8 ms·

>"...it is unlikely that [Bitcoin] will remain free of government intervention, if only because the governance of the bitcoin code and network is opaque and vul

by jnbiche 13y ago

>"...it is unlikely that [Bitcoin] will remain free of government intervention, if only because the governance of the bitcoin code and network is opaque and vulnerable." And the traditional banking system is not opaque and vulnerable? Let us recall that -- despite its vaunted regulatory system -- the banking system nearly destroyed the global economy back in 2007, exactly because it was (and is) opaque and vulnerable. Sometimes, I wonder if people stop and think about what they're writing.

res0nat0r 13y ago
I'll keep my life savings at Chase bank any day of the week over a Bitcoin wallet thank you very much. If my credit card is stolen or even used in a strange manner I get a phonecall and a hold put on my account. How many people have recovered money from their stolen Bitcoin wallets?
- atom-morgan 13y ago
  We're in the early adoption phase so concerns like yours are understandable. However, give it some time and the infrastructure and services will be built to make Bitcoin a true competitor to Chase. Just imagine back in the early days of the Internet when someone said, “I’ll shop at the brick and mortar store down the street any day of the week over an online store thank you very much.” It was a legitimate concern back then but we moved past it to the point that it sounds ridiculous today. Just wait :)
  - cinquemb 13y ago
    I always wondered why people don't transfer to offline wallets as soon as the trade goes through since most people are holding anyways. On traditional banking, It also depends on where you live. I doubt people in Cyprus, Zimbabwe, Venezuela and a couple other places feel that safe with their life savings in banks post 2007. I know JPM recently put capital controls on transfers greater than 50k outgoing from the US (but accepting incoming), I wonder what that is all about.
    - qnr 13y ago
      Much of Bitcoin criticism (the chicagofed paper included) is very western centric and fails to take into account how utterly dysfunctional most countries' money systems are. In most countries in the world local currencies are unstable and subject to the whim of politicans (would you keep your life savings in argentinian pesos? Neither would Argentinians!), there are no easy ways to accept online payments, there are no easy ways to transfer money to/from abroad etcetera. I would argue that adopting Bitcoin is an immediate quality of life improvement for a big portion of the world population, moreso when/if it value stabilizes.
    - lectrick 13y ago
      On the offline wallet thing- For the record, BIP 0038 https://en.bitcoin.it/wiki/BIP_0038 https://en.bitcoin.it/wiki/BIP_0038 was released just a few days ago (although it was a working draft for a while). You can, right now, create a BIP38 encrypted paper wallet (finally!) over at bitaddress.org which means that someone with access to your paper wallet can't just sweep it unless they know the key, and the key uses scrypt so it's quite resistant to brute forcing. I recently moved most of my btc savings into this type of paper (or in my case, pdf) wallet and entrusted the key (broken into pieces of course) to trusted people. Much better peace of mind. I set the public addresses as "Watch Only" on blockchain.info/wallet so even if blockchain is hacked, nobody can get to those wallets, they are effectively airgapped, and I can monitor any activity on them from anywhere.
  - kybernetikos 13y ago
    In order to achieve bank levels of trust you need to be confident of being able to enforce contracts against the organisation you're dealing with. This usually comes from them being vulnerable to an actor who you believe will wield force on your behalf if they break contract. This then means you're stuck trying to find an actor who 1. you trust to wield force on your behalf (i.e. they're not just some cutout established by your counterparty) 2. who you are sure has means to wield the force against the counterparty (perhaps they can prove that they know where the counterparty lives) Those are difficult criteria to fill, which is among the reasons why over a long period of time, we've invented governments we can put up with. I can imagine two other scenarios where you might be able to generate the level of trust you want: 1. If the counterparty can somehow prove that it's not in their short-term interest (because sometimes people run successful and profitable services for years and then abscond with the money suddenly) to just take all your money and run. 2. If you have insurance with an insurer that you are sure could pay you if everyone transacting with that counterparty made a claim at once. (But then, how can you trust that insurer unless they are vulnerable to someone you can trust to wield force against them on your behalf if they break contract?) I think any future where bitcoin organisations are as trusted as banks is a future where they are registered with the government as financial bodies and regulated in such fashion.
  - kale 13y ago
    Bitcoin will be a competitor to Chase as much as the U.S. Dollar is a competitor to Chase.
    - atom-morgan 13y ago
