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Belz...
26th September 2012, 02:58 AM
That still doesn't make sense to me. Splitting a bitcoin worth $10 will only give you two half-bitcoins worth $5 each.

No. If it gets split, then it's because there's more people to own bitcoins. Each half bitcoin might be worth 6$ instead, making everybody who held them a bit richer.

Laeke
26th September 2012, 03:22 AM
So, excuse me for the question, but how is bitcoin doing as a currency then, as in a currency to buy stuff, to exchange against goods & services?
Isn't that what it is supposedly for?

gnome
26th September 2012, 04:01 AM
The originators would have to mine/buy their bitcoins just like anybody else and would have no special advantage over anybody else.

Except the special advantage of mining bitcoins when they were super easy to mine.

Just because the originators failed to design growth in the bitcoin algorithm doesn't mean they did it on purpose to rip off buyers. It just means that they didn't appreciate the desirability of growth. A lot of people think that currency doesn't need to be able to grow (just ask Tippit).

It doesn't mean it for sure, but when lacking that feature provides a tremendous financial incentive for the originators, it makes it rather suspicious.

John Albert
26th September 2012, 09:24 AM
Neither is the stock market but speculating in stocks is gambling in its purest form (not that anybody in the stock market will describe it that way).


Nobody in the stock market will describe it as pure gambling because it's not just pure gambling. Gambling is simply betting on some measure of uncertainty for the chance of acquiring more money. The stock market is far more complex than that and actually serves some positive benefits to the overall marketplace.

The stock market exists to allow public ownership of demonstrably profitable corporations, both to provide an influx of capital for business and to allow stockholders to share in the profits.


Yes, that is why it was created and it may yet fulfill that role but ATM the opportunities to buy things with bitcoins is too limited. The only other possible use is as a speculative investment and that seems to be its main role so far.


Why do you think "the opportunities to buy things with bitcoins is too limited"?

If Bitcoin has such potential as a useful, workable currency, then why do so few merchants accept it? Why doesn't PayPal accept it? Why doesn't Amazon accept it? Why doesn't the grocery store accept it?


It's been shown conclusively that the originators would gain nothing from creating something just for "a tiny cabal of users who invested nothing initially".


Really?

Where has that been "shown conclusively"?


The originators would have to mine/buy their bitcoins just like anybody else and would have no special advantage over anybody else.

It is incomprehensible that they would set up a "scam" that they couldn't profit from.


The originators themselves are part of the "tiny cabal of users" originally allowed to mine huge fortunes of bitcoins while the difficulty was extremely low and competition nearly nonexistent. The originators awarded themselves and their friends an unfair opportunity at the expense of people who would have to buy in with actual cash later.

It's not like they created a profitable company that attracted investors. There's no company at all, no employees, no assets, no profits. All they created is a fake funny money scheme designed to appeal to libertarian gold bugs and other currency cranks, that has proven to be a dismal failure in the purpose for which it was originally created.

Or maybe they were just misguided about economics and actually believed the system they were setting up would work as a currency. Maybe, but looking at how this thing has actually been set up to operate, I seriously doubt they could have been so naïve.


I agree but "fraudulent" means that you are falsely representing something (concealed risk, fraudulent product, false odds etc).


Lots of details about Bitcoin's operation are obscured from the public, simply by virtue of its technical complexity. To understand how it works, one would need to (at the very least) read the whitepaper, which requires some knowledge of arcane cryptography. Then there are the economic implications, which are even more complicated than that.


With bitcoin, all of the risks are known (including insecure bitcoin exchanges).


The full extent of those risks is just becoming evident now, as we see the news of more and more Bitcoin-related scams in the mainstream media. The risks were largely unknown for the investors who got in a year and a half ago when the popularity was just starting to blow up, prior to the "hacking" of Mt. Gox, Bitcoinica, MyBitcoin, etc. Yet we still have people proselytizing Bitcoin as if it's the new economic paradigm that will replace national currency, obviate bank fees, end war, and solve all the world's economic woes.


Bitcoin exchanges that lack proper security are not a "design feature" of bitcoin. They are hazards of the market. Nothing about the bitcoin algorithm makes exchanges more or less secure.


This argument that you, EGarrett, Tippet, and other Bitcoin advocates keep repeating is based on a compositional fallacy (http://en.wikipedia.org/wiki/Fallacy_of_composition).

Much is made of the security of the crypto used in the Bitcoin algorithm, but that's only partially relevant (at best) to the overall security of the economy as a whole. There's more to that economy than just the software that people run on their computers. If the entirety of Bitcoin was just the software, it would amount to nothing but a computer game with absolutely no purpose in the real world. Without exchanges, bitcoins would be completely infungible with other currencies, hence completely useless. So the exchanges are 100% mission critical services to the operation of this economy. If we're discussing the situation of bitcoins as a "currency" or a "commodity" exchangeable in the marketplace, then you must consider the entirety of the system including the exchanges.

Arguing that the exchange security is irrelevant is like arguing that car crashes are irrelevant to the safety of automobiles because of the reliability of the internal combustion engine.

When you really get down to it, there are 2 root causes of Bitcoin's insecurity: its extralegality, and its lack of central organization. With no applicable laws and no authority to provide oversight or accountability, there's absolutely nothing to prevent theft, graft or fraud at the highest levels of Bitcoin's financial services industry.


Paypal or some form of government regulation might make buying and selling bitcoins safer but current policy seems to be that bitcoin users are on their own.


Why do you suppose that is?

Why do you think none of the major retailers are interested in welcoming Bitcoin?

Why do you think governments are not interested in getting involved with this rogue currency whose enthusiasts hype it as a decentralized, anti-authoritarian, alternative shadow economy that people can use to evade taxes and purchase contraband?


You have never successfully argued this.


By what standards do you determine that?


When the differences between bitcoin and the distinguishing features of pyramids are pointed out you claim that bitcoin shares some of the features of a pyramid.


Yeah, that's what I've always argued.

The only inflow of money into Bitcoin comes from investors. It contains no assets and generates no profits. Thus, investors pay to get into an economy which is dominated by a small class of users amounting to less than 1% of all, who collectively hold over 50% of all value in the system, yet who've paid nothing to gain entry.

Thus, it draws in funds from investors at the bottom and concentrates that wealth among a tiny few barons at the top. The fundamental architecture is just like a pyramid scheme.



The truth is that it is just person A selling X coins to person B at an agreed price. That's as linear as you can get. It is exactly what happens in the stock market or the trade in any commodity.


See, what you're not getting is that Bitcoin is really just a metaphor, a pretense of being a currency. It's not a real currency because it lacks most of the properties of a real currency, most importantly general acceptance. In that sense, it's no more a "currency" than Linden Dollars, WoW gold, arcade tokens, or carnival tickets are "currencies." Its function is so ill-suited and its usefulness is so limited that calling it a "currency" is really a misnomer.

The fundamental difference between Bitcoin and the stock market is that in the stock market, investors buy shares of real companies with real, material assets and demonstrable profits, whereas in Bitcoin there is no company with no assets and no profits.

Likewise, the difference between Bitcoin and commodities trading is that in a commodities market, investors are buying shares in an actual, physical marketable good with real-world use as opposed to an immaterial, symbolic placeholder for wealth.

With Bitcion, there is no physical commodity at all. The entire Bitcoin market system is based on an idealistic fiction with unrealized promise: Bitcoins represent nothing more than a ledger balance of numbers completely disconnected from any real-world value beyond what some small segment of the population happen to believe BTC are worth.

In that sense, a "bitcoin" is not so very different from a "ticket" sold to a "passenger" on the Airplane Game. The primary differences are the metaphor being used ("a currency" as opposed to "an airline,") and the mechanics of the scam (an engineered economic bubble rather than an MLM scheme).

John Albert
26th September 2012, 10:18 AM
Of course, like any commodity with a limited supply, bitcoin can be cornered in the market and it appears that this is the case.


Of course it appears that way! Just look at the way the thing was designed. Bitcoin was specifically engineered to be a cornered market.

All one needed to do was get in early enough and one can wield total control over the entire thing. In other words, the creators and their friends created a homebrewed economy based on nothing, and set themselves up as bank barons of that economy. On top of that, they've convinced quite a few suckers to buy into their little fantasy gimmick with real cash.


This does not mean that bitcoin was designed to be a cornered commodity and it doesn't make bitcoin a ponzi or pyramid scheme.


I can't believe the level of denial at work here.

First of all, I specifically said it's not strictly a Ponzi scheme or a Pyramid scheme, but that it shares characteristics with both of those models. Yet you keep on begging the question (http://en.wikipedia.org/wiki/Begging_the_question) with these remarks.

The entire system was engineered to be an easy-to-corner commodity right from the start! Everything about its design points to that purpose: the "mining difficulty factor" that started off "ridiculously easy" but increases exponentially over time, the restricted quantity of total units, the function of the units being "splittable" like stocks...

For what other reason do you suppose they would have engineered this thing with a built-in economic crisis like that?

Come on, man. Use your head. Just try looking at this thing with a critical mind for once.


That sort of speculation can be made of any company.


BUT BITCOIN IS NOT A COMPANY!

It's an engineered economic bubble!


You never know when a stock price change is due to changing market conditions or if the company plotted some illegal activities.


But here with Bitcoin we can actually see how the market is gamed, right from the start!

Look at this graph:

http://oi40.tinypic.com/vd2t5k.jpg

What does that tell you about the economics of the way this thing has been planned out by its creators?


All we know is that it is (theoretically) possible for the top 1% of bitcoin holders to act as a cartel to control the price of bitcoins.


We also know its economics are totally bogus, rendering it practically useless for its stated purpose.

We also know it's extremely volatile, given to huge swings in valuation consistent with large scale manipulations of the market.

We also know that all the major monetary exchanges associated with Bitcoin are extremely untrustworthy; at the very least they're outrageously irresponsible, if not outright corrupt themselves.

Worst of all, we know the market is totally unregulated so there are no checks and balances against fraud, theft and deception.


No, the entire system was designed to be a peerless currency. It just happened to be more useful as a commodity for speculative purposes so far.


A "peerless currency"?

Actually, its design is singularly poor for use as a currency, with volatility akin to that of a continuously collapsing economy.

Maybe it's a scam intended to masquerade as a currency, or maybe it's an honest attempt at an alternative currency that's so horribly ill-conceived that it just happens to behave like a scam on accident.

Which seems more likely?

Does it even matter, from a practical perspective?

Just look at how many people have already been fleeced and much money has already been lost to this thing. Do you really mean to tell me that doesn't faze you in the slightest?


The airplane game was just another way to gamble with your money. If you got in and out quick enough, you could make an eight-fold increase in your money.


The Airplane Game was a con game, a scam. If you refuse to recognize that then, I have no reply other than to call your business ethics into question yet again.


Most games of chance rely on the average punter being unable to calculate the odds and therefore, being unable to decide if a bet is "fair" or not. If a closed community decided to play the airplane game (this was apparently popular with the monied classes), then everybody had the same chance of winning or losing. This makes the airplane game "fair" unlike anything you will find in a casino.


No, pyramid schemes are not "fair" at all. The perpetrator who starts the thing has the decided advantage over the people he collects money from. The farther you go down the food chain, the more "unfair" the pyramid scheme becomes. That's the reason why it's generally considered a scam, included in most lists of confidence games, and deemed illegal in many countries.

It sounds to me like you're using this "gambling" excuse as a cheap rationalization for engaging in some really underhanded, predatory business dealings.


That still doesn't make sense to me. Splitting a bitcoin worth $10 will only give you two half-bitcoins worth $5 each.


You seem unfamiliar with stock market economics. The purpose of stock splits is to increase liquidity in times of extremely high valuation, in order to maintain upward momentum during a stock run.


If your claim is that "splitability" is likely to make the value of bitcoins rise faster than otherwise expected then I doubt that I will hear a bitcoin buyer complaining.


My complaint is that it allows the wealth to continue consolidating in the hands of the holders even after the money supply has stagnated.


Yes, bitcoin would be more successful as a currency if it had perpetual growth.


Limiting its growth is a detrimental flaw. Not only did they limit its growth, but by capping its availability, they've deliberately built an economic crisis into their market.


Just because the originators failed to design growth in the bitcoin algorithm doesn't mean they did it on purpose to rip off buyers. It just means that they didn't appreciate the desirability of growth.


They sacrificed stability and sustainability for the apparent purpose of creating overvaluation, and calculated that function to effect an economic bubble.


A lot of people think that currency doesn't need to be able to grow (just ask Tippit).


"Ask Tippet"?

I'd just as soon ask Bill O'Reilly about celestial mechanics, or ask the Insane Clown Posse to explain the Standard Model of particle physics.

Laeke
26th September 2012, 10:29 AM
So, did some search on the thing, and well, the real currency use seems still to be buying drugs.

Also, the history of bitcoin is kind of hilarious, between the fact that it is hardly cost-sensitive to mine with the silly arms-race going on ("miners" buy computers solely dedicated and engineered to that end) and the few exchanges sites being hacked over and over again, sometimes it would seem by their own creator... but no-one called the police despite a six figure amount in USD of BTC being stolen, and most everyone readily accept the explanation of the possible culprit about a Chinese relic salesman having access to his accounts (!)

Bitcoin sounds like an interesting experiment, from which we may learn something, but future currency it is not.

EDIT: Holy ****
Youtube video of a man "cooling" his Bitcoin mining rig with liquid nitrogen (http://www.youtube.com/watch?v=Ut8mwo7vGBI)

John Albert
26th September 2012, 11:12 AM
Wait a minute.. he's just dumping it all over the floor?!? What an idiot.

ehcks
26th September 2012, 12:03 PM
Wait a minute.. he's just dumping it all over the floor?!? What an idiot.

Without leaving the room. So it's both useless and suicidal.

John Albert
26th September 2012, 02:23 PM
Actually, I don't think that would necessarily hurt you unless you stood in a puddle of it for long enough to get frostbite.

Here's the proper way to cool a CPU using LIN:

QmSBaizEqkk

Laeke
26th September 2012, 02:47 PM
Actually, I don't think that would necessarily hurt you unless you stood in a puddle of it for long enough to get frostbite.

Here's the proper way to cool a CPU using LIN:

QmSBaizEqkk

Read that it can be dangerous. It's also a totally inefficient way of cooling a computer which may suffer from the treatment.

On another note:
There's apparently a bitcoin forum (bitcointalk (https://bitcointalk.org/)) where scamming happens every month or so. There were recently a huge collapse of Ponzi schemes because of the default of a major one (promised 7% a week!). Numerous other "investments opportunities" folded while they supposedly were different operations, "insurances" were not met because it turns out they were invested in the top Ponzi after all, and the man running the big operation (screen name: "Pirate"... I kid you not!) continued to have another "venture" at the side (he's buying GPU cycles to mine Bitcoin and offers 1.2BTC for each 1 mined... in short, a bitcoin laundering operation).

People on a message board, sometimes very young and with no credentials are able to convince people to "invest" their bitcoins in the several thousands (which could translate to a reasonable sum in USD) without any sort of business plan whatsoever, all this while giving updates on IRC. And they learn slowly (https://bitcointalk.org/index.php?topic=103573.0) (Warning: Not Safe For Sanity). The mind boggles.

This may not be an indictment of bitcoin itself, but it is not totally unexpected considering how little real-life use it has so far.

Belz...
26th September 2012, 05:05 PM
The only inflow of money into Bitcoin comes from investors. It contains no assets and generates no profits. Thus, investors pay to get into an economy which is dominated by a small class of users amounting to less than 1% of all, who collectively hold over 50% of all value in the system, yet who've paid nothing to gain entry.

I think this is a very crucial point. In the event that you're right and the original users of bitcoins withdraw their money value from the market, they are essentially going to get 100% of the value of the entire market for putting in 0% of the investment, while the people who collectively put in 100% of the investment will get 0%.

Sounds like a scam to me, assuming this is the plan.

Belz...
26th September 2012, 05:16 PM
The Airplane Game was a con game, a scam.

Apparently, there is no such thing as a scam.

Belz...
26th September 2012, 05:17 PM
They sacrificed stability and sustainability for the apparent purpose of creating overvaluation, and calculated that function to effect an economic bubble.

It's odd, isn't it ? Most economies thrive well under inflation, if such inflation is somewhat controlled. Given my previous post about 100% vs 0%, it's hard to believe the artificial deflation, in addition to all the features of BTC was accidental.

Belz...
26th September 2012, 05:23 PM
Also, the history of bitcoin is kind of hilarious, between the fact that it is hardly cost-sensitive to mine with the silly arms-race going on ("miners" buy computers solely dedicated and engineered to that end)

Since I assume they are buying high-end machines, that's a hell of an investment considering how few BTCs are generated now.

Speaking of, how fast are those things generated as of today ?

gnome
26th September 2012, 08:40 PM
I'd like to borrow from somethingpsionl0 said that I think might better separate the concept of a scam from a fraud. A fraud is done through outright lying--the money isn't used for what they say it is, for example.

A scam could be defined as something that has a transparent operation but where the implications are concealed.

psionl0
26th September 2012, 09:13 PM
So, excuse me for the question, but how is bitcoin doing as a currency then, as in a currency to buy stuff, to exchange against goods & services?
Isn't that what it is supposedly for?There aren't many "real world" businesses that take bitcoin but there's a few (https://en.bitcoin.it/wiki/Real_world_shops).

Here is a motel in the US (http://www.monarchmotel.com/motel-policies/#payment) that accepts bitcoins.

psionl0
26th September 2012, 11:42 PM
There's apparently a bitcoin forum (bitcointalk (https://bitcointalk.org/)) where scamming happens every month or so. There were recently a huge collapse of Ponzi schemes because of the default of a major one (promised 7% a week!). Numerous other "investments opportunities" folded while they supposedly were different operations, "insurances" were not met because it turns out they were invested in the top Ponzi after all, and the man running the big operation (screen name: "Pirate"... I kid you not!) continued to have another "venture" at the side (he's buying GPU cycles to mine Bitcoin and offers 1.2BTC for each 1 mined... in short, a bitcoin laundering operation).Is this supposed to be something unusual?

My spam folder is full of "get rich quick" scams. Bitcoin holders are just as likely to be targeted by scammers as anybody else.

psionl0
27th September 2012, 12:01 AM
I'd like to borrow from somethingpsionl0 said that I think might better separate the concept of a scam from a fraud. A fraud is done through outright lying--the money isn't used for what they say it is, for example.

A scam could be defined as something that has a transparent operation but where the implications are concealed.Sometimes the word "scam" is used to describe a scheme that (although above board) nets the schemer money without delivering anything that is particularly useful. The word "scam" in this case is subjective and depends on what you mean by "particularly useful". If that was the context that "scam" is used in this thread I would probably have no problem with it.

However, most of the posters here are using the word "scam" to imply that there is something fraudulent going on (and it is all to do with the true motives of the originators). That position can not be justified.

Laeke
27th September 2012, 12:13 AM
Is this supposed to be something unusual?

My spam folder is full of "get rich quick" scams. Bitcoin holders are just as likely to be targeted by scammers as anybody else.

Are they?
The major "exchanges" sites all seem to have an history of being hacked.
And while bitcointalk may not be representative of all bitcoin users, the number of scams running there is unnerving. The one I mention, by pirate, was supposedly concerning 500.000 BTC. Maybe an inflated figure but we're speaking of roughly 5% of all the BTC circulated (approx. 10m) lost to something barely more sophisticated than a Nigerian prince e-mail: I mean really... a 7% weekly return without any details, for a currency that so far have very few prospects of investments, and all this without any proper paperwork?

The relative "confidentiality" of the Bitcoin system, coupled with the fact currency movements are "final" and can't be overturned does not alleviate those problems, on the contrary.

But heh, as I said, maybe it's not an indictment of the whole system: maybe just of some of the crowd heavily invested in BTC.

Since I assume they are buying high-end machines, that's a hell of an investment considering how few BTCs are generated now.

Speaking of, how fast are those things generated as of today ?

As of June, if what I read is correct, 7200btc / day. Maybe a tad less today.
"Blocks" will be halved somewhere around December, yielding 25 BTC instead of 50 today.

"Butterfly Labs", who apparently sell "high end" mining rig, sell a computer for 15.000$ and has pre-orders for one at 30.000$.
And well, their CEO may or may not have a past (https://bitcointalk.org/index.php?PHPSESSID=7aaf51e88f8872f459b11a8d433b3b 86&topic=110805.0)...

psionl0
27th September 2012, 12:18 AM
Are they?
The major "exchanges" sites all seem to have an history of being hacked.You changed the subject!

The security of bitcoin exchanges has nothing to do with whether scammers are trying to separate bitcoin holders from their bitcoins.

