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I know everyone is gleefully using the failure of three poorly-coded Bitcoin exchanges to crow about the many wonders of regulations. However, has anyone stopp

by jnbiche 13y ago

I know everyone is gleefully using the failure of three poorly-coded Bitcoin exchanges to crow about the many wonders of regulations. However, has anyone stopped to ask why so many exchanges are poorly-coded? No, it's not because everyone in Bitcoin adores PHP. I've met some of the most capable coders among cryptocurrency enthusiasts. Go check out Conformal's btcd, or any of Jeff Garzik or Warren Togami's projects, or the amazing talents of the Bitcoin core dev team. (If you decide to denigrate the abilities of any of these Bitcoin/cryptocurrency developers in a response, please be sure to include a link to your own github) No, it's not because there's no talent. Rather, it's because nobody who is competent in the Bitcoin world is willing to risk their hides or the welfare of their families on something they know the authorities will eventually crack down on. You see, competent people actually learn about the space, and the relevant regulations before jumping in. And they understand that -- absent several million in start-up funding -- there is no way to legally open an exchange at this point. So by process of elimination, the only ones left to open exchanges are either scammers, or ignorant, incompetent coders who can barely code up a PHP site, or a very few brave, mostly-competent individuals who have the money and lawyers to at least (hopefully!) keep them out of jail when the inevitable crackdown occurs. I know personally of several extremely competent entrepreneur-developers who have abandoned Bitcoin projects out of regulatory concerns. And I'm sure that's just a small sample. So that's the reason for the prevalence of poor coders among Bitcoin exchanges. Your solution to this problem will of course be a function of your worldview.

bunderbunder 13y ago
My suspicion is that simply removing barriers to entry for more cautious folks would not effectively resolve this sort of problem. Methodical people who take their time in engineering ironclad software systems backed by rock-solid accounting practices don't get first mover advantage, and they might not have bottom lines capable of supporting the kind of fee structures that would allow them to compete effectively with faster, sloppier businesses. An unstated major premise of the "wonders of regulations" argument is that regulations exist because sometimes the hand of government is needed to handle situations where the invisible hand is a demonstrable failure.
- jnbiche 13y ago
  Perhaps, in the case of the most cautious developers. But right now, I'd be happy with just competent developers. And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions.
  - danielweber 13y ago
    it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions Where's 'rayiner? He'll love this. Writing bitcoin software is like writing crypto. You need to get it exactly right. But instead of starting with a spec written down that the crypto community tears to pieces, instead the developers eat their own dogfood. No, change that: they build critical infrastructure out of their own dogfood. All before it's ever been vetted by the really smart people. I'd say competent people don't write Bitcoin marketplaces that handle real money for the same reason competent people don't write their own home-grown crypto and then make it a single-point-of-failure for their entire business.
    - jnbiche 13y ago
      The arrogance here is unfortunate. First, you start out with a remark reminiscent of a high school bully. Do you really need a co-conspirator to share in your attempt to ridicule someone? Also, you're pretty uninformed about the history of Bitcoin. Satoshi did start with a spec, or at least a white paper (yes, the lack of a proper spec for Bitcoin has been a major problem). Satoshi presented the white paper to the cryptography e-mail list several months before releasing the software. He got some feedback at that time, and then he got significant feedback when upon his initial release, which he integrated into the protocol. This list included many of the top cryptographers in the cryptocurrency space, including Hal Finney and Adam Back. You can find all these discussions, and the original release at: http://nakamotoinstitute.org/ http://nakamotoinstitute.org/ Finally, with the exception of the transaction malleability issue, the failures in exchanges have had nothing to do with cryptography, but rather with basic secure software development practices and architectures.
ryanjshaw 13y ago
For whatever reason, decentralised cryptocurrencies seem to be a very polarized subject. As somebody in the financial markets regulatory space, your comment aligns with my own thoughts - there is a middle-ground: a balanced but essentially prudent view of Bitcoin and altcoins that is seldom seen in these threads full of naive ideals and cynical strawmen. Another aspect of this middle-ground viewpoint: both of these polarized sides seem to be focused exclusively on fully automated Bitcoin-based systems. I find this highly unlikely. If Bitcoin-based systems do become popular, there is no reason to imagine they won't involve some human (e.g. back office settlement systems with STP rules, payment tests and 4-eye reviews of breaches) and legal elements (e.g. declare your BTC addresses to your government tax office, KYC/AML compliance for exchanges, etc.) to solve certain problems that have been in the news lately.

by jnbiche 13y ago

bunderbunder 13y ago

My suspicion is that simply removing barriers to entry for more cautious folks would not effectively resolve this sort of problem. Methodical people who take their time in engineering ironclad software systems backed by rock-solid accounting practices don't get first mover advantage, and they might not have bottom lines capable of supporting the kind of fee structures that would allow them to compete effectively with faster, sloppier businesses. An unstated major premise of the "wonders of regulations" argument is that regulations exist because sometimes the hand of government is needed to handle situations where the invisible hand is a demonstrable failure.

jnbiche 13y ago
Perhaps, in the case of the most cautious developers. But right now, I'd be happy with just competent developers. And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions.
- danielweber 13y ago
  it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions Where's 'rayiner? He'll love this. Writing bitcoin software is like writing crypto. You need to get it exactly right. But instead of starting with a spec written down that the crypto community tears to pieces, instead the developers eat their own dogfood. No, change that: they build critical infrastructure out of their own dogfood. All before it's ever been vetted by the really smart people. I'd say competent people don't write Bitcoin marketplaces that handle real money for the same reason competent people don't write their own home-grown crypto and then make it a single-point-of-failure for their entire business.
  - jnbiche 13y ago
    The arrogance here is unfortunate. First, you start out with a remark reminiscent of a high school bully. Do you really need a co-conspirator to share in your attempt to ridicule someone? Also, you're pretty uninformed about the history of Bitcoin. Satoshi did start with a spec, or at least a white paper (yes, the lack of a proper spec for Bitcoin has been a major problem). Satoshi presented the white paper to the cryptography e-mail list several months before releasing the software. He got some feedback at that time, and then he got significant feedback when upon his initial release, which he integrated into the protocol. This list included many of the top cryptographers in the cryptocurrency space, including Hal Finney and Adam Back. You can find all these discussions, and the original release at: http://nakamotoinstitute.org/ http://nakamotoinstitute.org/ Finally, with the exception of the transaction malleability issue, the failures in exchanges have had nothing to do with cryptography, but rather with basic secure software development practices and architectures.

ryanjshaw 13y ago

For whatever reason, decentralised cryptocurrencies seem to be a very polarized subject. As somebody in the financial markets regulatory space, your comment aligns with my own thoughts - there is a middle-ground: a balanced but essentially prudent view of Bitcoin and altcoins that is seldom seen in these threads full of naive ideals and cynical strawmen. Another aspect of this middle-ground viewpoint: both of these polarized sides seem to be focused exclusively on fully automated Bitcoin-based systems. I find this highly unlikely. If Bitcoin-based systems do become popular, there is no reason to imagine they won't involve some human (e.g. back office settlement systems with STP rules, payment tests and 4-eye reviews of breaches) and legal elements (e.g. declare your BTC addresses to your government tax office, KYC/AML compliance for exchanges, etc.) to solve certain problems that have been in the news lately.