9 ms·

What’s Not Being Said About Bitcoin

49 points by ibsathish 13y ago

Zigurd 13y ago
He makes an interesting analogy to email, which, like Bitcoin, is constantly under attack from scammers, and criminals. And email wasn't designed to be hardened. So far, so good. But, and this is a very big "but," what's really going unsaid is that Bitcoin might also be under attack from governments who think it might be a threat to the effectiveness of central banks and to the survival of weaker currencies. That's a whole other ball game.
- rayiner 13y ago
  Predictable. Mt Gox implodes and its somehow the governments fault.
  - Zigurd 13y ago
    I'm not making an anti-government, much less an ideological anti-regulation argument. Regulation could potentially benefit crypto-currency. If Bitcoin succeeds it is almost certain to prompt the creation of regulations, even laws, that pertain, some beneficial, some not. I'm saying that state actors are a different scale of threat, and that goes un-addressed in the article by a Coinbase founder. If they've got the balls to go up against such threats, they're not saying. I'd be very pleased if it turns out you can successfully harden a p2p protocol against state actors.
    - rayiner 13y ago
      Fair enough. I shouldn't have been snarky.
- philwelch 13y ago
  That's a conspiracy theory. The real reason Bitcoin might "come under attack by governments" is because the primary applications for it have been to buy drugs, hire hit men, and launder money.
  - Zigurd 13y ago
    > the primary applications for it have been to buy drugs, hire hit men, and launder money Has anyone actually determined whether such claims are credible? It should be possible to analyze if that's likely, even if it would be hard to prove.
    - philwelch 13y ago
      What was the largest online Bitcoin marketplace and what was sold there?
      - Zigurd 13y ago
        What was the total transaction volume through Silk Road? Something in the middling 10s of million US$. As many have pointed out, Silk Road was an impractical novelty, with higher-than-market prices, and hardly a measurable part of the black market for drugs. The total market value of bitcoin mined so far is something like US$1billion, and about US$2.5billion at peak prices. 90%+ of Bitcoin is a bet against conventional currencies. A bet that value will flow into Bitcoin because people would prefer that over conventional currency.
        philwelch 13y ago
        I guess I wasn't counting speculation in Bitcoin itself as an application of Bitcoin.
aristidb 13y ago
So this is a tiny bit of a pet peeve of mine: I do not think changing strictly more informative titles to the version in the article itself is a good idea. Changing "Brian Armstrong: What's Not Being Said About Bitcoin" to "What's Not Being Said About Bitcoin" helps nobody. "Brian Armstrong" is not editorializing. It's a fact. Proposal: Instead, put the non-canonical part in brackets at the end, like so: What's Not Being Said Aboit Bitcoin [Brian Armstrong] Editorializing additions would still be banned.
btown 13y ago
I've grown not to take anything TC says seriously... but when they say that nobody's been talking about this: > Open networks keep growing even if individual participants fail. ... then they must have been burying their head in the ground for the past week. EVERYONE has been talking about that.
- balls187 13y ago
  The article isn't from TC, it's from the CEO of CoinBase.
- eterm 13y ago
  They're also wrong, open networks can die out. Usenet died out to proprietary forums, to the point where we've been left without satisfactory replacement. Email might not be dying out but it's being assaulted on all sides by proprietary messaging systems. Some of the largest recently acquisitions of companies have been proprietary messaging systems. One day we might be "stuck" without email in the way we're "stuck" without usenet and wonder how we got to that point. Bitcoin is potentially vulnerable to a more easy to use (or more easy to scale) proprietary version.
  - philwelch 13y ago
    Usenet isn't gone; people just don't use it anymore because it became terrible.
Phlarp 13y ago
I'm interested to see if the communities around various other exchanges will jump up to demand more accountability from those in charge or if the chaos of the crowd will continue to prove how valuable governmental regulation can actually be to the system as a whole.
- sixQuarks 13y ago
  jokesters like Coinbase? the CEO of coinbase wrote the article you just agreed with.
  - jonesetc 13y ago
    I think you replied to the wrong comment.
    - sixQuarks 13y ago
      yeah, I don't know what happened. Weird
  - Phlarp 13y ago
    Coinbase certainly appears to be a more reputable player, but I would still like to see them embrace transparency by helping to create and use the inherent properties of the blockchain to prove (preferably continuously) that they have not been the victim of a large heist nor engaged in fractional reserve bitcoining.
- crazy1van 13y ago
