Don’t Stop Believing – Hold on to the Feeling

fools_and_money
On this chart, the line (which is scaled on the right axis) represents the price of bitcoin in US Dollars. The bars are volume on one of the larger bitcoin exchanges (in the free market paradise of Slovenia). I believe green means predominantly deposits, and red means withdrawls, but the coinerati don’t bother to explain their fucking overly complex charts. Click to embiggen if you give a shit.

The 25th is the day that bitcoin exchange Mt Gox shit the bed after being robbed. Well, another one bit the dust today, also robbed. I expect we’ll see another little dip and then the price will make another recovery. This behavior will continue until someone sucks the last exchange dry. Then all the US glibertarian bitcoin millionaires who have been prophesying the worldwide domination of the one currency to rule them all will turn to SNAP and Medicaid to survive.






97 replies
  1. 1

    These exchanges biting the dust are good things and will lead to better results. I had this glibsplained to me just this morning. Bitcoin cannot fail. It cannot be failed.

  2. 2
    jl says:

    Will the last version of the blockchain be in a currency museum someplace? Or maybe that will have to wait until after all the court cases are over?

    The old SF Mint would be a fitting place for a display.

  3. 3
    max says:

    but the coinerati don’t bother to explain their fucking overly complex charts

    Bqhatevwr.

    Then all the US glibertarian bitcoin millionaires who have been prophesying the worldwide domination of the one currency to rule them all will turn to SNAP and Medicaid to survive.

    LEVIATHAN!

    max
    [‘Strangely, the dog’s ears did not perk up.’]

  4. 4
    artem1s says:

    I had this glibsplained bitsplained to me just this morning.

  5. 5

    @artem1s: heh, indeedy that is a better term.

  6. 6
    flukebucket says:

    I keep thinking of the term “Prosecution Futures” and can’t stop smiling.

  7. 7
    Paul in KY says:

    The people out in Cali that found all those gold coins may have unearthed a stash that was stolen from San Francisco mint in 1900.

    If that is so, those coins are property of US government.

  8. 8
    Origuy says:

    @jl: Speaking of the San Francisco Mint, it looks like we know where those gold coins that were found in the Sierra foothills came from.

    The value of the coins was enhanced, according to a broker, because they are mostly uncirculated, mint condition. The face value of the coins adds up to $27,000. Those two facts are a match of the gold heist in 1900 from the San Francisco Mint.

  9. 9
    jl says:

    @Paul in KY:

    ” The people out in Cali that found all those gold coins may have unearthed a stash that was stolen from San Francisco mint in 1900.

    If that is so, those coins are property of US government. ”

    Well.. there you go. Who’s laughing at bitcoin now, huh?

  10. 10
    Amir Khalid says:

    I was expecting the whole bitcoin shebang to run into some kind of disaster, but not this quickly. (I am so glad I didn’t have any money to invest in it.) How many more exchanges are left, I wonder, and how soon will we hear of the next one going down?

    For what it’s worth, I think the bitcoin thefts have been carried out by a saboteur or team of saboteurs, some person or group looking to bring Bitcoin down by undermining confidence in it, rather than by someone looking to score a butt-load of bitcoins and get rich.

  11. 11
    max says:

    Lindsey Graham On Ukraine: ‘It Started With Benghazi’

    I knew it! Benghazi, Maidan, all these cheap Chinese food places with lousy eggrolls, this crappy bad weather, Mt. Gox and Huckleberry’s overflowing toilet.

    It’s a plot! Hillary did it! In the Lincoln Bedroom, with the iPhone!

    max
    [‘I’ll bet she even sexts Putin from it!’]

  12. 12
    srv says:

    I find your lack of faith in BTC disturbing.

    In other news, the teahadi’s heads are exploding over the $1B of dollar-coin going to Ukraine.

  13. 13

    Note to self: Form a dream team of a mercenaries and hackers to hunt down bitthieves. Advertise in Soldier of Fortune and techbro mags. Then steal the money that I collect up front and never chase down the thieves.

  14. 14
    Paul in KY says:

    @jl: Good point. If those had been uncirculated bitcoins, then theyd have to upload them or something?