Laeke
27th September 2012, 12:40 AM
You changed the subject!

The security of bitcoin exchanges has nothing to do with whether scammers are trying to separate bitcoin holders from their bitcoins.

Please.
Did you read beyond this sentence?

As I said the pirate scheme and the whole pyramid that ties into it may have collected 500K btc : do you agree that it is a lot considering the current amount of btc available, lost to a "single" fraudulent investment?

The security of exchanges is not directly the subject but as an outside observer I can't help but to notice that there is some consistency in the problems: Bitcoinica, hacked at least twice for something like 65.000BTC according to reports, and maybe once by its own creator (a 17 year old Chinese...), showed some serious flaws in security and design. The absence of any meaningful guarantee that even a rookie investor would expect from such services paints a bleak picture of the maturity of a large part of the bitcoin market as of today: Bitcoinica and Mt Gox* were/are (resp.) not bit players. Thus I wonder if they are not symbolic of a bigger, systematic problem that you cannot boil down to the fact that a sucker is born every minute.

Yes, I do not pretend any of this is a "scientific" observation: feel free to disagree on how representative this all is, or to counter that the USD/"real" economy is not very different. The later may probably be true.

* I have a problem taking seriously an economy where a major player is a former Magic the Gathering site. Call me prejudiced.

psionl0
27th September 2012, 01:07 AM
Please.
Did you read beyond this sentence?

As I said the pirate scheme and the whole pyramid that ties into it may have collected 500K btc : do you agree that it is a lot considering the current amount of btc available, lost to a "single" fraudulent investment?
Of course I did. You conflated scamming with insecure bitcoin exchanges.

If you want to argue about the scams that involve bitcoin I don't have a counter argument. As long as there is money in any form, there will be scamming.

If you want to discuss the security of bitcoin exchanges then I have a few thoughts about that.

So what do you want to talk about?

John Albert
27th September 2012, 02:41 AM
The security of bitcoin exchanges has nothing to do with whether scammers are trying to separate bitcoin holders from their bitcoins.


You haven't been paying attention to the news for the past year or so, have you?

Belz...
27th September 2012, 03:02 AM
PsionI0, am I on ignore ?

John Albert
27th September 2012, 03:19 AM
However, most of the posters here are using the word "scam" to imply that there is something fraudulent going on (and it is all to do with the true motives of the originators). That position can not be justified.


Using basic principles of deduction, one can objectively examine a system—its structure, its design, the manner in which it functions—and conclusively determine its purpose.

For example, one can look at the design and functioning of an automobile and reliably conclude that it's intended as a conveyance to move a person from place to place by means of manual control. Even if one had never seen an automobile before, it would be quite possible to examine all its parts and their functioning in relation to the whole, and reliably determine that it was built to serve as a conveyance. That conclusion is even more obvious if we're able to actually observe the behavior of the automobile while in operation.

Conversely, one can also postulate some of the kinds of features a given system lacks, and make reliable conclusions as to what purposes that system is not intended to serve. For example, the fact that an automobile does not contain a source of clean water, a place to keep food fresh, or a sanitary system might lead one to the conclusion that it was not designed to serve as a domicile. That some people might choose to misuse an automobile as a home and live out of their car, is contrary to the purpose for which the automobile was originally designed. (That too will be evident by their car looking and smelling like a nasty, stinky mess.)

Furthermore, if the system is a human-engineered one, then it's entirely possible to make a reliable assessment of the motivations of the individuals who designed that system. One can make inferences about their technical ability, their knowledge of relevant concepts to its operating environment, and given the right set of circumstances one can even fairly reliably deduce their motives in building the system.

This kind of deductive logic is widely used in most modern legal systems. For example, if a person mounts a shotgun to the edge of a doorjamb and rigs a wire between the trigger and the doorknob in such a way that opening the door causes the shotgun to discharge into the doorway at a height of 4 feet, it is a fair assumption that the creator intended to kill somebody and wasn't just hunting squirrels.

The fact that Bitcoin is set up to operate the way it is, indicates a few things about its true purpose that all the advertising blurbs and cutesy animated marketing videos and informational Wikis fail to mention.

From the way this thing has been set up to operate, it does not appear to operate in the manner that a currency ought to. It lacks some key elements that make currencies appropriate for the purpose of facilitating exchange.

The originators of Bitcoin have set it up to make it very easy for themselves and their closest associates to quickly obtain controlling shares in a totally immaterial economy, then restrict the availability of those shares as more and more people come on board. In other words, they engineered a valuation bubble. Then they began to hype their bubble economy in the media, to lure investors to put actual cash value into the system. What does that tell you about the motives of the originators of Bitcoin?

The originators of Bitcoin have set their system up with no mechanism for stabilizing its value, making investments and exchanges a crap shoot from minute to minute, hour to hour, and day to day. That indicates that either the creators of Bitcoin were totally ignorant of the function and purpose of a currency, or else Bitcoin was never intended to really function as a reliable currency. What does that tell you about the motives of the originators of Bitcoin?

The originators of Bitcoin have also chosen to conceal their own identities from the public. What does that tell you about the motives of the originators of Bitcoin?

John Albert
27th September 2012, 04:00 AM
My spam folder is full of "get rich quick" scams. Bitcoin holders are just as likely to be targeted by scammers as anybody else.


Maybe the word that you're into Bitcoin is circulating among the techno-grifter community.

I never get emails about "get rich quick schemes," unless you count IT recruiters advertising programming jobs.

Belz...
27th September 2012, 04:43 AM
John: I get those e-mails regularily (not the Ponzi ones, but some banker in a country with some 'lost' money to launder and, conveniently, my e-mail address as a potential collaborator. If only I put in some of my own money up front, or give him my details, I'll get hundreds of thousands, or even millions, in short order. If I believed all of them, I'd be a millionaire a hundred times over by now), even though nothing in my internet behaviour has ever marked me as someone interested in those things.

psionl0
27th September 2012, 06:55 AM
You haven't been paying attention to the news for the past year or so, have you?Wow, talk about a non-sequitur!

The irony is that you are convinced that the price of bitcoins will continue to rise.

Moreover, you maintain that the originators knew that bitcoin would be a big hit. They even had the foresight to design limited growth and divisibility into the algorithm to ensure that its price would rise exponentially for ever!

You are the best ad for buying bitcoins - EVER! :D

John Albert
27th September 2012, 07:36 AM
The irony is that you are convinced that the price of bitcoins will continue to rise.


Where did I say that? I said it was designed to create artificial overvaluation.


Moreover, you maintain that the originators knew that bitcoin would be a big hit. They even had the foresight to design limited growth and divisibility into the algorithm to ensure that its price would rise exponentially for ever!


I never said any of those things.

John Albert
27th September 2012, 07:45 AM
John: I get those e-mails regularily (not the Ponzi ones, but some banker in a country with some 'lost' money to launder and, conveniently, my e-mail address as a potential collaborator. If only I put in some of my own money up front, or give him my details, I'll get hundreds of thousands, or even millions, in short order. If I believed all of them, I'd be a millionaire a hundred times over by now)


Oh, you mean the "419" scams. I haven't seen one of those in awhile. Though I do get lots of spam for medical services, sex services, and trying to sell me gold.

One perplexing email I did receive last week claimed to be from the FBI/DHS, purporting to tell me I won $10.5 million in a foreign lottery campaign and the US authorities suspect possible terrorist involvement.


nothing in my internet behaviour has ever marked me as someone interested in those things.


I was being facetious. It's called a "joke."

Belz...
27th September 2012, 08:31 AM
I was being facetious. It's called a "joke."

A what ? Must be one of those new trends.

Laeke
27th September 2012, 09:17 AM
So what do you want to talk about?

Nothing in particular I guess.
You seem to think that all those are regrettable, separate accidents, which in the big picture are common in the economic system (Bitcoin or not).
Myself, as an outsider, sees a no-small part of the Bitcoin community rife with incompetence, dishonesty or outright fraud; and wonders how much of that may be structural.

Chaos
27th September 2012, 10:18 AM
Wow, talk about a non-sequitur!

The irony is that you are convinced that the price of bitcoins will continue to rise.

Moreover, you maintain that the originators knew that bitcoin would be a big hit. They even had the foresight to design limited growth and divisibility into the algorithm to ensure that its price would rise exponentially for ever!

You are the best ad for buying bitcoins - EVER! :D

Just once in a ******* lifetime, could you PLEASE respond to what someone ACTUALLY wrote?

Belz...
27th September 2012, 10:55 AM
I'm apparently on Psio's ignore list. Could someone find out for me if he's a libertarian or not ?

psionl0
27th September 2012, 06:07 PM
I'm apparently on Psio's ignore list. Could someone find out for me if he's a libertarian or not ?I apologize for missing this question earlier.

I believe that governments and corporations should not be allowed to get too big but I am no libertarian.

psionl0
27th September 2012, 06:10 PM
Just once in a ******* lifetime, could you PLEASE respond to what someone ACTUALLY wrote?I don't know what you are whingeing about. John Albert's posts are too lengthy and numerous for me to respond to line by line (although I did one for your sake).

In view of the statements he makes, it seems perfectly legitimate to me to put it to him that he expects the price of bitcoins to continue to rise. I also believe that it is perfectly legitimate to put it to him that his views are based mostly on moral grounds.

Belz...
28th September 2012, 03:09 AM
I apologize for missing this question earlier.

I believe that governments and corporations should not be allowed to get too big but I am no libertarian.

Ah, thank you. We are also in agreement on this basic principle.

Chaos
28th September 2012, 03:19 AM
In view of the statements he makes, it seems perfectly legitimate to me to put it to him that he expects the price of bitcoins to continue to rise. I also believe that it is perfectly legitimate to put it to him that his views are based mostly on moral grounds.

You could try reading his statements, line by line, before deciding what he thinks. But apparently that, too, is too much for you.

John Albert
28th September 2012, 07:35 AM
I don't know what you are whingeing about. John Albert's posts are too lengthy and numerous for me to respond to line by line.


Your lackadaisical approach to discourse is not my problem. You consistently call me a liar and misrepresent the things I say, apparently without even bothering to read or consider them.


In view of the statements he makes, it seems perfectly legitimate to me to put it to him that he expects the price of bitcoins to continue to rise. I also believe that it is perfectly legitimate to put it to him that his views are based mostly on moral grounds.


What might "seem perfectly legitimate to you" is objectively wrong.

I have never said that I expect the price of Bitcoins to continue to rise. I do not believe the price of bitcoins will continue to rise. I believe the price of bitcoins will continue to fluctuate wildly until they inevitably crash for the last time and become completely valueless.

Although I agree that there is an ethical component to my viewpoint, you are also incorrect to assume it is "based mostly on moral grounds." I have pointed out numerous reasons why Bitcoin is by design a pointless, misguided and destructive endeavor, and an extremely foolish investment.

Laeke
28th September 2012, 09:20 AM
To be honest I kind of fail to see how there could be any meaningful endgame for bitcoin if it doesn't seriously expand its real use as a currency. Apart from buying drugs, and maybe some other activities (strip cams on reddit, I am told...), there's not much you can do with it: even the fabled money laundering scheme seems difficult right now, since at current exchange rate, the whole BTC economy is 100m USD approx. and the exchanges are shaky.

The entire thing only has value insofar you can expect to cash out, at least for now. It will be interesting to see how the mining arms race and the halving of "mined blocks" will affect the market (esp. since the halving should be done in December and "mining-wunderdevice" ASICs should hit the market in the next 6 months): it may actually contract the network and the number of people invested in the economy. Once mining get really difficult, it's up to the transaction fees to entice people in "devoting" computing power: is there enough transactions to actually make that worthwhile?

To be honest, if early adopters indeed have hoarded large amount of the thing, I would expect them to have already cashed out of the thing gradually when the market peaked: BTC went up twice to 30$, is it correct? It's a small market, and a couple of people dumping tons of BTC would surely crash the thing hard. It's what I would have done, anyway: the possibility of a definitive crash is very real...

EDIT: Short version: not sure why bitcoin would appeal to external demand (which will be needed to prop the price) in its current state

Laeke
28th September 2012, 09:55 AM
And two of the majors hurdles comes down to... well, convenience.

Installing the client for a random normal dude seems to be a really long, tedious experience now as it seems you must download the ever-growing archive of all transactions.

I also seem to understand that transactions may take up to ten minutes since they must be confirmed in "processed blocks".

Anyway...
Do we know the daily volume of transactions in bitcoin?

John Albert
28th September 2012, 10:44 AM
As mining becomes less and less profitable, the smaller players will eventually drop out until it eventually becomes dominated by one single player who holds nearly all the computational power (assuming it doesn't completely collapse before that point). Despite the ostensible goal of being distributed and decentralized, everything about the actual economics of Bitcoin appear rigged to consolidate control into the hands of a relatively small oligarchy.

Laeke
28th September 2012, 10:50 AM
It seems a Zurich university (ETH Zürich) has conducted an experiment, claimed all blocks during a short period of time and uncovered a yet undisclosed loophole (http://www.ethlife.ethz.ch/archive_articles/120924_Neuer_Globe_Bitcoin_fw/index_EN).

Belz...
28th September 2012, 10:59 AM
To be honest, if early adopters indeed have hoarded large amount of the thing, I would expect them to have already cashed out of the thing gradually when the market peaked: BTC went up twice to 30$, is it correct?

Yeah but can they really manage to withdraw all that money ? Who pays ?

Laeke
28th September 2012, 11:49 AM
Yeah but can they really manage to withdraw all that money ? Who pays ?

That's why I think they would have gradually liquidated their stash over several days (or during peaks). The summer 2011 peak lasted a few weeks over 10 USD, I believe. If you were sitting on inexpensive bitcoins, that's quite a return even at 5$. I would be milking it, myself...

But indeed, I'm not sure you could even drop 100.000btc/day without seriously affecting the market.

I'm no Captain of Industry, so who knows?

EDIT: Zürich must be on something, because they are indeed very successful at mining (or cheating) despite "only" providing 10% of computational power into the fray. Would they exploit double-spending(?) (https://bitcointalk.org/index.php?topic=113654.msg1228213#msg1228213) for this, or another thing? You'll find a link to the university paper, if you can be bothered.

The thread itself is a far more humorous read though "We're under attack by the Swiss-watchdog of the filthy fiat money!"

Almo
28th September 2012, 12:04 PM
It seems a Zurich university (ETH Zürich) has conducted an experiment, claimed all blocks during a short period of time and uncovered a yet undisclosed loophole (http://www.ethlife.ethz.ch/archive_articles/120924_Neuer_Globe_Bitcoin_fw/index_EN).

That's pretty interesting.

Laeke
28th September 2012, 12:12 PM
It's unclear whether they really "mined" those blocks, or so I would suppose by reading the bitcointalk thread.

Nevertheless, the Swiss university is definitely on something there...

John Albert
28th September 2012, 01:27 PM
Yeah but can they really manage to withdraw all that money ? Who pays ?


Just like in any market, the buyers pay.

Say I want to cash in 10,000 BTC for $USD. I go to Mt Gox and make a transaction to put 10,000 BTC on the market. Let's assume that at the moment BTC are trading at $12 per $USD, so Mt Gox needs to find enough buyers to take possession of my 10,000 BTC. That could mean finding a single person willing to buy $120,000 worth of bitcoins (good luck!), or 10,000 people willing to pay $12 (again, good luck!), or any permutation in between.

Of course there might not even be 10,000 people willing to pay $12 apiece for bitcoins. Maybe I'll only be able to sell off about 100 BTC at that price, before nobody else will pay that much to take them off my hands. So once I've saturated the market, the price will begin to drop. I might find some people willing to spend $11.50, or $10, or $9.80 or whatever. Once the price starts to drop, a selling panic may take hold causing it to fall even further. If the price starts falling too fast some people might try to sell at $9.50, but the exchange rate might drop so far during the course of their transaction that they may end up getting only $8.20 or $5.50, or even just a few cents per bitcoin.

By the time I've ended up selling off my entire run of 10,000 BTC, I might end up getting only like $30,000 USD total for them, but I'll be leaving the market with a 10,000 BTC glut, meaning the price will be really low. At this point I could take some of that $30,000 and start buying back into the market at the new, lower price.

Of course, once I start buying back in, the price will start to rise again due to the sudden demand. Some people may be willing to sell at $2 a BTC, but other BTC traders might hold out for more. Eventually the price will creep back up though it may take days or weeks.

Of course this is a pretty radical example. I'd be willing to guess that the Bitcoin upper classes manage their money far more carefully, "milking" the system as much as possible by waiting until the peak times and then only selling off enough BTC at once to net a modest profit. Do that with small sums regularly enough and you'd probably be able to make a pretty good profits just gaming the market.

Make no mistake though, all the actual cash that the "early adopters" might take out of the market has come at the direct expense of investors buying in later. Because the early adopters paid nothing initially to enter the market, it's all free money to them.

Belz...
28th September 2012, 02:33 PM
Indeed. I'm just not sure they can withdraw significant amounts at one time, and you seem to imply that I'm right on this.

Laeke
28th September 2012, 04:37 PM
Indeed. I'm just not sure they can withdraw significant amounts at one time, and you seem to imply that I'm right on this.

Which begs the question: where are those 10m bitcoins already issued?

As I said, "pirate" was able to scam 500k BTC between Oct 2011 and August 2012, but it is unclear if he cashed some of that. There was speculation that he lost the money... in an USD ponzi scheme :D but who knows?
You also had last year maybe a couple hundred thousand BTC lost to exchange hacks and such.

Where are they and where did they go?

If I read correctly the Mt.Gox home page, they have a daily volume of 25.000 BTC traded (maybe the same one several times?). Last I heard, this was the biggest exchange out there.

psionl0
28th September 2012, 11:52 PM
It would appear that much of John Albert's objections to bitcoin are worded similarly to that of a blog by Adam Cohen in http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea.

The rebuttals on that site might make interesting reading.

psionl0
28th September 2012, 11:56 PM
If I read correctly the Mt.Gox home page, they have a daily volume of 25.000 BTC traded (maybe the same one several times?).You must be reading a different MtGox home page than the one I am reading.

At the top of https://mtgox.com/ it says, "Last price:$12.37010 High:$12.45000 Low:$12.12000 Volume:27739 BTC Weighted Avg:$12.36336".

Laeke
29th September 2012, 04:08 AM
You must be reading a different MtGox home page than the one I am reading.

At the top of https://mtgox.com/ it says, "Last price:$12.37010 High:$12.45000 Low:$12.12000 Volume:27739 BTC Weighted Avg:$12.36336".

So?
Is there a significant difference between a rounded figure of 25k and 29k (the number right now) or 26k (roughly the number I saw yesterday when checking)?

But since you are more knowledgeable about bitcoin, do you have an average of the volume for Mt.Gox, or even better for all -major- exchanges? Since that was my original question.

psionl0
29th September 2012, 05:13 AM
So?
Is there a significant difference between a rounded figure of 25k and 29k (the number right now) or 26k (roughly the number I saw yesterday when checking)?

But since you are more knowledgeable about bitcoin, do you have an average of the volume for Mt.Gox, or even better for all -major- exchanges? Since that was my original question.Ah! When you wrote 25.000 you weren't using a decimal point (we use commas there).

The bitcoin charts (http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv) show the daily volumes for MtGox. There were a couple of mini-dumps on Aug 17 and 19 of well over 200k BTC which saw the price fall by 20%.

Belz...
29th September 2012, 06:03 AM
Ah! When you wrote 25.000 you weren't using a decimal point (we use commas there).

The bitcoin charts (http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv) show the daily volumes for MtGox. There were a couple of mini-dumps on Aug 17 and 19 of well over 200k BTC which saw the price fall by 20%.

20% is a pretty huge dip for a currency. I'd hate (or love) to see what would happen with larger dumps.

Kensington Bailey
29th September 2012, 06:31 AM
A fiat currency is one that is enforced by government decree and backed by nothing.

A market currency is one that people voluntarily chose to use.

Historically market currencies have been commodities based because this means they can not be infinitely reproduced.

Bitcoins meet all the qualifications of a gold standard and then some.

What happens when people voluntarily use a fiat currency, such as when Saudis use US bucks?

John Albert
29th September 2012, 12:18 PM
It would appear that much of John Albert's objections to bitcoin are worded similarly to that of a blog by Adam Cohen in http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea.

The rebuttals on that site might make interesting reading.


I share most of Mr. Cohen's objections to Bitcoin, but he eventually retracted his contention that Bitcoin is a scam under a significant amount of fire and downvotes from Bitcoin advocates. If you look farther down the conversation, you'll see that I also posted in that thread.