  "... to prove how valuable governmental regulation can actually be to the system as a whole." Conversely, if Mt Gox had been regulated more like a major bank, right now we'd all be getting out our checkbooks to bail them out. Then, a similar organization like Coinbase would have even less incentive to keep their house in order. In the worst case scenario, they'll just be bailed out too. And then there is the consumer, who will have no incentive to only bank with solvent institutions. Who cares? We've got FDIC. The amount of ignorance and moral hazard created by this style of system adds up pretty quickly. The current bitcoin system is definitely messy. But when something goes wrong, the damage is largely contained. Mt Gox died. People who had value stored there lost it. But people with bitcoins are Coinbase were fine. And the average tax payer didn't have to spend a dime. All in all, I find the whole thing to be a fascinating test case for unregulated finances. I could be totally wrong and bitcoins exchange rate with dollars could drop to zero because of this. However, the biggest "bank" just failed and the system itself seems remarkably stable.
balls187 13y ago
> Bitcoin is getting stronger and proving to consumers and businesses it is not going away. That's all well and good, but as a consumer, I want some level of protection. With credit cards and my bank account, if some entity (myself included) makes stupid decisions and causes me to lose money due to digital theft, my credit card/bank will often take care of the issue. With BitCoin, and the failure of Mt. Gox, consumers have no recourse (at least as far as I can tell). EDIT TO ADD: I'm not sure what problems BitCoin solves for me, as a consumer. I hate that PayPal can "lock" me out of my account, so I don't use it. BankOfAmerica, can, but usually will only do so for extreme circumstances (ie asset seizing and forfeiture). I hate that Banks charge a fee for the privilege of storing my money in it, but there are enough banks/credit unions that offer services for free. This article leaves open several issues by likening BitCoin to email. Great that email is a protocol. But what happens when Gmail fails? At this point GMail is too big to fail, and I for one am glad that Google, with it's resources and very talented engineers are backing it. > New technologies take time to mature. Granted. BitCoin is very sophisticated, and it's clearly valuable. But, this is my hard earned cashtro we're talking about, and I don't want to put it into "immature" technology. Again, as a consumer, my confidence is a real material thing when dealing with financial institutions.
- SilasX 13y ago
  Just like you'll wait until physical cash has mugger protections before using it?
  - danhak 13y ago
    Great strawman. Parent post didn't mention physical cash. He mentioned credit cards, which have chargeback/purchase protection, and bank accounts, which have deposit insurance.
    - SilasX 13y ago
      That's not what strawman means, and the point is that different measures protect you from different things and you shouldn't fault one for not protecting against others (outside its "threat model"). Paper dollars are designed to protect against counterfeit. That's all. To protect against muggers requires either a) sacrificing the desirable properties of paper dollars, or b) use of a separate security layer (vaults, safes, holding little at a time on you, etc). In no case are those limitations a failing of the paper dollar itself. They likewise don't themselves protect against someone convincing you to give them your paper dollars under false pretenses. Same points apply: to handle that threat, you rely on laws, trust networks, escrows (like credit card arbitration) etc. Still not a problem with the dollar, just outside its threat model. I made the previous comment in the hopes of compressing that point into one sentence. Perhaps I failed, but at no point did I misattribute a position to the GGP. "Your position implies X" != "you are advocating X" ... even and especially if you're not advocating X!
forgottenpass 13y ago
He's got a point. Once the jokesters like Mt Gox and Coinbase die off and some reliable companies set up shop, Bitcoin will be stronger for it.
- deleted 13y ago
  [deleted]
- chadwickthebold 13y ago
  Uh... "Brian Armstrong is the co-founder and CEO of Coinbase"
  - forgottenpass 13y ago
    Whoops. I guess writing about a bright bitcoin future is a good promotion for his business then. I'm still waiting for it to be replaced by a company that doesn't need PR nightmares popping up on HN before they start processing orders in a reliable and timely fashion.
  - mortenjorck 13y ago
    A company having unreliable infrastructure and unresponsive customer service does not necessarily mean its CEO doesn't understand the potential of the market they're in.
- ossreality 13y ago
  >jokesters... Coinbase LMAO. You're joking, right?
jerf 13y ago