  15. 15
    MikeJ says:

    in the story:

    According to a Flexcoin statement, the company “will attempt to work with law enforcement to trace the source of the hack,”

    It amuses me that the techno libertarians are losing their money through unauthorized access to computer systems and they go running to the gubbmint for help when it happens to them.

  16. 16
    jl says:

    @Amir Khalid: I am an economist, and therefore biased about motives. I think that the prospect of a very high ROI in terms of some real economic resources that could be consumed, invested or saved was the motive behind these projects.

    What would be the motive of these saboteurs, besides getting some money?

  17. 17
    Paul in KY says:

    @Amir Khalid: After working in data processing & reading up on some of these hacker teams & computer prodigies, it seems like it wouldn’t be all that hard for one of those entities to steal them just for giggles.

  18. 18
    Belafon says:

    @srv: Not just teahadi’s. I’m sure you’re not surprised, but try the comments at Daily Kos.

  19. 19
    Trollhattan says:

    @max:

    That just never gets old. You go, grrrl!

  20. 20
    SatanicPanic says:

    It mwould add to the general hilarity if thieves stealing bitcoin caused the currency’s value to collapse and everyone ended up with nothing. That would be awesome.

  21. 21
    dmsilev says:

    And yet, libertarians will continue to insist that things like the FDIC are evil and unnecessary.

  22. 22
    Kylroy says:

    @ranchandsyrup: I wholeheartedly agree that these crashes are good things that will lead to better results. I just think that “investors flee cryptocurrencies like rats from a sinking ship” is not the result your glibsplainer meant.

  23. 23
    C.V. Danes says:

    Noticed a couple of shows (Almost Human, Betas) throwing some bitcoin lingo in their dialog. Perhaps they may want to use something more generic going forward…

  24. 24
    googily says:

    I have an extended-family relative who is big into Bitcoin (and probably drug dealing, but that’s another story). Would be lying if I said I wasn’t kinda hoping he got wiped out thanks to Mt Gox, though apparently he’s “well diversified.”

  25. 25
    Amir Khalid says:

    @jl:
    What’s been the effect of these bitcoin exchanges being broken into? The value of bitcoins has gone down. Would you keep stealing something, if the effect of each new theft was to significantly drive down the value of what you just stole? Plus, what Paul in KY said #17.

  26. 26
    Trollhattan says:

    @dmsilev:

    “Audit the Fed!”

    —This has been a paid political message from the Amalgamated Union of Fed Auditor Wannabees (AUFAW).

  27. 27

    @Kylroy: That was my point to him, that his enthusiasm for more transparency, better processes, market self-regulation would be offset by losses through theft and/or devaluation.

    He tried to say that if he had bitcoins (he doesn’t), he’d “take one for the team”. I don’t believe that for a second. He’d have no choice but to take one for the team and he’d be upset.

    Is there any potential scenario which would be bad news for bitcoin, Kylroy? Domo arigoto Mr. Roboto.

  28. 28
    Jim says:

    I can’t help thinking about the gold rush of the past few years. Every day we heard about how great an investment gold was, pushing the price ever upward. Now that the price is waaay down, we don’t hear as much. Lots of people lost lots of money in recent months.

  29. 29
    Kylroy says:

    @ranchandsyrup: Yeah, I’d say anything is possible, but all it will take is Bitcoin and maybe one other cryptocurrency to flame out before nobody wants to put serious money behind it.

    Ironically, a lack of serious money behind it might work in their favor in the long run – if the goal is for these things to be *currency*, rather than tulip futures, having them exist in the background (and probably primarily among criminals, but whatever) without people treating them as an investment might be the best situation.

  30. 30
    Carol says:

    Question: If you steal BCs, what do you get? They aren’t worth anything if no one will give you anything in exchange for them, like money or diamonds, etc. If they’re not worth anything, why bother to steal them? Just because they’re there?

  31. 31
    srv says:

    This is just exasperating. You n00bs just do not get the New Reality.

    If a bank that held 10% of the wealth collapsed tomorrow and no one bailed them out, what would happen to the dollar?