The rebuttals in that Quora question are just more of the same parroted sales pitches, libertarian sloganeering, false assumptions, anti-gubmint rants, logical fallacies, etc. that we've heard from the Bitcoin advocates in this thread.

John Albert
29th September 2012, 12:19 PM
A fiat currency is one that is enforced by government decree and backed by nothing.

A market currency is one that people voluntarily chose to use.

Historically market currencies have been commodities based because this means they can not be infinitely reproduced.

Bitcoins meet all the qualifications of a gold standard and then some.What happens when people voluntarily use a fiat currency, such as when Saudis use US bucks?


You do realize that he's fundamentally wrong about every single one of those statements...

John Albert
29th September 2012, 12:40 PM
Indeed. I'm just not sure they can withdraw significant amounts at one time, and you seem to imply that I'm right on this.


There's obviously some point at which the price will drop to $0.00. It's happened several times already, most notably after the major exchange "hacks."

psionl0
29th September 2012, 05:29 PM
The rebuttals in that Quora question are just more of the same parroted sales pitches, libertarian sloganeering, false assumptions, anti-gubmint rants, logical fallacies, etc. that we've heard from the Bitcoin advocates in this thread.;)

psionl0
29th September 2012, 05:35 PM
There's obviously some point at which the price will drop to $0.00. It's happened several times already, most notably after the major exchange "hacks."If the price of bitcoin ever dropped to zero then the early adopters would get nothing for their efforts. Sure, they could wait for the price to go up again but they would have not have had any advantage over the "late" adopters at that time. The moral issue wouldn't exist.

Of course, the facts (http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-05-01zeg2011-12-31ztgSzm1g10zm2g25zv) don't bear this out. After the Mt Gox scare, the price of bitcoin was decimated over the next five months but it never got to zero and it has been recovering since.

roger
29th September 2012, 05:47 PM
Fair enough, that instutes some level of protection, but even so, somewhere in that code must be some form of limitition on the number of bitcoins, otherwise the system would not work
That limitation needs to be protected somehow, I'm not a programmer, but it needs to be there or again, the system would not work.
And the original programmer knows exactly what that is and how it works.

Being open source would make it a bit harder to circumvent this, but I doubt its impossible and if *I* were the programmer I would have this ready before I went public. It needs not be in the open source program of course, it just needs to know how to get in to deceive or modify the program to knock off a few million bitcoins in a second, then dump it on the market.
The conversation has moved on from this, but allow me to address this with an analogy.

I have invented bitping. I provide a vat of 1 million ping pong balls. 10,000 are red, the rest are white. Only the red are valuable. To mine for bitpings, you reach into the vat blindly and pull a ball out. If it is red it is yours to keep, if white, you toss the ball back in the vat.

So, at first the mining goes fast - roughly every 100th try yields a red ball. But as time goes on the # of red balls declines, while the # of white balls stays the same. Before long it takes 1000 tries before you get a red ball. After awhile it takes 2000 tries. Eventually, when the number of red balls is very low, it takes close to a million tries to get a red ball. Finally, no matter how many times you reach into that vat, you will never pull out more than 10,000 balls.

This is an analogy: of course it would be easy to manufacture a red ball behind the scenes. That is where the analogy fails.

bitcoin is a numerical algorithm that performs a seach in a defined numerical space. There is no known way to 'instantly' generate 1,000,000 answers in secret. Quick, find me the 1,345,0454,3453,455,545,389,432th prime! Quick! What's taking you so long? I gave you the algorithm to test if a # is the nth prime (let's pretend),so why can't you instantly tell what the 1,345,0454,3453,455,545,389,432th prime is? Because a test for validation is often completely different than generating the result to be tested.

That is not the bitcoin algorithm either, but you see my point I hope? It's a mathematical search in a space that no one knows how to mathematically cheat. Well, it's related to cryptography, so maybe the NSA does, but no one outside of the super secret part of cryptography does. It's costly to compute, but cheap to check for correctness.

Make sense?

psionl0
29th September 2012, 05:51 PM
I believe the price of bitcoins will continue to fluctuate wildly . . .That's a fair assessment.

. . .until they inevitably crash for the last time and become completely valueless.I doubt this bit. There will always be new players who will want to muck around with this limited commodity.

John Albert
29th September 2012, 06:18 PM
I seem to remember it hitting zero at least once during October or November of 2010.

psionl0
29th September 2012, 06:48 PM
Not according to bitcoin charts (http://bitcoincharts.com/charts/mtgoxUSD#czsg2010-08-30zeg2010-12-31ztgSzm1g10zm2g25zv). The price had been skating at under 10c until sometime in October 2010 when it began to rise. By the end of the year, it was trading at 30c.

Korren
29th September 2012, 09:21 PM
I doubt this bit. There will always be new players who will want to muck around with this limited commodity.

So you're saying that the value of bitcoins is due to the "greater fool" theory? How comforting.

Lukraak_Sisser
29th September 2012, 09:38 PM
The conversation has moved on from this, but allow me to address this with an analogy.

I have invented bitping. I provide a vat of 1 million ping pong balls. 10,000 are red, the rest are white. Only the red are valuable. To mine for bitpings, you reach into the vat blindly and pull a ball out. If it is red it is yours to keep, if white, you toss the ball back in the vat.

So, at first the mining goes fast - roughly every 100th try yields a red ball. But as time goes on the # of red balls declines, while the # of white balls stays the same. Before long it takes 1000 tries before you get a red ball. After awhile it takes 2000 tries. Eventually, when the number of red balls is very low, it takes close to a million tries to get a red ball. Finally, no matter how many times you reach into that vat, you will never pull out more than 10,000 balls.

This is an analogy: of course it would be easy to manufacture a red ball behind the scenes. That is where the analogy fails.

bitcoin is a numerical algorithm that performs a seach in a defined numerical space. There is no known way to 'instantly' generate 1,000,000 answers in secret. Quick, find me the 1,345,0454,3453,455,545,389,432th prime! Quick! What's taking you so long? I gave you the algorithm to test if a # is the nth prime (let's pretend),so why can't you instantly tell what the 1,345,0454,3453,455,545,389,432th prime is? Because a test for validation is often completely different than generating the result to be tested.

That is not the bitcoin algorithm either, but you see my point I hope? It's a mathematical search in a space that no one knows how to mathematically cheat. Well, it's related to cryptography, so maybe the NSA does, but no one outside of the super secret part of cryptography does. It's costly to compute, but cheap to check for correctness.

Make sense?

I understand the analogy, and like I said, it does provide better security then I thought.
But cryptography is ludicrously easy to crack for anyone with the decoder ring (so to speak)
And somewhere in the computer program of the whole bitcoin system there is a subroutine that has to check wether the ball is red. That subroutine is checking something in the bitcoin code and if you know how to fool that you can pass every white ball off as red.
Now I'm not saying that that is going to happen, but it IS possible.

Its hard to get your hands on a minting press, but that has happened too.

The difference is that counterfeiting money is a crime, and counterfeiting bitcoins is not, hence my worry for it as a commodity.
IF someone were to want to scam everyone else this way, they literally are free to do so, and if I were the one designing the system, I would have made sure I could do so.

Laeke
30th September 2012, 04:01 AM
There was talks during the recent Swiss experiment that a certain number of the "blockchain confirmation" (which confirms which ip has mined bitcoins) were indeed false. That does not mean they were awarded it however.

There's a number of safechecks in theory: difficulty adjusts itself depending on the mining success (every few days, I believe?). Also the expected rate of creation is public and the number of bitcoins is capped. But since it is an "untraceable" commodity, there's actually little to no way to account for all the BTC. If an user dies, deletes its wallet, burn his computer, the bitcoins are lost forever and no one can know.

I totally agree that the system favors early-adopters, and that the creator(s) could probably manipulate the thing even further for his own gain... but there's a very constraining condition there: as we currently discuss, it's not clear the bitcoin economy as it now exists is big or liquid enough to absorb a huge number of bitcoins being put on sale.

Some estimates that Mt.Gox is representing 18% of the current exchange market (http://bitcoinmagazine.net/growing-decentralization-in-the-bitcoin-economy/), which would put the total exchange market at the 125k-150k range (if its volume is indeed 25k-30k daily). Plus the security considerations, difficulties related to specific exchanges (foreign ones)...

If some early-adopters hoarded bitcoins early on, it's still a gamble whether they'll even be able to cash out big.

John Albert
30th September 2012, 09:53 AM
So you're saying that the value of bitcoins is due to the "greater fool" theory? How comforting.


Exactly.

He's arguing that there will always be some supply of suckers who are willing to pay a dollar amount for nothing, on the amoral pipe-dream of scamming some other future sucker at a later date.

It can't continue forever. Sooner or later the thing will run out of steam, and/or its security will be compromised. The law of averages demands it.

John Albert
30th September 2012, 10:35 AM
Not according to bitcoin charts (http://bitcoincharts.com/charts/mtgoxUSD#czsg2010-08-30zeg2010-12-31ztgSzm1g10zm2g25zv). The price had been skating at under 10c until sometime in October 2010 when it began to rise. By the end of the year, it was trading at 30c.


Pretty sure it dropped below a penny at least a few times during that period. All it takes is for the sellers not to be able to find a buyer at any price for any appreciable length of time.

Belz...
30th September 2012, 11:40 AM
Pretty sure it dropped below a penny at least a few times during that period. All it takes is for the sellers not to be able to find a buyer at any price for any appreciable length of time.

Compare with the US dollar. When's the last time you found it hard to get rid of your currency ?

John Albert
30th September 2012, 06:32 PM
Compare with the US dollar. When's the last time you found it hard to get rid of your currency ?

Yeah, right?

I never seem to have quite enough of the stuff lying around, and everybody always has their hand out demanding more of it.

psionl0
30th September 2012, 06:55 PM
Pretty sure it dropped below a penny at least a few times during that period. All it takes is for the sellers not to be able to find a buyer at any price for any appreciable length of time.Why look up the data when you can just be "pretty sure" about something instead.

He's arguing that there will always be some supply of suckers who are willing to pay a dollar amount for nothing, . . .You would sound a lot less Luddite-like if you knew about the concept of "intellectual property". What do you think a corporation is? Fiat money?

John Albert
30th September 2012, 07:07 PM
You would sound a lot less Luddite-like if you knew about the concept of "intellectual property". What do you think a corporation is? Fiat money?


I've already explained to you the difference between stocks and economic scams like Bitcoin. Go back and read my posts. "Intellectual property" is irrelevant.

By the way, I'm not a "Luddite." I do computer programming for a living and build computer systems as a hobby.

psionl0
30th September 2012, 09:17 PM
"Intellectual property" is irrelevant. It is not surprising that your kneejerk reaction is to dismiss the concept of "intellectual property" as irrelevant. The website (http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea) where you got your opinion from doesn't discuss this aspect and you would have a hard time explaining why something that exists only at the stroke of the legislative pen is somehow superior to something that exists as the result of a (so far) uncrackable code.

I've already explained to you the difference between stocks and economic scams like Bitcoin. Go back and read my posts.
Nobody in the stock market will describe it as pure gambling because it's not just pure gambling. Gambling is simply betting on some measure of uncertainty for the chance of acquiring more money. The stock market is far more complex than that and actually serves some positive benefits to the overall marketplace.

The stock market exists to allow public ownership of demonstrably profitable corporations, both to provide an influx of capital for business and to allow stockholders to share in the profits. More uncritical thinking.

It is true that in the initial share issue, the money goes to a company that is (presumably) backed by assets and a business plan. The irony is that nobody is buying that. They are buying shares in a corporation that "doesn't exist".

Beyond the initial share issue, it is just people gambling on the share price. It is not just brokers bringing their money and bits of paper to the trading room floor either. There are 1001 "investment strategies" all designed to capitalize on the smallest movement in share prices. Yet, none of this money goes to the companies. The winners take their money and run while the losers look for another "get rich quick" stockmarket investment strategy.

Of course, all of this is legally sanctioned so it must be "all right". Since the government hasn't taken a pro-bitcoin stance, bitcoin must be "bad".

gnome
1st October 2012, 04:04 AM
It is not surprising that your kneejerk reaction is to dismiss the concept of "intellectual property" as irrelevant. The website (http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea) where you got your opinion from doesn't discuss this aspect and you would have a hard time explaining why something that exists only at the stroke of the legislative pen is somehow superior to something that exists as the result of a (so far) uncrackable code.

"somehow" includes FDIC and financial fraud enforcement.

psionl0
1st October 2012, 05:06 AM
Your faith in the legal system is impressive.

gnome
1st October 2012, 06:28 AM
Nice try. There is better than faith, there is evidence, that these safeguards are in place. Not perfect, but more than bitcoin offers.

Belz...
1st October 2012, 06:58 AM
Your faith in the legal system is impressive.

Well I didn't expect to see the creationist tu quoque creed uttered in this thread.

Laeke
1st October 2012, 07:13 AM
After reviewing the start of this thread, I see that we are pretty much at the same point than a year ago.

I suspect it will be the same in 2013, to be honest.

John Albert
1st October 2012, 07:58 AM
It is not surprising that your kneejerk reaction is to dismiss the concept of "intellectual property" as irrelevant.


The concept of "intellectual property" is just as irrelevant to Bitcoin as it is to the "Airplane Game."

Both are scams that entice investors to sink money into a fictional economy with no material basis, wherein all monetary value comes from investors, with the earlier investors' profits coming directly out of the pockets of the later investors. Just because somebody dreamed it up and gave it a name does not mean it's somebody's "intellectual property" and therefore not a scam.


The website (http://www.quora.com/Bitcoin/Is-the-cryptocurrency-Bitcoin-a-good-idea) where you got your opinion from


I did not "get my opinion" from the Quora website. I have formed my opinion on my own, by looking at the facts. Your argument doesn't have a factual or logical leg to stand on, so you've resorted to making ad hominem attacks?


you would have a hard time explaining why something that exists only at the stroke of the legislative pen is somehow superior to something that exists as the result of a (so far) uncrackable code.


"Uncrackable code" or not, Bitcoin is still insecure and untrustworthy, for numerous reasons which I and others have repeatedly explained throughout this thread. You can have the best lock in the world on your front door, but that provides little protection if you leave your windows wide open.


More uncritical thinking.


:dl:


It is true that in the initial share issue, the money goes to a company that is (presumably) backed by assets and a business plan. The irony is that nobody is buying that. They are buying shares in a corporation that "doesn't exist".


:crazy:


Beyond the initial share issue, it is just people gambling on the share price. It is not just brokers bringing their money and bits of paper to the trading room floor either. There are 1001 "investment strategies" all designed to capitalize on the smallest movement in share prices. Yet, none of this money goes to the companies. The winners take their money and run while the losers look for another "get rich quick" stockmarket investment strategy.


You haven't the slightest idea what you're talking about. Stocks are shares in ownership of a company. When investors buy shares in a company, it means just that: they own shares in that company's ownership. If one were to acquire enough of a company's stock to gain "controlling interest," one could essentially attain executive control over the company. Even "preferred" (non-voting) stock is directly tied to the economic profitability of the company.

Contrast that with Bitcoin: when investors buy "bitcoins," they own imaginary shares in nothing. They give their money away to some unknown stranger to record the transaction on a cryptographically-secured ledger, purely on the confidence that the anonymous agency they're giving their money to (the "exchange") is honest. The entire system is predicated on confidence and nothing more. That's why I call it a "con game."

Moreover, there are no laws governing this rogue system. There's no accountability whatsoever, and we've seen countless scams perpetrated within the Bitcoin economy for precisely this reason. Every major Bitcoin exchange has been "hacked" at one point or another. But what does "hacked" mean, exactly? Given that there's no oversight or investigation into these "thefts," all the general public knows is that somehow or other, the exchanges either lost or stole huge amounts of their investors' money. Yet the faithful Bitcoin suckers just keep on coming, dollars in hand, just begging to get ripped off.


Of course, all of this is legally sanctioned so it must be "all right". Since the government hasn't taken a pro-bitcoin stance, bitcoin must be "bad".


Strawman. I never said anything like that.

I have cited many good reasons why Bitcoin is "bad," and have backed those up with facts.

Korren
1st October 2012, 08:17 AM
Beyond the initial share issue, it is just people gambling on the share price.

No, it's not. While shares have an external value in what you can sell them for on the stock market, but they also have an internal value in that they ensure you voting rights at general meetings and a share of any dividends paid out.

John Albert
1st October 2012, 08:19 AM
This discussion is getting to the point where I'm about to start answering everything in emoticons of Laughing Dog and Bucktoothed Eye-roll Guy.

Korren
1st October 2012, 08:24 AM
Your faith in the legal system is impressive.

Quick question: if the dollar collapses, what'll bitcoins be worth?

Belz...
1st October 2012, 08:46 AM
Quick question: if the dollar collapses, what'll bitcoins be worth?

Ouch.

John Albert
1st October 2012, 09:08 AM
Why look up the data when you can just be "pretty sure" about something instead.


Here are a few instances when the price of BTC skated along and hit zero:

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-20&e=2010-07-20&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-29&e=2010-07-29&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-27&e=2010-07-27&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-26&e=2010-07-26&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-25&e=2010-07-25&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&

It's happened a number of times. Whenever it happens, Mt Gox just shuts down and suspends trading for awhile.

stevea
1st October 2012, 09:46 AM
That is why bitcoin can't be a national currency. Even if it were to operate side by side with a national currency (merchants accepting payments in either national currency or bitcoins) it could harm the national currency. Since bitcoin would be seen as inflation resistant, most people would rather keep their money in bitcoin format than leave it in an inflation prone bank account where the meagre interest the bank pays is taxed.

Of course, the level of mistrust in bitcoin is too high for this to be a reality any time in the near future.

Mistrust is relative and Bernanke its trying hard to catch up to bitcoin. ;););)

I think you are talking past my point and drawing some wrong conclusions.

To be inflation/deflation neutral, the quantity of any currency needs to match the quantity of goods produces/sold/bought in the long term. That's basic QTM theory.

Current bitcoin fails to increase/decrease with economic activity. This could have been accomplished by tying bitcoin "difficulty to mine" to a proxy like bitcoin velocity (qty of bitcoin transacted per unit time). It appears to me that the qty of bitcoin is limited, below historic production increase rates, so it should increased in value (bitcoin deflation) in the long term. Not unlike gold in the current era.

The use of two parallel currencies has centuries long precedent and Gresham's law, "weak currency drives out strong", applies. The strong deflating bitcoin would not replace the inflating dollar(or other). Instead people would horde the deflating bitcoin and only use the weak inflating dollar in transactions. This greatly decreases the amount of circulating strong currency further adding to it's deflationary tendency. A parallel bitcoin currency would be 'under the mattress', not used in trade.

This is roughly what has happened to gold, whereas all national fiat currencies inflate. The amount of gold has not kept up with world GDP, so gold coins are horded and not used in transactions.

There is a good argument that a little inflation in a fiat currency is a good thing as it overcomes the wage-stickiness Keynes described, but that's a discussion for another thread.

John Albert
1st October 2012, 11:47 AM
There is a good argument that a little inflation in a fiat currency is a good thing as it overcomes the wage-stickiness Keynes described, but that's a discussion for another thread.


We've already been over that in this thread, way back near the beginning. But I think that level of theory kind of went over the heads of most.

psionl0
1st October 2012, 04:12 PM
Here are a few instances when the price of BTC skated along and hit zero:

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-20&e=2010-07-20&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-29&e=2010-07-29&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-27&e=2010-07-27&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-26&e=2010-07-26&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=1&i=1-min&c=1&s=2010-07-25&e=2010-07-25&Prev=&Next=&t=C&b=&a1=&m1=10&a2=&m2=25&x=0&i1=&i2=&i3=&i4=&v=0&cv=0&ps=0&l=0&p=0&

It's happened a number of times. Whenever it happens, Mt Gox just shuts down and suspends trading for awhile.I take it those charts are from July 2009.

Which chart shows the price reaching zero?

psionl0
1st October 2012, 04:41 PM
The concept of "intellectual property" is just as irrelevant to Bitcoin as it is to the "Airplane Game."If you think the airplane game involves intellectual property then I must be talking way over your head.

I did not "get my opinion" from the Quora website. I have formed my opinion on my own, by looking at the facts.:rolleyes:

:dl:





:crazy:Well that's better than seeing Adam Cohen's words all the time.

Unfortunately it also shows that you don't understand a single word that I post.

You haven't the slightest idea what you're talking about. Stocks are shares in ownership of a company. When investors buy shares in a company, it means just that: they own shares in that company's ownership. If one were to acquire enough of a company's stock to gain "controlling interest," one could essentially attain executive control over the company. Even "preferred" (non-voting) stock is directly tied to the economic profitability of the company.The fact that you think that voting rights addresses the share price speculation issue seems almost retarded to me.

