchanges, can they be spent besides "tipping" on reddit)
c) I gather there are tech differences between doge and bitcoin, but is there anything fundamentally different in the protocols that would matter to a consumer?
posted by danny the boy at 3:32 PM on February 25 [1 favorite]


My beef is with the original and totally false statement that the technology is hard to use. No, it isn't.

This is too narrow a reading on what use is. If someone says "roller skating is a pain in the ass method for getting around an office building" and your response is that, no, lacing them up is a simple over-under pattern and then a bowtie knot, you're both technically right about the bit you're talking about and seriously wrong about the holistic bit that is under practical discussion. Insisting repeatedly that bowties are really easy to learn doesn't change the fact that practically speaking roller skates are a really useless way for 99% of people to get around the office. Even if skating is working great for you during the 1% of your day that you spend rolling around on them.

Basically, nobody cares about whether you can buy cronuts with bitcoins if it's not trivial and transparent and somehow obviously preferable for them to use it to pay their rent and their utility bills and buy stuff at basically every store they need to go to.
posted by cortex at 3:40 PM on February 25 [16 favorites]


Nobody is arguing that the technology is hard to use.

That was exactly the argument of the original post to which I responded:

I heard that if you keep your bitcoins yourself, you need to constantly synchronize your wallet with the network. If that's correct, it sounds like a bit of a pain in the ass.

That statement is factually incorrect. Really, that's it. But I guess Bitcoin is the new South, it's impolitic to say anything that isn't bad about it.
posted by localroger at 3:44 PM on February 25 [1 favorite]


it is just a way to make anonymous on-line cash transactions

What on earth makes you think that? You don't think the NSA isn't using deep packet inspection right now on every Bitcoin transaction passing through every ISP on the web? The mind boggles.
posted by daq at 3:49 PM on February 25 [3 favorites]


But I guess Bitcoin is the new South, it's impolitic to say anything that isn't bad about it.

Oh, please. You also said, and I quote, "This is simply not the case; in almost every respect working with bitcoin is easier than working with real currency." And that's only true if you leave out the part where you want to actually trade bitcoins for things you actually need, the way you can do with any other kind of currency. Yes, it's true, if you just want to pass them around like Upworthy videos or pictures of cats, that's very easy. But using them as money is about as easy as, well, using Upworthy videos or pictures of cats as money.
posted by KathrynT at 3:52 PM on February 25 [9 favorites]


grandsham: this is an accurate representation of when I tried to exchange 15 dollars canadian at the local branch of my smallish Texas bank. Intense scrutiny of the bills that took almost 20 minutes, then a 75 cent exchange rate (the going rate was almost 90 cents) plus a 10 dollar exchange fee (plus I would have to wait a week for it to be deposited in my account).

I've travelled quite a bit internationally, and it really - probably like using BitCoin - comes entirely down to knowing the drill. First off, your home bank matters a lot. I use credit unions in the US, which tend to have negligible exchange rate penalties low transaction fees (2%) for international purchases with my visa credit/debit card. This means the best way to do things is to take out a pile of currency in the local cash commensurate with what I plan to use (maybe for two week intervals, if I'm around for a while, or in increments of about $200), using the ATMs in-country. On returning home, difficulty of exchange mostly depends on the currency in question: Euros are really easy, again with low fees at the credit union, Ethiopian Birr are tougher. I expect that your bank's rules are fairly hostile to the process of foreign exchange, and that your Texan tellers may have a touch of Texas xenophobia.

That said, using the Visa card abroad is entirely convenient and painless at anyplace that takes Visa, which is an increasingly large proportion of places worldwide. And getting local cash from ATM's is similarly simple. It's Very Easy to get local currency to use as needed, and maybe a bit tougher to convert back to USD.

This is maybe similar to bitcoin, except it's harder to convert my cash to bitcoin for short-term usage, and actually much tougher from what I gather to get back to USD. And I can't use bitcoin basically everywhere.

Advantage: Local currencies with a visa credit/debit card.
posted by kaibutsu at 3:53 PM on February 25 [2 favorites]


From the Economist article:
But as ever, much of the Bitcoin community continues to act as if nothing has happened. Six Bitcoin businesses issued a statement saying that recent events don’t “reflect the resilience or value of bitcoin.” And today’s entry on the Bitcoin Foundation’s blog is an invitation to “Bitcoin 2014” in Amsterdam (“Bitcoin is a game changer on a global scale — don’t miss out!”). It’s hard not to think that the real problem in Bitcoinland isn’t denial-of-service attacks. It’s denial.

Scathing!
posted by kaibutsu at 4:00 PM on February 25 [6 favorites]


You should be able to pay taxes in BTC this tax season. Not direct to the IRS yet, but through a processor...

Doge: can mine if you have a GPU and pool up. AMD beats Nvidia. CPU mining is still even workable minimally - I amuse myself with solar powered Android occasionally.

Worth: 1 D, .001 USD, about 200 Satoshi. New exchanges - vault of satoshi, ANX (iirc) trade doge/usd. Most fiat volume is CNY though, bter and one other. USD still mostly through BTC I think.

Relevant differences: faster confirms, lower fees, scrypt makes asiçs only slightly better than gpus so far. Inflation if you consider that a tech parameter.
posted by save alive nothing that breatheth at 4:01 PM on February 25 [1 favorite]


the idea of a currency requiring computing time automatically makes it something for the global 1%
The global 20%, currently rising at 6% per year.
posted by roystgnr at 3:21 PM on February 25 [+] [!]


Income-wise, you only need more than about US$34,000 a year to be in the global top 1%
posted by Bwithh at 4:31 PM on February 25


Basically everyone who's not an elderly non-adapter or like, an uncontacted people, has a smart phone within a few years though.
posted by save alive nothing that breatheth at 4:33 PM on February 25


So far, I've only had the opportunity to watch the first "Explain Like I'm Five" talk from the New America Symposium, but one thing the presenter had to say stuck hard with me. Short version:
The people who see this as "All technology, no politics" fundamentally have it wrong.
In that, basically if cryptocurrencies do become viable and become a threat to state currencies, why on Earth wouldn't state actors move against them as disruptive to one of their core functions. You can ignore politics. Doesn't mean politics will reply in kind.
posted by Pirate-Bartender-Zombie-Monkey at 4:36 PM on February 25


But as ever, much of the Bitcoin community continues to act as if nothing has happened...it’s hard not to think that the real problem in Bitcoinland isn’t denial-of-service attacks. It’s denial.

That's a cute line from the Economist writer, but if the summaries at Buttcoin are correct, this was indeed a problem particular to MtGox, which was still operating in a casually dumb way the other exchanges had already fixed. Read it again:

This is a well known issue with the bitcoin protocol and other exchanges workaround this by looking up the inputs in the blockchain instead of relying on the transaction ID, and only using the transaction ID after the transaction has been reliably confirmed. Mt. Gox is saying that this is a problem with bitcoin to cover their ass. I am not sure if its even bug. Its more of “don’t assume a transaction ID is legit until the transaction has actually been confirmed”.

So basically Mt. Gox has been getting ass raped by this known exploit for who knows how long, and has resent god knows how many butts. So their internal ledger is completely and totally fucked and they are going to have to go through every transaction they have ever done, look it up in the blockchain by inputs instead of transaction ID, and try to pick up the pieces. This is like finding out that you have accidentally been writing two checks for all your bills and then only realize this when your account goes negative.


I have no dog in this fight but that Economist piece seems unfair, if not a bit uninformed.
posted by mediareport at 4:38 PM on February 25


The great promise of "cryptocurrency" it seems to me, is if it it could somehow reduce the need for financial regulation and oversite by eliminating fraud and abuse technologically.

I'm confused by what seem to me to be conflicting arguments by bitcoin advocates: 1) bitcoin's technological marvels will (eventually) free people from the surveillance and oppressive controls of state government-run financial systems and 2) bitcoin's technological marvels will mean that (eventually) bitcoin thieves and financial fraudsters will be tracked down easily
posted by Bwithh at 4:38 PM on February 25 [3 favorites]


In that, basically if cryptocurrencies do become viable and become a threat to state currencies, why on Earth wouldn't state actors move against them as disruptive to one of their core functions.
Perhaps they just did.
posted by fullerine at 4:40 PM on February 25


You should be able to pay taxes in BTC this tax season. Not direct to the IRS yet, but through a processor...

That is not "paying your taxes in BTC."
posted by Novus at 4:42 PM on February 25 [18 favorites]


Weren't coins a lot easier to mine back then? Maybe there was a lot of people mining just to try it out and decided it was a waste of time, never bothered to cash out and now don't remember their passwords or have copies or something.

That's me. I mined a few (not a huge amount - if I recall, possibly 6.5?) back when CPU mining was still possible. Well, at the time CPU mining was considered completely inefficient and pointless, but at the time people were telling me that BTCs were trading for about $5.00.

I had the mining pool transfer them to an online wallet somewhere. No idea where they are now, presumably stolen or lost to the ether. I'm honestly not bothered. Because I have 1,500 DOGE now and I'm ready for the next ride!
posted by Jimbob at 4:44 PM on February 25 [3 favorites]


>Any kind of significant rate of deflation is poison for the economy, because it will make it more profitable to hoard money than to invest it. It's not buying breakfast that is the problem; it's long-term investments.

>Long-term investments today already need to provide returns above the rate of inflation to be profitable, don't they? People who hoard large amounts of money don't typically keep it in cash. Would they not still have similarly suitable instruments for hoarding if expected inflation were slightly negative? Long-term interest rates might be lower but they'd still have to be positive.

Inflation decreases the real interest rate for investment while deflation increases the real interest rate for investment. This is why the Fed has been trying (rather weakly) to increase inflation to get the economy out of the slump.

If you you have 20% annual deflation, in real terms your borrowing interest rate is more than 20% per year. How willing would you be to sign a mortgage to buy at house at an effective interest rate of more than 20% per year?
posted by JackFlash at 4:59 PM on February 25 [1 favorite]


I have no dog in this fight but that Economist piece seems unfair, if not a bit uninformed.


This is the thing with brand new tech that has money explicitly tied into it: technological failures have big financial implications. And a huge part of tech is the iterative process of working out the bugs as they are revealed, which is something we see constantly evolving in cryptography policies. These things settle down into best practices with time, with hopefully increasingly minor bugfixes, until everything runs like a dream and gets really stable. For example, this is more-or-less where we're at with e-commerce at the moment: the process is quick and painless and stable (but with room for improvement in the arena of massive card number thefts).

Right now, bitcoin is anything but stable, and I really don't think it's unfair to be a bit suspicious of the evangelism of CEOs of Bitcoin companies.
posted by kaibutsu at 5:05 PM on February 25


The "It's a Wonderful Life" parody opportunity is just waiting for the right person to pick it up.

I was thinking of that exact scene!

ERNIE
Don't look now, but there's something funny going on over there at the bank, George, I've never really seen one, but that's got all the earmarks of a run.


I was thinking of "Momma bitcoin and Poppa bitcoin!"
posted by jrochest at 5:15 PM on February 25 [1 favorite]


dogecoin: faster confirms, lower fees, scrypt makes asiçs only slightly better than gpus so far. Inflation if you consider that a tech parameter.

GPU mining for doge won't last forever and is already difficult enough that I wouldn't rush out to buy even just a new video card for more hashes, let alone a whole mining rig. But I'm happy to devote the best GPU I have to it until winter is over and the heat becomes an nuisance rather than a welcome addition to keeping me warm. My GT560 is producing hundreds of doge per day! I have literally thousands of coins! Much wealthy.

The inflation mechanism is not really important. It's a nice idea and might help in the long run, but if dogecoin somehow catches on in a big way it won't be nearly enough to stop it rising in price, for however many years of growing demand. Fortunately they put the decimal point in the right place, so even if it goes up by a factor of ten you'll still be able to spend whole numbers of doge without worrying about it. Handy for microtransactions. Or maybe "nanotransactions" since people have lately started calling some pretty big transactions "micro". Maybe some day I'll be able to configure adblock to pay visited websites the amount they would've made from my visit in ads, $0.002 or whatever it is, instead of them getting nothing or way too much. I kind of like the idea.

Mostly I guess the difference with dogecoin is just a marketing thing. Bitcoin has sort of failed at creating a brand image that has any mass-market appeal, being associated in everyone's minds with all sorts of libertarian crypto-anarchist fantasy nonsense. Even my mom, when I happened to mention bitcoin one day, had heard of it as that stuff they use on the Internet to buy drugs. Sheesh. So I think dogecoin has some small chance to start over with public perception and do better, currently being best known for its users donating lots of money to charity, tipping each other on reddit, and making silly jokes. Well it's not much, but that's a more friendly image than hedge funds and drug deals, and it might make a difference.

More likely some other coin will eventually come along and become the one everyone ends up using. Maybe one backed by the government, maybe one with an actual sensible monetary policy, like targeting the price of cotton or something. For now I keep mining for the doge.
posted by sfenders at 5:16 PM on February 25 [5 favorites]


In that, basically if cryptocurrencies do become viable and become a threat to state currencies, why on Earth wouldn't state actors move against them as disruptive to one of their core functions. You can ignore politics. Doesn't mean politics will reply in kind.

IRL US politics has mostly been amenable to crypto, within certain boundaries, so far. Crypto made friendly with NYS DFS Ben Lawsky, calls him Supernintendo Ben, he makes jokes about the founding fathers never foreseeing doge. Does a Reddit AMA. Dem. Senator from Delaware released this statement on Gox's failure - it doesn't sound like he wants to shut the whole thing down.

I really think sometimes you guys overestimate government power. They can't even stop me from smoking weed and downloading torrents, ffs. Now, one thing is BTC is by design not that unfriendly to gov't compared to cash - it's all numbered accounts, so only through great care do you achieve real anonymity (I certainly don't bother), esp. once enforcement infrastructure gets going. Some of these cryptos are full ancap though - Zerocoin, Darkcoin - might be better to embrace BTC's cash-like nature - like cash, the government can't quite stop you from moving it around, but it can watch all the entry and exit points, audit, etc.

Riddle me this: I'm seeing taxes, rent, bills.

I could go set up a company what handles rent and bills in Bitcoin. Processes taxes too if that's not too inauthentic. Someone will. I don't particularly plan to enter that market myself, but if very unexpectedly no one else does soon I could see myself being in the position in some time to just, you know, hire some guys to set that up for me. I am curious why the hell you guys see this not happening? Everyone in the world thinks, "well, I could make money moving power bills through BTC for a fraction of CC fee, but I don't want to"? - see me I have more fun ideas, but not everyone is as clever...

How many people, in 1-2 years, have to be paying taxes, rent, bills, in crypto for it to count? Can we get some goalposts here for me to "I told you so" over?

I strongly believe, like every gun controller should fire off a gun once in their life, that you should probably give crypto a minimal try so you don't look completely foolish criticizing it. Anyone wants, set up Android Dogecoin Wallet (prob. easiest), dogecoin-qt (must sync some gigs overnight), multidoge, or wowdoge (less sync, more beta) and I will send you enough spare DOGE to pick up someone's spare Steam game, donate to charity, or tip around Reddit, Twitter, Facebook, Steam, etc. Your couple hundred doge transaction is not going to accidentally smash the state, don't worry! Also seriously the most prominent politics in IRL NYC DOGE is probably OWS.

Right now, bitcoin is anything but stable, and I really don't think it's unfair to be a bit suspicious of the evangelism of CEOs of Bitcoin companies.

The meat of their statement is factual: nothing changed for the BTC protocol or network. Malleability was a minor bug corrected by all reputable providers long before. So far the technology remains sound - I haven't vetted it for flaws myself, but I know I'm not really the security expert to do that anyway, but I also know enough to respect others' trust in the tech.
posted by save alive nothing that breatheth at 5:17 PM on February 25 [1 favorite]


How many people, in 1-2 years, have to be paying taxes

Who do you pay taxes to again?
posted by PMdixon at 5:26 PM on February 25 [2 favorites]


Inflation decreases the real interest rate for investment while deflation increases the real interest rate for investment.

Temporarily it would. Why wouldn't all the prices including those for money eventually adjust and re-equilibriate, and the real rate go back to what it was if nothing else had changed? If inflation were held constant at the new rate of -0.5%, I mean.

If you you have 20% annual deflation ...

Well yeah, then you're screwed. I wasn't really contemplating anything more than 1% or less.
posted by sfenders at 5:29 PM on February 25


Installing the software and conducting Btc transactions is easier than using other currencies.

You have any idea how long it would take to download the blockchain on my suburban Australian internet connection? It would take approximately the same amount of time as to take a plane to the US to change my currency. And (I've tried this, by the way), having the bitcoin daemon running maxes out my bandwidth and I can't do anything else on the internet. Like have a life.

the day to day practice of directly trading Btc is in every way simpler than the practice of exchanging USD.

Yes but I'm not getting anything that's of value and useful to me when I trade Bitcoin with someone. I can't pay my mortgage with it, or do my grocery shopping, or buy fuel for my car, or pay my dog's vet bills. It's useless for 99% of the day-to-day things I actually use money for. And when I have had to exchange currency online, or send money online, I've never had a problem with Paypal, which despite its problematic nature at times, has never screwed me over, nor charged unreasonable fees.
posted by Jimbob at 5:40 PM on February 25 [1 favorite]


I've travelled quite a bit internationally, and it really - probably like using BitCoin - comes entirely down to knowing the drill.

Tell me about it. Using a particular US commercial bank and a particular cell phone company, I can go to over a hundred countries where my ATM card works the same as it does in my home town, with no fee and a reasonably good exchange rate. No fee. It's a bank on your corner in your town. My chip pin Visa card works similarly, using the day's published official exchange rate, except I take a 3% transaction fee on currency conversions, which is the welcome price of not carrying cash when traveling abroad and knowing my bank has my back. My cell phone automatically connects to local networks in a similar range of countries and gives me unlimited texting, unlimited 2G data, unlimited local calls, and dirt cheap calls back home from my own phone number. And just today I got paid by a European publisher with a direct wire transfer to my bank account that cost me nothing, also at the day's published interbank exchange rate. I presume it cost the publisher something, but I never saw the hit.

Granted I am a first world professional white guy, this is not a lot of friction for me to worry about given that it means my funds are insured in my home bank account, that I am protected robustly by my bank and credit card companies from any significant personal loss (including being robbed of cash, and other than perhaps identity theft), and that I really don't think much about the cost of doing business in Euros or Yen in my globalizing profession.

I can see where an immigrant agricultural worker with no bank account wanting to wire money home does not, of course, benefit from this level of privileged transparency of th4e global currency system, but then, I don't see a lot of farmworkers mining bitcoins either. I mostly see similarly privileged white guys claiming this currency will revolutionize capitalism for the poor.

Cryptocurrency offers no evident utility to me as someone who routinely travels abroad and/or gets paid in foreign currencies (admittedly, I rarely have to send money abroad, except when it travels with me). And even if it were a legitimate alternative, without regulation, insurance, stability, and government approval, the utilities it does offer pale in comparison with the risks it entails as an utterly speculative medium for value.
posted by spitbull at 5:50 PM on February 25 [14 favorites]


You have any idea how long it would take to download the blockchain on my suburban Australian internet connection?

I've been wondering about the block chain size. It's over 14 GB, and last I looked clients still had to have a complete copy of the whole thing in order to participate in the network. Bitcoin isn't so much decentralized as it is "everyone has a copy of the whole transaction record, ever". Clearly that doesn't scale, and I'd argue 14 GB is already way too big to be of practical use. Is there some way to short-circuit it while still holding your Bitcoin balance privately on your own computer?
posted by Nelson at 5:54 PM on February 25


Malleability was a minor bug corrected by all reputable providers long before. So far the technology remains sound

You can argue that the "technology" is ok, but what this event tells everyone else is that the financial system is very not ok. It's like claiming in 2007 that everything's ok, the $20 bill is still difficult to counterfeit, the technology remains sound.
posted by kiltedtaco at 6:05 PM on February 25 [4 favorites]


last I looked clients still had to have a complete copy of the whole thing in order to participate in the network.

Look again. MultiBit is one client that doesn't download the whole block chain. As of recently there is also a MultiDoge. I think Electrum is another.
posted by sfenders at 6:08 PM on February 25 [3 favorites]


The thing about the Bitcoin universe is that it IS a shared reality to some extent. If only more people would buy in, it could be everyone's reality!

The one thing which convinces me Bitcoins have value is that people keep trying to steal them.
posted by sebastienbailard at 6:12 PM on February 25 [4 favorites]


Bitcoins undeniably have value. A lot of things have value. The problem is that Bitcoins lack several key attributes which would make them useful as actual currency, and many of those problems flow directly from the culture and ideology surrounding Bitcoin.
posted by Sticherbeast at 6:28 PM on February 25 [3 favorites]


The problem is that Bitcoins lack several key attributes which would make them useful as actual currency, and many of those problems flow directly from the culture and ideology surrounding Bitcoin.

Replace bitcoin with dollars in that sentence.
posted by empath at 6:30 PM on February 25 [1 favorite]


Actually...

Technically, you could have a central bank, right? I mean, all it takes is a software update to change max(M0) or whatever else. If consensus is that a body is trusted to make source updates, and everyone does so, that makes them a decent facto central bank, right? Presumably there's a publicly posted hash as a signature to compare against the processors. That seems like a standard sort of crypto problem.
posted by PMdixon at 6:30 PM on February 25


According to the top two lines of this article in the WSJ that I can't read any further because paywall, Mt Gox receives subpoena from US federal prosecutor...
posted by Jimbob at 6:37 PM on February 25


full article, which says very little. (The WSJ version is the same; you can read it past the paywall if you go there through a link from a Google search.)
posted by Nelson at 6:45 PM on February 25


BTW, it's been some time now: IMG TAG PLS KTHX

The complete collapse of crypto.

That image is now out of date: Winkdex, the Winklevoss Index
posted by save alive nothing that breatheth at 6:45 PM on February 25


Internet Chat Reveals Mt. Gox CEO Hasn't 'Given Up', purports to be an IRC interview with Karpeles, the CEO of Mt. Gox. Fox is reporting this as legit, but the only proof they have is a photo of a keyboard with his cat lying on it. I'm not sure which is more hilarious: Fox's fact checking or the professional standards of the leading Bitcoin financial service providers. But who knows, the interview may be authentic. More info alleged to be here, more discussion about the cat and its Youtube appearances on Reddit.
posted by Nelson at 6:51 PM on February 25 [1 favorite]


You have any idea how long it would take to download the blockchain on my suburban Australian internet connection?

In case anybody is wondering why I am so hot about the tiny little point I am trying to make, please read that quote about fifteen times.

I'll wait.

Now read this.

YOU DO NOT HAVE TO DOWNLOAD THE GODDAMN BLOCKCHAIN TO YOUR OWN PERSONAL COMPUTER TO USE BITCOIN. THIS IS A FACTUALLY CORRECT STATEMENT. STOP SPREADING MISINFORMATION.

Just protecting my USD $17 gift investment here, folks. If the local coffee shop thinks they have to download 14 gigabytes of data to transact in bitcoin, I might never get that cronut.
posted by localroger at 6:52 PM on February 25 [5 favorites]


I was wondering about that, so thanks for the clarification.
posted by cribcage at 6:58 PM on February 25 [1 favorite]


localroger, can you explain who would need to/want to download the whole blockchain?
posted by benito.strauss at 7:00 PM on February 25


...if you know what "blockchain" means, and know specifically which clients to use so that you don't have to download the whole thing. But you know, patently EASIER! THAN! CASH!!
posted by danny the boy at 7:02 PM on February 25 [19 favorites]


YOU DO NOT HAVE TO DOWNLOAD THE GODDAMN BLOCKCHAIN TO YOUR OWN PERSONAL COMPUTER TO USE BITCOIN.

But the option, if you don't want to do this, is to trust an online wallet run by the kind of fedora-clad numbnut who verifies his identify by taking a photo of his keyboard with his cat on it. Keeping your own wallet on your own computer is the reccomended way to "do Bitcoin securely". Until someone gets you with a keylogger or something, at least. Although that MultiBit thing linked above seems like an alternative - not sure what the downsides would be.
posted by Jimbob at 7:05 PM on February 25 [5 favorites]


Guys, guys, I'm sorry, I introduced the whole blockchain derail. In the long long ago clients had to have the whole thing and it was clearly a scaling problem and apparently it's solved. It sounds like current wallet software just runs and deals with it without requiring much bandwidth. Yay, software!

Can we get back to the real story; the verification of the identity of Karpeles' cat? Maybe it's a lolcatz conspiracy against dogecoin.
posted by Nelson at 7:05 PM on February 25 [6 favorites]


Only specialty software involved in things like mining even tries to download the blockchain. Look, it took me like 20 minutes to figure out to download MultiBit, which is a fairly bog standard wallet program, and it does everything a normal person (even a fairly rich person doing a lot of stuff in a heavily Btc-oriented economy should that ever emerge) would need. There are similar programs for iOS and Android, which should tell you something about the need for such resources to use the tech.

On preview JimBob -- things like MultiBit are HOW YOU DO IT. You only send your coins to the sketchy people when you need to enter the gray area between the Btc and the $REAL_CURRENCY.
posted by localroger at 7:06 PM on February 25 [2 favorites]


Technically, you could have a central bank, right?

Yeah, more or less. It'd never happen for bitcoin, but for a new bitcoin-like currency, then yes I believe it could work as you imagine without much trouble. People are inventing new "coin" variants all the time, and usually failing to gain any traction with them. In this case, beyond the usual difficulty, you'd need to have a credible central bank to get such a coin started, which doesn't sound particularly easy. Maybe an algorithmic, strictly rules-based (but substantially more sophisticated than bitcoin's) monetary policy would work better.

But hey, someone should give it a try. I'm surprised that I haven't heard of more experimentation with that sort of thing among the many dozens of failing attempts to copy the success of dogecoin, bitcoin, and litecoin.
posted by sfenders at 7:29 PM on February 25


Just protecting my USD $17 gift investment here, folks. If the local coffee shop thinks they have to download 14 gigabytes of data to transact in bitcoin, I might never get that cronut.

Localroger, would you like us to take up a collection to mail you seventeen bucks and a dozen cronuts, if you're that badly in need of them?
posted by EmpressCallipygos at 7:43 PM on February 25 [6 favorites]


How many people, in 1-2 years, have to be paying taxes, rent, bills, in crypto for it to count? Can we get some goalposts here for me to "I told you so" over?

Bitcoin doesn't support enough transactions for every resident of the United States to perform even one transaction per year. Someone may be saying "I told you so," but I doubt it will be you.
posted by one more dead town's last parade at 7:44 PM on February 25 [8 favorites]


A lot of these "It's difficult to use" arguments strike me as similar to arguments people made against the WWW in the mid 90s, when it was also difficult to use. Human interface problems are a lot easier to solve than getting the platform and network up and running. Right now, you have early adopters and geeks hacking away at an unfinished protocol. Once the infrastructure is humming along and working well, they other stuff will follow. Once the volatility evens out, I imagine you'll see more B2B transactions before it becomes a major consumer thing. Businesses who spend a lot of money transferring money around will invest in hiring people and developing processes to deal with it long before grandma will.
posted by empath at 7:45 PM on February 25 [4 favorites]


Bitcoin doesn't support enough transactions for every resident of the United States to perform even one transaction per year. Someone may be saying "I told you so," but I doubt it will be you.

They constrained the TPS to make bitcoin mining usable on a home computer connection, but now that most mining is being done in big data centers, they can probably raise that a significant amount.
posted by empath at 7:48 PM on February 25 [1 favorite]


Well bitcoin was designed rather defiantly from the ground up to neither require nor encourage any kind of centralized control. What your ownership (meaning possession of a certain crypto-key that links to the blockchain) represents is "a share of proven work done." In the early days of Btc that work was pretty easy and now it's very hard, but it takes computational work to create new Btc and your cryptographic possession of some measure of Btc means that you either did some mining or you were given shares of the Btc by someone else who did (or who got theirs from someone else who did, etc.)

In this sense, and very deliberately, Btc was designed to be almost exactly equivalent to a scarce commodity resource like gold or platinum. This is good in some ways, especially if you're a libertarian, and it's bad in others if you're a macroeconomist. It's very volatile because unlike gold and platinum Btc has no actual intrinsic usefulness; you can't make it into jewelry or chemical catalysts. Its only value is its scarcity as proof of work. So in some ways it's a purer currency than anything ever devised by man; you can't even wear it to show it off.

I am finding the whole thing pretty hilarious, and much more enjoyable now that I have a little fistfull of bitcoins to root for. I'm not an evangelist and I don't know how it will work out, but a tremendous amount of work has gone into the idea and its implementation. I have to respect the skills of the people who built it all if not in some ways their economic wisdom.

And I'm only a little bitter because I didn't get my million for thinking this was cool in 2009.
posted by localroger at 7:49 PM on February 25 [5 favorites]


I'll have one of those cronuts.
posted by Blazecock Pileon at 7:50 PM on February 25


But the option, if you don't want to do this, is to trust an online wallet run by the kind of fedora-clad numbnut who verifies his identify

I think most people will end up storing their cryptocurrency in banks, which I'm sure will drive the libertarians who pushed adoption of the thing bonkers, but that's neither here nor there. Nobody stores their life savings in their mattress, and people will not end up storing their bitcoins on their home PC, imo.
posted by empath at 7:50 PM on February 25 [2 favorites]


They constrained the TPS to make bitcoin mining usable on a home computer connection, but now that most mining is being done in big data centers, they can probably raise that a significant amount.

We're still talking about the combined value of all Bitcoins that could ever be mined, at the maximum historical value of Bitcoin in USD, being less than the GDP of any individual U.S. state.
posted by one more dead town's last parade at 7:57 PM on February 25 [1 favorite]


Technically, you could have a central bank, right?