    The quick recovery from Mt. Gox and rising price of BTC clearly demonstrates that this unregulated market is robust and stable regardless of these huge events. People not stuck in their dollar-denominated echo chambers will realize this over time while inflationary pressures of big government, debt and health care spending will leave your retirement menu to consist of various flavors of Science Diet.

  32. 32
    MikeJ says:

    @max:

    Lindsey Graham On Ukraine: ‘It Started With Benghazi’

    bin Laden himself said it started when the Marine barracks was bombed in Beirut and Reagan pulled all the troops out.

  33. 33
    Belafon says:

    @MikeJ: I’m pretty sure it all started with God forming man out of dust.

  34. 34
    MikeJ says:

    @Carol:

    If you steal BCs, what do you get? They aren’t worth anything if no one will give you anything in exchange for them, like money or diamonds, etc

    You can exchange them for real money.

  35. 35
    NonyNony says:

    @Carol:

    Question: If you steal BCs, what do you get? They aren’t worth anything if no one will give you anything in exchange for them, like money or diamonds, etc. If they’re not worth anything, why bother to steal them? Just because they’re there?

    Step 1 – Steal Bitcoins from one exchange
    Step 2 – Find another exchange to cash them out on before the exchange you stole them from discovers that they’re gone
    Step 3 – There is no Step 3 (Step 2 was basically “Profit!”)

    So long as the “Bigger Sucker Principle” holds (also known as the “Greater Fool Theory”), you’ll be able to unload the Bitcoins. If the market for Bitcoins drops low enough that it no longer is worth your time to steal them, you move onto another target. If the market picks back up again, you go back to stealing the Bitcoins until the market tanks again.

    At some point you’d think that security would improve on the sites that host the exchanges, but I doubt it. And, frankly, there’s no such thing as perfect security. This is why banks have things like “insurance”.

  36. 36
    Kylroy says:

    @MikeJ: …for now.

  37. 37
    scav says:

    @Carol: Isn’t prestige, elegance and general proficiency highly thought of in the hackerati / coderati class?

  38. 38
    🎂 Martin says:

    @NonyNony: And I’ll go one further and suggest that the perpetrator of all of this might be the still-unknown inventor of bitcoin. He creates a scarcity machine, waits for rubes to attach monetary value to said scarcity, makes money off of them in the process (you earn bitcoins by processing transactions), then steals the later valuable bitcoins, earning yet more bitcoins by processing his own theft.

    He doesn’t particularly care if he gets out early or late because his only investment has been his time and cleverness. He’s the only individual never to have to pay into the system.

  39. 39
    Xantar says:

    @C.V. Danes:

    Almost Human mentions them as a form of payment whenever some super crime is being committed. I’d say the show is using Bitcoins entirely appropriately.

  40. 40
    Paul in KY says:

    @NonyNony: How is this different from a ponzi scheme?

  41. 41
    MikeJ says:

    @Kylroy: And now is when these thefts are being committed. When they have no value at all some thefts will continue just just because it’s fun to fuck with people, but it will mostly die off.

  42. 42
    ericblair says:

    @scav:

    Isn’t prestige, elegance and general proficiency highly thought of in the hackerati / coderati class?

    Maybe it’s highly thought of, and there are very skilled people out there, but from the general level of discussions of IP networking, software development, security, and cryptography there are a lot of posers with social media accounts making most of the noise.

  43. 43
    JoeShabadoo says:

    Bitcoin is old hat. Now Dogecoin is where its at or is it Huntercoin or Hashcoin or Betacoin or Megacoin.

    All these cryptocurrencies have one thing in common, the people who made it mined the first chunk of coins and have cashed out earning shitloads of money.

    When libertarians go on about Bitcoins rareness making it worth money they always forget that Bitcoin isn’t special and a hundred other cryptos have already cropped up. They all can’t be worth something because while and individual crypto may be rare there is no rarity in aggregate. Unless everyone decides to stick to one for no good reason none will rise to dominate and they will continue to be the realm of glibs, hopeless speculators, and pyramid schemes operators.

    If in the unlikely event we are using crypto in the future I hope its Dogecoin. Love them shibes.

  44. 44
    catclub says:

    @NonyNony: “At some point you’d think that security would improve on the sites that host the exchanges, but I doubt it. And, frankly, there’s no such thing as perfect security.”

