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The analysis in this article is so flawed that it's hard to take it seriously. A more balanced analysis might have helped. Sure, bitcoin has several terrible ch

by ashray 13y ago

The analysis in this article is so flawed that it's hard to take it seriously. A more balanced analysis might have helped. Sure, bitcoin has several terrible characteristics that have been exposed over the past few weeks (volatility, tons of speculation, new users don't understand wallet security, etc.) But to insinuate with absolutely zero understanding that the creators of bitcoin did this to get rich is just plain nasty. Maybe they did want to get rich (in dollar terms) but there is nothing obvious on the block chain that proves that they cashed out. The argument seems to be that they can't cash it all out so they are waiting for something. Well, they haven't cashed anything out yet as far as anyone who looks at the block chain can tell. It's already possible to cash out $5-$10MM easily over bitstamp which would represent a fraction of their holdings. Why not do that and make sure your future is taken care of? At least that? Furthermore, for several years it did not look like bitcoins were going anywhere. However, the people behind it continued to work on it, and still continue to do so, but under much new pressure because suddenly they are evil ponzi dealers. Applying old school economics and psychology is great, but I must ask this question. What kind of value appreciation did gold see when people suddenly for no reason decided that it was worth a lot? Following this value appreciation did people not use it as a means of exchange as well as a store of value? Why can't bitcoin be thought of as gold 2.0? We started valuing dollars, pounds, euros, airplanes, cars, oil, and those didn't exist for much of human history. Bitcoin isn't like something we've ever seen before and that includes Ponzi schemes. It may end up crashing and burning and it may end up doing really awesome stuff. I just wish the naysayers would come up with better researched arguments instead of this crazy witch hunt.

zanny 13y ago
> Sure, bitcoin has several terrible characteristics that have been exposed over the past few weeks (volatility, tons of speculation, new users don't understand wallet security, etc.) None of these are new, bitcoin has been volatile, has had a large speculative market, and a problem with new users understanding it since 2009.
- ashray 13y ago
  Thanks for adding that, I am of course personally aware that these discussions have taken place time and again on bitcointalk. I meant to say that these problems have been exposed more by the general press, etc. lately. There are other issues that the recent spike in value/volume have introduced: - bitcoin clients, usage, security are too complex for the average consumer - minimum miners fee is now too high ($0.10) - some miners are cherry picking transactions with higher fees so some transactions are taking longer to confirm - fear that the transaction bottleneck might be hit (imagine if all the internal movements on exchanges were on chain transactions, this would've already happened) - a lot of ill feeling and negativity from tech folks who could've been early adopters but missed the bus. Truth is, it's still early times. Also, services still need to be built, tech folks can always do that! :)
  - nightpool 13y ago
    From what I understand, isn't "some miners are cherry picking transactions with higher fees so some transactions are taking longer to confirm" part of the design of the Bitcoin network? From what I understand, as mining gets harder, transaction fees are supposed become the larger economic incentive for miners.
corresation 13y ago
But to insinuate with absolutely zero understanding that the creators of bitcoin did this to get rich is just plain nasty. Maybe they did want to get rich (in dollar terms) but there is nothing obvious on the block chain that proves that they cashed out. Why is that "nasty"? Why even debate or get so defensive about this point? For very strong reasons it does absolutely seem that the creator of Bitcoins did an early and heavy accumulation of the currency. The fact that they didn't "cash out" (which is rather irrelevant to whether it is "wealth" or not, as an aside) doesn't justify their mining, but actually makes it significantly more questionable -- they added no liquidity, instead actually restricting liquidity by doing a land grab of the easily mined coins. That is not altruistic. Having a single, mystery figure holding a substantial quantity of a currency is absolutely worthy of debate. Personally I think Bitcoin will be a v0.1 to something similar in the future. But I do absolutely believe it is effectively a pyramid scheme right now, and the rise in the currency is a combination of limited liquidity coupled with mainstream news and a gold rush mentality.
- trekky1700 13y ago
  I agree with this. People are concerned with wealth distribution in the physical world, while in the bitcoin world one man owns nearly 10% of all money. The fact that this man is its creator is even more dubious. This is the equivalent of one American, someone like the head of the federal reserve owning 1.05 trillion US dollars. Even if one day we'll have 21 million Bitcoins out there, that's still around 5% of all wealth being owned by one man, the currencies creator. Sounds crazy to me.
gutnor 13y ago
> Sure, bitcoin has several terrible characteristics that have been exposed over the past few weeks (volatility, tons of speculation, new users don't understand wallet security, etc.) Is there any sort of solution to that ? Seems like in order to become a currency, volatility at least will need to be reined in ? All the rest is like meh, no worse than cash and regular transaction on internet. But you can't use a currency seriously (one that does not have a country economy backing it) if its perceived value change that much.