I can see it as kinda-sorta being like a central bank's interest-rate-setting powers. However, it would be a very weak central bank - setting the interest rate is a by-product of a central bank's real power, the ability to create money. A central bank like you described wouldn't inherently be able to act as a lender of last resort, or employ other monetary mechanisms apart from slowly shifting the rate of creation of new money.
posted by kithrater at 8:00 PM on February 25 [1 favorite]


We're still talking about the combined value of all Bitcoins that could ever be mined, at the maximum historical value of Bitcoin in USD, being less than the GDP of any individual U.S. state.

Then what does that tell you about what they should be worth? Let's say that they end up being 10% of the GDP of the US. Each bitcoin would be worth $70,000. And in practice probably significantly more because a big chunk of bitcoins are missing.
posted by empath at 8:10 PM on February 25


I can see it as kinda-sorta being like a central bank's interest-rate-setting powers. However, it would be a very weak central bank - setting the interest rate is a by-product of a central bank's real power, the ability to create money. A central bank like you described wouldn't inherently be able to act as a lender of last resort, or employ other monetary mechanisms apart from slowly shifting the rate of creation of new money.

Here is one of the things that I don't think bitcoin people understand about economics. There is absolutely NO reason that a bank couldn't do fractional reserve banking with bitcoin, and no reason that the US, Chinese or Russian governments couldn't stock pile them.
posted by empath at 8:12 PM on February 25 [2 favorites]


Then what does that tell you about what they should be worth? Let's say that they end up being 10% of the GDP of the US. Each bitcoin would be worth $70,000. And in practice probably significantly more because a big chunk of bitcoins are missing.

There is no inherent property of Bitcoin that makes them that desirable. The number of extant Bitcoins tells you absolutely nothing about their fair market value.
posted by one more dead town's last parade at 8:22 PM on February 25 [5 favorites]


Who do you pay taxes to again?

Exactly. I'm relatively certain that Revenue Canada will only accept tax payments in Canadian funds.

I'd be astonished if the IRS took anything other than greenbacks, whether physical or digital. So, again, that's where BTC (and everything similar) falls down: sure you can get 'paid' in it, and you can use it for goods and services online and apparently IRL too, but none of those are the essentials at this time: groceries. Utilities. Rent. Mortgage. Taxes.

Maybe groceries and utilities may start taking BTC at some point. Landlords? A few fedora types maybe. Mortgages? Nope, not going to happen. That's like trying to pay your mortgage with stocks; banks want their fixed dollar amount, not an instrument whose value can fluctuate so wildly. (Yes, the value of fiat currencies can also fluctuate pretty wildly. Moving on.)

And taxes? No. There's just no way any major government is a) going to accept taxes remitted in anything other than their own currency (AFAIK), nor b) accept taxes paid for with an instrument of fluctuating value.

I mean, let's say a BTC is worth $100 today. Coincidentally, I need to pay $100 in taxes today. So I send my BTC to Revenue Canada.

And tomorrow BTC drops to $75.

Why on earth would any governmental or banking entity do this?

Owning BTC or Dogecoin or whatever is more or less exactly the same as owning gold: it has a fluctuating value, is negotiable virtually nowhere, and is a total bitch to turn into currency that has a relatively stable value and is negotiable virtually everywhere.
posted by feckless fecal fear mongering at 8:25 PM on February 25 [2 favorites]


... but a tremendous amount of work has gone into the idea and its implementation. I have to respect the skills of the people who built it all if not in some ways their economic wisdom.

You could be describing tranches of collateralized debt obligations there.
posted by benito.strauss at 8:34 PM on February 25 [13 favorites]


Maybe groceries and utilities may start taking BTC at some point. Landlords? A few fedora types maybe. Mortgages? Nope, not going to happen. That's like trying to pay your mortgage with stocks; banks want their fixed dollar amount, not an instrument whose value can fluctuate so wildly. (Yes, the value of fiat currencies can also fluctuate pretty wildly. Moving on.)

Canadian Realtor Accepts Bitcoin Deposits For Residential Properties. Not the mortgage, of course. Just the down payment.

The argument that "you can't buy anything important with them, therefore it is doomed to fail" is a weak argument. There's a lot of important things you can't buy with them right now, sure. If five years from now Bitcoin is seen as an acceptable store of value and gains widespread acceptance, banks and landlords will be falling all over themselves to take them off your hands.

So the question is will they gain enough people's trust to become an effective store of value and a useful medium of exchange? That's the question. And inasmuch as that is the issue, I think the key problems are the inherent deflationary nature of the currency and the utter impossibility of a central bank which could intervene in a crisis.

On the other hand, there's been a lot of signs lately that the mainstream finance world has bitcoin in its sights and is keen to assimilate it for its own purposes (just look at the Times piece up on top of the page). If they can do that it may solve these problems and become a viable currency. Becoming viable through being absorbed into the establishment would be about the worst possible outcome for most of Bitcoin's current evangelists, but hey, it worked okay for Christianity.

That's the flex point, to me --- can bitcoin be mainstreamed without draining the enthusiasm for bitcoin from the fever swamps and killing it? Maybe no, maybe yes. It will be interesting to see.
posted by Diablevert at 8:50 PM on February 25 [3 favorites]


Owning BTC or Dogecoin or whatever is more or less exactly the same as owning gold: it has a fluctuating value, is negotiable virtually nowhere, and is a total bitch to turn into currency that has a relatively stable value and is negotiable virtually everywhere.

Gold's negotiable everywhere. Makes for a heavy suitcase, but other than that it's an extremely liquid instrument. Hell, in times of crisis it's often the only liquid instrument.
posted by Diablevert at 8:52 PM on February 25


In times of crisis, by the same token, BTC is likely to be as illiquid as it gets.

But, no, gold is not negotiable everywhere. Please go try and buy your weekly groceries with a chunk of gold. Pay your taxes or your mortgage or your internet bill, pick up a pack of cigarettes, stay in a hotel... etc etc etc. People have this bizarre notion that gold is liquid, when it simply is not in any meaningful sense for day to day life.

The only way BTC ever becomes even remotely useful or widespread is if it has a stable value compared to other currencies. That seems, oh let's just say unlikely.
posted by feckless fecal fear mongering at 8:56 PM on February 25 [12 favorites]


There is absolutely NO reason that a bank couldn't do fractional reserve banking with bitcoin.

Hmm. While they could in a technical sense, I think there is at least one good reason not to. Without a lender of last resort, the risk to a bank that operates on BTC (I assume this means they would hold the wallet file of the depositor, forgive me I don't know much about the technical side of this) of a bank run is greatly increased because a lack of depositor protections means depositors are more likely to make a run on the bank (presumably, withdraw their wallet?) at the first sign of trouble.

Although, such problems didn't prevent the rise of banks in the first place.
posted by kithrater at 8:59 PM on February 25


If you could rapidly convert BTC to $USD and vice versa it would be useful without being stable. And by rapidly say less than a few minutes. But you can't and that seems to be the real problem.
posted by Mitheral at 9:02 PM on February 25 [2 favorites]


Exactly. I mean there's non-negligible risk here; if transactions take ten minutes to settle, the value can fluctuate wildly in that time period. If that goes against you, you're fucked.

Using BTC to pay for something is like trying to use volatile stocks to pay for something. It's simply not viable long term or for anything that most people use money for.
posted by feckless fecal fear mongering at 9:06 PM on February 25 [2 favorites]


Exactly. I mean there's non-negligible risk here; if transactions take ten minutes to settle, the value can fluctuate wildly in that time period. If that goes against you, you're fucked.

That's why there are services like coinbase who act as middleman and guarantee the price. It takes a few days to settle, but you get the exact dollar amount, not the bitcoin amount in the end.

In any case, once the volatility settles down (ie, once the market gets bigger and more legitimate), that won't be an issue.
posted by empath at 9:14 PM on February 25 [2 favorites]


That's why there are services like coinbase who act as middleman and guarantee the price. It takes a few days to settle, but you get the exact dollar amount, not the bitcoin amount in the end.

IU think you've missed my point or I was unclear about it.

I put in an order to buy 1 BTC at $100. In the ten minutes between making the transaction and having it settle, value of BTC has dropped to $80. I now have 1 BTC, and have lost 1/5 of its value--the only way I come out okay is to somehow make another transaction selling my 1 BTC for >$100.

How, exactly, does the market grow bigger? There's a finite number of coins that can be mined. How does it grow more legitimate? The entirety of BTC is built on anonymity and no regulation.

You can't just handwave away the very real and concrete issues that will prevent BTC (and its imitators) from ever being a real currency that people can use just as easily and in as many places as fiat money. You need to show a roadmap from here to there. Nothing I have ever seen indicates that BTC can ever be viable as an actual currency.

It's stock in a company that doesn't even exist, it's illiquid and for a great number of reasons can never be as liquid as cash.
posted by feckless fecal fear mongering at 9:30 PM on February 25 [1 favorite]


Exactly. I mean there's non-negligible risk here; if transactions take ten minutes to settle, the value can fluctuate wildly in that time period. If that goes against you, you're fucked.

Don't see how, really. The value only changes relative to other currencies. If I agree to hand over 1 BTC for a burger at noon, when 1 BTC=$10, and by quarter past twelve when the transaction closes 1 BTC=$25, then I've overpaid for my burger, probably. But I haven't lost anything I wasn't willing to give up, and I had lunch. If I'm eating lunch in Cape Town when the rand crashes against the yen, does it affect the price of my sandwich on the bill? Eventually stuff like that impacts the economy of both counties, sometimes profoundly, sometimes not. But not in a ten minute window.

There's obvious shenanigans that could occur with that time gap, sure. But I think you're conflating two problems --- the volatility makes bitcoin a shit store of value, which is a big deal, at the same time as the deflation curtails the velocity of the money supply, which is also a big deal, but that doesn't prevent it from operating as a medium of exchange.

It can't be a successful currency unless it's both, of course. But it seems silly to huff and puff about "it will never" if all your arguments break down to is "because it doesn't right now."
posted by Diablevert at 9:31 PM on February 25 [1 favorite]


How, exactly, does the market grow bigger? There's a finite number of coins that can be mined. How does it grow more legitimate? The entirety of BTC is built on anonymity and no regulation.

Yeah but you can split those coins into smaller and smaller amounts, and you can increase the amount of transactions per second you can do. And BTC isn't entirely anonymous -- it's also not impossible to regulate.

Paper money is anonymous and has no regulation built into it. All of the money tracking and regulation was built on top of it.
posted by empath at 9:45 PM on February 25 [3 favorites]


But it seems silly to huff and puff about "it will never" if all your arguments break down to is "because it doesn't right now."

It also seems uncharitable to characterize perfectly rational opinions supported by all current evidence as 'huffing and puffing,' so I'm out.
posted by feckless fecal fear mongering at 9:56 PM on February 25


Because labour isn't paid in bit coins and even if they were the vast majority of day to day transactions can't be transacted in bit coins. If you are getting paid two BTC a week and your rent is $500 250% volatility is a serious budgeting problem. Anyone who has ever been paid in once currency while living in another currency (EG: Living in Canada and being paid in US funds) can tell you what a hassle it is. It is a real chicken and egg problem that fiat currencies get around by having the government mandate acceptance for at a minimum government AR/AP.

Anyone know of private scripts that have had long term wide spread success? Canadian Tire money is one I can think of but it has a firm fixed exchange rate backed by Canadian Tire. Do Casino Chips expire?

What the heck is the legal process of being paid in such a volitle commodity in regards to stuff like minimum wage laws and income taxes anyways?
posted by Mitheral at 9:58 PM on February 25 [1 favorite]


How, exactly, does the market grow bigger? There's a finite number of coins that can be mined.

The ones which exist simply become more valuable as demand for them rises. The zeros on the Coke machine run to the right; you grandpa will talk of spending a whole bit-nickle for a soda while your kids plunk in a bit-nano or something. 0.0000000005 instead of 0.05.

That's the theory, anyway. There's huge problems with it, but they're mostly to do with incentivizing hoarding and crippling velocity.

How does it grow more legitimate? The entirety of BTC is built on anonymity and no regulation.

Well, the TL;DR is "more and more people let you pay for things with them." More specifically, one of the very first links in this very post talks about how a number of financiers who specialize in semi-OTC trading in illiquid items --- pre-IPO Facebook shares, for example --- had planned to announce the launch of a new Bitcoin exchange aimed at large institutional investors, e.g., Wall St. Banks. Hedge funds and venture capitalists are already interested in the space, and government regulators at various levels are already mulling aloud about how to bring bitcoin into the fold, while federal prosecutors are already prosecuting the operators of bitcoin exchanges under existing finance laws. That's how, basically. The Big Boys decide they would like to play with this toy, elbow the nerds aside and start making real money. And in 18 months the more venturesome financial planners are convincing people to use them to help diversify their portfolios, and in two years they're taxed and tamed and Amazon starts offering you a slight discount for paying with them because it's a useful tactic in their lobbying against state sales taxes and on and on and on.

That's just one scenario of course, only partially factual as of yet. And stuff like the Mt. Gox crash could certainly derail it. But interest in Bitcoin has spread far beyond neck beards and tech bloggers in the past six months. The straight world has taken notice and is already commencing assimilation.
posted by Diablevert at 9:59 PM on February 25 [5 favorites]


That would be fine and dandy if Bitcoin could scale, which it can't.

It's slightly out of date since the demise of Mt Gox, but everything you ever wanted to know about bitcoin but were afraid to ask.
posted by fifteen schnitzengruben is my limit at 10:12 PM on February 25 [7 favorites]


Because labour isn't paid in bit coins and even if they were the vast majority of day to day transactions can't be transacted in bit coins.

"No one will ever use online banking because most people don't have internet and don't know how to use a computer."

I don't think anyone is going to get paid in bitcoins any time soon(well aside from a few well motivated nerds), but that isn't an essential requirement for bitcoins to be successful.

It could be useful as:

A) A store of value, like gold.
B) A way to remit money, like Western Union.
C) An online payment system, like paypal.
D) A way to buy drugs or launder money, like $100 bills.

Any of those use cases would be enough to give bitcoins some value. It doesn't need to be useful for every thing that every currency is used for.
posted by empath at 10:33 PM on February 25 [4 favorites]


I suggest we divert all of the NSA's spying spy computer spy centers to bitcoin mining for a few days to plug holes int he national deficit.
posted by kaibutsu at 10:37 PM on February 25 [1 favorite]


NSA stuff is prob not very good at BTC.
posted by save alive nothing that breatheth at 10:56 PM on February 25


I think most people will end up storing their cryptocurrency in banks

Literally I'm putting a nicely laminated paper wallet in the old safety deposit box tomorrow. No FDIC yet...
posted by save alive nothing that breatheth at 11:17 PM on February 25


BTW, it's been some time now: IMG TAG PLS KTHX

What is with Bitcoiners and thinking that a cryptocurrency going up 5% in value in a day is a GOOD thing?
posted by Pope Guilty at 11:44 PM on February 25 [5 favorites]


Favorite theory -- Mt Gox is deliberately trying to crush the value of BTC, because their primarily liability is in BTC. If BTC drops $100 in USD, the cost of them drops $75 million. Get BTC to $1 USD, and MtGox could repurchase the missing BTC for less than a million.

Can someone, and like show yr work here, explain why "they're just going to shut down, ignore everyone, and fuck off" isn't something they could be doing here?

Like what laws would they have broken unless they're holding USD? Who would take anyone seriously going "they stole my internet points!"

It's not like a bunch of reddit neckbeards are going to order drone strikes on the mt.gox guys, who as far as i remember are white dudes who probably aren't even japanese citizens and could just jet to somewhere else and fuck off.

Has anyone even been prosecuted for cashing out stolen bitcoins? Wouldn't you basically just need an exchange that would sign off on giving you cash?

And i know the USD exchanges have tons of rules, but why not withdraw the money in some other international currency especially if you aren't coming back to the US anyways?

I'm just failing to think of why just jacking a ton of the money and fucking off doesn't have a huge pile of cash in the benefits column, and very little in the threats/negatives column other than pissing off some impotent nerds.

Like, i know this sort of thought process will piss off a bunch of ardent buttcoin defenders, but seriously other than "they couldn't get away with it" what's a practical explanation as to why they should even care?
posted by emptythought at 12:01 AM on February 26 [3 favorites]


I've had multi thousands of fraud on my account twice, once credit card, once debit card. In both cases I lost nothing beyond a hassle. I had a bank fail during the financial crisis, and with the exception of not being able to get my money for a day, lost nothing. With cryptocurrencies in both cases I would have lost everything. That security costs, and it's part of why I prefer having my money in a bank and having my payments be done in a system where fraud can be backed out.

Now I don't disagree that there should be a better way to move cash across the internet. PayPal sucks, credit cards are more focused on the credit pat which makes them way more complicated and expensive, but how can you look at something like bitcoin and honestly think yes, this is a nice simple system that I want to use for money transfer? It's horrible for that purpose. Just because the current options suck doesn't change that fact.
posted by aspo at 12:06 AM on February 26 [6 favorites]


Maybe they are scared the internet libertarians would hire hitmen to kill them.
Though from past examples they would have about a 50 percent chance that the "hitman" is actually their target, or the other 50 percent chance is that they were hiring an under cover FBI agent.
posted by Iax at 12:07 AM on February 26 [1 favorite]


Like what laws would they have broken unless they're holding USD? Who would take anyone seriously going "they stole my internet points!

Well, there's lots of laws that say, "if something has monetary value, and someone steals it, it's a misdemeanor/felony/what-have-you." And I'd strongly suspect a court would think Bitcoins have monetary value, because of all of the previous instances where people have exchanged them for currency.

Heck, people get prosecuted for activities in MMORPGs.

And there's also a bunch of laws involving banking and laws involving remotely misusing other folks' computers.

It's not like a bunch of reddit neckbeards are going to order drone strikes on the mt.gox guys, who as far as i remember are white dudes who probably aren't even japanese citizens and could just jet to somewhere else and fuck off.

I imagine Japanese prosecutors don't mind going after non-japanese citizens even if they've left the country. Also, some of this stuff happened in other international jurisdictions as well, thus the US subpoena mentioned above.
posted by sebastienbailard at 12:22 AM on February 26 [1 favorite]


e.g.
In effect from february 3, 2000

Unauthorized Computer Access Law

Law No. 128 of 1999

Husei access kinski hou

(Prohibition of acts of unauthorized computer access)
...
(2) An act of making available a restricted specific use by making in operation a specific computer having that access control function through inputting into it, via telecommunication line, any information (excluding an identification code) or command that can evade the restrictions placed by that access control function on that specific use (to exclude such acts conducted by the access administrator who has added the access control function concerned, or conducted with the approval of the access administrator concerned; the same shall apply in the following item);
...


Although they might regard spoofing a Bitcoin transaction ID as "illegal production of an electromagnetic record", aka computer fraud.

Looking at their penal code:

Chapter XXXVI Crimes of Theft and Robbery
(窃盗)
(Theft)
第二百三十五条 他人の財物を窃取した者は、窃盗の罪とし、十年以下の懲役又は五十万円以下の罰金に処する。
Article 235 A person who steals the property of another commits the crime of theft and shall be punished by imprisonment with work for not more than 10 years or a fine of not more than 500,000 yen.

(Assuming that this is the right chunk of law, that it is applicable, and that a court would regard the stolen Bitcoins as "property".)

Japan reformed its cybercrime laws a couple years ago so they're mostly similar to that of some other countries, I think.

..
The passing of this legislation allows Japan to join the Convention on Cybercrime, an international treaty allowing co-operation on criminal matters committed online, which has been in effect since 2004 with 31 other countries participating so far.

This is just from a bit of googling and skimming rather than careful reading, mind. There's probably laws about wire fraud and bank transfer fraud that might be applicable.
posted by sebastienbailard at 1:34 AM on February 26


Ok, so it's illegal on paper. Has anyone been prosecuted for it? There's been several good examples of it, IE the silk road 2 BS zone.

People have ripped off TONS of money with services like paypal and converted it into real cash and walked away

It seems like all they'd need to do is provide some shaky proof it was "stolen" by "hackers" and they don't have it, when in reality it's just associated with a few wallets they have squirreled away on an FTP somewhere else in another country.

It seems like all that they'd need to prove to defend themselves is that they don't know who took it and it can't be determined from the info they have, not even that it wasn't taken.

And seeing as the way the bitcoin system works, all you can prove is that something went from wallet A to wallet B, it's not like each wallet says "THIS BELONGS TO USER XYZ LOL" on it.

"the hackers did this and this, double dipped these transactions, and now our ledgers are fucked and we don't know what the hell happened"

Meanwhile, they've taken a bunch of the extras from double transactions that weren't from actual customers, but the logs are so fucked and inconsistent that it's just a total mess. Entire withdrawal transactions were by someone in on it so the double dip goes back to them.

This is just something i randomly bullshitted up. If these guys are smart at all they could likely invent a bunch of other ways.

And it would all look completely normal unless a SERIOUS investigation took place, and even then, how would they prove who owned the wallets?

Maybe i'm some crazy conspiracy theorist, but this just sounds way too plausible to me.

And to be totally clear here, i'm not attacking you or anything. You thoroughly skewered the "is this even illegal" side of this, i'm not engaging on that. This is coming from a place of "Ok, so it's illegal, how likely are they to actually be prosecuted and/or have a decent case built against them that isn't totally shaky and easy for them to shrug off.
posted by emptythought at 2:07 AM on February 26 [3 favorites]


Then what does that tell you about what they should be worth? Let's say that they end up being 10% of the GDP of the US. Each bitcoin would be worth $70,000. And in practice probably significantly more because a big chunk of bitcoins are missing.
Can't possibly see any problems with this.
Also, Bitcoins are becoming less volatile because Wall Street is getting involved?
posted by fullerine at 2:41 AM on February 26


Can't possibly see any problems with this.

How many dollar bills have gone out of circulation? People lose bitcoins, it happens.
posted by empath at 3:41 AM on February 26


How many dollar bills have gone out of circulation? People lose bitcoins, it happens.

Dollar bills going out of circulation doesn't permanently decrease the money supply.
posted by Pope Guilty at 4:27 AM on February 26 [6 favorites]


Oh and also

"No one will ever use online banking because most people don't have internet and don't know how to use a computer."

Are you serious? Like, how do you think this is a defensible statement.

1. Online banking was still backed up by a real, insured bank. There were(legitimate!) security concerns when it was a 1.0 technology, but you knew for a fact that if you got boned over there was a bank and banking regulations to back you up.

2. You were doing it in standard meatspace dollars, even if they were represented by bits on a screen.

3. A whole bunch of other things I know you know. This is like making an analogy comparing an early 2000s smartphone to a computer or something. But worse.

I get that analogy wasn't the basis of the thesis of your post, but I think it also fails and will Continue to fail for quite a while at anything you listed.

Its OK for A if you invested early on and are playing the long game, shitty for b and c for exactly situations like this MTGOX shitstorm and the fact that who would put money in to paypal knowing you might get a different amount out? And if not that, Who would want to run a serious US based exchange+payment processing site like WU or paypal knowing their profits would be getting fucked with by the market constantly? What VC would back that? How could they sell it to anyone on the business side with that risk?

The entire model of "we guarantee this price to you" is unsustainable until the market has SERIOUSLY stabilized to the point that guarantee seems like a weird thing to say.

As for option D, it seems ok for that except for how traceable transactions can be. Tumbling would work if you weren't trying to flush too much through, and if there were enough regular transactions going through that tumbler. The reasons that B and C aren't great also come in to play here. I guess it would be acceptable as a "cost of doing business" but market fluctuations could make it shit for this too. Think about it, you're paying a fee to go local currency to BTC, to tumble, and to go BTC to exit currency. I get that money laundering is usually not cheap, but taking a random fluctuation in the middle seems like something not many people would care for, especially when you have fixed business costs you're trying to plan ahead for and likely outstanding business debt on a timetable of repayment.

In the end, the fervor with which the end of this thread turned in to some weird bitcoin evangelism soapbox raised my eyebrow. It reminds me of how much people freaked out and defended android in the G1/1.0-1.5 days.

No one is saying bitcoin is shit or is completely useless, but we're in the early days here where it has some massive flaws and issues, and just isn't ready for the prime time. The fact that some dude bought a Porsche with it doesn't make it any more ready for my mom to use than the fact you could do that with WoW gold or something. People are making fun of you because you're insisting it's ready to do anything you can imagine. Which is just well, euphoric.
posted by emptythought at 4:28 AM on February 26


LOL, apparently the US Attorney in NY thinks there's something worth looking into at Mt. Gox.

Subpoena!

What I said in the last BTC thread still holds. I have always thought the end game was going to be governments squashing BTC like a bug.
posted by spitbull at 4:33 AM on February 26 [1 favorite]


People are making fun of you because you're insisting it's ready to do anything you can imagine

I'm doing what now? I think it's basically in the 'experimental' stage for all of those things.
posted by empath at 4:35 AM on February 26


And if not that, Who would want to run a serious US based exchange+payment processing site like WU or paypal knowing their profits would be getting fucked with by the market constantly? What VC would back that? How could they sell it to anyone on the business side with that risk?

A bunch of VC people are backing Coinbase.
posted by empath at 4:37 AM on February 26 [2 favorites]


But I think you're conflating two problems --- the volatility makes bitcoin a shit store of value, which is a big deal, at the same time as the deflation curtails the velocity of the money supply, which is also a big deal, but that doesn't prevent it from operating as a medium of exchange.

The volatility and illiquidity are exactly what make Bitcoin unusable as a currency. I can't go around paying for my lunch with my house (or, more realistically, a few housatoshis) for exactly the same reason: I can't be sure what the price will be or when (or whether) the transaction will go through. None of those things are true of actual currencies.
posted by one more dead town's last parade at 4:49 AM on February 26


The volatility and illiquidity are exactly what make Bitcoin unusable as a currency

Neither of those things are an inherent property of the protocol. It's just the immaturity of the market and the lack of legal clarity as to bitcoins status. Once you can just go to the bank and buy and sell bitcoins as easily as you can use an atm, the price will settle down.

In fact, it'll probably be sooner than that -- once the index funds come online.
posted by empath at 4:56 AM on February 26


What is with Bitcoiners and thinking that a cryptocurrency going up 5% in value in a day is a GOOD thing?

On the day that was supposed to be its eternal downfall, I'll take it...
posted by save alive nothing that breatheth at 4:56 AM on February 26


Did they shut everything down before of after the subpoena?
posted by humanfont at 4:57 AM on February 26


On the day that was supposed to be its eternal downfall, I'll take it...

Serious talk: do you not understand why deflation and volatility are terrible things for a currency?
posted by Pope Guilty at 4:58 AM on February 26 [1 favorite]


Neither of those things are an inherent property of the protocol.
I'd agree with that, but some properties of bitcoin aren't properties of the protocol - such as the enormous quantity apparently held by a small number of players, who could cause massive swings in bitcoin value even after the market has apparently behaved maturely for some time.
posted by edd at 4:59 AM on February 26 [1 favorite]


I think the theory that
The ones which exist simply become more valuable as demand for them rises.
is one of those things that gets overlooked a lot. A lot of Bitcoin evangelists are upset that something which was defined ab initio as a guaranteed good investment and a license to print money somehow isn't quite as advertised; they're wondering why their instafortune hasn't arrived yet.

So it's basically House-as-ATM 2.0.
posted by one more dead town's last parade at 5:02 AM on February 26 [1 favorite]


Neither of those things are an inherent property of the protocol. It's just the immaturity of the market and the lack of legal clarity as to bitcoins status. Once you can just go to the bank and buy and sell bitcoins as easily as you can use an atm, the price will settle down.

In fact, it'll probably be sooner than that -- once the index funds come online.


You could say exactly the same thing about gold, except for the fact that the funds have been online for half a century, and gold is still too volatile and illiquid to use as a currency.
posted by one more dead town's last parade at 5:13 AM on February 26 [1 favorite]


Serious talk: do you not understand why deflation and volatility are terrible things for a currency?

Yes, that is one reason I think BTC will be supplanted by other cryptos, the deflation. I wouldn't call it a failure even then though - was Napster a failure?

Merely, specifically yesterday, when you guys were vulturing around BTC dieing with Gox, it maintained value.
posted by save alive nothing that breatheth at 5:23 AM on February 26 [1 favorite]


I'd love it if BitCoin died out making room for better designed successors, like DogeCoin, ZeroCoin, etc.
posted by jeffburdges at 5:28 AM on February 26


LOL, apparently the US Attorney in NY thinks there's something worth looking into at Mt. Gox.

How much weight does a U.S. subpoena actually carry in Japan?
posted by one more dead town's last parade at 5:34 AM on February 26


I wouldn't call it a failure even then though - was Napster a failure?

As a business model? Most definitely. Everything that came (iTunes, Amazon MP3, etc) after was merely an extension of existing industry and regulatory structures.

Merely, specifically yesterday, when you guys were vulturing around BTC dieing with Gox, it maintained value.

The irony of mocking people for not seeing the long-term big picture by focusing on an immediate argument made by only a few critics is delicious.
posted by zombieflanders at 5:35 AM on February 26 [1 favorite]


I wouldn't call it a failure even then though - was Napster a failure?

As a business model? Most definitely.


But does anyone say "Wow Napster what a dumb idea that was that went nowhere."
posted by save alive nothing that breatheth at 5:36 AM on February 26


I have always thought the end game was going to be governments squashing BTC like a bug.

If that does happen, the question is will that happen because the government is quaking in their boots about the threat to their power or because BTC is being used as a way to defraud citizens of that government?
posted by yerfatma at 5:40 AM on February 26


But does anyone say "Wow Napster what a dumb idea that was that went nowhere."

If your goal is to convince us of the legitimacy of your enterprise, comparing it to Napster is unwise.
posted by Pope Guilty at 5:43 AM on February 26 [5 favorites]


In fact, it'll probably be sooner than that -- once the index funds come online.

