What is money, anyway?
December 4, 2017 11:36 AM   Subscribe

How bitcoins became worth $10,000 $11,317
Bitcoin Is a Delusion That Could Conquer the World
You Don’t Understand Bitcoin Because You Think Money Is Real

(Based purely on Bitcoin's current price, Satoshi Nakamoto is the 118th richest person in the world.)
posted by gwint (189 comments total) 33 users marked this as a favorite
 
r/buttcoin is unironically the best place on the internet to talk about bitcoin, second maybe to the YOSPOS thread on something awful. both have david gerard fucking around on there
posted by hleehowon at 11:39 AM on December 4 [10 favorites]


I keep thinking, via Cstross, what happens when Bitcoin fails and the peope most invested in it tend to be attracted to fringe ideaologies?
posted by The Whelk at 11:43 AM on December 4 [5 favorites]


It's pretty scary to imagine that we might have a schism like that. Will the world know what to believe if we have more than one Bitpope?
posted by billjings at 11:47 AM on December 4 [11 favorites]


The environmental impact of this shit is staggering, but have fun with your ponzi schemes you tools.
posted by ODiV at 11:50 AM on December 4 [56 favorites]


The Winklevoss brothers put part of their Facebook settlement into Bitcoin and have parlayed their $11M investment into more than $1 beeellion dollars.
posted by briank at 11:50 AM on December 4 [2 favorites]


And speaking of David Gerard, I strongly endorse his book Attack of the 50-Foot Blockchain, an excellent introduction to bitcoin and blockchain- what they are, what they do, and why you should probably not trust anything you hear out of the mouths of their proponents.
posted by Pope Guilty at 11:54 AM on December 4 [12 favorites]


As of November 1st, a single bitcoin transaction uses as much energy as a well-equipped western household uses in a week.

There is no way this is sustainable. None.
posted by mhoye at 11:55 AM on December 4 [87 favorites]


On the bright side though I got a good solid belly laugh out of the article saying that doomsday preppers are switching from gold to bitcoin. So there's that.
posted by mhoye at 11:56 AM on December 4 [46 favorites]


Any time something super financial pops up in any discussion, I always just think of these two scenes from Trading Places. I feel confident in my knowledge of finance and business.
posted by Fizz at 11:56 AM on December 4 [10 favorites]


On the bright side though I got a good solid belly laugh out of the article saying that doomsday preppers are switching from gold to bitcoin. So there's that.

OH MY GOD, RIGHT?!?! Imagine preparing for society to collapse and assuming the power grid and internet backbones will be unaffected.
posted by Pope Guilty at 12:01 PM on December 4 [59 favorites]


Jeez, that Medium article is rough. "You sheeple don't realize that all money is equally fictional, so you can't comprehend the glory of bitcoin" (barely a paraphrase) certainly explains a lot about what attracts a particular fringe element to that area.
posted by Holy Zarquon's Singing Fish at 12:01 PM on December 4 [30 favorites]


There is no way this is sustainable. None.

It's late capitalism writ large, in that way, which I think might help explain the appeal.
posted by tobascodagama at 12:01 PM on December 4 [8 favorites]


People have spent over $1M buying virtual cats on the Ethereum blockchain
Right now about 15% of all Ethereum network traffic is dedicated to the game, making it the most popular smart contract on the network. For reference, number two with about 8% of network transactions is EtherDelta, the popular decentralized token exchange.

This traffic is making it hard to play CryptoKitties, and a lot of transactions (like buying and selling cats) are taking longer than usual to process and needing multiple attempts.
CryptoKitties @CryptoKitties

🚨🚨🚨🚨 Due to network congestion, we are increasing the birthing fee from 0.001 ETH to 0.002 ETH. This will ensure your kittens are born on time! The extra is needed to incentivize miners to add birthing txs to the chain. Long-term solution will be explored very soon! 🚨🚨🚨🚨
5:13 PM - Dec 3, 2017
Not only is this making it hard to play the game, but this scaling issue is a real concern for the Ethereum network in general. If one viral game that hasn’t even spread beyond the tech world can slow down the network, what happens when the blockchain expands to real world applications?
posted by tonycpsu at 12:02 PM on December 4 [10 favorites]


There is no way this is sustainable. None.

well until some entirely benevolent bitcoin kajillionaire uses her vast wealth to conjure up the technology needed for clean free energy for all, and gives it to the UN.

could happen.
posted by senor biggles at 12:03 PM on December 4 [8 favorites]


Maybe this is a dumb question but why would I spend $100 worth of bitcoins on dark web molly or whatever if it might be worth $1000 in a few months?
posted by theodolite at 12:03 PM on December 4 [8 favorites]


I still think that blockchain technology is a really neat solution in search of the perfect problem, but my record on technological prognostication is not 100%, to put it mildly.

Regarding the Winklevii, they are only worth that on paper. If they can't convert them into cash (and the places that I've used to do that have limits on the amount you can convert per week which wouldn't work for hundreds of thousands of bitcoins).

I also find it amusing that bitcoins are largely promoted by the same crowd who believes that fiat money is worthless, but if you take them at their word then the Winklevoss brothers are worth exactly the same amount now as they were a few years ago: 100,000 bitcoins. If dollars are meaningless, why price your assets in terms of them?
posted by It's Never Lurgi at 12:04 PM on December 4 [32 favorites]


Money is in good company. The unexamined assumption in all these pieces seems to be that, since it isn't physical, it's not real - it's a "group hallucination", or whatever ontological pejorative you like. But physical things aren't real either! You can tell this because they don't even last; they always decay or somehow lose their form. It's not even clear what one means by a physical thing. What even is a "thing", anyway, before we get to what it means for one to be "physical"? It seems to depend on some kind of half-assed, unwritten consensus reality whether an entity counts as a thing, or a collection of things.

The only proper backing for a currency is the primordial supply of undifferentiated matter and energy that seems to be associated with space-time. That, or kittens.
posted by thelonius at 12:05 PM on December 4 [27 favorites]


Yeah, I mean - crypto as _currency_? Good luck with that between transaction fees and hyperinflation. Crypto as fiat investment? Eh, I've seen stupider investment vehicles.

What surprises me is the number of otherwise level headed people I know who are getting caught up in it. It was one thing to fuck around and spend a couple hundred dollars on asic miners and sell the product to the next fool to come along but ... yeesh.
posted by Kyol at 12:08 PM on December 4


Metafilter: the primordial supply of undifferentiated matter and energy that seems to be associated with space-time. That, or kittens.
posted by gwint at 12:08 PM on December 4 [16 favorites]


The article works hard early on to imply that because they're both (principally-)digital, both ephemeral, and both inherit only that value that they're collectively given by society, that both Bitcoin and US Dollars are the same kind of stuff. But that's not true for one fundamental reason: you can't pay your taxes in Bitcoin. States ensure that at least some of the transactions within their borders must take place using the official currency of that state by insisting that taxes are paid in that currency, and it is that that's the key difference between a currency that is state-sanctioned and one that is not.

Bitcoin is great: I've used it lots and I got lucky in that my first few coins, bought for around £1 GBP each were things I could eventually sell for around £750 GBP each. But as others in the thread have said: they're not sustainable. But they're interesting mostly to me as a research project, and they were never intended to be the be-all-and-end-all of cryptocurrencies. Bitcoin might well be relegated to the history books before the next decade is over, but other cryptocurrencies which learn from its mistakes - or which develop in entirely new and innovative ways - will come to take its place. And it's those cryptocurrencies that I'm really interested in!
posted by avapoet at 12:09 PM on December 4 [14 favorites]


What surprises me is the number of otherwise level headed people I know who are getting caught up in it.

Isn't that the nature of a bubble, though?
posted by gwint at 12:09 PM on December 4 [12 favorites]


Maybe this is a dumb question but why would I spend $100 worth of bitcoins on dark web molly or whatever if it might be worth $1000 in a few months?


You shouldn't. By the same token, you shouldn't spend $100 (bitcoin or otherwise) on groceries if you can scrape by and turn it into $1000 of bitcoins (or any other investment vehicle) in a few months.
posted by grobstein at 12:10 PM on December 4 [6 favorites]


States ensure that at least some of the transactions within their borders must take place using the official currency of that state by insisting that taxes are paid in that currency, and it is that that's the key difference between a currency that is state-sanctioned and one that is not.

Also they pay their soldiers and tax-collectors with it
posted by thelonius at 12:12 PM on December 4 [1 favorite]


The environmental impact of this shit is staggering, but have fun with your ponzi schemes you tools.

These idiots owe me a new video card for my computer, which I totally could have afforded if not for their stupid shenanigans.
posted by straight at 12:13 PM on December 4 [6 favorites]


From the Medium article:
U.S. dollars are not backed by anything other than the faith of the fools who accept it as payment and of other fools who agree in turn to accept it as payment from them.
Nearly every medium of exchange is backed to some extent by the faith of the fools who will accept it as payment. What distinguishes US dollars from other media of exchange is that one of those fools is the US government itself who demands that tax payments be made in US dollars. So long as the US government has the ability to levy taxes (and, I guess, continues to require that they be paid in US dollars), US dollars will have some value. And if the US government is somehow rendered unable to collect taxes... well, you've probably got bigger problems. I'm not really sure why this non-trivial aspect of most government-backed "fiat" currencies is so overlooked by cryptocurrency enthusiasts.

On preview: what avapoet said
posted by mhum at 12:15 PM on December 4 [37 favorites]


Ah, Bitcoin - the Dunning-Krugerrand.
posted by NoxAeternum at 12:15 PM on December 4 [98 favorites]


That said Bitcoin is clearly a bubble now, the (even-)dumber money is pouring into it now that the merely dumb money has gotten insanely rich off it, and in a few months or years we're going to be stuck with the bill when the price collapses, it turns out places Bank of America Merrill Lynch were balls deep in it through unregulated funds and complicated swaps, and half the financial system is going into default unless the American public ponies up a trillion dollars and their houses.
posted by grobstein at 12:15 PM on December 4 [20 favorites]


I still think that blockchain technology is a really neat solution in search of the perfect problem, but my record on technological prognostication is not 100%, to put it mildly.

This much, I agree with. The tech is cool, and I think there are probably some really interesting applications that will shake out in 5-10 years.

