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(The New York Times)   The collapse of the Bitcoin "bank" Mt Gox after the theft of $340 million worth of customer's coins is a GOOD thing for the currency according to Cameron Winklevoss. And if there is somebody proven to understand technology trends, it's a Winklevoss   (dealbook.nytimes.com ) divider line
    More: Strange, Cameron Winklevoss, bitcoins, Marc Andreessen, John Grisham, sovereign immunity, GSEs, Warren E. Buffett, denial-of-service attack  
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1634 clicks; posted to Geek » on 26 Feb 2014 at 10:35 AM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-02-26 10:38:41 AM  
I'm bettin' ole Cameron Winklevoss didn't lose his shirt with the collapse of Mt. Gox.
 
2014-02-26 10:39:48 AM  
So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?
 
2014-02-26 10:47:34 AM  
It looks like things have stabilized for now because people knew Mt. Gox was bad and priced it into the market, but long term I could see a mere rumor of an exchange being in causing a run on that exchange and putting it out of business. With Bitcoins it is easy to pull them out of the exchange and put them in a flash drive under the mattress, so it isn't quite like a real bank run, but if the currency takes a huge plunge and panic sets in I could see exchange after exchange folding if there is a rush to cash out ASAP.
Something like 75% of Bitcoins are out of circulation, so there are a LOT of coins that could be dumped on the market quickly, so it could plunge fast. Hell, just the other day when Mt. Gox went belly up, it dropped 20% and rebounded, so I wouldn't put it past some people to try to cause chaos just to get some short term gain. For example, the Winklevii could easily sell a big chunk of their holdings, cause panic selling, and then buy back in at a lower price and profit even more
 
2014-02-26 10:48:49 AM  
In addition to the clsoing of Mt. Gox, there is also news of a virus that infects computers and diverts bitcoins and other cryptocurrencies to the virus-makers.

The conspiracy theoriest in me thinks that the creator of bitcoin maybe had a plan to create the cryptocurrency and then if it ever hits it big, creating a way to reel in the profit by stealing it back.
 
2014-02-26 10:49:54 AM  

Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?


In theory, whomever stole the coins could easily be identified because every single transaction is publicly tracked.  While people do attempt launder bitcoins, it's much more difficult to obfuscate origins because you can't change the chain.  Regulations are in place in the physical world mainly because lots of things happen that are untraceable.
 
2014-02-26 10:50:08 AM  
(its full name derives from 'Magic: the Gathering Digital Exchange') 

Would it really take any thought to realize MtGOX is unlikely to derive from anything with the word "Digital" in it?
 
2014-02-26 10:51:16 AM  

Mad_Radhu: With Bitcoins it is easy to pull them out of the exchange and put them in a flash drive under the mattress, so it isn't quite like a real bank run, but if the currency takes a huge plunge and panic sets in I could see exchange after exchange folding if there is a rush to cash out ASAP.


If I am safe storing it in a flash drive under my mattress what's the point of putting it in an exchange?
 
2014-02-26 10:53:55 AM  

bhcompy: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

In theory, whomever stole the coins could easily be identified because every single transaction is publicly tracked.  While people do attempt launder bitcoins, it's much more difficult to obfuscate origins because you can't change the chain.  Regulations are in place in the physical world mainly because lots of things happen that are untraceable.


So the anonymous-ness of it is complete bullshiat?  Well, that is fairly hilarious.
 
2014-02-26 11:00:41 AM  

Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?


Regulations!

Enron
Madoff
S&L

Thank god for regulations!
 
2014-02-26 11:03:42 AM  

MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!


It's amazing what you can do when you own the regulators.
 
2014-02-26 11:04:18 AM  

Shakin_Haitian: So the anonymous-ness of it is complete bullshiat?  Well, that is fairly hilarious.


There are a lot of things about BitCoins that are bullshiat. Now, the ownership of the coins  is anonymous, in the sense that nobody knows that  you personally own the coin. But each wallet the coin passes through is logged in the blockchain. That's how the proof-of-work system actually tracks the coins.
 