Contrast that with Bitcoin: when investors buy "bitcoins," they own imaginary shares in nothing.Now you are being a Luddite again.

psionl0
1st October 2012, 05:04 PM
I think you are talking past my point and drawing some wrong conclusions.My conclusion is that bitcoin is unsuitable as a currency because it has no long term growth.

To be inflation/deflation neutral, the quantity of any currency needs to match the quantity of goods produces/sold/bought in the long term. That's basic QTM theory.That sounds like your conclusion too.

The use of two parallel currencies has centuries long precedent and Gresham's law, "weak currency drives out strong", applies.Bitcoin could provide an interesting counter to Gresham's law (assuming it becomes a currency).

Traditionally, Gresham's law meant that people hoarded their gold while spending their paper money. The point being that paper money is easier to spend than bullion. With bitcoin, the opposite is the case. You can send bitcoins person to person at minimum cost and without involving a bank. Ironically, since it takes at least 10 minutes to do a bitcoin transaction, you would need banks to handle the small EFTPOS transactions that would take too long to do with bitcoin directly.

psionl0
1st October 2012, 05:35 PM
Quick question: if the dollar collapses, what'll bitcoins be worth?er . . . 0.2g of gold? (I bet you thought I would say that bitcoins are worth their weight in gold :D)

John Albert
1st October 2012, 05:46 PM
If you think the airplane game involves intellectual property then I must be talking way over your head.


No, I think that the Airplane Game has nothing at all to do with "intellectual property," and neither does Bitcoin. I think that's just a red herring (http://en.wikipedia.org/wiki/Red_herring_(fallacy)) intended to spin this discussion off into another irrelevant direction.

Why don't you try to explain how you figure "intellectual property" has anything at all to do with Bitcoin vs. government-backed legal tender.


Well that's better than seeing Adam Cohen's words all the time.


Again with the ad hominem attacks, but no statements of any real substance.

Point out a single instance where I plagiarized Adam Cohen.


The fact that you think that voting rights addresses the share price speculation issue seems almost retarded to me.


What "speculation issue"? Stock market speculation is irrelevant to the fact that Bitcoin operates as a scam.

So people speculate on stock prices. Big deal. That doesn't mean the stock market is just as big a con game as Bitcoin. You're trying to compare two very different things because of a shared superficial similarity.

Yeah, people buy and speculate on stocks. People buy and speculate on commodities. BFD.

People buy and speculate on Bitcoin too. But that's where the similarities end, because stocks and commodities represent real-world things, whereas Bitcoin represents nothing but imaginary value based on wishful thinking. Comparing bitcoins (imaginary money backed by nothing) to shareholders owning stock in a company is one of the most "retarded" arguments I've seen in this thread.


Unfortunately it also shows that you don't understand a single word that I post.


You apparently don't even understand the things you post.

psionl0
1st October 2012, 07:06 PM
No, I think that the Airplane Game has nothing at all to do with "intellectual property," and neither does Bitcoin. I think that's just a red herring (http://en.wikipedia.org/wiki/Red_herring_(fallacy)) intended to spin this discussion off into another irrelevant direction.

Why don't you try to explain how you figure "intellectual property" has anything at all to do with Bitcoin vs. government-backed legal tender.Then it is time for you to research the concept of intellectual property.

No matter how incomprehensible it seems to you, "virtual" doesn't mean "nothing".

Korren
1st October 2012, 10:07 PM
Then it is time for you to research the concept of intellectual property.

No matter how incomprehensible it seems to you, "virtual" doesn't mean "nothing".

It also doesn't mean "intellectual property", so why don't you explain how you think intellectual property law applies to Bitcoins?

Korren
1st October 2012, 10:11 PM
er . . . 0.2g of gold? (I bet you thought I would say that bitcoins are worth their weight in gold :D)

Hoo boy. Let me put it this way: When you're standing on a termite-ridden, two-legged stool balanced atop of a hydraulic lift you're not really in a position chide people for trusting their safety to hydraulics.

psionl0
1st October 2012, 10:31 PM
It also doesn't mean "intellectual property", so why don't you explain how you think intellectual property law applies to Bitcoins?Can you own software?

psionl0
1st October 2012, 10:38 PM
Hoo boy. Let me put it this way: When you're standing on a termite-ridden, two-legged stool balanced atop of a hydraulic lift you're not really in a position chide people for trusting their safety to hydraulics.If your point was that you trust the government more than an algorithm then why didn't you say so?

There is no way that I could have come up with the answer you did for your question.

John Albert
1st October 2012, 11:07 PM
If your point was that you trust the government more than an algorithm then why didn't you say so?


I've already pointed out that Bitcoin is not just an "algorithm." You're repeating the same compositional fallacy of defining the entire system by only a single one of its many attributes.


No matter how incomprehensible it seems to you, "virtual" doesn't mean "nothing".


There you go with yet another strawman. I never said "virtual" means "nothing." That's a deliberate misrepresentation of my position that you keep on reiterating, even after I've corrected you numerous times.


Then it is time for you to research the concept of intellectual property.


Your snarky comments notwithstanding, I know what "intellectual property" means. It's a term of art in the legal profession, used to grant exclusive rights over ideas like inventions, trade secrets, works of art, advertising logos, slogans, etc. "Intellectual property" generally denotes information protected under copyright, trademark, and patent law.

Why is it so difficult for you to articulate a cogent argument, instead of dropping these obtuse hints and then berating people for not being able to decipher your tortured logic?

Spit it out! What the hell does intellectual property have to do with the discussion at hand?

psionl0
1st October 2012, 11:14 PM
when investors buy "bitcoins," they own imaginary shares in nothing.I never said "virtual" means "nothing."So bitcoins are not virtual?

Korren
1st October 2012, 11:24 PM
Can you own software?

Yes, but a) it's more common to license the rights to use it and b) bitcoins are not software.

You still need to explain how you believe that intellectual property law is important for bitcoins.

John Albert
1st October 2012, 11:53 PM
So bitcoins are not virtual?


Bitcoins are virtual, and they're also backed by nothing.

The entire market has not one penny of intrinsic value in it. All the money that anyone receives from the sale of bitcoins comes out of the pockets of the later investors, just like in a pyramid scheme. The entire thing is a confidence game based on wishful thinking.

psionl0
2nd October 2012, 12:41 AM
Yes, but a) it's more common to license the rights to use it and b) bitcoins are not software.How could bitcoins be anything but software? If it wasn't for the bits of code you have in the computer file called a "bitcoin wallet" you would have no bitcoins.

Is this some sort of "no true Scotsman" argument?

You still need to explain how you believe that intellectual property law is important for bitcoins.I never said "law" although it makes an interesting aside.

The legal system could always get all funny about the status of bitcoins but it is most likely that they would have the same status as songs or poetry or any other idea that can be patented. If you can prove that you paid for some bitcoins and that somebody took those coins from your computer then you have a legal case for reimbursement.

John Albert
2nd October 2012, 12:48 AM
The legal system could always get all funny about the status of bitcoins but it is most likely that they would have the same status as songs or poetry or any other idea that can be patented.


:crazy:

Mojo
2nd October 2012, 12:50 AM
I never said "law" although it makes an interesting aside.


You need to explain how intellectual property exists other than as a legal concept.

Mojo
2nd October 2012, 12:54 AM
The legal system could always get all funny about the status of bitcoins but it is most likely that they would have the same status as songs or poetry or any other idea that can be patented.


You can't patent songs or poetry because of prior use going back millennia.

Well, you might be able to in Australia (http://www.newscientist.com/article/dn965-wheel-patented-in-australia.html) but it would never stand up in court.

psionl0
2nd October 2012, 01:05 AM
You need to explain how intellectual property exists other than as a legal concept.Why would I want to wade through that legalistic minefield?

At the end of the day, a judge could just do a John Albert and say, "this is different".

John Albert
2nd October 2012, 01:11 AM
Bitcoin is already copyrighted under the standard MIT open-source license.

Korren
2nd October 2012, 01:25 AM
How could bitcoins be anything but software? If it wasn't for the bits of code you have in the computer file called a "bitcoin wallet" you would have no bitcoins.

Is this some sort of "no true Scotsman" argument?

No, it's making a distinction between software and information. A text file is not software. An e-mail is not software. An encryption key is not software. A jpg file is not software. A database is not software. Your WoW character is not software. A bitcoin wallet and its contents are not software.

And just to preempt another common misconception: no, information is not generally protected as intellectual property. Intellectual property only comes into play if the information enshrines one of the concepts protected by intellectual property law: a copyrighted work, a patented invention, a registered trademark and, in some places, a trade secret. Bitcoins does not fall in under any of these categories, and thus intellectual property has no relevance to them.

I never said "law" although it makes an interesting aside.

I don't think it makes much sense to talk about "intellectual property" outside of the context of intellectual property law.

The legal system could always get all funny about the status of bitcoins but it is most likely that they would have the same status as songs or poetry or any other idea that can be patented. If you can prove that you paid for some bitcoins and that somebody took those coins from your computer then you have a legal case for reimbursement.

... You have no understanding of intellectual property law whatsoever. Songs and poetry are issues of copyright, never patents. There is a clear distinction between ideas and inventions and only the latter can (sometimes) be patented. Bitcoins are not creative works nor inventions and can be neither copyrighted or patented, nor can they be trademarked, protected as trade secrets or considered to be design rights.

John Albert
2nd October 2012, 01:25 AM
You need to explain how intellectual property exists other than as a legal concept.
Why would I want to wade through that legalistic minefield?


Because you're the one who brought it up in the first place...

Because a number of people have asked you to clarify your position...

Because it's in your own best interest to make yourself understood...

Korren
2nd October 2012, 01:28 AM
Bitcoin is already copyrighted under the standard MIT open-source license.

No, Bitcoin is a protocol. Some of the software clients that implement that protocol have been licensed under open-source licenses, but that's another matter. The actual bitcoins themselves, of course, are just pieces of data that fall entirely outside the remit of intellectual property law.

psionl0
2nd October 2012, 01:33 AM
... You have no understanding of intellectual property law whatsoever.If you are a legal expert and you say that a case of bitcoin theft could not be brought before the courts - even if you can prove the facts of the matter - then I bow to your superior knowledge.

Korren
2nd October 2012, 01:49 AM
If you are a legal expert and you say that a case of bitcoin theft could not be brought before the courts - even if you can prove the facts of the matter - then I bow to your superior knowledge.

No, I'm not a legal expert but I do have a layman's knowledge of intellectual property laws.

Further, I do not say that a case of bitcoin theft could not be brought before the courts. As long as bitcoins have monetary value (which they do, even if it's down to fools) you have a case to bring before the courts1. It's just a matter of criminal law and not intellectual property law.

The law generally doesn't distinguish between virtual goods and actual goods: criminal cases have been successfully made over the theft of items in MMORPGs, for instance, and, in theory, income in bitcoins (or for that matter, WoW gold) is taxable.

[1] Granted, with bitcoins pseudonymous nature it will probably be difficult to prove anything.

John Albert
2nd October 2012, 01:54 AM
No, Bitcoin is a protocol. Some of the software clients that implement that protocol have been licensed under open-source licenses, but that's another matter. The actual bitcoins themselves, of course, are just pieces of data that fall entirely outside the remit of intellectual property law.


I meant the (original) Bitcoin software. It's an open source software project (http://sourceforge.net/projects/bitcoin/) licensed for public use under the MIT open source license (http://sourceforge.net/directory/os:linux/license:mit/freshness:recently-updated/).

And yes, I know that "bitcoins themselves" are not software. They're merely items of data encoded within the Bitcoin cipherblock chain. I also realize they cannot be patented or copyrighted under any IP law.

John Albert
2nd October 2012, 02:05 AM
Further, I do not say that a case of bitcoin theft could not be brought before the courts. As long as bitcoins have monetary value (which they do, even if it's down to fools) you have a case to bring before the courts1. It's just a matter of criminal law and not intellectual property law.

The law generally doesn't distinguish between virtual goods and actual goods: criminal cases have been successfully made over the theft of items in MMORPGs, for instance, and, in theory, income in bitcoins (or for that matter, WoW gold) is taxable.

[1] Granted, with bitcoins pseudonymous nature it will probably be difficult to prove anything.


Good luck getting the cops to seriously investigate the disappearance of your ethereal Internet funny money off your computer's hard drive.

Actually, there was some talk of a lawsuit (https://bitcointalk.org/index.php?topic=20699.0) against the owners of "MyBitcoin" by victims seeking damages for lost bitcoins. MyBitcoin was an online company that provided exchange services as well as a "cloud wallet" service. It was allegedly "hacked" in August of last year, to the tune of $250 million BTC. Many people suspect career finance swindler and premier Bitcoin huckster Bruce Wagner (http://www.metafilter.com/107065/Bruce-Wagner-and-the-Bitcoin-Scam) of being in on the heist.

psionl0
2nd October 2012, 02:11 AM
Further, I do not say that a case of bitcoin theft could not be brought before the courts. As long as bitcoins have monetary value (which they do, even if it's down to fools) you have a case to bring before the courts1. It's just a matter of criminal law and not intellectual property law.Thanks for the clarification.

This is what I suspected is the case but I am not about to predict an individual judge's ruling over a bitcoin matter.

Korren
2nd October 2012, 02:11 AM
Good luck getting the cops to seriously investigate the disappearance of your ethereal Internet funny money off your computer's hard drive.

Oh, certainly. Practically you're likely to be sol because of lack of evidence, but in principle the law applies and you could take the culprit to court for theft or embezzlement.

Mojo
2nd October 2012, 02:11 AM
Why would I want to wade through that legalistic minefield?


Because you posted: You still need to explain how you believe that intellectual property law is important for bitcoins.I never said "law" although it makes an interesting aside.


Highlighting from your post. You are clearly claiming that you were using the term "intellectual property" outside the context of intellectual property law. You therefore need to explain how intellectual property exists other than as a legal concept. you may not want to "wade through that legalistic minefield", but your argument requires you to do so.

psionl0
2nd October 2012, 02:23 AM
You are clearly claiming that you were using the term "intellectual property" outside the context of intellectual property law. You therefore need to explain how intellectual property exists other than as a legal concept. you may not want to "wade through that legalistic minefield", but your argument requires you to do so.I am probably using "intellectual property" in a non-legal sense.

Nevertheless, it is still possible to own software/information/ideas/data or whatever you want to call it.

Korren
2nd October 2012, 02:57 AM
I am probably using "intellectual property" in a non-legal sense.

Nevertheless, it is still possible to own software/information/ideas/data or whatever you want to call it.

It gets tricky. What you can certainly own is a physical expression or embodiment of the same: a print-out of a computer program, a set of index cards, a napkin with a hastily scribbled idea, a hard-drive containing a database of sensor readings.

Outside of intellectual copyright law (which may or may not apply depending on the specifics), unless they're depriving you of actual value you have no legal recourse if someone merely copies the information contained: types the program into a computer, photographs the index cards, glances at the napkin and reads the scribbles, copies the bits on the hard-drive.

(Not that legal access to the information is a separate issue. If you break into someone's house to read the idea they've scribbled on a napkin, you're still breaking and entering.)

In particular, it's worth noting that raw ideas have no legal protection. Only expressions of ideas -- inventions, creative works -- are protected. The underlying ideas are free for everyone to take. (As long as you don't also take the actual napkin it's written on.)

In Kremen vs. Cohen, the court used a three-part test to determine if (non-intellectual) property rights exists, which might relevant to this discussion: "First, there must be an interest capable of precise definition; second, it must be capable of exclusive possession or control; and third, the putative owner must have established a legitimate claim to exclusivity." Raw information is not, generally speaking, "capable of exclusive possession or control, but I would hazard a guess that the cryptological signing of bitcoins makes it pass that part of the test.

Belz...
2nd October 2012, 03:15 AM
So bitcoins are not virtual?

I think you're very, very confused.

psionl0
2nd October 2012, 03:59 AM
In Kremen vs. Cohen, the court used a three-part test to determine if (non-intellectual) property rights exists, which might relevant to this discussion: "First, there must be an interest capable of precise definition; second, it must be capable of exclusive possession or control; and third, the putative owner must have established a legitimate claim to exclusivity." Raw information is not, generally speaking, "capable of exclusive possession or control, but I would hazard a guess that the cryptological signing of bitcoins makes it pass that part of the test.There is no need to get that complicated. This forum will never get around all the legal issues associated with bitcoin.

It is sufficient to have established that bitcoin is definitely not "nothing".

psionl0
2nd October 2012, 04:00 AM
I think you're very, very confused.Try a little less quote filtering.

Korren
2nd October 2012, 04:05 AM
There is no need to get that complicated. This forum will never get around all the legal issues associated with bitcoin.

It is sufficient to have established that bitcoin is definitely not "nothing".

Uh? I fail to follow your argument. What is that supposed to be sufficient for?

Korren
2nd October 2012, 04:07 AM
Try a little less quote filtering.

No, I agree with him. Your argumentation appear confused and somewhat to the side of the rest of the debate.

psionl0
2nd October 2012, 04:22 AM
Uh? I fail to follow your argument. What is that supposed to be sufficient for?Don't tell me you've been barracking for John Albert without knowing what he has been posting.

Korren
2nd October 2012, 04:30 AM
Don't tell me you've been barracking for John Albert without knowing what he has been posting.

I have read his posts, and in all honesty I have to say your responses to him have tended to avoid his actual arguments and positions in favour of attacking tangential points and outright straw-men.

So, once again, I have to ask: what, exactly, is establishing "that bitcoin is definitely not 'nothing'" supposed to be sufficient for? Do you even know yourself at this point?

Belz...
2nd October 2012, 06:52 AM
Good luck getting the cops to seriously investigate the disappearance of your ethereal Internet funny money off your computer's hard drive.

I don't know. Since BTC have monetary value I think you'd have a case, if only you could have evidence of the theft and who stole it...

Belz...
2nd October 2012, 06:53 AM
Try a little less quote filtering.

I made no edit, alteration or omission, and I saw the exchange. You're still confused.

John Albert
2nd October 2012, 07:01 AM
In particular, it's worth noting that raw ideas have no legal protection. Only expressions of ideas -- inventions, creative works -- are protected. The underlying ideas are free for everyone to take.


Unless of course, you're talking about software patents, which appear to be granted on a mostly arbitrary basis.

psionl0
2nd October 2012, 07:28 AM
I have read his posts, and in all honesty I have to say your responses to him have tended to avoid his actual arguments and positions in favour of attacking tangential points and outright straw-men.That's like saying that John Albert has proven his ridiculous claim that bitcoin is a scam.

So, once again, I have to ask: what, exactly, is establishing "that bitcoin is definitely not 'nothing'" supposed to be sufficient for? Do you even know yourself at this point?You obviously missed the posts that are rebutted by establishing that bitcoin is not nothing.

John Albert
2nd October 2012, 07:32 AM
It is sufficient to have established that bitcoin is definitely not "nothing".


I never said Bitcoin is "nothing." You're misrepresenting me again.

What I said was that bitcoins are backed by nothing. They purport to be units of something, but there is no stable foundation beneath them. There is no real-world economy, no authority, or even any legal system in place to ensure their value. Bitcoins represent nothing more than whatever some small community of people are willing to pay for them, and that price fluctuates crazily because there's no intrinsic value on which to stabilize the system; all value comes from whatever price the "greater fools (http://en.wikipedia.org/wiki/Greater_fool_theory)" are willing to pay from one moment to another, in hopes of sharing in the fantasy, making a killing, or recouping their earlier losses.

The only mechanism that even ensures the existence of bitcoins is an arcane cryptographic protocol, which is a really lousy basis for an economy because cryptography has a long history of being broken. Anybody with even a basic understanding of cryptographic systems should realize that it's only a matter of time before this thing gets cracked. There's money wrapped up in Bitcoin, so the stakes are high. You can bet that lots of very smart people are busy picking apart the code at this very moment. Sooner or later a fatal flaw will be discovered, the crypto will get broken and the entire house of cards will come crashing down. Woe be to the poor fools who wasted their money on bitcoins whenever that happens.

Even beyond the risk of the crypto being cracked, there's the problem that the security of the entire system is predicated on the leverage of computational power against outside attack. For that model to succeed, the computational power would need to be decentralized and evenly distributed among many hosts. But what we're seeing with Bitcoin is an increasing aggregation of computational power among large "mining pools," one of which currently handles over a third of all transactions on the "blockchain." As the "mining difficulty" ramps upward, the economics will force smaller mining interests out of the game, further consolidating computational power into a single, monopolistic concern. That imbalance has the potential to topple the entire economy even without the vaunted "cryptographic algorithm" being broken.