Anonymous financial transactions are probably the least interesting way to use the blockchain. But there's a lot of demand for it, somewhat unsurprisingly. Can you use bitcoin for Venmo transactions yet?
posted by tobascodagama at 12:17 PM on December 4 [1 favorite]


Maybe this is a dumb question but why would I spend $100 worth of bitcoins on dark web molly or whatever if it might be worth $1000 in a few months?

Because in a few months it could be worth $10.
posted by gwint at 12:17 PM on December 4 [9 favorites]


Isn't it still basically impossible to turn bitcoins into money? Like if I have a $million in bitcoins, and want that much cash, how long/difficult will that be?
posted by Sebmojo at 12:19 PM on December 4 [6 favorites]


Dammit, first I put all my baseball card money into Star Wars collectibles. Then I shifted into Beanie Babies. When the Beanies hit bottom I cashed out and followed the smart money into Web 2.0 startups. When those went bust, I started buying subprime loan debt, then pivoted to iPhone killers. Now you're telling me my Windows Phone stake should shift to Bitcoin? It's so hard to keep up!
posted by me3dia at 12:21 PM on December 4 [13 favorites]


Isn't it still basically impossible to turn bitcoins into money? Like if I have a $million in bitcoins, and want that much cash, how long/difficult will that be?

A $1MM holding you can probably liquidate pretty easily, I think, not that I've tried. Daily trading volume for bitcoins is in the range of $2 billion right now.

If you're one of the people who holds billions and billions in bitcoins then you're in a more complicated position.
posted by grobstein at 12:22 PM on December 4 [1 favorite]


Isn't it still basically impossible to turn bitcoins into money? Like if I have a $million in bitcoins, and want that much cash, how long/difficult will that be?

Do a market sell on GDAX for USD or EUR. Transfer USD or EUR to you bank account. I've done same day with EUR.
posted by Damienmce at 12:24 PM on December 4 [1 favorite]


Is that bitcoins being traded, or converted into money though? Does anyone have experience in cashing out?
posted by Sebmojo at 12:25 PM on December 4 [2 favorites]




Does anyone have experience in cashing out?

Well, if Bitcoin continues down its warpath of using up as much non-renewable energy and resources as possible as quickly as possible to make something that literally only exists as code to enrich a handful of techbros, then I get the feeling the whole species might be "cashing out" soon enough.
posted by deadaluspark at 12:28 PM on December 4 [8 favorites]


Maybe this is a dumb question but why would I spend $100 worth of bitcoins on dark web molly or whatever if it might be worth $1000 in a few months?

Congratulations to you! By demonstrating an understanding of why deflation is a terrible, terrible thing, you've exhibited more economic understanding than literally every Bitcoin proponent !!
posted by Pope Guilty at 12:30 PM on December 4 [46 favorites]


The environmental impact of this shit is staggering

Sincere, and admittedly dumb, question - how?
posted by EmpressCallipygos at 12:32 PM on December 4 [1 favorite]


Sincere, and admittedly dumb, question - how?

Google how much juice is being spent on conjuring monopoly-money - it'll drive you 'round the bend. It's truly the tragedy here.
posted by eclectist at 12:35 PM on December 4 [9 favorites]


The environmental impact of this shit is staggering

Sincere, and admittedly dumb, question - how?


Bitcoin mining consumes more energy than 159 countries
posted by gwint at 12:35 PM on December 4 [17 favorites]


Because of the astonishing amount of computing power required to do pretty much anything with cryptocurrencies. Computing power which uses vast amounts of electricity, and, accordingly, fossil fuels.
posted by howfar at 12:36 PM on December 4


For anyone who wants to watch a really cool documentary on bitcoin mining, check this out, from Motherboard: Life Inside a Secret Chinese Bitcoin Mine.
posted by Fizz at 12:37 PM on December 4


Well, not only do bitcoin mining rigs draw an insane amount of energy (according to a link upthread, as much as a full week of energy from a electroniced-up Western home.), as well as using tons of non-recyclable computer parts, which they use until they burn out and are then replaced.

Most computer components use rare, non-renewable rare-earth metals as well, so every time they dump another non-recyclable video card, its just another nail in the coffin of materials we actually might need in the future to keep building new computer products.

Computing already produces massive amounts of toxic waste, and bitcoin is just helping speed that process up a great deal, while sucking a lot of electrical energy (lots of which is still produced by coal and other fossil fuels) to produce currency.

I think that's part of what people are missing too, it's not just energy that bitcoin it burning through, it's also burning through a litany of barely-recyclable computing components and then trashing them. That matters, too.
posted by deadaluspark at 12:37 PM on December 4 [29 favorites]


I don't understand bitcoin, but not because I think money is real. I understand what fiat currency is. I also understand what bubbles are and how even in the middle of a bubble people can never really be sure whether there's a bubble going on or not.

I don't understand bitcoin because I don't understand why people want to invest in something that has such limited liquidity options. Like, you buy grain futures, at least you'll end up with grain in the worst case.
posted by GuyZero at 12:39 PM on December 4 [10 favorites]


I read up on blockchains, bitcoin, and ethereum a few weeks ago, as I was going to give a lecture on it (I'm an associate professor in CS). I do not recall ever being as outraged by reading white papers and design documents before, but this technology is appalling inefficient and inelegant. I'm with Tim Bray: I Don’t Believe in Blockchain. It's mind-boggling energy inefficient, atrociously slow, and solves very few real world problems, that cannot be solved better through proven cryptography, database, and distributed systems means.
posted by bouvin at 12:40 PM on December 4 [22 favorites]


Here is my read on the energy thing. The estimate on how much energy each bitcoin transaction uses looks like it was just pulled out of someones ass. To quote from the article linked above:

"An index from cryptocurrency analyst Alex de Vries, aka Digiconomist, estimates that with prices the way they are now, it would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually as they compete to solve increasingly difficult cryptographic puzzles to "mine" more Bitcoins. "

So all the analyst is saying is that it would still be profitable to use that much energy, not that it actually uses that much energy. And then the headline writers ran with it:

"This averages out to a shocking 215 kilowatt-hours (KWh) of juice used by miners for each Bitcoin transaction (there are currently about 300,000 transactions per day). Since the average American household consumes 901 KWh per month, each Bitcoin transfer represents enough energy to run a comfortable house, and everything in it, for nearly a week."

Basically, they assume miners will use 60% of the value of their bitcoins on energy.

Of course, as we all know, you can't pay electrical bills in bitcoin. So while I'm sure the computers are energy intensive, near as I can tell it is all one big giant guess.
posted by fimbulvetr at 12:41 PM on December 4 [3 favorites]


You Don’t Understand Bitcoin Because You Think Money Is Real

Also, let me add: could you be more condescending? Christ on the cross, bitcoin has issues. You people are one pack of flavour mix away from the next Jonestown.
posted by GuyZero at 12:43 PM on December 4 [12 favorites]


At a high level, there's a sort of deflationary story built into the adoption of bitcoin. Additional bitcoin is going to be increasingly rare, but it's still largely on the fringes of society. So there's this huge potential for more demand, but not a lot in the way of extra supply. This is a recipe for skyrocketing prices, but also suggests how it plummet back to earth.

So you can't concoct more bitcoin, but altcoins are increasingly common. And if the bitcoin market isn't useful in making transactions, one of those altcoins may replace it. Or it may fail to live up to a potential that may accounted for at the current market price. I could imagine some sort of analysis suggesting an equilibrium of blockchain based currencies introduced to counteract deflatinary effects of adoption, but I don't follow blockchain closely to know if anyone's done that publication yet. I mean, we objectively have altcoin already, so it's more a matter of measuring whether altcoin is over- or under-supplied. And whether any of them have better properties in supporting transactions that clear in a reasonable time frame.

The 'good' news is that when the adoption rate stabilizes, the deflationary stage is greatly diminished; it'd be not much different than real estate. Sure, populations will likely grow, and people will lose bitcoin wallet keys over time, but my wild ass guess is that it's no bigger in effect size than interest rate changes. Which, if we were anywhere else on the interest rate curve, would be fine, but is believed to be a problem when we approach the zero bound -- who would give out money and get less back tomorrow when they could just keep it?
posted by pwnguin at 12:45 PM on December 4 [3 favorites]


If I had put a dollar into Bitcoin the first time and then every other time that I read an article and thought, "well, this is clearly a pyramid scheme," I'd have a pretty nice early retirement saved up.

I think my investment strategies fail because I underestimate the number of stupid people in the world. :/
posted by Skwirl at 12:45 PM on December 4 [19 favorites]


I think the main difference between bitcoin and government-issued currency is that bitcoin is a terrible currency. It's expensive and slow to perform transactions, it's not accepted anywhere, and it's not at all anonymous (rather it's pseudonymous, which is all well and good until you try to actually convert it to usable money).

Instead, BTC is purely a speculative vehicle. In fact, the price appreciation vs USD over the past year has little to do with the merits of Bitcoin; rather, it's likely been initiated and kept rolling by a laughably blatant fraud currently being perpetrated by the largest crypto exchange, Bitfinex.

Bitfinex has been issuing hundreds of millions of dollars in a new cryptocurrency they manage, called Tether. They peg it to USD, based on a supposed reserve of USD they maintain, and are issuing huge tranches of it which they trade to other people for Bitcoin, causing the BTC price to go up.

But if you own a Tether, you, er, can't trade it to Bitfinex for one of the aforementioned dollars. This is likely because the dollars don't exist. Or rather, some of them exist, but signs indicate that Bitfinex has double-dipped them to secure margin trading in other cryptos, along with other interesting shenanigans that they are almost certainly hiding from whichever anonymous bank they convinced to give them an account - that is, if they have an account at all.

In fact, given their past struggles with banks, it may be the case that Bitfinex originated this scheme solely to generate a steady stream of USD from BTC appreciation, so they can continue to pay out USD for trades on their exchange while desperately seeking an actual bank dumb or crooked enough to take their business.

TL;DR - the 2017 hockey-stick curve of BTC/USD is almost certainly due to murky price manipulation by the largest exchange, whose continued existence depends on pumping up the BTC price so they can stay solvent.
posted by xthlc at 12:45 PM on December 4 [39 favorites]


altcoins are increasingly common. And if the bitcoin market isn't useful in making transactions, one of those altcoins may replace it.

li-quid-it-y.