What on earth do index funds have to do with Bitcoin?
posted by indubitable at 5:46 AM on February 26


There are index funds for bitcoin in development. So you don't need to use gox, etc, to invest. You just click a button to add it to your fidelity account or whatever.
posted by empath at 5:50 AM on February 26


One of the most interesting things about Bitcoiners is their simultaneous contempt for the straight economy and desperation for its approval.
posted by Pope Guilty at 5:52 AM on February 26 [13 favorites]


PG, do you have to be insulting to people directly participating in the thread?
posted by empath at 5:56 AM on February 26 [1 favorite]


Are you, personally, involved in setting up a Bitcoin index fund, of all the ridiculous ideas?
posted by Pope Guilty at 5:57 AM on February 26 [1 favorite]


[Don't make it personal, guys. Thanks.]
posted by goodnewsfortheinsane at 5:58 AM on February 26 [1 favorite]


There are index funds for bitcoin in development. So you don't need to use gox, etc, to invest. You just click a button to add it to your fidelity account or whatever.

So I can pay for my lunch with an ETF?
posted by one more dead town's last parade at 6:02 AM on February 26 [1 favorite]


No, but you could *short* a BTC index fund. That might interest me.
posted by spitbull at 6:04 AM on February 26 [2 favorites]


Is money also cultural construct, as much as a creation of bankers and governments? Does that explain the strong feelings and reactions to Bitcoins.
posted by humanfont at 6:04 AM on February 26 [1 favorite]


Merely, specifically yesterday, when you guys were vulturing around BTC dieing with Gox, it maintained value.

Did bitcoins "maintain value" in the sense that they can actually be exchanged for other currencies at the advertised rates? Or just in the sense that some websites run by people with an interest in promoting the bitcoin system published some numbers?
posted by A Thousand Baited Hooks at 6:07 AM on February 26 [1 favorite]


Of course money is a cultural construct. But all such constructs must appear as natural and not conventional or arbitrary to those who use them. That is why gold bugs cannot entertain the idea that gold has no intrinsic value beyond being pretty and a good conductor, for example. Scarcity as such is the only necessary condition for believers to accept its "intrinsic" worth. Same idea animates BTC.

Many things that are scarcer than gold have no value at all (rare sea creatures, for example, that you can't eat). Many things far more abundant than gold have much more intrinsic worth for human needs (for example, green bell peppers).

The semiotician and linguist Greimas once corrected Saussure's famous but flawed account of the "arbitrariness" of the linguistic sign. Greimas said yes, linguistic signs are arbitrary and conventional (other than the usual few naturalistic exceptions like onomatopoeia and cries, etc.). But for language to work as a rough and ready model of social reality, the sign needs to appear *completely* natural and motivated and non-arbitrary to a speaker/listener. The more we believe something is natural and motivated, the less we are tempted to doubt its value or significance.
posted by spitbull at 6:10 AM on February 26 [8 favorites]


It actually wasn't MTG cards. It was MTG Online cards. Virtual, nonexistent cards. Not even, like, little bits of cardboard. Just worthless bits. The comparison is trivial and not worth making.

Apparently they never even got around to selling virtual Magic: the Gathering cards in the first place.
posted by Evilspork at 6:26 AM on February 26


There are index funds for bitcoin in development. So you don't need to use gox, etc, to invest. You just click a button to add it to your fidelity account or whatever.

Now see, that's there the existing financial institutions are a screw job: whether you go long or short, whether you're right or wrong, they're still collecting a fee. That is a case of "investing" being the same as Vegas: just set the line and let the punters punt.
posted by yerfatma at 7:09 AM on February 26


whether you go long or short, whether you're right or wrong, they're still collecting a fee.

Randolph Duke: Good, William! Now, some of our clients are speculating that the price of gold will rise in the future. And we have other clients who are speculating that the price of gold will fall. They place their orders with us, and we buy or sell their gold for them.

Mortimer Duke: Tell him the good part.

Randolph Duke: The good part, William, is that, no matter whether our clients make money or lose money, Duke & Duke get the commissions.

Mortimer Duke: Well? What do you think, Valentine?

Billy Ray: Sounds to me like you guys a couple of bookies.

Randolph Duke: [chuckling, patting Billy Ray on the back] I told you he'd understand.
posted by localroger at 7:18 AM on February 26 [7 favorites]


Did bitcoins "maintain value" in the sense that they can actually be exchanged for other currencies at the advertised rates?

The last link in the fpp lets you watch in real time as thousands of dollars per minute are traded for bitcoins on a few different exchanges.
posted by sfenders at 7:28 AM on February 26


Some of those exchanges even let you then withdraw your money!
posted by Nelson at 7:35 AM on February 26 [8 favorites]


The last link in the fpp lets you watch in real time as thousands of dollars per minute are traded for bitcoins on a few different exchanges.

So right now, if I had a bitcoin, I could exchange it for US dollars at whatever that going rate is? (Serious question; I don't quite understand what's possible and what's not, anymore.)
posted by inigo2 at 7:39 AM on February 26 [1 favorite]


If your goal is to convince us of the legitimacy of your enterprise, comparing it to Napster is unwise.

At least he didn't pick KaZaA.
posted by Blazecock Pileon at 7:57 AM on February 26 [4 favorites]


So right now, if I had a bitcoin, I could exchange it for US dollars at whatever that going rate is? (Serious question; I don't quite understand what's possible and what's not, anymore.)

If you had a Bitcoin and you had an account with an appropriate provider, yes.

I have an account at Vault of Satoshi; from the time I deposit Bitcoin into their account, it's supposed to take about an hour for it to show up and be confirmed (and you can't place an order until then).

On their pay-per-trade plan, VoS charges a 1% trade fee if your 30-day trading volume is under $5,000 USD. They also have a $99 per month "unlimited trade" plan. Getting your USD out involves them cutting you a check. They also do wire transfers, but there's an additional fee there.

I have a VoS account because I can directly trade Dogecoin and Litecoin with USD there. Haven't tried it yet, but it made sense to keep that option open.
posted by QuantumMeruit at 8:15 AM on February 26 [1 favorite]


Gentlemen, I don't want to overstate anything, but we could be looking at the next LimeWire.
posted by Holy Zarquon's Singing Fish at 8:15 AM on February 26 [10 favorites]


If your goal is to convince us of the legitimacy of your enterprise, comparing it to Napster is unwise.

Why? I have 0 stake in bitcoin and have 0 bitcoins. I have about 25 doge ($0.03!).

Bitcoin and cryptocurrencies right now are the Newton or Palm Pilot of technology. The comparison to Napster is similar.

Listen - it's not about the legitimacy of the enterprise. In the same way that Napster heralded the presence of p2p filesharing, modified legal/mental approaches to intellectual property, the iTunes music store, the 'cloud' and thus Google Docs / Dropbox, I feel like Bitcoin is similar. Napster failed, sure, and spawned a million similar music sharing services.

I won't disagree with all the critiques of Bitcoin as it is currently. But none of this all is a blow against cryptocurrency itself, the same way that the fall of Napster was not a blow to p2p filesharing, or the concept of a distributed, disseminated archive of files.
posted by suedehead at 8:30 AM on February 26 [5 favorites]


modified legal/mental approaches to intellectual property

What does this mean?
posted by JohnLewis at 8:49 AM on February 26


What does this mean?

Anti-piracy laws are hard to enforce.
posted by GenjiandProust at 8:56 AM on February 26 [1 favorite]


The comparison to Napster is perfectly apt. Bitcoin will lead to better things - or at least, more legitimized things - but Bitcoin itself is not the answer. Yes, Mt. Gox was not Bitcoin itself, but the problems at Mt. Gox are indeed representative of the problems surrounding Bitcoin itself - not just the BTC tech itself, but also the ideology and culture surrounding it.

The big thing is that a failure with a Napster-type system is necessarily going to be much smaller than a failure with a cryptocurrency. When Napster "failed", you wound up with mislabeled mp3s, dropped transfers, nastygrams from university IPs, and lawsuits from the RIAA.

When Bitcoin "fails", on the other hand, you can literally lose thousands of USD worth of real money.
posted by Sticherbeast at 8:59 AM on February 26 [3 favorites]


I think part of the weirdness of the dynamic in discussions about bitcoin et al is that, yes, absolutely, there's the "this is just an interesting bit of nascent tech stuff, it'll be interesting to see what happens with it" angle (which is where I am with it mostly), but that doesn't stay partitioned from the evangelism/boosterism stuff that's driving a lot of the altcoin visibility.

So on the one hand, sure, it's not about the legitimacy of the enterprise. On the other hand, a lot of people really, really seem to want to underscore or predict the legitimacy of the enterprise, seem to want to bank on the inevitable triumph of bitcoin as something to borrow credibility against to justify their current zeal. That there's in many (obviously not all) cases some degree of actual traditional cash money invested in the situation (and a speculative stake in the idea that that investment will pay dividends) makes things weirder still, since people tend to argue the case that they're not bad investors regardless of the details on the ground.

And then of course folks respond to that weirdness, and we end up with discussions that are more about the argument for or against the boosterism/zealotry or symptoms of same than about the more removed general ideas and implications of the thing. Which is not super exciting stuff, but is in some ways inevitable when there's just not much happening in the immediate sense with the thing. "Altcoins will eventually either catch on a lot more or not" isn't something that there's much to say about; they will, or they won't, and we'll know by waiting and seeing, not by declaring it to be so or putting money on the table.
posted by cortex at 9:01 AM on February 26 [4 favorites]


When Bitcoin "fails", on the other hand, you can literally lose thousands of USD worth of real money.

I feel like this is necessarily a risk of any cryptocurrency, though. If it's possible to encrypt your wallet in a way that isn't vulnerable to a backdoor or brute force before the heat death of the universe, then if you can't remember the password, are incapacitated, or die, that value just disappears.
posted by one more dead town's last parade at 9:12 AM on February 26 [1 favorite]


"Altcoins will eventually either catch on a lot more or not" isn't something that there's much to say about; they will, or they won't, and we'll know by waiting and seeing, not by declaring it to be so or putting money on the table.

I agree with almost everything you say, except for this last part.

Altcoins/cryptos will catch on precisely because people will be declaring it so and because people will be putting money on the table.

In a similar way, p2p caught on because people were using it; I remember nothing more depressing than opening Kazaa/limewire/gnutella/etc and seeing nothing in response to your query. If everyone was waiting and seeing, then there would be no usage, no activity, and p2p would have never worked out, etc. The early adopters and the v0.1 betas are all necessary and the potential birthing pangs of change and something entirely new.

Which is why I think dogecoin is pretty amazing/interesting to see; the barrier to entry is super low, people give each other dogecoin all the time for nothing, even making websites (dogecoin 'faucets') to automate giving away dogecoin, etc. It seems genuinely warm and open and fun, like reddit gold, which is another really interesting phenomenon (although not a currency at all).
posted by suedehead at 9:13 AM on February 26 [4 favorites]


Canadian Realtor Accepts Bitcoin Deposits For Residential Properties. Not the mortgage, of course. Just the down payment.

Deposits aren't down payments.
posted by MisantropicPainforest at 9:16 AM on February 26 [1 favorite]


Cortex, it seems you've described a variant of the old "Internet Fighting" trope from SMBC...

I think what fuels the fire, though, is the reaction of some of the proponents/evangelists to the "hurf durf magic Internet money" stuff. Combine that with journalism that misstates things, and there's lots of room for misunderstanding and hyperbole.

Case in point, the LA Times is running an article about the Mt.Gox closure with the headline, "Bitcoin virtual currency is on verge of collapse". That assertion is belied by the fact that the BTC/USD exchange rate has rebounded -- on the other exchanges -- to the pre-gox announcement price.

Is that kind of volatility bad? Sure, but that's different than "verge of collapse".
posted by QuantumMeruit at 9:17 AM on February 26 [4 favorites]


That assertion is belied by the fact that the BTC/USD exchange rate has rebounded -- on the other exchanges -- to the pre-gox announcement price.

Zoom out a few months and the picture isn't so rosy. I think that's the kind of Ponziesque hucksterism what be botherin reg'lar folk.
posted by Blazecock Pileon at 9:22 AM on February 26 [1 favorite]


Exactly. I'm relatively certain that Revenue Canada will only accept tax payments in Canadian funds.

Need to check this is legit but I am now hearing that the Canadian Mint is going to issue crypto backed by Canada.
posted by save alive nothing that breatheth at 9:22 AM on February 26


AKA "Canadian funds."
posted by JohnLewis at 9:23 AM on February 26 [1 favorite]


Apparently somewhat old news. I assume it will eventually work to pay taxes, as it's literally gov't coin.
posted by save alive nothing that breatheth at 9:26 AM on February 26 [1 favorite]


Why does it upset everyone so much that I am considering sponsoring a racecar for crypto. You can get a 4" sq. for like 3kDOGE! Such equality!
posted by save alive nothing that breatheth at 9:28 AM on February 26 [1 favorite]


Altcoins/cryptos will catch on precisely because people will be declaring it so and because people will be putting money on the table.

Poor choice of words on my part. I agree that it's more or less tautological that the potential success of a new currency depends on people buying in large numbers into that currency. No argument there.

My point is more that people being loud about their own very-small-scale contributions to that pool of use is not going to make it happen; talking incessantly about one's investment in Bitcoin or Dogecoin or so on is not the force multiplier that it feels like a lot of zealots believe it to be. Broad, systemic interest and investment in the thing will drive its health as a mature tech/currency; evangelistic "yuh huh!" stuff will not, it'll just turn a lot of otherwise neutral people into annoyed skeptics.

In a similar way, p2p caught on because people were using it

But people were using it because there was a really, really clear incentive to doing so: suddenly you could get your hands on free music quickly and easily over the internet. Sucking down mp3s didn't require ideological boosterism to succeed; no one needed convincing that being able to snag some music would pay dividends. Ethics of filesharing entirely aside, there was a profound built-in utility mandate to p2p file-sharing; fuckin' everybody likes listening to music and watching movies and so on, and this was actively enabling that in a way that hadn't been available previously.

There is so far no clear utility mandate for cryptocurrency for a broad swath of internet users. Altcoin enthusiasts make some arguments for the existence of utility-in-principle, and that's fine, but that's different from most folks actually giving a damn, actually having a reason to want to bother with it.
posted by cortex at 9:29 AM on February 26 [6 favorites]


Blazecock Pileon, sure. The long-term volatility is scary. But the LA Times report is citing the Mt.Gox event as an indication that Bitcoin is on the "verge of collapse". That's not what the actual trading data is showing.

"Evidence of long-term instability" is a lot less sexy than "verge of collapse", admittedly.

BTW, for those that don't wanna play with graphs, here's a screenshot of the graph showing the BTC exchange rate over the last 72 hours or so.
posted by QuantumMeruit at 9:29 AM on February 26


Many things that are scarcer than gold have no value at all (rare sea creatures, for example, that you can't eat). Many things far more abundant than gold have much more intrinsic worth for human needs (for example, green bell peppers).

Sea creatures and bell peppers are perishable. Gold is indestructable, but can be counterfeited and can't be backed up - same as paper money. Perhaps there are good reasons why virtually all money is essentially digital and transferred electronically.

I'm not clear on why BTC would be better than USD. The built in scarcity limits the damage a central bank can do, but also limits the good it can do. A currency needs to be stable for it to be useful for contracts involving future prices, which our entire financial system rely on. There are good reasons we went off the gold standard. If BTC were to replace the dollar, it would probably crash the global economy. BTC appears to be easy to steal, and the companies and people surrounding it are untrustworthy. What good qualities does BTC possess as a medium of exchange that USD lacks other than scarcity?

- It can't be counterfeited.
- It has built in accounting.
- It is easily transferred electronically.
- It is somewhat anonymous.
- ?
posted by Golden Eternity at 9:31 AM on February 26 [1 favorite]


Metafilter's attitude does seem a bit strange if you've been on the site for a while.

Before Bitcoin, the subject of alternative currencies came up occasionally (e.g. e.g. e.g.) and Metafilter seemed to love alt-currencies.

Cryptography comes up quite a lot as well, and Metafilter seems to love that too, firmly believing that privacy concerns well outweigh the ability of evil-doers to get away with crime. Metafilter seems to love cryptography.

But for some reason, when those are combined into the idea of a cryptography-based alt-currency, Metafilter hates it.

Again, a few years ago when we were talking about bailouts of financial sector organizations, Metafilter seemed to strongly oppose bailouts. Much better to let the institution fail, let the idiots face the consequences of their actions, than to put everyone else on the hook for it.

But with Mt Gox, now everybody seems to think it's absurd that there isn't a bailout of a failed financial organization.

It's a bit like the kids on the other lunch table really like peanut butter and jelly sandwiches, and we hate those kids, so we all have to go round in a circle talking about how much we hate peanut butter and jelly sandwiches and they probably give you cancer, even though we like peanut butter and we like jelly.
posted by TheophileEscargot at 9:31 AM on February 26 [1 favorite]


But with Mt Gox, now everybody seems to think it's absurd that there isn't a bailout of a failed financial organization


ERRRRRRMMMM, no. Many of us think its hysterical that libertarian wackos who think all regulation is the devil had one of their pet projects almost destroy itself because its unregulated.
posted by MisantropicPainforest at 9:34 AM on February 26 [16 favorites]


Schadenfreude does not equal desire for a bailout.
posted by kaibutsu at 9:36 AM on February 26 [1 favorite]


But with Mt Gox, now everybody seems to think it's absurd that there isn't a bailout of a failed financial organization

I think I am the only one in this thread who called for a bailout of the Bitcoin community, but that was because I don't want the Buttcoin site to go under. Too butt to fail.
posted by Blazecock Pileon at 9:36 AM on February 26 [2 favorites]


for some reason, when those are combined into the idea of a cryptography-based alt-currency, Metafilter hates it.

MetaFilter (if I may overgeneralize) likes problem-solving and things that solve problems for them. Lifehacking sorts of things. I think a lot of people here are interested in alt-currencies. I think a lot of people don't like it when people who don't know them and may or may not understand their lives or their priorities tell them that this is a thing that is necessary and important for them. And who strongly imply that if you don't think it's necessary and important for you that you are just wrong and not actually working from a different set of priorities. As I said upthread, I like Reddit okay but I resent people telling me that it's a better online community for me. And I see the same sort of blind unconsidered boosterism surrounding bitcoin stuff. It does not solve a problem for me in my existing life. I'm sure there's an argument that this may mean that something is wrong with my life, but that's a different argument.

I think a lot of people are bitcoin-curious but that doesn't have to mean, at all, investing in it or doing anything other than reading some stuff and learning about it. I feel that your overgeneralization is not reflecting the actual conversation in this thread.
posted by jessamyn at 9:38 AM on February 26 [10 favorites]


Metafilter's attitude

Standard disclaimer applies to this sort of statement: Metafilter is a great big pile of people, the total cohort shifting over time and the per-thread cohort shifting profoundly from discussion to discussion, so speaking about it monolithically while comparing the tenor of one thread to another makes little sense and pretty badly undercuts any argument made from that basis.

There appear to be a lot of people on Metafilter who think altcoins are interesting, and a lot of people who think they're silly, and a lot of people who think the specific aspects of the culture of some altcoin stuff is silly even if the idea of cryptocurrency is interesting, and a lot of people who are into crypto in the more general sense, and a lot of people who have misgivings about aspects of traditional economics and finance regulation, and even a fair share of people in just this one thread who feel multiple aspects of that all at the same time.

Characterizing a heterogeneous crowd as an incoherent monolith is, itself, basically incoherent.
posted by cortex at 9:38 AM on February 26 [4 favorites]


Merely, specifically yesterday, when you guys were vulturing around BTC dieing with Gox, it maintained value.

Ok, so here's the thing

It will take a metric ton to convince me today that it is safe to buy a bit coin. If I won't buy it, you can't sell it. Your asset isn't liquid in that you can't retrieve its value. You may have well invested in Latinum Bricks - at least Star Trek cosplayers would be possibly interested in exchanging dollars for physical fictional currency.

Why won't I invest in it today? Because I've assigned a worth to my goods and services - and while today that may mean your currency and my currency have parity at that level - if I can't trust that will exist when I look to transfer my btc back into my native currency - I'm hosed. A 5% deflation of value is a problem.

Now it is possible that the currency is stable or even increases in value between that time and now. Great! I've made money - except I haven't. As many have pointed out - I can't really purchase goods with it. What I need is to take it out from an exchange. First, I'll point out that Tuesday we all woke up with one fewer of those. Second, it sounds like a nightmare to get money out. Third from stories linked here everybody who tries to liquidate their btc seems to take a 10-20% loss below the stated value of their btc than the effective exchange rate.

My time has an intrinsic value that is paid in dollars. While I have hobbies that don't pay me money - I view waiting in line at the bank as someone killing me very slowly. This is a digital currency pyramid scheme.

If I had to pick a more stable digital currency? I'd pick ISK. It is ~10 years old, everybody knows about it, there are some great schemes that I could participate in regarding economic deregulaton, and it is possible to convert ISK directly into dollars. Now, like all investing, there is risk - and risk of loss. But at least then when I lose it I can derive a little enjoyment out of losing it.
posted by Nanukthedog at 9:43 AM on February 26 [2 favorites]


Metafilter is a great big pile of people

And I, for one, would ask you to move your elbow.
posted by yerfatma at 9:47 AM on February 26 [8 favorites]


Second, it sounds like a nightmare to get money out. Third from stories linked here everybody who tries to liquidate their btc seems to take a 10-20% loss below the stated value of their btc than the effective exchange rate.

In reporting by people who seem invested in having a hard time cashing out. I can cash out no problem. I don't care if you won't buy. Winklevoss are buying.
posted by save alive nothing that breatheth at 9:53 AM on February 26


Oh man do I want a nice bell pepper stir-fry now.
posted by benito.strauss at 10:00 AM on February 26 [1 favorite]


Save nothing alive that breatheth, when was the last time you actually did cash out? I don't ask to be snarky, I ask because I've seen a lot of reporting from people who figured it would be easy until they went to do it and it wasn't. Or it always had been easy, until suddenly it wasn't. That alone is enough to keep me from ever buying bitcoins.
posted by KathrynT at 10:05 AM on February 26


The last link in the fpp lets you watch in real time as thousands of dollars per minute are traded for bitcoins on a few different exchanges.

For proper effect you are supposed to extend your pinkie to your lips as you say "thooosands of dollars per meeenute."
posted by JackFlash at 10:07 AM on February 26 [1 favorite]


Save nothing alive that breatheth, when was the last time you actually did cash out?

I went to the post office to retreive goods for DOGE just a little while ago. Business equipment. I've only cashed out experimentally Coinbase and a little Google Wallet (the last is a minor risk if u want to avoid use Coinbase) and I intend to try VoS but mostly I'm buying goods and services. Works reliably for me.
posted by save alive nothing that breatheth at 10:15 AM on February 26


I'll sum up roughly all the business transactions I've done in DOGE so far later - gotta start doing my sums anyhow.
posted by save alive nothing that breatheth at 10:15 AM on February 26


Wait, though, that's DOGE, not BTC, right?
posted by KathrynT at 10:20 AM on February 26


Yes but they're very liquid and correlated.
posted by save alive nothing that breatheth at 10:21 AM on February 26


Yes but they're very liquid and correlated.

In reporting by people who seem invested in using cryptocurrency as the coin of the realm.
posted by EmpressCallipygos at 10:23 AM on February 26 [7 favorites]


EmpressCallipygos, are you asserting that the DOGE to BTC market isn't liquid?

Here's the Cryptsy volume for that pair.
posted by QuantumMeruit at 10:29 AM on February 26


I hear now is a good time to buy Bitcoins.
posted by Blazecock Pileon at 10:30 AM on February 26 [1 favorite]


EmpressCallipygos, are you asserting that the DOGE to BTC market isn't liquid?

No, I'm re-stating that my reaction to whether or not it's liquid is "what the fuck difference does it make if you can liquidize between them easily, it's not gonna make it a widely-accepted currency to Joe Sixpack".
posted by EmpressCallipygos at 10:31 AM on February 26 [4 favorites]


How long does it take from when you decide "I would like my dollars now" to when you're holding the dollars in your hand?
posted by KathrynT at 10:34 AM on February 26 [1 favorite]


I'll sum up roughly all the business transactions I've done in DOGE so far later - gotta start doing my sums anyhow.


Okay, DOGE I'd consider buying - not for anything real - but in the same way I'd buy someone a gift card for Steam/DOTA2. I can't get a cup of coffee with it, but I can get a nifty hat for my favorite avatar. It isn't totally useful, but the folks behind it aren't actively trying to screw me over.

I don't care if you won't buy. Winklevoss are buying.

The Winklevoss twins settled with Zuckerberg for $65MM. They've stated that they own ~1% of all btc. Rumors are they've got about 40K btc, or at today's Winkdex echange rate, $23,225,600 worth. Allegedly they've also thrown an additional $11.5MM into Winkdex itself. They lose $33MM if btc fails. That's it. From Zuckerberg money, they're still $32MM positive and that's excluding external funding and family money. They think btc is worth 10x what it is trading at now. That means they think their actual investment thusfar is worth $232MM. Go ahead, put your money into them. What you'd find is this - Especially when you own the exchange, it is easy to undervalue the btc coming in and easy to charge more for it going out. As a matter of fact - that's pretty desirable.

These guys are not particularly far from the silk road fiasco. Guess what, that's also sorta okay - for them at least, less so for me. They are distant enough that they'll be above water - but watch as those around them sink in unregulated scandal. That's just the kind of person I would want having any say in what my money is worth. What's there not to like about conducting business with someone slightly shady? If every transaction took place in a seedy opium bar in Marrakesh it might be appealing, but this is not film noir. This is the currency you expect people to use for their life savings? Really?
posted by Nanukthedog at 11:00 AM on February 26 [5 favorites]


People are snarking because the bitcoin evangelists in this thread are behaving the same as every bubble evangelist. People do basic logic to point out why it's a bubble, the evangelists ignore it because magic. Last time around it was real estate, this time it's bitcoins, 400 years ago it was tulips.
posted by tavella at 11:04 AM on February 26 [10 favorites]


But people were using it because there was a really, really clear incentive to doing so: suddenly you could get your hands on free music quickly and easily over the internet. Sucking down mp3s didn't require ideological boosterism to succeed; no one needed convincing that being able to snag some music would pay dividends.

Yes, totally BUT - sharing mp3s requires a little bit more ideological boosterism; why should I leave my computer on and be a seeder for everyone? Why should I let everyone download my music? There's a little bit of buy in necessary to the idea of p2p, sharing/seeding ("please seed!"), and the subsequent formalization of this into quota-based opt-in trackers.
posted by suedehead at 11:05 AM on February 26


For sure. And "because everybody benefits, and you'll be able to download music faster if you're seeding" is the basic response, and some people are like sure! and some people are like no! and the adoption of seed-based throttling applies a bit of pressure to the system where sheer altruism falls down.

But that's the inversion of the thing, compared with altcoins: with p2p stuff, you had scads of random Joe Q. Public people who a priori knew they wanted in on this whole downloading music thing, basically as soon as they heard a six word summary of it, and then came the need to muss about with the tech a bit to get at that utility. Lots of people found the mussing worth it, lots of people didn't particularly, but in both cases the mussing was motivated by a prevailing initial interest.

With altcoins, that prevailing initial interest by scads of people isn't there; the tech buy-in arguments aren't coming from frustrated masses who want in but are a little annoyed at the tech, it's coming from folks who are already inside the enthusiast circle insisting that other people not yet expressing interest ought to not be bothered by the tech mussing required to do the thing they haven't expressed an interest in doing.

People who don't want to do a thing in the first place aren't interested in being reassured that it's only a little bit of fuss to mechanically accomplish it. Arguments that it's not as much of a fuss to accomplish as some people are saying are missing that point pretty badly, which feels like a lot of where the zealot-meets-skeptic conversation ends up going in cricles.
posted by cortex at 11:20 AM on February 26 [6 favorites]


I'm not clear on why BTC would be better than USD. ... BTC appears to be easy to steal, and the companies and people surrounding it are untrustworthy.

BTC isn't easy to steal, in of itself. What happened with Mt. Gox is very loosely akin to Madoff - is money any less trustworthy because of Madoff's pyramid scheme? Are you going to stop trusting Citibank, or your local credit union?

Cryptocurrencies are different, in the way that credit cards are different than cash, and in the way that government bonds are different from stocks.

Similar to what cortex mentions - Cryptocurrencies are both a technological-social invention, as well as investments. The two are intertwined, which is why you get a lot of bitcoin investors who think it's the HOT NEW THING, SO BUY NOW. You also get a lot of people (like me) who think it's a really fascinating technological+social system, like p2p, or social media, that is probably immature now, but will just keep on growing -- and will ultimately alter the world to some extent.

Bitcoin : cryptocurrency = classmates.com/napster/newton : facebook/bittorrent/iphone.

As for altering the world - how exactly and to what degree? Who knows? For example:

I posted it before in the thread, but the Hawala system is interesting, and I could imagine custom cryptocurrencies designed to have a highly limited number of coins (say, 20 coins), for a given social network only (a group of friends, a specific community), in which the cryptocurrency would stand-in as tokens of exchange or IOUs, independently verifiable, not able to be counterfeited, etc.

Or: imagine Steam, or EVE online, or an even more immersive game, creating a custom cryptocurrency that operates in-game, or across game universes; so the question of liquidity/usage is solved because the cryptocurrency is created for a specific market. Games already have complex economic systems within them; what if the currencies that they used didn't have to rely on the centralized servers of the game, etc?

Or: cryptocurrency usage does become widespread enough that it begins to be used for micropayments (as already happens on Reddit using u/bitcointipbot, or u/dogetipbot), which then creates a market for the usage of cryptocurrency, which then creates the demand for cryptocurrency. The low (maybe even non-existent) transaction fee and the worldwide acceptability/usage of these micropayments means that other websites can also start charging small amounts for content. This leads to the micro-scale commodification of websites; bloggers make it big because hundreds of thousands of viewers per month pay a few cents each when they enjoy content, allowing bloggers to have a decent salary and to live off of their work. Larger companies start joining the bandwagon, forcing users to pay $0.10 to access each NYTimes article. Cryptocurrency becomes championed as a way to micro-crowd-fund websites. Subsequent anti-payment factions of the internet arise that pledge to revert back to the old system in which access was free, arguing that information should be free, like speech, and also like beer. Etc. etc. etc.