As I said on another post that got a bit more buried, what matters is not that there was a crisis; it is a fully correct and accurate observation that conventional currency has crises too, and sometimes they even entirely collapse. What matters for BitCoin is the same thing that matters for conventional currency, which is what comes next. Again, rationality forces me to concede that I did not expect BitCoin to recover this well. Look at the past six months of BitCoin value [1] and this barely shows as a blip. This is, of course, because the currency itself is pretty darned volatile still, but, you know, still not what I would have predicted, and I have to respect that. [1]: http://bitcoincharts.com/charts/bitstampUSD#rg180ztgMzm1g10zm2g25zv http://bitcoincharts.com/charts/bitstampUSD#rg180ztgMzm1g10z...
- ewillbefull 13y ago
  To be fair, most of the downturn you see starting in Feb is due to this issue, it just came to a head when bankruptcy was inevitable. Not really a blip.
  - jerf 13y ago
    I still would have expected worse, just from the sheer bad publicity press. It's also hard for me to believe that the market had fully priced in the possibility that MtGox would collapse, and that price was only about 1/2 - 2/3s the value of BitCoin. I would easily have expected 2-3 factors of magnitude with a good odds of a full-on death spiral. So far, I've been wrong, and rationality compels me to adjust my beliefs in reaction to that. (Bearing in mind the market may still remain irrational longer than I can retain solvency in my opinions. Still... this is not what I would have predicted two weeks ago.)
higherpurpose 13y ago
> When trying to predict the future, you should never look at the state of a technology today, but the trend of how it is growing or maturing over time. That's always an important principle to remember, and I always try to bring it up myself even in discussions about overpopulation. These days I'm actually even more excited about all the "Bitcoin-like" protocols popping out, and new research being done for all sorts of crazy distributed applications, that couldn't have been done before Bitcoin. Bitcoin is kind of like the Gopher protocol of the Internet. There's so much more stuff and bigger stuff that's going to appear over the next few years or decade. It's still very early days for these technologies and for the full decentralization of trust.
badman_ting 13y ago
I actually believe Bitcoin will live on after this, but I just can't see myself using it. I have no idea how I would turn money in to bitcoin without getting totally fucked. Where I would put it that it wouldn't just get stolen through some crypto trickery I don't understand. Who knows if supposed "good guys" are really just playing a long con, or getting robbed themselves. This isn't just a flaky beta of an app that needs a couple months to shake out the bugs, people lost huge sums of money here.
- wyager 13y ago
  Recently, a number of my non-computer-y friends have asked me how to start using bitcoins. To my surprise, they had no trouble doing everything properly. I told them to use electrum, and they managed to A)encrypt the wallet and B) back up the seed with no help from me. I helped them back up their wallets online, and also buy bitcoins via localbitcoin. I'm confident they would have figured those out on their own eventually. Of course, these folks are mostly using OS X or linux and are relatively competent, so I'm not worried too much about malware. If they were using windows I wouldn't be as confident.
  - badman_ting 13y ago
    That's cool but I don't think tech-savvy is the issue here, rather it is risk aversion. I have no idea if anything you just said is secure at all. The word "encryption" doesn't make me feel any better about any of this.
pistle 13y ago
I gave it the moment that it deserves, but I don't know if it's possible to over-discount what the CEO of a company with so incredibly much invested in said virtual-crypto-currency has to say. He's looking for reach to console everyone sitting tenuously on their virtual piles. "Oh, we're all better off for the massive amounts of consumer loss. Keep calm, carry on." Or, to put it another way, "Yeah, all those suckers with money at the largest exchange were stupid to be putting confidence in a stupidly run exchange. So glad everyone can feel better since a bad apple fell off. There are only good apples left now - trust me."
- ewillbefull 13y ago
  It's hard to overstate how much of a bad apple MtGox was. In 2011 they were hacked causing the first huge bitcoin crash -- probably still the largest crash ever in bitcoin's history. Yet because they had the most reserves, people kept the volume there. In 2012 their tech was incapable of supporting new volume and caused flash crashes. Yet because they had the most reserves, people kept the volume there. For most of 2013 nobody could withdraw anything from MtGox. Yet because they had the most reserves, people kept the volume there. No other exchange was this bad. Now you see why a lot of us are happy this company is gone. It just sucks they had to take so many people down with them.
lingben 13y ago