You can buy altcoins, sure, but good luck turning them back into money that you can use.

Fiat currency has one major advantage which is very, very hard to displace: network effect.
posted by GuyZero at 12:49 PM on December 4


Funny, xthlc, that sounds exactly like a pyramid scheme..... which bitcoin believers always claim bitcoin most certainly is not, no siree.
posted by fimbulvetr at 12:50 PM on December 4


The only proper backing for a currency is the primordial supply of undifferentiated matter and energy that seems to be associated with space-time. That, or kittens.

The true backing for any currency is its exchange value for human labour. (But I'll accept kittens.)
posted by heatherlogan at 12:52 PM on December 4 [9 favorites]


I also understand what bubbles are and how even in the middle of a bubble people can never really be sure whether there's a bubble going on or not.
the insane thing about bubbles is that they are inevitable (they can reliably be replicated with automated simulations) and even if you do know that one is happening, it can be economically rational (for definitions of "rational" used by economists) to participate in a bubble, or even to intentionally create a new bubble. An economic actor that controls a high enough proportion of assets can create a bubble by demonstrating a willingness to pay a higher than average price for a specific asset, and can cash out during the ensuing feeding frenzy of speculation.
posted by idiopath at 12:52 PM on December 4 [9 favorites]


Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal:
But lay up for yourselves treasures in the blockchain, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal:
For where your treasure is, there will your transaction history be also.

Hey, out of curiosity, which is the easier liquidation path:
Bitcoin—>USD, or
Bitcoin—>cocaine—>USD?
posted by Huffy Puffy at 12:54 PM on December 4 [11 favorites]


I just sorta keep wondering what will finally be the straw that breaks the camel's back - the big challenge to a massive selloff seems to be the limited capacity for exchanging crypto into anything that isn't more crypto, which seems like it'd be a check valve on a rush to get out before the losses mount.
posted by Kyol at 1:02 PM on December 4 [1 favorite]


Google how much juice is being spent on conjuring monopoly-money - it'll drive you 'round the bend.

It's truly the tragedy here. it's also burning through a litany of barely-recyclable computing components and then trashing them.


Bitcoins make diamonds look like an ethical investment. It's rolling coal for nerds.
posted by straight at 1:04 PM on December 4 [34 favorites]


Fiat currency has one major advantage which is very, very hard to displace: network effect.

Going back to that godawful "lol money isn't real" piece, the writer dismisses the "full faith and credit of the United States" as meaningless:
A U.S. dollar is “backed by” “the full faith and credit of the United States.” But what exactly does this mean? It means that if you take one dollar to the U.S. Treasury and ask them to redeem it, they will: They’ll give you…one dollar. Or four quarters, if you want, probably.
Which totally ignores that as long as dollars are backed by the government's faith and credit, the largest employer in the country is going to be paying all its employees in USD; The biggest lender in the country will be lending dollars; and the biggest debtor in the country will be repaying its debts in dollars. All of that goes a very long way to keeping the "shared delusion" in place.
posted by Holy Zarquon's Singing Fish at 1:05 PM on December 4 [21 favorites]


I think the basic conceptual framework of blockchains--as opposed to cryptocurrency in general and Bitcoin specifically--is pretty solid and has some decent potential. Ironically enough, the organizations that I see eventually working best with blockchain are governments, up to and including the federal government. Using it for stuff like grants may actually end up streamlining the process, which is probably second to ideological barriers in frustrations many grantees have with the current way of doing things.

Unfortunately, most of the proponents/evangelists for blockchain are currently libertarian wackjobs, rich idiots, techbros with unknown and possibly nefarious intent, or some combination of those. It's hard to convince government orgs of the benefits of something that is supported by the same people who want to destroy everything you work for, but there's a small (and growing) push to make it work. From a personal POV, I'd find quite a bit of schadenfreude in the ultimate beneficiaries of blockchain to be big government entities and their citizen "customers."
posted by zombieflanders at 1:06 PM on December 4 [6 favorites]


Obligatory reminder: despite all the coverage focusing on western techno-libertarians, Bitcoin’s single most popular use is evading Chinese government currency controls, to the point where 90% of bitcoin transactions a year ago were taking place entirely within China. The price of bitcoin dropped sharply when the Chinese government banned exchanges, and has rebounded in part because they seem unwilling to enforce that ban (and according to rumors may be lifting it soon anyway).

Any analysis of bitcoin that doesn’t discuss China is doomed to miss the mark.
posted by Itaxpica at 1:09 PM on December 4 [32 favorites]


If I had put a dollar into Bitcoin the first time and then every other time that I read an article and thought, "well, this is clearly a pyramid scheme," I'd have a pretty nice early retirement saved up.

Pyramid schemes can be fantastically profitable, as long as you're high up on the pyramid. By the same token, financial bubbles can be staggeringly profitable, as long as you divest right before the bubble pops.
posted by Mr.Encyclopedia at 1:21 PM on December 4 [4 favorites]


Good luck actually selling a bitcoin for $11,000...
posted by Yowser at 1:24 PM on December 4


Yowser, it's pretty easy. You put in the amount you'd like to sell, hit "Sell," transfer the money to the bank. Seriously.

Regarding the environmental costs, I wrote a comment on FB earlier today, and will paste it here:

Just purely out of curiosity, I dug up some random USGS report estimating the energy consumption for a variety of mineral deposits, and they estimate, for 8 potential mines in Ghana, in 2010, that the energy consumption for an ounce of gold is anywhere between 300 and 1,200 kWh. A different report says that an average gold mine in 2005 produced 12,100 kg of CO2 per kg of gold, which is pretty similar to what the article says it takes to mine a bitcoin.

To summarize, capitalism will inevitably destroy the planet.
posted by papayaninja at 1:31 PM on December 4 [5 favorites]


Wow, holy shit. I've known about bitcoin for years, of course, but this shit is... next-level. We really are living in a simulation, aren't we? "The Winklevoss brothers put part of their Facebook settlement into Bitcoin" was totally written by the same entity that wrote that Reality Winner story arc a few months back. Jeebus.
posted by rabbitrabbit at 1:34 PM on December 4 [4 favorites]


Papayaninja, isn't one of the important points here the fact that we *don't* actually have to mine new gold every time we need to increase the money supply?
posted by sagc at 1:46 PM on December 4 [9 favorites]


Just purely out of curiosity, I dug up some random USGS report estimating the energy consumption for a variety of mineral deposits, and they estimate, for 8 potential mines in Ghana, in 2010, that the energy consumption for an ounce of gold is anywhere between 300 and 1,200 kWh. A different report says that an average gold mine in 2005 produced 12,100 kg of CO2 per kg of gold, which is pretty similar to what the article says it takes to mine a bitcoin.

The difference being that you don't need mine gold new to be able to transact in it. Also, there is gold that was dug up 6000 years ago in Bulgaria that is still gold today. If you made a spreadsheet using the leading software 25 years ago, you can't open it anymore; in fact, the last version of Excel that would let you open it is 10 years old itself.
posted by Homeboy Trouble at 1:49 PM on December 4 [9 favorites]


Bitcoin Is a Delusion That Could Conquer the World

and how is this actually different in principle than any other fiat money? And then, there it is (sort of), third paragraph of the link in question:

Throughout history, currency has taken one of two forms: physical assets, like gold or beads, and fiat currency, like government-backed paper and coins. Bitcoin and its brethren introduce a third category: digital currencies that run on a combination of game theory, economics, and cryptography—thus, cryptocurrencies. If all money is the sharing of an illusion, bitcoin wants to build a better way to share it.

okay, but it's still an illusion. Maybe I just need to read the Baroque Cycle again. The Confusion in particular.
posted by philip-random at 1:50 PM on December 4 [2 favorites]


Guys, it's time for some game theory.
posted by tobascodagama at 1:51 PM on December 4 [11 favorites]


some peeps are posting trade values and transaction volume stuff in here, claims about 2 billion usd yadda yadda

never trust transaction volume stuff, bitfinex has wash trading and lots of other exchanges also have wash trading

the order book on crypto is always thin. it's never not thin.
posted by hleehowon at 1:51 PM on December 4 [6 favorites]


what happens when Bitcoin fails and the peope most invested in it tend to be attracted to fringe ideaologies?

Depends on who's out of the chair in the duck, duck, goose game of pushdown.

If an EMP takes out electronics - whoever is blamed for the nuke(s) that did it or caused the solar flare to hit the earth.
Governmental rule changes backed with jailtime? That government.
Published advisory from banking interests calling it a scam? That bank.
The selling off of some of the large stashes of bitcoins? Elon Musk as he was the latest Satoshi.

It won't matter too much why - SOMEONE will get blamed. I'd put a cake that someplace on an internet someone will blame Obama. Perhaps a Clinton. (And I'm shocked that CIA george HW Bush bitcoin didn't give a theory of some kind already)

Whomever gets the blame runs the risk of their own Samuel Byck.
posted by rough ashlar at 1:54 PM on December 4 [1 favorite]


Which totally ignores that as long as dollars are backed by the government's faith and credit, the largest employer in the country is going to be paying all its employees in USD; The biggest lender in the country will be lending dollars; and the biggest debtor in the country will be repaying its debts in dollars. All of that goes a very long way to keeping the "shared delusion" in place.

Also, the army is paid in USD, and taxes are collected in USD. This is not a shared delusion, it's an enforced delusion "backed" by laws, guns & prison.

Of course, this mode of thinking also explains gold bugs & anyone else who wants to trade without government interference.
posted by chavenet at 1:54 PM on December 4 [6 favorites]


Man, I've been reading up on Cryptokitties and it is probably one of the cooler ideas ever implemented on a blockchain, but again I am left to wonder why implement this on a blockchain at all, except for ideological reasons.

Nominally they could offer assurances to players that the game could never be tampered with, but because of the fear of hacks/bugs, they have put so many access points for themselves to end, upgrade, or change the game that there's no real assurance of anything.
posted by muddgirl at 1:57 PM on December 4


Honestly, I gave up on Bitcoin as soon as I found out the Hedge Fund douchebags were interested in it. Everything since has done nothing more than confirm my suspicions that Bitcoin, and cryptocurrency in general, is a dumb, dumb, dumb idea.
posted by SansPoint at 2:00 PM on December 4 [2 favorites]


Yowser, it's pretty easy. You put in the amount you'd like to sell, hit "Sell," transfer the money to the bank. Seriously.