These scenarios are not all ideal or perfect, but yet ways in which cryptocurrencies could possibly change how we use the internet, or interface with the world. Like all technologies, it will be used, misused, mobilized, instrumentalized, designed, for a myriad of good/bad/harmful/benevolent reasons.
posted by suedehead at 11:23 AM on February 26 [1 favorite]


Napster's arrival didn't mean that the wave of legitimate market entrants like iTunes, Rhapsody, Google Play and Amazon would adopt the P2P distribution model. Napster forced the music industry to agree to what they had previously considered impossible terms to license their music; because the alternative was you get nothing. Also unlike the days of Napster and music, there are already a lot of options to move money electronically. I'm not sure that the current interest in alt-coins will prove to be the model that works in the long term.
posted by humanfont at 11:25 AM on February 26 [1 favorite]


Bitcoin is fascinating to me. Cryptocash is an amazingly interesting technical problem. Alternative currencies are a little less exciting to me, particularly ones grounded in libertarian wet dreams of no regulation or government banking. But the whole topic is fascinating, and here it is playing out in real time, with Bitcoin.

But lest we lose site of the topic of this Metafilter thread.. Mt. Gox was, until about a year ago, the #1 name in Bitcoin commerce. The biggest exchange, the most transaction volume, the de facto rate setter. All along some of us were saying "hey, this unregulated thing could be a bad idea. And have you looked at their code quality?". And then the US government started looking at money laundering issues at Mt. Gox and they started making it hard to withdraw dollars. And then Mt. Gox said they had a bug in their implementation of a tricky part of the Bitcoin protocol, might have lost some coins, and made it hard to withdraw Bitcoins. Then they went entirely radio silent. And we don't even know how much money has disappeared into Mt. Gox, but maybe as much as $1 billion USD, and no one's saying a word. The outcome is probably an acquisition and liquidation, at some loss, but in the absence of oversight it's could be a very disorderly process.

Mt. Gox is a pretty big fucking failure for Bitcoin. Maybe Bitcoin will recover, maybe not. I maintain that the only way Bitcoin becomes a real currency is if it reinvents all the same legal and regulatory mechanics that all the other currencies and commodities have.
posted by Nelson at 11:26 AM on February 26 [5 favorites]


the bitcoin evangelists in this thread are behaving the same as every bubble evangelist.

I think it's really hard to disaggregate snark against the techno libertarian/Ron Paul worshippers who are dominant voices on /r/bitcoin, against folks who are saying that cryptocurrency might actually have something to it, that it's not on the verge of collapse, and already has traction outside of the bubble evangelists. Or that it's not as hard to use as some are making it out to be.

Perhaps there are overly broad brushes and straw men being used on both sides of the argument here.

How long does it take from when you decide "I would like my dollars now" to when you're holding the dollars in your hand?

If trying to sell BTC or DOGE at Vault of Satoshi, they talk about processing wire transfer requests in 24-48 hours. Both order books are robust enough (at least to my eye) that a market sell order would be filled immediately. After filling the order, it's a matter of waiting for adequate confirms (i.e., an hour or so for Bitcoin, less for Doge).

So can you "cash out" your 100-doge tip (current $ value, $0.12) easily? No. But if you had that equivalent in Euros I think you'd be hard-pressed to walk away with dollars, too. If I had a few thousand euros in a bank account somewhere, how long would it take (and how much in fees would I be charged) to get dollars in hand at my US bank?

But for the people poking holes at how cumbersome this all is, what about the expectation that things will improve? To take the Napster/p2p sharing analogy further, when I started college in the dark ages, email access involved telnetting into a Unix box...
posted by QuantumMeruit at 11:27 AM on February 26 [1 favorite]


People are seriously, with a straight face, claiming that bitcoin is a legit currency because the jock winkelvii twins from The Social Network are investing in it?
posted by MisantropicPainforest at 11:29 AM on February 26 [9 favorites]


But for the people poking holes at how cumbersome this all is, what about the expectation that things will improve? To take the Napster/p2p sharing analogy further, when I started college in the dark ages, email access involved telnetting into a Unix box...

Just because there are some things now that are good and they used to suck does not mean that anything that sucks now will be good.
posted by MisantropicPainforest at 11:30 AM on February 26 [1 favorite]


Just because there are some things now that are good and they used to suck does not mean that anything that sucks now will be good.

Corollary; just because something sucks now doesn't mean it will suck in the future.
posted by suedehead at 11:32 AM on February 26


BTC isn't easy to steal, in of itself.

Actually, yes, yes it is. All you need is a key and boom, it's yours. And once stolen it's STOLEN. Since it's a distributed system built on lack of trust there's no way to back out changes or contest a valid transaction as illegitimate.
posted by aspo at 11:33 AM on February 26 [1 favorite]


The "market" "value" of BTC is mainly set by grifters operating in collusion. Money launderers tossing coins back and forth at one another. A very small amount of btc converted to real dollars by ordinary people more than balanced out by a bunch of johhny-come-lately dupes converting real dollars into massively inflated btc. And everyone operating in desperate self-interest to maintain the fiction, even as exchanges prove themselves incompetent and corrupt. Rationality is out the window: fairy dreams, unicorn farts, and the rank stench of neckbeard desperation keep btc valued so highly.
posted by five fresh fish at 11:36 AM on February 26 [4 favorites]


Citation required, five fresh fish. I share that suspicion about the reality of most of the BTC transactions, but I have absolutely no evidence for it. Do you? I'd love to read more. It might be discoverable with blockchain analysis.
posted by Nelson at 11:41 AM on February 26


I don't think the argument "Using bitcoin is no more difficult than trying to use Euros in the US!" is a particularly strong selling point.
posted by kiltedtaco at 11:42 AM on February 26 [1 favorite]


Kiltedtaco, it's not using Bitcoin I was talking about. It was converting Bitcoin to US dollars.
posted by QuantumMeruit at 11:43 AM on February 26 [1 favorite]


Which is the same gambit that has happened about 100 times in this thread. Someone asks how hard is it to "use" bitcoin, referring to the entire system of converting USD to/from bitcoins and dealing with the intermediaries that constitute the bitcoin system, and when anyone says well that's difficult they are immediately informed that the bitcoin is actually the easiest thing on earth, if by "use" bitcoin you strictly mean transfer value you already have in bitcoin to someone else. It's extremely easy to use euros in the US, I can just give them to someone standing next to me, but that doesn't make me want to switch to using euro.
posted by kiltedtaco at 11:51 AM on February 26 [9 favorites]


And nobody opts to get paid in a currency other than their domestic currency without a really good reason, because converting it to domestic currency is a fundamental part of its usefulness but also an annoyance. No one is going to ask to be paid in rate-equivalent Euros instead of USD if they do all their transactions in USD, unless they've got something really unusual going on. That they end up with some Euro despite the inconvenience is generally the product of some externality, not a specific active interest in having Euro in their pocket.

Nobody who is not currently actively pursuing altcoins for hobbyist, speculation, or paranoia reasons has any external reason to be holding or accepting altcoins. People aren't coming back from a vacation or a work-abroad assignment in Bitconia.
posted by cortex at 11:58 AM on February 26 [10 favorites]


People aren't coming back from a vacation or a work-abroad assignment in Bitconia.

I'm starting to wonder whether Bitcoin might be the official currency of Elbonia.
posted by one more dead town's last parade at 12:00 PM on February 26 [1 favorite]


People are seriously, with a straight face, claiming that bitcoin is a legit currency because the jock winkelvii twins from The Social Network are investing in it?
posted by MisantropicPainforest at 2:29 PM on February 26 [3 favorites −]


Slight derail, but on the Winklevoss brother's rowing, I think calling them 'jocks' is very unfair.

Legendary Clemson University Football coach Frank Howard opposed rowing so much that, “Clemson will never subsidize a sport where a man sits on his rump and goes backward.” That's right, they may be sporty - but the jockiest of jock sports still considers rowing not to be jockish enough. (Additional derail: Title 9 made Clemson an excellent school for Women's Varsity Rowing.)
posted by Nanukthedog at 12:28 PM on February 26


People are seriously, with a straight face, claiming that bitcoin is a legit currency because the jock winkelvii twins from The Social Network are investing in it?

They're worth like 500 million. All I know about your net worth is at least 5bux.
posted by save alive nothing that breatheth at 12:34 PM on February 26 [1 favorite]


They're worth like 500 million. All I know about your net worth is at least 5bux.

Much like btc, their $500MM came from somewhere. They are old enough money that generally speaking, it came from other people's pension plans. Consider this: they will make money whether btc rises or falls - there is no risk for them in this. You however, you have actual risk. Seriously, this is how money has been made all the way back to the robber barons.
posted by Nanukthedog at 12:38 PM on February 26 [5 favorites]


They're worth like 500 million

Seriously? And could their dad beat up my dad? Prince Philip is worth about $245 million. Going to take any financial advice from him? You're ignoring the fact they have a vested interest in the success of Bitcoin because they already have a high net worth? Not only is this poor logic, it's exactly how people get taken to the cleaners. How many old movies show a con where they have some phony distressed royal or guy in a fancy suit as the way to convince the mark their scam is completely legitimate?
posted by yerfatma at 12:38 PM on February 26 [7 favorites]


Wow, such thread. I quite honestly hope that Bitcoin will fail, because I clearly did not get into the game early enough. Money is basically an agreement, and I will not agree that a tiny amount of people suddenly have a lot of money while I got none of it. And most people should not either, because most people do not have a single satoshi. Some other cryptocurrency, maybe. But no way Bitcoin.
posted by ikalliom at 12:39 PM on February 26 [8 favorites]


They're worth like 500 million. All I know about your net worth is at least 5bux.

Well... if your are the expert on all things financial you should know that one's net worth is not derived from how much money they spent, but their assets minus liabilities. If you think spending 5 dollars to join metafilter means that I have 5 dollars in assets, then see here.
posted by MisantropicPainforest at 12:49 PM on February 26 [2 favorites]


You however, you have actual risk. Seriously, this is how money has been made all the way back to the robber barons.

Yeah I've invested under $1000 USD-equiv. and much more worth of my $75-$100/hr valuable time. I can chance that. I'm basically totalling up receipts for my cash/DOGE outlays only by pretty soon and offering up the Founder shares based on that... few hundred bucks = Founder Demigod, but not to Metafilter LOL. But to at least 2 immigrant W. of C. out of 10-12 or so, and early contractor paid USD is a middle aged woman who is unemployed and stereotypically gentrification victim. But I think this will only make you guys rage harder. We're gonna redistribute wealth too!

I guess a Metafilter account is more of a liability now that I think of it.
posted by save alive nothing that breatheth at 12:51 PM on February 26


How long does it take from when you decide "I would like my dollars now" to when you're holding the dollars in your hand?

No one can answer this question for you. No one can tell you, because no exchange has even as vague of a "couple of days" guarantee as paypal with all their bullshit. Some places will quote 24-48, and a few might actually honor it. One day you might get a wire transfer/mailed a check/etc within a day, other times you'll be held up for some bullshit invented reason. That is not, at all, limited to mtgox. Every time i hear "Oh, XYZ exchange is reliable" a few days later i see someone complaining that they're sitting on everything right now.

You can always find someone to go "WELL I'VE NEVER HAD A PROBLEM" smugly, but everyone i've personally talked to whose tried this stuff at all over the last couple years has had issues with that along the lines of the stuff mentioned in the buttcoin article above about actually getting money exchanged from BTC.
posted by emptythought at 12:56 PM on February 26


Okay, hold up.

But to at least 2 immigrant W. of C. out of 10-12 or so, and early contractor paid USD is a middle aged woman who is unemployed and stereotypically gentrification victim.

What is this about?
posted by EmpressCallipygos at 12:56 PM on February 26


One of my neighbors is doing some contract work for me.
posted by save alive nothing that breatheth at 12:57 PM on February 26


No, I mean what the hell do her age and housing situation have to do with your assets?
posted by EmpressCallipygos at 12:58 PM on February 26 [1 favorite]


No amount of social justice I personally achieve, no pushback against gentrification, no keeping alive of the local flavor, could ever be enough.
posted by save alive nothing that breatheth at 1:01 PM on February 26


If the Mt. Gox guys decided to just shred their infrastructure and then eat a bullet would the BTC on the exchange be lost or would the owners still have control of that currency?
posted by Mitheral at 1:01 PM on February 26


No amount of social justice I personally achieve, no pushback against gentrification, no keeping alive of the local flavor, could ever be enough.

Social justice doesn't factor into a direct question about what your financial assets are.

You're also coming uncomfortably close to a conversation that you had in memail with someone.
posted by EmpressCallipygos at 1:02 PM on February 26 [7 favorites]


I see we've reached the "everybody that disagrees with my ironclad libertarian arguments are the real racists/misogynists/etc" part of the conversation.

Hooray...
posted by zombieflanders at 1:06 PM on February 26 [14 favorites]


Okay save alive nothing that breatheth, so here's the thing. I think you sum up the difference in communities between DOGE and btc it your comment here. I think you'd find most of the people here agree with your sentiment - that btc is some clusterfuck of neolibertarian f-u I want mine, while DOGE coin is all SUCH CURRENCY! LETS FIND! TIP!

I think ikalliom spells out exactly why not btc: Money is basically an agreement, and I will not agree that a tiny amount of people suddenly have a lot of money while I got none of it. And most people should not either, because most people do not have a single satoshi. Some other cryptocurrency, maybe. But no way Bitcoin.

DOGE - not stable, but as fun as playing a lottery ticket or converting your retirement accounts into iTunes gift cards.
Bitcoin - land of people actively trying to not work together, only interested in maximizing their only wealth, and taking a cut of the money you've decided to let them have access to.

Mt. Gox has infrastructure for btc, because a-holes gotta fund a-holes. They realize that they can also leverage on these equally fake but slightly higher regarded DOGE coins.... Seriously - DOGE != btc. DOGE won't magically accepted at your nearest coffee shop (unless your coffee shop is run by someone independently wealthy). btc will try to be globally accepted, but it will be as popular a choice as Pepsi Clear.
posted by Nanukthedog at 1:07 PM on February 26


This got really weird. Weirder than bitcoin.
posted by MisantropicPainforest at 1:07 PM on February 26 [10 favorites]


No amount of social justice I personally achieve, no pushback against gentrification, no keeping alive of the local flavor, could ever be enough.

save alive, this has at this point zero to do with a Metafilter discussion about Mt. Gox other than you having a habit of weirdly personalizing discussions about altcoin stuff here. I am not sure why this is something you keep doing on Metafilter, but you really need to cut it out at this point. If you want to talk altcoin stuff for altcoin discussion's sake, that's fine, but you need to keep it in check.
posted by cortex at 1:08 PM on February 26 [1 favorite]


[And by extension, folks need to maybe let it drop on the other end too and have this not be an ongoing take-on-all-comers sort of argument.]
posted by cortex at 1:09 PM on February 26 [1 favorite]


Seriously - DOGE != btc. DOGE won't magically accepted at your nearest coffee shop (unless your coffee shop is run by someone independently wealthy).

Yeah, I've got that hooked up in about 3-4 months. Do you think the local coffee shop doesn't like me?
posted by save alive nothing that breatheth at 1:11 PM on February 26


It seems like all they'd need to do is provide some shaky proof it was "stolen" by "hackers" and they don't have it, when in reality it's just associated with a few wallets they have squirreled away on an FTP somewhere else in another country.

If the people at Mt Gox had hacked themselves, but done it remotely using a machine in another country they'd ssh'ed into, and then laundered the coins in a tumbler, Mt Gox's logs would present as "well, looked like a machine in another country did it".

The good news is that if a Japanese prosecutor decides you're guilty, you're guilty. If he
can be bothered, that is.
posted by sebastienbailard at 1:13 PM on February 26


If the Mt. Gox guys decided to just shred their infrastructure and then eat a bullet would the BTC on the exchange be lost or would the owners still have control of that currency?

If I understand your question correctly, if Mt. Gox shreds the infrastructure the coins would be lost. A Bitcoin is a secret magic number that only the owner possesses. In this sense Mt. Gox was the owner (custodian) of the coins on deposit. Bitcoins are the cryptographic equivalent of a forgery-proof dollar bill. If Mt. Gox destroyed a hard drive with those secret magic numbers on it, it would be functionally equivalent to setting a dollar bill on fire.

Except, hilariously. Mt. Gox is apparently not the possessor of at least some of the secret magic numbers it thought it was. Because they fucked up implementing the Bitcoin protocol so that some thief allegedly was able to exchange Gox's magic numbers for ones only the thief knows. Effectively stealing the Bitcoin.

Only no one knows how many Bitcoins were supposed to be on deposit at Mt. Gox or how many are left. They weren't reporting that info to anyone. It's possible Gox doesn't know themselves, apparently they weren't auditing their own balances. Welcome to the libertarian wonderland of unregulated financial services!
posted by Nelson at 1:15 PM on February 26 [10 favorites]


I just want to be clear here that I'm not boosting bitcoin and I don't recommend that anyone buy it right now unless you have some money you feel like playing blackjack with in a crooked casino. I think it's an interesting experiment that might end up being extremely valuable and might end up being worth nothing.
posted by empath at 1:32 PM on February 26 [4 favorites]


Which is the same gambit that has happened about 100 times in this thread. Someone asks how hard is it to "use" bitcoin, referring to the entire system of converting USD to/from bitcoins and dealing with the intermediaries that constitute the bitcoin system, and when anyone says well that's difficult they are immediately informed that the bitcoin is actually the easiest thing on earth, if by "use" bitcoin you strictly mean transfer value you already have in bitcoin to someone else. It's extremely easy to use euros in the US, I can just give them to someone standing next to me, but that doesn't make me want to switch to using euro.



I agree there's been a lot of talking past each other in the thread on this point. But I don't think it's a question of goalpost shifting so much as different expectations...

There are two different kinds of use here:

1. I can't use it because no one I want to buy stuff from accepts it

2. I can't use it because it's confusing and technical and I don't understand how it works well enough to trust it

Those things feed into each other. But I'd say the bitcoin advocates see only the second as a potentially permament problem. Even the most nutty of its evangalists understand that Bitconia is a frontier town. They know that lots of people don't take them now. What they care about is whether lots of people will take them in the future. If the second thing isn't a problem, they figure the first thing will solve itself.

I don't know that I'd agree with them on that, personally. I feel like some of the technical features of bitcoin could make it difficult for people to build trust in the system, and therefore there won't be enough people selling stuff I want to buy to make it worthy my while to use them. But we've definitely seen instances where once a network effect builds up enough steam people will put up with a great deal of technical hassel to participate in a system --- think of say, Ebay or Craigslist in the early days of the Net.

Craigslist may look like a perfectly simple interface to a mefite, but I'd hardly describe it as intuitive to say, the average mom n' pop landlord circa 1998. But once there were enough people on there looking for rentals, it became worth their while. Ditto EBay --- creating an item description, uploading photos, waiting five days for bids to close, dealing with cranky buyers, waiting in line at the post office ---- all of that is a way bigger hassle than setting up a bitcoin wallet. But people did it because it opened up a much bigger market to them than "the 50-odd people who happen to wander by my garage sale on a Saturday morning."

Buying drugs was the killer app that made bitcoin worth the hassle; now that that's gone it's entirely possible that there won't be another. On the other hand, an effective internet-based currency would be an extremely useful thing for trade of all kinds. I do think it's possible that those advantages will be enough to get people to sign on.
posted by Diablevert at 1:45 PM on February 26 [6 favorites]


The difference is that currency is a fundamentally different thing that a classified ad or a flea market.
posted by MisantropicPainforest at 1:48 PM on February 26


Buying drugs was the killer app that made bitcoin worth the hassle

Really? I'd have thought the killer app was undercutting a number of the middlemen (credit card services, banks, wire transfer people, money order offerers) that sit between me and someone else that I want to exchange money with. Buying drugs is only a killer app for people who want to buy drugs and can't easily do so.
posted by yerfatma at 1:49 PM on February 26 [1 favorite]


If the Mt. Gox guys decided to just shred their infrastructure and then eat a bullet would the BTC on the exchange be lost or would the owners still have control of that currency?

Most likely MtGox is not in possession of any BTC or much USD. It has all been stolen, and the thiefs can do whatever they want with it. If you had a MtGox "account," it may show that MtGox was crediting you with BTC, but those bitcoin were actually long gone. The USD credited to your "account" were also long gone probably (due to accounting problems or whatever - those USD are now in the personal accounts of MtGox employees or thiefs). They still made it look as if your account was real and the exchange was real for a little while, but MtGox's real bank accounts and bitcoin wallets were probably empty for a long time, and therefore all of the "trading" through their exchange during that time was fantasy, unless they could borrow money or raise capital to re-back their user accounts.
posted by Golden Eternity at 1:50 PM on February 26


Really? I'd have thought the killer app was undercutting a number of the middlemen (credit card services, banks, wire transfer people, money order offerers) that sit between me and someone else that I want to exchange money with. Buying drugs is only a killer app for people who want to buy drugs and can't easily do so.

It's been a long thread, but it was me earlier who brought up this very point; we are in agreement.

The reason why I said buying drugs was the killer app is that buying drugs and other black market items was a novel use, and one in which dealing with faceless internet strangers was actually less shady and shit tons more convenient than doing it in real life. As tons of people in this thread have been at pains to mention, for pretty much every legal item you'd care to purchase, cash is much easier to use.

In order to effectively compete against credit card cos. and other financial middlemen bitcoin will have to be adopted on a widespread level; whether it will be remains to be seem. If it can gain that acceptance then I think it could be hugely impact full in the very arenas you name.

The difference is that currency is a fundamentally different thing that a classified ad or a flea market.

Sure, but buy-in is buy-in. People will put up with hassle if it's worth their while. If --- and it's a helluva an if! --- there arises a compelling use case for bitcoin, then I think the technical hassles of using it would be put up with. There has to be something big enough to seed the network. If you can get it going, though, the implications could be huge and surprising.
posted by Diablevert at 2:04 PM on February 26 [2 favorites]


Yeah, the impression I get of Mt. Gox is that they cannot repay their account holders. Their bright idea now is to close up shop, change jurisdiction, rebrand, keep accounts frozen, and then lay low while other people pump money into them. Stagger the reopening of accounts so as to avoid a bank run.

Problem is, it seems like only other fools would want to invest in Mt. Gox at the moment. A reasonable person would know that most account holders would want to withdraw their funds as soon as they could. Even if I had a billion dollars and I could promise all kinds of wonderful reforms, not many account holders are going to have much reason to trust me and Gox 2: Gox Harder, unless they knew that there was some sort of legal remedy they could rely on should things go under again.
posted by Sticherbeast at 2:12 PM on February 26


The difference is that currency is a fundamentally different thing that a classified ad or a flea market.

Well of course. But unless you can explain what those differences are, and why they make those things different, you're just using dictionary definitions to prove a point.

The point is that a technology/app/website, given a good enough use case, will overcome any barriers to usage and adopt a wide audience. Cryptocurrencies as a technology may too, also. It's a question of the use case.
posted by suedehead at 2:15 PM on February 26 [1 favorite]


buying drugs and other black market items was a novel use

Ah, got you. Sorry about that.

posted by yerfatma at 2:20 PM on February 26 [1 favorite]


Only no one knows how many Bitcoins were supposed to be on deposit at Mt. Gox or how many are left. They weren't reporting that info to anyone. It's possible Gox doesn't know themselves, apparently they weren't auditing their own balances. Welcome to the libertarian wonderland of unregulated financial services!

...

apparently they weren't auditing their own balances.

This is only bolstering the thoughts in my mind that this is an inside job.

Since yea, what proof would they have it was or wasn't if they weren't auditing or keeping that kind of info around?

Well of course. But unless you can explain what those differences are, and why they make those things different, you're just using dictionary definitions to prove a point.

And unless you can explain why you want them to explain it, you're just splitting hairs for the sake of smug debate over something you know the difference over. It's like going "But what's the difference between potbelly pigs and dogs? they're both pets" or something.

You know. Don't be obtuse. No one has to define this for you, they're different.

This is exactly the kind of helicopter dicking stuff that makes people skeptical of altcoins, and tire quickly of these discussions.
posted by emptythought at 2:20 PM on February 26 [3 favorites]


There may be no difference between the Winkelvii, but there is a difference between Napster and the Euro.
posted by MisantropicPainforest at 2:25 PM on February 26


If I had a few thousand euros in a bank account somewhere, how long would it take (and how much in fees would I be charged) to get dollars in hand at my US bank?

Direct interbank transfer of Euros? I do it regularly. It costs me nothing and takes 2-3 business days. I believe there is a $15-25 fee on the other end (depending on the bank) I'd have to pay if I was transferring between my own accounts, but in my case I'm getting paid a fee or honorarium converted from Euros and, as I said above, the transfer costs me nothing, and it travels from one insured bank account to another (mine) via a process that can be traced and recalled and that is reported properly to the IRS.

For a couple of basis points in cost, whoever pays the fee, I'm happy to have this security. I think a lot of people must not know how simple and relatively cheap it is to transfer money between banks internationally, because y'all make it sound like it's rocket science. You need a SWIFT of IBAN number, an account number, and a routing number.

PayPal has always mystified me. It seems like a middleman I don't need since anything I would ever buy online I would charge to a credit card where my liability can't exceed $50 in fraudulent charges.

Moving capital between countries and currencies is a solved problem for people with bank accounts and credit cards unless you want to reinvent a more dangerous, albeit more anonymous, way to do it.
posted by spitbull at 2:31 PM on February 26 [5 favorites]


Can somebody ELI5 what I can expect these Mt Gox shenanigans to do to the value of the virtual Mox Emeralds I've been hoarding?
posted by prize bull octorok at 2:32 PM on February 26 [1 favorite]


And unless you can explain why you want them to explain it, you're just splitting hairs for the sake of smug debate over something you know the difference over. It's like going "But what's the difference between potbelly pigs and dogs? they're both pets" or something.

You know. Don't be obtuse. No one has to define this for you, they're different.


No, quite sincerely, I'm not being obtuse.

Part of the problem with working with definitions and categories is that you define things by what they "are", not what they do. This is not the right thread to go into ontological/philosophical inquiries into how the world works, so I'll just leave this here.

But as a succinct example: isn't it clear to us that an iPhone with the Yelp app installed, and a friend's verbal recommendation of a restaurant may have the same function as making us go to a new restaurant? So why would you say "Well, an internet-enabled phone and a friendly chat - they're fundamentally different. Why are we even talking about them together?"

Or take Twitter and megaphones. Protestors anywhere might use Twitter to alert each other about information. Megaphones might be used to alert protesters in the area, or to shout out slogans. In a protest, you might be both checking your phone to see what's going on, and listening to people shouting on megaphones to hear what's going on locally. So why would you say, "Well, a website and a handheld speaker system are fundamentally different. Why are we even talking about them together?

Or take Plumpy'nut and paved asphalt roads. Plumpy'nut is used to solve acute malnutrition; shelf-stable individual packets. It's especially advantageous when transportation is slow and road conditions are bad. Good road infrastructure is also helpful for shipping food and resources into an area as well - so Plumpy'nut's shelf-stable nature temporarily solves the problems created by bad infrastructure. Both Plumpy'nut and good paved roads would help solve certain supply issues in providing nutrition to those who need it. But if you say, "Well, asphalt roads and foil-wrapped food products are fundamentally different. Why are we even talking about them in the same breath? We need infrastructure, not products", then you'd be missing out something crucial.

The same deal with an internet-based auction site (and this was back in the day when the internet was new to the vast majority of people), and a cryptocurrency. Totally different in many different ways. But they both have issues with adopting users; the barrier to using technology in the first place, trusting financial transactions online, trusting other users online, and then trusting eBay in general.

The point is - maybe there's something to be learned by examining these similarities about what the do, instead of writing off these differences because eBay is classified as an "auction website" and Bitcoin is a "cryptocurrency" in the grand scheme of some totalizing taxonomy.
posted by suedehead at 2:43 PM on February 26 [2 favorites]


Maybe it's important to differentiate between alt-/cryptocurrencies and Bitcoin. I'm sure an alt currency will suceed. I'm equally confident Bitcoin is not that currency.
posted by five fresh fish at 2:51 PM on February 26 [2 favorites]


Suedehead, check out the functions of money on Wikipedia for a ground floor description of where people are coming from when they talk about what qualities people look for in currency. For example, Bitcoin is especially poor as a reliable store of value. For currency to be more useful than Pogs, you need to be able to, say, draft up a contract enforcing a loan in a way that is coherent and fair to both parties. This is very difficult when a currency is both volatile and deflationary, and when it exists within an ideological framework that is resistant to regulation.

Other alt-currencies won't necessarily run into the same problems, but Bitcoin surely does.
posted by Sticherbeast at 2:55 PM on February 26


If I had a few thousand euros in a bank account somewhere, how long would it take (and how much in fees would I be charged) to get dollars in hand at my US bank?

Eleven years ago, we were given a fairly substantial sum of money in British pounds sterling as a wedding present. We were mailed a check drawn on HSBC, which we deposited at our bank, who did the currency exchange for us at current rates. I presume the same thing could happen these days electronically. It was no different than depositing any other check.
posted by KathrynT at 3:05 PM on February 26


Sticherbeast - yes thank you, I understand the functions of money.

I don't think I'm really disagreeing with anyone, just pointing out (as five fresh fish already has) that alt/cryptocurrencies are interesting, and while Bitcoin may not be it, some other one will be.

And while may criticisms of bitcoin may be valid, they do not all extent to cryptocurrencies proper, or even to bitcoin itself, but the community/society/speculation surrounding it. Which, to some extent, is part of bitcoin itself, yes. But what we're seeing is a result of lack of regulation at the social-interpersonal-communal level, not directly due to a technological-conceptual flaw in the currency itself.