The number #1 requirement for a currency is trust and confidence in it. Why would anyone trust a currency which has no consumer protection whatsoever and provides zero recourse for when things inevitably go wrong? What I mean is, everyone is hating on Mt. Gox but conceivably what happened to them can happen to any of the exchanges out there now. There is no mechanism to prevent it and there is no recourse for users when it does. This is why bitcoin is interesting as a protocol but a non-starter when it comes to being a true currency. A currency requires backing by a central authority. No amount of code can make up for that. EDIT: I would also like to add one simple thing. Here we are discussing a topic that falls into the field of economics. How many here are economists? ok. How many here have taken at least a few courses in economics? ok. How many here have taken 1 course in economics? If a slew of people with zero knowledge of programming, computers, technology, etc. decided one day to start pontificating incessantly about code, programming languages, etc. hn would first sneer at them and then rightly ignore them. But if people with zero knowledge of economics or finance write a torrent of vapid and completely ignorant articles about currency, bitcoin, macro-economics and their intersection hn seems to vote it up. I'm really tired of this. I do get that the bitcoin protocol has some interesting aspects. But can we please ignore the total waste of space, time and pixels that is every single article about the bitcoin currency?
- VikingCoder 13y ago
  Gold was currency. Silver was currency. No central authority was required to back them. Your conclusions may be correct, but your argument is rubbish.
  - philwelch 13y ago
    The gold and silver standards were established by central authorities. Where do you think they came from?
    - Double_Cast 13y ago
      Give me one example where seigniorage preceded raw metal.
coldcode 13y ago
It's all well and good until governments step in a regulate/destroy it. Which will happen.
- lutusp 13y ago
  > It's all well and good until governments step in a regulate/destroy it. Which will happen. When governments control spam, then I'll start to believe they can control digital currencies. My point is not to equate Bitcoin with spam, but to say that certain Internet activities are completely outside anyone's control, regardless of how much public or political pressure is applied.
rayiner 13y ago
I'm surprised by the reaction to Mt Gox's bankruptcy. There appears to be a lot more people treating it as a real bank then I thought. Which is disconcerting not because people lost money, but because it could lead to premature regulation of Bitcoin before we really understand what the ecosystem can sort out for itself. I'd love to see Bitcoin as an alternative economy that's left alone except to the extent it threatens the dollar denominated economy. If only because I think people can decide for themselves if they want to take the risk of participating. Nobody is holding a gun to your head making you use Bitcoin.
thinkcomp 13y ago
What's Not Being Said About Coinbase: https://www.quora.com/What-is-the-legal-and-technical-setup-of-Coinbases-exchange/answer/Aaron-Greenspan https://www.quora.com/What-is-the-legal-and-technical-setup-...
CookWithMe 13y ago
I don't think it's a good idea to use email as heavily as OP does for his argument, especially with regards to spam and "weeding out bad actors". > Like the spam filters developed on top of email, the best Bitcoin services providers will develop the best software to iron out any details the Bitcoin protocol has still left open to abuse. While spam-detection is certainly a lot better than, say, 5 years ago, it's not perfect. And while the cost of false-negatives is relatively low, false-positives can have bad consequences. I don't think average people want to trust their money with something that is as trustworthy as a spam-filter is today, let alone go through the equivalent of "I had 10 penis-enlargement-scams in my inbox this morning"-technology-maturing-phase for a payment technology.
brudgers 13y ago
What Mt. Gox shows is that the integrity of bitcoin as a currency is somewhat dependent on the level of technical sophistication of 'legitimate' bitcoin players versus the technical sophistication of 'illegitimate' bitcoin players. If the bitcoin establishment isn't the smartest people in the room, then can a person on the street trust them? Anyone can put cash in their mattress and reasonably assess the risks. Likewise the risks associated with a bank are somewhat knowable. But assessing the risks with crypto currency is almost impossible for even a reasonably sophisticated user. Under a rational actor model, bitcoin becomes attractive when the risk of not being able to assess the risk of bitcoins is less than the risk of using another form of transaction - e.g. Silk Road. That's not to say that bitcoin = Silk Road. But any bitcoin transaction has a higher probability of involving a party with fewer inhibitions against illegal activity. Will the person who uses bitcoins to avoid taxes on the income from AirBnB rentals rob you? Probably not. But as using bitcoin becomes a more compelling economic option, the activity is likely to be farther away from the bounds of law. Amassing bitcoins makes sense when it is the best economic option and the scenarios in which that will always apply are speculation and legal burdens on other currencies. In neither of those cases is their a reason to trust the other party.