You seriously think you could move millions of dollars in AND out of BTC every day with the reliability of a Schwab or E-Trade? There's no regulation of these bitcoin exchanges and virtually no recourse if they just don't pay you.
posted by GuyZero at 2:01 PM on December 4 [4 favorites]


The more it becomes a speculative investment, the less it becomes a stable currency.
posted by mygoditsbob at 2:05 PM on December 4 [8 favorites]


what happens when the blockchain expands to real world applications?

You get people who want to make bitcoin platinum, bitcoin uranium and other "hard forks" to address what the forkers think is that problem.

The lack of ability to scale is why banks have called out bitcoin as either needing bankings help to address the problem OR called blockchain crypto-money bullshit. Either position is taken as hostile by the cryptocoiners.

The more interesting "threat" to cryptocoin is the possibility of large (1500) actual qbit computers working if articles are to be believed. The soonest date I've heard on that? 2022. 2022 is not that long away.
posted by rough ashlar at 2:08 PM on December 4 [1 favorite]


Yowser, it's pretty easy. You put in the amount you'd like to sell, hit "Sell," transfer the money to the bank. Seriously.

You seriously think you could move millions of dollars in AND out of BTC every day with the reliability of a Schwab or E-Trade? There's no regulation of these bitcoin exchanges and virtually no recourse if they just don't pay you


I mean, the question was specifically about selling a single bitcoin for eleven thousand dollars, which is still pretty easy. Now, selling a thousand bitcoins, or a hundred thousand, that gets messy fast.
posted by Itaxpica at 2:09 PM on December 4 [1 favorite]


While I think it is fair to construct strong criticism of bitcoin and related technologies, I think virtually everyone in casual discourse of this topic makes a lay mistake in their economic analysis.

The amount of energy used by, or emissions from, a bitcoin network has to be quantified under the lens of economic opportunity cost: but that's the carbon footprint of the state apparatus itself. The question isn't of "Does a bitcoin transaction cost as much to power an American household for a week", but rather has to be weighed against the total ecological impact of if governmental support of conventional money simply didn't have to exist. People don't realize they are trying to compare alternate societies.

It's analogous to evaluating a zero emissions electric vehicle versus the end-to-end carbon footprint of manufacturing of electric cars.

I think there are two takeaways from this perspective. One, why is that the people involved don't seem to get this. Two, this also explains—it does not justify, but rather clarify—the "ideological" position that crypto money proponents seem to not care about the role of the state in their analysis.

Like, I don't know the answer to this issue. But I do know that a strong critique needs good economic, philosophical foundations.
posted by polymodus at 2:09 PM on December 4 [1 favorite]


polymodus: the conventional money still has to exist as of now, because of the crap throughput. if you scaled everything up to an economy size (even a relatively small economy), it would be multiples of the entire current energy consumption of the human race.
posted by hleehowon at 2:24 PM on December 4 [4 favorites]


Like, you buy grain futures, at least you'll end up with grain in the worst case.

In theory - in practice most future markets these days are fiat also*.

My memory was an article bitching about 27 trillion dollars in fiat future commodity markets but the search engines came up with this infographic instead.

How does settling 1.2 quatrillion derivatives sound?

Bitcoins aren't squat in comparison.

(I tried to find the other end - the people using beans as a local currency in preparation for the collapse of oil production but theoildrum is now gone so tracking that idea is now a tad harder.)

*GATA tries to be the end all and be all of such claims for Gold/Silver. I'll let you look that up that theory about a conspiracy on your own.
posted by rough ashlar at 2:27 PM on December 4 [1 favorite]


I'd like to be smug about Bitcoin (and crypto generally) but I have friends that have gone from struggling to multimillionaire by taking what they made in more conventional businesses and rolling it into Bitcoin, whereas I blew what I money I inherited trying to keep a family business afloat that has now failed. If I had plowed it all into bitcoin instead, I'd probably never have to work again. Instead, I may never be able to stop working.

Just a couple weekends ago a different, older friend mentioned that he'd made a few grand over the weekend trading coins. And this guy is a family oriented old hippie type whose other interests involve home crafts, he's not some silicon valley or financial industry asshole.

Sorry, but I can't help but feel like I'm the dumbest money. I also won't find much consolation if these assholes manage to finish wrecking the planet along the way. Have you seen Elysium?
posted by snuffleupagus at 2:38 PM on December 4 [3 favorites]


Yeah, I remember vigourously making fun of bitcoin, and if I'd instead chucked in a few hundred quid, I could be making fun of SO MANY OTHER THINGS now. from my beach hut. Sigh.
posted by ominous_paws at 2:40 PM on December 4 [4 favorites]


Papayaninja, isn't one of the important points here the fact that we *don't* actually have to mine new gold every time we need to increase the money supply?

Right, so gold ruins the environment forever but bitcoin is just one and done! It's so efficient!! ;)

But, really, good point.
posted by papayaninja at 2:40 PM on December 4


I have friends that have gone from struggling to multimillionaire by taking what they made in more conventional businesses and rolling it into Bitcoin

As in, millions of US dollars in a FDIC-insured bank account multi-millionaires or hypothetical paper multi-millionaires? There is a considerable difference.

older friend mentioned that he'd made a few grand over the weekend trading coins

Guess how many times he lost a few thousand trading coins and didn't mention it.
posted by GuyZero at 2:42 PM on December 4 [11 favorites]


but again I am left to wonder why implement this on a blockchain at all, except for ideological reasons.

If marketing and viral buzz is an ideological reason then yea, that is a possible fit for CryptoKitties.

Cats, InterNet, cute graphics, owning a virtual thing and then slap on blockchain via an "affordable" Etherium? Cats and Internet are strong with each other.

Virtual things? Glitch as a thing is a thing this week on TheBlue. And, based on the glitch thread it had a few of the above list.

The $11K price of bitcoin was a $10K. And if it went from $8k to $5 - still buzz about cryptothings. And while going up is better for your cat-based blockchain marketing going down means people are still talking.

Charge a whole bunch for some of the cats for better buzz.

Just make some of your cats cheap.
$10 cat or $30 virtual cat - all 1st world problems. Will it put coin in your pocket as the creator - sure seems to be. And heck, at $10 or $30 that virtual cat is cheaper than pet(mart/co/whatever)'s price and you don't need mom/dad to say OK to get the cat.
posted by rough ashlar at 2:44 PM on December 4 [1 favorite]


Let me be clear that I find bitcoin (and other cryptocurrency) mining deeply unethical and ecologically inexcusable. I literally hate people who waste energy on it - even renewables, as they support the financial system that encourages others to waste non-renewable energy on it.

But you have to be careful saying "Bitcoin mining consumes more energy than 159 countries". It consumes more than any one of 159 individual countries, not 159 in total.

Let's nip it in the bud now and stop it before this comment becomes hideously and grotesquely outdated.
posted by edd at 2:44 PM on December 4 [2 favorites]


Sorry, but I can't help but feel like I'm the dumbest money. I also won't find much consolation if these assholes manage to finish wrecking the planet along the way. Have you seen Elysium?

Yeah, it's tough not to feel like that when you've been Internet-watching long enough to remember when the ground floor of Bitcoin was a thing. I just remind myself that I have zero expertise in recognizing when it's time to cash out of a speculative bubble and could easily have ended up burned by Mt. Gox or whatever.
posted by Holy Zarquon's Singing Fish at 2:44 PM on December 4 [10 favorites]


Any analysis of bitcoin that doesn’t discuss China is doomed to miss the mark.

Holy cow, you weren't kidding. Playing around with the link grobstein posted above regarding trade volume, you can zoom out to a five-year view and see almost exactly when China cracked down (hint: it's probably between Dec. 2016 and Jan. 2017 when trade volume dropped from >100MM BTC per month to <5MM).
posted by mhum at 2:44 PM on December 4 [4 favorites]


As in, millions of US dollars in a FDIC-insured bank account multi-millionaires or hypothetical paper multi-millionaires? There is a considerable difference.

You know what? I'd be fine with either, me.

And, as per upthread, there's a enough volume to get millions out. Maybe not billions. Oh no.
posted by snuffleupagus at 2:50 PM on December 4 [1 favorite]


The problem with bubbles is that there's no option that leaves you happy:
a) You don't participate, and feel the nagging sense that you could have been rich.
b) You participate, but cash out early and feel the nagging sense that you could have been rich.
c) You participate and hold until the whole thing crashes.
posted by Pyry at 2:52 PM on December 4 [21 favorites]


older friend mentioned that he'd made a few grand over the weekend trading coins

People literally said things exactly like this back in the late 90s, only it was "day trading stocks" instead of "trading coins". And yeah, sometimes after a few beers I wonder what my life would have been like, if I'd bought Apple at $13. That's life.

Some people did legitimately make out very well. But lots of people didn't get out when the market bubble finally popped, because psychologically it's very, very hard to exit before the pop. Any moron can ride a wave on its way up; getting off before it crests and drops you into the trough is the difficult part.
posted by Kadin2048 at 2:54 PM on December 4 [11 favorites]


The amount of energy used by, or emissions from, a bitcoin network has to be quantified under the lens of economic opportunity cost: but that's the carbon footprint of the state apparatus itself. The question isn't of "Does a bitcoin transaction cost as much to power an American household for a week", but rather has to be weighed against the total ecological impact of if governmental support of conventional money simply didn't have to exist. People don't realize they are trying to compare alternate societies.
A whole house-week of energy per transaction! I bet I make 5-10 transactions per week, and I bet I'm on the low-end of the US. Imagine how many transactions investment banks make each day! This alternate society is going to require a *lot* of energy. Other, non-transactional, uses of energy wouldn't be affected, so how on earth could switching to cryptocurrency as currently constituted be anything but massively bad, environmentally?
posted by dbx at 2:55 PM on December 4 [3 favorites]


sometimes after a few beers I wonder what my life would have been like, if I'd bought Apple at $13. That's life.

