8 ms·

A few weeks old but saw this earlier today via Brad DeLong: Who’d have thought that there might be an incentive for operators in a totally unregulated market t

by Steko 13y ago

A few weeks old but saw this earlier today via Brad DeLong: Who’d have thought that there might be an incentive for operators in a totally unregulated market to take people’s assets and run? Or that self-regulation would be so lacking in a market that purposefully concocts information asymmetries that benefit money creators/the tech-savvy…. or that the Bitcoin system was only recreating and replicating all the bad incentives we know and love in our current system, which are now being curbed by intensified post-crisis regulation? Irony of irony, Bitcoin Magazine concludes that since it is unfortunately the case that many bitcoin businesses must use escrow accounts to hold people’s bitcoin, the only solution to the problem is moving towards a quint-party agreement to manage unauthorised liability creation in the system... But you mustn’t confuse this with some sort of recommendation to forge a Federal Bitcoin Reserve system. It’s a “Five Parties Model” system. Entirely different... All in all, it would be NOTHING like the Federal Reserve System we have already arrived at thanks to decades of collective trial and error, and acquired wisdom from the countless bank collapses and system crises that have come before us. Except, of course it would be exactly like the Fed. And where it wasn’t yet exactly like the Fed, it would soon be, because exactly the same human processes, incentives and behaviours would govern its evolution and development. Proving the point yet again that there is nothing new under the sun, and that bitcoin is more of a replication of the old unregulated past, under a new technological order, which society collectively refined and regulated until it created the system-stabilising framework we know today, than a golden era of finance no-one had yet been smart enough to discover beforehand. ftalphaville.ft.com/2014/03/03/1787992/magic-the-undercapitalised-gathering-online/