49 points by ibsathish 13y ago

He makes an interesting analogy to email, which, like Bitcoin, is constantly under attack from scammers, and criminals. And email wasn't designed to be hardened. So far, so good. But, and this is a very big "but," what's really going unsaid is that Bitcoin might also be under attack from governments who think it might be a threat to the effectiveness of central banks and to the survival of weaker currencies. That's a whole other ball game.

rayiner 13y ago
Predictable. Mt Gox implodes and its somehow the governments fault.
- Zigurd 13y ago
  I'm not making an anti-government, much less an ideological anti-regulation argument. Regulation could potentially benefit crypto-currency. If Bitcoin succeeds it is almost certain to prompt the creation of regulations, even laws, that pertain, some beneficial, some not. I'm saying that state actors are a different scale of threat, and that goes un-addressed in the article by a Coinbase founder. If they've got the balls to go up against such threats, they're not saying. I'd be very pleased if it turns out you can successfully harden a p2p protocol against state actors.
  - rayiner 13y ago
    Fair enough. I shouldn't have been snarky.
philwelch 13y ago
That's a conspiracy theory. The real reason Bitcoin might "come under attack by governments" is because the primary applications for it have been to buy drugs, hire hit men, and launder money.
- Zigurd 13y ago
  > the primary applications for it have been to buy drugs, hire hit men, and launder money Has anyone actually determined whether such claims are credible? It should be possible to analyze if that's likely, even if it would be hard to prove.
  - philwelch 13y ago
    What was the largest online Bitcoin marketplace and what was sold there?
    - Zigurd 13y ago
      What was the total transaction volume through Silk Road? Something in the middling 10s of million US$. As many have pointed out, Silk Road was an impractical novelty, with higher-than-market prices, and hardly a measurable part of the black market for drugs. The total market value of bitcoin mined so far is something like US$1billion, and about US$2.5billion at peak prices. 90%+ of Bitcoin is a bet against conventional currencies. A bet that value will flow into Bitcoin because people would prefer that over conventional currency.
      - philwelch 13y ago
        I guess I wasn't counting speculation in Bitcoin itself as an application of Bitcoin.

aristidb 13y ago

So this is a tiny bit of a pet peeve of mine: I do not think changing strictly more informative titles to the version in the article itself is a good idea. Changing "Brian Armstrong: What's Not Being Said About Bitcoin" to "What's Not Being Said About Bitcoin" helps nobody. "Brian Armstrong" is not editorializing. It's a fact. Proposal: Instead, put the non-canonical part in brackets at the end, like so: What's Not Being Said Aboit Bitcoin [Brian Armstrong] Editorializing additions would still be banned.

btown 13y ago

I've grown not to take anything TC says seriously... but when they say that nobody's been talking about this: > Open networks keep growing even if individual participants fail. ... then they must have been burying their head in the ground for the past week. EVERYONE has been talking about that.

balls187 13y ago
The article isn't from TC, it's from the CEO of CoinBase.
eterm 13y ago
They're also wrong, open networks can die out. Usenet died out to proprietary forums, to the point where we've been left without satisfactory replacement. Email might not be dying out but it's being assaulted on all sides by proprietary messaging systems. Some of the largest recently acquisitions of companies have been proprietary messaging systems. One day we might be "stuck" without email in the way we're "stuck" without usenet and wonder how we got to that point. Bitcoin is potentially vulnerable to a more easy to use (or more easy to scale) proprietary version.
- philwelch 13y ago
  Usenet isn't gone; people just don't use it anymore because it became terrible.

Phlarp 13y ago

I'm interested to see if the communities around various other exchanges will jump up to demand more accountability from those in charge or if the chaos of the crowd will continue to prove how valuable governmental regulation can actually be to the system as a whole.