2014-02-26 11:06:17 AM  

Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?


Explains that echo chamber effect.

Also, I think it's best to remove the winklevosses along with the dingleberries.
 
2014-02-26 11:09:11 AM  
Where is your digital god now, Bitcoin Farkers?
 
2014-02-26 11:12:01 AM  

MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!


YEs, crimes still happen despite laws and regulations...please try not to lose your monocle over that revelation.  But hey, tell me how even less regulation would prevent Enron Madoff or S&L?  Is the anser 'rational self interest'?  lol
 
2014-02-26 11:16:31 AM  

BizarreMan: Mad_Radhu: With Bitcoins it is easy to pull them out of the exchange and put them in a flash drive under the mattress, so it isn't quite like a real bank run, but if the currency takes a huge plunge and panic sets in I could see exchange after exchange folding if there is a rush to cash out ASAP.

If I am safe storing it in a flash drive under my mattress what's the point of putting it in an exchange?


FREEDOM. Or Rand Paul. Or something.
 
2014-02-26 11:17:05 AM  
All I know about Bitcoins is that they set up a machine to get them at South Station (Boston) and the guys who "work" there just get in my way when I am trying to get to the train.
 
2014-02-26 11:17:06 AM  

MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!


which one of those stole 6% of the USD out there?
 
2014-02-26 11:17:56 AM  

asmodeus224: YEs, crimes still happen despite laws and regulations...please try not to lose your monocle over that revelation.  But hey, tell me how even less regulation would prevent Enron Madoff or S&L?  Is the anser 'rational self interest'?  lol


I think the burden of proof, so to speak, is on determining the effectiveness of current or new regulations, not vice versa.

If you're going to make somebody's life more difficult, or somebody's business more expensive to run, etc, you need to provide a valid rationale.
 
2014-02-26 11:23:56 AM  

MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!


I know.  Scams that occur every once in a while are worse than ones that are happening monthly.
 
2014-02-26 11:26:16 AM  

Shakin_Haitian: I know.  Scams that occur every once in a while are worse than ones that are happening monthly.


You don't think there are any financial scams happening right now (or all of the time) involving US dollars?
 
2014-02-26 11:32:38 AM  

Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?


I think it's more of a lack of public oversight (note: the Fed does adhere to public oversight even if a lot of conspiracy theorists who also take the idea of lizard people seriously are unaware).
 
2014-02-26 11:35:50 AM  
The price has essentially bounced back already, though may slowly do more over time. There are other exchanges.

People are acting like Gox's shutdown is not bad, maybe even good, because it IS. They were badly managed and clearly corrupt. They help underscore the need for regulation and legitimacy, things that are in the courts of various states and countries now.
 
2014-02-26 11:38:18 AM  
I think that anyone who has played Eve Online long enough to experience bank thefts/collapses understands how risky any such nonregulated service is. And loss of confidence undermines any currency. People expect to be able to retain and use currency and one or two high profile collapses or thefts can undermine any system. The existence of banks for BitCoins is as problematic as banks for Eve ISK.

On the other hand the only reason I could see for a bank with BitCoins is for laundering. Anyone who actually gives someone some coins to hold for any other reason is courting trouble. Keep a couple backups on your own end and hold them for yourself. Look at the kinds of people who do business primarily through bitcoins and ask yourself "Do I really trust someone over the internet with this money?" If the answer is yes then I know a few Nigerian princes who would love an introduction.
 
2014-02-26 11:41:51 AM  
This is my favorite part:

Then on Monday, Ryan Galt, a bitcoin blogger, posted a document purporting to outline crisis strategy for Mt. Gox.  The bio on Galt's blog says he's "doubling down on Bitcoin like a damn fool," but apparently the hijinks shook him sober.  "This is catastrophic, and I am sorry to share this," he wrote. "I do believe that this is one of the existential threats to bitcoin that many have feared and have personally sold all of my Bitcoin holdings through Coinbase."

Go Galt!
 
2014-02-26 11:57:10 AM  

MugzyBrown: Shakin_Haitian: I know.  Scams that occur every once in a while are worse than ones that are happening monthly.