thinkcomp 13y ago
The e-mail I just sent to the author of that post: "Ms. Kaminska, In your recent post (http://ftalphaville.ft.com/2014/03/03/1787992/magic-the-undercapitalised-gathering-online/ http://ftalphaville.ft.com/2014/03/03/1787992/magic-the-unde...), which I found via Brad DeLong’s web site, you described Bitcoin as "totally unregulated" and "completely unregulated" a number of times. Such characterizations are completely erroneous, and you should probably correct your post. Unfortunately, many people are under the impression that Bitcoin is unregulated because its various proponents (such as Marc Andreessen, the Bitcoin Foundation, etc.) have done an excellent job convincing the world that it’s so new and supposedly novel that no regulations could possibly apply. That’s not even close to true. In the United States, numerous Bank Secrecy Act statutes, 18 U.S.C. § 1960, and a state money transmission framework involving 47 different state laws all apply. The problem is that the state laws are hugely problematic, the regulators are bumbling fools, the entrepreneurs and their venture capitalist backers are exceptionally cunning in their efforts to evade regulatory scrutiny, while the press utterly refuses to write about what is actually going on. My company is the plaintiff in two federal lawsuits over the issue, one of which has set the record for the most-delayed, non-stayed motion to dismiss in California federal judicial history (764 days and counting): http://www.plainsite.org/dockets/index.html?id=716056 http://www.plainsite.org/dockets/index.html?id=716056 http://www.plainsite.org/dockets/index.html?id=2434524 http://www.plainsite.org/dockets/index.html?id=2434524 If you’re interested in the issues, I would suggest that you read my recent comment letter to the Consumer Financial Protection Bureau, which can be found here: http://www.thinkcomputer.com/20140214.cfpbcomment.pdf http://www.thinkcomputer.com/20140214.cfpbcomment.pdf You may also find this article on my personal web site about Mt. Gox specifically and the role of Iowa’s state regulators of interest: http://www.aarongreenspan.com/writing/essay.html?id=101 http://www.aarongreenspan.com/writing/essay.html?id=101 Feel free to let me know if you have any questions. Aaron"
- ghshephard 13y ago
  While you may take issue with coinbase, or MtGox, can you accept that a cryptographic proof-of-work solution to the byzantine general's problem, that implements a general consensus ledger of forth-like script applications, is not a "currency" per se, but a mechanism in which currencies can be implemented upon? I.E. Regulate the companies that are engaging in currency like transactions on top of the bitcoin ledger, but don't be too quick to attempt to regulate bitcoin itself.
  - thinkcomp 13y ago
    No.
    - kovacs 13y ago
      Aaron you come across so angry and prickly that even people that may agree with you do so begrudgingly. In this case you're simply wrong to not even agree and cannot expound beyond a simple "No", like a 2 year old that doesn't want to share their drink box. The fact is he's right, there's nothing about bitcoin and the technology itself that should fall under scrutiny until it's used in monetary transactions. It's almost as if you didn't even read that questions because your answer is just flat wrong. I respect what you've done to disseminate the information regarding the complete failure of government to clarify and enforce laws around finance but you may want to reconsider your tone because it's not going to help you to further that cause.
      - dcc1 13y ago
        He's a legal troll a parasite on innovation not to different from patent trolls, don't entertain him.
        thinkcomp 13y ago
        You have it backwards.
      - hnnewguy 13y ago
SilasX 13y ago
A: We've created a decentralized accounting system and currency that obviates the need for most of the standard accounting controls and fraud prevention measures, so long as you operate within that currency! B: Oh yeah? Well look at all the shenanigans that happen at the re-entry points to the conventional financial system! Checkmate, hard-moneyists.
- JulianMorrison 13y ago
  What makes you think it's only exchange providers that are incompetent and/or crooked? Exchange providers tend to hold the largest balances, that makes them targets, but anyone else with a big sack of bitcoins and security by "my cousin knows Linux" is vulnerable too.
  - AJ007 13y ago
    The analogy I give people is you lock the doors of your house, but it isn't really secure. Anyone can kick down the door or break a window, very easily and very quickly. Your real security for your house comes from the environment which makes it difficult for people to run around ransacking neighborhoods, e.g. your local police force. With bitcoin, you actually have to use real security to secure your possessions. There is no local police force preventing a break in or a credit card company which will absorb fraudulent charges, or a bank that will flag and freeze questionable withdraws. In a crypto currency world, the wealth will have a tendency to flow not to the most business savy or politically connected but to the most secure (in some dimensions we see that the same thing happens with global wealth, both in terms of countries and currencies.) The flip side of that is, stolen bitcoins may fall under a legal classification of stolen property and be retrievable through legal systems -- or at the least blacklisted and non spendable through sources that fall under those jurisdictions. That outcome, I think, is the most important thing to watch, above any other hypothetical bitcoin regulation or banning. If I was an active bitcoin startup I would build a system to identify and classify bitcoins as safe, stolen, unknown, or questionable. Think of the current implementation of bitcoin as crypto currency alpha build 2 or 3. It is slightly amusing that people would risk so much of their own capital to participate in an alpha test, but also necessary in order to truly stress test the system.

by Steko 13y ago

thinkcomp 13y ago

The e-mail I just sent to the author of that post: "Ms. Kaminska, In your recent post (http://ftalphaville.ft.com/2014/03/03/1787992/magic-the-undercapitalised-gathering-online/ http://ftalphaville.ft.com/2014/03/03/1787992/magic-the-unde...), which I found via Brad DeLong’s web site, you described Bitcoin as "totally unregulated" and "completely unregulated" a number of times. Such characterizations are completely erroneous, and you should probably correct your post. Unfortunately, many people are under the impression that Bitcoin is unregulated because its various proponents (such as Marc Andreessen, the Bitcoin Foundation, etc.) have done an excellent job convincing the world that it’s so new and supposedly novel that no regulations could possibly apply. That’s not even close to true. In the United States, numerous Bank Secrecy Act statutes, 18 U.S.C. § 1960, and a state money transmission framework involving 47 different state laws all apply. The problem is that the state laws are hugely problematic, the regulators are bumbling fools, the entrepreneurs and their venture capitalist backers are exceptionally cunning in their efforts to evade regulatory scrutiny, while the press utterly refuses to write about what is actually going on. My company is the plaintiff in two federal lawsuits over the issue, one of which has set the record for the most-delayed, non-stayed motion to dismiss in California federal judicial history (764 days and counting): http://www.plainsite.org/dockets/index.html?id=716056 http://www.plainsite.org/dockets/index.html?id=716056 http://www.plainsite.org/dockets/index.html?id=2434524 http://www.plainsite.org/dockets/index.html?id=2434524 If you’re interested in the issues, I would suggest that you read my recent comment letter to the Consumer Financial Protection Bureau, which can be found here: http://www.thinkcomputer.com/20140214.cfpbcomment.pdf http://www.thinkcomputer.com/20140214.cfpbcomment.pdf You may also find this article on my personal web site about Mt. Gox specifically and the role of Iowa’s state regulators of interest: http://www.aarongreenspan.com/writing/essay.html?id=101 http://www.aarongreenspan.com/writing/essay.html?id=101 Feel free to let me know if you have any questions. Aaron"

