Bitcoin done (or at least demo'd) Right
April 20, 2015 4:46 PM   Subscribe

...MIT Media Lab announced the launch of the Digital Currency Initiative. The goal of this initiative is to bring together global experts in areas ranging from cryptography, to economics, to privacy, to distributed systems... previously previously-er more-previously more-er-previously oh-heck-kittens-in-boxes
posted by sammyo (34 comments total) 17 users marked this as a favorite
 
One of the big problems: How do you get "privacy" without getting "money laundering"?
posted by Chocolate Pickle at 5:06 PM on April 20, 2015 [1 favorite]


From the point of view of (many) cryptocurrency enthusiasts, "money laundering" is a feature, not a bug.

(Lest anyone misread me, this comment is not written with any intent to stake a position on whether that's a good or a bad thing, but I think it's a thing. )
posted by brennen at 5:16 PM on April 20, 2015 [8 favorites]


One of the big problems: How do you get "privacy" without getting "money laundering"?

Well, if you're the government, you watch to see if someone has an expensive new car or house without a legitimate income source; same way as you stop people using cash to launder money, really.
posted by topynate at 5:29 PM on April 20, 2015 [2 favorites]


tl,dr: the MIT Bitcoin Club has new faculty advisers.
posted by charlie don't surf at 5:32 PM on April 20, 2015 [9 favorites]


You get money laundering. As, indeed, you do under any financial system. Money's like that.

I've never quite managed to build a FPP about it, but here's a very good blog by someone who takes money laundering personally and has made herself an expert because of this passion. It's worth half an hour's browse.
posted by Devonian at 5:44 PM on April 20, 2015 [7 favorites]


^F sponsor

Nothing?
posted by benito.strauss at 5:47 PM on April 20, 2015


...enabling developing nations to leapfrog the tech of developed nations.

leapfrog back in time to the gold standard...
posted by ennui.bz at 6:07 PM on April 20, 2015


I only followed one link, but I think I've got the gist of all these cryptocurrencies.
posted by maryr at 6:25 PM on April 20, 2015 [2 favorites]


The kittens in boxes are nice.
posted by Tell Me No Lies at 6:27 PM on April 20, 2015 [3 favorites]


Media Lab is making a commitment to work with developers, academics, the private sector, governments, and nonprofits to conduct the research necessary to support the commercial and social viability of this technology.

This initiative has three goals:

1. Conduct research and engage more students on digital currency topics that address questions about security, stability, scalability, privacy, and economics.

2. Convene governments, nonprofits, and the private sector to research and test concepts that have high social impact.

3. Provide evidence-based research to support existing and future policy and standards.


So, could governments be earnestly test driving this in the lab? That's an interesting prospect.
posted by Aya Hirano on the Astral Plane at 6:44 PM on April 20, 2015


I read the goals twice and still don't know what they're supposed to be doing. Those aren't goals, they're processes. If someone's going to talk about having a "high social impact", I want to know what the aims are. You could try to use alternate currencies to reduce inequality, or stratify the system further. I don't know where these folks are headed, but the political history of bitcoin isn't encouraging.
posted by phooky at 6:51 PM on April 20, 2015 [3 favorites]


Taler provides anonymous payments without tax evasion, Chocolate Pickle. And payers can prove they paid if necessary.

Taler provides anonymity through RSA blind signing, assuming you use Tor. A blockchain based currency like BitCoin, et al. can only provide pseudonymous payments, even if you use Tor. As DPR, etc. recently learned.

RSA blind signing requires a centralized mint, but avoids wasting resources on proof-of-work "mining" the way that existing blockchain currencies do. There are efforts like FileCoin to develop blockchain based currencies where the proof-of-work is not wasteful, btw.

Taler tokens are contracts so they need not fluctuate wildly in value the way BTC does, making them uninteresting to speculators, but more useful for exchange.

