What’s Not Being Said About Bitcoin

http://techcrunch.com/2014/02/28/whats-not-being-said-about-bitcoin/

by ibsathish • 12 years ago

49 123 12 years ago

techcrunch.com

btown• 12 years 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.

balls1876• 12 years ago

The article isn't from TC, it's from the CEO of CoinBase.

eterm• 12 years 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.

philwelch12• 12 years ago

Usenet isn't gone; people just don't use it anymore because it became terrible.

Phlarp3• 12 years 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.

sixQuarks2• 12 years ago

jokesters like Coinbase? the CEO of coinbase wrote the article you just agreed with.

jonesetc• 12 years ago

I think you replied to the wrong comment.

Phlarp3• 12 years 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.

crazy1van2• 12 years 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.

Phlarp3• 12 years ago

Just because the specific regulations imposed by a mostly corrupt government led to failure and a subsequent bailout does not mean all regulations are inherently flawed.

rayiner4• 12 years ago

Its less telling an experiment than you think. The Bitcoin economy isn't that sophisticated. There aren't complex Bitcoin denominated contracts that could cause ripple effects from one bank failing. But those things are useful and will arise in the Bitcoin ecosystem as it grows. And when that happens, a bank failure won't be an isolated thing like it is now.

danielweber• 12 years ago

The minimum -- THE BARE MINIMUM -- that any regulator would have demanded of MtGox was an outside auditor coming in occasionally to make sure their books balanced.

If you believe the "slow leak" story, even that threshold was not met.

harryh• 12 years ago

This wasn't a test case for unregulated finances. It was a test case for immature and unconnected finances.

doctoboggan• 12 years ago

I hope to see exchanges transparently demonstrating their solvency on the blockchain regularly

balls1876• 12 years 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.

SilasX4• 12 years ago

Just like you'll wait until physical cash has mugger protections before using it?

danhak2• 12 years 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.

CJefferson• 12 years ago

I would never carry around, or own, more than a couple of hundred pounds worth of physical cash or bitcoin at a time.

balls1876• 12 years ago

I have a blue belt in Krav Maga.

I am my own mugger protection.

aroch• 12 years ago

Bitcoin are also vulnerable to physical theft and the OP isn't talking about physical theft of currency -- I'm pretty sure you know that and are electing to be snarky in spite of that.

A credit/debit card when stolen, regardless of physical or electronic purloining, is backed by a set of consumer protection laws, regulations and policies -- some obviously required by government but some provided without legal obligation. Further a bank account, a brokerage account or any number of real money stores are insured against theft and loss (bankruptcy). BTC are not.

patmcc• 12 years ago

"Physical cash" stored at a third-party like a bank or credit union does have mugger protections - they have safes and vaults and security guards and insurance. If a bitcoin "wallet" service opened that offered those things, consumers would be more likely to take it seriously.

Putting a fortune into Mt. Gox or someone similar is like burying your cash in someone else's backyard. You don't need mugger protection, you need common sense.

pseut• 12 years ago

I think you're looking for the phrase "debit card."

sosborn• 12 years ago

It will be interesting to see if/how this evolves. It popularity is being driven (at least partly) by the "not controlled by a bank" aspect of it, but we are seeing that it is a double-edged sword. Is it possible to find a happy medium between traditional banking/currency systems? Will something similar to FDIC come to bitcoin, and if it does, will it be via private industry or government regulation?

canvia• 12 years ago

You want to choose to pay insurance for security. That is fine and a valid option.

Other people want to choose to accept responsibility for their own security and lose the overhead from all the regulation and insurance. This is the concept of libertarianism and bitcoin.

The problem is that a small group of individuals wants to force everyone to purchase their insurance and security, and they are fighting tooth and nail to make that the only available option.

This is not a free market. This is not an efficient market. It is a corrupt artificially created monopoly.

balls1876• 12 years ago

Perhaps it fails in that it's less efficient than an open unregulated market.

And it's a monopoly.

But outside of economic theory and beliefs, how is that necessarily a bad thing?

The US Dollar is a single currency, so it is a monopoly, but it has allowed for the growth of interstate commerce, as opposed to allowing any institution to use it's own currency.