These are the birthing pangs of something. The bitcoin speculators are not looking at the full picture, but nor are the blanket detractors. But I think it's important to sift and to figure out what aspects may be interesting.

For example - examine a highly peer-regulated, decentralized inflationary currency, with standardized protocols for exchanges (after all, Mt. Gox's situation happened because they wrote a bad mechanism for verifying transfers, and there was no regulatory system or standard that could catch this from happening). If this were to exist -- and I don't think it's far off, then imagine the implications.

Or Namecoin, which is not a currency but an alternative, decentralized DNS. Or imagine using blockchains to create immutable historical records. Etc, etc, etc..
posted by suedehead at 3:28 PM on February 26 [1 favorite]


When the US government issues a cryptocurrency instrument for transferring dollars that I can use to pay taxes or get paid by a European publisher, I'll bite. The problem isn't the currency, it's what theory of value stands behind it, and what actual economic productivity and/or military power backs that up.

BTC has no power. It represents no actual productive creation of value. Its only distinguishing property other than easily transferability in theory is that it is designed to be scarce, a property a currency doesn't really need and that may in fact be undesirable in a mere instrument of accounting for underlying real economic value or power.
posted by spitbull at 3:36 PM on February 26 [2 favorites]


suedehead: "For example - examine a highly peer-regulated, decentralized inflationary currency"

"Highly peer-regulated, decentralized" are not desirable features to a majority of the developed world that, as it turns out, prefers fiat money with big governments standing behind it. Furthermore, creating a stable level of inflation in a cryptocurrency isn't possible without a central bank that can respond to exogenous shocks. Preprogrammed rates of new money creation don't actually solve the problem or make the currency inflationary or deflationary.

suedehead: " Or Namecoin, which is not a currency but an alternative, decentralized DNS. Or imagine using blockchains to create immutable historical records. Etc, etc, etc.."

Yes, as many Bitcoin detractors have conceded here, the technical building blocks of various cryptocurrencies are interesting and useful in a wide variety of contexts. The problem is when people (a) try to paper over the very real limitations of cryptocurrency as it exists today or (b) assume the future existence of a magic piece of technology that somehow obviates the need for a central bank.
posted by tonycpsu at 3:40 PM on February 26


Maybe it's important to differentiate between alt-/cryptocurrencies and Bitcoin. I'm sure an alt currency will suceed. I'm equally confident Bitcoin is not that currency.

Yea this is a really annoying thing i see a lot in this thread, reading through it from end to end. People fluidly shift from discussing all cryptocurrency and just bitcoin as it suits their argument, or as they can use it as a hammer in the discussion. Attack bitcoin directly? you're attacking altcoin.

It's doing a complete disservice to the discussion to constantly shift gears like that as it suits peoples points.
posted by emptythought at 3:46 PM on February 26 [3 favorites]


yeah, what makes money useful as currency, rather than as a tool for barter, is the strength of the guarantor. Cryptocurrency is an interesting idea as a basis for a money system, but it can't function as an economic system unless EVERYONE knows that it can maintain consistent worth and transferability, and the way to do that is have the government (or an organization on the same scope as a government) backing it up. Just because something has value doesn't make it currency; I can't pay my cell phone bill in diamonds, musical performances, or limited-edition Beanie babies, even though those demonstrably have value.
posted by KathrynT at 3:46 PM on February 26 [2 favorites]


If anyone's having trouble getting old-fashioned cash for your bitcoins, I'm willing to give you a Beanie Baby named "Smoochy", a mediocre performance of Mozart's Fantasia in D minor KV385g, and a small piece of cubic zirconium, all that in exchange for just 1 BTC.
posted by sfenders at 4:17 PM on February 26 [2 favorites]


MtGox reminds me of the Full Tilt Poker fiasco. This is a pretty fascinating interview about it: The Howard Lederer Files 1.2.3.4.5.6.7

Wikipedia:
On September 20, 2011, the U.S. Justice Department accused certain Full Tilt principals of defrauding poker players out of more than $300 million. The U.S. Attorney in the Southern District of New York filed a motion to amend an earlier civil complaint to allege that company directors Chris Ferguson, Howard Lederer, Rafe Furst, and Ray Bitar operated what the Justice Department claims was a Ponzi scheme that allowed the company to pay out $444 million to themselves and other owners, which included other famous poker players.[40][41]
posted by Golden Eternity at 4:21 PM on February 26 [1 favorite]


Okay, regarding the "ease of use" aspect, the takeaway I'm getting is:

1) If you want to do transactions with someone who takes/gives BitCoin, it's fairly simple to install a program and do setup. It is then easy to pay them for goods/services or get paid by them for goods/services in BitCoin.
2) If you want to do transactions with someone who doesn't use BitCoin, requiring conversion into conventional money, it's often hard, and/or time consuming to convert BitCoin into conventional money.

So BitCoin advocates are saying "Using BitCoin is easy", and they're referring to usage case 1, and BitCoin detractors are saying "Using BitCoin is hard", and they're referring to usage case 2.

Is that interpretation of both sides' positions fairly accurate?
posted by Bugbread at 4:46 PM on February 26 [2 favorites]


I can't pay my cell phone bill in diamonds, musical performances, or limited-edition Beanie babies, even though those demonstrably have value.

let's not have crazy talk in this thread, KathrynT.
posted by GenjiandProust at 4:49 PM on February 26 [1 favorite]


I feel sorry for the local trendy donut place that just started to accept bitcoins as payment seriously last fucking Friday. What the hell is the impact going to be there? Will I no longer be able to enjoy cronuts in Durham, NC? CRYPTOLIBERTARIANS RUINED MY BREAKFAST DREAMS

And I'm actually kinda less likely to go to Rise the more they talk about how they accept Bitcoin and get the local media to write about them accepting it. Though, I guess I can't blame them for wanting to trade some flour, sugar, and oil for a little BTC to see if it actually goes anywhere.
posted by statolith at 5:44 PM on February 26


1. I can't use it because no one I want to buy stuff from accepts it

2. I can't use it because it's confusing and technical and I don't understand how it works well enough to trust it

Yes we are apparently talking past each other, because nobody who's trying to defend bitcoin seems to understand the problem:

3. Major components of the bitcoin ecosystem keep imploding and/or getting indicted.

Like, this thread exists because of factor #3, and everyone keeps wanting to explain how easy transactions are.
posted by kiltedtaco at 5:49 PM on February 26 [15 favorites]


kiltedtaco: "Like, this thread exists because of factor #3, and everyone keeps wanting to explain how easy transactions are."

Eh, I dunno, I'm not reading the thread that way. People were all talking about factor #3, and then some folks jumped in with, "Yeah, and the usage factor, too!", which spun off a tangent.

I don't think that addressing claims is a failure to understand the problem. If it were, then everyone saying, "No, really, BitCoin sucks, you can't use it to pay the rent or tax or groceries or medical bills" is, by your same logic, failing to understand the problem, because they keep wanting to explain how hard transactions are.
posted by Bugbread at 5:59 PM on February 26 [2 favorites]


I like your 1. 2. and 3. but I think that the fact that the exchanging institutions which create problem 1. or 2. are hindered by the fact that - apparently they can close up shop with someone's money and there is no guarantee you'll ever see it again - which is concern #3. I mean, fundamentally, whether the money is easily used is immaterial to whether or not my money is safe. For all the talk of cryptosecurity, if someone makes off with $7.5MM and closes down an exchange in the process - that's not an investment - that's not currency - that's a really expensive scratch ticket with a really bad return.
posted by Nanukthedog at 6:23 PM on February 26


the local trendy donut place that just started to accept bitcoins

Bitcoin/altcoin boosters should take note that whether a trendy donut place accepts something for payment is not a strong endorsement for the value of the item. I remember a donut shop in Toronto accepting Bre-X share certificates for a small cup of coffee one morning in 1997. It put them on the TV news during rush hour. A week later you could buy coffee and a donut from them for one Bre-X share, and $3 (CAD). Even later there was this guy (video might not work outside Canada) who threw in a complimentary share of Bre-X for every glass of Kool-Aid you bought at his stand.
posted by ceribus peribus at 6:34 PM on February 26


Bitcoin/altcoin boosters should take note that whether a trendy donut place accepts something for payment is not a strong endorsement for the value of the item

I think it's important to remember that, well, retailers try things - to attract some sales, to gain a commercial advantage. And yes, it's true that through operations like Coinbase, the barrier to entry to being able to accept Bitcoins for your business is low, so it's reasonable for a business owner who's a little bit tech-savvy to start accepting payments to see what happens.

The question is, how long are they going to keep that sign in their window when they get 3 Bitcoin transactions a week, and the trainee staff member at the till has to go ask what the hell they're supposed to do with this stuff, on the rare occasion when one of them turns up.

It's not the sign of a serious currency when you can, in a small number of shops in economically advantaged locations, use it to buy a doughnut. That's an experimental, low-barrier-of-entry marketing exercise, up there with Groupon and things like that. The coffee shop I walk past on the way to work hasn't started accepting Bitcoins, but they've tried three-different smartphone based payment systems, one after the other, and have now stopped trying that idea due, I imagine, to lack of interest from the average person on the street who just wants to hand over cash for a cup.

I mean, no-one's even loaning Bitcoins on credit yet, are they, and charging interest payable in Bitcoin? Of course they haven't - it makes no sense to do that with a deflationary currency. And yet real economic, commercial activity is basically centered around credit and interest.
posted by Jimbob at 6:47 PM on February 26


I mean, no-one's even loaning Bitcoins on credit yet, are they, and charging interest payable in Bitcoin? Of course they haven't - it makes no sense to do that with a deflationary currency. And yet real economic, commercial activity is basically centered around credit and interest.

Maybe true believers will be willing to lend out BTC with a negative interest rate.
posted by Golden Eternity at 6:57 PM on February 26


Nevermind, that makes no sense I think.
posted by Golden Eternity at 7:03 PM on February 26


Jimbob: "I mean, no-one's even loaning Bitcoins on credit yet, are they, and charging interest payable in Bitcoin? Of course they haven't - it makes no sense to do that with a deflationary currency."

Ok, question from a person with a sense of economics on par with an elementary school kid here: From the lender's position, wouldn't it still make sense? And if the borrower needed the money, wouldn't it still make sense?

I mean, the Japanese yen has been deflating for like 20 years now, but every bank offers home loans, and everyone I know who has bought a home has taken out a loan, so it seems like loans make sense to both banks and borrowers. Do you just mean it would make no sense with a currency that is really heavily deflationary?
posted by Bugbread at 7:08 PM on February 26 [1 favorite]


I'm really curious if the inflationary / stimulative monetary policy of Doge coin win out over Bitcoin's tight / deflationary model. I would be, as they say "much happy" if some crazy Internet meme became the basis for a new global reserve currency.
posted by humanfont at 7:08 PM on February 26


What are the technical limitations of Doge coin? For example, does it support a larger number of transactions per day than Bit Coin?
posted by sebastienbailard at 7:11 PM on February 26


Nevermind, that makes no sense I think.

Sure it does -- instead of a bank loaning money to buy goods, the vendor just agrees to a 0 or negative interest payback plan. The rise in value over time of the payments has the same effect as interest.

The problem is that the deflation rate needs to be as stable as the dollar inflation rate is -- and without centralized control by a 'bank of bitcoin', I don't see how that's possible.
posted by empath at 7:23 PM on February 26


empath: "Sure it does -- instead of a bank loaning money to buy goods, the vendor just agrees to a 0 or negative interest payback plan. The rise in value over time of the payments has the same effect as interest."

But...let's say the bank loans 100 BitCoins, and then gets paid back 90 BitCoins...wouldn't it have made more sense for the bank to have just not loaned the money in the first place, in which case it would now have 100 BitCoins?
posted by Bugbread at 7:26 PM on February 26


The coffee shop I walk past on the way to work hasn't started accepting Bitcoins, but they've tried three-different smartphone based payment systems, one after the other, and have now stopped trying that idea due, I imagine, to lack of interest from the average person on the street who just wants to hand over cash for a cup.

OK, these are like smartphone payments that don't suck. Now there is proliferation of crypto but anyone in deep enough to have Vertcoins knows how to trade them to BTC or DOGE quickly. So the payment processors can pretty much service 3-5 main cryptos and be fine. IT WORKS ANYWHERE IN THE WORLD. The whole problem with those existing smartphone services is they all silo up and fight each other and whatnot.

NFC crypto is coming.
Bluetooth crypto is at least experimental.
posted by save alive nothing that breatheth at 7:30 PM on February 26 [1 favorite]


But...let's say the bank loans 100 BitCoins, and then gets paid back 90 BitCoins...wouldn't it have made more sense for the bank to have just not loaned the money in the first place, in which case it would now have 100 BitCoins?

Mt. Gox wasn't a bank, but this would have probably been a better business plan for them.
posted by ODiV at 7:38 PM on February 26


But...let's say the bank loans 100 BitCoins, and then gets paid back 90 BitCoins...wouldn't it have made more sense for the bank to have just not loaned the money in the first place, in which case it would now have 100 BitCoins?

Yeah, good point :) I guess people will just have to not borrow money.
posted by empath at 7:39 PM on February 26


empath: "Yeah, good point :) I guess people will just have to not borrow money."

Or banks could just charge positive interest rates.
posted by Bugbread at 8:03 PM on February 26


Yes we are apparently talking past each other, because nobody who's trying to defend bitcoin seems to understand the problem:

3. Major components of the bitcoin ecosystem keep imploding and/or getting indicted.

Like, this thread exists because of factor #3, and everyone keeps wanting to explain how easy transactions are.


I wouldn't consider myself a bitcoin supporter; I'd consider myself a bitcoin skeptic --- I think there are serious structural problems with the way it's set up. (I have argued this very point early on in this very thread, ctl-f 1907 if you care to.)

But I do think it is interesting, and though I am a skeptic I admit the possibility that I could be wrong, and it will turn our to be very important indeed. Mostly I think it's a bit blinkered to simply dismiss it as simply some Libertarian fantasy funny money --- over the past few months the mainstream financial world has been casting a weather eye over it, and the reaction has been, surpringly neutral-to-positive, I'd say. Like I said above, a functioning internet currency could have a revolutionary effect on the payments system --- not exactly the anarchist's wet dream of a stateless money system, but still a pretty big deal.

So, no, I don't think the volitlity of bitcoin and the fact that exchanges can collapse and disappear your money overnight is insignificant --- it's a huge problem that will make it much more difficult for bitcoin to ever gain widespread acceptance.

But. The United States did not have a central bank for 80-something years, for most of the 19th century and into the 20th. During that time, greenbacks were something issued by local banks, entirely on their own backing. And just like Mt. Gox, a lot of them went under and depositors lost all their money. This caused huge instability in the financial system, with repeated boom-bust cycles. (There's a reason Dickens cracks on "mere United State's security" in a Christmas Carol.) But we still managed to build the railroads and become a world power, you know? I think a lot of the reasons people are advancing about why "this can never work" are simply reasons why "this is unlikely to work" and that's an important difference.
posted by Diablevert at 8:03 PM on February 26 [3 favorites]


IT WORKS ANYWHERE IN THE WORLD

I don't want to buy my coffee ANYWHERE IN THE WORLD. I want to buy it at the coffee shop. Which is in a country. Which has a currency. Which (as long as I am solvent) I can easily obtain.

As I've said above, there's a ton of opportunities in the payment space, both local and remote. (And there's a lot of players in the game as well, and have been since well before BitCoin) But adding a distributed, untrusted by design system to payments is totally unnecessary and creates a huge set of problems that make using it for currency or distributed payments stupid as hell.
posted by aspo at 8:08 PM on February 26


But we still managed to build the railroads and become a world power, you know?

Yeah! Robber barons, gross corruption, exploitation of the desperately poor, and bank runs for everyone! There's a reason bitcoins are a libertarian fantasy after all.
posted by aspo at 8:11 PM on February 26 [6 favorites]


IT WORKS ANYWHERE IN THE WORLD.

Having one monetary policy for everyone in the world must be a good thing, since it's worked so well for Europe.
posted by one more dead town's last parade at 8:13 PM on February 26 [1 favorite]


Since you mentioned it there is actually a coffee shop in walking distance from my workplace that takes Dogecoin, and I do kind of want to try it for a lark. But I have no idea how to even get any Dogecoin since I am not exactly in possession of any material computational resources (well, apart from abuse of research clusters, but something tells me my boss wouldn't like that very much), and I was a little skeeved about violating Paypal's terms of service to buy some with USD on r/dogecoin.
posted by en forme de poire at 8:13 PM on February 26


But. The United States did not have a central bank for 80-something years, for most of the 19th century and into the 20th. During that time, greenbacks were something issued by local banks, entirely on their own backing.

I was surprised to read a bit about this in the CBC yesterday.

...
What makes their find particularly valuable, McCarthy said, is that almost all of the coins are in near-perfect condition. That means that whoever put them into the ground likely socked them away as soon as they were put into circulation.

Because paper money was illegal in California until the 1870s, he added, it's extremely rare to find any coins from before that of such high quality.


CBC - Couple uncovers rare gold coins worth $11M on dog walk
posted by sebastienbailard at 8:25 PM on February 26


I know I have been a Bitcoin defender in this thread, but this piece of effluvia is just too good.

Chris Lamprecht, who achieved notoriety in 1995 for being the "first person banned from the Internet", was imprisoned for money laundering. As part of the conditions of his supervised release after serving some time in jail, he was forbidden from accessing the Internet. Source: Wikipedia. (The supervised release ended in 2002/2003.)

Someone using Lamprecht's handle (and claiming to be him) posted to Reddit on /r/Bitcoin today.
posted by QuantumMeruit at 8:31 PM on February 26 [4 favorites]


But. The United States did not have a central bank for 80-something years, for most of the 19th century and into the 20th. During that time, greenbacks were something issued by local banks, entirely on their own backing. And just like Mt. Gox, a lot of them went under and depositors lost all their money. This caused huge instability in the financial system, with repeated boom-bust cycles. (There's a reason Dickens cracks on "mere United State's security" in a Christmas Carol.) But we still managed to build the railroads and become a world power, you know? I think a lot of the reasons people are advancing about why "this can never work" are simply reasons why "this is unlikely to work" and that's an important difference.

It's more complicated than that. I suggest finding a better historical analogy.
posted by kithrater at 9:37 PM on February 26


The Federal Reserve is like a box of chocolates...
posted by Bugbread at 10:08 PM on February 26 [1 favorite]


But. The United States did not have a central bank for 80-something years, for most of the 19th century and into the 20th. During that time, greenbacks were something issued by local banks, entirely on their own backing. And just like Mt. Gox, a lot of them went under and depositors lost all their money. This caused huge instability in the financial system, with repeated boom-bust cycles. (There's a reason Dickens cracks on "mere United State's security" in a Christmas Carol.) But we still managed to build the railroads and become a world power, you know? I think a lot of the reasons people are advancing about why "this can never work" are simply reasons why "this is unlikely to work" and that's an important difference.

And i think that no one wants to retread all that history and go back through those shittier modes of handling all this stuff except for a bunch of fedora-tipping internet libertarians.

That seems pretty damning to me, idk. "It happened before and we worked it out" is not evidence of "So everyone is willing to go through all that instability and shittiness again".

Do i think that stuff will eventually be worked out with some form of crypto? yea. Do i think that's going to happen in a couple months? No. To the point that i don't even get the purpose of bringing up that it's happened before as a defense of "And they'll work it out, because they did before".

Like, i don't even get the point of bringing that stuff up unless you're going to use it to make a "And that's how stupid everything was, and we got the hell away from it" kind of point.

Someone using Lamprecht's handle (and claiming to be him) posted to Reddit on /r/Bitcoin today.

Holy fucking shit. Go to the profile page, that account is 8 years old which is just about as old as reddit accounts get.

High quality lulz/internets intrigue right there.
posted by emptythought at 11:02 PM on February 26 [4 favorites]


The Final Goxing, The Two-Bit Idiot, 27 February 2014
posted by ob1quixote at 12:01 AM on February 27


From that link:

The latter seems likely, however, as one source believes that Karpeles knew about the pervasive damage of the transaction malleability attacks for several weeks and was engaging in an arbitrage scheme that leveraged the depressed Mt. Gox price to reap gains on other exchanges.

I feel so incredibly vindicated in my theory.

I can't wait to see what else comes out. This is such an inside job.
posted by emptythought at 1:26 AM on February 27 [2 favorites]


As somebody else said, it's grifters all the way down.
posted by Pope Guilty at 2:44 AM on February 27 [1 favorite]


I feel so incredibly vindicated in my theory.

I beat you to it by a week.
posted by empath at 3:53 AM on February 27 [2 favorites]


It's more complicated than that. I suggest finding a better historical analogy.

It's a simplification, and if you want to argue that my comment about private bank notes is only truly reflective of the pre-Civil War free-banking era, I'll cop to that.

And i think that no one wants to retread all that history and go back through those shittier modes of handling all this stuff except for a bunch of fedora-tipping internet libertarians.

That seems pretty damning to me, idk. "It happened before and we worked it out" is not evidence of "So everyone is willing to go through all that instability and shittiness again".

Do i think that stuff will eventually be worked out with some form of crypto? yea. Do i think that's going to happen in a couple months? No. To the point that i don't even get the purpose of bringing up that it's happened before as a defense of "And they'll work it out, because they did before".

Like, i don't even get the point of bringing that stuff up unless you're going to use it to make a "And that's how stupid everything was, and we got the hell away from it" kind of point.


Well, then I believe you have misunderstood me. As I said, I think it's obviously a huge problem. I do not think it's at all obvious that they'll work it out, or that a central bank/clearinghouse will inevitably arise --- the emergence of such a thing is deliberately disincentivized.

My only point was that currencies can exist and function without a central bank, the society that uses them can still prosper in the long run --- even though without a central bank the currency is subject to huge volatility swings and frequent bank runs and panics. That's it: It is possible. Whether Bitcoin will prove attractive enough to overcome these flaws is a whole 'nother, much more difficult question --- likely not, in my view.
posted by Diablevert at 4:37 AM on February 27 [2 favorites]


Whether Bitcoin will prove attractive enough to overcome these flaws is a whole 'nother, much more difficult question --- likely not, in my view.

I don't think anyone but libertarian crazies actually believes that bitcoins will replace dollars. To me, I think it's most likely that they'll be used for:

1) A temporary store of value in a country that is suffering from hyperinflation or a run on the banks or some other kind of currency collapse. (See Cyprus)
2) International money transfers for people who can't or don't want to use wire transfers for some reason. (China, for example)
3) Some B2B uses within particular industries where it's possible to get a set of vendors on board. (The CEO of overstock has expressed interest in paying his vendors in bitcoin)
4) A replacement for paypal in some cases. (Paypal itself has said its interested in cryptocurrencies).

It doesn't need to be all things to all people to have enough value to keep the network running. I don't know what that value is, but it seems to be greater than 0.
posted by empath at 4:51 AM on February 27 [2 favorites]


Why have I not seen this video before? Ð is for Ðogecoin.
posted by Sticherbeast at 4:58 AM on February 27 [4 favorites]


CBC - Couple uncovers rare gold coins worth $11M on dog walk

Much grass. Many pees. Shiny thing!


Introducing Dog Coins.
posted by spitbull at 5:06 AM on February 27 [4 favorites]


Considering the number of people who amassed their Mt Gox vanishing fortunes by selling their sketchy wares on Silk Road, I'm not sure I'd want to be one of the Mt Gox grifters when the Season 5 Walter White shows up wanting his bitcoins.
posted by localroger at 5:16 AM on February 27 [4 favorites]


CBC - Couple uncovers rare gold coins worth $11M on dog walk


And I heard today that word is those coins were stolen by US Mint worker .. Real, real, irony there..
posted by k5.user at 7:03 AM on February 27


In 100 years, a dog walker will find a discarded hard drive in a trash heap, and stored on it will be 700,000 bitcoins in mint condition.

If you want to make a joke about HOW LITTLE BITCOINS WILL BE WORTH, turn to page 185.
If you're fantasising about this being you and WANT BITCOINS TO BE WORTH LOADS, turn to page 127.
If you want a punchline about the hard drive being TRADED FOR WATER RATIONS IN A POST-APOCALYPTIC HELLWORLD, turn to page 192.

posted by EndsOfInvention at 7:21 AM on February 27 [25 favorites]


192!!!
posted by kaibutsu at 7:36 AM on February 27 [3 favorites]


This Two-Bit Idiot guy (supposedly Ryan Selkis) is interesting. He's the only credible person talking who's claiming to have an inside source on what's going on at Mt. Gox. He leaked the alleged "Crisis Strategy Draft", he's leaked a Mt. Gox business plan document, and now he's written a claim that Karpéles was the only person at Mt. Gox with access to the Bitcoin cold storage. The keys to the vault, if you will.

His writing is calm, plausible, and very interesting. It's also all 100% unverified and unsourced. He could be making it all up, right now we have no way to know. Maybe Mt. Gox is fine? Maybe Mt. Gox is totally broke? Maybe it's all Karpéles personal fault, maybe it's some inside theft, maybe it's an outside theft? We really have no way of finding out.

In business, information usually leaks to benefit someone. Whether that information turns out to be true or false. Spin your own cynical conspiracy stories, I've got about 20 I could argue. What we don't have with Bitcoin is any process by which we get to the truth.
posted by Nelson at 8:05 AM on February 27 [1 favorite]


Goxers: I can haz bailout?
posted by tonycpsu at 11:02 AM on February 27 [2 favorites]


Goxers: I can haz bailout?

Bargaining is the Third Stage, this guys almost halfway there.
posted by sparklemotion at 11:43 AM on February 27 [5 favorites]


Nelson: "This Two-Bit Idiot guy (supposedly Ryan Selkis)"

Seems to be confirmed
posted by exogenous at 11:57 AM on February 27


I'm still holding out hope that Ty will get into the game with limited edition Beanie Coins.
posted by alms at 1:26 PM on February 27


Bitcoin: By The Privileged, For The Privileged

I'm sure there's some selection bias in the survey the piece links to, but it's at least notable that they conform to the Bitcoiner stereotypes. The piece also has some interesting comments on how the "unbanked" (often cited as a population that could be helped by the emergence of cryptocurrency) really don't have any use for something that's got no government guarantee behind it, no matter how good the tech is.
posted by tonycpsu at 2:13 PM on February 27 [10 favorites]


So this thread has taught me that Mt. Gox is headquartered in Japan. Wha? Doing some Googling, there are only 8 stores in all of Japan that accept BitCoin (and one of those is a restaurant that primarily serves the American expat community) (It's good, I had Thanksgiving dinner there once). Why on earth would they put their headquarters in Tokyo?

And it looks like, due to potential threats, they moved from their former address, in a reasonably priced part of Shibuya, to Cerulean Tower, almost certainly the most expensive office space in Shibuya. Wha??
posted by Bugbread at 3:50 PM on February 27


Wallets are private keys. If you move the file to media that you isolate from the Internet you call it cold storage. However you must be certain that the key has been deleted from all the other places it might be lurking. For example if you have time machine on your mac, and you delete it, it is still accessible. It is also possible that your private key was generated improperly and is not random. An attacker would then be able to brute force the key and take all the money.
posted by humanfont at 3:55 PM on February 27 [1 favorite]


Bugbread, the Cerulean Tower address is said to be a virtual office; just a receptionist working for many virtual offices.

I don't know why Mt. Gox started in Japan, but it's important for any future legal action. Of course the true libertarian believers would never stoop to filthy government intervention, not to mention the drug dealers. But for anyone looking for their missing millions a Japanese prosecutor is probably the place to start.
posted by Nelson at 3:58 PM on February 27


Why on earth would they put their headquarters in Tokyo?

I gather there is some relative interest in crypto among the Japanese? There certainly is among the Chinese, gougoubi is Chinese for Dogecoin and they move most of the volume most of the time.

Supposedly their new office is shared/virtual, basically they're hiding.
posted by save alive nothing that breatheth at 4:01 PM on February 27


Maybe the Yakuza have an interest?
posted by localroger at 4:06 PM on February 27


I'm sure there is some interest in crypto among the Japanese, but not any more than in most other countries (less than in the US or China, that's for sure). And yakuza interest...extremely improbably. Yakuza are interested in sure bets. If BitCoin actually gets big, then, sure, the yakuza may get involved, but at this stage, no way. They'd rather shake down small companies to get the money they actually have, not mess with a speculative volatile new technology.

Thanks for the virtual office info, Nelson. That makes way more sense. It also makes me wonder if, perhaps, the former Mt. Gox address wasn't also a virtual office. Perhaps it all just comes down to the belief that the creator of BitCoin is Japanese, so why not HQ it at a virtual office somewhere in Japan, which fits the mythology, and which would be relatively far from the prying eyes of most BitCoin users?
posted by Bugbread at 4:17 PM on February 27 [1 favorite]


No the first address was actually real, two protestors that waited outside have some pics of them talking to the CEO on his way inside with some starbucks coffee.
do a google image search for "mt gox protesters"
Yes, one of them is wearing google glasses....
posted by Iax at 4:21 PM on February 27


Yeah, sorry, I just watched some of Mark Karpeles YouTube videos, and he definitely lives in Japan. My jump-to-conclusions.
posted by Bugbread at 4:23 PM on February 27


Bugbread: "Why on earth would they put their headquarters in Tokyo?"

2 Fast 2 Goxious: Tokyo Grift

(Stolen from a coworker)
posted by tonycpsu at 4:59 PM on February 27 [4 favorites]


Why on earth would they put their headquarters in Tokyo?

Honestly i think it's because a lot of fedora-clad nerds worship japan as some mecca of animu and technology.