Just a few scenarios in which Taler could see significant adoption :  Anywhere that internet access is more common than banking an NGO could provide free electronic banking services.  A nation wanting foreigners to hold it's currency could provide the world with free bank accounts and anonymous transactions.  An ad serving company could do accurate accounting while proving to users that they do not do targeted ads or otherwise spy on user.  And obviously a company could launch a payment service.
posted by jeffburdges at 7:25 PM on April 20, 2015 [7 favorites]


Blockchain apps are the thin edge of the wedge for serverless apps. It's a lot like Las Vegas in the 50's - the mobsters were muscled out by legit business. Newspapermen, can't trust 'em for an instant. Especially when there's a trillion dollar market at stake.
posted by Slap*Happy at 8:33 PM on April 20, 2015 [1 favorite]


One of the big problems: How do you get "privacy" without getting "money laundering"?

I really hate this argument. The cash system doesn't prevent this, and I don't know why we should make this the standard before allowing the new currency standard to apply. All it does is prevent progress.
posted by hal_c_on at 9:02 PM on April 20, 2015 [3 favorites]


How do you get "freedom" without "privacy"?
posted by rustcrumb at 9:29 PM on April 20, 2015 [2 favorites]


There will be other applications for the blockchain beyond cheesy anonymous currency. I'm not sure what they will be, but it is too powerful an idea to not have widespread ramifications.
posted by miyabo at 9:29 PM on April 20, 2015 [1 favorite]


>> One of the big problems: How do you get "privacy" without getting "money laundering"?
>>
> I really hate this argument. The cash system doesn't prevent this
>


I believe they're out to replace a lot more than cash here, but in any case the fact that the current scheme has spotty support for currency tracing is seen as a problem by some. Something to be fixed.

> I don't know why we should make this the standard before allowing the new currency standard to apply.

Why bother with a new system at all if its not an improvement on the last one?
posted by Tell Me No Lies at 10:06 PM on April 20, 2015 [2 favorites]


Bitcoin haiku

Bitcoin price falls down
Hold the line! Trust Satoshi!
Tears fall, like your coins.


To the Moon we go
Oh no, the price crashed again
Back to Mom’s Basement

posted by a lungful of dragon at 11:15 PM on April 20, 2015 [6 favorites]


Lotta "libertarians amirite" going on in here. And yet. In my limited experience, interest in Bitcoin (or at any rate cryptocurrency mechanisms) is a reliable marker for two broad categories of individual:
  1. Hopeless dweebs / compulsive gamblers / people who get kind of misty-eyed when you talk about the market (that is, in the not-altogether-unreasonable model where you view Bitcoin as a total scam, the scammed and the scammers).
  2. People way smarter than me.
I tend to not really care that much about the whole cryptocurrency trip, and I have come to dread it as a topic more than conversations about Objectivism, but it feels like probably I should take note of those smart people and kinda keep the whole thing in the back of my mind.
posted by brennen at 12:40 AM on April 21, 2015


Screw Bitcoin, I'm going straight to Pegasus Coin.
posted by teraflop at 2:10 AM on April 21, 2015 [2 favorites]


People way smarter than me.

There's some really sweet ideas in there, that nobody outside the crypto community was really aware of, so I'm not surprised it attracted a certain kind of mind. For me, mining and proof-of-work were "woah!" moments.

But in terms of wider adoption.... I think that ship's sailed, to be honest. But it has lots of neat components that will go into the parts box and turn up in other products over the next decade - think of the path from Napster to Bittorrent.
posted by Leon at 3:30 AM on April 21, 2015


The "money laundering" bit was just a verbal flub. The question is not "How do you get 'privacy' without getting 'money laundering'?" but "How do you get 'privacy' without making 'money laundering' much easier than it already is?"
posted by Bugbread at 4:06 AM on April 21, 2015


Media Lab is making a commitment to work with developers, academics, the private sector, governments, and nonprofits to conduct the research necessary to support the commercial and social viability of this technology.

Isn't this pretty much the Media Lab's mission statement for just about everything it gets involved with?
posted by Thorzdad at 6:38 AM on April 21, 2015 [3 favorites]


> People way smarter than me.

Some of the best and the brightest people around.
posted by benito.strauss at 8:25 AM on April 21, 2015 [3 favorites]


I'll back whatever currency Visa and Mastercard buy.
posted by benzenedream at 8:42 AM on April 21, 2015


I know people way smarter than me who are excited about Bitcoin so I'm keeping it back of mind as well.
posted by sweetkid at 9:23 AM on April 21, 2015


I know people way smarter than me who are going to vote for Ted Cruz...so...it's not always the best metric.
posted by Drinky Die at 11:40 AM on April 21, 2015 [5 favorites]


How do you get "privacy" without getting "money laundering"?