You don't think there are any financial scams happening right now (or all of the time) involving US dollars?


I don't have to worry about my bank just closing and running with my money.
 
2014-02-26 11:59:25 AM  
They still use bitcoins in the mildly dystopian, mildly science fiction show Almost Human.  That's all the proof I need.
 
2014-02-26 12:02:53 PM  

Shakin_Haitian: MugzyBrown: Shakin_Haitian: I know.  Scams that occur every once in a while are worse than ones that are happening monthly.

You don't think there are any financial scams happening right now (or all of the time) involving US dollars?

I don't have to worry about my bank just closing and running with my money.


http://en.wikipedia.org/wiki/Savings_and_loan_crisis#Home_State_Savi ng s_Bank_of_Cincinnati

huh?
 
2014-02-26 12:04:37 PM  

Shakin_Haitian: MugzyBrown: Shakin_Haitian: I know.  Scams that occur every once in a while are worse than ones that are happening monthly.

You don't think there are any financial scams happening right now (or all of the time) involving US dollars?

I don't have to worry about my bank just closing and running with my money.


Gox was an exchange, not a bank. You should not store funds indefinitely on an exchange. Gox was in no sense a bank.
 
2014-02-26 12:07:07 PM  

LasersHurt: The price has essentially bounced back already, though may slowly do more over time. There are other exchanges.

People are acting like Gox's shutdown is not bad, maybe even good, because it IS. They were badly managed and clearly corrupt. They help underscore the need for regulation and legitimacy, things that are in the courts of various states and countries now.


Tell people who got farked over when it collapsed, that it's good thing. Now maybe it's a good thing from a long term perspective, but there's nothing to prevent other exchanges from going belly up.
 
2014-02-26 12:10:41 PM  

Some Bass Playing Guy: LasersHurt: The price has essentially bounced back already, though may slowly do more over time. There are other exchanges.

People are acting like Gox's shutdown is not bad, maybe even good, because it IS. They were badly managed and clearly corrupt. They help underscore the need for regulation and legitimacy, things that are in the courts of various states and countries now.

Tell people who got farked over when it collapsed, that it's good thing. Now maybe it's a good thing from a long term perspective, but there's nothing to prevent other exchanges from going belly up.


Right, so use the exchange as an exchange, not a storage facility. Know what you are buying and what you are doing and you'll probably be fine.

Granted you're gambling with something unpredictable anyway, so you should be going into it expecting potential losses from the start.
 
2014-02-26 12:11:01 PM  

MugzyBrown: Shakin_Haitian: MugzyBrown: Shakin_Haitian: I know.  Scams that occur every once in a while are worse than ones that are happening monthly.

You don't think there are any financial scams happening right now (or all of the time) involving US dollars?

I don't have to worry about my bank just closing and running with my money.

http://en.wikipedia.org/wiki/Savings_and_loan_crisis#Home_State_Savi ng s_Bank_of_Cincinnati

huh?


Not sure what about this proves your point? Especially since it was a state temporarily closing a credit union to prevent a massive hit, and reopening it later, with borrowers reimbursed from the insurance.

As opposed to a an online, unmonitored and unaffiliated entity with no government backing or oversight just up and farking off with hundred and millions of dollars of people's monopoly money with no warning and nothing in place to protect the victims of said loss.
 
2014-02-26 12:12:54 PM  

Mad_Radhu: It looks like things have stabilized for now because people knew Mt. Gox was bad and priced it into the market, but long term I could see a mere rumor of an exchange being in causing a run on that exchange and putting it out of business. With Bitcoins it is easy to pull them out of the exchange and put them in a flash drive under the mattress, so it isn't quite like a real bank run, but if the currency takes a huge plunge and panic sets in I could see exchange after exchange folding if there is a rush to cash out ASAP.
Something like 75% of Bitcoins are out of circulation, so there are a LOT of coins that could be dumped on the market quickly, so it could plunge fast. Hell, just the other day when Mt. Gox went belly up, it dropped 20% and rebounded, so I wouldn't put it past some people to try to cause chaos just to get some short term gain. For example, the Winklevii could easily sell a big chunk of their holdings, cause panic selling, and then buy back in at a lower price and profit even more