by ashray 13y ago

zanny 13y ago

> Sure, bitcoin has several terrible characteristics that have been exposed over the past few weeks (volatility, tons of speculation, new users don't understand wallet security, etc.) None of these are new, bitcoin has been volatile, has had a large speculative market, and a problem with new users understanding it since 2009.

ashray 13y ago
Thanks for adding that, I am of course personally aware that these discussions have taken place time and again on bitcointalk. I meant to say that these problems have been exposed more by the general press, etc. lately. There are other issues that the recent spike in value/volume have introduced: - bitcoin clients, usage, security are too complex for the average consumer - minimum miners fee is now too high ($0.10) - some miners are cherry picking transactions with higher fees so some transactions are taking longer to confirm - fear that the transaction bottleneck might be hit (imagine if all the internal movements on exchanges were on chain transactions, this would've already happened) - a lot of ill feeling and negativity from tech folks who could've been early adopters but missed the bus. Truth is, it's still early times. Also, services still need to be built, tech folks can always do that! :)
- nightpool 13y ago
  From what I understand, isn't "some miners are cherry picking transactions with higher fees so some transactions are taking longer to confirm" part of the design of the Bitcoin network? From what I understand, as mining gets harder, transaction fees are supposed become the larger economic incentive for miners.

corresation 13y ago

But to insinuate with absolutely zero understanding that the creators of bitcoin did this to get rich is just plain nasty. Maybe they did want to get rich (in dollar terms) but there is nothing obvious on the block chain that proves that they cashed out. Why is that "nasty"? Why even debate or get so defensive about this point? For very strong reasons it does absolutely seem that the creator of Bitcoins did an early and heavy accumulation of the currency. The fact that they didn't "cash out" (which is rather irrelevant to whether it is "wealth" or not, as an aside) doesn't justify their mining, but actually makes it significantly more questionable -- they added no liquidity, instead actually restricting liquidity by doing a land grab of the easily mined coins. That is not altruistic. Having a single, mystery figure holding a substantial quantity of a currency is absolutely worthy of debate. Personally I think Bitcoin will be a v0.1 to something similar in the future. But I do absolutely believe it is effectively a pyramid scheme right now, and the rise in the currency is a combination of limited liquidity coupled with mainstream news and a gold rush mentality.

trekky1700 13y ago
I agree with this. People are concerned with wealth distribution in the physical world, while in the bitcoin world one man owns nearly 10% of all money. The fact that this man is its creator is even more dubious. This is the equivalent of one American, someone like the head of the federal reserve owning 1.05 trillion US dollars. Even if one day we'll have 21 million Bitcoins out there, that's still around 5% of all wealth being owned by one man, the currencies creator. Sounds crazy to me.

gutnor 13y ago

> Sure, bitcoin has several terrible characteristics that have been exposed over the past few weeks (volatility, tons of speculation, new users don't understand wallet security, etc.) Is there any sort of solution to that ? Seems like in order to become a currency, volatility at least will need to be reined in ? All the rest is like meh, no worse than cash and regular transaction on internet. But you can't use a currency seriously (one that does not have a country economy backing it) if its perceived value change that much.