The Euro is another example--now I know many of my EU brethren may not be happy by the Euro, but as a consumer, using a single currency while in Europe has distinct advantages.

forgottenpass2• 12 years 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.

chadwickthebold• 12 years ago

Uh... "Brian Armstrong is the co-founder and CEO of Coinbase"

forgottenpass2• 12 years 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• 12 years 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.

jerf2• 12 years 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#rg180ztgMzm1g10z...

ewillbefull2• 12 years 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.

jerf2• 12 years 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• 12 years 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_ting2• 12 years 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.

wyager2• 12 years 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_ting2• 12 years 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• 12 years 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."

ewillbefull2• 12 years 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.

lingben4• 12 years 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?

panarky• 12 years ago

"A currency requires backing by a central authority."

Citation needed.

lingben4• 12 years ago

citation: see bitcoin

/snark

But seriously, it is difficult to not approach the question with sarcasm as it is so self-evident. Put yourself in the shoes of one of the hundreds of people who lost their bitcoins via the Mt. Gox fiasco and ponder your own question anew.

lutorm• 12 years ago

It is pretty obvious from the preceding sentences that this is an opinion, not a statement of fact, and hence a citation is not needed.

wyager2• 12 years ago

Why should a currency provide those things? Institutions using the currency can always provide those services better than the currency itself.

"Why would anyone trust gold when it has no consumer protection whatsoever and provided zero recourse for when things inevitably go wrong?"

vbuterin• 12 years ago

Why is it a currency's job to provide consumer protection? That's like saying that it's a kitchen stove's job to tell you what things you can cook with it, or that it's TCP's job to provide built-in encryption and authentication. It's not; it's the job of third-party services built on top. Systems are better when they're modular and distinct components are not arbitrarily bunched together, allowing separate innovation in each one. And the Bitcoin community is developing such third-party services as well; I know of at least three Bitcoin businesses working on providing arbitration services and secure Bitcoin wallets using multisignature transactions.

lingben4• 12 years ago

"Why is it a currency's job to provide consumer protection?"

I think you are misunderstanding what I'm saying. It isn't the currency's "job". It is a fundamental prerequisite that the currency have a backer for said currency to be used widely.

The mistake that people make with bitcoin is to put the cart before the horse. That is, they think that achieving critical mass [1] means that a currency has 'succeeded'.

In fact, you first need to provide a reason for people to trust the currency (central authority) which then leads to critical mass... and then 'success'.

The essence of bitcoin is ephemeral with no control, no central authority and no recourse. This stuff is built in. Unlike our current 'old style' currencies, bitcoin prides itself on standing apart this way.

When a currency is built in such a way that it EXPLICITLY removes the ability to have such necessary characteristics of a currency, you better believe it matters.

[1] http://en.wikipedia.org/wiki/Critical_mass_%28sociodynamics%...

thesimpsons10223• 12 years ago

I guess we disagree on the definition of a currency then. You are treating currencies like consumer products. Currencies are stores of value that people have to rely on for our market based economy to work on. The dollar is backed by the full faith and credit of the United States government. Bitcoin is backed by the full faith and credit of... satoshi nakamoto? If the dollar wasn't backed by the US government with strong regulations then I wouldn't use it to store my value and target wouldn't accept it. It is unethical to distribute a currency without insurances/regulations controlling it. You are messing with people's life savings and livelihood, its irresponsible to not protect consumers. Furthermore, with your stove example, there are certain regulations that the stove has to meet to be sold. http://www.wsiltv.com/news/local/EPA-Proposes-New-Regulation... This is done to protect consumers and society. You may say its people own faults for not doing proper risk assessment, but not everyone is educated and smart enough to understand this stuff. If you want true mass adoption of bitcoin then it will need regulation and consumer protection.

VikingCoder3• 12 years 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.

philwelch12• 12 years ago

The gold and silver standards were established by central authorities. Where do you think they came from?

acdha3• 12 years ago

Commodities have intrinsic value. A fiat currency such as bitcoin lacks that intrinsic value and is valued based on consensus. In the case of a government-backed currency, there's at least some value based on that government's ability to mandate its use for taxes. Governments can manage that with varying degrees of success but any official currency has more intrinsic value that Bitcoin to the extent that the government has sovereign authority over a larger economy.