Or at least, i can't think of a better reason and i like that one a lot because lol.
posted by emptythought at 5:43 PM on February 27 [1 favorite]


Inside Japan’s Bitcoin Heist, Jake Adelstein, The Daily Beast, 27 February 2014
A former Mt. Gox employee says incompetent management and faulty accounting—not virtual robbers—are the real culprits in the missing millions.
posted by ob1quixote at 10:26 PM on February 27 [1 favorite]


That article seems a little self-contradictory. It seems like it's saying it was virtual robbers (well, if "virtual" means "online" as opposed to "physical break-in" style robbers), but not inside robbers. Just that there was a flaw in the system and that an unknown number of people found out about it and used it to double-withdraw funds.
posted by Bugbread at 10:55 PM on February 27


Japan says any bitcoin regulation should be international, Sophie Knight and Takaya Yamaguchi, Reuters, 27 February 2014
posted by ob1quixote at 11:14 PM on February 27


It sounds like it may well have been the Winklevoss twins who leaked mt.gox's Crisis Strategy draft. The only thing I know about those guys is what I saw in THE SOCIAL NETWORK but I don't like them on general principle of them being way cooler than me.
posted by Justinian at 11:14 PM on February 27


So we have all these folks talking about how awesome BitCoin is because it can be used to avoid all the problems involved in dealing with exchanging currencies, and then the article linked to by ob1quixote says:
People who had bitcoins at Mt. Gox are more definitive.

"It was the only place you could buy bitcoin directly with yen, so it hurts that it's gone," said Ryoichi Taga, a fellow at the Japan Digital Money Association.
So now, without Mt. Gox, if you are in Japan and want to, say, pay someone in the US for goods and services, instead of the old inconvenient system of having your bank wire the money to the payee's bank, paying a small processing fee, you can now have your bank convert your yen into US dollars, paying a small processing fee, and then use those US dollars to buy BitCoins, paying a small processing fee, and then send those BitCoins to the payee.
posted by Bugbread at 11:24 PM on February 27


Bugbread: “That article seems a little self-contradictory. It seems like it's saying it was virtual robbers (well, if "virtual" means "online" as opposed to "physical break-in" style robbers), but not inside robbers. Just that there was a flaw in the system and that an unknown number of people found out about it and used it to double-withdraw funds.”
I think the point is that Karpeles was apparently neither all that great at software engineering nor did he have a rudimentary understanding of Generally Accepted Accounting Principles. This is a poor combination for the founder of a software-based online bank-like entity.
posted by ob1quixote at 11:24 PM on February 27 [5 favorites]


Oh, I totally agree. I just thought it was weird that it said "It wasn't theft", and then went on to explain how the theft occurred.
posted by Bugbread at 11:27 PM on February 27 [1 favorite]


Man oh man is that article such wow.

So a "leak in the hot wallet" draining the cold wallets as in the Gox statement doesn't make sense. The cold wallets are keys stored on paper or offline USB storage, they can only be drained by having an employee pick it up and scan the key or plug it in. Gold in Fort Knox, IT security-wise. The only way a "leak" could drain the cold wallet is if the employees blindly transferred funds from cold to hot as necessary with no accounting or auditing. Yep.

He says that because the firm hadn’t hired an accounting firm to keep the books or an auditor, the theft was undetected.


This is hilarious, let's run a financial services firm with no accountants...
posted by save alive nothing that breatheth at 5:32 AM on February 28 [6 favorites]


Mt. Gox Bankruptcy, NYT
posted by ReeMonster at 6:01 AM on February 28


This is hilarious, let's run a financial services firm with no accountants...

No no, it's not a financial services firm, it's part of a revolution.
posted by inigo2 at 6:03 AM on February 28 [10 favorites]


That Daily Beast article is good, and worth reading.

“From our analysis of [the record of Bitcoin transactions], it appears Mt. Gox might not only have leaked money through a bug, but might have also accidentally thrown away Bitcoins. It’s hard to believe this level of incompetence,” he said.

Keep in mind that, according to Buttcoin, the bug in question was well-known and already dealt with by the other Bitcoin exchanges.
posted by mediareport at 8:16 AM on February 28


With this bankruptcy filing we now have the first verifiable statement of Mt. Gox's assets and loss. Apparently the 744,408 number in the leaked document was about right. I'm still confused though. From the NYT piece:
He said that the exchange had most likely lost 750,000 of its customers’ Bitcoin holdings and more than 100,000 of its own coins, or more than $450 million worth.

The exchange has liabilities of 6.5 billion yen, or $64 million, compared with total assets of 3.84 billion yen, the company said. It has 127,000 creditors.
Huh, a shortfall of assets of only $26M? That's not so bad! But I think the NYT just reported the US dollar part of the balance sheet and left off the 850,000 BTC / $450M of its own holdings and customer deposits its missing. That would seem to be the larger, more important number to focus on.

Not stated in today's news: any fraud investigation. Also nothing said about an acquisition, which I take to mean that any potential deal has fallen through and bankruptcy was their last remaining option.
posted by Nelson at 8:26 AM on February 28


Here's video of Karpéles announcement, if you want to see what "oops I lost $500M" looks like. All in Japanese, including Karpéles' statement.

My favorite theory on what happened to the Mt. Gox Bitcoins: they lost the private key to the cold storage. The money's all still in the vault but no one can open it. Somehow I like this explanation more than theft; it's way more hilarious.
posted by Nelson at 8:40 AM on February 28


“If Mt. Gox had been treated like a bank, this problem would have never happened. It would have had to have proper accounting and people with financials skills to get licensed. It’s unlikely that the Japanese government would have granted such authority to a company run by a 27-year-old computer genius with no financial background.”
posted by mediareport at 8:45 AM on February 28


Computer user, maybe. Not a genius.
posted by Sticherbeast at 9:08 AM on February 28 [1 favorite]


The only bug that mattered was the lack of auditing and accounting controls.
posted by humanfont at 9:29 AM on February 28 [2 favorites]


The exchange has liabilities of 6.5 billion yen, or $64 million, compared with total assets of 3.84 billion yen, the company said. It has 127,000 creditors.

If these are the actual numbers in their bankruptcy filing, it appears that they are saying that their only legal liabilities are deposits of dollars and yen. They are saying that bitcoins have no value and therefore no liability. If true, that says something about the legal status of bitcoin -- it has no legal value in a bankruptcy.
posted by JackFlash at 10:18 AM on February 28 [4 favorites]


Yellen on Bitcoin: Fed Doesn’t Have Authority to Regulate It in Any Way
“The Federal Reserve simply does not have authority to supervise or regulate bitcoin in any way,” Ms. Yellen said Thursday in testimony before the Senate Banking Committee. “This is a payment innovation that is taking place entirely outside the banking industry and to the best of my knowledge there is no intersection at all” between bitcoin and banks that the Fed can oversee.

“It’s not so easy to regulate bitcoin because there is no central issuer or network operator to regulate,” she said in response to questions by Sen. Joe Manchin (D., W.Va.), who previously called on U.S. regulators to impose stricter limits on bitcoin.
posted by Golden Eternity at 10:21 AM on February 28 [1 favorite]


Yellen is right that the Fed has nothing to do with Bitcoin. That however says nothing about government, which certainly can make it illegal to own or trade Bitcoin.

Granted, that might be an unenforceable decree, but from 1933 through 1974 it was illegal to own monetary gold (coins, as opposed to jewelry) in the US. And not even by law, by executive order! While there were no widespread seizures of safe deposit boxes, as usual the interface between the gold hoarding economy and US dollars was where the legal action occurred.
posted by localroger at 12:42 PM on February 28


If true, that says something about the legal status of bitcoin -- it has no legal value in a bankruptcy.

Well, it may just be saying that Mt. Gox would like them to be valueless, which is certainly what I would want to assert were I them. Does anyone know what the user agreement was like for Mt. Gox. Did they agree to make you whole if the lost or had your property stolen? Or are those questions too prosaic in the case of bitcoins?
posted by JohnLewis at 1:03 PM on February 28


The only bug that mattered was the lack of auditing and accounting controls.

If only there was some sort of law, perhaps one sponsored by Congressmen from--and I'm just spitballing here--Maryland and Ohio, that specifically dealt with the requirements for private companies to have auditing and accounting controls in place. Hypothetically speaking, of course.
posted by zombieflanders at 1:12 PM on February 28 [5 favorites]


Has anybody ever actually been prosecuted for SarbOx failures? I have no idea.
posted by benito.strauss at 1:40 PM on February 28


Prosecuted, yes, though very few people. Convicted?
posted by frimble at 1:51 PM on February 28 [1 favorite]


FinCEN has said that people who mine Bitcoin or who convert Bitcoin to real currency or its equivalent are money transmitters which they may regulate. Can't cite it from a phone, but it's in a guidance.
posted by Sticherbeast at 2:00 PM on February 28


Practically they seem to be regulating converters while leaving miners alone.
posted by save alive nothing that breatheth at 2:02 PM on February 28


Considering the "profitability" of mining nowadays, that seems wise.
posted by Sticherbeast at 2:05 PM on February 28


I know people are joking but I think SarbOx only applies to public companies, which would exclude Mt. Gox (right?)
posted by exogenous at 2:08 PM on February 28


If these are the actual numbers in their bankruptcy filing, it appears that they are saying that their only legal liabilities are deposits of dollars and yen. They are saying that bitcoins have no value and therefore no liability. If true, that says something about the legal status of bitcoin -- it has no legal value in a bankruptcy.

Wow, if this sticks it's going to say some serious things about bitcoin in general. And they're also going to completely wash their hands of this and walk away, at least in japanese court(which seemed to be what people in here were saying "you will get convicted if prosecuted" and were taking all serious-like).

Who would in any way want to convert their traditional currency into another currency that another person/corporation can simply go "oh, that stuff is monopoly money teehee, doesn't count!" in bankruptcy?

This could be a seriously defining court case and should really give pause to anyone but the most hardcore BTC trolls.
posted by emptythought at 2:47 PM on February 28


If these are the actual numbers in their bankruptcy filing, it appears that they are saying that their only legal liabilities are deposits of dollars and yen.

Yeah, let's see the bankruptcy filing before worrying about that rather bold theory. It's more likely (IMHO) that the NYTimes just didn't report the limited information very well.

Another conspiracy theory popular on the Reddits, that Karpéles is under a US gag order for ongoing legal action, possibly related to Silk Road or other investigations. And that maybe the coins still exist but have been seized, or he's being forced to hold them, or blah blah blah. Bitcoin, the miraculous new digital economy!
posted by Nelson at 2:58 PM on February 28


Legally, what's the difference between Bitcoins and World of Warcraft gold? Both are virtual currencies that you can buy (and, with more difficulty, sell) with $US and which can be used to purchase a limited range of mostly-online goods and services.

Is the only difference Blizzard's End User Agreement explicitly saying that WoW gold has no real-world value? Would that hold up in court when you can clearly demonstrate that WoW does have a real-world value?
posted by straight at 3:06 PM on February 28


Maybe I'm being obtuse, but how on earth could an exchange claim that BTC are worth anything other than what they had been trading at?
posted by Sticherbeast at 3:08 PM on February 28


straight, that's an interesting question. It brings to mind those notices fixing the cash value of a $1.00 off discount coupon at $0.0001, an amount that is nonzero but trivial compared to the regular use value.
posted by localroger at 3:15 PM on February 28


Maybe I'm being obtuse, but how on earth could an exchange claim that BTC are worth anything other than what they had been trading at?

Every bitcoin is stamped with "For Novelty Purposes Only".
posted by benito.strauss at 3:30 PM on February 28 [3 favorites]



Has anybody ever actually been prosecuted for SarbOx failures? I have no idea.

Prosecuted, yes, though very few people. Convicted?


Well, the /b/tard who hacked Sarah Palin's yahoo mail was convicted under SOX 802(a). Seriously. The 6th Circuit upheld the verdict.
posted by [expletive deleted] at 3:37 PM on February 28 [3 favorites]


Mt. Gox forensic accounting. Karpéles demonstrated ownership of 424,242.42424242 BTC back in 2011. They've walked those coins forward through the blockchain and believe they can prove that Gox still owns at least 90,000 of those BTC (and probably much more).

Ironically, the fact that Bitcoin transactions are traceable and non-anonymous may just be the saving grace for a currency popular with people who want anonymous, nontraceable transactions.
posted by Nelson at 3:55 PM on February 28 [3 favorites]


[expletive deleted]: "Well, the /b/tard who hacked Sarah Palin's yahoo mail was convicted under SOX 802(a). Seriously. The 6th Circuit upheld the verdict."

Oh wow. I was wrong earlier about Sarbanes-Oxley only including public companies. The statute (18 U.S.C. § 1519) casts a wide net and includes destroying evidence or otherwise trying to "influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States." Super fucking broad. Searching for that law revealed a load of law firm publications referring it to as things like an "anti-obstruction cannon."

Back on topic, it seems like the Mt. Gox bankruptcy was filed in Japan so this might not apply, but I don't think many would be surprised if we later learn that Karpéles is under federal investigation.
posted by exogenous at 4:31 PM on February 28 [1 favorite]


Plugged in my USB key
and booted up the Mac
Logged on to the land of the online coin
In the middle of a storm of flack

Where are my bitcoins
I had a lot you know
Yeah I got a quote for the USD
But it's starting to look like snow

So I'm walking the blockchain
Tracing where those transactions go
Walking the blockchain
Where my coins are do I want to know?
posted by localroger at 4:38 PM on February 28 [1 favorite]


We have lost
the bitcoins
that were in
your virtual wallet

and which
you were probably
saving
for drugs

Forgive me
they were delicious
so sweet
and so hot (because of the servers mining them) (they get really hot)
posted by NoraReed at 4:59 PM on February 28 [20 favorites]


That is the best comment ever on Metafilter other than the MetaTalk thread full of the Dune/Lebowski mashup.
posted by JohnLewis at 5:30 PM on February 28


zombieflanders: "If only there was some sort of law, perhaps one sponsored by Congressmen from--and I'm just spitballing here--Maryland and Ohio, that specifically dealt with the requirements for private companies to have auditing and accounting controls in place. Hypothetically speaking, of course."

To what degree would it matter, given that Mt. Gox is headquartered in Japan, and it's not a virtual off-shore type of headquartering, but the CEO actually lives in Japan?
posted by Bugbread at 6:13 PM on February 28


Yea, i just actually looked this up. The dude is a french national living in japan running this country. He's only lived there since 2009, so he's probably still a french citizen.

Would the US just long-dick-of-the-law this? Like how does what any US senator or whatever says mean fuckall with relation to this?

Did a commit a crime in the US somehow simply because he was paying people in USD?

This is the most confusing part of all this to me, honestly.
posted by emptythought at 6:31 PM on February 28


Would the US just long-dick-of-the-law this?

I don't know if the US DOJ will be doing anything about this, but Mt. Gox was offering money transmission services to USians. At the very least, they could get in serious trouble for not registering with FinCEN and any state which requires money transmitters to register.
posted by Sticherbeast at 7:05 PM on February 28


People on /r/bitcoin seem to think that he lost the cold storage wallet somehow, so perhaps not very much money was stolen at all.
posted by empath at 7:26 PM on February 28


That would be hilarious.

You guys know that 500 million dollars? Yeah, I can't remember where I left that.
posted by Justinian at 10:06 PM on February 28


It would be really funny if in a few years, after MtGox is long gone, he suddenly remembers where he put it.
posted by Golden Eternity at 11:35 PM on February 28 [3 favorites]


If he's a French national, then he could get into "serious trouble" only in the sense that "if he were stupid enough to travel to America, he could get arrested". Failing to register with FinCEN is far from an extradition-level offense.
posted by Bugbread at 1:13 AM on March 1


Basically the theory is that the keys to the cold wallet were generated by buggy software, and they aren't right. I think they are hoping that he can give some cryptography experts the software and they can figure out how to regenerate the correct key.
posted by empath at 1:16 AM on March 1


Basically the theory is that the keys to the cold wallet were generated by buggy software, and they aren't right. I think they are hoping that he can give some cryptography experts the software and they can figure out how to regenerate the correct key.
      $result = changeKey( $_REQUEST['key'] );
      if ( $result = false ) {
           print 'Your key was not changed.';
      } else {
           print 'Your new key is: ' . $result;
      }
"Dude, your code doesn't work, it never changes the key!"
posted by maxwelton at 2:30 AM on March 1 [1 favorite]


If he's a French national, then he could get into "serious trouble" only in the sense that "if he were stupid enough to travel to America, he could get arrested". Failing to register with FinCEN is far from an extradition-level offense.

You're totally correct, and I realize that. To clarify, I was responding to the idea that Mt. Gox's dealings with the US were limited to the fact that it paid out in USD. What I was saying was, the very fact that Mt. Gox had offered services to Americans-in-America at all gives the US government skin in the game. The US government very much does prosecute international cybercrime, if this is something that could qualify for that. Whether the US government would even attempt to do anything about it is another question, of course.

Sidenote: Bitstamp, which I think is now the largest BTC exchange, was originally founded in Slovenia (by a Slovenian). However, due to the founder's claims of "political and economic tensions", it has pulled up stakes and moved to the UK, where BTC is allegedly unregulated, and it also does business with the Italian bank Unicredit. Unicredit's branches in Slovenia supposedly want nothing to do with BTC at all. Makes me wonder what those conversations were like when the founder decided to move. Considering Slovenia's ongoing journey to economic recovery, to avoid going down the same tubes as Spain and Greece, I can't imagine many people there would be too thrilled about getting involved in BTC.
posted by Sticherbeast at 6:54 AM on March 1 [1 favorite]


Basically the theory is that the keys to the cold wallet were generated by buggy software, and they aren't right. I think they are hoping that he can give some cryptography experts the software and they can figure out how to regenerate the correct key.

Time to post that image of the sun with the triumphant speech on it about how BTC is so secure because not enough matter or energy exists in the universe in order to even run a computer that could brute force a BTC password before the literal end of time

(yes, I realize that they wouldn't be brute forcing it)
posted by Sticherbeast at 6:57 AM on March 1


The Gox Crater: crowd detectives reveal billion-dollar heist as inside job. Another analysis of the Blockchain + various Mt. Gox events. The author seems to favor a conclusion that the Bitcoin has actually been missing since 2011. Also links to stories of two suicides related to the Mt. Gox loss.

We're going to see a whole lot of theories about where the Bitcoin is. One of them might even turn out to be true! The real point is no one knows.
posted by Nelson at 8:36 AM on March 1 [1 favorite]


Someone knows.
posted by spitbull at 8:49 AM on March 1 [5 favorites]


"So what you're saying is that this is a really good time to buy BTC?"

Wait a couple days and you might get an even better price.

It seems these are the pre-Wright Brothers days of Bitcoin, full of impressive looking flying machines that crash spectacularly. In a year or two, maybe the survivors will have worked out the major problems.


We would not have airplanes now if the early versions flew with hundreds of millions of dollars in them and all that money was wiped out when they crashed.
posted by Ironmouth at 9:14 AM on March 1 [1 favorite]


I was just looking around at this and discovered that the Fidelity branded American Express card (which offers 2% cash back) charges a 1% fee to convert foreign currency at the day's published forex rate. Beats the hell out of the 3% rate Visa charges and which I was suggesting above was already a pretty low cost for the security it offers.

So again, I'm wondering what is the great transactional efficiency of a Bitcoin that is worth saving a 1% fee that gets you stable and predictable exchange rates, complete transaction security, a major corporation heavily invested in preventing you from being defrauded, usability in a very large number of countries for virtually any category of goods or services, and returns 2% on every purchase?

From the consumer's point of view (presuming s/he has a bank account and a credit card), the point again is that BTC solves no problem that actually exists except the problem of how to remain anonymous. For that, cash is still better anyway, and BTC is not really anonymous.
posted by spitbull at 9:48 AM on March 1 [1 favorite]


Beats the hell out of the 3% rate Visa charges and which I was suggesting above was already a pretty low cost for the security it offers.

Visa only charges 1%. Many banks will issue Visa cards where the foreign transaction fee is only 1%. You can even find 0% on some cards (although some of these have high annual fees so the bank makes up the money elsewhere).
posted by grouse at 10:23 AM on March 1


We're going to see a whole lot of theories about where the Bitcoin is. One of them might even turn out to be true! The real point is no one knows.

It's A Mined, Mined, Mined, Mined World
posted by cortex at 10:28 AM on March 1 [2 favorites]


The Gox Crater: crowd detectives reveal billion-dollar heist as inside job

This article is hilarious.
...it’s 6% of all bitcoin in existence, and assuming bitcoin keeps growing to its potential, that means one individual is sitting on 6% of the world’s future trade and retail currency supply. In today’s USD value, such an amount would be on the order of 20 trillion US dollars...

CEO Mark Karpeles responded to questions with a picture of his cat. This means that the communications skills from MtGox and Karpeles are either so carefully orchestrated here that only an experienced genius would understand them, or so incompetent that it falls below any description.
What?
posted by Golden Eternity at 10:59 AM on March 1 [1 favorite]


presuming s/he has a bank account and a credit card

That's a pretty big presumption.

Visa only charges 1%

My wife has done a fair amount of international traveling. Every single card provider has chosen the sweet spot in the time between the purchase and the end of the billing cycle where the exchange rate was worst to screw us. Every time.
posted by localroger at 12:26 PM on March 1


Every single card provider has chosen the sweet spot in the time between the purchase and the end of the billing cycle where the exchange rate was worst to screw us. Every time.

That is interesting. I have used multiple U.S. credit cards abroad over a period of 11 years or so and have almost always seen transactions post to my account right away with that day's exchange rate, without any sort of retroactive change in the exchange rate at the end of the billing cycle. I would like to know which card issuers retroactively change the exchange rate so that I can avoid them in the future.
posted by grouse at 1:54 PM on March 1 [2 favorites]


grouse, I'm pretty sure Chase was one of the bigger offenders -- we've stopped doing business with them for other reasons -- but most of our cards are with similar large national providers. Our credit rating is such that we get more offers than we need and we tend to accept and switch based on interest rates and introductory offers.
posted by localroger at 2:03 PM on March 1


Interesting. I've had a Chase credit card for more than eight years, much of that time living abroad, and never noticed such a thing. In fact, that appears to be prohibited by the cardmember agreement.
posted by grouse at 2:14 PM on March 1


I too see the charge hit my statement at the day of transaction exchange rate (Bank of America Visa and an Amex). I could swear the Visa transaction fee was 3% on charges, but maybe that's on cash advances, which I wouldn't use since my bank ATM card (TD bank) allows me to get cash with no fees almost everywhere.

The Fidelity Amex, which I just discovered, has no annual fee at all, in addition to 2% cash back directly paid into your retirement accounts (you have to have a Fidelity account).

I too despise Chase Bank credit cards, and never use the one I have.
posted by spitbull at 2:35 PM on March 1


I could swear the Visa transaction fee was 3% on charges, but maybe that's on cash advances, which I wouldn't use since my bank ATM card (TD bank) allows me to get cash with no fees almost everywhere.

The foreign transaction fee for your card is whatever you and your issuer agree to. Visa does not impose a rate to charge cardholders on the card issuers. It is quite likely that the fee for your Visa card is 3%. It is easy to find a Visa for which the fee is 1%.
posted by grouse at 2:39 PM on March 1


Even if credit card companies are ripping people off, is "cryptocurrency" the only answer? Maybe a competing financial company could just offer a lower comission and faster FOREX transactions or something.
posted by Golden Eternity at 4:29 PM on March 1


My US Chase credit card has a 0% foreign currency fee, no annual fee, and an EMV chip so it works in machines in countries that are less stupid than the US. And of course US credit cards come with fraud protection too, so I have some hope for getting my money back if the merchant rips me off.

The primary payment problem Bitcoin solves is how you somewhat anonymously transfer money to someone else on the Internet. Like cash, but not in person. Much like WebMoney and eGold before it, it makes a fantastic black market currency. The advantage of Bitcoin over those previous systems is it's somewhat decentralized and harder for governments to shut down. However the clowns and fraudsters in the Bitcoin market are doing a good enough job shutting themselves down.
posted by Nelson at 4:51 PM on March 1 [1 favorite]


Earlier today I used my goofy meme-money to send, well, anonymity, but somewhere between $10-$99 to an actual literal fighting in the streets revolution.

Which is providing from time to time accounting reports on its spending.
posted by save alive nothing that breatheth at 7:19 PM on March 1 [1 favorite]


save alive nothing that breatheth: "Earlier today I used my goofy meme-money to send, well, anonymity, but somewhere between $10-$99 to an actual literal fighting in the streets revolution.

Which is providing from time to time accounting reports on its spending.
"

A fighting-in-the-streets revolution which issues periodic accounting reports. We are truly living in the future.
posted by Bugbread at 8:16 PM on March 1 [1 favorite]


so neoliberal
very quantified
wow
posted by save alive nothing that breatheth at 8:23 PM on March 1 [3 favorites]


...it’s 6% of all bitcoin in existence, and assuming bitcoin keeps growing to its potential, that means one individual is sitting on 6% of the world’s future trade and retail currency supply. In today’s USD value, such an amount would be on the order of 20 trillion US dollars...

what

what

i can't even just. what?

Like are they saying that BTC is going to be 6% of all global currency at some point?

My brain can't this level of euphoric fedoraness.
posted by emptythought at 9:45 PM on March 1 [4 favorites]


No emptythought, much stupider than that. Bitcoin evangelicals think that bitcoin will BE the future and only currency.
Like a single bitcoin would be worth several billion dollars.
posted by Iax at 9:59 PM on March 1 [7 favorites]


Yeah, it's saying "Assuming the value of BTC becomes equal to the value of the entire trade and retail currency supply, 6% of that would be 20 trillion US dollars".

On the other hand, assuming that BTC become as valuable as beany babies in the future, 6% of that would be enough to buy a few packs of gum.
posted by Bugbread at 11:07 PM on March 1 [1 favorite]


BTC caps out at 21 million bitcoins. 6% of 21 million is 1,260,000. $20 trillion divided by 1,260,000 bitcoins is $15,873,015.87 per bitcoin. Good luck with that, fedoral reserve.
posted by Pope Guilty at 2:17 AM on March 2 [6 favorites]


The World's Been Mt.Goxed: Bitcoin Blockchain Responds to the Crisis of Legitimacy.
The mainstream media has been painting it as a fundamental failure of Bitcoin itself, yet this crisis runs much deeper - into the current and structure of the fiat and central banking model. It is now becoming clear that instead of following basic Bitcoin security and transparency practices, Mt. Gox was operating in an opaque centralized model more akin to existing banking systems.

The Mt. Gox crash mirrors the inherent tendency toward corruption of the centralized financial system itself, where States and banks can regularly siphon off trillions of dollars from the hard work and savings of ordinary people. For years now we have all been getting Goxed, the only difference with this one is there will be no government bailout or debasing the currency. The whole world has been Goxed and what we are seeing now is a crisis of the centralized financial system.
posted by TheophileEscargot at 2:25 AM on March 2 [4 favorites]


Graffiti spotted in Brighton this week:
give me
your
tears
BITCOINS
Assume it will soon be changed back.
posted by EndsOfInvention at 2:55 AM on March 2


Ouch.
posted by tonycpsu at 6:45 AM on March 2


such interesting coins roundup: There are currently 138 coins listed on coinmarketcap.com, a sign that many of the basic functional elements of a crypto are present, including an exchange connected to USD through some crypto chain. I'm gonna go on a bike ride & have pizza for BTC for lunch...
posted by save alive nothing that breatheth at 7:29 AM on March 2 [2 favorites]


Forgot one: Premine, experimental, the first 100% premined coin that basically functions as current capped cryptos will when mining finishes rather than trying to do something different like Ripple or Mastercoin. 499K were distributed to randoms who were encouraged to redistribute, miners are paid only transaction fees.
posted by save alive nothing that breatheth at 7:41 AM on March 2 [1 favorite]


The World's Been Mt.Goxed: Bitcoin Blockchain Responds to the Crisis of Legitimacy

Audit the Fedora!
posted by one more dead town's last parade at 12:10 PM on March 2


PBS NewsHour just posted an informative article on BitCoin gambling by Simone Pathe.


Apparently "more than half of global Bitcoin transactions are wagers on gambling sites."

I had no idea. Of course this is the ultimate utility for BTC, and it makes much more sense as a gambling currency than a replacement for standard trade. Once the US government cracked down on gambling with dollars in the US, and the credit card companies stopped allowing their use for gambling sites due to the risk of chargeback and new federal laws, BTC rushed in to fill the need.

So it's good for buying drugs and porn and hit men, perhaps, but it seems significant that more than half of all transactions in BTC are wagers on gambling sites. Now it makes a lot more sense. Because "investing" in BTC takes a gambler's risk tolerance to begin with.
posted by spitbull at 12:50 PM on March 2 [3 favorites]


OK, I am genuinely fascinated by MazaCoin, the supposed crypto sovereign currency of the Traditional Lakota Nation. Hmmmm.
posted by spitbull at 12:58 PM on March 2


The TSA is looking for Bitcoin
posted by homunculus at 1:33 PM on March 2 [1 favorite]


It should be noted that it's not as simple as it looks, re: gambling.

With Bitcoin, every transaction is recorded on a public ledger called the blockchain. This means everyone can check if a bitcoin transaction took place. Bitcoin gambling sites like Satoshi-Dice use the blockchain to prove they run a fair casino. They could have run their business so that they do the gambling on an internal ledger, which would be faster and bloat the blockchain less, but by having each bet take place on the blockchain, they can prove that they are paying out at or near the rates they promise.

What this means is that every bet in Satoshi Dice counts as a transaction, and further, Satoshi Dice lets you automatically make many repeated bets, so even a small number of gamblers can add a lot of transactions to the blockchain. There was actually some concern that Satoshi Dice would create problems for other transactions, as all Satoshi Dice transactions include fees (making them higher priority to be included on the blockchain than low fee or fee free transactions), each transaction is stored on the blockchain (which makes the file larger, although the blockchain doesn't need to be downloaded by most users), and miners need to store more transactions (although the current 7 transaction per second limit isn't really being approached). These things didn't come true, although fee free transactions do have a very hard time getting included promptly. A new update is supposed to lower fees to about half a cent if prices stay steady, though.
posted by mccarty.tim at 3:26 PM on March 2 [3 favorites]


I didn't know that re: the provably fair gambling.

