5 ms·

Digging for answers: The “strong smell” of fraud from one Bitcoin miner maker

40 points by pr0zac 13y ago

deleted 13y ago
[deleted]
- sliverstorm 13y ago
  It may have spin, but it also has a lot of interesting information I hadn't seen before.
- toki5 13y ago
  ... but it mentions them in a legitimate way. Did you actually read said opening paragraph?
  - deleted 13y ago
    [deleted]
bigdubs 13y ago
Isn't the object of business generally to do as much nefarious stuff as you can get away with? With bitcoin I think the 'moral' bar is a bit lower because this is new territory. note: I do not believe this (that business moral judgements are just what they can get away with), but it seems to be a commonly held belief. note #2: to people the downvoted this, if it wasn't a thought provoking or at least intelligent comment please elaborate why.
- bmelton 13y ago
  As someone who downvoted you, and then saw the request for explanation, here's mine: I downvoted you because rhetoric, however commonly held, isn't worth the discussion space, in my opinion. Further, I disagree with the implication that all capitalist endeavors would just be highway robbers, if not for those pesky laws. Even those who suggest that Wal-Mart is definitively evil for paying minimum wage doesn't tend to hold the belief that all economic exchange is similarly evil, nor are all companies nefariously motivated. Yes, successful business owners like to maximize value, but for every person trying to sneak in a hidden surcharge, or lobby Congress for favors, there's another person who runs the minimum amount of ads on his website because he doesn't want it to feel dirty, or who is contributing to open source, because he likes giving back.
  - bigdubs 13y ago
    Thanks for answering. I think this notion is specifically relevant to BFL. The point is that in the absence of a Kohlberg "Conventional" and beyond sense of morality what we are left with is what companies (actors, individuals) can do, and what they can't do. I don't think that companies are inherently bad, it's just that companies will do what they can to maximize profit. It's as simple as that. As long as we let companies like BFL operate without punishment, they will test the limits of what they can do. Does it make it right? Of course not.
    - bmelton 13y ago
      > I don't think that companies are inherently bad, it's just that companies will do what they can to maximize profit. SOME companies will. What percentage, I honestly don't know, but I honestly suspect that it's a much smaller percentage than people tend to believe. Aside from that, I'm not arguing with you _per se_, but you asked for an explanation, so I gave one. FWIW, I tend to downvote most pithy rhetoric that doesn't contribute to the conversation, even from pg himself.
      - bigdubs 13y ago
        Again, thanks for the color. I hate to think that _anyone_ thinks this is 'pithy' (or overly concise to be clear) rhetoric though. It's a simple observation, but I feel it's one that people seem to miss quite often when dissecting events of moral ambiguity concerning companies. The point is this; we _have_ to get stronger at holding companies accountable for things we feel are suspect. That's all. Otherwise the playing field is more open to nonsense like BFL pulled.
darkarmani 13y ago
How poorly run do you have to be to not make money simply selling the hardware and harvesting bitcoins during the burn in period? It's no different than using the float in other ways. Do it in a way that customers are still happy and everyone wins.
jerf 13y ago
Before anyone knee-jerks the "you asked for anarchy" response, bear in mind that A: libertarians generally are OK with contract enforcement and B: the real world legal system is apparently already quite involved, and I doubt anyone's complaining. (Libertarianism isn't anarchy. If it were, we wouldn't need a separate word.)
- sliverstorm 13y ago
  libertarians generally are OK with contract enforcement Although, the last hardcore libertarian I talked to suggested private contract enforcement, and I think I know where that leads- less civil suits, more broken kneecaps.
  - Crito 13y ago
    > "I think I know where that leads- less civil suits, more broken kneecaps." Unlikely, breaking kneecaps is manual labor that scales poorly. In a short period of time abstraction layers would likely be built up to insulate creditors from the hassle of breaking kneecaps themselves. Debtor Prisons would probably arise, and with the realization that debtor prisons are not the most efficient way to extract an owed debt, debtors would be given the opportunity to agree to structured repayment of debt. Confiscation of property and/or the threat of imprisonment (backed by threats of violence that would rarely actually need to be carried out) would be used to enforce these repayment agreements. Hmm, this sounds familiar. It's basically just a very round-about way of disassembling the current government and creating a new identical system that goes by a different name.
    - jerf 12y ago
      I support the reduction of government to focus on this sort of thing, and that's why I call myself a libertarian and not an anarchist. It concerns me that the Federal government is all our eggs in one basket, and people don't realize that doing dumb shit like blowing billions of dollars on programs that shouldn't even exist jeopardizes the whole basket... if our overbloated, overextended government collapses (and there is NO NATURAL LAW against this), it won't just take out the bloated overextended bits, the whole shebang goes down. Sometimes people try to fling the "Oh, so, what about Police huh, you crazy libertarian?" at me, but at times I feel like I'm one of the only people actually taking the idea that government has certain core responsibilities seriously. Yes, we need police! Stop endangering them by stuffing every crazy-ass idea you come up with and decide call a "right" suddenly into the Federal government, without any apparent limit until it topples over! We need to approach government more like engineering and less like a laundry list to the DC Fairy of everything we want in the world. One of the cores of any robust system is simplicity.
DanBC 13y ago
So what's the method of the scam? Take money from people to build the machines; run the machines to earn bitcoin; use that bitcoin to repay anyone who complains and hope the bitcoin is profitable? Could people sue for the lost opportunity of bit oin they could have earned if they had the machines?
IvyMike 13y ago
The eternal question I always have is: if you make machines that print money, why would you sell them? There are several plausible answers, but it's still interesting to think about. (Although in this case, the answer may be "they don't make machines that print money and they sell them anyway")
- wmf 13y ago
  The eternal answers from every mining thread: if you need crowdfunding to pay for your NRE or if you would prefer to have USD instead of BTC or if you would prefer to have a certain amount of money now rather than an uncertain amount later, etc.
- betterunix 13y ago
  The most obvious answer is this: you sell the money printing machine for more than the money it would have printed. In other words, anyone selling a mining rig believes that they will make more money from the sale than they would make from actually using the machine. If you buy the rig, you are making the opposite bet. It is similar to futures trading.
- kandalf 13y ago
  A good question to ponder. But I think a very strong answer is that as a company producing bitcoin hardware you want to reduce exposure to bitcoin. Selling the machines (monetizing their future use value) instead of using them yourself does that to some extent.
frade33 13y ago
Where ever greed is involved, it must be administrated. Otherwise it would be as chaotic as sadly things are shaping up in the bitcoin world. I will try to search for ARS article on butterfly, which went into depth about mining, actually it was my first time, I had completely known what is bitcoin mining. Now When I read 'butterfly' I was in a complete shock and awe..... here it is. http://arstechnica.com/gadgets/2013/05/weve-got-a-butterfly-labs-bitcoin-miner-and-its-pretty-darn-fast/ http://arstechnica.com/gadgets/2013/05/weve-got-a-butterfly-...
dobbsbob 13y ago
If you want an excellent example how to not run a company, go through this guy's post history https://bitcointalk.org/index.php?topic=276848.msg4602313#msg4602313 https://bitcointalk.org/index.php?topic=276848.msg4602313#ms... 'Inaba' is the COO of Butterfly Labs. He also runs his own mining pool (prob with customer miners)

