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>> Such a thing has (in modern times) never happened with the normal monetary system, and couldn't happen (because governments wouldn't let it). Easily trumped

>> Such a thing has (in modern times) never happened with the normal monetary system, and couldn't happen (because governments wouldn't let it). Easily trumped once again. Not only have governments let failures happen at a much greater scale - they've facilitated them. Bear Stearns - when it collapsed was actually relatively well capitalized - it just couldn't get access to the day to day liquidity that all large institutions need access to these days because the markets were spooked. The fed could have just provided them a loan to see them through, and the NY fed were poised to give them funding - but instead at the last moment changed their mind and ordered Bear Stearns to do a deal with JP Morgan to have them bought out. JP Morgan came to the table with an offer of 2 dollars per share. It eventually went up to 10 - but this was a stock that was trading at over a hundred dollars per share not a few months before. Shareholders were effectively wiped out. Despite this event being part of a catalyst that almost ended modern capitalism as we know it - you state that the failures of Bitcoin seem much bigger. I'm sorry - but this isn't just a matter of perception - this is just false. There were no systemic failures that happened on account of the failure of Mt Gox. People lost money. Trade moved onto the other exchanges. That was it. The fact that you can come to the conclusion that Bitcoin's failures seem bigger somehow proves everything that I've been saying about the absurdity of Bitcoin perception.

pjc50 12y ago
The finance system failing has nothing to do with failures of the monetary system, nor of retail banking. If I wanted to point to one of those, I'd say Cyprus. Gox failed in a remarkably traditional way: a bank run. They didn't have enough reserves to cover their liabilities. It turns out that this was due to fraud and/or insolvency. It's always possible to say "bitcoin cannot fail, it can only be failed", because the failures are those of its support institutions. However, the support institutions are critical to actually using it and it retaining its value. They're not part of the tech but they're part of the system.
- grovulent 12y ago
  I can't tell if you agree with me or not. We're talking about the institutional systems built on top of the monetary system and our respective trust in each. You seem to say the same at the end of your comment. But I'm not claiming that the collapse of Bear Stearns was a failure of the traditional monetary system. The fact that the fed can print money at will is the reason why essentially they had it in their power to extend an emergency loan to Bear Stearns. That they chose instead to wipe out shareholders was an institutional failure. It was an institutional failure on a colossal scale - and yet clearly water off a duck's back.
  - Nursie 12y ago
    Wiping out shareholders is entirely different from wiping out depositors though, entirely different.
CJefferson 12y ago
Are you comparing people holding shares in a company to Mt Gox? No-one (as I understand) whose money was been looked after by Bear Stearns lost any money. Of course shareholders did, shareholders gain and lose money every day, that's part of holding shares. However, my personal view (and perhaps you disagree) was to consider bitcoin more as "money" than "investment" (like shares).
- grovulent 12y ago
  Yeah - I'm making that comparison. Because firstly - Bitcoin is being treated as a commodity by governments around the world (particularly when it comes to taxation policy). Secondly, we're talking about broad perceptions of trust in institutions and ecosystems - such that even when Bitcoin is compared to non-insured forms of investment (as opposed to FDIC insured forms of deposits), the bitcoin ecosystem still gets a relatively bad rap. The collapse of the commodities brokerage firm MF Global was to the tune of billions of dollars of client and creditor funds. Not insured. Tough luck. Yet no systemic black mark gets recorded. Thirdly - even if we ARE going to compare the bitcoin ecosystem to currencies as opposed to commodities - we might want to acknowledge that Mt Gox was an exchange - not a bank. There are plenty of Forex brokers which do not have insured deposits for their clients (unless they are also banks themselves). And forex companies dropped like flies during the financial crisis, taking client funds with them. So why is Bitcoin perceived as inferior to normal currency on account of a loss of client funds at Mt Gox? For some reason everyone thinks it's logical to compare MT Gox with FDIC insured banks. Clearly a HIGHER standard is being expected for bitcoin here than for normal currency given the type of comparisons being made. Fourth - some Bitcoin institutions DO have insurance on deposits. Coinbase, Circle and the like have limited private insurance. Elliptic offers insurance backed by a major private insurer. And while I accept that this insurance doesn't compare to FDIC insurance - note that there hasn't yet been a loss of depositor funds at any of these major VC backed start ups. Yes - ultimately lack of FDIC insurance is a strong reason not to use Bitcoin. I'm not denying overall that there are good reasons to avoid bitcoin. My point is that the level of distrust and suspicion directed toward bitcoin is not commensurate given appropriate comparisons made with other sectors.