A similar superficial analysis problem seems to be happening when people look at the amounts held by the richest addresses as proof of inequality - the problem is those richest addresses are gambling sites, pools, wallets, and exchanges that are functioning as 100% reserve depositories in one way or another.

Gox should just rebrand itself as an innovator - the first to introduce Bitcoin fractional reserve - internet detectives are saying it looks like Gox might still hold some significant funds.
posted by save alive nothing that breatheth at 5:05 PM on March 2


The TSA is looking for Bitcoin

Well, isn't the author of this piece so precious.
posted by one more dead town's last parade at 10:29 PM on March 2 [4 favorites]


I confess that I only skimmed it, but in my skimming, my favorite part was this:
I was joking with them, like I do with most equals.
Then blue shirt said, “Just answer the question.”
Full stop. State speech is hate speech.
posted by Bugbread at 10:59 PM on March 2 [2 favorites]


What Did Not Happen At Mt. Gox, Emin Gün Sirer, Hacking, Distributed, 01 March 2014
posted by ob1quixote at 11:42 PM on March 2 [7 favorites]


Thanks ob1quixote, that's a great article.
posted by EndsOfInvention at 2:11 AM on March 3 [1 favorite]


This is getting more and more interesting.

BREAKING: a group of hackers claims that they have a DB dump from Mt Gox. They're looking at what to do with it - their alleged motive is to expose Mt Gox, without dumping customer information. Their wry Serbian spokesman asserts that they "want gox boss going a jail for crime against user".

An amusing bit from the IRC log, the veracity of which I cannot confirm: "i know why... mark is just a stupid geek boy. he made two mistakes that pros won't ever make: he didn't do homework to study countries finance laws... for example he did set up a company in the US but he forgot to sign paper stating that the company he owns that they doesn't deal in or exchange money, and that it doesn't send funds based on customer instructions which did lead to US seize 5 millions."

Another interesting bit, the veracity of which I cannot confirm: "so according to nanashi____, russians are hacked into mtgox computers, as we can see some evidence"
posted by Sticherbeast at 4:40 AM on March 3


Also: Mt Gox has just received a subpoena from US federal prosecutors.
posted by Sticherbeast at 5:02 AM on March 3


Man, this is the most ridiculously boring stolen audio recording. I'm still only 12 minutes into it, and I don't think I can make it through the full 30.
posted by Bugbread at 5:15 AM on March 3


Yeah, ob1quixote, that Sirer piece is superb. I leaned a ton from it that has been obscure to me despite lots of prior reading. Thanks! He can write too:

Bitcoin demographic is 98% male, between the ages of 20-30. I base this on official online polls, confirmed by pictures of the Bitcoin Christmas party at Bitcoin HQ in NYC, which somehow managed to look more depressing than my high-school dances. This demographic uses their laptops for viewing highly questionable content and their phones for installing flapping bird software from Jimmy Bob's Software Inc. These are the same people who have started but not yet finished reading The Fountainhead, the same people who grant permissions to make phone calls, activate cameras and send SMSs to phone apps whose sole function is to act as a flashlight. Running a wallet is the last thing they should be trusted with.
posted by spitbull at 5:56 AM on March 3 [7 favorites]


And damn, the next paragraph is just as kickass.

I wanted to end on a note of cautious optimism, similar to those visionary futurists from the 70s who were all full of hope for mankind, extrapolating from their experience after a decade of awesome parties. They expected a future filled with tech wonders, strawberries the size of watermelons, and carefree love with strangers. But it's just not possible. Cryptocurrencies are here to stay, but future systems will look nothing like the currency systems we have today. Before Bitcoin, we had Karma, and before Karma, we had millicent, with plenty of others before and in between. There will be others.

posted by spitbull at 6:02 AM on March 3 [1 favorite]


Mt Gox customers now receiving phone calls from Russia.

From the OP, within the post:

"Yes, i just got in touch with a woman, she said that they are interested in investors for a new trading platform.
when i asked where she got my number, her reply was that she got a list and that her job is just to call potential investors."

Hooooooooooooooooooo boy.
posted by Sticherbeast at 6:38 AM on March 3 [7 favorites]


Wired: The Inside Story of Mt. Gox, Bitcoin's $460 Million Disaster

Bits from the article:

"Mt. Gox, he says, didn’t use any type of version control software — a standard tool in any professional software development environment. This meant that any coder could accidentally overwrite a colleague’s code if they happened to be working on the same file."

"Federal agents had seized $5 million from the company’s U.S. bank account, because the company had not registered with the government as a money transmitter[.]"
posted by Sticherbeast at 7:02 AM on March 3 [3 favorites]


Bitcoin promises to give a bank account to anyone with a mobile phone, no ID required. It’s clearly an amazing and potentially world-changing technology — the first viable, decentralized, reliable form of digital cash. It could democratize international finance. But it’s also a technology that was pushed forward by a community of people who were unprepared or unwilling to deal with even the basics of everyday business

Clearly, Wired has somewhat different standards for "viable" and "reliable" than most people. Which would just be another cheap jab at Bitcoin and its enthusiasts, I admit, if this wasn't a central problem with cryptocurrencies -- once you add financial expertise, regulation, and all the other things to make it truly "viable" and "reliable," it ends up as a new appendage on the already existing financial apparatus, which might be nice for micropayments, but not the thrilling upending of the status quo we are breathlessly promised. On the other hand, without those things, cryptocurrencies remain vulnerable to the the next hack, the next scam, the next unwelcome discovery. And, as the quote spitbull identified above points out, many of the cryptocurrency users do not have even the technical skills necessary to evaluate the risks, much less protect themselves. And they are more clued in than the J.Q. Publics who are supposed to embrace this revolution?
posted by GenjiandProust at 7:27 AM on March 3 [3 favorites]


In retrospect, Mt. Gox server security is absolutely something we should be wondering about. The company has always been famous for sloppy software engineering. That alone isn't a death knell, apparently the product was good enough to accumulate $500M worth of customers' desposits. But a bunch of poorly written PHP scripts are not where I'd look to for bank-level systems security.

OTOH if they had a serious security breach I'd expect to see it first as some sort of hack installed alongside the web server that was siphoning off customer wallets. That looks a bit different than "oops, we just noticed all our Bitcoin reserves disappeared".

Here's a Pastebin claimed to be some Mt. Gox source code leaked yesterday.
posted by Nelson at 8:01 AM on March 3


Mt. Gox has posted an updated statement detailing their bankruptcy status. (Reddit has a copy).

There's nothing too surprising, although I'll note that it repeats the same tally of assets and liabilities of the company that totally leaves out the far larger Bitcoin balance. Also not new but notable, "we found out large discrepancies between the amount of cash held in financial institutions and the amount deposited from our users". That refers to cash in hard currencies, yen and dollars. So apparently it's not just the magic cryptocash they weren't counting correctly, but also simple ordinary money.
posted by Nelson at 8:06 AM on March 3 [3 favorites]


Which would just be another cheap jab at Bitcoin and its enthusiasts, I admit, if this wasn't a central problem with cryptocurrencies -- once you add financial expertise, regulation, and all the other things to make it truly "viable" and "reliable," it ends up as a new appendage on the already existing financial apparatus, which might be nice for micropayments, but not the thrilling upending of the status quo we are breathlessly promised.

Yep!

It's one thing to have this efficient-looking thing that seems nice in theory. At some point, you will have to enter the real world, and in the real world, there be dragons. People will use the product for something other than its original design. People will seek to game or break the system. That's where rules come in. Nobody likes the idea of rules, until the stuff hits the fan: when, say, the exchange crashes, and you either go into bankruptcy protection, or you assert your rights as a creditor.

That's why I roll my eyes at that Medium piece, which accidentally makes the status quo look simply marvelous by comparison. It's easy to chastise Mt Gox for conducting transactions off of the public blockchain, but you cannot avoid the fact that the transactions conducted off of the public blockchain are part of the entire appeal of BTC in the first place. It doesn't matter that these transactions aren't officially part of the protocol - the bumblebee flies anyway. Actually Existing Bitcoin does, in fact, involve things like exchanges and tumblers and so on.

Actually Existing Bitcoin also necessarily involves how a massive percentage of BTC users had kept their BTC on exchanges, ready to be converted into plain old fiat currency. For them, BTC wasn't the way of the future, in the sense that they wanted to use BTC itself as a currency on a regular basis. If this was what they had wanted to do, then they would have used cheaper, easier, and more secure ways to keep their wallets. No, for them, BTC was just an investment trick, so that they could get more plain old fiat currency. They sacrificed BTC's alleged security and anonymity and the use of the public blockchain, all so that they could buy low and sell high.

You can't talk about BTC without accepting these realities. You can't just pretend that Bitcoin is really just a technologically sound currency, and that the people who are screwing themselves and others just aren't playing by the rules.

Because if there aren't any rules, then the rules are just what's happening right now.
posted by Sticherbeast at 8:35 AM on March 3 [11 favorites]


[Comment removed. Even if it's something you're treating largely as silly fake not-money goofiness, we really need folks not to use Metafilter threads as a place to ask for donations/tips/gifts/whatever. Totally fine to talk about this stuff, not so fine to be like SEND ME SOME DOGE, etc.]
posted by cortex at 2:01 PM on March 3 [5 favorites]


Mt Gox customers now receiving phone calls from Russia.
From the OP, within the post:
"Yes, i just got in touch with a woman, she said that they are interested in investors for a new trading platform.
when i asked where she got my number, her reply was that she got a list and that her job is just to call potential investors."


That's one aspect that I haven't seen mentioned elsewhere. To get real money out of mtgox (like 6 months ago, before they started crapping out) you had to send them tons and tons of personal information, scans of passports and other ids, birth certificates, bank account information, ect.. You couldn't ask for a more perfect package for identity theft.
With the stuff you had to send in, someone could get a mortage in your name.
posted by Iax at 7:37 PM on March 3 [3 favorites]


Plus, the marks come prefiltered for gullibility!
posted by tavella at 8:21 PM on March 3 [6 favorites]


The hits keep on coming!

Poloniex and flexcoin have been hacked. Poloniex lost 12.3% of their BTC, and in response they have (allegedly temporarily) docked everybody's deposits by 12.3%. Flexcoin lost all 896 BTC in their hot wallet, and now that exchange is dead forever.

It's probably those pesky Russians again. One of the addresses implicated in the thefts was found posted on Russia's version of 4chan.

What a crazy set of stories...
posted by Sticherbeast at 4:42 AM on March 4 [2 favorites]


Almost all of the exchanges are a disaster. I wouldn't buy hold any money or bitcoins on any of them.
posted by empath at 5:00 AM on March 4


I was wondering what Bitstamp was up to, and Wikipedia didn't disappoint with an interesting story:

In February 2014, the company suspended withdrawals for several days in the face of a distributed denial-of-service.[4] Bitcoin Magazine reported that people behind the attack sent a ransom demand of 75 bitcoins to Kodrič, who refused due to a company policy against negotiating with “terrorrists”.[5] Days after restoring service, Bitstamp temporarily suspended withdrawals for some users as a security precaution due to increased phishing attempts.[6]

What a world.
posted by Sticherbeast at 5:20 AM on March 4


I decided that I should dip my toes into *coin. Not as a true believer, but as a way to find out how easy or hard it is for a reasonably savvy individual to turn *coin into money, a question already discussed many times in this thread.

I chose dogecoin since it apparently doesn't have quite the fedora quotient of bitcoin. I now have a personal wallet and a machine doing CPU mining. I have about 1500DOGE to my name, with another 1300 estimated to come the next time my pool completes a block.

I have an unverified account at vaultofsatoshi.com, where I've converted some DOGE to approximately 5 cents (the exchange rate is on the order of magnitude of 1000DOGE=1USD). Once I complete verification AND convert enough *coin to have 10USD in my vaultofsatoshi account, I can supposedly request a check to be mailed to me. At the current exchange rate and mining rate, this'll take a minimum of weeks and use far more of my time than the $10 I might possess at the end---and the cost of the electricity input will also probably be on the same order of magnitude as the payout, so this is strictly a losing proposition for me. (for the purposes of my investigation, I intend to not use $ to purchase *coin outright, nor buy any items to help me mine, though my time and electricity are OK)

I posted a similar message yesterday but included a dogecoin address. Assuming the possibility that this is why the message was deleted by moderators, I won't include a dogecoin address this time around.
posted by jepler at 7:18 AM on March 4 [1 favorite]


Archer had a cryptocurrency B-plot last night, but, sadly, they didn't do that much with it.

OTOH, I LOLed at "Kriegerrands"
posted by tonycpsu at 7:30 AM on March 4 [1 favorite]


In light of the identity thefts, new coin collapses, and info about the stunning incompetency of mtgox, re-reading this thread is a barrel of laughs. Gosh, the embarassing blind support of bitcoin! Such naïvity, much gullible, oh wow!
posted by five fresh fish at 8:09 AM on March 4 [2 favorites]


Almost all of the exchanges are a disaster. I wouldn't buy hold any money or bitcoins on any of them.

If the infrastructure is entirely untruthworthy, as is demonstrably true at this point, then what advantage is *coin vs hand to hand bartering of gold ingots or chickens?
posted by T.D. Strange at 8:23 AM on March 4


They smell better than chickens. Usually.
posted by Kadin2048 at 8:53 AM on March 4 [2 favorites]


Poloniex and flexcoin have been hacked ...

The Poloniex write up is great (assuming it's true)
The hacker discovered that if you place several withdrawals all in practically the same instant, they will get processed at more or less the same time. This will result in a negative balance, but valid insertions into the database, which then get picked up by the withdrawal daemon.
Every time you read about implementing transactions in a computer system you see the same damned example: withdraw from one account and deposit to another account. It's amazing that they blew such a basic item. (If you're not into computers, an analogy might be decrying gasoline cars, inventing electric cars, but providing no way to recharge or replace the batteries.)
posted by benito.strauss at 9:11 AM on March 4 [2 favorites]


OTOH, I LOLed at "Kriegerrands"

"Dunning-Kruegerrands" remains my favorite nickname for Bitcoin.
posted by Pope Guilty at 9:12 AM on March 4 [4 favorites]


I recently heard "kleptocurrency".
posted by ODiV at 10:03 AM on March 4 [9 favorites]


Douchemarks.

If the infrastructure is entirely untrustworthy, as is demonstrably true at this point, then what advantage is *coin vs hand to hand bartering of gold ingots or chickens?

The thing is the entire infrastructure is not untrustworthy; just all the shitty businesses that have grown up around it. The core decentralized blockchain protocol that Bitcoin is based on seems pretty solid, and useful, and novel. The problems we're seeing with Mt. Gox etc are all not really related to Bitcoin itself; they could have happened with any grey market financial service. In that sense nozomi hayase's piece in Medium is correct, despite being ridiculous; "Mt. Gox was operating in an opaque centralized model more akin to existing banking systems." Mt. Gox's problem is that it was not Bitcoin enough.

Some unrelated links that are fascinating because they dive into the idea of Bitcoin as a new system of distributed consensus. The programming error that cost Mt Gox 2609 bitcoins, which goes in depth into the way Bitcoin transactions contain embedded executable programs and sometimes those programs have bugs. And Ethereum, a system under development that takes the Bitcoin idea of programs running in a distributed consensus system and runs with it far past digital currency.
posted by Nelson at 10:22 AM on March 4 [5 favorites]


Oh god that Poloniex writeup is painful. The worst part is his published fix: "the withdrawal daemon now checks for negative balances before processing withdrawals and will freeze any account with a negative balance." Note: this is not actually a fix. Distributed transactions are difficult and there's a reason grownups who write financial software work hard and carefully. Do not trust this person with your money.

The followup discussion is trying to trace the theft through the blockchain. Allegedly the trail starts here.
posted by Nelson at 10:37 AM on March 4 [7 favorites]


Race conditions are no fun for anyone to deal with, but wow that is some repugnant, incompetent shit. Get that dude away from software.
posted by invitapriore at 11:10 AM on March 4


The thing is the entire infrastructure is not untrustworthy; just all the shitty businesses that have grown up around it. The core decentralized blockchain protocol that Bitcoin is based on seems pretty solid, and useful, and novel.

But the "shitty businesses that have grown up around it" are the infrastructure of Bitcoin. I don't think anyone here has disparaged the Bitcoin protocol itself (besides quibbles about deflation, which is a valid economic argument but not the one being made right this second).

And while there are undoubtedly well run, reliable businesses that have been built around Bitcoin, the last couple of weeks have shown that it's not super easy for consumers to suss out which ones they are. In fiat land, banks are regulated and cash deposits are generally insured (FDIC, CDIC, etc)*. So, when shitty banks show up they are likely to be caught out and individual depositors are generally made whole again.

Until that exists for Bitcoin, holding onto Bitcoin seems foolhardy. BUT, with companies like Coinbase making it so that businesses can accept Bitcoin without accepting the risk, I have hope for Bitcoin (or some other cryptocurrency) to be able to exist as a payment system independent of the Paypals and Visas of the world.

*obviously the story is different for investments (2008, etc)
posted by sparklemotion at 11:58 AM on March 4 [3 favorites]


Until that exists for Bitcoin, holding onto Bitcoin seems foolhardy. BUT, with companies like Coinbase making it so that businesses can accept Bitcoin without accepting the risk, I have hope for Bitcoin (or some other cryptocurrency) to be able to exist as a payment system independent of the Paypals and Visas of the world.

And when/if that infrastructure becomes viable enough for your grandpa to order something off Bitcoin Ebay or whatever form Bitcoin commerce takes...it will be effectively an alternate payment system to Paypal. With all the accompanying oversight and regulations, which exist for good reason. It will become a part of the existing banking system, or simply rebuild it in parallel.

Bitcoin/cryptocoin can't be both (1) an unregulated gray/black market full of predators where drug seekers routinely lose their shirts to hackers and tinfoil hat wearing prophets preach the end of the USD and all taxes and (2) enjoy any kind of widespread acceptance in the real economy.
posted by T.D. Strange at 12:28 PM on March 4 [8 favorites]


With all the accompanying oversight and regulations, which exist for good reason. It will become a part of the existing banking system, or simply rebuild it in parallel.

I agree with this, although I think part of the reason why any of the cryptocoins are popular at all is because the current rules of the banking system try to prevent people from doing things that they are going to do anyway. People take money out of the bank and buy illegal drugs with it for example, and no amount of financial regulation can stop those kinds of transactions from happening. Until the legit banking systems provide people with ways to do things like that, there are always going to be black/grey market workarounds. The cryptocoin scene will probably try to self-regulate and create their own rules as time goes on (like the illegal file sharing scene has done) or the normal banking industry will figure out a way to do digital cash in a way that makes alternatives unnecessary.
posted by burnmp3s at 3:24 PM on March 4


I agree with this, although I think part of the reason why any of the cryptocoins are popular at all is because the current rules of the banking system try to prevent people from doing things that they are going to do anyway.

One problem with pre-existing electronic payments is that there has tended to be a bias in who can accept them and for what purposes - I as a random couldn't receive money quickly from friends' credit cards until recently, and now even with more tech bought to bear Google Wallet and Venmo take their cuts, and also, importantly, record the transactions in secret (inequality of data?), while coin mostly takes the David Brin transparent approach.

With coin I can send money to a guy who got a QR on TV at a college football game ($24K I heard), Ukrainian protestors who put a short text string on the Internet, and to anyone on Twitter, Reddit, Facebook soon if not already, Steam...
posted by save alive nothing that breatheth at 8:33 PM on March 4


And yet that one problem is insignificant when compared to the frighteningly stupid, ever-multiplying problems of the cryptocurrencies you relentlessly promote.
posted by five fresh fish at 10:35 PM on March 4 [6 favorites]


Peter R’s Theory on the Collapse of Mt. Gox, Bitcoin Talk, 02 March 2014
A young man had a secret. To keep it hidden, he kept digging until the hole was a billion dollars deep. This is a speculative tale of a great bitcoin theft from MtGox in 2011 and the efforts that this man undertook to fix it. The tale explains the bitcoin bear market of 2011, the explosive rally of 2013, delayed fiat withdrawals, malled transactions, and a bot named Willy.
posted by ob1quixote at 12:56 AM on March 5 [1 favorite]


What Did Not Happen At Mt. Gox, Emin Gün Sirer, Hacking, Distributed, 01 March 2014

While the burns about android apps and stuff made me double over with laughter, the line about "twerking their support line" just made me go wut.

if you don't know what the word means, just like, don't use it dude.
posted by emptythought at 3:39 AM on March 5


...the line about "twerking their support line" just made me go wut.

When I read it, I debated back and forth whether it was a mistake, and decided that the image of someone twerking while calling Mt. Gox support, every call, was better than any fix I could think of to make the sentence accurate.
posted by frimble at 4:14 AM on March 5


So I was poking around on the Poloniex writeup thread on bitcointalk, and a came across an ad for PonziCoin - The Very Best BitCoin Ponzi!

An opt-in, acknowledged Ponzi scheme, played with bitcoin, as a casino game.

Satire is dead.
posted by murphy slaw at 4:48 AM on March 5 [4 favorites]


"Seeing that nothing could be done to help get back my or anyones coins/cash I decided to do some red pill talk."

oh god what

Never before have I wished so hard that Japanese call centers could deploy knockout gas via phone.
posted by Sticherbeast at 5:33 AM on March 5 [6 favorites]


I'm trying to decide which is worse: the red pill talk, the "Jewgold killed 'Murica" WTFery, or the anime-level grasp of Japanese culture.
posted by zombieflanders at 6:04 AM on March 5 [2 favorites]


"'Bank' that claimed to solve Bitcoin’s security problem robbed, shuts down"

Flexcoin said it solved "nearly all" of Bitcoin's problems, then it lost $600,000.
posted by grouse at 6:09 AM on March 5 [1 favorite]


Never before have I wished so hard that Japanese call centers could deploy knockout gas via phone.

I think a "brown tone" would be more practical. And apt.
posted by GenjiandProust at 6:17 AM on March 5


"twerking their support line"

I decided to read this as a physical escalation of support line engagement. Like, you would just be calling or emailing; you would just be calling or emailing a whole lot; you wouldn't even just be standing at an actual support technician's desk; you'd be physically shaking your ass rapidly and relentlessly two inches from the support tech's face, shouting BAD TRANSACTION, BAD TRANSACTION, BAD TRANSACTION the whole time.

It doesn't really make a lot of narrative sense but it's evocative and got me through the paragraph.
posted by cortex at 7:31 AM on March 5 [3 favorites]


I'm not sure what kind of music they would play, but Red Pill Talk would be the worst fucking band ever.
posted by MCMikeNamara at 7:49 AM on March 5 [1 favorite]


I know it's all lulz with Mt. Gox now, but here's some people who lost money they couldn't afford to lose, responses to a proposed class action suit before the bankruptcy filing.
I'm a student and this is almost all of my money I have left (I actually have a lot of debt, which I intended to pay back with that money). I'm really panicking right now and not sure what to do!!!

I am a French citizen. I would like to know how to try and join you in reclaiming my lost funds. I had almost 100.000 EUR in my account. It will be a complete disaster for me if it is stolen.
I mentioned two possible suicides before, here they are. Autumn Radtke, CEO of First Meta, a Singapore-based virtual currency trading platform that also deals in bitcoin. And My best friend, who I knew had about 900 btc stuck on gox.

I read a lot about Bitcoin, one common theme is Bitcoin is the first "investment" for naïve people with no experience in markets or currencies. And certainly no expertise in broken software platforms or the risks of unregulated markets. These people are often victims of a scam they don't even understand. I know, I know, a fool and his money.. But in the US at least the investment industry is well enough regulated that you have to step pretty far out of the mainstream to fall prey to a straight-up theft of dollars invested in securities.
posted by Nelson at 8:02 AM on March 5 [1 favorite]


Long post short, I covered Nathan Rothschild, the Napolean war and subsequent hijacking of the Bank of England/British stock market. How contries are overtaken financially and stable, prosperous states are thrown into ruin. Those that know better and refuse to co-operate get invaded and flattened to allow profits to be made from rebuilding. Covered QE (Abenomics over here) and how our money is taken from our wallets gradually over time.

/r/thathappened.
posted by jaduncan at 8:30 AM on March 5


But in the US at least the investment industry is well enough regulated that you have to step pretty far out of the mainstream to fall prey to a straight-up theft of dollars invested in securities.

Yes. But that's exactly what they did. I am in great sympathy with the idea that in general, markets need to be regulated to prevent the average citizen from being ripped off. But to be honest I don't have much sympathy for people who lost it all on Gox or the other exchanges --- the troubles there didn't start last week, for one thing, but far more importantly: the whole damn point of bitcoin was that it was beyond the reach of governments. That was the appeal. It was a brand new thing, a wild frontier where the long arm of the law couldn't reach. Even the most clueless of chuckleheads must have known this.
posted by Diablevert at 8:37 AM on March 5


Even without gox going under, bitcoins are an incredibly reckless and risky investment. I spent a bit of money on them after some bad news caused a dip in the price, but it was all money I can afford to lose. I've already written that money off, mentally. If I come back in a year and I've doubled my money, fantastic. If not, it wasn't a big loss.

If you lost all your money on gox, you made a lot of really stupid decisions to get there.
posted by empath at 8:43 AM on March 5 [1 favorite]


So, this made me laugh:
‏@drewtoothpaste How many Bitcoin users does ATTENTION EVERYONE WE HAVE BEEN HACKED AND ALL THE LIGHTBULBS ARE GONE.
posted by EndsOfInvention at 8:46 AM on March 5 [8 favorites]


All too often "stupid decisions" are stupid only after the fact. I am by no means a BC defender, personally I think they are all likely to fail horribly or end up being such a niche product they will never really intersect with my life, but... I could be wrong. But, the difference between "a gutsy bold move" and "complete fucking idiot" is pretty thin as to be indistinguishable from a roll of the die
posted by edgeways at 8:57 AM on March 5


Who is the reclusive billionaire creator of Bitcoin?
posted by the man of twists and turns at 9:04 AM on March 5 [1 favorite]


edgeways: "But, the difference between "a gutsy bold move" and "complete fucking idiot" is pretty thin as to be indistinguishable from a roll of the die"

If the money you're investing is money you literally cannot afford to lose, then the difference is not thin at all.
posted by tonycpsu at 9:06 AM on March 5


I bristle every time I see the word "investment" applied to Bitcoin. "Speculation" is a more appropriate term.
posted by malocchio at 9:14 AM on March 5


Yeah, I'm trying to be charitable. The point is, just because die rolls come out when you gamble your life savings doesn't mean it was a "gutsy bold move" -- it just means it was a dumb move that happened to work out for you.
posted by tonycpsu at 9:16 AM on March 5 [2 favorites]


If the money you're investing is money you literally cannot afford to lose, then the difference is not thin at all.

But aren't almost all investments money people can't afford to lose? I don't know of many people who keep all their worldly goods in cash in a mattress. It seems like, as malocchio points out, a lot of people didn't understand the difference between an investment and a speculation. . . but that is a difference that is deliberately obscured in many, many places. I have, for example, a LOT of friends who got incredibly mindblowingly wealthy by investing in Microsoft stock in the late 80's/ early 90's, mostly because they worked there. NOW it's an investment. . . but at the time, were tech stocks more investment or more speculation?
posted by KathrynT at 9:17 AM on March 5


One "invests" in stocks. One "speculates" in gold. One "gambles" in Bitcoin.
posted by Nelson at 9:17 AM on March 5


You guys should come teach Wall St lessons, they don't seem to understand how "investment" and "speculatory" are mutually exclusive either.

Gambling, investment, and insurance are three forms of the same thing.
posted by save alive nothing that breatheth at 9:21 AM on March 5


KathrynT: "But aren't almost all investments money people can't afford to lose? I don't know of many people who keep all their worldly goods in cash in a mattress."

Well, cash in a mattress is a guaranteed loss due to our non-zero inflation target. Not all investments are money people can't afford to lose. Retirement savings are the closest thing to that, and without trying to open up a derail about the evils of 401(k)s vs. defined benefit pension plans, I'll just say that even with the system we have now, guidance is to start out with more risk tolerant investments (equities) and transition toward bonds and eventually money market funds as you get older. If your retirement fund gets nuked when you're in your 40s, you can probably recover, in your 60s, not so much.
posted by tonycpsu at 9:22 AM on March 5


One "invests" in stocks.

Oh, I think the dot-com boom was speculatory at best. It worked out great for some people. . . not so much for others.
posted by KathrynT at 9:23 AM on March 5


One "invests" in stocks. One "speculates" in gold. One "gambles" in Bitcoin.

I like to think that gambling involves a much more defined and easily calculable table of odds.
posted by malocchio at 9:36 AM on March 5 [2 favorites]


So, upthread people were talking about someone in Britain mailing cash to the US. I am in Britain, and I actually did this in 2000 to pay for my first eBay transaction (CD of the Grosse Pointe Blank soundtrack). Nowadays I'd be using Paypal. I don't particularly like it - they are very very hard to be held accountable if anything happens in the UK, as their headquarters are in Luxembourg, their call centre is in Ireland, and if they decide they want to freeze your account for six months with £200 in it, they can and there's fuck all you can do about it. But, it means I can buy things from overseas easily, particularly small items, and I could donate it too if I wanted. Friend in Florida can't pay her electricity bill? I just need to open my account and send her the money, bosh. I use my debit card to pay for 99% of everything I need day to day, so I'm quite happy with my money existing electronically rather than on paper.