    That is the crazy thing about this. The whole point (I thought) was that each transaction is voluntarily entered into, and you cannot fake someone elses digital signoff on the transfer. Putting the coins on the exchange makes even less sense. Why not just keep them on your own computer (usb stick, memento-weasel) until you want to transfer them?

    Oh well. Glad I did not think I understood them.

  45. 45
    NonyNony says:

    @Kylroy:

    Ironically, a lack of serious money behind it might work in their favor in the long run – if the goal is for these things to be *currency*, rather than tulip futures, having them exist in the background (and probably primarily among criminals, but whatever) without people treating them as an investment might be the best situation.

    The problem is that this kind of peer-to-peer currency cannot exist if people don’t want it.

    It’s a chicken-and-egg problem. The whole POINT behind Bitcoin (and peer-to-peer currencies in general) is that there is no authority behind it guaranteeing its value. But if there’s no guarantee of a floor or a ceiling for the value, the value can only be what “the market” believes it to be. And so the only thing it has is the faith in the currency itself – faith in the technology, faith in the economic model ,etc. If you can’t get people into the currency, then it won’t work as a currency. But if people aren’t already in it there’s no way you’re going to get other people to risk it.

    This kind of thing cannot work EXCEPT as a bubble generating machine. There’s no control on the market to prevent bubbles at all – as soon as there is perceived value in it, it will inflate the bubble. Until something happens to destroy the market for it, at which point it pops. Perhaps multiple times, as people work to reinflate the bubble over and over again to try to cash out, and then the very act of trying to cash out pops the bubble again.

    (With a government backed currency you have Central Banks that are able to adjust things to keep bubbles under control. This is pretty much why Central Banks exist at all – because the boom-and-bust cycle of the 19th and early 20th century was FUCKING DEVASTATING to the nations of the world and a better model was needed.)

  46. 46
    dmsilev says:

    @🎂 Martin: I feel like starting a rumor that Bitcoin was invented by a collaborative team at the Fed and the NSA, with the explicit goal of suckering libertarians into wasting enormous amounts of effort and electricity ripping each other off.

    Oh, and it’s not really anonymous; you’re just meant to think it is…

    Fly, little rumor, fly! And I’m off to buy some shares in Alcoa. The Reynolds Wrap market is going places.

  47. 47
    scav says:

    @ericblair: the squelping of many true believers with vanishing magic beans, yeah, but I was addressing the payoff to those doing the vanishing. That lot can be / may be motivated for reasons other than monetary personal prophet, profit (interesting typo) that’s all.

  48. 48
    🎂 Martin says:

    @Paul in KY: Quite a bit different. A key component of a ponzi scheme is that the number of investors and the deposits taken are obscured, so nobody can see how much of their original investment is liquid, how much of the so-called returns are flowing back to investors or into their reserves.

    Bitcoin isn’t like that at all. You have a fixed number of bitcoin and you aren’t dependent on the fund manager to tell you what they’re worth, instead they’re worth whatever some other individual is willing to pay you. The problem here is that someone stole your bitcoin, and bitcoin exchanges aren’t FDIC insured or any other such communist thing.

    They claim that bitcoin is open and you can see the transactions laid bare, and that’s largely true, but the key to controlling money laundering and other such activities was the transaction cost associated with converting currency. In the old days, you had to take up some person’s time, so it was impractical to launder small amounts of money. So the Fed required that large transactions be reported and traced and let small ones go. Bitcoin is fully automated and distributed, so while in theory you can track each transaction, the transaction cost is so small that there is no disincentive to launder money in millions of tiny transactions which logistically becomes impossible to track. Whatever signal they thought they’d be able to detect due to an open transaction system reverts to nothing but noise. It’s easier to trace physical money than bitcoin quite often.

    That said, bitcoin is exceedingly clever. It’d be admirable if it wasn’t so destructive.

  49. 49
    Trollhattan says:

    @NonyNony:

    This is a great post. Frealz.

  50. 50
    ChrisH says:

    @dmsilev: I have proposed the NSA made bitcoin in the past. They invented SHA-256 hashing to begin with. And if hypothetically they knew there was some vulnerability in hash protocol, what better control than handing out a crypto currency everyone else thinks can’t have a backdoor.