Choosing to get into Bitcoin during the first couple years was not like picking a stock on the existing and well understood stock market. It was recognizing that this alternative financial network would actually work and having some idea of how valuable the tokens could become vs the escalating cost to mine them. Buying in now is more like picking a stock (especially with other crypto currencies coming out all the time).

I think I'd rather have made the fortune to lose again. All of these psychological justifications for why it's better to sit on the sidelines are rational but unconvincing.

That said there's clearly a lot of fuckery going on now, I could barely follow the whole Tether thing but it looks pretty bad.
posted by snuffleupagus at 3:03 PM on December 4


Yowser: "Good luck actually selling a bitcoin for $11,000 at all..."

FTFY, assuming you were talking real cash.
posted by Samizdata at 3:09 PM on December 4 [1 favorite]


burned by Mt. Gox or whatever.

Odds are you didn't know that the head of Mt. Gox might end up becoming solvent by the bankruptcy. (Take THAT reality!) Note how the people who had coins in the exchange won't get their coins back. Just some money. Maybe.

There is another risk: Plenty of exchanges that have done a run off with people's bitcoins. In 2015 there were over 30 of 'em. Couldn't find a modern list.

Think you can pick the next bitcoin? over 600 dead cryptocoins. (CopperBars is at least something I remember hearing about.)

Think that having physical silver/gold in someone else's vault as tokens? I'll point you at Liberty Dollar and let you google about Rob Grey and http://opencurrency.com/ You might want some cannabis tokens for your own giggles or some Bush tokens

Want "trusted" silver/gold at discount? A copy of the letter about the topic of fake gold-looking money as sent this year is here. (no endorsement of the web location is intended and the idea of a Trump executive taking action on things looking like Gold and yet are fake seems optimistic)
posted by rough ashlar at 3:11 PM on December 4 [5 favorites]


Also, the intersection of the Bitcoin crowd and the smugger-than-thou "supersmart" crowd on a Venn is almost one circle.
posted by Samizdata at 3:11 PM on December 4 [6 favorites]


I think I'd rather have made the fortune to lose again.

That's hindsight speaking. It's like seeing somebody win the Powerball and thinking, "Damn, that could have been me!" Statistically, no, it couldn't have been.
posted by tobascodagama at 3:16 PM on December 4 [6 favorites]


All of these psychological justifications for why it's better to sit on the sidelines are rational but unconvincing.

YMMV, of course. I love the sideline!

popcorn?
posted by sandettie light vessel automatic at 3:17 PM on December 4


Also, the intersection of the Bitcoin crowd and the smugger-than-thou "supersmart" crowd on a Venn is almost one circle.

Coin-shaped, you say?
posted by chavenet at 3:23 PM on December 4 [4 favorites]


As a point of anecdata, I bought 0.5 btc in 2012 when it was around $800 USD per, expecting to quickly double my money (or more). Turns out I bought at a peak, and prices tanked very shortly after. I held that same fraction of a Bitcoin for 5 years, checking the price regularly, my dreams of profit long gone and willing to settle for at least of sizable fraction of my money back. Finally earlier in 2017 prices ticked up to my break even line and I immediately liquidated my position and dusted my hands of the whole cryptocurrency speculation economy.

It's easy for me to look at today's price and think, 'wow, I should have held on - if I cashed out today I'd have been able to take a decent vacation!' But man that is some severe rose-colored cognitive bias talking, for multiple reason:
1. I used btc-e as an exchange, and it was shut down about a week after I cashed out. Could have lost everything.
2. I also dabbled in some other speculative currencies, in which I lost most of what I put in.
3. The btc price today is unprecedented. So my fantasy is: if only I'd held 6 years, instead of 5, I'd have made multiple times my investment! But the reality is: I would have sold my 0.5 dozens of times over in the run-up to today's price. There's no alternate timeline in which I'd be sitting on 0.5 btc at today's price.

I get pissed about the whole situation in general (not about myself specifically) because all the stories about people making money are evidence of survivorship bias. There is no skill in knowing the right time to buy or sell in these wildly unregulated exchanges, it's 100% luck. Sure a lot of very rich people are making a lot of money speculating in bitcoin, but these people had the capital to invest gamble in the first place, and could afford to hold play until they got lucky. It's not a scheme, in my opinion, but it's definitely a lottery.
posted by smokysunday at 3:24 PM on December 4 [29 favorites]


That's hindsight speaking. It's like seeing somebody win the Powerball and thinking, "Damn, that could have been me!" Statistically, no, it couldn't have been.

Well, sure it's hindsight. And while the rest of that may be consoling but it's really not the same at all. It's certainly not a lottery, of all things. And there's no need for statistics here.

I made a decision not to spend a bunch of money on Radeons during the first few years of mining, because I didn't really understand the potential and so I computed my upside based on then-current prices and one years worth of mining.

Speculating on it in some huge way would've only happened if I had done that, and so had become less clueless.
posted by snuffleupagus at 3:24 PM on December 4


I wonder how Dogecoin is doing these days.... Did it outlast Doge memes?
posted by edheil at 3:29 PM on December 4 [3 favorites]


It was recognizing that this alternative financial network would actually work

I'm not sure I'm on board with that, for non-financial-bubble values of "work". The network doesn't seem to scale well, prohibiting it from ever displacing significant parts of the financial system; governments don't like it for most of the reasons that users do like it, and it never pays to bet against the people with the guns and monopolies on violence; it's also not unique, in the sense that anyone can create another blockchain-based system if they want to.

There's been a shitload of "hot money" floating around in the world since the real estate crunch in 2007/08. Particularly in Asia, where there's also limited access to traditional investments. Some of that hot money has gone into Bitcoin. I think that's what has driven its insane valuation.

And it should be viewed as a valuation, like an opaque early-stage startup: just because someone paid $10k or $11k for a Bitcoin doesn't mean that everyone with a Bitcoin can get that; there's not nearly enough liquidity for everyone to make a clean exit. Since the intrinsic value of a Bitcoin is exactly zero (plus or minus the value of it as a transaction platform, which diminishes over time as competitors emerge and/or governments go after it), there will eventually be a bloodbath. The majority of Bitcoin holdings can't be cleanly liquidated at anything like their current prices, because once people start to sell, nobody is going to want to buy.

I don't fault people for trying to get in, make money, and get out, but eventually it's going to end badly. There's no good exit. Anyone holding Bitcoins is betting that they're not going to be the ones holding them when the market tanks, and so far they've been right — but past performance is no guarantee of future results.
posted by Kadin2048 at 3:31 PM on December 4 [12 favorites]


I'm not sure I'm on board with that, for non-financial-bubble values of "work"...

I meant "successfully function" more or less, but those are all good points (beyond scaling).

it should be viewed as a valuation, like an opaque early-stage startup: just because someone paid $10k or $11k for a Bitcoin doesn't mean that everyone with a Bitcoin can get that; there's not nearly enough liquidity for everyone to make a clean exit. Since the intrinsic value of a Bitcoin is exactly zero (plus or minus the value of it as a transaction platform, which diminishes over time as competitors emerge and/or governments go after it), there will eventually be a bloodbath.

In my admittedly unschooled and inexperienced view, this is the real problem/threat on the horizon.
posted by snuffleupagus at 3:36 PM on December 4 [1 favorite]


the order book on crypto is always thin. it's never not thin.

Emphasis added. This is a true statement that should be the beginning and end of any discussion. It's also why the idea of CME offering BTC/USD exchange rate futures settled in USD scares the shit out of me even at 30% margin.
posted by PMdixon at 3:54 PM on December 4 [3 favorites]


And, as per upthread, there's a enough volume to get millions out. Maybe not billions. Oh no.

By all means, sink your $10K of mad money into BTC. Buy $100 of lottery tickets. Day-trade $RH. Some people will make a profit doing these things. Many will not.
posted by GuyZero at 4:05 PM on December 4


I wonder how Dogecoin is doing these days.... Did it outlast Doge memes?


a rapist ended up finagling his way to scamming everyone out of most of it
posted by hleehowon at 4:09 PM on December 4 [6 favorites]


Whether btc is US$1 per or US$11,000 per is immaterial. The currency is fundamentally broken by its reliance on technology - more so than vulnerability to EMP or other catastrophic power failure. Bitcoin Bros often harp on about how a currency free of government interference is obviously more 'free' and 'ethical' and whatever than government-backed currency, but at least with government currency there is a baseline of access. What about the huge portion of the world that doesn't have reliable power? Internet access? Mobile phone coverage? If you don't have these things, you're totally shut out of a blockchain-based economy. How does a homeless person beg for Bitcoin?

Bitcoin has no social conscience - if you can't access it, it's your fault for being insufficiently technological. I know it's a hiding to nothing to expect techbros to examine privilege, but the problem that Bitcoin solves is a) not actually a problem, and b) not the problem they think they're solving.
posted by prismatic7 at 4:10 PM on December 4 [7 favorites]


Cameron and Tyler Winklevoss... Invested $11 million of their payout into Bitcoin in 2013... their slice of the Bitcoin pie is now worth over $1 billion...

Wow. This is not the only example, but the more I learn about the ways people come by money, the more I think this seems like a really great, completely fair system for figuring out who should get what kind of food, housing, and health care. Also, we should definitely reward these job creators by lowering their taxes. /heavy sarcasm
posted by salvia at 4:22 PM on December 4 [9 favorites]


Recently said to me by a bitcoiner:
"if we want to eliminate the use of fossil fuels we're going to have to use more and more electricity."

[walks away]
posted by edd at 4:29 PM on December 4 [7 favorites]


I have friends in a developing country with super cheap subsidized energy and they are bitcoin mining. They have made a shit ton of money already. Hmm.
posted by k8t at 5:03 PM on December 4


I know it's a hiding to nothing to expect techbros to examine privilege, but the problem that Bitcoin solves is a) not actually a problem, and b) not the problem they think they're solving.