However, bitcoins. I've been reading about it off and on for a while, as bubble crazes fascinate me. I still have not the first idea of how I would go about acquiring one. I looked up Dogecoin out of interest, thinking it was just a case of downloading a program and leaving it running, but it isn't. I'm as computer literate as any non-IT person - I know how to torrent and fileshare and install old programmes so my PC thinks I'm running Vista - but I hadn't the foggiest how I'd actually get some Dogecoin myself. And how would I exchange real money for a Bitcoin etc? If I want USD, I can go to the Post Office on the way to work and experience the inconvenience of a queue and possibly having to show my passport/withdraw a chunk of paper cash to get them. Some of you are talking about it as though it's obvious, but it isn't. It seems to me it's a lot more like investing in the stock market than it is like an online transaction or currency exchange - something the individual can do, but not without considerable prior knowledge and taking on a decent amount of risk first.
posted by mippy at 9:43 AM on March 5


zombieflanders: "I'm trying to decide which is worse: the red pill talk, the "Jewgold killed 'Murica" WTFery, or the anime-level grasp of Japanese culture."

There are some awesome rejoinders from the other folks in that thread.

In addition to all this guy's standard BitCoin supporter crazy, this plainer part jumped out at me:
With a completely digital money world you go to buy rice but the supermarket will pay your overdue electric bill for you and then tell you that you don't have enough money to buy food. With Bitcoin this would be impossible to do.
Wha? My bank account is all "digital money", in the sense that it's just ones and zeroes in the bank's database, and my electric bill is automatically deducted because I filled out a form saying "I would like you to withdraw this automatically, instead of me doing a manual bank transfer each month". The same as this guy, in Japan. How is it that if the bank switched from paying cash at ATMs to instead only charging my Suica or Nanaco cards, this would no longer be the case? And is he saying "With BitCoin it's impossible to set up automatic bill payment?" Because that would fucking suck!

Also:
"hopefully a shit load of people who start of googling about Bitcoin end up wiser about the world we live in than ever before."
I suspect he means "...and realize how wonderful BitCoin is", not realizing the result would be "...and go from not knowing what BitCoin is to thinking it and its supporters are ridiculous"

I doubted his thing about 庶民, and, in fact, one of the commenters took him to task saying "that's not what 庶 means", but doing more research, it turns out he's right, that's what 民 means. "Slaves with their eyes blinded with needles". Wow.
posted by Bugbread at 10:48 AM on March 5 [1 favorite]


It is easy to find a Visa for which the fee is 1%.

Mine is 0% and a 'preferential exchange rate' that's close to what you'd get at the bank, on both cash and charges. It makes it far too easy to run up a ginormo bill on holiday, though.
posted by mippy at 10:52 AM on March 5


Okay, a question for you knowledgeable tech folks. I've heard that BitCoin is great because anonymous payments, and BitCoin is great because you can't cheat the system because all transactions are recorded in the blockchain. I just figured this was me not understanding the technology, and that somehow both were true (because even anti-BitCoin people didn't talk about this discrepancy), but the Telegraph article linked above says:
Certainly, anonymity is one of the biggest myths about Bitcoin. In fact, there has never been a more easily traceable method of payment. Every single transaction is recorded and retained permanently in the public “blockchain”.
So are they just having the same comprehension fail I am, or was I right, that one or the other can be true, but not both?
posted by Bugbread at 10:56 AM on March 5


The Doomsday Cult of Bitcoin
posted by the man of twists and turns at 11:00 AM on March 5 [2 favorites]


You guys should come teach Wall St lessons, they don't seem to understand how "investment" and "speculatory" are mutually exclusive either.

Oh, they know the difference very well. They don't feel the need to tell the rubes retail "investors" about it, though.
posted by Kadin2048 at 11:11 AM on March 5


I've heard that BitCoin is great because anonymous payments, and BitCoin is great because you can't cheat the system because all transactions are recorded in the blockchain.

The blockchain records all transactions to wallets. Wallets aren't necessarily linked to a particular identity.

Obviously, if you use a wallet to buy something from Amazon and they send it to your house, then Amazon knows the physical address of that wallet, but there are steps that can be taken to keep the your identity secret even in transactions like this.

For a trivial example, remember that people can have as many wallets as they want. So, you could keep an Amazon wallet, that you use only for transacting with Amazon, and transfer coins from a "secret" wallet to the Amazon wallet. If you do this with enough "secret" wallets, someone trying to examine the blockchain to trace the transaction won't necessarily be able to prove that any of the "secret" wallets belong to you. This is, from what I understand, the principle behind "tumblers".
posted by sparklemotion at 11:22 AM on March 5 [1 favorite]


Ok, that makes sense, but to get money into the secret wallet, you'd have to transfer it from your public wallet, right? So if someone sees that wallet 0123456 was used to pay for something illegal, you could look at the blockchain to see that the money was transferred to 0123456 from 987654, and 987654 belongs to, say, Matt Haughey. Or you could use tumblers, obfuscating through sheer numbers...but that's not all that different from conventional money laundering, so it seems like BitCoin is "anonymous" only in the way that any money is "anonymous", in that it can be laundered. Am I still missing something? Perhaps that tumblering is much easier to do or harder to unravel than conventional laundering?
posted by Bugbread at 11:30 AM on March 5


What Did Not Happen At Mt. Gox
posted by the man of twists and turns at 11:45 AM on March 5


Perhaps that tumblering is much easier to do or harder to unravel than conventional laundering?

As far as I understand it, yes.
posted by sparklemotion at 11:46 AM on March 5


My opinion is that you are right, Bugbread, and that Bitcoin is the absolute opposite of anonymous because of the public transaction log. Tools like blockchain.info and QuantaBytes let you explore that record. Wallets are of course pseudonymous and money laundering services (aka "tumblers") do seem to be effective in washing at least small amounts of Bitcoin. But my opinion is that with appropriate analysis, Bitcoins are trackable.

Here's a few links on tracking specific Bitcoins through the block chain: A Fistful of Bitcoins: Characterizing Payments Among Men with No Names (academic paper), There's a £60m Bitcoin heist going down right now, and you can watch in real-time (magazine article about tracking a thief), and anatomy of a $40MM bitcoin heist, a diagram showing Bitcoin transfers. Also interesting are Quantitative Analysis of the Full Bitcoin Transaction Graph (academic paper) and Bitcoin is not Anonymous (blog post; old but still relevant).

However, I have to admit that there have been a lot of significant thefts of Bitcoin and as far as I know no money has ever been recovered because of blockchain analysis. There's about $500M worth of motivation to find the missing Mt. Gox money, for instance, and so far no one's turned up much useful info. There are smaller thefts going back at least two years that have also been tracked, but again I'm unaware of any stories of those resulting in funds being frozen or seized or any perpetrators being caught. So maybe in practice it really is anonymous enough. I'd love to read more on this topic.
posted by Nelson at 11:47 AM on March 5 [1 favorite]


The blockchain is like some weirdass digital treasure trove:

Hidden surprises in the Bitcoin blockchain and how they are stored: Nelson Mandela, Wikileaks, photos, and Python software
posted by malocchio at 11:47 AM on March 5 [3 favorites]


Hidden surprises in the Bitcoin blockchain and how they are stored: Nelson Mandela, Wikileaks, photos, and Python software

I'd be very curious to see what happened if someone were to put a copyrighted MP3 into the blockchain. Assuming it wasn't the copyright holder that uploaded it, every new blockchain p2p participant would be committing a $100,000 reproduction infringement (sum varies by jurisdiction). The same could be done with a clearly libelous statement or a classified document.

Either everyone who uploads the blockchain ends up either accruing potential liability or a change would have to be made in the protocol so the blockchain is no longer unalterable. Either seems relatively painful.
posted by jaduncan at 3:23 PM on March 5 [1 favorite]


I've thought of that attack and the MUCH more damaging obvious corollary, it's relevant to my interests and I definitely don't expect hostile corporations/gov to play nice ... while it's not a fully formed idea so I won't talk out my ass too much, I think a reasonable defense could be mounted. Something I'll be working on in coming months.

I don't think it would even matter too much with copyrighted MP3s though, no one really cares.
posted by save alive nothing that breatheth at 5:26 PM on March 5


I don't think it would even matter too much with copyrighted MP3s though, no one really cares.

What if it was my copyrighted MP3, and I cared? Is this how I make my millions billions?
posted by inigo2 at 6:11 PM on March 5 [1 favorite]


You prolly have less money & power than Metallica and the Big Two and a Half or however many record companies are left, and no one cared when they cared.

If you haven't noticed how IP law works, it's not for you.
posted by save alive nothing that breatheth at 7:49 PM on March 5


If you haven't noticed how IP law works, it's not for you.

Quit with the condescending tone, dude. Bitcoin has lost the game. It's all over.
posted by five fresh fish at 9:31 PM on March 5 [1 favorite]


Bitstamp seems to be reaching the trading volumes of MtGox and trading prices have been over $600/coin for a while.
posted by humanfont at 10:07 PM on March 5


Quit with the condescending tone, dude. Bitcoin has lost the game. It's all over.

I have not met the person in real life who has expressed more than mild & non-dismissive skepticism & hesitance. It's weird on here anymore.

Giving people 25 50 cents of DOGE on Twitter usually wows them over. They don't need to have setup anything, and I'm like, "yes, you can cash that out if you collect some minimum or donate those to charity, or buy a Steam game for under 50c probably".

You guys are pretty serious about money. Literally more serious than Wall Street bankers in my experience. I've sold them coins (personal amts).

What sequence of events do you see leading to the failure of not only Bitcoin per se but cryptocurrency / blockchain tech in general? I am very curious - I see risks, the government could up and outlaw it, it could turn out to have some fundamental security flaw, etc... but nothing that seems doomed to happen.
posted by save alive nothing that breatheth at 10:26 PM on March 5


With regards to the differences you've felt in real-life reactions vs. Internet reactions, that's probably not because MeFites have a fundamentally different reaction to BitCoin than other regular folks, but because very few people are as abrupt/brusque/rude in real life as they are on the net, and also because the people with less strong opinions seldom engage in threads for as long, so you'll end out seeing very pro- and very anti- people.
posted by Bugbread at 11:10 PM on March 5


"Bitcoin exchange boss, Autumn Radtke, found dead of suspected suicide in Singapore"
posted by grouse at 3:29 AM on March 6 [1 favorite]


"The Face Behind Bitcoin." Newsweek believes that "Satoshi Nakamoto," the shadowy creator of Bitcoin is actually a 64-year-old Japanese-American named… Satoshi Nakamoto.
posted by grouse at 5:16 AM on March 6 [5 favorites]


Holy crap, grouse. That article is both amazing in every detail and disturbing in what it reveals about a man who wants to be left alone. I'm not sure I'm down with that sort of doxing by the media. No one accuses Nakamoto of doing anything but having a brilliant conceptual insight that could well serve many socially legitimate ends.

I feel dirty after reading it, even if I couldn't stop.

Leave Satoshi Aloooooooone!
posted by spitbull at 5:24 AM on March 6 [1 favorite]


Yeah, the comments below the article are pretty damning. And yet, like a yutz, I read the whole thing as well.
posted by jquinby at 5:31 AM on March 6


And the fact that there are Rickrolls hidden in the blockchain is cracking me up.

Oh Internet, have you no shame?
posted by spitbull at 5:31 AM on March 6


Farhad Manjoo's NYT piece on the question of how BTC might need to be regulated, really interesting and balanced.
posted by spitbull at 5:57 AM on March 6 [1 favorite]


"Bitcoin exchange boss, Autumn Radtke, found dead of suspected suicide in Singapore"

I just want to say I was overjoyed by the last line in that article. In bold text, telling you who to call if you're in crisis. That's a house editorial stance I can really get behind. Bravo.
posted by feckless fecal fear mongering at 6:01 AM on March 6 [2 favorites]


grouse: ""The Face Behind Bitcoin." Newsweek believes that "Satoshi Nakamoto," the shadowy creator of Bitcoin is actually a 64-year-old Japanese-American named… Satoshi Nakamoto."

This is perhaps the worst sentence written this week: There are several Satoshi Nakamotos living in North America and beyond - both dead and alive - including a Ralph Lauren menswear designer in New York and another who died in Honolulu in 2008, according to the Social Security Index's Death Master File.
posted by chavenet at 6:28 AM on March 6 [1 favorite]


Valleywag: "The Winklevii Are Going to Space"
There was a time when news that Tyler and Cameron Winklevoss just bought spaceship tickets using Bitcoin would have been completely surprising. That time is long, long gone.
posted by grouse at 6:32 AM on March 6 [1 favorite]


There are several Satoshi Nakamotos living in North America and beyond - both dead and alive

Wha? There are "dead" Satoshi Nakamotos "living in North America"?
posted by EndsOfInvention at 6:48 AM on March 6 [2 favorites]


They're not dead, they're pining for the fjords!
posted by five fresh fish at 7:02 AM on March 6 [2 favorites]


So. Full name, birth date, car plate, home address, employment history, relatives, and no absolutely definitive evidence it's him but a strong suggestion that he has access to an extremely high quantity of BTC. Quite impressively dangerous for the subject.
posted by jaduncan at 7:11 AM on March 6


They're not dead, they're pining for the fjords!

Mining, presumably.
posted by cortex at 8:05 AM on March 6 [5 favorites]


Wow that Newsweek article about Satoshi is something else. I found it very compelling, then on reflection I'm more skeptical. The key question is the believability of someone wanting to be anonymous and detached but still using your birth name on the project (albeit a name you don't use in daily life). It seems ridiculous, but then again if you're just starting a project and are already sort of a recluse at home communicating via email, maybe that felt anonymous enough. What a crazy story.

I read /r/bitcoin so you don't have to. The folks there are all upset at the violation of his privacy, and most are skeptical that Newsweek found the right guy. Lots of links to random bits of text attributed to the person in question, Amazon reviews and messages to the local city planner. The English in those is pretty poor compared to the Bitcoin writing.

I hope the guy in LA is OK, whether he's the Bitcoin inventor or not.
posted by Nelson at 9:41 AM on March 6 [1 favorite]


New thread.
posted by Golden Eternity at 9:45 AM on March 6


I read /r/bitcoin so you don't have to

I read it because I can.
posted by spitbull at 11:26 AM on March 6


"Seeing that nothing could be done to help get back my or anyones coins/cash I decided to do some red pill talk."

What does "red pill talk" mean in this context? I understand the Matrix meaning, but not whatever he was trying to talk to that poor lady about.
posted by Evilspork at 3:01 PM on March 6


Evilspork: "What does "red pill talk" mean in this context? I understand the Matrix meaning, but not whatever he was trying to talk to that poor lady about."

I think it's meant to be the same as the Matrix meaning: pulling back the veil and showing her the real underlying reality. "Money doesn't have real value, it only has value because of mutual consensus", that kind of thing.
posted by Bugbread at 3:12 PM on March 6 [2 favorites]


What does "red pill talk" mean in this context?

Inside Red Pill, The Weird New Cult For Men Who Don't Understand Women
The Red Pill is a collection of ideas encompassed by what its subscribers refer to as the "manosphere," a number of loosely-associated blogs that focus on masculinity and personal philosophy for men. At the surface level there's nothing terribly contentious about this, but if you click around one or two layers deeper, you'll find plenty of examples why chatter from this gallery regularly turns heads. Like this:
"You are hating women because you have the wrong expectations for them. Don't hate someone for something they CANNOT be. Women are, by nature, manipulative, attention-seeking, inconsistent, emotional, and hypergamous. Accept this truth. Once you do, you can game women for what they are ... not what you want them to be."
The community's name is a tip of the hat to the truth-seeking attitude in The Matrix – Keanu Reeves pops a red pill to unplug his mind from a simulated world, freeing him to explore genuine reality.

For Red Pillers, genuine reality goes something like this: Female oppression is a myth and men are the ones holding the short end of the stick. That said, men and women are inherently different due to evolution, so each gender should carry out its designated role in society. For example, females should raise children at home and men should work and have sex with women.
And BI is sugar-coating it, tbh. It's extremely misogynistic all around, just hateful, vile stuff.
posted by zombieflanders at 3:21 PM on March 6 [4 favorites]


The community's name is a tip of the hat to the truth-seeking attitude in The Matrix – Keanu Reeves pops a red pill to unplug his mind from a simulated world, freeing him to explore genuine reality.

Amusingly enough, the Matrix was arguably also an adolescent power fantasy.
posted by jaduncan at 3:49 PM on March 6 [1 favorite]


Zombieflanders, I don't think "red pill" refers to that, in this context. It's just that both groups, bitcoin evangelists and MRAs, use the same term. I imagine that there are a lot of other groups that use it, too. I'm guessing it's a popular term among various conspiracy theorists (a little of which leaks through in that bitcoin guy's thread).
posted by Bugbread at 4:23 PM on March 6 [5 favorites]


Maybe, but it's definitely a loaded term/dogwhistle when it comes to Reddit. And considering the guy is really condescending in describing his interactions with the woman in the story, and that a not-insignificant number of /r/Bitcoin posters seem to have a disturbing view of women, it's not out of the question. Besides, the fact that the alternatives are anti-Semitism and a weird view of Japanese culture doesn't really make it any better.
posted by zombieflanders at 4:43 PM on March 6 [1 favorite]


zombieflanders: "considering the guy is really condescending in describing his interactions with the woman in the story"

Considering the way this guy writes, I strongly, strongly get the feeling that he's condescending to everyone. I'm not seeing anything sexist in what he wrote, just universal asshole.

zombieflanders: "a weird view of Japanese culture"

You mentioned that before, with the "anime-level grasp of Japanese culture" thing, but I'm not really getting it. What are you referring to with this?
posted by Bugbread at 4:56 PM on March 6


Sorry, one more thing:

zombieflanders: "a not-insignificant number of /r/Bitcoin posters seem to have a disturbing view of women, it's not out of the question."

I agree it's not out of the question, but using "shit_rbtc_says" as a representative sample from which to conclude that a not-insignificant number of /r/bitcoin posters are sexists doesn't make sense. I dunno, I don't read /r/bitcoin, so I'm not saying you're wrong. Maybe a whole lot of /r/bitcoin are MRA asses. But using shit_rbtc_says as the basis on which to make that assumption seems flawed.
posted by Bugbread at 5:00 PM on March 6


I went and checked out /r/bitcoin, found an easy dozen messages calling the reporter in question the C-word, and checked out. Might not meet your definition of "MRA asses," but is definitely enough for me.
posted by KathrynT at 5:34 PM on March 6 [3 favorites]


Considering the way this guy writes, I strongly, strongly get the feeling that he's condescending to everyone. I'm not seeing anything sexist in what he wrote, just universal asshole.

I get the sense he wouldn't be condescending to his fellow travelers, who, as linked above, self-report as almost exclusively male.

You mentioned that before, with the "anime-level grasp of Japanese culture" thing, but I'm not really getting it. What are you referring to with this?

The fact that he felt the need to explain Japanese cultural aspects that are, in my experience, largely Westernized. That whole thing with the "slave" characters I've only seen in discussions of Kurosawa and other Japanese filmmakers, and it didn't refer to Japanese people in particular.

I agree it's not out of the question, but using "shit_rbtc_says" as a representative sample from which to conclude that a not-insignificant number of /r/bitcoin posters are sexists doesn't make sense.

I'm not saying it's representative, but the sheer number of sexist posts in that feed and that a perusal of comments (and on preview, what KathrynT read as well) is enough to make it significant to me.
posted by zombieflanders at 5:41 PM on March 6 [1 favorite]


KathrynT: "I went and checked out /r/bitcoin, found an easy dozen messages calling the reporter in question the C-word, and checked out. Might not meet your definition of "MRA asses," but is definitely enough for me."

No, that totally meets my definition of "MRA asses". And I see that zombieflanders wasn't using shit_rbtc_says as the foundation of his conclusion, but more of a compendium of examples, so I'm totally on board. Sorry, zombieflanders, I misread what you were saying.

zombieflanders: "That whole thing with the "slave" characters I've only seen in discussions of Kurosawa and other Japanese filmmakers, and it didn't refer to Japanese people in particular."

I didn't get the sense he talking about Japanese in particular being slaves. But the more I think about this, the more I suspect that maybe we're making a different assumption. I assumed he had this conversation with her in Japanese, so, of course, talking about the 民 etymology, he did so knowing that he was talking about a Chinese character, and using it as an example of a universal relationship between the governed and the governers. Don't get me wrong, it's still etymology wank. I just don't think it was etymology wank about Japanese culture, but about How Governments Everywhere Are Automatically Oppressors. Now, if he had this conversation with her in English, a lot of my other assumptions would change, too, and I'd get a totally different read on this.

But I'd still think he was insufferable ass. I think that transcends language barriers.
posted by Bugbread at 6:19 PM on March 6 [2 favorites]


Oh, wait, just noticed the title of the guy's post is "My hour long conversation with Mtgox call center staff in Japanese". So, yeah, I'm thinking the 民 thing was not about Japanese culture, but about the very nature of government.
posted by Bugbread at 6:21 PM on March 6


But I'd still think he was insufferable ass. I think that transcends language barriers.

Of course, one can be an insufferable ass in a general way while still being specifically sexist and racist as well. Condescension is an almost infinitely renewable resource....
posted by GenjiandProust at 5:42 AM on March 7 [2 favorites]


Karpeles almost certainly has control of 200K BTC which he is moving now. I haven't read closely enough to evaluate this, but some folks watching Bitcoin transactions think Mt. Gox is doing something with 200,000 Bitcoin. (Sorry for the Reddit link, but it's the best there is at the moment.)
posted by Nelson at 8:45 AM on March 7 [1 favorite]


Vault of Satoshi Halts US Bitcoin Exchange Service, Cites Worsening US Regulatory Conditions
posted by Golden Eternity at 9:10 AM on March 7


A decentralized digital currency was a beautiful thought, but Bitcoin wound up immediately inviting the same kind of corruption it sought to end in a rigged, top-heavy global economy.
posted by the man of twists and turns at 9:14 AM on March 7


Shit Bitcoin fanatics say.
posted by malocchio at 10:09 AM on March 7 [1 favorite]


Hah, I'm an unverified vaultofsatoshi customer in the US with $.05 converted from doge. I wonder if vaultofsatoshi will actually cut me a check for the five cents. If so, I'll go cash it for a shiny new US nickel and consider my quest to turn *coin into any amount of money finished. yay.
posted by jepler at 6:09 AM on March 8 [1 favorite]


Coup or Death for the Bitcoin Foundation. Two-Bit Idiot (Ryan Selkis) alleges evidence that the Bitcoin Foundation and its leadership are unprofessional and negligent, possibly fraudulently so. Promises to publish evidence on Monday if they don't resign. Given his role in leaking the Mt. Gox documents before their bankruptcy filing, may be more than the usual bluster.
posted by Nelson at 11:19 AM on March 8 [1 favorite]


Nope jepler, they have cut off all US customers.
posted by Iax at 1:32 PM on March 8


Right, but in the coindesk article they claim "Any dollars currently in your account will be refunded to you via check, which you should receive within [two to three] weeks’ time.", which in my case would be that five cents I'm so eager to claim.
posted by jepler at 2:54 PM on March 8


Mark Karpeles' blog hacked; Mt Gox database leaked
posted by Golden Eternity at 11:51 AM on March 9 [3 favorites]


Doesn't it cost more than five cents to cash a cheque (when banking retail)?
posted by ceribus peribus at 1:52 PM on March 9


At this point, it's a matter of principle and closing out the story of "beg and mine dogecoins, try to turn into $" that I started in this thread. My conclusion will be: yes, it's very iffy to turn cryptocurrency into money.

But no, I would not pay any charge to deposit a five cent check at my local bank, though obviously I'm going to use well more than five cents of my own time. But I've wasted tens of dollars of my time by now, so like I said there's the matter of principle.

On the other hand, maybe I'll just frame the check.
posted by jepler at 2:02 PM on March 9


The Mt. Gox leak is a big deal. If I understand the discussion correctly, it includes customer balances, wallet addresses, maybe full transaction logs. It should be possible to link Mt. Gox activity into the blockchain. GoxDB is a search engine to the data and there's a 700 MB zip file floating around. People on Reddit are reporting their own data matches what they expected to see.
posted by Nelson at 4:39 PM on March 9


My buddy going into this business with me gets the technical convince talk and he jumps right to "I could totally just program up an exchange!" I'm just, NOPE. You're getting hacked, going to jail, or getting murdered, leave it to the pros.
posted by save alive nothing that breatheth at 4:49 PM on March 9


save alive nothing that breatheth: "gets the technical convince talk"

What does that mean?
posted by Bugbread at 4:51 PM on March 9


We're both pretty high level CS, which means I can thoroughly convince him of the technological merits of the blockchain - that the main risks are social and political. (And of course competitive...)
posted by save alive nothing that breatheth at 5:08 PM on March 9


There has been a distinct lack of pros or professionalism in bitcoin, from start to finish. From bad code to bad security practices to bad exchanges and bad people.
posted by five fresh fish at 5:37 PM on March 9


Definitely. Barry Silbert, though, he's a pro. The pros are coming online.
posted by save alive nothing that breatheth at 6:10 PM on March 9


Ponzicoin was a scam! Who knew!
posted by Sticherbeast at 6:47 PM on March 9 [4 favorites]


Yeah someone followed me on Twitter who is openly running pump and dumps. Probably works out for him. For sale, one bridge to Brooklyn, 10,000 BTC.
posted by save alive nothing that breatheth at 9:53 PM on March 9


So apparently Two-Bit Idiot was just trolling. " I am not publishing the article tomorrow that I said I was going to on Friday. In fact, I never intended to...". Man, Bitcoin, even the critics are clowns.

Ponzicoin is not unique, a new one of those pops up every once in awhile. Ponzi schemes pay well as long as you get in early enough, you can attract enough front runners to keep it going for a little while. Although this most recent one seems to have never paid out at all? That's more scammy than usual.

Both the Ponzi schemes and SatoshiDice are interesting in using the blockchain as a public, verifiable transaction log to prove they really are doing what they say they're doing. It's sort of like a private lottery.
posted by Nelson at 7:53 AM on March 10


Mt. Gox files bankruptcy in the US. Along with Sbarro, the disgusting mall pizza chain.
posted by Nelson at 7:58 AM on March 10


The best bitcoin ponzi was http://ponzi.io/

After taking a bunch of bitcoins;

The experiment is over!
experimental outline:
title: crypto-stupidity exploration

purpose: to determine if bitcoin's detractors are exaggerating the propensity of bitcoiners to get scammed

hypothosis: if exposed to an obvious scam, bitcoiners will still fall for it

procedure: create blatant ponzi scheme where returns are clearly being paid out of latest "investor". wait.

measurements: received in excess of $130k worth of "investments" in less than four days.

conclusions: hypothesis confirmed. bitcoiners are indeed that fucking stupid.
posted by Iax at 8:12 AM on March 10 [7 favorites]


So apparently Two-Bit Idiot was just trolling.

When someone starts their self-description on their blog header with "VC", and ends with "Truth-Teller" you can be pretty sure you're dealing with an asshole. That their icon is a South Parkified bro is another hint.
posted by benito.strauss at 8:38 AM on March 10


I have to say, I love PonziCoin. It takes scamming to the next level.

Simple scam: Pretend to be a non-scammer. Take marks' money.

Meta-scam: Pretend to be a scammer, who the mark will lend seed money to so the scammer can pretend to be a non-scammer to other marks, and take their money. Then take original marks' money.

PonziCoin scam: Pretend to be a scammer, who the mark will lend money to, so that the scammer can continue to present himself as a scammer to other marks. Then take original marks' money.

Wonderful.
posted by Bugbread at 12:02 PM on March 10 [7 favorites]


Along with Sbarro, the disgusting mall pizza chain.

Every cloud, eh?
posted by jaduncan at 1:03 PM on March 10


So...personal anecdata that might have been interesting a week ago. At the risk of linking my MeFi account here with other accounts (not that I have any illusions of anonymity given my posting history), last week, my daughter and I sold some of her Girl Scout cookies on /r/dogemarket on Reddit, accepting payment in Dogecoin.

Most of our headaches had to deal with the high cost of shipping and snowflake-y requests from individual customers who didn't want us to use the flat-rate shipping boxes. Pretty much standard, ebay-ish stuff. In other words, the headaches had nothing to do with the fact that we were accepting payment in cryptocurrency.

Bottom line, we sold 30 boxes, and received payment immediately. I quoted a separate price to each buyer based on the prevailing Doge-->BTC-->$US rates, but I was a little slow in converting the Dogecoin to Bitcoin after receiving payment so we had a bit more exposure to market fluctuations. Some of the fluctuations actually worked to our advantage (to the tune of a few cents).

The price I quoted included Cryptsy's 0.3% trading fee (for Doge to Bitcoin), and Coinbase's 1% fee (for Bitcoin to US$). I converted the Doge to BTC on Saturday night, and requested the fiat transferred out on Sunday evening. As of Thursday, the dollars were available my (US) bank account.

We were subject to Gox-like counterparty risk for a few hours (for Cryptsy) and 4 calendar days / 3 business days (for Coinbase).

I think the true comparator here is Paypal's merchant fees. Without any discounts (which I don't qualify for), Paypal would have charged 2.9% plus $0.30 per transaction.

That percentage point (and then some) is potentially huge. It's even bigger for micropayments.

I freely acknowledge that the volatility is a problem. But I don't think that recent volatility means that this technology is forever doomed to failure.
posted by QuantumMeruit at 8:09 AM on March 14 [8 favorites]


Visualizing a failed bitcoin market: The MtGox 500. Graphs of trading behavior of 500 Mt. Gox customers, data from the stolen database. A bold and fascinating work by Stamen Design.
posted by Nelson at 4:25 PM on March 20 [1 favorite]


That's some fascinating stuff. There were a whole lot of greater fools, indeed.
posted by tavella at 5:11 PM on March 20


Mt. Gox May Still Hold $118 Million (200,000 BTC) in Funds, Report Suggests. Bankruptcy lawyer says Gox found 200,000 BTC in an old wallet. That lines up with some movements of Gox Bitcoins people had been observing on the blockchain.
posted by Nelson at 6:06 PM on March 20


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