pjc50 12y ago

The finance system failing has nothing to do with failures of the monetary system, nor of retail banking. If I wanted to point to one of those, I'd say Cyprus. Gox failed in a remarkably traditional way: a bank run. They didn't have enough reserves to cover their liabilities. It turns out that this was due to fraud and/or insolvency. It's always possible to say "bitcoin cannot fail, it can only be failed", because the failures are those of its support institutions. However, the support institutions are critical to actually using it and it retaining its value. They're not part of the tech but they're part of the system.

grovulent 12y ago
I can't tell if you agree with me or not. We're talking about the institutional systems built on top of the monetary system and our respective trust in each. You seem to say the same at the end of your comment. But I'm not claiming that the collapse of Bear Stearns was a failure of the traditional monetary system. The fact that the fed can print money at will is the reason why essentially they had it in their power to extend an emergency loan to Bear Stearns. That they chose instead to wipe out shareholders was an institutional failure. It was an institutional failure on a colossal scale - and yet clearly water off a duck's back.
- Nursie 12y ago
  Wiping out shareholders is entirely different from wiping out depositors though, entirely different.

CJefferson 12y ago

Are you comparing people holding shares in a company to Mt Gox? No-one (as I understand) whose money was been looked after by Bear Stearns lost any money. Of course shareholders did, shareholders gain and lose money every day, that's part of holding shares. However, my personal view (and perhaps you disagree) was to consider bitcoin more as "money" than "investment" (like shares).

grovulent 12y ago
Yeah - I'm making that comparison. Because firstly - Bitcoin is being treated as a commodity by governments around the world (particularly when it comes to taxation policy). Secondly, we're talking about broad perceptions of trust in institutions and ecosystems - such that even when Bitcoin is compared to non-insured forms of investment (as opposed to FDIC insured forms of deposits), the bitcoin ecosystem still gets a relatively bad rap. The collapse of the commodities brokerage firm MF Global was to the tune of billions of dollars of client and creditor funds. Not insured. Tough luck. Yet no systemic black mark gets recorded. Thirdly - even if we ARE going to compare the bitcoin ecosystem to currencies as opposed to commodities - we might want to acknowledge that Mt Gox was an exchange - not a bank. There are plenty of Forex brokers which do not have insured deposits for their clients (unless they are also banks themselves). And forex companies dropped like flies during the financial crisis, taking client funds with them. So why is Bitcoin perceived as inferior to normal currency on account of a loss of client funds at Mt Gox? For some reason everyone thinks it's logical to compare MT Gox with FDIC insured banks. Clearly a HIGHER standard is being expected for bitcoin here than for normal currency given the type of comparisons being made. Fourth - some Bitcoin institutions DO have insurance on deposits. Coinbase, Circle and the like have limited private insurance. Elliptic offers insurance backed by a major private insurer. And while I accept that this insurance doesn't compare to FDIC insurance - note that there hasn't yet been a loss of depositor funds at any of these major VC backed start ups. Yes - ultimately lack of FDIC insurance is a strong reason not to use Bitcoin. I'm not denying overall that there are good reasons to avoid bitcoin. My point is that the level of distrust and suspicion directed toward bitcoin is not commensurate given appropriate comparisons made with other sectors.