In addition to the inherent problems of predicating an imaginary economy upon a computationally expensive cipher, you have the significant problem of interfacing that imaginary economy with the real world. Lacking any means of transferring value between Bitcoins and other currencies, the entire Bitcoin system would operate in a vacuum, no more "real" than a video game. So that's where the "exchanges" come in. They're a business-critical part of Bitcoin, so the safety and stability of the entire economy relies upon them, yet in only 3 years of operation they've already proven notoriously insecure and unreliable.

The entire Bitcoin economy is a shaky structure built on a fiction.

I cannot prove the intentions of the Bitcoin creators one way or another, so I can't say for certain that it was deliberately engineered to rip people off. But judging by the way it operates, it certainly appears that Bitcoin is a financial scam that harbors and facilitates a variety of subsidiary scams.

psionl0
2nd October 2012, 07:33 AM
I made no edit, alteration or omission, and I saw the exchange. You're still confused.Contradictory statements tend to do that to me.

Korren
2nd October 2012, 07:35 AM
That's like saying that John Albert has proven his ridiculous claim that bitcoin is a scam.

No, it's like saying that your responses to him have tended to avoid his actual arguments and positions in favour of attacking tangential points and outright straw-men.

You obviously missed the posts that are rebutted by establishing that bitcoin is not nothing.

That's a possibility, but I think the alternative that you've misread him or are quibbling on some semantic point tangential to his arguments is more likely.

John Albert
2nd October 2012, 07:38 AM
I have read his posts, and in all honesty I have to say your responses to him have tended to avoid his actual arguments and positions in favour of attacking tangential points and outright straw-men.

That's like saying that John Albert has proven his ridiculous claim that bitcoin is a scam.


Actually, no. He isn't saying that at all. As far as I've seen, he hasn't passed judgment one way or another on whether it's a scam. All he's saying is that you're not doing a very good job at arguing your case.

Korren
2nd October 2012, 07:47 AM
Contradictory statements tend to do that to me.

No, they don't.

(Sorry. :-p )

John Albert
2nd October 2012, 07:57 AM
Oh, certainly. Practically you're likely to be sol because of lack of evidence, but in principle the law applies and you could take the culprit to court for theft or embezzlement.


Actually, I'd think a prosecutor (an American one, anyway ;)) would have a much easier go at establishing a violation of the Computer Fraud and Abuse Act of 1986 (http://en.wikipedia.org/wiki/Computer_Fraud_and_Abuse_Act) (a.k.a. the "Anti-hacking Law"), if the attacker did indeed obtain unauthorized access to the victim's computer system.

But it's doubtful that an American prosecutor would (or could) prosecute the offender on theft charges because unlike some other countries (like Australia and South Korea, for example) the USA's criminal justice system does not recognize "virtual assets" (http://www.gamepolitics.com/2011/10/25/do-you-actually-own-your-virtual-property-your-favorite-online-game) as real property. Of course different countries have different laws, so YMMV.

There's also the possibility that a court case involving bitcoin theft could change all that.

Belz...
2nd October 2012, 08:38 AM
Contradictory statements tend to do that to me.

No, the confusion is the reason why you think they're contradictory.

psionl0
2nd October 2012, 10:05 AM
I never said Bitcoin is "nothing." You're misrepresenting me again.

What I said was that bitcoins are backed by nothing. They purport to be units of something, but there is no stable foundation beneath them.That's not what you were saying in post #1319 (http://forums.randi.org/showthread.php?postid=8657431#post8657431). If what you mean is that bitcoin is backed by nothing of value then that is a bit of a non-statement. There was never any intention for that to happen. Bitcoin stands or falls on its own.

There is no real-world economy, no authority, or even any legal system in place to ensure their value.Who said there has to be? The test is whether the bitcoin network (not the exchanges) is secure enough to work without resorting to external authorities. So far this is the case.

Bitcoins represent nothing more than whatever some small community of people are willing to pay for them, and that price fluctuates crazily because there's no intrinsic value on which to stabilize the system; all value comes from whatever price the "greater fools (http://en.wikipedia.org/wiki/Greater_fool_theory)" are willing to pay from one moment to another, in hopes of sharing in the fantasy, making a killing, or recouping their earlier losses.In spite of your "greater fool" references (and this is a prediction not a fact), you are just pointing out that bitcoins are worth whatever somebody is willing to pay for them. This is as it should be. This is the way commerce has worked for thousands of years.

Why should bitcoin be any different? I don't recall a rule saying that something must exist independently of electronic media before it can be marketed. I don't recall a rule saying that something has to have a utility beyond pure existence before it can be marketed. I don't see what business it is of yours if somebody else wants to buy them - even if they are just gambling. It is just the old case of caveat emptor/caveat venditor.

And if the only use made of bitcoin is for gambling, are you really going to say that shouldn't be allowed? That is unbelievably oppressive. If the worst of the worst is true, all you can say is that the founders might have made a fortune in bitcoins. When did making money out of an idea become a bad thing? Maybe you think they should be open about how much they are making but that is an issue for the buyers of bitcoins - not bystanders.

The only mechanism that even ensures the existence of bitcoins is an arcane cryptographic protocol, which is a really lousy basis for an economy because cryptography has a long history of being broken. Anybody with even a basic understanding of cryptographic systems should realize that it's only a matter of time before this thing gets cracked. There's money wrapped up in Bitcoin, so the stakes are high. You can bet that lots of very smart people are busy picking apart the code at this very moment. Sooner or later a fatal flaw will be discovered, the crypto will get broken and the entire house of cards will come crashing down. Woe be to the poor fools who wasted their money on bitcoins whenever that happens.Another prediction. If it comes to pass and the algorithm gets broken then it's game over. All the gamblers who didn't get out in time lose and no spin-off technology would be likely.

In addition to the inherent problems of predicating an imaginary economy upon a computationally expensive cipher, you have the significant problem of interfacing that imaginary economy with the real world. Lacking any means of transferring value between Bitcoins and other currencies, the entire Bitcoin system would operate in a vacuum, no more "real" than a video game.Again, that is not anybody's problem. If lots of people want to buy and sell bitcoins then exchanges will spring up to accommodate them but that is not a function of bitcoin itself.

So that's where the "exchanges" come in. They're a business-critical part of Bitcoin, so the safety and stability of the entire economy relies upon them, yet in only 3 years of operation they've already proven notoriously insecure and unreliable.The exchanges have nothing to do with the operation of bitcoin - only buying and selling. Exchange security is mostly about taking proper security measures. It seems almost unamerican to suggest that exchange security won't improve without government involvement but that is a separate issue altogether.

The entire Bitcoin economy is a shaky structure built on a fiction.ftfy. There is NO bitcoin economy. Just bitcoins.

I cannot prove the intentions of the Bitcoin creators one way or another, so I can't say for certain that it was deliberately engineered to rip people off.But that hasn't stopped you from claiming so anyway.

But judging by the way it operates, it certainly appears that Bitcoin is a financial scam that harbors and facilitates a variety of subsidiary scams.Pure non-sequitur. There is no bitcoin economy to "scam" anybody. There are just scams that bitcoin holders (like anybody else) can be victims of. There is no "system" designed to lure in the suckers. Just something to buy or sell.

Belz...
2nd October 2012, 10:42 AM
Bitcoin stands or falls on its own.

Frequently.

Who said there has to be? The test is whether the bitcoin network (not the exchanges) is secure enough to work without resorting to external authorities.

You seem to be implying that this is the purpose of BTC, but I see no evidence of this. How do you know ?

Pure non-sequitur. There is no bitcoin economy to "scam" anybody.

Again, for someone who thinks other posters shouldn't say they know the mind of the people who made bitcoin, you seem to claim quite a bit of said knowledge yourself.

John Albert
2nd October 2012, 10:58 AM
I never said Bitcoin is "nothing." You're misrepresenting me again.

What I said was that bitcoins are backed by nothing. They purport to be units of something, but there is no stable foundation beneath them.
That's not what you were saying in post #1319 (http://forums.randi.org/showthread.php?postid=8657431#post8657431).


This is what I said in post #1319:

So you're saying that the value of bitcoins is due to the "greater fool" theory? How comforting.


Exactly.

He's arguing that there will always be some supply of suckers who are willing to pay a dollar amount for nothing, on the amoral pipe-dream of scamming some other future sucker at a later date.

It can't continue forever. Sooner or later the thing will run out of steam, and/or its security will be compromised. The law of averages demands it.

See?

Why do you feel the need to constantly misrepresent the things I say? Can't you just honestly address my statements without these transparent attempts at subterfuge?

Or do you really, honestly not understand the difference between saying "Bitcoin is nothing" and saying "bitcoins represent nothing of value"?


If what you mean is that bitcoin is backed by nothing of value then that is a bit of a non-statement.


Um, no, I'm pretty sure it's actually a statement.


Bitcoin stands or falls on its own.


:confused:

It's fallen repeatedly over the past 2 years, and each and every time, lots of people have lost a lot of money while others have gotten rich directly at their expense.


There is no real-world economy, no authority, or even any legal system in place to ensure their value.


Who said there has to be?


The fact that there's nothing behind it except a bunch of people taking free money directly out of the pockets of investors is what makes it a scam.

My mind boggles at how steadfastly resistant you are to even trying to comprehend that obvious fact.


The test is whether the bitcoin network (not the exchanges) is secure enough to work without resorting to external authorities. So far this is the case.


What "test"?

Is there some kind of "test" to see how many people can get scammed on their foolish investments before the entire thing collapses under its own inertia?

Who is in charge of proctoring this "test"?

I'd say that person, whomever they are, should be a prime candidate for a stint in Federal "PMITA" Prison.


In spite of your "greater fool" references (and this is a prediction not a fact), you are just pointing out that bitcoins are worth whatever somebody is willing to pay for them. This is as it should be. This is the way commerce has worked for thousands of years.


Appeal to tradition (http://en.wikipedia.org/wiki/Appeal_to_tradition). You must be referring to the thousands of years prior to the advent of Federal laws against the sale of false and misleading securities.


Why should bitcoin be any different? I don't recall a rule saying that something must exist independently of electronic media before it can be marketed. I don't recall a rule saying that something has to have a utility beyond pure existence before it can be marketed.


Here are a few Federal laws that Bitcoin and its exchanges appear to violate:

Securities Act of 1933

Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives:

require that investors receive financial and other significant information concerning securities being offered for public sale; and
prohibit deceit, misrepresentations, and other fraud in the sale of securities.

The full text of this Act is available at: http://www.sec.gov/about/laws/sa33.pdf.

Purpose of Registration

A primary means of accomplishing these goals is the disclosure of important financial information through the registration of securities. This information enables investors, not the government, to make informed judgments about whether to purchase a company's securities. While the SEC requires that the information provided be accurate, it does not guarantee it. Investors who purchase securities and suffer losses have important recovery rights if they can prove that there was incomplete or inaccurate disclosure of important information.

The Registration Process

In general, securities sold in the U.S. must be registered. The registration forms companies file provide essential facts while minimizing the burden and expense of complying with the law. In general, registration forms call for:

a description of the company's properties and business; a description of the security to be offered for sale;
information about the management of the company; and
financial statements certified by independent accountants.

http://www.sec.gov/about/laws.shtml#secact1933


Securities Exchange Act of 1934

With this Act, Congress created the Securities and Exchange Commission. The Act empowers the SEC with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation's securities self regulatory organizations (SROs). The various securities exchanges, such as the New York Stock Exchange, the NASDAQ Stock Market, and the Chicago Board of Options are SROs. The Financial Industry Regulatory Authority (FINRA) is also an SRO.

The Act also identifies and prohibits certain types of conduct in the markets and provides the Commission with disciplinary powers over regulated entities and persons associated with them.

The Act also empowers the SEC to require periodic reporting of information by companies with publicly traded securities.

The full text of this Act can be read at: http://www.sec.gov/about/laws/sea34.pdf.

...

Corporate Reporting

Companies with more than $10 million in assets whose securities are held by more than 500 owners must file annual and other periodic reports. These reports are available to the public through the SEC's EDGAR database.

Insider Trading

The securities laws broadly prohibit fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against fraudulent insider trading. Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading.

Registration of Exchanges, Associations, and Others

The Act requires a variety of market participants to register with the Commission, including exchanges, brokers and dealers, transfer agents, and clearing agencies. Registration for these organizations involves filing disclosure documents that are updated on a regular basis.

The exchanges and the Financial Industry Regulatory Authority (FINRA) are identified as self-regulatory organizations (SRO). SROs must create rules that allow for disciplining members for improper conduct and for establishing measures to ensure market integrity and investor protection. SRO proposed rules are subject to SEC review and published to solicit public comment. While many SRO proposed rules are effective upon filing, some are subject to SEC approval before they can go into effect.

http://www.sec.gov/about/laws.shtml#secexact1934


Investment Company Act of 1940

This Act regulates the organization of companies, including mutual funds, that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public. The regulation is designed to minimize conflicts of interest that arise in these complex operations. The Act requires these companies to disclose their financial condition and investment policies to investors when stock is initially sold and, subsequently, on a regular basis. The focus of this Act is on disclosure to the investing public of information about the fund and its investment objectives, as well as on investment company structure and operations. It is important to remember that the Act does not permit the SEC to directly supervise the investment decisions or activities of these companies or judge the merits of their investments.

The full text of this Act is available at: http://www.sec.gov/about/laws/ica40.pdf.
http://www.sec.gov/about/laws.shtml#invcoact1940


I'm sure there are others.


I don't see what business it is of yours if somebody else wants to buy them - even if they are just gambling. It is just the old case of caveat emptor/caveat venditor.


Ah, the old "Some of us got a good thing going here, why don't you butt out" argument. How charming.

Well, I have a right to warn people about dangerous scams. That's a major part of what the so-called "skeptics movement" is about, in case you didn't notice.


And if the only use made of bitcoin is for gambling, are you really going to say that shouldn't be allowed?


Yes, because it's fundamentally unfair and manipulative, and people ought to be made aware of that.


That is unbelievably oppressive.


:cry1

Cry me a river.


If the worst of the worst is true, all you can say is that the founders might have made a fortune in bitcoins.


...at the direct expense of a lot of innocent people who got swindled.


When did making money out of an idea become a bad thing?


It's a bad thing when the "idea" is specifically engineered to siphon funds directly from later investors into the pockets of the early adopters.


The exchanges have nothing to do with the operation of bitcoin - only buying and selling. Exchange security is mostly about taking proper security measures.


This is the same logical fallacy (http://en.wikipedia.org/wiki/Fallacy_of_composition) you've been called on numerous times already, yet you still can't seem to wrap your mind around it.

The exchanges have everything to do with the operation of Bitcoin. If there were no exchanges, there would be no Bitcoin trading or commerce at all.


It seems almost unamerican


Gimme a break :rolleyes:

"Last refuge of a scoundrel."


There is NO bitcoin economy. Just bitcoins.
Pure non-sequitur. There is no bitcoin economy to "scam" anybody. There are just scams that bitcoin holders (like anybody else) can be victims of. There is no "system" designed to lure in the suckers. Just something to buy or sell.


:crazy:

Korren
2nd October 2012, 11:17 AM
And if the only use made of bitcoin is for gambling, are you really going to say that shouldn't be allowed?

Gambling is strictly regulated and taxed by the government.

John Albert
2nd October 2012, 12:58 PM
I cannot prove the intentions of the Bitcoin creators one way or another, so I can't say for certain that it was deliberately engineered to rip people off.


But that hasn't stopped you from claiming so anyway.


Um, no, that's another lie, another blatant misrepresentation of what I've said.

I have repeatedly stated that I don't claim to know the minds of the Bitcoin creators, and have explained that my entire assessment of Bitcoin has come solely from a dispassionate, critical analysis of its design and operation, and the manner in which it has been implemented.

And hey, guess what... my very next sentence in my post, I clarified that position yet again:


But judging by the way it operates, it certainly appears that Bitcoin is a financial scam that harbors and facilitates a variety of subsidiary scams.


You handwaved it as a "non sequitur," but that accusation doesn't even make sense. Do you even know what a non sequitur is?

psionl0
2nd October 2012, 02:41 PM
This is what I said in post #1319:

See?

Why do you feel the need to constantly misrepresent the things I say? Can't you just honestly address my statements without these transparent attempts at subterfuge?

Or do you really, honestly not understand the difference between saying "Bitcoin is nothing" and saying "bitcoins represent nothing of value"?LOL It says in black and white "pay a dollar amount for nothing" and you still deny it.

Of course, bitcoins aren't supposed to represent anything of value. They just exist.

It's fallen repeatedly over the past 2 years, and each and every time, lots of people have lost a lot of money while others have gotten rich directly at their expense.This is just a colossal LIE (http://bitcoincharts.com/charts/mtgoxUSD#czsg2009-07-01zeg2012-10-04ztgSzm1g10zm2g25zv). Apart from the loss of value between July and November 2011, the price of bitcoin has risen constantly with few hiccups on the way.

The fact that there's nothing behind it except a bunch of people taking free money directly out of the pockets of investors is what makes it a scam.

My mind boggles at how steadfastly resistant you are to even trying to comprehend that obvious fact.This is why everything you post about bitcoin is nonsense.

There are no people running around picking pockets (or whatever other imagery you are trying to conjure up). Nobody is demanding money and nobody is being coerced into buying bitcoins. No promises or representations are made to potential bitcoin buyers.

All these words like "scam", "pyramid" exist only inside your head. The only scamming going on is in your head. You have to invent an entire "system" to try and make your objections sound plausible but that system also exists only inside of your head.

What "test"?The bitcoin algorithm test.

Is there some kind of "test" to see how many people can get scammed on their foolish investments before the entire thing collapses under its own inertia?No.

Who is in charge of proctoring this "test"?

I'd say that person, whomever they are, should be a prime candidate for a stint in Federal "PMITA" Prison.Releasing bitcoin onto the internet without getting prior permission from the government must be a shocking crime.

Appeal to tradition (http://en.wikipedia.org/wiki/Appeal_to_tradition). You must be referring to the thousands of years prior to the advent of Federal laws against the sale of false and misleading securities.Don't we allow things to be sold at whatever price someone is willing to pay anymore?

Here are a few Federal laws that Bitcoin and its exchanges appear to violate:


http://www.sec.gov/about/laws.shtml#secact1933



http://www.sec.gov/about/laws.shtml#secexact1934



http://www.sec.gov/about/laws.shtml#invcoact1940


I'm sure there are others.If you want to make the argument that bitcoin exchanges are violating the security acts that's fine but it has got absolutely nothing to do with bitcoin itself

Ah, the old "Some of us got a good thing going here, why don't you butt out" argument. How charming.I couldn't have put it better myself. ;)

Well, I have a right to warn people about dangerous scams. That's a major part of what the so-called "skeptics movement" is about, in case you didn't notice.That's why your time is wasted here. Bitcoin is not a "dangerous scam" (when did you upgrade the description from plain old scam?)

Readers have the right to know that you are desperately trying to make them believe that bitcoin is a scam because you want it banned and moral arguments are not enough.

Yes, because it's fundamentally unfair and manipulative, and people ought to be made aware of that.

:cry1

Cry me a river.So bitcoin is bad because people gamble with it? That must mean that you are opposed to all forms of gambling. Or is gambling bad only when it involves bitcoin?

What is "fundamentally unfair" about buying bitcoins? How are people being "manipulated" into buying bitcoins. This is just more words you are throwing around like mud and hoping something sticks.

This is what it is all about for you. Imposing your moral values on the rest of society.

...at the direct expense of a lot of innocent people who got swindled.Bitcoin buyers are now "innocent people"? How did these "innocent people" get swindled? Didn't they get the bitcoins they bought?

How many other negative ways can buying something be presented?

It's a bad thing when the "idea" is specifically engineered to siphon funds directly from later investors into the pockets of the early adopters.So now they have a hose in their pockets? The hyperbole never ceases!

Of course bitcoin wasn't "engineered" to do any such thing. It just exists. If bitcoin was "engineered" to do anything, it is to be transferred over the internet without requiring a third party.

It's ridiculous to suggest that the whole reason for eliminating the third party was to make bitcoin a "scam".

This is the same logical fallacy (http://en.wikipedia.org/wiki/Fallacy_of_composition) you've been called on numerous times already, yet you still can't seem to wrap your mind around it.

The exchanges have everything to do with the operation of Bitcoin. If there were no exchanges, there would be no Bitcoin trading or commerce at all.That is because the bitcoin exchanges are completely and utterly irrelevant to bitcoin itself.