40 points by pr0zac 13y ago

deleted 13y ago

[deleted]

sliverstorm 13y ago
It may have spin, but it also has a lot of interesting information I hadn't seen before.
toki5 13y ago
... but it mentions them in a legitimate way. Did you actually read said opening paragraph?
- deleted 13y ago
  [deleted]

bigdubs 13y ago

Isn't the object of business generally to do as much nefarious stuff as you can get away with? With bitcoin I think the 'moral' bar is a bit lower because this is new territory. note: I do not believe this (that business moral judgements are just what they can get away with), but it seems to be a commonly held belief. note #2: to people the downvoted this, if it wasn't a thought provoking or at least intelligent comment please elaborate why.

bmelton 13y ago
As someone who downvoted you, and then saw the request for explanation, here's mine: I downvoted you because rhetoric, however commonly held, isn't worth the discussion space, in my opinion. Further, I disagree with the implication that all capitalist endeavors would just be highway robbers, if not for those pesky laws. Even those who suggest that Wal-Mart is definitively evil for paying minimum wage doesn't tend to hold the belief that all economic exchange is similarly evil, nor are all companies nefariously motivated. Yes, successful business owners like to maximize value, but for every person trying to sneak in a hidden surcharge, or lobby Congress for favors, there's another person who runs the minimum amount of ads on his website because he doesn't want it to feel dirty, or who is contributing to open source, because he likes giving back.
- bigdubs 13y ago
  Thanks for answering. I think this notion is specifically relevant to BFL. The point is that in the absence of a Kohlberg "Conventional" and beyond sense of morality what we are left with is what companies (actors, individuals) can do, and what they can't do. I don't think that companies are inherently bad, it's just that companies will do what they can to maximize profit. It's as simple as that. As long as we let companies like BFL operate without punishment, they will test the limits of what they can do. Does it make it right? Of course not.
  - bmelton 13y ago
    > I don't think that companies are inherently bad, it's just that companies will do what they can to maximize profit. SOME companies will. What percentage, I honestly don't know, but I honestly suspect that it's a much smaller percentage than people tend to believe. Aside from that, I'm not arguing with you _per se_, but you asked for an explanation, so I gave one. FWIW, I tend to downvote most pithy rhetoric that doesn't contribute to the conversation, even from pg himself.
    - bigdubs 13y ago
      Again, thanks for the color. I hate to think that _anyone_ thinks this is 'pithy' (or overly concise to be clear) rhetoric though. It's a simple observation, but I feel it's one that people seem to miss quite often when dissecting events of moral ambiguity concerning companies. The point is this; we _have_ to get stronger at holding companies accountable for things we feel are suspect. That's all. Otherwise the playing field is more open to nonsense like BFL pulled.