Well, it does kind of solve some money-laundering problems, I guess. Or at least push the responsibility for the laundering down a couple of tiers in the hierarchy, which I assume the folks who previously had to worry about it see as a problem well worth solving.
posted by tobascodagama at 5:06 PM on December 4


I have friends in a developing country with super cheap subsidized energy and they are bitcoin mining. They have made a shit ton of money already. Hmm.
Which only serves to highlight how inequitable computationally-intensive currencies are! They rely on always-on power, always-on internet, the technical know-how, and the language skills to interact with other users of the technology. This is the epitome of privilege!
posted by prismatic7 at 5:08 PM on December 4 [4 favorites]


Argh. Apologies for threadsitting, but:
Well, it does kind of solve some money-laundering problems, I guess.
Those problems generally appear to be along the lines of "how do I launder this money in such a way that it remains as morally reprehensible as possible, yet conveniently obfuscated from official view?"
posted by prismatic7 at 5:10 PM on December 4 [5 favorites]


How does a homeless person beg for Bitcoin?

By day I'm a Nigerian prince at my local library, by night I sleep in bus shelters?
posted by I'm always feeling, Blue at 5:11 PM on December 4


Re: Fiat currency
I think it’s worth mentioning that the USD has been backed by OIL, since the mid-seventies (shortly after abandoning the gold standard). Even more so, because the collapse of the petrodollar, sooner or later, seems inevitable.
A bitcoin bubble is perhaps an expression of collective anxiety; a sense of impending doom that we’re helpless to prevent, and so we just obsessively run computers to produce magic numbers that will not save us ...
posted by thedamnbees at 5:37 PM on December 4 [1 favorite]


More like: in a world where 7/11 only accepts fiat money and not Bitcoin, how does a homeless person convert their Bitcoin to something they can buy a sandwich with? To my knowledge, most BTC exchanges are not physical places. You still need to move the fiat money, after it's been exchanged, out of the exchange and into another bank account that you can actually withdraw it from. The last step is going to be difficult for a homeless person to do, even if they have regular computer access via a public library.

(Forget Venmo, how long until check-cashing places accept Bitcoin?)
posted by tobascodagama at 5:37 PM on December 4


Just to quote a few comments here:

"That said Bitcoin is clearly a bubble now"

Impossible to say. It could go to zero, could also go to 1MM per coin. I have friends that say that bitcoin "is 100% sure to fail soon". They may be right. But Napster is not around anymore not because it was bad, but because better solutions are available today. If bitcoins fails, it fails due to better solutions. The blockchain technology is here to say.

"Nearly every medium of exchange is backed to some extent by the faith of the fools who will accept it as payment."

100% true

"As of November 1st, a single bitcoin transaction uses as much energy as a well-equipped western household uses in a week."

Every kind of currency requires more energy than the previous one (e.g. mining of gold vs direct exchange of goods). The always increasing amount of energy required is the curse of the industrial society and I see it as a hint, that cryptocurrencies are here to stay.


I think very few people understand

a) what money really is (a very complex question, I see money as debt)
b) how broken our financial system really is.


James Altucher's 10 predictions about where bitcoin and cryptocurrencies are headed

posted by yoyo_nyc at 5:45 PM on December 4


the order book on crypto is always thin. it's never not thin.

What does that mean? What's an "order book"? How would things be different if it were thick?
posted by thelonius at 6:34 PM on December 4 [1 favorite]


The "order book" is the list of people interested in actively buying or selling a certain stock or other sort of financial instrument. A "thin book" means there are few people looking to get in or cash out at any one time, which means it's harder to buy/sell a ton of the stuff at one time, e.g. the idea of the Winkelvii turning their "billions of dollars worth of bitcoin" into billions of actual dollars.
posted by Holy Zarquon's Singing Fish at 6:40 PM on December 4 [6 favorites]


Every kind of currency requires more energy than the previous one

You offer no evidence for this, and your one example is both probably ahistorical and in such loose terms as to not even be obviously true - what was the caloric cost of the cognitive effort of maintaining an extra n^2-n prices in a barter economy, even accepting the probably false barter->gold leap?

James Altucher's 10 predictions about where bitcoin and cryptocurrencies are headed

8. In the same way the internet changed the monopolistic phone industry, crypto will change the monopolization of government-backed money.


This isn't even a prediction! Change it how? From what to what? And the rest are of similar value, either already true, so vague as to be meaningless, or couched as about some unspecified long-term.
posted by PMdixon at 6:54 PM on December 4 [9 favorites]


Re: Fiat currency I think it’s worth mentioning that the USD has been backed by OIL, since the mid-seventies

And the argument could be made that it has also benefited from a projection of physical power via the military and benefits from money laundering.

BCCI, HSBCs assets nabbed by Cap One, Panama and paradise papers, The picture of the FARC leader with the NASDAQ guy and the Red Button (guess it just links back to the older 2011 published work and nothing new-ish) are all examples of the money laundering issue. Pay the US its taxes and it would seem the money has a shot at becoming "good".
posted by rough ashlar at 6:59 PM on December 4 [1 favorite]


Sure some folks might lose their shirts if there is a crash, but I'm limiting my collection to vintage bitcoins with numismatic value. I'm partial to rare pre-2010 coins.
posted by JackFlash at 7:01 PM on December 4 [7 favorites]


...but these people had the capital to invest gamble in the first place, and could afford to hold play until they got lucky.

Ah yes, as it says in the Book of Republicans:
For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath.
posted by BlueHorse at 8:17 PM on December 4 [3 favorites]


It’s interesting that none of the articles mentioned that this bubble in bitcoin coincides with roll outs of legalized cannabis. Since access to banks is a huge problem, I’ve heard industry insiders saying that bitcoin is being used to transact and move money around as a middle layer between players in the market.
posted by herda05 at 8:33 PM on December 4 [1 favorite]


I think very few people understand

a) what money really is (a very complex question, I see money as debt)
b) how broken our financial system really is.


I think a lot of people here might understand those things, but perhaps aren't expressing them. I only just came back to this thread, and I'm kind of surprised it took until five hours after it being posted for anyone to bring up the petrodollar.

I mean, we've only waged ludicrous fucking wars to attempt to prevent nations from selling oil in anything other than the almighty dollar.
posted by deadaluspark at 8:48 PM on December 4 [2 favorites]


Also, obligatory:

Metafilter: an expression of collective anxiety; a sense of impending doom that we’re helpless to prevent, and so we just obsessively run computers to produce magic numbers that will not save us ...
posted by deadaluspark at 8:48 PM on December 4 [8 favorites]


Maybe this is a dumb question but why would I spend $100 worth of bitcoins on dark web molly or whatever if it might be worth $1000 in a few months?

No it's a very perceptive question. This is a thing I say a lot but there's a weird contradiction at the heart of Bitcoin in that the deflationary aspect and wild speculation did a lot to attract people to this crazy idea in the first place - in hopes of striking it rich - but is really bad for its actual usefulness as currency.

I have to say though I am interested in where this line of technology goes next. But I think a certain libertarian sort has gotten weirdly hung up on this particular early-stage brute force implementation as True Pure Internet Gold.
posted by atoxyl at 8:58 PM on December 4 [3 favorites]


b) how broken our financial system really is.
A good portion of that breakage is to do with the super-wealthy locking up vast swathes of liquidity in their personalised offshore investment schemes in order to avoid paying tax on it. Given that TFA refers to the massive btc fortunes amassed by super rich twin brothers, I think it’s really clear that cryptocurrencies are not going any way along the road to fixing that problem, and are in fact enabling it.
posted by prismatic7 at 9:32 PM on December 4 [7 favorites]


And yeah, sometimes after a few beers I wonder what my life would have been like, if I'd bought Apple at $13. That's life.

The one moment in my life (1997?) when I actually thought seriously about playing investment roulette. When I said "fuck it, let's buy $1000 worth" and had the money. Did I chicken out, or change my mind? No, just too lazy. When I said this to a friend he said "so what, you would have sold it a couple of years later when it doubled, you're not that type".
posted by bongo_x at 10:05 PM on December 4 [4 favorites]


Actually, just realized it was summer of '99, so it was all the way up at a buck and a half.
posted by bongo_x at 10:08 PM on December 4


But Napster is not around anymore not because it was bad, but because better solutions are available today.

napster is not around anymore because it was sued out of business - (actually, there's still a company doing business as that name, but ...)

something similar could happen to bitcoin
posted by pyramid termite at 4:16 AM on December 5 [2 favorites]


something similar could happen to bitcoin

Out of curiosity, what would you envision happening that's similar? Government crackdown of some kind? How do you sue bitcoin, and how does it prevent it from being used?
posted by hoborg at 8:22 AM on December 5




Outside of China, where it seems to be used for actual commerce, Bitcoin seems to be just another commodity. It's one that's rising, great. But I will tell you that the only times it shows up in the news are things like ransomware attacks and dark web shenanigans. We already have a perfectly good currency in the United States and there's no real reason for most people to adopt another. If I was a medium sized merchant, what reason would I have to allow for bitcoin to pay for my goods and services, except as a marketing tactic. Anyone who has bitcoin is able to transform that to cash. As an alternate currency, its use it limited to places where an alternate currency is necessary (see the China discussion).

Yes, I'm annoyed with myself for not throwing a couple of hundred into it when it started up. But I do know that I would have thrown it at Mt. Gox. Which means that I did manage to save that $200.

Ultimately, I don't trust any system that doesn't have sufficient government regulation. (I feel that most investment vehicles don't have sufficient government regulation, so something like Bitcooin is far beyond the pale.) It is another investment vehicle, one which may prove very profitable for some.

Finally, the second article mentions that "[i]t’s the reserve currency of the ICO market." The ICO market was dreamed up as a way around all those pesky regulations about IPOs. Some of which are stupid, yes, (you can only buy IPO stock if you have enough money, no matter what is going on), but most of which are there to make sure that the company is not about to go belly up tomorrow. ICOs are a way for companies operating on the edge of sketchiness to drum up money from people who think they have found the new secret to wealth.
posted by Hactar at 10:26 AM on December 5 [2 favorites]


the order book on crypto is always thin. it's never not thin.

Oh, there's at least high 8 or low 9 figure USD/day running through it just in drug transactions. Without that initial use to make the market in the first place, I doubt BTC ever would have reached $10. I suspect the vast majority of non-sham transactions are still illicit transactions of some sort or another. There are some legitimate non-speculative transactions going on, but the volume is relatively low compared to its other use. That's not to say that in and of itself makes Bitcoin bad. Dollars (and Euros and every other currency) are used for many many billions of dollars worth of drug transactions each year also.