Nothing about the bitcoin algorithm requires the establishment of exchanges. Without them, only a bit of private trading would be possible and bitcoins would probably cost a lot less. There is no rule that says that the value of bitcoin has to be enhanced in any way.

The only reason the exchanges exist is because bitcoin has proved immensely popular and a demand for them sprung up. Do you think that is evil?

Gimme a break :rolleyes:

"Last refuge of a scoundrel."

:crazy:Yes, it bears repeating over and over until the message sinks in:
There is NO scheme, scam, system, economy, pyramid or anything else. There is only bitcoins.

shuttlt
2nd October 2012, 03:29 PM
Would it be a good idea to agree to restrict the discussion to either:

a. Bitcoin the protocol.

b. This particular instance of bitcoin. Aren't there others (litecoin)? But no exchanges, no transfering into dollars. Is this what psionIO wants?

c. The Bitcoin system as a whole, including the exchanges, the users, etc...

It just seems to me that a lot of the time the conversation is John Albert saying "c. operates as a scam" and psionIO saying "no, b. does not operate as a scam".

John Albert
3rd October 2012, 10:56 AM
LOL It says in black and white "pay a dollar amount for nothing" and you still deny it.


Bitcoin investors are paying a dollar amount to buy into a fantasy. Bitcoins represent no real world thing.


Of course, bitcoins aren't supposed to represent anything of value. They just exist.


Just like the tickets on the "Airplane Game." They're immaterial placeholders for wealth that serve to facilitate the logical breakdown and redistribution of wealth into the hands of the majority bitcoin holders.

To help you understand what I'm talking about, please try answering these questions:

For what reason was Bitcoin created in the first place?

What benefits does Bitcoin bring to the table that make it better suited to that purpose than previously existing solutions?

Why go through the trouble of implementing all this advanced cryptography and resource-hogging software to support a fake currency, when the problem could be more easily solved by creating a distributed, peer-to-peer payment transfer system using existing currencies?


It's fallen repeatedly over the past 2 years, and each and every time, lots of people have lost a lot of money while others have gotten rich directly at their expense.
This is just a colossal LIE (http://bitcoincharts.com/charts/mtgoxUSD#czsg2009-07-01zeg2012-10-04ztgSzm1g10zm2g25zv). Apart from the loss of value between July and November 2011, the price of bitcoin has risen constantly with few hiccups on the way.


Quite a few "hiccups" indeed (https://bitcointalk.org/index.php?topic=83794.0).

The chart you've posted looks pretty good from the long-range perspective. But zooming in to view the day-to-day activity of this market tells a different story entirely.

Look at the large number of precipitous drop-offs where the share price has fallen drastically, often losing a major percentage of its total value. The reason the Bitcoin economy is so unstable is because it's a small and very slanted playing field that can be easily gamed by a tiny fraction of outrageously powerful players. Do you realize what happens every time one of the major players cashes in a huge load of BTC? Lots of people who are in the process of selling their coins (and even people just using Bitcoin for its ostensible purpose as a currency) are effectively getting screwed. The market drops so fast that you can't transact the exchange fast enough to avoid a huge loss in value. And there's no telling when such a drop is going to occur. You can get screwed out of your money at any moment of any day.

Just because a lot of people are jumping on board and buying into this craze is no indication that it isn't a scam. My advice to you is to do a bit of reading on speculative bubble scams. This would be a good place to start (http://www.econlib.org/library/Mackay/macEx2.html#firstpage-bar).


There are no people running around picking pockets (or whatever other imagery you are trying to conjure up). Nobody is demanding money and nobody is being coerced into buying bitcoins. No promises or representations are made to potential bitcoin buyers.


Nobody coerced or forced investors to sink their money into Madoff Securities or the various pyramid or Ponzi schemes either, but you'd be a fool to defend that those kinds of practices as not being scams (as you've already tried to argue at least once). The whole premise of a scam is to beguile somebody into giving up their money freely, by raising false hopes by means of a compelling story (like a "revolutionary digital cryptocurrency that will revolutionize the world").

The entire premise of Bitcoin being a currency is fraudulent to start with. Bitcoin is aggressively promoted as a general-use currency, but it's not a currency. It lacks most of the fundamental elements that define a currency. That fact ought to raise some red flags right away.

What it really amounts to is a crooked investment scam based on a fraudulent "virtual commodity" that represents nothing real. You'd have to look pretty damn hard to find an investment more foolish than just throwing your money away at nothing.


All these words like "scam", "pyramid" exist only inside your head. The only scamming going on is in your head.


I've backed up my position with facts, sound reasoning and decent ethical principles. You have yet to rebut any of my arguments with anything substantial. Your ad hominem attacks amount to nothing.


You have to invent an entire "system" to try and make your objections sound plausible but that system also exists only inside of your head.


I haven't "invented" anything. The "system" I've described is the actual operation of the Bitcoin protocol, the software that implements that protocol, and the various financial services that support that protocol being used as a means for exchange.

That you deny the existence of a "system" speaks volumes about your own closed-minded, willful ignorance about this cockamamie "investment opportunity" you've decided to involve yourself with.


The bitcoin algorithm test.


I've never heard of this "Bitcoin algorithm test" before. Please link to somewhere I can read about it.


Releasing bitcoin onto the internet without getting prior permission from the government must be a shocking crime.


:confused:

I was referring to the scam in which some programmers created a fake, pre-cornered economy for themselves wherein they could feed off the monetary investments of credulous rubes. It's most certainly a crime under several US Federal codes, but not really all that shocking to be honest.


Appeal to tradition (http://en.wikipedia.org/wiki/Appeal_to_tradition). You must be referring to the thousands of years prior to the advent of Federal laws against the sale of false and misleading securities.
Don't we allow things to be sold at whatever price someone is willing to pay anymore?


Not when those "things" are false investment securities peddled through unlicensed, unregistered financial institutions that operate outside the law and regularly lose millions of dollars of their customers' money.

(Why do I really need to explain this over and over again?)


If you want to make the argument that bitcoin exchanges are violating the security acts that's fine but it has got absolutely nothing to do with bitcoin itself


The above statement makes absolutely no sense. You said:

I don't recall a rule saying that something must exist independently of electronic media before it can be marketed. I don't recall a rule saying that something has to have a utility beyond pure existence before it can be marketed.


So I pointed out that yes, in fact there are several "rules" (Federal criminal codes, in fact) governing the industry of marketing financial instruments, and that Bitcoin violates a number of them.

Now you're turning that around and saying "it's got nothing to do with Bitcoin"?!?

Please try for once to make an honest effort at a conversation instead of just omnislashing my posts with snarky replies.


Ah, the old "Some of us got a good thing going here, why don't you butt out" argument. How charming.
I couldn't have put it better myself. ;)


I was actually criticizing your unprincipled sense of ethics. Your impertinent brush-off speaks volumes about your true character.


That's why your time is wasted here.


My time is most assuredly not wasted here.


Readers have the right to know that you are desperately trying to make them believe that bitcoin is a scam because you want it banned and moral arguments are not enough.


Quite putting words into my mouth. I never said any of that.


So bitcoin is bad because people gamble with it?


It's bad because it's a contrived, crooked economy that operates as an investment scam.


That must mean that you are opposed to all forms of gambling.


No, but I am certainly opposed to crooked gambling that is unfairly rigged against the interest of the players.


Or is gambling bad only when it involves bitcoin?


Bitcoin is bad, yes, just like any other investment scam. Not quite as bad as some others, but far worse than most just on the basis of its sheer scale.


What is "fundamentally unfair" about buying bitcoins?


Bitcoin is fundamentally unfair because it's a crooked market wherein all the monetary value comes from new investors paying money in but the majority of the capital is owned by only 1% of the players who initially paid nothing yet who control well over half the resources, and who regularly exploit that advantage to manipulate the market.

There, I managed to cram most of the meat of it into one single run-on sentence.

*whew*


How are people being "manipulated" into buying bitcoins.


I never said people are being "manipulated" into buying bitcoins.

What I said was, Bitcoin is a manipulative system.

It's manipulative in that its promoters falsely advertise it as a general-use currency, it is marketed towards political radicals whose ideology clouds their financial judgment; it hides critical details about its design beneath layers of complexity, it relies on disingenuous metaphors such as "mining" to justify creating a clearly rigged system intended to disproportionately benefit its creators, and its market is unfairly manipulated by a small cartel of users who are anonymous.


This is what it is all about for you. Imposing your moral values on the rest of society.


You really need to check your attitude there. You're betraying the weakness of your position by relying on all these tiresome ad hominem attacks. Raising awareness about a financial scam does not constitute "imposing moral values."


Bitcoin buyers are now "innocent people"?


Good point. I'm probably wrong about that point. In fact there's pretty good evidence in this thread and elsewhere that at least a large number of them are total douchebags.


How did these "innocent people" get swindled? Didn't they get the bitcoins they bought?


[QUOTE]List of events in rough chronological order

~Stone Man Loss
Time: 2010-08-09T23:35 ± 600 s
Victim: Stone Man @BitcoinTalk
Status: Coins lost, effectively destroyed
Amount: Exactly 8999.00000000 BTC
Transaction of interest: eb5b761c7380ed4c6adf688f9e5ab94953dcabeda47d9eeabd 77261902fccccf
Due to not keeping proper wallet backups, 8999 BTC sent as change were effectively destroyed when the private key controlling them was lost. Because this theft is from 2010, it is not included in severity lists.


~Ubitex Scam
Time: April 2011 to July 2011
Victim: Investors on GLBSE of Ubitex
Status: Ubitex founder known, but nothing returned
Amount: About 1138.98 BTC (amount "invested" into Ubitex)
Equivalent USD: 11668.70 $ (wt. avg)
A GLBSE investment run by a minor, around 1000 BTC of the missing investments are said to have been "spent", many of which were further scammed, or converted into USD without follow-up.


~Stefan Thomas Loss
Time: June 2011
Victim: Stefan Thomas
Status: Coins destroyed (no thief)
Amount: Estimate 7000 BTC (estimate)
Equivalent USD: 128000 $ (wt. avg, rounded to nearest thousand)


~Allinvain Theft
Time: 2011-06-13T17:52 (UTC) ± 600 s [satoshi estimated block transmission time]
Victim: Bitcointalk.org user "allinvain"
Status: Thief uncaught
Amount: Exactly 25000.01000000 BTC
Equivalent USD: 502750.20 $
Chief transaction of interest: 4885ddf124a0f97b5a3775a12de0274d342d12842ebe595203 59f976721ac8c3
Perhaps the most famous bitcoin heist of all time, there has been some dispute about its genuineness, with some believing that it was set up as a ploy for donations. Allinvain was an early adopter, and most of his coins were mined, so there is little reason for him to sabotage Bitcoin's image for donations. The hack ended up redistributing some early-adopter coins, and the presence of these coins in nearly every user's wallet is cited as a reason that a tainted coin system would definitely fail. Although not as important as it once was, being dwarfed by the MyBitcoin Theft not too much later, this heist will likely remain the most famous for some time.


~June 2011 Mt. Gox Incident
Time: 2011-06-19T18:00 ± 1 h (theft), days ensuing (hacks & withdrawals)
Victim: Mt. Gox (some claim also customers)
Status: Thief uncaught
Amount:
Stolen by thief: 2000 BTC (official estimate)
Additional withdrawn from Mt. Gox: 643.27 BTC (lower bound)
Total: Lower bound 2643.27 BTC
Equivalent USD: 46970.91 $ (used last trade value; actual price at the time was not reliable)
Transactions: none released officially
The event's scale was widely disputed; some report a theft of almost 500000 BTC due to related account hacking. At this time, these reports seem to be unfounded and closer inspection puts the losses at closer to 2500 BTC. Some additional money was stolen by traders capitalizing on the dropping price and withdrawing in time, including toasty of the bitcointalk.org forums. Mt. Gox claims it has reimbursed customers for this theft.


~MyBitcoin Theft
Time: Unknown time in July 2011 (claimed it was a process)
Victim: MyBitcoin & customers
Status: Thief unknown, planned shutdown suspected (disputed theft)
Suspects: "Tom Williams", likely pseudonym (founder of MyBitcoin)
Amount: Exactly 78739.58205388 BTC
Equivalent USD: 1110544 $ (wt. avg, definitely >$1M, rounded to nearest $)
Transaction information: none
Little information was released about the MyBitcoin theft, however, many argue that Tom Williams ran it as a scam (and was not a theft per se). In terms of both dollars and bitcoins, this was by far the largest theft, however, it is possible it was simply a scam. Although MyBitcoin offered to release its code as a gift to the community, it failed to follow through on that promise. In the months ensuing, some evidence has been uncovered supporting mortgage broker Bruce Wagner; however, any evidence is inconclusive.


~Bitomat.pl Loss
Time: 2011-07-26
Victim: Bitomat.pl
Status: Coins destroyed (no thief)
Amount: Estimate 17000 BTC (likely estimate/lower bound, no tx due to technical reason)
Equivalent USD: 236000 $ (rounded to nearest thousand)
Bitomat.pl, during a server restart, had its remote Amazon service that housed the wallet wiped. No backups were kept. Mt. Gox later bailed bitomat.pl out, and neither customers nor original owners suffered any loss from the incident.


~Mooncoin Theft
Time: 2011-09-11
Victim: Mr. Moon, Mooncoin, & Customers
Status: Unknown (Federal intervention suspected)
Amount: Estimate 4000 BTC (conservative estimate based on SC values)
Equivalent USD: 24000 $ (rounded to nearest thousand)
Transactions: numerous
Moonco.in's hack has been compared to the MyBitcoin of SolidCoin, back when it remained a powerful cryptocurrency. Over 800000 SC have been removed from circulation, only to have been put back through SolidCoin 2.0. The effects on Bitcoin were also substantial, and the effect on Namecoin was not negligible. In total, this may have been the worst cross-currency hack in cryptocurrency history.


~Bitcoin7 Hack
Time: 2011-10-05 (UTC)
Victim: Bitcoin7 & Customers
Status: Hacker unknown (officially from Eastern Europe or Russia), scam suspected, some returned
Amount: Estimate 11000 BTC*
Based on size of order books at that time, ~15000.
A quarter supposedly not stolen (3 of 4 wallets compromised).
Rounded to 11000 BTC
* Bitcoin7 may have disappeared with more (u.b. 15000 BTC).
Equivalent USD: 50000 $ (rounded to nearest ten thousand)
Bitcoin7 later shut down because of this hack. The magnitude served as a reminder to the Bitcoin community to stop trusting new exchanges without identification.


~October 2011 Mt. Gox Loss
Time: 2011-10-28T21:11 (UTC)
Victim: Mt. Gox
Status: Coins destroyed (no thief)
Amount: Exactly 2609.36304319 BTC
Equivalent USD: 8115.12 $ (wt. avg price)
Transactions:
111291fcf8ab84803d42ec59cb4eaceadd661185242a1e8f4b 7e49b79ecbe5f3
81f591582b436c5b129f347fe7e681afd6811417973c4a4f83 b18e92a9d130fd
ddddf9f04b4c1d4e1185cacf5cf302f3d11dee5d74f71721d7 41fbb507062e9e
305fbc2ec7f7f2bc5a21d2dfb01a5fc52ab5d064a7278e2ecb ab0d2a27b8c392
f0137a6b31947cf7ab367ae23942a263272c41f36252fcd346 0ee8b6e94a84c1
633acf266c913523ab5ed9fcc4632bae18d2a7efc1744fd43d d669e5f2869ce5
5bd88ab32b50e4a691dcfd1fff9396f512e003d7275bb5c1b8 16ab071beca5ba
64c01fedd5cf6d306ca18d85e842f068e19488126c411741e0 89be8f4052df09
3be0ac3dc1c3b7fa7fbe34f4678037ed733a14e801abe6d3da 42bc643a651401
9edab6e7fadf1d6006315ff9394c08a7bf42e19cf61502200a 1f73994f8da94b
835d4dcc52e160c23173658de0b747082f1937d1184e8e1838 e9394bc62c0392
aebe39a99114f1b46fc5a67289545e54cbfec92d08fc8ffc92 dc9df4a15ea05a
aa62bdd690de061a6fbbd88420f7a7aa574ba86da4fe82edc2 7e2263f8743988
6a86e6a5e8d5f9e9492114dafe5056c5618222f5042408ad86 7d3c1888855a31
7ad47a19b201ce052f98161de1b1457bacaca2e698f542e196 d4c7f8f45899ab
0ca7f7299dc8d87c26c82badf9a303049098af050698c694fb ec35c4b08fc3df
3ab5f53978850413a273920bfc86f4278d9c418272accddade 736990d60bdd53
03acfae47d1e0b7674f1193237099d1553d3d8a93ecc85c18c 4bec37544fe386
15ad0894ab42a46eb04108fb8bd66786566a74356d2103f077 710733e0516c3a
2d00ef4895f20904d7d4c0bada17a8e9d47d6c049cd2e5002f 8914bfa7f1d27b
6d39eeb2ae7f9d42b0569cf1009de4c9f031450873bf2ec84c e795837482e7a6
07d33c8c74e945c50e45d3eaf4add7553534154503a478cf6d 48e1c617b3f9f3
6d5088c138e2fbf4ea7a8c2cb1b57a76c4b0a5fab5f4c18869 6aad807a5ba6d8
Mt. Gox fully reimbursed customers after this incident.


~Bitscalper Scam
Time: January 2012 to March/April 2012
Suspects:
Alberto Armandi
bitdaytrade @BitcoinTalk
bitscalper @BitcoinTalk
jjfarren @BitcoinTalk
Victim: Users of Bitscalper
Status: MiningBuddy (bitcointalk.org user) attempted to reorganize bitscalper, but failed. No coins have been returned at all.
Amount: Estimate 1000 BTC (official estimate)
Equivalent USD: 5000 $ (wt. avg, rounded to nearest thousand)
Bitscalper was founded as an "arbitrage engine", and users were invited to deposit money. It was promising extremely high and unrealistic returns. As a result, it was suspected of being a scam from the beginning, fears that were compounded due to a shady and anonymous management. After Bitscalper shut down without returning user funds, BitcoinTalk user MiningBuddy attempted to reform Bitscalper using the remnants of the engine. However, no success was found and the coins could not be returned.


~Bitcoin Savings and Trust
Time: 2011–2012
Victim: Creditors of First Pirate Savings and Trust, later Bitcoin Savings and Trust
Status: Trendon Shavers (perpetrator) may still repay
Amount: Estimated 200000 BTC; Upper bound 500000 BTC
References:
Blockchain Analysis used for 200000 BTC estimate
DailyTech article used for upper bound


~Andrew Nollan Scam
Time: February 2012
Victim: Investors of Shades Minoco, creditors of bitcointalk.org user "shakaru", investors of BitArb
Status: Andrew Nollan (a.k.a. shakaru[2])(thief) known but disappeared, repaid some (not included in amount)
Amount: Lower bound 2211.07786728 BTC, possibly more [1]
Equivalent USD: 10978 $ (wt. avg price, rounded to nearest $)
References:
[1]
[2]


~February 2012 Bitcoinica Theft
Time: February 2012 (also possibly prior)
Victim: Bitcoinica, LLC.
Status: Various thieves possible, untraceable exploit
Amount: unknown, est. 3000 BTC
Equivalent USD: 15000 $ (rounded to nearest thousand)


~Linode Hacks
Time: Late 2012-03-01, Early 2012-03-02
Victim: Bitcoinica, Bitcoin.cx mining pool (Marek Palatinus), Bitcoin Faucet, possible others
Status: Thief unknown, not caught. Linode employee suspected.
Amount:
Bitcoinica: 43554.02005417 BTC
Bitcoin.cx: 3094.45825078 BTC
Bitcoin faucet: 5 BTC (estimated, no tx)
Total: About 46653.47830495 BTC
Equivalent USD: 230468 $ (rounded to nearest $)
Transactions of interest:
5a09f4ef0e91bc7bc044365cd27236fe4ac3c02088ac21ab51 c93c8a11d33d4b
7b45c1742ca9f544cccd92d319ef8a5e19b7dcb8742990724c 6a9c2f569ae732
901dbcef30a541b8b55fae8f7ad9917ef0754bda5b643705f3 773e590785c4d3
a57132e2cbc580ac262aa3f7bac1e441d6573f9633118bc480 09618585a0967e
a82ad85286c68f37a2feda1f5e8a4efa9db1e642b4ef53cb9f d86170169e5e68
ff04763e3e8c93e43799dbbca833e183faad7e2611f20f136f 47c2f1049481ae
0268b7285b95444808753969099f7ae43fb4193d442e3e0dee bb10e2bb1764d0
34b84108a142ad7b6c36f0f3549a3e83dcdbb60e0ba0df96cd 48f852da0b1acb
In early March 2012, the New Jersey-based web and cloud hosting company Linode was suspected of robbing many popular Bitcoin services. A vulnerability in the customer support system was used to obtain administrator access to the servers. Once the Linode servers were compromised, eight accounts dealing with bitcoins were targeted. The hardest hit was the bitcoin trading platform, Bitcoinica. This resulted in the unauthorized transfer of BTC from the "hot wallets", a term used to describe operational withdrawal wallets, of the services affected. A severe bitcoin-denominated theft, the Linode theft also affected Tradehill, but no coins were stolen from them; instead, Tradehill had a short downtime because of the incident. In the aftermath of this theft, all the services migrated to other platforms and Linode remains with a negative connotation to this date.