ghshephard 13y ago
While you may take issue with coinbase, or MtGox, can you accept that a cryptographic proof-of-work solution to the byzantine general's problem, that implements a general consensus ledger of forth-like script applications, is not a "currency" per se, but a mechanism in which currencies can be implemented upon? I.E. Regulate the companies that are engaging in currency like transactions on top of the bitcoin ledger, but don't be too quick to attempt to regulate bitcoin itself.
- thinkcomp 13y ago
  No.
  - kovacs 13y ago
    Aaron you come across so angry and prickly that even people that may agree with you do so begrudgingly. In this case you're simply wrong to not even agree and cannot expound beyond a simple "No", like a 2 year old that doesn't want to share their drink box. The fact is he's right, there's nothing about bitcoin and the technology itself that should fall under scrutiny until it's used in monetary transactions. It's almost as if you didn't even read that questions because your answer is just flat wrong. I respect what you've done to disseminate the information regarding the complete failure of government to clarify and enforce laws around finance but you may want to reconsider your tone because it's not going to help you to further that cause.
    - dcc1 13y ago
      He's a legal troll a parasite on innovation not to different from patent trolls, don't entertain him.
      - thinkcomp 13y ago
        You have it backwards.
    - hnnewguy 13y ago

SilasX 13y ago

A: We've created a decentralized accounting system and currency that obviates the need for most of the standard accounting controls and fraud prevention measures, so long as you operate within that currency! B: Oh yeah? Well look at all the shenanigans that happen at the re-entry points to the conventional financial system! Checkmate, hard-moneyists.

JulianMorrison 13y ago
What makes you think it's only exchange providers that are incompetent and/or crooked? Exchange providers tend to hold the largest balances, that makes them targets, but anyone else with a big sack of bitcoins and security by "my cousin knows Linux" is vulnerable too.
- AJ007 13y ago
  The analogy I give people is you lock the doors of your house, but it isn't really secure. Anyone can kick down the door or break a window, very easily and very quickly. Your real security for your house comes from the environment which makes it difficult for people to run around ransacking neighborhoods, e.g. your local police force. With bitcoin, you actually have to use real security to secure your possessions. There is no local police force preventing a break in or a credit card company which will absorb fraudulent charges, or a bank that will flag and freeze questionable withdraws. In a crypto currency world, the wealth will have a tendency to flow not to the most business savy or politically connected but to the most secure (in some dimensions we see that the same thing happens with global wealth, both in terms of countries and currencies.) The flip side of that is, stolen bitcoins may fall under a legal classification of stolen property and be retrievable through legal systems -- or at the least blacklisted and non spendable through sources that fall under those jurisdictions. That outcome, I think, is the most important thing to watch, above any other hypothetical bitcoin regulation or banning. If I was an active bitcoin startup I would build a system to identify and classify bitcoins as safe, stolen, unknown, or questionable. Think of the current implementation of bitcoin as crypto currency alpha build 2 or 3. It is slightly amusing that people would risk so much of their own capital to participate in an alpha test, but also necessary in order to truly stress test the system.