      I never really meant to imply that Bitcoin was a competitor to Chase. I just referred to them because of the concern that was raised in the comment I replied to. As for Bitcoin being a competitor to centrally controlled government currencies on the other hand...
- FellowTraveler 13y ago
  How many Cypriots have recovered money from their stolen bank accounts? Quis custodiet ipsos custodes?
  - res0nat0r 13y ago
    I'm in the USA and am keeping my money in a US bank. I'll stick with their track record and the FDIC before Bitcoin for the foreseeable future.
    - FellowTraveler 13y ago
      Are you ignorant of the publicly-available plans to impose a Cyprus-style "haircut" on U.S. depositors? Bernanke stated at the FOMC Press Conference in March that such a haircut was possible.
      - res0nat0r 13y ago
        There are no such plans, at least in the real world. Infowars.com does not factor into US monetary policy decisions.
        FellowTraveler 13y ago
        http://www.fdic.gov/about/srac/2012/gsifi.pdf http://www.fdic.gov/about/srac/2012/gsifi.pdf Resolving Globally Active, Systemically Important, Financial Institutions. "...An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities...the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution." ===> Sounds like what happened in Cyprus. They got stock in return for the haircut. No exception is indicated for "insured deposits" in the U.S. Bloomberg: "...Bank of America’s holding company...held almost $75 trillion of derivatives at the end of June..." ===> I don't know where you get your news, but I'm willing to bet that the sources you trust are not going to be talking about this until your haircut is complete. And when they do, they will probably blame it on "deregulation."
- csomar 13y ago
  I don't think people have a problem with the banks. They have a problem with the currency. If the currency value drops to 0 (which is a possible thing), it doesn't matter if your bank was secure or not.
- lectrick 13y ago
  Your life savings is losing 4% of value a year (on average) due to inflation. In some countries, this is as high as 20%. Are your savings earning more than 4% a year, wherever they're invested in? If not, it's losing money, and if it is, subtract 4% from it and that's your "real" interest. What do you think is going to happen once a bunch of countries with really crappy currency systems get wind of Bitcoin in any meaningful way? Do you think the value might rise? :)
- swswsw 13y ago
  Hi, perhaps there is some misunderstanding of how bitcoin works. People only need to know your credit card number, name, and expiration date to use your credit card to purchase something online. Since you give those information to many merchants, it is very easy for those info to leak out. For someone to use your bitcoin to purchase something, they have to have your private key. When you make a purchase, you do not give out your private key to anyone. bitcoin and credit card are two very different things. Credit card was not designed for internet, while bitcoin is.
  - res0nat0r 13y ago
    If someone uses my credit card to buy something in Kenya it is automatically flagged and I am notified. If I tell Chase the transaction is fraudulent I am automatically reimbursed and am out nothing.
Cowen 13y ago
Ostensibly the goal of all government intervention in financial systems is to make them more transparent and secure. Whether or not they accomplish those goals is obviously a matter of serious debate, but Velde's reasoning there is consistent with all other arguments for government intervention. There's no point in trying to spin that statement into him giving the traditional banking system a pass.
- camus2 13y ago
  > the goal of all government intervention in financial systems is to make them more transparent and secure. with a whole lot of loopholes .
  - Cowen 13y ago
    There's a reason I used the word "ostensibly."
svantana 13y ago
I don't see any contradiction here? Both systems are opaque and vulnerable, and both may need government regulation. Some people would have it that the repeal of Glass-Steagall is what indirectly lead to the '07 crisis.
- ArbitraryLimits 13y ago
  Seriously. It bugs me when people take the '07 meltdown as proof that the banking system need to be left alone by the government. If the government's regulatory authority hadn't been curtailed, it wouldn't have had to rescue the banking system at all.
  - FellowTraveler 13y ago
    The financial and banking system is the most heavily-regulated industry there is. The 2007 meltdown was caused by a number of abuses, but "lack of regulation" was not one of them. We most certainly do not have a free market in money, so we cannot blame the problems of the banking cartel on the "free market" when one does not exist.
    - anigbrowl 13y ago
      Repeating an assertion doesn't make it any more true.
      - FellowTraveler 13y ago
        "Repeating an assertion doesn't make it any more true." ===> In that case, deny it. Go ahead, present your case that banking and finance isn't the most cartelized, regulated, corrupt industry on earth.
        srdev 13y ago
        Burden of proof is on the person making the claim. Thats you.
javert 13y ago
By "opaque and vulnerable," I thought he meant "we can see who is using/operating/mining/developing bitcoin." (Which lets them pass laws to coerce those people.)