That's the thing about Bitcoin "banks"  they aren't really banks in the traditional understanding of that term.Banks make their money by holding deposits and then lending that money out at interest   That's why a bank run is so devastating: by definition, if the bank is doing its job correctly, it doesn't have everyone's money lying around as cash on hand.   Bitcoin banks are really more like rented safety deposit boxes, which means any profitability they have will come from the rental fees, and given the low barriers to entry, the price competition on that service will mean it has razor thing margins, so there is little or no attractiveness to the big and more stable financial players
 
2014-02-26 12:14:31 PM  

bhcompy: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

In theory, whomever stole the coins could easily be identified because every single transaction is publicly tracked.  While people do attempt launder bitcoins, it's much more difficult to obfuscate origins because you can't change the chain.  Regulations are in place in the physical world mainly because lots of things happen that are untraceable.


If that's true then why are they the Black market currency of choice?  They seem MORE traceable than regular cash
 
2014-02-26 12:17:40 PM  
What is the advantage of Bitcoins?  Does it hold its value or something?
 
2014-02-26 12:19:29 PM  

NickelP: MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!

which one of those stole 6% of the USD out there?


that's the number that really caught me if $344 Million is 65 of the Bitcoin supply that means there is currently $5,733,333,333 or nearly SIX BILLION DOLLARS tied up in an entirely made-up currency with no sovereign backing or inherit value.   Something that was originally just a thought experiment by a very smart computer scientists, and at their peak, that number was more like twelve billion
 
2014-02-26 12:21:43 PM  

Codenamechaz: Not sure what about this proves your point? Especially since it was a state temporarily closing a credit union to prevent a massive hit, and reopening it later, with borrowers reimbursed from the insurance.

As opposed to a an online, unmonitored and unaffiliated entity with no government backing or oversight just up and farking off with hundred and millions of dollars of people's monopoly money with no warning and nothing in place to protect the victims of said loss


So Bitcoin would be better if they had the power to force every US taxpayer to fund 'insurance' for when a bank fails?

What about people who had more than the FDIC limit of insurance?

There is private insurance available for bitcoin holders by the way.  Amazing, and they don't need to tap the wallet of everybody in the country to do it.
 
2014-02-26 12:23:58 PM  
digital wallet
what is the POINT of a digital bank??
 
2014-02-26 12:25:11 PM  

MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!


Enron happened because Arthur Andersen was getting more money from consulting fees than from their audit work. They knew of the problems with the company, but they didn't want to give Enron a bad audit and lose their consulting projects with the company. At the time, there was no regulation against this obvious compromise of auditor independence, so tell me again how Enron is a failure of regulation.
 
2014-02-26 12:27:02 PM  

Gunny Highway: What is the advantage of Bitcoins?  Does it hold its value or something?


black market
tax avoiding
completely immune to government printing press created inflation

aka
nothing
 
2014-02-26 12:29:49 PM  

SigmaAlgebra: MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!

Enron happened because Arthur Andersen was getting more money from consulting fees than from their audit work. They knew of the problems with the company, but they didn't want to give Enron a bad audit and lose their consulting projects with the company. At the time, there was no regulation against this obvious compromise of auditor independence, so tell me again how Enron is a failure of regulation.


REALLY???
You going to blame the AUDITORS? HAHAHAHAH
How about blaming the people committing the crimes first?

Seriously.
Everyone on the planet KNEW that Enron was breaking laws.
A company with only growth and no downside? LOL
Not in reality.
 
2014-02-26 12:32:12 PM  

Gunny Highway: What is the advantage of Bitcoins?  Does it hold its value or something?


The entire value of bitcoins is based on what people think it's worth.

So you have a ton of people sitting on bitcoins thinking they'll gain more valuable and no one using them, which means no business is truly willing to support it.

On top of that, because the value is only based on what people believe it 's worth, its actual value is so volatile that it would be completely unusable in a real world market.
 