    Article from Cornell professor and bitcoin enthusiast, though seems a bit more of a realist than most, who suggests the Mt.Gox fall was just straight up wildcat banking and incompetence.

    FT Alphaville (have to register a free account) having a good laugh that in reaction to the failure of the exchange of their currency meant to overthrow centralized reserve currencies they have proposed…creating something eerily similar to a central reserve.

  51. 51
    Paul in KY says:

    @🎂 Martin: Thank you, Martin. Excellent summation. How does one ‘make’ a bitcoin?

  52. 52
    NonyNony says:

    @Paul in KY:

    How is this different from a ponzi scheme?

    Ponzi schemes don’t involve outright theft that way. In a ponzi, you convince people to invest money with you. Then you convince a second group of people to invest money with you and use it to pay out the first group. Then you get a third group to invest money with you and use it to pay out the second group. And so on, skimming bits for yourself out of each group until the whole thing burns to the ground around you. (It’s like a Pyramid scheme, except in a Pyramid scheme you get each layer of investors to do the work recruiting new suckers for you).

    This is just outright theft. It’s more like robbing a casino and then “laundering” the money by using it to buy chips in another casino, then cashing back out and walking out the door.

    @catclub:

    The whole point (I thought) was that each transaction is voluntarily entered into, and you cannot fake someone elses digital signoff on the transfer. Putting the coins on the exchange makes even less sense. Why not just keep them on your own computer (usb stick, memento-weasel) until you want to transfer them?

    My understanding, and I’m not an expert on this, is that it’s for convenience. The exchanges are supposed to be a convenience to make spending Bitcoins easier (and to make cashing them out easier, as the exchanges provide a place for people to trade Bitcoins for dirty filthy government-backed currency).

  53. 53
    🎂 Martin says:

    @NonyNony: And because it’s a bubble machine, it’s impractical as an online currency. Menu costs are real, and McDonalds can’t reprice their product from hour to hour as the cost of bitcoin fluctuates all over the place.

    It can either be speculative or a currency. It can’t be both.

  54. 54
    JoeShabadoo says:

    @🎂 Martin: The guys who made bitcoin don’t need to steal it because they mined the first 6 million coins.

    After that they just needed to pump up its worth. It is why cryptos are appearing all over the place, the creators can make tons of money if it becomes worth a penny.

  55. 55
    NonyNony says:

    Damn it. I forgot comparing the purchasing of Bitcoins to going to a place where people place wagers on events would get me stuck in moderation. Grr…

  56. 56
    NotMax says:

    The “invisible hand’ has sticky fingers.

  57. 57
  58. 58
    ChrisH says:

    @🎂 Martin: The more accurate description, rather than ponzi scheme, is pump and dump

  59. 59
    catclub says:

    @dmsilev: “And I’m off to buy some shares in Alcoa.”

    I am starting to hate the carbon cost of running servers simply to generate bitcoins.

    Also, Alcoa is a huge user of electricity. The site their plants by hydropower dams – kind of like google that way. Are you thinking killing bitcoin will drop the price of that?
    Or tinfoil hat prices go up?

  60. 60
    different-church-lady says:

    @Amir Khalid:

    For what it’s worth, I think the bitcoin thefts have been carried out by a saboteur or team of saboteurs, some person or group looking to bring Bitcoin down by undermining confidence in it, rather than by someone looking to score a butt-load of bitcoins and get rich.

    Occam’s Razor is like a butter knife on you.

  61. 61
    Suffern ACE says:

    Yeah. I wonder if anyone thought to hire an auditor to examine the transaction control practices of these places. Seems convient to say “we lost your money and don’t know where it is and we have no physical place where you can find us”. How do we know the employees of the exchanges themselves didn’t run off with the coin.

  62. 62
    Kylroy says:

    @🎂 Martin: Agreed.

    So, brainstorming here – Is there any chance that Bitcoin could persist as the black – market currency of choice? All these drawbacks tell me why a legitimate business wouldn’t bother, but weighed against the costs of either money laundering or hauling around physical currency, it might still be worthwhile.