This doesn't mean that Bitcoin can't be valued but it means that the community has to have a strategy to provide equivalent reassurances.

riffraff• 12 years ago

if $exchange provided his users with the same guarantees that normal banks do (i.e. insurance) it wouldn't really matter that it's not from the government, IMO.

On the other hand, I don't think anyone does.

Groxx2• 12 years ago

Lets assume you're correct.

Why is Bitcoin still around? Why didn't it vanish a long time ago? Why don't people see the truth?

lingben4• 12 years ago

I've learned to never underestimate the supply of stupidity in the world.

We could ask the same thing about a myriad other things: scientology, religion in general, creationism, denial of climate change, racism, etc.

acdha3• 12 years ago

Why is Bitcoin still around? Why didn't it vanish a long time ago? Why don't people see the truth?

2000: ”Why is pets.com still around? Why didn't it vanish a long time ago?”

2007: “Why are mortgage values so high? Why didn't they return to historical averages a long time ago?”

If bubbles were obvious and corrected quickly, they'd never happen.

richcollins• 12 years ago

The USD doesn't provide these protections either.

Customers will flock to the first exchange that implements cryptographic proof of ownership.

Where is your evidence that a current requires backing by a central authority. Gold has often functioned as a true currency without a central authority. We moved away from gold because it's not as easy to carry or divide as cash. Bitcoin has all of the desirable properties of gold and the desirable properties of cash.

lutusp13• 12 years 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?

Well, yes, I agree that paper money has these problems, but over time, in spite of many uncertainties, and in spite of occasional manipulation of paper money's value by the owners of the printing presses ... oh, wait, you're talking about Bitcoin, not folding money. My mistake.

A currency requires backing by a central authority.

Are you serious? Dollars don't have this property. The only thing that gives paper money authority and value is public faith and trust -- there is no "backing", in the way you're using the term. If a freely elected administration decided to manipulate the currency for some political objective, they could fatally undermine it. It's a matter of political discretion:

http://2012patriot.files.wordpress.com/2011/08/inflation-1.j...

rbehrends• 12 years ago

There are really two aspects to the term "currency" here, and you're kinda of right only with respect to one of them.

For one thing, Bitcoin (or any other digital currency) serves as an online replacement for cash. In that regard, lack of consumer protection is actually a feature; the possibility of chargeback is precisely what makes existing payment systems so exceedingly cumbersome. In fact, the fact that transactions are final (modulo contractual disputes) is exactly what you want in a large number of cases.

Obviously, as with real world dollar bills, you should never have more of a digital currency on hand than you can afford to lose, precisely because it can be lost or stolen. But the fact that physical money can be stolen isn't a bug, either. Nobody expects consumer protection against loss of physical money (outside of contract law and criminal laws against fraud or theft, of course, but those work for digital currencies also).

The other aspect is that of Bitcoin as a replacement for the dollar, the Euro, the Yen, etc. with built-in deflation because some people don't trust fiat currencies. This is kook territory and potentially worrisome, though still not necessarily a consumer protection issue: governments write consumer protection laws not for currencies, but for payment instruments, investment schemes, or contractual arrangements between businesses and individuals. And there's no reason why legislatures can't in principle also write laws to regulate Bitcoin traders.

jccooper• 12 years ago

No "regular" currency has any consumer protection at all. If there's a hole in my pocket and all my pesos fall out, they're gone, and ain't nothing the Banco de México can or will do about it.

You might go to the police about the pile of USD that was stolen from under your mattress, but you can do that for gold and yen and USB drives and potted plants, too. The US Treasury, however, won't help you a bit. Even if you send them photos of you holding the money.

It's the institutions that use fiat currencies that have "consumer protection". It's true that the financial system built around everyday use of domestic currency is more forgiving than current everyday use of Bitcoin. But that doesn't really have anything to do with the issuing authority; someone could offer reversible bitcoin payments on credit like AmEx or insure deposits like the FDIC (or SPIC, which is a more appropriate model). And probably they will. Except unlike USD you'll also be able to operate on a cash basis online, if you so choose.