2014-02-26 12:39:08 PM  

RexTalionis: In addition to the clsoing of Mt. Gox, there is also news of a virus that infects computers and diverts bitcoins and other cryptocurrencies to the virus-makers.

The conspiracy theoriest in me thinks that the creator of bitcoin maybe had a plan to create the cryptocurrency and then if it ever hits it big, creating a way to reel in the profit by stealing it back.


*shrugs* anytime you attach a monetary value to something on the internet - people will hack it

that's just the way things work
 
2014-02-26 12:42:55 PM  

SigmaAlgebra: MugzyBrown: Shakin_Haitian: So this is happening like once a month now.  You think those libertarians are going to finally figure out why we have regulations or are their heads waaaaaaaay too far up their asses?

Regulations!

Enron
Madoff
S&L

Thank god for regulations!

Enron happened because Arthur Andersen was getting more money from consulting fees than from their audit work. They knew of the problems with the company, but they didn't want to give Enron a bad audit and lose their consulting projects with the company. At the time, there was no regulation against this obvious compromise of auditor independence, so tell me again how Enron is a failure of regulation.


Something tells me you won't be getting an answer any time soon.
 
2014-02-26 12:44:10 PM  
www.superpoop.com
 
2014-02-26 12:57:40 PM  
True believers are always crowing about the future of bitcoin as a currency rather than an investment. So I looked up the places that accept bitcoins in a 20 mile radius and found only 3.

1. shiatty web designer
2. Acupuncturist whose website was done by above
3. New age spiritual workshop (possibly a cult)

Wow! Truly the currency of the future.
 
2014-02-26 12:59:02 PM  
Buddy of mine just spent about 1300 or so setting up a mining computer.  I warned him I would be mocking him relentlessly and all he could do was sort of meekly say "I know."
 
2014-02-26 01:03:11 PM  
Another tread to be filled with coconut economists that misuse words like "deflation" when they have no idea what they are talking about. Woohoo.
 
2014-02-26 01:07:24 PM  

PDid: True believers are always crowing about the future of bitcoin as a currency rather than an investment. So I looked up the places that accept bitcoins in a 20 mile radius and found only 3.

1. shiatty web designer
2. Acupuncturist whose website was done by above
3. New age spiritual workshop (possibly a cult)

Wow! Truly the currency of the future.


Something new not widely accepted in your area? I am shocked, shocked!
 
2014-02-26 01:12:23 PM  

Gunny Highway: What is the advantage of Bitcoins?  Does it hold its value or something?


They do have some value in that they are, or can be, a useful tool for transferring money internationally while avoiding bank fees. The mining community gets sufficient reward from the coins they mine to motivate them to continue providing the computing power to manage all the transfers.

As I understand they cannot be duplicated and so if you receive a coin you aren't getting scammed - i.e. there isn't a scenario where the bank would reverse the transaction as sometimes happens in various forms of check fraud. The value in their supposed 'scarcity' isn't that the coin's value can be deflated away but in that it makes them a potentially useful currency transfer device.

There is some added value in that they can facilitate transferring money for illegal purposes in a way that can be more anonymous than using regular financial institutions.

That said - the currency needs the coin value to be enough to motivate miners, if it tanks to the point where the computing power costs more than the coins are worth then users will either:

A. Need to start paying transfer fees, which would defeat many of the advantages of BitCoin.
B. Switch to an alternative crypto currency where the coin value is still more than the computing power it costs to manage a coin's worth of transactions.

"B" is also a likely consequence of the fact the currency stores all transactions and will eventually require an absurd amount of storage capacity that would A: Prevent casual miners from contributing to the mining effort and B: add to the costs associated with running the system and the likelihood coins will hit a point where they aren't worth mining.

TL;DR : They have a value, it isn't because of what most people think it is, and the currency is doomed.
 
2014-02-26 01:15:30 PM  
Now, I've heard of Bitcoins and seen pictures on the internet but I haven't really delved into understanding it at all.  Is it just me or is this the Pyramid scheme of the   internet?
 
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