  63. 63
    aimai says:

    @Amir Khalid: I assume that the coins were stolen some time ago and sold on the market at a high price. Since there doesn’t seem to be any penalty for the holders of the notional bank that would be the way I’d do it, if I were them. You accept the bitcoins out the front, sell them out the back and then close up shop saying “sorry, everything was stolen.”

  64. 64
    JoeShabadoo says:

    @Suffern ACE: A lot of people think some guys at the exchanges ran away with it or were siphoning money. I have no idea really but it wouldn’t surprise me, they are currently in a legal gray area where everyone says its not their jurisdiction in many countries. The true believers are all talking about getting independent trusted auditors (not government related of course) on the new exchanges that are trying to pop up.

  65. 65
    JoeShabadoo says:

    @Kylroy: It will probably be one of several cryptos that are widely used in black market trade. Switching between cryptos is painless so the most used cryptos will be whatever is reliably worth something/anything. There is no reason to stick with bitcoins so it will probably be overtaken by whatever newcoin is popular but growing in value only for it to happen again at the next bubble.

  66. 66
    Roger Moore says:

    @Carol:
    The question is how long it takes people to discover the theft. From the sounds of it, there was a very long delay between the theft from Mt. Gox and it becoming public. It’s that suspiciously long delay that makes so many people think the theft was an inside job, and somebody working at an exchange would have plenty of opportunity to convert their ill-gotten gains to other currency.

  67. 67
    ChrisH says:

    @Kylroy: Bitcoin kind of feels like the payphones in the Wire. It is hard to trace initially but once you know the system your whole network can be compromised. Accounts can be made anonymously, but all transactions are publicly visible. If the government manages to figure out this or that bitcoin account is being used to funnel drug money they can see every account that received or sent money there, and eventually trace transactions to an exchange where someone tried to get real money. I’ve also heard if they are actively monitoring a bitcoin account that makes a transaction they can find your IP address.

  68. 68
    Kylroy says:

    @JoeShabadoo: So we could get to the point that even criminals have their own currency exhanges. Man, how glibertarians have strayed from their goldbug roota.

  69. 69
    🎂 Martin says:

    @Paul in KY: Bitcoins are cryptographic keys. There are these cryptographic blocks that need to be decrypted, which reveal the bitcoin keys. There are currently 25 bitcoin per block, and a block requires on the order of 3 billion calculations to complete. Effectively, an arbitrarily complex problem with a limited set of solutions was created and bitcoin exists to convert computing power into ownership of a solution. That solution is hard to acquire and therefore has value, because the number of blocks and the number of bitcoin is limited. That also establishes a price floor on the currency because the cost of the hardware to do the processing, plus the cost of the power and AC and all that is real and tangible. If the price of bitcoin falls below that floor, people will stop mining it, and new entrants to the market will have to bid the price up. Now, what’s keeping the whole thing from collapsing is Moores Law which implies that the cost of that computing power will go down over time, so even if bitcoin bottoms out, a little bit later it’ll again become profitable to mine. There’s a kinda cool market for dedicated bitcoin mining hardware. ASICs are much faster than general purpose computing. Working against this trend is that bitcoin was designed to pay out less over time, so the two sides stay pretty well in balance so long as there is activity.

    Additionally, you earn bitcoin by processing/auditing transactions. If Mt Gox is the equivalent of your broker, holding your actual stock certificate on your behalf, the equivalent to the NYSE is this whole network of computers that handle the transactions in a distributed manner. And these are public and can be explored.

    Because finding a key is a pretty hit-or-miss thing (mostly miss), most people join groups of miners that track the work each member does and then divides the found bitcoin proportionately. It smoothes out the payoff.

    This stuff really hits home with the uber-geeks. They can get their gaming rig hard-ons while trying to make money and stick it to the fiat currency defenders at the same time. RAND PAUL 2012!

  70. 70
    JoeShabadoo says:

    List of the billion cryptos out there now for people who don’t look into this stuff. These things are popping up everywhere because they are potential huge moneymakers for the creator/pyramid schemer. The cryptocurrency boom has caused prices of some computer components to rise quite a bit because of all the miners trying to get their fortune.

    And because Balloon Juice loves cute animals the awesome Dogecoin video.

