I have to admit, I have been a non-believer in Bitcoin and I am not surprised that things are getting ugly in the
bigcon bitcoinistan. My skepticism, of course comes from an affinity for real money. And also being old enough to have seen the movie before — Second Life for instance had similar level of insanity around it. Who amongst today’s young remembers Flooz and Beenz? They had similar grandiose digital currency ambitions. Flooz was fronted by Whoopi Goldberg and by 2001 it was being investigated by FBI. Beenz raised a whopping $100 million from some of world’s richest and smartest people. I am not saying the crypto-currency is a terrible idea, but one shouldn’t underestimate the regulatory regimes and of course, one can’t really underestimate the nefarious who want to profit off the gullible. (Photo: via Wikipedia)
9 thoughts on “Mt. Gox & the Bitcoin Crash”
I’d feel more secure with hawala in a Casablanca souk.
I’ve never quite understood how bitcoin could ever have been used as a workable currency, other than holding it as an asset – the value of individual coins is too big – and the limited pool pretty much kills it for widespread use.
Individual bitcoins used to be worth fractions of a penny, so you could have made the opposite argument a couple years ago…
Currently bitcoin allows subdivision into 2.1 quadrillion units (if you run this agains current global M1 that comes out to about 2 cents/satoshi), which is plenty of accounting for now (makes calculations easy as it fits in a DP float, but the protocol itself uses 64-bit signed ints which is good to 9.2 quintillion units if more decimal places are needed). In practice we’ve seen people pretty easily switch from BTC to mBTC and presumably, uBTC if that becomes unwieldy. There are many real scalability problems Bitcoin faces, but absolute number of coins is not one of them.
It appears that the potential demise of the dollar as the world’s currency standard will push investors to the bit coin. Have to prepare for the worst.
Whether BitCoin or some other technology, the current paper money currency is unsustainable in an increasingly digital world. It will be disrupted and there is little that the wealthy and their bought politicians doing their bidding can do to stop it. I wish we lived in a just world, but that’s a fairy tail. The wealthy and rich are fearful that majority of the people on this planet will one day wakeup, and stop dancing to their tunes of religion, war, poverty and ignorance. If they don’t correct the income inequality of this world, the last phrase they will ever hear will be “Off With Their Heads” and their billions and millions will not save them. Let us all pray that it doesn’t come to that.
Charles E. Campbell
I think that I agree with. I think the current form of currency we have will be increasingly digitized. On your comments about the disparity in human condition, I agree that we all need to pause and think about how we are living as a planet.
You can’t possibly compare Flooz and Beenz to Bitcoin. Sure, they were digital currencies, but what makes Bitcoin special is that it is de-centralized, anonymous, and its value fluctuates against other currencies. As far as I know it is indeed the first with these important characteristics.
The other ones are basically gift card equivalents.
If you were here during the late 1999 time frame, those were essentially viewed and hailed as how Bitcoin is being hailed today. The analogy holds, the future outcome might be different. I remain skeptical, mostly because the whole Bitcoin thing is super shadowy.
Om, I think it’s quite possible that bitcoin (the currency) won’t survive, however the crypto-currency paradigm that Bitcoin (the protocol/technology) has brought together w/ the blockchain (enabling decentralized trust), as kirsch mentioned, is a quantum leap from all previous digital currencies, which were completely dependent on a centralized ‘bank’ for all its functions. Beyond obvious/fatal counterparty risk of those systems, decentralization allows Bitcoin to function much more like the Internet as a network/ecosystem that allows end-to-end (edge-based) innovation, and while services like exchanges and payment processors that reintroduce counterparty risk are one side, the other, is in extension of the protocol – colored coins, CoinJoin, multisig escrow, etc that will allow bitcoin (or future cryptocurrencies) to extend services while minimizing risk. (There’s a new proposal, Proof of Reserves, that would use the blockchain to create verifiable audit reports)
It’s still early days and it’s still the Wild West days (and we’re not done shaking out the “accidents of history” players). And because its money, cons, grift, fraud, and stagecoach robberies are going to be a fact of life, but the potential rewards will keep driving things forward, I think.
While I’m trying to remain skeptical/critical (fraud/risk is most of why payment processors exist and those are value adds that won’t go away w/ bitcoin), overall I’m pretty bullish because there is so much rent-seeking/pure profit taking at the moment and beyond merely providing an alternative/competition, crypto-currency actually tries to realign incentives by splitting various functions across decentralized parties and, as long as things happen on-chain, allowing a level of accountability/transparency that doesn’t exist in the current financial system.
I’m still thinking/working through this stuff, but I’ve been keeping notes. I think it’s less “shadowy” just quite complex (certainly there’s no consensus on the economics side of things): https://randomfoo.hackpad.com/Adventures-with-Bitcoin-iCzz3ITVFrY
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