by jnbiche 13y ago

res0nat0r 13y ago

I'll keep my life savings at Chase bank any day of the week over a Bitcoin wallet thank you very much. If my credit card is stolen or even used in a strange manner I get a phonecall and a hold put on my account. How many people have recovered money from their stolen Bitcoin wallets?

atom-morgan 13y ago
We're in the early adoption phase so concerns like yours are understandable. However, give it some time and the infrastructure and services will be built to make Bitcoin a true competitor to Chase. Just imagine back in the early days of the Internet when someone said, “I’ll shop at the brick and mortar store down the street any day of the week over an online store thank you very much.” It was a legitimate concern back then but we moved past it to the point that it sounds ridiculous today. Just wait :)
- cinquemb 13y ago
  I always wondered why people don't transfer to offline wallets as soon as the trade goes through since most people are holding anyways. On traditional banking, It also depends on where you live. I doubt people in Cyprus, Zimbabwe, Venezuela and a couple other places feel that safe with their life savings in banks post 2007. I know JPM recently put capital controls on transfers greater than 50k outgoing from the US (but accepting incoming), I wonder what that is all about.
  - qnr 13y ago
    Much of Bitcoin criticism (the chicagofed paper included) is very western centric and fails to take into account how utterly dysfunctional most countries' money systems are. In most countries in the world local currencies are unstable and subject to the whim of politicans (would you keep your life savings in argentinian pesos? Neither would Argentinians!), there are no easy ways to accept online payments, there are no easy ways to transfer money to/from abroad etcetera. I would argue that adopting Bitcoin is an immediate quality of life improvement for a big portion of the world population, moreso when/if it value stabilizes.
  - lectrick 13y ago
    On the offline wallet thing- For the record, BIP 0038 https://en.bitcoin.it/wiki/BIP_0038 https://en.bitcoin.it/wiki/BIP_0038 was released just a few days ago (although it was a working draft for a while). You can, right now, create a BIP38 encrypted paper wallet (finally!) over at bitaddress.org which means that someone with access to your paper wallet can't just sweep it unless they know the key, and the key uses scrypt so it's quite resistant to brute forcing. I recently moved most of my btc savings into this type of paper (or in my case, pdf) wallet and entrusted the key (broken into pieces of course) to trusted people. Much better peace of mind. I set the public addresses as "Watch Only" on blockchain.info/wallet so even if blockchain is hacked, nobody can get to those wallets, they are effectively airgapped, and I can monitor any activity on them from anywhere.
- kybernetikos 13y ago
  In order to achieve bank levels of trust you need to be confident of being able to enforce contracts against the organisation you're dealing with. This usually comes from them being vulnerable to an actor who you believe will wield force on your behalf if they break contract. This then means you're stuck trying to find an actor who 1. you trust to wield force on your behalf (i.e. they're not just some cutout established by your counterparty) 2. who you are sure has means to wield the force against the counterparty (perhaps they can prove that they know where the counterparty lives) Those are difficult criteria to fill, which is among the reasons why over a long period of time, we've invented governments we can put up with. I can imagine two other scenarios where you might be able to generate the level of trust you want: 1. If the counterparty can somehow prove that it's not in their short-term interest (because sometimes people run successful and profitable services for years and then abscond with the money suddenly) to just take all your money and run. 2. If you have insurance with an insurer that you are sure could pay you if everyone transacting with that counterparty made a claim at once. (But then, how can you trust that insurer unless they are vulnerable to someone you can trust to wield force against them on your behalf if they break contract?) I think any future where bitcoin organisations are as trusted as banks is a future where they are registered with the government as financial bodies and regulated in such fashion.
- kale 13y ago
  Bitcoin will be a competitor to Chase as much as the U.S. Dollar is a competitor to Chase.
  - atom-morgan 13y ago
    I never really meant to imply that Bitcoin was a competitor to Chase. I just referred to them because of the concern that was raised in the comment I replied to. As for Bitcoin being a competitor to centrally controlled government currencies on the other hand...
FellowTraveler 13y ago
How many Cypriots have recovered money from their stolen bank accounts? Quis custodiet ipsos custodes?
- res0nat0r 13y ago
  I'm in the USA and am keeping my money in a US bank. I'll stick with their track record and the FDIC before Bitcoin for the foreseeable future.
  - FellowTraveler 13y ago
    Are you ignorant of the publicly-available plans to impose a Cyprus-style "haircut" on U.S. depositors? Bernanke stated at the FOMC Press Conference in March that such a haircut was possible.
    - res0nat0r 13y ago
      There are no such plans, at least in the real world. Infowars.com does not factor into US monetary policy decisions.
      - FellowTraveler 13y ago
        http://www.fdic.gov/about/srac/2012/gsifi.pdf http://www.fdic.gov/about/srac/2012/gsifi.pdf Resolving Globally Active, Systemically Important, Financial Institutions. "...An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities...the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution." ===> Sounds like what happened in Cyprus. They got stock in return for the haircut. No exception is indicated for "insured deposits" in the U.S. Bloomberg: "...Bank of America’s holding company...held almost $75 trillion of derivatives at the end of June..." ===> I don't know where you get your news, but I'm willing to bet that the sources you trust are not going to be talking about this until your haircut is complete. And when they do, they will probably blame it on "deregulation."
csomar 13y ago
I don't think people have a problem with the banks. They have a problem with the currency. If the currency value drops to 0 (which is a possible thing), it doesn't matter if your bank was secure or not.
lectrick 13y ago
Your life savings is losing 4% of value a year (on average) due to inflation. In some countries, this is as high as 20%. Are your savings earning more than 4% a year, wherever they're invested in? If not, it's losing money, and if it is, subtract 4% from it and that's your "real" interest. What do you think is going to happen once a bunch of countries with really crappy currency systems get wind of Bitcoin in any meaningful way? Do you think the value might rise? :)
swswsw 13y ago
Hi, perhaps there is some misunderstanding of how bitcoin works. People only need to know your credit card number, name, and expiration date to use your credit card to purchase something online. Since you give those information to many merchants, it is very easy for those info to leak out. For someone to use your bitcoin to purchase something, they have to have your private key. When you make a purchase, you do not give out your private key to anyone. bitcoin and credit card are two very different things. Credit card was not designed for internet, while bitcoin is.
- res0nat0r 13y ago
  If someone uses my credit card to buy something in Kenya it is automatically flagged and I am notified. If I tell Chase the transaction is fraudulent I am automatically reimbursed and am out nothing.