  71. 71
    Roger Moore says:

    @ChrisH:

    FT Alphaville (have to register a free account) having a good laugh that in reaction to the failure of the exchange of their currency meant to overthrow centralized reserve currencies they have proposed…creating something eerily similar to a central reserve.

    There’s a reason the banking system looks the way it does; we learned what doesn’t work by trial and error. If something like Bitcoin survives, I predict it will eventually wind up with a remarkably similar structure. If the developers are smart, it will be by copying the existing system as much as possible. If they’re a bunch of pie-in-the-sky glibertarians, it will only happen by the same kind of trial and error process, one crisis at a time. Those who fail to learn from history…

  72. 72
    Morbo says:

    I feel that people don’t use the full name of Mt. Gox often enough: Magic the Gathering Online Exchange.

  73. 73
    Villago Delenda Est says:

    @NonyNony:

    History is so boring. No one cool knows anything about history. Instead, they’re busy being cool and not recalling tulip mania.

  74. 74
    ShadeTail says:

    I’ve shown this off before. A bitcoin billboard near my house:

    http://imgur.com/8BMFmpF

  75. 75
    Villago Delenda Est says:

    @JoeShabadoo:

    What they’re doing, in this:

    The true believers are all talking about getting independent trusted auditors (not government related of course) on the new exchanges that are trying to pop up.

    is setting up a government. They won’t call it that, of course, but that’s precisely what they’re doing.

    Beat these idiots senseless with a clue-by-four. Won’t take more than one whack to do it it, because they’re pretty much senseless already.

  76. 76
    chopper says:

    @🎂 Martin:

    i still can’t get over the fact that the currency itself is based merely on a number of computing cycles burned in the past. how that alone has any value at all makes no fucking sense at all.

    it’s like inventing a currency that’s earned by how long you idle your car. hey, i left my honda running all week and a CARCOIN popped out!

  77. 77
    Kylroy says:

    @chopper: It’s a little better than that – my understanding is that the cycles are used to check and double check transaction history within the Bitcoin world. In theory this makes the currency more secure, in practice crap like this happens. Or am I misunderstanding Bitcoin “mining”?

  78. 78
    Roger Moore says:

    @chopper:

    i still can’t get over the fact that the currency itself is based merely on a number of computing cycles burned in the past. how that alone has any value at all makes no fucking sense at all.

    It’s not a complete waste of computing cycles. The computing cycles spent on “mining” bitcoins are actually validating the transaction record, and the coins they get are a reward for making the system work. They legitimately want to make it hard to validate the transaction record because there are various kinds of fraud that people could carry out if they could take over the process of validating the record, so making it very challenging makes it harder for somebody to carry out that fraud. That’s the price you pay for having a distributed system.

  79. 79
    ericblair says:

    @Kylroy:

    It’s a little better than that – my understanding is that the cycles are used to check and double check transaction history within the Bitcoin world. In theory this makes the currency more secure, in practice crap like this happens. Or am I misunderstanding Bitcoin “mining”?

    Yes, the “check” is a verification of the transaction through public key encryption and is pretty quick. The whole point of mining is to ensure a time delay in a network: mining means calculating a hash of the blockchain by twiddling a value and recalculating until you get around 13 leading zeros by blind luck, which is tuned to take around ten minutes. If there was another way to guarantee a time delay without trusting other parties they’d use that. The reason you need a time delay is to solve what’s called the Byzantine General’s problem of coming to a common distributed decision with the presence of a certain number of cheaters/traitors. There’s a good readable explanation here.

  80. 80
    NCSteve says:

    Bitcoins: the Esperanto of money.

  81. 81
    ChrisH says:

    By the by, if you thought the exchanges were the only way bitcoin drains money from rubes, The money being thrown away on mining equipment is probably an even worse scandal. Google “Butterfly Labs” sometime. They accepted pre-order payments and then got around to actually delivering the mining rigs sometimes over a year later.

    One person I know waited six months then successfully obtained their pre-order by saying they were cancelling it. Within 24 hours got back a message that was essentially “Your order has been shipped today, no refunds, hope you enjoy your miner.”