sixQuarks 13y ago
jokesters like Coinbase? the CEO of coinbase wrote the article you just agreed with.
- jonesetc 13y ago
  I think you replied to the wrong comment.
  - sixQuarks 13y ago
    yeah, I don't know what happened. Weird
- Phlarp 13y ago
  Coinbase certainly appears to be a more reputable player, but I would still like to see them embrace transparency by helping to create and use the inherent properties of the blockchain to prove (preferably continuously) that they have not been the victim of a large heist nor engaged in fractional reserve bitcoining.
crazy1van 13y ago
"... to prove how valuable governmental regulation can actually be to the system as a whole." Conversely, if Mt Gox had been regulated more like a major bank, right now we'd all be getting out our checkbooks to bail them out. Then, a similar organization like Coinbase would have even less incentive to keep their house in order. In the worst case scenario, they'll just be bailed out too. And then there is the consumer, who will have no incentive to only bank with solvent institutions. Who cares? We've got FDIC. The amount of ignorance and moral hazard created by this style of system adds up pretty quickly. The current bitcoin system is definitely messy. But when something goes wrong, the damage is largely contained. Mt Gox died. People who had value stored there lost it. But people with bitcoins are Coinbase were fine. And the average tax payer didn't have to spend a dime. All in all, I find the whole thing to be a fascinating test case for unregulated finances. I could be totally wrong and bitcoins exchange rate with dollars could drop to zero because of this. However, the biggest "bank" just failed and the system itself seems remarkably stable.

balls187 13y ago

> Bitcoin is getting stronger and proving to consumers and businesses it is not going away. That's all well and good, but as a consumer, I want some level of protection. With credit cards and my bank account, if some entity (myself included) makes stupid decisions and causes me to lose money due to digital theft, my credit card/bank will often take care of the issue. With BitCoin, and the failure of Mt. Gox, consumers have no recourse (at least as far as I can tell). EDIT TO ADD: I'm not sure what problems BitCoin solves for me, as a consumer. I hate that PayPal can "lock" me out of my account, so I don't use it. BankOfAmerica, can, but usually will only do so for extreme circumstances (ie asset seizing and forfeiture). I hate that Banks charge a fee for the privilege of storing my money in it, but there are enough banks/credit unions that offer services for free. This article leaves open several issues by likening BitCoin to email. Great that email is a protocol. But what happens when Gmail fails? At this point GMail is too big to fail, and I for one am glad that Google, with it's resources and very talented engineers are backing it. > New technologies take time to mature. Granted. BitCoin is very sophisticated, and it's clearly valuable. But, this is my hard earned cashtro we're talking about, and I don't want to put it into "immature" technology. Again, as a consumer, my confidence is a real material thing when dealing with financial institutions.

SilasX 13y ago
Just like you'll wait until physical cash has mugger protections before using it?
- danhak 13y ago
  Great strawman. Parent post didn't mention physical cash. He mentioned credit cards, which have chargeback/purchase protection, and bank accounts, which have deposit insurance.
  - SilasX 13y ago
    That's not what strawman means, and the point is that different measures protect you from different things and you shouldn't fault one for not protecting against others (outside its "threat model"). Paper dollars are designed to protect against counterfeit. That's all. To protect against muggers requires either a) sacrificing the desirable properties of paper dollars, or b) use of a separate security layer (vaults, safes, holding little at a time on you, etc). In no case are those limitations a failing of the paper dollar itself. They likewise don't themselves protect against someone convincing you to give them your paper dollars under false pretenses. Same points apply: to handle that threat, you rely on laws, trust networks, escrows (like credit card arbitration) etc. Still not a problem with the dollar, just outside its threat model. I made the previous comment in the hopes of compressing that point into one sentence. Perhaps I failed, but at no point did I misattribute a position to the GGP. "Your position implies X" != "you are advocating X" ... even and especially if you're not advocating X!

forgottenpass 13y ago

He's got a point. Once the jokesters like Mt Gox and Coinbase die off and some reliable companies set up shop, Bitcoin will be stronger for it.

deleted 13y ago
[deleted]
chadwickthebold 13y ago
Uh... "Brian Armstrong is the co-founder and CEO of Coinbase"
- forgottenpass 13y ago
  Whoops. I guess writing about a bright bitcoin future is a good promotion for his business then. I'm still waiting for it to be replaced by a company that doesn't need PR nightmares popping up on HN before they start processing orders in a reliable and timely fashion.
- mortenjorck 13y ago
  A company having unreliable infrastructure and unresponsive customer service does not necessarily mean its CEO doesn't understand the potential of the market they're in.
ossreality 13y ago
>jokesters... Coinbase LMAO. You're joking, right?