One person's money laundering can be another's necessary privacy for political resistance. COINTELPRO explicitly targeted financial records and used them to target financial supporters of MLK, among other things.
posted by fivebells at 11:44 AM on April 21, 2015


[media lab director] joi ito's Why Bitcoin is and isn't like the Internet mentioned in his announcement i think is worth reading about "a real need for a coordinating function around standards and policy. I believe that this effort must be multinational and multistakeholder." (also btw check out his 'interview' with [clinton donor & peter thiel pal] reid hoffman ;)

i don't think widespread adoption will happen without gov't involvement* so to me it'll be interesting to watch taler for governments (estonia comes to mind) and fedcoin developments.

as for capabilities and functions check out:
  1. The plot to replace the internet - "'Ethical hackers' in Fulham think they have a way to make your online life truly private, secure and anonymous. The world will be very different if they succeed;" and...
  2. Bitcoin as a Smart Contract Platform - "Distributed Ledger Platforms may be Getting All the Hype but the architecture of Bitcoin is more sophisticated than many people realise..."
---
*the fundamental reason why i think is concisely explained on pg. 160 of the end of banking: "A functioning price system is a classic public good, as undistorted prices are neither rivalrous nor excludable. Besides its public-good character, a functioning price system is also a network good. As such, the provision of a price system can be considered a natural monopoly. One functioning price system is more efficient than many price systems. Both network effects and the public-good nature of a functioning price system suggest that organizing money is a public affair."
posted by kliuless at 11:56 AM on April 21, 2015 [4 favorites]


Both network effects and the public-good nature of a functioning price system suggest that organizing money is a public affair

It's the free rider problem that can require government, but I fail to see how a free price system (in the sense used by Hayek) can suffer from the free rider problem: any action, or absence of action, that an actor might take will help 'produce' the price system by sending a price signal.
posted by topynate at 1:29 PM on April 21, 2015


More exactly, any consumer or producer, by offering or not offering, purchasing or not purchasing at a given price, indirectly affects the price of a product and so contributes to the functioning of the price system.
posted by topynate at 1:33 PM on April 21, 2015


I know people way smarter than me who are going to vote for Ted Cruz...so...it's not always the best metric.
posted by Drinky Die An hour ago [3 favorites +]


kliuless' comment is a good expansion on why Bitcoin isn't quite like Ted Cruz. Bitcoin as a Smart Contract Platform was a really good read, thanks!
posted by sweetkid at 1:35 PM on April 21, 2015


in the words of bill davidow :P "There was $600 trillion in over the counter derivatives by 2006, which helped cause the economic meltdown..."

and the 'free price system' in capital markets -- "Banking just makes full use of government guarantees without offering anything..." -- is being gamed yet again, to elaborate:
It is for a good reason that the industry changed its label from P2P lending to marketplace lending: P2P lending is dead. Institutional investors have taken over the entire investor side of marketplace lending. The initial vision of connecting investing and borrowing households directly has been replaced by hedge-funds, asset managers and banks using marketplace lending as a supplier of loans in their chase for yield.

And with this development, marketplace lending is integrated into banking. Companies such as Lending Club and Prosper have redefined themselves into loan originators and underwriters for the traditional bank. One marketplace lending CEO I talked to explained that his company is a „raw material“ producer for the institutional investors. The times when the industry wanted to disintermediate the financial system are long gone.

Marketplace lending also connects with shadow banking. Asset managers securitize marketplace loans into asset-backed securities, and hedge-funds use large amounts of borrowed money to leverage their investments. Some investors are already talking about the need to create credit default swaps for marketplace loans. Overall, the parallels between these developments in marketplace lending and the shadow banking that led to the financial crisis of 2007-08 become undeniable.

[...]

The LendIt conference affirmed my belief that we have to end banking with a systemic solvency rule to restore a functioning financial system. Otherwise, banking finds its way into every financial innovation, and transforms it into a device to circumvent regulations and increase risk taking. Marketplace lending is just one example in a long line of innovations.
posted by kliuless at 2:12 PM on April 21, 2015 [1 favorite]




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