~Betcoin Theft
Time:
Event Time
Theft Commences
Transaction: #1, #2 2012-04-11T10:55:54
Theft Continues
Transaction: #3 2012-04-11T12:15:49
Theft Culminates
Transaction: #4 2012-04-11T12:43:14
All times are blockchain time, and have possible error of up to 3 hours.
Victims: Betco.in, creditors
Status: Hacker not known. Some of creditors' deposits were repaid, around 2900 BTC outstanding.
Amount: Exactly 3171.50195016 BTC
Equivalent USD: 15509 $ (rounded to nearest $)
Transactions of interest:
266e4682abdf4932c4c271872ca9ba6bfdbe75941eb9ba4c4d 81e4d3c7364e4b
40fc8f6b2f222fb2871a38a245132ed1eada9ff6aec8d46ebe 74b29c64fd82a7
bf70ac1d2b702dbe0e14fbefb3a0cb2ff5ee5aa425cfe4249f 16d6ede7b3ff14
92968a2331a02a3128460a64ba16fbf8d3a2fc79ebc8882300 015d3ca0e4fb17
References:
https://bitcointalk.org/index.php?topic=68066.msg848855#msg848855
https://bitcointalk.org/index.php?topic=82100.0
Similar to the Mooncoin Theft a year ago, and just as devastating, a gambling website's customers lost a large amount of money. This time, the owner took just as large a hit: all the deposits, plus non-live storage, were stolen. 2900 BTC remains to be refunded to creditors today.


~Tony Silk Road Scam
Time: 2012-04-20
Victim: Buyers on Silk Road
Status: Hacker's name (possibly pseudonym) determined to be "Tony"
Amount: Estimate 20000 BTC (estimate from Silk Road users)
Equivalent USD: 100000 $ (wt. avg price, rounded to nearest thousand)


~May 2012 Bitcoinica Hack
Time: 2012-05-12T11:19 (UTC)
Victim: Bitcoinica, LLC
Status:
Hacker unknown, minimal coins were returned.
Venture capital group Wendon Group threatened legal action against Bitcoinica Consultancy.
Receivership in New Zealand ongoing.
Amount: Exactly 18547.66867623 BTC
Equivalent USD: 91306.46 $ (last Mt. Gox price)
Chief transaction of interest: 7a22917744aa9ed740faf3068a2f895424ed816ed1a04012b4 7df7a493f056e8
Zhou Tong, former founder of Bitcoinica, discovered an entry into Bitcoinica's Rackspace server through an excessively privileged compromised email address. This caused the theft of the entire "hot wallet", funds stored on-site, as well as the loss of the main database. No backups were kept. Bitcoinica shut down because of this incident. The claims process is still ongoing; however, Bitcoinica is now entering receivership.


~[B]Bitcoin Syndicate Theft
Time: 2012-07-04T14:34:19 (Mt. Gox time)
Victims:
Bitcoin Syndicate
Paul Mumby
Shareholders on GLBSE
Suspect: IP 130.83.54.115
Status: Pending
Amount: Exactly 1852.61553553 BTC
Equivalent USD: 12134.61 $
Medium of theft: Mt. Gox
Transactions of interest: On Mt. Gox. Withdrawal transaction was 4c61d3639f010e30ad305b294cd128f381f58fc161d0badda1 f39807dc2f12f7.
A hacker infiltrated the Mt. Gox account used by Bitcoin Syndicate, sold off the USD owned, and withdrew all balances.


~July 2012 Bitcoinica Theft
Time: 2012-07-13 (UTC)
Victims:
Bitcoinica, LLC
Creditors of Bitcoinica (former users of Bitcoinica)
Suspects:
Suspect Accused by Defended by Additional evidence
Zhou Tong AurumXChange
Mt. Gox Tihan Seale Selling bitcoins after event
Chen Jinghai Zhou Tong
Status: All funds returned
Amount: Exactly 40000.00000000 BTC (Mt. Gox Daily Limit)
Equivalent USD: 305200 $ (wt. avg, rounded to nearest $)
Medium of theft: On MtGox.
On July 13, 2012, a thief compromised the Bitcoinica Mt. Gox account. The thief made off with around 30% of Bitcoinica's bitcoin assets, which are likely to cost claimants of Bitcoinica debt. Additionally, 40000 USD was also reported to be stolen. The thief is still unknown at this point, but the theft has supposedly been entirely returned. This theft further complicated the May 2012 Bitcoinica Hack.


~BTC-E Hack
Time:
Event Time
Commencing 2012-07-31 00:07 (UTC)
Action taken 2012-07-31 06:30 (UTC)
Victim: btc-e.com
Suspects: BTC-E chat user MrWubbles
Status: Pending
Amount: Estimate 4500 BTC (Official estimate)
Equivalent USD: 42000 $ (rounded to nearest thousand)
Medium of theft: On BTC-E.
On July 31, 2012, the BTC-E Liberty Reserve API secret key was broken. This key was shorter than it needed to be at only 16 characters long. The attacker initiated many Liberty Reserve deposits and injected large amounts of USD into the system, which were quickly sold for BTC. Not all BTC was withdrawn; official estimates state that the scope was limited to 4500 BTC. Similar to the June 2011 Mt. Gox Incident, the BTC-E market was disturbed during the duration of the hack. The handling of this hack was widely applauded after BTC-E revealed they would cover the losses and revert to a backup made just before the hack.


~Bitfloor Theft
Time:
Event Time
Theft Commences
Transaction: #1 2012-09-04T03:07:39
Theft Continues
Transaction: #2, #3 2012-09-04T03:12:52
Theft Culminates
Transaction: #4, #5 2012-09-04T03:43:33
All times are blockchain time, and have possible error of up to 3 hours.
Victims: Bitfloor, creditors
Status: Hacker not known, but IP is 178.176.218.157.
Amount: Upper Bound 24086.17219307 BTC
Equivalent USD: 248088 $ (rounded to nearest)
Transactions of interest:
83f3c30dc4fa25afe57b85651b9bbc372e8789d81b08d6966e a81f524e0a02be
d5d23a05858236c379d2aa30886b97600506933bc46c6f2aab 2e05da85e61ad2
358c873892016649ace8e9db4c59f98a6ca8165287ac80e80c 52e621f5a26e46
f9d55dc4b8af65e15f856496335a29e2be40f128a7374c75b7 5529e864579f93
42ea472060118ee5aee801cdedbc4a3403f3708a87340660f7 66e2669f0afeb0
References:
https://bitcointalk.org/index.php?topic=105819.msg1159518#msg1159518
https://bitcointalk.org/index.php?topic=105818.0
Although the keys to the hot wallet of Bitfloor was secured, an unencrypted backup was mistakenly stored on some of the servers. After a hacker gained entry, most of not only the hot wallet but also the cold wallet was stolen. To this date, none of the coins have been returned by either the hacker to Bitfloor or Bitfloor to its creditors.

[B]Limbo

~Kronos Hack
Time: ?
Suspects:
Alberto Armandi
bitdaytrade @BitcoinTalk
bitscalper @BitcoinTalk
jjfarren @BitcoinTalk
Victim: Kronos.io, liability onto:
Jonathon Ryan Owens
Matthew Neal Wright
Status: Legal action possibly pending
Amount: Estimate 4000 BTC (official estimate)
A serial scammer, Alberto Armandi reportedly hacked into a website he himself coded. The vulnerability was in the withdrawal script that Alberto coded, reportedly intentionally as a backdoor. Information about Kronos is highly uncertain, due to a lack of communication. Neither Jonathon Ryan Owens nor Matthew Neal Wright were responsive to demands for information.


Thefts not included

Some thefts in Bitcoin's history, although severe and damaging to Bitcoin users, did not involve the theft of over one thousand bitcoins. These thefts are listed below.
World Bitcoin Exchange, due to fraudulent activity, stole over 5000 BTC worth at the time in AUD. The total amount stolen was 25779.49 AUD. More information: https://bitcointalk.org/index.php?topic=65867.msg923845#msg923845
Tradehill was repeatedly hassled by Dwolla, and eventually dropped support after being scammed off 17000 USD. Later fraudulent transactions ended up costing the exchange even more, and after the March 2012 Linode Hacks they shut down, citing 100000 USD stolen or scammed through fraud.


Minor but notable thefts

Other thefts are minor, but are unique in some manner (for example, interesting methods or a first of its kind).
First recorded physical theft of bitcoins: https://bitcointalk.org/index.php?topic=52206.0
Coordinated hacking of BitcoinTalk accounts allowed theft of many "loaned" bitcoins: https://bitcointalk.org/index.php?topic=61500.0
Bitcointalk.org user "Goat" lost 400 BTC through sending to a wrong address. These bitcoins were later recovered: https://bitcointalk.org/index.php?topic=82600.0
On watch
This section is reserved for possible thefts and scams that bear mentioning. It is not an endorsement, and the presence on this list does not imply a scam. At the moment, no thefts are listed here.


Pirate default

It's over. I personally will offer sympathy to those who may have lost.

I'm at odds about what to do about this. On one side, the implications are clear: Pirate@40 willingly scammed hundreds off their money, which best estimates put at around 500000 BTC. Such an amount, making up more than 5% of all BTC in circulation, in unprecedented in the history of Bitcoin. It is my duty to include it in this list, as not doing so would be dishonest. However, by doing so, the complexity of this situation requires restructuring at the least.

I am looking for community input into this issue. There are missing data which I deem important, and I welcome any estimates for the values I list below.
Total BTC defaulted on
Total investors directly with Pirate
Total investors exposed through defaulting passthroughs
Total investors exposed through all passthroughs, including ones that compensated partially or fullyhttps://bitcointalk.org/index.php?topic=83794.0

That's not to even count the untraceable losses due to market manipulations.


If bitcoin was "engineered" to do anything, it is to be transferred over the internet without requiring a third party.


It's also engineered to appreciate artificially on an asymptotic scale after allowing the creators to mine huge fortunes of bitcoins at little computational cost.


This is the same logical fallacy (http://en.wikipedia.org/wiki/Fallacy_of_composition) you've been called on numerous times already, yet you still can't seem to wrap your mind around it.

The exchanges have everything to do with the operation of Bitcoin. If there were no exchanges, there would be no Bitcoin trading or commerce at all.


That is because the bitcoin exchanges are completely and utterly irrelevant to bitcoin itself.

Nothing about the bitcoin algorithm requires the establishment of exchanges.


You keep on repeating that same compositional fallacy (http://en.wikipedia.org/wiki/Fallacy_of_composition). Why is it so difficult for you to understand this?

There's more to that economy than just the Bitcoin software that people run on their computers. If the entirety of Bitcoin was just the software, it would amount to nothing but a computer game with absolutely no purpose in the real world. Without exchanges, bitcoins would be completely infungible with other currencies, hence completely useless. So the exchanges are 100% mission critical services to the operation of this economy. If we're discussing the situation of bitcoins as a "currency" or a "commodity" exchangeable in the marketplace, then you must consider the entirety of the system including the exchanges.

Arguing that the exchange security is irrelevant is like arguing that car crashes are irrelevant to the safety of automobiles because of the reliability of the internal combustion engine.


Without them, only a bit of private trading would be possible and bitcoins would probably cost a lot less. There is no rule that says that the value of bitcoin has to be enhanced in any way.


But that's not how Bitcoin works, is it? Bitcoin has exchanges. Why do you think that is?

Despite your own musings about what may or may not be "irrelevant to the bitcoin algorithm," the fact is that Bitcoin is what it is, and that includes the exchanges that allow it to be fungible with other currencies. I'm not going to let you evade discussing the reality of the situation by venturing into rhetorical questions.


The only reason the exchanges exist is because bitcoin has proved immensely popular and a demand for them sprung up.


The exchanges exist because Bitcoin could not be monetized without them. Without the exchanges, Bitcoin would be completely worthless to anyone except a minuscule community of hobbyists.

Most importantly, you cannot deny that the exchanges exist and are essential to Bitcoin's current model of operation, so you cannot just handwave them away.


Yes, it bears repeating over and over until the message sinks in:
There is NO scheme, scam, system, economy, pyramid or anything else. There is only bitcoins.

:crazy:

You sound like a cult member or religious nut spouting doctrine.

Bitcoin is a system just as much any other computer program is a system, just as the US Federal Reserve System is a system, just like even the Internet itself is a system.

Bitcoin also has an economy around it. The movements of monetary value within that economy can be measured and observed over time, just as in any other economy. The "Bitcoin charts (http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv)" are rather obvious evidence of that.

I already explained how Bitcoin takes in money among a large base of investors, and redistributes those funds according to a structure wherein a small portion of the early adopters hold the largest share of monetary value. By taking in money from many and redistributing it to a few, Bitcoin operates in the manner of a pyramid scheme.

psionl0
4th October 2012, 02:33 AM
Today, 10:56 AM
Today, 01:17 PM
Today, 01:18 PMWhenever I fail to get a post confirmed or a JREF page takes excessively long to load up, the culprits invariably turn out to be "burstnet" or "pagead".

I have now installed "Simple Adblock" and all of the JREF pages now load up almost instantly. (I hope this doesn't cost JREF too much money :D).


Bitcoin investors are paying a dollar amount to buy into a fantasy. Bitcoins represent no real world thing.It is not possible to tell anymore whether you are referring to bitcoin's lack of physical existence or its lack of "intrinsic" value. Ever ytime you are challenged on the "bitcoin is nothing" mantra, you change tack.

I suspect that it is no coincidence that "fantasy" could be interpreted either way.

Just like the tickets on the "Airplane Game."I would never have mentioned the airplane game if I knew you had such a complicated code of values regarding gambling.

The irony is that most "legitimate" forms of gambling are "unfair" meaning that the punters will lose their money if they keep playing the game long enough. Where does that fit into your gambling code?

For what reason was Bitcoin created in the first place?

What benefits does Bitcoin bring to the table that make it better suited to that purpose than previously existing solutions?

Why go through the trouble of implementing a fake currency when the problem could be more easily solved by creating a distributed, peer-to-peer payment system for existing currencies?Why does there have to be a "big problem" for bitcoin to solve?

Obviously, somebody had an idea for a peerless currency transfer mechanism and wanted to give it a "soak test". If the algorithm holds up in the hostile environment of the internet then any number of useful spin-off technologies could evolve.

I'm not going to speculate about the motives of the designers nor the people who spend money on bitcoin. It is totally irrelevant.

The chart you've posted looks pretty good from the long-range perspective. But zooming in to view the day-to-day activity of this market tells a different story entirely.

Look at the large number of precipitous drop-offs where the share price has fallen drastically, often losing a major percentage of its total value. The reason the Bitcoin economy is so unstable is because it's a small and very slanted playing field that can be easily gamed by a tiny fraction of outrageously powerful players. Do you realize what happens every time one of the major players cashes in a huge load of BTC? Lots of people who are in the process of selling their coins (and even people just using Bitcoin for its ostensible purpose as a currency) are effectively getting screwed. The market drops so fast that you can't transact the exchange fast enough to avoid a huge loss in value. And there's no telling when such a drop is going to occur. You can get screwed out of your money at any moment of any day.There is no denying the long term trend. You can find days where the bitcoin price fell "significantly" but the price would recover again.

. . . craze . . . scam . . . economic bubble . . . Madoff Securities (http://www.econlib.org/library/Mackay/macEx2.html#firstpage-bar) . . . pyramid . . . Ponzi schemes . . . etcThis is just pure attempted word association. Bitcoin isn't associated with any of those words.

The whole premise of a scam is to beguile somebody into giving up their money freely, by raising false hopes by means of a compelling story (like a "revolutionary digital cryptocurrency that will revolutionize the world").That doesn't apply to bitcoin. The only hopes being raised come from the information you see on the price charts.

The entire premise of Bitcoin being a currency is fraudulent to start with. Bitcoin is aggressively promoted as a general-use currency, but it's not a currency. It lacks most of the fundamental elements that define a currency. That fact ought to raise some red flags right away.You are just splitting hairs on the definition of "currency". It is not government sanctioned legal tender but you are trying to imply that it can't even perform the function of "medium of exchange".

What it really amounts to is a crooked investment scam based on a fraudulent "virtual commodity" that represents nothing real. You'd have to look pretty damn hard to find an investment more foolish than just throwing your money away at nothing.When you say "nothing real" are you referring to the lack of physical substance or lack of "intrinsic value"? :rolleyes:

I've backed up my position with facts, logical reasoning and sound ethical principles. You have yet to rebut any of my arguments with anything substantial.I've backed up my position with facts, logical reasoning and sound ethical principles. You have yet to rebut any of my arguments with anything substantial. :D

Your entire case consists of "begging the question". You have assumed that bitcoin is a fraudulent rip off and used that to prove that bitcoin is a fraudulent rip off.

I haven't "invented" anything. The "system" I've described is the actual operation of the Bitcoin protocol, the software that implements that protocol, and the various financial services that support that protocol being used as a means for exchange, and the market that has developed around all those things.

That you deny the existence of any form of "system" speaks volumes about your own closed-minded, willful ignorance about this cockamamie "investment opportunity" you're become involved with.Bitcoin was released onto the internet and a gambling industry soon formed around it.

Can you prove it is anything more than that?

I've never heard of this "Bitcoin algorithm test" before. Please link to somewhere I can read about it.

:confused::rolleyes:

I was referring to the scam in which some programmers created a fake, pre-cornered economy for themselves wherein they could feed off the monetary investments of credulous rubes. It's most certainly a crime under several US Federal codes, but not really all that shocking to be honest.I thought this was about bitcoin.

Not when those "things" are false investment securities . . .
. . . <snip> . . .
. . . So I pointed out that yes, in fact there are several "rules" (Federal criminal codes, in fact) governing the industry of marketing financial instruments, and that Bitcoin violates a number of them.

Now you're turning that around and saying "it's got nothing to do with Bitcoin"?!?I'll admit I missed the point of the quoted legislation. It appeared to be showing that there are laws to be complied with when setting up a company.

What you are actually trying to show is that there are laws associated with the trade of securities. This is hardly surprising. A security is a claim on ones future income or assets. It is a debt instrument. It would not do to have the securities industry run by cowboys. If a bunch of securities turn bad then it doesn't just affect the people trading in them. It can threaten the entire economy (subprime crisis).

The problem is that bitcoin is not a security. No matter how many of the bitcoins you have in your possession, you don't have one iota of a claim on anything. If the price of bitcoins crashed permanently for any reason, the only people who would get hurt would be the people who traded in bitcoin so the securities act doesn't apply.

I was actually criticizing your unprincipled sense of ethics. Your impertinent brush-off speaks volumes about your true character.Do your really think your character is suprerior to mine just because of your views on gambling? (You can start a thread about it but your views on the subject are all over the place).

Bitcoin is fundamentally unfair because it's a crooked market wherein all the monetary value comes from new investors paying money in but the majority of the capital is owned by only 1% of the players who initially paid nothing yet who control well over half the resources, and who regularly exploit that advantage to manipulate the market.

There, I managed to cram most of the meat of it into one single run-on sentence. *whew*You have no basis whatsoever to claim that the top 1% of bitcoin holders paid "nothing" for their bitcoins. Whethere any of them did or not is totally irrelevant.

I never said people are being "manipulated" into buying bitcoins.

What I actually said was, Bitcoin is a manipulative system.A "manipulative system" that doesn't manipulate people into buying bitcoins isn't very manuipulative.

It's manipulative in that its promoters falsely advertise it as a general-use currency,That part is true (depending on what precisely you mean by "currency").
it is marketed towards political radicals whose ideology clouds their financial judgment;"political radicals whose ideology clouds their financial judgment" have discussed how bitcoin fits in with their ideology. That is a very different thing. In any case, these aren't the people who are buying bitcoins. The gamblers are.
it hides critical details about its design beneath layers of complexity, it relies on disingenuous metaphors such as "mining"That one never occurred to me. Deliberately employing poor technical writers to obfuscate the technical details of bitcoin is a devilishly clever plot. to justify creating a clearly rigged system intended to disproportionately benefit its creators, and its market is unfairly manipulated by a small cartel of users who are anonymous.You need to make up some more details if you are going to sell this.