jerf 13y ago

As I said on another post that got a bit more buried, what matters is not that there was a crisis; it is a fully correct and accurate observation that conventional currency has crises too, and sometimes they even entirely collapse. What matters for BitCoin is the same thing that matters for conventional currency, which is what comes next. Again, rationality forces me to concede that I did not expect BitCoin to recover this well. Look at the past six months of BitCoin value [1] and this barely shows as a blip. This is, of course, because the currency itself is pretty darned volatile still, but, you know, still not what I would have predicted, and I have to respect that. [1]: http://bitcoincharts.com/charts/bitstampUSD#rg180ztgMzm1g10zm2g25zv http://bitcoincharts.com/charts/bitstampUSD#rg180ztgMzm1g10z...

ewillbefull 13y ago
To be fair, most of the downturn you see starting in Feb is due to this issue, it just came to a head when bankruptcy was inevitable. Not really a blip.
- jerf 13y ago
  I still would have expected worse, just from the sheer bad publicity press. It's also hard for me to believe that the market had fully priced in the possibility that MtGox would collapse, and that price was only about 1/2 - 2/3s the value of BitCoin. I would easily have expected 2-3 factors of magnitude with a good odds of a full-on death spiral. So far, I've been wrong, and rationality compels me to adjust my beliefs in reaction to that. (Bearing in mind the market may still remain irrational longer than I can retain solvency in my opinions. Still... this is not what I would have predicted two weeks ago.)

higherpurpose 13y ago

> When trying to predict the future, you should never look at the state of a technology today, but the trend of how it is growing or maturing over time. That's always an important principle to remember, and I always try to bring it up myself even in discussions about overpopulation. These days I'm actually even more excited about all the "Bitcoin-like" protocols popping out, and new research being done for all sorts of crazy distributed applications, that couldn't have been done before Bitcoin. Bitcoin is kind of like the Gopher protocol of the Internet. There's so much more stuff and bigger stuff that's going to appear over the next few years or decade. It's still very early days for these technologies and for the full decentralization of trust.

badman_ting 13y ago

I actually believe Bitcoin will live on after this, but I just can't see myself using it. I have no idea how I would turn money in to bitcoin without getting totally fucked. Where I would put it that it wouldn't just get stolen through some crypto trickery I don't understand. Who knows if supposed "good guys" are really just playing a long con, or getting robbed themselves. This isn't just a flaky beta of an app that needs a couple months to shake out the bugs, people lost huge sums of money here.

wyager 13y ago
Recently, a number of my non-computer-y friends have asked me how to start using bitcoins. To my surprise, they had no trouble doing everything properly. I told them to use electrum, and they managed to A)encrypt the wallet and B) back up the seed with no help from me. I helped them back up their wallets online, and also buy bitcoins via localbitcoin. I'm confident they would have figured those out on their own eventually. Of course, these folks are mostly using OS X or linux and are relatively competent, so I'm not worried too much about malware. If they were using windows I wouldn't be as confident.
- badman_ting 13y ago
  That's cool but I don't think tech-savvy is the issue here, rather it is risk aversion. I have no idea if anything you just said is secure at all. The word "encryption" doesn't make me feel any better about any of this.

pistle 13y ago

I gave it the moment that it deserves, but I don't know if it's possible to over-discount what the CEO of a company with so incredibly much invested in said virtual-crypto-currency has to say. He's looking for reach to console everyone sitting tenuously on their virtual piles. "Oh, we're all better off for the massive amounts of consumer loss. Keep calm, carry on." Or, to put it another way, "Yeah, all those suckers with money at the largest exchange were stupid to be putting confidence in a stupidly run exchange. So glad everyone can feel better since a bad apple fell off. There are only good apples left now - trust me."

ewillbefull 13y ago
It's hard to overstate how much of a bad apple MtGox was. In 2011 they were hacked causing the first huge bitcoin crash -- probably still the largest crash ever in bitcoin's history. Yet because they had the most reserves, people kept the volume there. In 2012 their tech was incapable of supporting new volume and caused flash crashes. Yet because they had the most reserves, people kept the volume there. For most of 2013 nobody could withdraw anything from MtGox. Yet because they had the most reserves, people kept the volume there. No other exchange was this bad. Now you see why a lot of us are happy this company is gone. It just sucks they had to take so many people down with them.