On the bright side for the homeless person begging for BTC, as long as they've got a smartphone and there's a Bitcoin ATM around somewhere getting a few hundred bucks isn't much of a hassle, though they'll charge 6-10% for their trouble.
posted by wierdo at 10:34 AM on December 5


Hard to imagine why anyone would think that Bitcoin is a bubble when a scammy fake gold mining company can literally just change its name to First Bitcoin Capital (I guess they also filled their website with a bunch of buzzwords and empty promises about future bitcoins they would mine/ICOs they would do) and immediately make $540 million as its stock shoots up 6000%.
posted by Copronymus at 10:38 AM on December 5 [4 favorites]




Maybe this is an ignorant question, but: if so much of these crypto-related computing efforts are being focused on Bitcoin mining, who is to say that's what is really going on in some of those places versus, say, some Bitcoin mining operations being a front for massive attacks on encrypted communications of some other kind?
posted by davejay at 11:58 AM on December 5 [1 favorite]


OK I've intentionally avoided reading anything about bitcoin for years, but I guess it's something real that I have to care about now.

I read the explanatory links and watched a couple of youtube videos and still don't get it. What is with this whole energy sucking, computer destroying mining shit? It looks insane.

I mean maybe I just don't understand money, but is making people waste time and resources treasure hunting imaginary coins some psychological magic trick that transmogrifies their monopoly funbux into real currency? Couldn't the coins have just as easily (and more fairly) been distributed through online lottery? Or why not exchanged for points earned in some popular videogame? Or, you know, for charitable volunteering or something else fun and/or socially worthwhile. I literally can think of countless ways that seem less crazy, but maybe I'm missing the dystopian logic of computer-farms burning through petroleum reserves so they can crack impossible math puzzles in exchange for digital chuck-e-cheese tokens.
posted by dgaicun at 12:16 PM on December 5 [3 favorites]


Yeah, I like davejay's theory.

This only makes sense as a trick by that mastermind Bond villain, Vladimir Putin, to trick the reddit dork hivemind into using all their combined computer power to decrypt US nuclear codes.
posted by dgaicun at 12:23 PM on December 5 [3 favorites]


I think we all know that, whatever they were before, the nuclear codes have been set to "12345" since January.
posted by tobascodagama at 12:31 PM on December 5 [4 favorites]


tobascodegama: Ah, the same combination as the President's luggage.
posted by SansPoint at 12:38 PM on December 5 [1 favorite]


One of the many ways that Trump is an inferior mind to President Skroob: I would be shocked if he knew the combination to his own luggage.
posted by Holy Zarquon's Singing Fish at 12:42 PM on December 5 [3 favorites]


I mean maybe I just don't understand money, but is making people waste time and resources treasure hunting imaginary coins some psychological magic trick that transmogrifies their monopoly funbux into real currency? Couldn't the coins have just as easily (and more fairly) been distributed through online lottery? Or why not exchanged for points earned in some popular videogame?

The point is that you can't counterfeit it. Making a counterfeit coin would be more expensive and difficult than mining a real one.
posted by straight at 1:13 PM on December 5 [1 favorite]


> but is making people waste time and resources treasure hunting imaginary coins some psychological magic trick that transmogrifies their monopoly funbux into real currency?

Pretty much. This solving-arbitrary-math-problems approach to distributing the initial money supply strikes people as decentralized and politics-free. You can argue it really isn't, as I do, but faith in the idea that Bitcoin is decentralized and politics-free is what made people take it seriously enough in the beginning to get it off the ground.

> Couldn't the coins have just as easily (and more fairly) been distributed through online lottery?

Nope. Too easy to mass produced fake online identities controlled by the same person to get more "tickets" and hence more money. Any attempt to identify actual real people (which the cryptocurrency crowd hates) to fairly distribute tickets would require a central authority (they also hate this) and thus could be targeted by a government or tax agency (they really hate this).

It's insanity for sure, but necessary to make the system trustworthy to use by people who don't trust each other. It's the same thing that makes us use passwords, combination locks, two factor auth, contracts, lawyers, armed guards, cops, judges, militaries and all the infrastructure that goes with them. It's necessary, but also insane because if we could just trust each other not to log into each other's no-password email accounts it would be unnecessary.

It costs nothing to trust, but a lack of trust is monsterously expensive and inconvenient.
posted by AlSweigart at 2:04 PM on December 5 [2 favorites]


The other thing about Bitcoin's insane overhead is: Because of the way mining rewards are distributed, everyone is incentivized to throw as much hardware and energy as they can afford into mining. But every node still needs to validate every transaction, which means adding more miners doesn't actually increase the capacity of the network; it's still just one block every 10 minutes.

So the "supply" of Bitcoin transactions is fixed, and their price keeps going up -- both in terms of energy (because miners are in an arms race) and in terms of monetary cost (because fees are charged in BTC, which keeps getting more expensive). Back when a transaction cost a few pennies, it could theoretically have made sense to actually use Bitcoin for everyday purchases. Now, the cost is more like $5-10, and so nobody except speculators and money launderers has any reason to actually move coins around.
posted by teraflop at 2:45 PM on December 5 [3 favorites]


Can someone tell me what the processors engaged in bitcoin mining are doing? Is there any output other than the bitcoin? Are they working on stuff for the blockchain or anything related to the bitcoin ecosystem? Maybe the answer is no, and I understand the general background of why the bitcoin designers set it up this way (enforced scarcity), but it just seemed strange to me, I wouldn't be surprised if someone's profiting from it in a non-public way.
posted by benbenson at 2:46 PM on December 5


Can someone tell me what the processors engaged in bitcoin mining are doing?

Computing SHA-256 hashes

Is there any output other than the bitcoin?

Heat.

Are they working on stuff for the blockchain or anything related to the bitcoin ecosystem?

Yes - they are also certifying transactions, basically.
posted by PMdixon at 3:18 PM on December 5 [5 favorites]


Can someone tell me what the processors engaged in bitcoin mining are doing? Is there any output other than the bitcoin? Are they working on stuff for the blockchain or anything related to the bitcoin ecosystem?

My understanding is that mining is essentially looking for valid roots in the bitcoin chain of custody that is the blockchain. The same algorithm (SHA 256) which validates a potential new root can be used to validate transactions -- a transfer of bitcoin from one wallet to another. Which is kind of the magic -- miners design circuitry to more effectively mine bitcoin, but the same circuitry investment can be put to work validating transactions. While you might think it's great that all that investment will eventually lead to low transaction costs, at least for now the skyrocketing price of bitcoin means there isn't much incentive to chase transactions beyond the whole community spirit -- transactions are what makes bitcoin worth owning, after all.

And this is another painpoint for bitcoin -- if SHA 256 is broken, bitcoin would basically be worthless. The good news is that you'd be very rich in short order if you broke SHA 256. I'm not sure how rich though, given that using a hack would destabilize the currency. FWIW, Git uses a similar chain of hashes approach, and after SHA-1 was shown to be weak it began the process of allowing new hashes. This is less catastrophic for git, where there's generally a small community and a trusted official origin. And because nobody built ASIC to make git faster, nobody is fighting the hash upgrade.
posted by pwnguin at 4:56 PM on December 5


The whole “money is an illusion”/“mass hallucination” meme has been going on since I was a kid hanging out with my stoner friends listening to Sublime, before bitcoin existed. It wouldn’t be a surprise to me at all that in this world we live in, in which millions of people are living in an entirely different reality, that in that reality, money is an illusion. That doesn’t jive with my experiences in which people lose their houses, their retirement funds, their children starve because there “isn’t enough money”. There’s a special type of privilege in believing that money is an illusion.
posted by gucci mane at 4:59 PM on December 5 [4 favorites]


I mean maybe I just don't understand money, but is making people waste time and resources treasure hunting imaginary coins some psychological magic trick that transmogrifies their monopoly funbux into real currency?

The network protocol is designed to prevent double spending. If I have 1 bitcoin, I can't simultaneously give it to Alice and Bob. That's what makes it a 'real currency.' If I could double spend, I wouldn't need to buy any with cash or goods. And thus nobody would accept it.

There's a democratic element -- the bitcoin procotol is whatever 51 percent of the network says it is. If after the next economic downturn bitcoin companies consolidate and merge, and control a majority of network nodes, the only thing saving bitcoin is that abusing it would cause the most harm to the incumbent.

The other bit about bitcoin is that it's non-coersive. Bob can't spend Alice's money. You need a private key, and so long as you keep it secret and never lose it, that bitcoin is yours to do with as you please. Like say, evading national currency controls, money laundering or tax evasion. Of course, while your bitcoin lives in the distributed ledgers of the blockchain, you still exist in the physical world where governments can incarcerate you until you pay up. And cash at least has the property that there's no permanent record of the transaction tied to a personal identifier.
posted by pwnguin at 5:11 PM on December 5


Bloomberg has picked up on Tether (warning: autoplay video): There’s an $814 Million Mystery Near the Heart of the Biggest Bitcoin Exchange

A lot of shady stuff going on, including a Turkish man who tried to cash out $1 million in Tether and was refused. For those who don't know, Tether is a cryptocurrency that's supposed to be pegged to US dollars -- the issuers, also called Tether, are supposed to be able to redeem Tether 1-for-1 for USD. Consequently, a lot of exchanges use Tether as a substitute for USD, including Bitfinex, the largest Bitcoin exchange. Bitfinex might not have survived without Tether; they lost their relationships with US banks in March 2017, so they can't actually trade in USD.

The problem is that there's no evidence that Tether is actually backed by anything (for instance, there are no US banks that work with the company, and the company has gone back and forth on whether they're working on an audit without releasing one). Nevertheless, $814 million in Tether has been issued, mostly in 2017, and used to buy cryptocurrencies.

A theory that's been going around since August, mostly put forth by Bitfinex'ed, is that Tether and Bitfinex (who are run by the same people) have been printing unbacked Tethers and using them to buy Bitcoin to keep the price going up. As long as the price keeps going up and people keep buying in, there won't be too many people who want to withdraw, but there's going to be a crash when they run out of new money. Tether could assuage fears about this by releasing an audit; instead, in the past week, they've hired a very aggressive PR firm and threatened to sue Bitfinex'ed.