darkarmani 13y ago

How poorly run do you have to be to not make money simply selling the hardware and harvesting bitcoins during the burn in period? It's no different than using the float in other ways. Do it in a way that customers are still happy and everyone wins.

jerf 13y ago

Before anyone knee-jerks the "you asked for anarchy" response, bear in mind that A: libertarians generally are OK with contract enforcement and B: the real world legal system is apparently already quite involved, and I doubt anyone's complaining. (Libertarianism isn't anarchy. If it were, we wouldn't need a separate word.)

sliverstorm 13y ago
libertarians generally are OK with contract enforcement Although, the last hardcore libertarian I talked to suggested private contract enforcement, and I think I know where that leads- less civil suits, more broken kneecaps.
- Crito 13y ago
  > "I think I know where that leads- less civil suits, more broken kneecaps." Unlikely, breaking kneecaps is manual labor that scales poorly. In a short period of time abstraction layers would likely be built up to insulate creditors from the hassle of breaking kneecaps themselves. Debtor Prisons would probably arise, and with the realization that debtor prisons are not the most efficient way to extract an owed debt, debtors would be given the opportunity to agree to structured repayment of debt. Confiscation of property and/or the threat of imprisonment (backed by threats of violence that would rarely actually need to be carried out) would be used to enforce these repayment agreements. Hmm, this sounds familiar. It's basically just a very round-about way of disassembling the current government and creating a new identical system that goes by a different name.
  - jerf 12y ago
    I support the reduction of government to focus on this sort of thing, and that's why I call myself a libertarian and not an anarchist. It concerns me that the Federal government is all our eggs in one basket, and people don't realize that doing dumb shit like blowing billions of dollars on programs that shouldn't even exist jeopardizes the whole basket... if our overbloated, overextended government collapses (and there is NO NATURAL LAW against this), it won't just take out the bloated overextended bits, the whole shebang goes down. Sometimes people try to fling the "Oh, so, what about Police huh, you crazy libertarian?" at me, but at times I feel like I'm one of the only people actually taking the idea that government has certain core responsibilities seriously. Yes, we need police! Stop endangering them by stuffing every crazy-ass idea you come up with and decide call a "right" suddenly into the Federal government, without any apparent limit until it topples over! We need to approach government more like engineering and less like a laundry list to the DC Fairy of everything we want in the world. One of the cores of any robust system is simplicity.

DanBC 13y ago

So what's the method of the scam? Take money from people to build the machines; run the machines to earn bitcoin; use that bitcoin to repay anyone who complains and hope the bitcoin is profitable? Could people sue for the lost opportunity of bit oin they could have earned if they had the machines?

IvyMike 13y ago

The eternal question I always have is: if you make machines that print money, why would you sell them? There are several plausible answers, but it's still interesting to think about. (Although in this case, the answer may be "they don't make machines that print money and they sell them anyway")

wmf 13y ago
The eternal answers from every mining thread: if you need crowdfunding to pay for your NRE or if you would prefer to have USD instead of BTC or if you would prefer to have a certain amount of money now rather than an uncertain amount later, etc.
betterunix 13y ago
The most obvious answer is this: you sell the money printing machine for more than the money it would have printed. In other words, anyone selling a mining rig believes that they will make more money from the sale than they would make from actually using the machine. If you buy the rig, you are making the opposite bet. It is similar to futures trading.
kandalf 13y ago
A good question to ponder. But I think a very strong answer is that as a company producing bitcoin hardware you want to reduce exposure to bitcoin. Selling the machines (monetizing their future use value) instead of using them yourself does that to some extent.

frade33 13y ago

Where ever greed is involved, it must be administrated. Otherwise it would be as chaotic as sadly things are shaping up in the bitcoin world. I will try to search for ARS article on butterfly, which went into depth about mining, actually it was my first time, I had completely known what is bitcoin mining. Now When I read 'butterfly' I was in a complete shock and awe..... here it is. http://arstechnica.com/gadgets/2013/05/weve-got-a-butterfly-labs-bitcoin-miner-and-its-pretty-darn-fast/ http://arstechnica.com/gadgets/2013/05/weve-got-a-butterfly-...

dobbsbob 13y ago

If you want an excellent example how to not run a company, go through this guy's post history https://bitcointalk.org/index.php?topic=276848.msg4602313#msg4602313 https://bitcointalk.org/index.php?topic=276848.msg4602313#ms... 'Inaba' is the COO of Butterfly Labs. He also runs his own mining pool (prob with customer miners)