lingben 13y ago

The number #1 requirement for a currency is trust and confidence in it. Why would anyone trust a currency which has no consumer protection whatsoever and provides zero recourse for when things inevitably go wrong? What I mean is, everyone is hating on Mt. Gox but conceivably what happened to them can happen to any of the exchanges out there now. There is no mechanism to prevent it and there is no recourse for users when it does. This is why bitcoin is interesting as a protocol but a non-starter when it comes to being a true currency. A currency requires backing by a central authority. No amount of code can make up for that. EDIT: I would also like to add one simple thing. Here we are discussing a topic that falls into the field of economics. How many here are economists? ok. How many here have taken at least a few courses in economics? ok. How many here have taken 1 course in economics? If a slew of people with zero knowledge of programming, computers, technology, etc. decided one day to start pontificating incessantly about code, programming languages, etc. hn would first sneer at them and then rightly ignore them. But if people with zero knowledge of economics or finance write a torrent of vapid and completely ignorant articles about currency, bitcoin, macro-economics and their intersection hn seems to vote it up. I'm really tired of this. I do get that the bitcoin protocol has some interesting aspects. But can we please ignore the total waste of space, time and pixels that is every single article about the bitcoin currency?

VikingCoder 13y ago
Gold was currency. Silver was currency. No central authority was required to back them. Your conclusions may be correct, but your argument is rubbish.
- philwelch 13y ago
  The gold and silver standards were established by central authorities. Where do you think they came from?
  - Double_Cast 13y ago
    Give me one example where seigniorage preceded raw metal.

coldcode 13y ago

It's all well and good until governments step in a regulate/destroy it. Which will happen.

lutusp 13y ago
> It's all well and good until governments step in a regulate/destroy it. Which will happen. When governments control spam, then I'll start to believe they can control digital currencies. My point is not to equate Bitcoin with spam, but to say that certain Internet activities are completely outside anyone's control, regardless of how much public or political pressure is applied.

rayiner 13y ago

I'm surprised by the reaction to Mt Gox's bankruptcy. There appears to be a lot more people treating it as a real bank then I thought. Which is disconcerting not because people lost money, but because it could lead to premature regulation of Bitcoin before we really understand what the ecosystem can sort out for itself. I'd love to see Bitcoin as an alternative economy that's left alone except to the extent it threatens the dollar denominated economy. If only because I think people can decide for themselves if they want to take the risk of participating. Nobody is holding a gun to your head making you use Bitcoin.

thinkcomp 13y ago

What's Not Being Said About Coinbase: https://www.quora.com/What-is-the-legal-and-technical-setup-of-Coinbases-exchange/answer/Aaron-Greenspan https://www.quora.com/What-is-the-legal-and-technical-setup-...

CookWithMe 13y ago

I don't think it's a good idea to use email as heavily as OP does for his argument, especially with regards to spam and "weeding out bad actors". > Like the spam filters developed on top of email, the best Bitcoin services providers will develop the best software to iron out any details the Bitcoin protocol has still left open to abuse. While spam-detection is certainly a lot better than, say, 5 years ago, it's not perfect. And while the cost of false-negatives is relatively low, false-positives can have bad consequences. I don't think average people want to trust their money with something that is as trustworthy as a spam-filter is today, let alone go through the equivalent of "I had 10 penis-enlargement-scams in my inbox this morning"-technology-maturing-phase for a payment technology.

brudgers 13y ago

What Mt. Gox shows is that the integrity of bitcoin as a currency is somewhat dependent on the level of technical sophistication of 'legitimate' bitcoin players versus the technical sophistication of 'illegitimate' bitcoin players. If the bitcoin establishment isn't the smartest people in the room, then can a person on the street trust them? Anyone can put cash in their mattress and reasonably assess the risks. Likewise the risks associated with a bank are somewhat knowable. But assessing the risks with crypto currency is almost impossible for even a reasonably sophisticated user. Under a rational actor model, bitcoin becomes attractive when the risk of not being able to assess the risk of bitcoins is less than the risk of using another form of transaction - e.g. Silk Road. That's not to say that bitcoin = Silk Road. But any bitcoin transaction has a higher probability of involving a party with fewer inhibitions against illegal activity. Will the person who uses bitcoins to avoid taxes on the income from AirBnB rentals rob you? Probably not. But as using bitcoin becomes a more compelling economic option, the activity is likely to be farther away from the bounds of law. Amassing bitcoins makes sense when it is the best economic option and the scenarios in which that will always apply are speculation and legal burdens on other currencies. In neither of those cases is their a reason to trust the other party.