If you're interested, Bitfinex'ed writes on Twitter and Medium, and David Gerard's blog provides daily roundups.
posted by ectabo at 5:40 PM on December 5 [8 favorites]


Mining processes transactions but it's made artificially difficult in order to make it harder for one entity to dominate the processing of transactions. There are some experiments with other ways to approach this but I don't know to what extent they've proved successful.
posted by atoxyl at 1:08 AM on December 6


Some of the "money isn't real" energy came from gold standard people, of course. I was pleased to see the links mention that the notion that gold has value is just as conventional as is the notion of a fiat currency.
posted by thelonius at 4:16 AM on December 6


Steam has stopped accepting bitcoin because of the high price (= $20 transaction fees) and volatility.
posted by Pyry at 3:09 PM on December 6 [2 favorites]


The price was $11,317 when I posted this two days ago. It's $14,321 as of 9PM EST.

Also in the news: $62 Million Gone? Cryptocurrency Mining Market NiceHash Hacked
The cryptocurrency mining marketplace NiceHash has been hacked, its team said Wednesday.

Posting on social media, NiceHash said that "there has been a security breach involving NiceHash website" resulting in a loss of funds. NiceHash, formed in 2014, serves as a marketplace for miners to rent out their hash rate to others.

The announcement follows an hours-long outage and reports from a multitude of users that their NiceHash-associated wallets had been emptied.
posted by gwint at 6:12 PM on December 6 [2 favorites]


I don't know enough to have an opinion either way, but if anyone who is rolling their eyes at bitcoin would like to put their money where their mouth is: This is how you can short bitcoin
posted by salvia at 10:30 PM on December 6


The wonderful thing about huge volatility is that you can become destitute regardless of what position you take.
posted by Pyry at 10:56 PM on December 6 [6 favorites]


That shorting thing looks incredibly complicated (for me), but don't you have to do it with the very same people you're thinking will fail?
posted by bongo_x at 8:38 AM on December 7 [1 favorite]




As I mentioned previously, one should consider quotes like "Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day." and "[Bitcoin consumes] 0.13% of the entire world's annual energy consumption" along side the wonderful blog post Exponential Economist Meets Finite Physicist.

In essence, our economic models designed around growth cannot be physically realistic if growth is measured in any physically realistic way, and bitcoin provides a particularly fast moving example.
posted by jeffburdges at 8:41 AM on December 7 [4 favorites]


Also, I argued once on mathoverflow.org that proof-of-work cannot be used to do useful research in mathematics. I'd expect the similar arguments hold for the physical sciences either, but if you can prove me wrong then that's great obviously.
posted by jeffburdges at 9:18 AM on December 7 [1 favorite]


That shorting thing looks incredibly complicated (for me), but don't you have to do it with the very same people you're thinking will fail?

This is the miracle of a central counterparty and why the idea of CME offering BTC/USD futures settled in cash terrifies me.

A central counterparty means that when you take a short position, you and the other side of the trade each have a contract with the exchange, not each other. So it doesn't matter to you if the other side doesn't pay up, because you know that the exchange is good for it, because the exchange demanded sufficient margin from each of you that it thinks it can close out the position before the money owed to the winner exceeds the margin put up by the winner.

The problem is if the exchange (or broker) doesn't demand sufficient margin - if you're only required to put up 30% of the value, and there's a 50% move, both the exchange and your broker are on the hook for the remaining 20% of the move. Regardless of whether they can get it out of you, they still have to pay the winning side of the contract their gains.

The Swiss unpegging CHF from EUR created exactly such a situation in FX - it was a 15% move in a market where margin requirements are in the 1-5% range.
posted by PMdixon at 9:22 AM on December 7 [3 favorites]


exceeds the margin put up by the winner.
... Should obviously be "exceeds the margin put up by the loser."
posted by PMdixon at 9:30 AM on December 7


unless, of course, the counterparty also goes bust. which one dude put up a full-page ad on the wall street journal warning about
posted by hleehowon at 10:02 AM on December 7


Well yes. And in this case the counterparty is also the counterparty for the bulk of US equity index futures.

I would really prefer that the E-mini not go poof.
posted by PMdixon at 10:35 AM on December 7 [1 favorite]


Intel Management Engine hacked by buffer overflow, so expect fun hacks like attacks on virtual cloud hosting providers and..

Fully self-sufficient cryptolocker malware, meaning malware that decrypts your files after you give it control over a bitcoin/etherium/monero/zcash account with sufficient value, that it transfers away to its creators, but which requires no central CnC. etc.
posted by jeffburdges at 2:29 PM on December 7 [2 favorites]


What if Skynet but for money
posted by snuffleupagus at 2:58 PM on December 7 [3 favorites]


We've joked at work about IME or DRM based malware hiring human developers to improve itself too, so not exactly Skynet level intelligence.

I liked this quote "The duo say they found a locally exploitable stack buffer overflow that allows the execution of unsigned code on any device with Intel ME 11, even if the device is turned *off* or protected by security software."
posted by jeffburdges at 3:17 PM on December 7 [2 favorites]


@cryptomanran:
A boy asked his bitcoin-investing dad for 1 bitcoin for his birthday.

Dad: What? $15,554??? $14,354 is a lot of money! What do you need $16,782 for anyway?
posted by gwint at 10:14 PM on December 8 [9 favorites]


All I can think of this week is the story about how Joe Kennedy avoided the great crash of 1929 by selling his entire portfolio days before it happened. Why? Because the shoe shine boy was giving out stock tips.

When people who have no business owning individual stocks much less speculating on cryptocurrencies they don't understand are getting on the bitcoin train it's a giant flashing neon SELL signal. Like when your hairdresser owned 3 houses he/she was flipping for a profit in 2007.
posted by Justinian at 10:21 PM on December 8 [9 favorites]




When people who have no business owning individual stocks much less speculating on cryptocurrencies they don't understand are getting on the bitcoin train it's a giant flashing neon SELL signal.

Which would seem to the natural explanation for the volatility? If it was all influx, the price would just go up.

More on Tether: The murky relationship between the bitcoin price and “tether” tokens is raising suspicions.

I was asking my hippy coin-flipping friend about the whole Tether thing over the weekend before Halloween. He hadn't read Bitfinex'ed on Friday, by Monday he was concerned.
posted by snuffleupagus at 5:48 AM on December 9


BI (12/6/17): Traders on a $1 billion cryptocurrency exchange* say they can't withdraw money and are left in the dark about why

*It's Bittrex. Official explanation is increased processing time for AML compliance.
posted by snuffleupagus at 5:55 AM on December 9 [1 favorite]


They should put some computers onto that task.
posted by rhizome at 10:32 AM on December 9 [1 favorite]


We need a crypto-currency exchange free software project that enables
semi-trusted but unbacked exchanges to facilitate cross-chain currency exchanges. In other words, (1) Alice posts a transaction that says "X BTC for ZEC on exchange Z" to the BTC blockchain, (2) exchange Z certifies it by republishing it with the minimum amount Y' of ZEC, (3) counter party Bob can post corresponding "Y ZEC" transactions to the ZEC blockchain, and (4) Alice or Z picks which Bob, and Z posts the final transfer commitment signatures to both blockchains.

Why do we need this? First, it solves the problem of exchanges routinely running away with people's money, so folks can do their trades without trusting exchanges. Second, it'll be super fun for all us spectators because it make 51%, net split, etc. attacks profitable! Are miners going to do a roll back fork because traders on another blockchain got scammed? Lol no <popcorn>

We also need wallets that do "taint tracking and management" that follow RBL style blacklists based on data like @NeonaziWallets, maybe adding some untaint protocol that lets you throw away the exact number of coins tainted by undesirable affiliations. I donno if I actually believe the article "Neo-Nazi wealth is rapidly growing. Why? Bitcoin." but anything that reduces fungibility is hilarious.
posted by jeffburdges at 4:17 PM on December 10 [1 favorite]


CBOE has commenced BTC futures trading, there were some rallies that triggered automatic halts and their website crashed. More to come this week.

Forbes OpEd (Peter Cohan, 12/8/17): Why Bitcoin Is Worth $0, $20,000, $200,000, Or $∞

Meanwhile, back on 12/29 McAfee revised his estimate of 1 BTC's future worth to $1M.
posted by snuffleupagus at 6:32 AM on December 11 [1 favorite]


People are taking out mortgages to buy bitcoin, says securities regulator: from CNBC.

Please don't do this, folks.
posted by Justinian at 1:16 PM on December 11 [3 favorites]


If you're going to take out a mortgage to buy bitcoin, why not just set your house on fire instead? It's faster, and the result will be about the same.
posted by SansPoint at 1:26 PM on December 11 [4 favorites]


They don't need to take out mortgages to buy bitcoin anymore. They can take out mortgages to speculate on bitcoin futures now! This establishes that bitcoin can be a part of the global economy long after it's all mined out and has settled into a handful of archive-banks.
posted by ErisLordFreedom at 4:45 PM on December 11 [4 favorites]


Christ, I hope anyone who is taking out a mortgage to buy bitcoin at least throws in some new kitchen cabinets or a new TV
posted by thelonius at 6:21 PM on December 11


My take is Bitcoin futures opens a gateway for institutionalized investors to bunch together to short the market. If you're taking a mortgage to buy bitcoin futures you're probably on the losing of the stick. It's important to understand what is a future before jumping in the next big thing.
posted by ashinayo at 6:46 AM on December 12 [3 favorites]


It's important to understand what is a future before jumping in the next big thing.

We are here to try to explain to you what it is we do here
posted by snuffleupagus at 5:11 AM on December 13 [1 favorite]




Does that make them the only US entity allowed to convert BTC to US dollars?
posted by rhizome at 7:23 PM on December 16 [2 favorites]


Actually, it made me wonder if other big players may make exits (or entrances) through private auctions or deals rather than on (their own) exchanges.
posted by snuffleupagus at 9:54 AM on December 17


And at different prices than those being publicly hyped.
posted by snuffleupagus at 1:41 PM on December 17


Amazingly, the Tether correlation continues to hold. At least transaction fees are back to being just overly high rather than totally nutballs.
posted by wierdo at 4:17 PM on December 17


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