Cowen 13y ago

Ostensibly the goal of all government intervention in financial systems is to make them more transparent and secure. Whether or not they accomplish those goals is obviously a matter of serious debate, but Velde's reasoning there is consistent with all other arguments for government intervention. There's no point in trying to spin that statement into him giving the traditional banking system a pass.

camus2 13y ago
> the goal of all government intervention in financial systems is to make them more transparent and secure. with a whole lot of loopholes .
- Cowen 13y ago
  There's a reason I used the word "ostensibly."

svantana 13y ago

I don't see any contradiction here? Both systems are opaque and vulnerable, and both may need government regulation. Some people would have it that the repeal of Glass-Steagall is what indirectly lead to the '07 crisis.

ArbitraryLimits 13y ago
Seriously. It bugs me when people take the '07 meltdown as proof that the banking system need to be left alone by the government. If the government's regulatory authority hadn't been curtailed, it wouldn't have had to rescue the banking system at all.
- FellowTraveler 13y ago
  The financial and banking system is the most heavily-regulated industry there is. The 2007 meltdown was caused by a number of abuses, but "lack of regulation" was not one of them. We most certainly do not have a free market in money, so we cannot blame the problems of the banking cartel on the "free market" when one does not exist.
  - anigbrowl 13y ago
    Repeating an assertion doesn't make it any more true.
    - FellowTraveler 13y ago
      "Repeating an assertion doesn't make it any more true." ===> In that case, deny it. Go ahead, present your case that banking and finance isn't the most cartelized, regulated, corrupt industry on earth.
      - srdev 13y ago
        Burden of proof is on the person making the claim. Thats you.

javert 13y ago

By "opaque and vulnerable," I thought he meant "we can see who is using/operating/mining/developing bitcoin." (Which lets them pass laws to coerce those people.)