There's not any particular protections for businesses or advanced uses in the conventional system, either. People hack and otherwise steal from banks all the time, and the banks usually just absorb the loss and try to get better. If you have your EUR in an Icelandic bank and they go under: sorry. And guess what: USD deposits in US investment accounts are not government-insured any more than the BTC in MtGox. Brokerages can (and usually do) have private insurance, and probably that will become desired in BTC exchanges. But have your bucks in an uninsured forex exchange and it goes poof? So do your bucks. Sorry, bad luck.

Why do normal brokerages and forex traders (which is more what a Bitcoin exchange is) not fail like Gox? Well, for one thing, they do, you just don't hear about it on HN. The real reason is that those are older systems and have more competence and experience, generally. The "regulators" require some basic competence, but not enough to save you from really bad management. Competence is what prevents a similar thing from happening to other exchanges out there. There's no magic in how the transactions are settled or who issues the currency. (Forex exchanges operate in a very similar environment, and generally work fine.) And you have to evaluate competence in a BTC business just like a fiat one.

Now, there's plenty of questions as to whether a deflationary money supply can work in the long term, and I kind of doubt it. But that's a different question from whether the crypto-currency mechanism, or a non-centralized issuer, works. They seem to work fine--if you pay attention. Running a bitcoin wallet is a bit like running a bank: not for everyone. A crypto that successfully manages inflation to preserve value will work just fine.

lutusp13• 12 years ago

A currency requires backing by a central authority.

Not so. The proof is that Bitcoin is functioning as a currency, and the Fed chair has recently said that the government has no right to regulate it:

Link: http://www.theguardian.com/business/2014/feb/27/janet-yellen...

Quote: "The Federal Reserve has no authority to supervise or regulate Bitcoin, chair Janet Yellen told Congress on Thursday."

Falsified.

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?

This is a logical error (http://en.wikipedia.org/wiki/Argument_from_authority). Do you have an opinion about whether astrology is real? You do? But you aren't an astrologer, so why do you think you have the right to your views? Don't you think you should ask an astrologer whether his field is valid?

It's not as though economics is a science, or that economic principles must be transferred from one person to another in a college classroom in order to be valid. If that were true, economics could not have come into existence in the first place.

dragonwriter3• 12 years ago

Bitcoin is functioning as a currency, and the Fed chair has recently said that the government has no right to regulate it

No, the Fed Chair (the chair of the Federal Reserve) said that the Fed (the Federal Reserve) had no power assigned by Congress to regulate it. She didn't say the government had no right (or more accurately, power) to regulate it. The Fed is not the same thing as the government.

figglesonrails2• 12 years ago

Agreed, trust and confidence //that it can be spent//. I don't think "trust and confidence" against terrible scenarios was a requirement 1,000 years ago, (FDIC formed 1933) yet people still had currency that was centrally issued and sometimes even based on gold/silver.

What you're really saying is "A currecy requires a central authority to absorb losses like the FDIC because it makes consumers want to use banks." I mean clearly, you aren't saying the FDIC should insure cash under peoples' mattresses in case they have a house fire that literally burns their wealth, right? The "backing" you're referring to only counts if you put it in a bank that complies with the FDIC, not by mere merit of owning the currency itself. In fact, there is absolutely no reason a person couldn't create a bitcoin bank and offer THE SAME PROTECTION. But who wants to do that when there is no Uncle Sam to pick up the tab for you?

EDIT: TL;DR: Bitcoin and keeping all your money as cash are effectively equivalent risk. In both cases, if you lose your wallet, you're screwed with no recourse. Hence, it is not by merely being centrally issued that risk automagically disappears.

marcoagner• 12 years ago

Do you know? http://opentransactions.org/

This is one of the great works towards making bitcoin more secure for who uses it and enable transactions where nobody has to trust a third party.

We can point all the problems about bitcoin - as fiat money has lots of it. But we can also work for improving our chances of a better economics future.

coldcode• 12 years ago

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

lutusp13• 12 years 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.

Zigurd4• 12 years 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.

rayiner4• 12 years ago

Predictable. Mt Gox implodes and its somehow the governments fault.

Zigurd4• 12 years 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.

philwelch12• 12 years 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.

Zigurd4• 12 years 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.

aristidb• 12 years 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.

rayiner4• 12 years 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• 12 years ago

What's Not Being Said About Coinbase:

https://www.quora.com/What-is-the-legal-and-technical-setup-...

CookWithMe• 12 years 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• 12 years 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.

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