    Butterfly Labs is actually pretty good because they eventually had an actual product. Stories are out there of Potemkin companies promising ultra rigs, getting a 5 figure down payment (in real money, of course) then evaporating into the net.

  82. 82
    ChrisH says:

    @ericblair: It’s not so much a delay of time but a proof of work. If you wanted to manipulate bitcoin transactions, you have to expend resources in order to do so and control a significant portion of all mining on the planet.

  83. 83
    Roger Moore says:

    @NCSteve:

    Bitcoins: the Esperanto of money.

    They’re more like the gold standard, without the tangibility and real world utility of gold.

  84. 84
    jl says:

    @Amir Khalid:

    From what commenters here said, who seem to know about it, and links they provided, the thefts, or embezzlements, have all occurred entirely at exchanges between bitcoin and real world money. Partly because the exchanges are a very weak link in the security system. I’d guess the bitcoin was cashed asap into real world money. Though to be honest, I have not ready anything that gives enough detail to know for sure.

  85. 85
    chopper says:

    @Kylroy:

    the cycles are used to check and double check transaction history within the Bitcoin world.

    which is pretty much meaningless to everybody.

  86. 86
    chopper says:

    @Roger Moore:

    at least with tulips you can grow a pretty flower. plus, planting a row of them attracts deer, which you can shoot and eat.

  87. 87
    Kylroy says:

    @chopper: It’s not meaningless to people with Bitcoins. The only thing that makes this fiat “currency” worth anything is the promise of accurate accounting, and they reward people for devoting processing power to ensuring the accounts are accurate.

    You don’t have to think cryptocurrency is anything but an elaborate pyramid scheme (Lord knows I feel that way), but saying that the “mining” is completely pointless busywork for processors is not accurate.

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    NotMax says:

    @chopper

    And (somewhat) edible, to boot.

    #1#2

  89. 89
    chopper says:

    @Kylroy:

    It’s not meaningless to people with Bitcoins.

    exactly. the vast, vast majority of people don’t own bitcoins. the process you speak of is pretty much meaningless to everybody.

  90. 90
    Calouste says:

    @ChrisH:

    As usual, the most reliable way to get rich during a gold rush is to sell overpriced equipment.

  91. 91
    Kylroy says:

    @chopper: Well yes, the workings of a system are meaningless to people not participating in the system. I suppose somebody could decide Sabermetrics is stupid because they don’t follow baseball. Or that “SETI at home” is meaningless because they don’t follow astronomy.

    Again, not defending the concept of cryptocurrencies. But the “mining” process is a central part of the idea, not just a time-waster.

  92. 92
    chopper says:

    @Kylroy:

    look, if some libertarian douche showed you his wallet full of ‘galtbucks’ that were supposed to compete with the dollar, but had no actual backing or anything, you’d say ‘they’re just a bunch of pieces of paper. they have no intrinsic value whatsoever’. if the guy said ‘yeah they do, they have holograms on em!’ you’d laugh yourself silly. holograms or microprinting don’t add anything really to the value of a piece of paper.

    whether the CPU cycles used to create a bitcoin are just wasted or are used for the crypto, intrinsically the currency is still merely the embodiment of a bunch of used CPU cycles. that makes them laughable from the get-go.

  93. 93
    Kylroy says:

    @chopper: I think we’re circling back here to the point of agreement – issuing currency is a joke if it’s not backed by either a good or a government.

  94. 94
    ChrisH says:

    For everyone who claimed all that mining is wasted I say, take that!

  95. 95
    Kylroy says:

    @ChrisH: Bitcoin – also giving us “dehyrdrated” fruit. Never would have guessed Chingy was into both cryptocurrencies and fruit preservation.

  96. 96
    moops says:

    The ultimate hang point for BitCoin is when the reward coin for mining is far less than the effort it takes to verify transactions. The algorithm is also tuned to get increasingly difficult over time. Verification gets longer and longer as BitCoins circulate. Right now most BitCoins don’t circulate much.

    ..and then the wall, when all the BitCoins have been mined, who will bother running the transaction verification?

  97. 97
    Paul in KY says:

    @🎂 Martin: Thank you, Martin. Must say this sounds completely fucked up as a ‘currency’.

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