You really need to check your attitude there. You're betraying the weakness of your position by relying on all these tiresome ad hominem attacks. Raising awareness about a financial scam does not constitute "imposing moral values."But falsely calling something a "scam" and inventing all sorts of stories about how this evil thing was plotted and hatched is.

Good point. I'm probably wrong about that point. In fact there's pretty good evidence in this thread and elsewhere that at least some of them are total douchebags with no qualms about entering into a fraudulent enterprise, so long as they end up on the receiving end of somebody else getting swindled.Some gamblers win and some gamblers lose. Or to put it in your more moralistic manner, some gamblers are "on the receiving end of somebody else getting swindled". (Except when it is "legitimate" gambling of course).

https://bitcointalk.org/index.php?topic=83794.0

That's not to even count any untraceable losses due to deliberate market manipulations.Yes, if you fail to take proper security measures or if you store your bitcoins at an exchange centre that has inadequate security then your bitcoins are at risk of being stolen. Is somebody else supposed to be responsible for what security measures you take?

It's also specifically engineered to appreciate artificially on an asymptotic scale, after allowing the creators to mine huge fortunes of bitcoins at little computational cost. You still haven't given a single good reason why on Earth they should have set up their "currency" to behave in such a way, if not for the explicit purpose of enriching themselves for free on the money invested by others.I gather you are talking about the 21M limit again. Nobody can "inflate" bitcoin away. Some might say this is necessary with a deregulated currency and some would say it is not a good idea. Not you however. For you it is proof to a mathematical certainly that the originators intended bitcoin to be a scam.

You keep on repeating that same compositional fallacy (http://en.wikipedia.org/wiki/Fallacy_of_composition). Why is it so difficult for you to understand this?Actually you are continuously repeating the fallacy of division (http://en.wikipedia.org/wiki/Fallacy_of_division).You assume that the problems of bitcoin exchanges is a problem of bitcoin itself.

No doubt, you believe that the designers were in cahoots with gambling operators to set up a sting operation.

Without exchanges, bitcoins would be completely infungible with other currencies, hence completely useless.
. . . . .
Why are you arguing how Bitcoin might work if there are no exchanges, instead of addressing the way it actually works, exchanges and all?Aren't you being a bit hypoctritical?

You could regulate exchanges if you wanted (tax them even) or abolish them entirely and drive the whole thing underground. But nothing you do to the exchanges or the associated gambling industry will change anything about bitcoin itself (except perhaps the price you could get for it).

:crazy:

You sound like a cult member or religious nut spouting doctrine.Just a word of advice: constantly putting up the "crazy" symbol make you look like an angry loser.

I already explained how Bitcoin takes in money among a large base of investors, and redistributes those funds according to a structure wherein a small portion of the early adopters hold the largest share of monetary value. By taking in money from many and redistributing it to a few, Bitcoin operates in the manner of a pyramid scheme.You have repeated this many times but repetition isn't proof. It doesn't even make any sense. The only people who make money out of bitcoinsare those who sell them and then only if they paid less (including nothing) for them than they sell them for. If all these "early adopters" are still holding onto their stash then they haven't made any money yet (and might not make any at all if your wish comes true).

Belz...
4th October 2012, 03:59 AM
:rolleyes:

Wait, so in response to both our requests to hear more about this "test" you seem to claim BTC is, you roll your eyes ?

I'm going to assume you just made that up.

psionl0
4th October 2012, 04:15 AM
Wait, so in response to both our requests to hear more about this "test" you seem to claim BTC is, you roll your eyes ?I'm a little skeptical that John Albert doesn't know what I am referring to. One of the oldest tricks (fallacies) is to say, "I don't understand you therefore you must be talking nonsense".

Nevertheless, an explanation is in my previous post.

Belz...
4th October 2012, 07:02 AM
I don't see an explanation, and that's a pretty long post. Would you mind ?

psionl0
4th October 2012, 07:45 AM
I don't see an explanation, and that's a pretty long post. Would you mind ?The best way to test the bitcoin algorithm is to put bitcoin on the internet. Are you sure you missed that part of the post?

Belz...
4th October 2012, 08:35 AM
No I didn't.

How does that demonstrate that Bitcoins are a test of the algorithm ?

You said:

The test is whether the bitcoin network (not the exchanges) is secure enough to work without resorting to external authorities.

Which implies there's a test. You have yet to demonstrate that. Showing that it could be a test or how it could be a test doesn't achieve this.

psionl0
4th October 2012, 09:03 AM
Are you really going to split hairs over whether putting bitcoin on the internet constitutes a test? That seems such a trivial point to me.

Belz...
4th October 2012, 09:07 AM
You're the one who brought it up. As I thought, you have no evidence of this.

shuttlt
4th October 2012, 09:45 AM
In what sense might the bitcoin protocol need to resort to external authorities? Do you mean in the sense of an ANSI like body to oversee it in some way, or something else? I'm no economist, but surely almost everything involving dollars/bitcoins that requires control is associated with the way people use it rather than the dollars/bitcoins themselves. I guess there is the rate at which it is produced, but apart from that, what might there be relating to the protocol that would need outside assistance?

shuttlt
4th October 2012, 09:54 AM
By the way, if a single mining group exceeds the 50% threshold, would that constitute a failure of the test?

Laeke
4th October 2012, 11:47 AM
The GLBSE ("Bitcoin Stock Exchange") is offline until sunday:

Hacking?
Fraud?
SEC crackdown?

The fun never stops with Bitcoin...

Belz...
4th October 2012, 12:06 PM
Assuming that the founders of bitcoin didn't intend it as a scam, it's a neat idea, but ultimately unreliable, and a failure.

John Albert
4th October 2012, 02:16 PM
It is not possible to tell anymore whether you are referring to bitcoin's lack of physical existence or its lack of "intrinsic" value. Ever ytime you are challenged on the "bitcoin is nothing" mantra, you change tack.


I'm talking about both. Bitcoin's lack of intrinsic value is a result of the fact that it's backed up by nothing at all.


Bitcoin investors are paying a dollar amount to buy into a fantasy. Bitcoins represent no real world thing. I suspect that it is no coincidence that "fantasy" could be interpreted either way.


The fantasy is fueled by the promotional efforts behind Bitcoin, intended to draw in investors.


I would never have mentioned the airplane game if I knew you had such a complicated code of values regarding gambling.


I do not have any "complicated code of values regarding gambling."

Do you mean to tell me you really don't understand that the Airplane Game is a scam?

Do you really and truly fail to understand why it's a scam?

It's actually very simple. The "Airplane Game" is not gambling. It is most definitely a scam. Pyramid schemes like the "Airplane Game" are generally recognized as scams by financial institutions, economists, financial advisors, regulatory authorities, and law enforcement agencies worldwide.

Why do you suppose all these experts and authorities consider pyramid schemes as scams?

The reason is simple. They're scams because they solicit investments in a pretend commodity that does not exist; the investments are literally applied toward nothing of intrinsic value. They're scams because they present a fictional construct as an investment opportunity, then take the money to enrich themselves.

And Bitcoin does the exact same thing. It takes money from investors and applies it to nothing of any intrinsic value. Instead of applying the money to something of real value, Bitcoin funnels it into a structure that is controlled by a very small oligarchy who can manipulate the value at will and cash in on it at the expense of other investors.


The irony is that most "legitimate" forms of gambling are "unfair" meaning that the punters will lose their money if they keep playing the game long enough. Where does that fit into your gambling code?


In an honest, above-board gambling casino, the odds are known (or at least can be computed). That's a big difference from a rigged game like Bitcoin where the returns can be controlled at will by the creators.


Why does there have to be a "big problem" for bitcoin to solve?


Because otherwise the whole concept of a "digital cryptocurrency" is nothing but a false pretense. Do you not understand that misrepresenting something is fundamentally dishonest?

I'm not alleging that Bitcoin was definitely created without any ideological goals in mind beyond making money for its creators, but the way it's designed is extremely suspect. It definitely appears to be designed to operate as a scam.


Obviously, somebody had an idea for a peerless currency transfer mechanism and wanted to give it a "soak test". If the algorithm holds up in the hostile environment of the internet then any number of useful spin-off technologies could evolve.


If that's indeed the case (it isn't quite so obvious to me), then it's extremely irresponsible of them to unleash something with the potential to cause widespread financial ruin for investors, just for the purpose of checking on a hunch.


I'm not going to speculate about the motives of the designers nor the people who spend money on bitcoin. It is totally irrelevant.


So let me try to figure out what aspects of Bitcoin you think are irrelevant:

the motives of the Bitcoin creators are irrelevant
the fact that the promoters of Bitcoin disingenuously refer to it as a "currency" is irrelevant
the fact that bitcoins have no intrinsic value but still cost money is irrelevant
the fact that they've been pre-programmed to cause artificial scarcity and overvaluation is irrelevant
the fact that the Bitcoin exchanges are fundamentally untrustworthy, regularly losing (or stealing) peoples' money is irrelevant
the fact that Bitcoin economy is overrun with swindlers and thieves is irrelevant
the fact that the entire thing can be manipulated by the top 1% to rip off investors for the benefit of the creators is irrelevant

So what is relevant? Just the fact that the crypto hasn't been cracked yet? The fact that you can make a little chump change wheeling and dealing in this fraudulent economy?

ETA: Oh yeah, for some reason you also argued that IP law was somehow relevant to Bitcoin, but you still haven't gotten around to explaining that one.


There is no denying the long term trend. You can find days where the bitcoin price fell "significantly" but the price would recover again.


As I said before, the fact that the "greater fools" still keep flocking to Bitcoin does not mean it's not a scam.

You're still ignoring the fact that the charts indicate an extreme volatility that makes Bitcoin extremely risky as an investment and practically useless as a medium of exchange.


This is just pure attempted word association. Bitcoin isn't associated with any of those words.


"Word association" based on facts and logic, perhaps. I've shown numerous similarities between Bitcoin and a number of financial scams. Those similarities do indeed support my argument that Bitcoin's functional operation generally resembles a scam.


That doesn't apply to bitcoin. The only hopes being raised come from the information you see on the price charts.


There's significant hype going on within the "Bitcoin community," much of it based on lies and false hopes.


You are just splitting hairs on the definition of "currency". It is not government sanctioned legal tender but you are trying to imply that it can't even perform the function of "medium of exchange".


It can indeed be used as a medium of exchange, but it's extremely ill-suited to that purpose. Calling it a "currency" is at best a lot of disingenuous media hype.


When you say "nothing real" are you referring to the lack of physical substance or lack of "intrinsic value"?


Both. The one is rather contingent upon the other.


Your entire case consists of "begging the question". You have assumed that bitcoin is a fraudulent rip off and used that to prove that bitcoin is a fraudulent rip off.


This is just wrong. I'm not begging any question.

I've looked at the facts about Bitcoin, and given heavy consideration to the subject. I've even cited sources to back up my points wherever possible, which is a lot more than most people around here bother to do.

I have examined how Bitcoin operates, the way it's marketed, the way it's being used, and the widespread outcome of its use, and have reached a provisional conclusion based on those observations.

Of course I don't expect my arguments to influence the 3 or 4 faithful Bitcoin enthusiasts and apologists who've argued against my position in this thread. They all have their own reasons for investing their money or confidence in this thing. Some folks see it through the filter of their own specific ideological biases, and others seem to want to justify it as a harmless opportunity to make a quick, easy buck.

As a disinterested critical thinker, I see no reason to give Bitcoin the benefit of the doubt. From all outward appearances, it has many hallmarks of a scam. It appears to operate like a scam. Bitcoin makes the news every month or two whenever some exchange gets "hacked," somebody gets their "wallet" stolen, a bunch of people fall prey to a pyramid scam, or some new malware comes along to leech off the Bitcoin economy.


Bitcoin was released onto the internet and a gambling industry soon formed around it.

Can you prove it is anything more than that?


Anything more than what?

Call me suspicious, but from the way this thing's been designed to operate, I suspect that the original intention of the Bitcoin creators all along was to create a rigged "currency market" that would lure investors for gambling purposes, that they could leech off of become rich. Even if they were honestly interested in creating a real, usable currency, you can tell by the engineering specs that at some point in the project's development, the lure of wealth must have sidetracked them from their original goal.


I'll admit I missed the point of the quoted legislation. It appeared to be showing that there are laws to be complied with when setting up a company.

...

The problem is that bitcoin is not a security...


Not just securities or companies. Any kind of financial instrument offered for sale for investors to buy into needs to be registered and regulated by the SEC, otherwise it's illegal.

I seriously doubt they'd touch some fraudulent sinkhole like Bitcoin though.


No matter how many of the bitcoins you have in your possession, you don't have one iota of a claim on anything.


Now you're getting it! Does that mean you're beginning to understand how something with zero intrinsic worth being sold $15 per share can be viewed as a scam?


If the price of bitcoins crashed permanently for any reason, the only people who would get hurt would be the people who traded in bitcoin so the securities act doesn't apply.

If the market crashed permanently tomorrow, everybody holding bitcoins that they paid good money for would be **** out of luck. A lot of merchants who accepted bitcoins in exchange for goods and services would be **** out of luck as well.


Do your really think your character is suprerior to mine just because of your views on gambling?


No, I think you're using "gambling" as an excuse to justify participating in a fraudulent con game with the hope of making money off a bunch of anonymous strangers.

Quite frankly, judging by your posts in this thread, you seem to profess a certain apathy where ethics are concerned. Pardon me if I'm wrong about this, but you appear to take the position that it doesn't really matter where one's money comes from, so long as one has enough of it; I consider that attitude to be unconscionable, and indicative of low character.

Not that I'm any kind of angel myself, but at least I try to consider the repercussions of my vices and appetites on the society around me, and act responsibly so as not to cause undue harm to others. Avoiding participation in predatory business opportunities is one of those things that I consider to be a "given." Your mileage may vary, apparently.


(You can start a thread about it but your views on the subject are all over the place).


You have no idea what my views on gambling are, so you have no business making such a presumptuous statement.


You have no basis whatsoever to claim that the top 1% of bitcoin holders paid "nothing" for their bitcoins. Whethere any of them did or not is totally irrelevant.


You seem not to comprehend the economics of how this thing works. Or maybe you're just pretending you don't, or else you don't even want to try to understand because you feel you've got too much invested in it already and would rather retain your plausible deniability than turn back and admit you're wrong.

The early adopters had over 2 years to accumulate vast amounts of BTC at very low-moderate difficulty with very little competition before Bitcoin started to blow up in April-May of 2011. That gave them a tremendous advantage over any of the miners who came on the scene later. By the time Bitcoin started getting heavily capitalized in June of 2011, the early adopters already possessed more BTC than anyone will ever be able to accumulate from then on. Within a few weeks, they suddenly were able to cash in their previously worthless BTC for enormous amounts of money, effectively gaming the market at the same time.

Now I don't know exactly how many of these people there are. I suppose I could try to estimate based on the Bitcoin stats, but even so I wouldn't how many accounts apiece they may own, or how many accounts they might share among themselves. If you just look at the basic mathematics of this thing it's obvious that 1% of BTC holders possessing over 50% of all units in existence is a hugely unfair advantage.

How can you trust any kind of investment strategy where the potential for abuse is so glaringly obvious?

Especially considering the huge amount of fraud, theft and probable graft we see reported in the news on a monthly or weekly basis?


A "manipulative system" that doesn't manipulate people into buying bitcoins isn't very manuipulative.

That part is true (depending on what precisely you mean by "currency").
"political radicals whose ideology clouds their financial judgment" have discussed how bitcoin fits in with their ideology. That is a very different thing. In any case, these aren't the people who are buying bitcoins. The gamblers are. Some gamblers win and some gamblers lose. Or to put it in your more moralistic manner, some gamblers are "on the receiving end of somebody else getting swindled". (Except when it is "legitimate" gambling of course).


Your entire "gambling" argument is disingenuous at best. A rigged system like Bitcoin, a Ponzi scheme or a pyramid scheme is not fair gambling by any measure.


That one never occurred to me. Deliberately employing poor technical writers to obfuscate the technical details of bitcoin is a devilishly clever plot. You need to make up some more details if you are going to sell this.


Strawman argument. I never said that.

Maybe I didn't make myself clear. What I meant to say is that Bitcoin's excessive technical complexity tends to befuddle users from understanding of how it actually works, and that confusion can lead to foolish investment decisions.


Yes, if you fail to take proper security measures or if you store your bitcoins at an exchange centre that has inadequate security then your bitcoins are at risk of being stolen. Is somebody else supposed to be responsible for what security measures you take?


Where the exchanges are concerned, security is out of users' hands. Nobody really knows who those people are, and even the largest and "most reliable" of exchanges have "lost" huge amounts of their clients' money.


I gather you are talking about the 21M limit again. Nobody can "inflate" bitcoin away. Some might say this is necessary with a deregulated currency and some would say it is not a good idea. Not you however. For you it is proof to a mathematical certainly that the originators intended bitcoin to be a scam.


No, I'm talking about the exponential ramp of artificial scarcity that's built into the system. No economist in his right mind would argue that's a reasonable model for a currency, "deregulated" or not.



Actually you are continuously repeating the fallacy of division (http://en.wikipedia.org/wiki/Fallacy_of_division).You assume that the problems of bitcoin exchanges is a problem of bitcoin itself.


Wrong. Bitcoin is not a closed system. It is tied into the outside economy at large through the exchanges, otherwise nobody would be able to invest in it. Therefore, the exchanges are business-critical to the operation of Bitcoin, so it would be wrong to exclude them from consideration of Bitcoin as a whole.


No doubt, you believe that the designers were in cahoots with gambling operators to set up a sting operation.


Another strawman. I never said, nor even implied anything like that.


You could regulate exchanges if you wanted (tax them even) or abolish them entirely and drive the whole thing underground. But nothing you do to the exchanges or the associated gambling industry will change anything about bitcoin itself (except perhaps the price you could get for it).


You're a fool if you really believe that.

Permanently taking down the exchanges would certainly kill Bitcoin. Nobody would bother with it if they didn't think they could speculate on it to make money, because it's practically useless for any other purpose.



Just a word of advice: constantly putting up the "crazy" symbol make you look like an angry loser.


And constantly saying crazy and stupid things makes you appear crazy and/or stupid.


You have repeated this many times but repetition isn't proof. It doesn't even make any sense. The only people who make money out of bitcoinsare those who sell them and then only if they paid less (including nothing) for them than they sell them for. If all these "early adopters" are still holding onto their stash then they haven't made any money yet (and might not make any at all if your wish comes true).


I already explained in a nutshell how the Bitcoin market works. That you cannot be bothered to read or apply yourself to understanding is not my problem.

Belz...
4th October 2012, 04:05 PM
If the market crashed permanently tomorrow, everybody holding bitcoins that they paid good money for would be **** out of luck. A lot of merchants who accepted bitcoins in exchange for goods and services would be **** out of luck as well.

I'm not sure it could permanently crash, unless the algorithm is cracked, though. Even if the market crashed because somehow the major holders managed to cash in on all or most of their bitcoins, the faithful will continue to use it, allowing the BTC to gain value again. In fact, one could argue that, assuming the designers had this in mind, they can continue to make money off of it through several such "crashes", which they will engineer themselves.

psionl0
4th October 2012, 07:13 PM
In what sense might the bitcoin protocol need to resort to external authorities? Do you mean in the sense of an ANSI like body to oversee it in some way, or something else?I don't know which post you are referring to but nobody has said that the bitcoin protocol needs external regulation. The protocol has been designed to be immuned to human intervention. The generation rate is internally programmed and no bitcoins can be created except through mining.

I'm no economist, but surely almost everything involving dollars/bitcoins that requires control is associated with the way people use it rather than the dollars/bitcoins themselves.Presently, transferring money from one person to another requires the co-operation of the banks and the amount of money we have in the economy is directly related to how much money the banks have loaned out (fractional reserve banking).

By the way, if a single mining group exceeds the 50% threshold, would that constitute a failure of the test?Not according to the information I have seen so far. "Double spending" might become possible if the receiver doesn't wait for block confirmation of the transaction but once the transaction has been confirmed, nothing in the bitcoin protocol makes it possible for anybody to take the coins off you (although data files can still be stolen).

psionl0
4th October 2012, 07:16 PM
In fact, one could argue that, assuming the designers had this in mind, they can continue to make money off of it through several such "crashes", which they will engineer themselves.I think you would have to do more than just "pump and dump" to make money this way. Think about how the great short of 1815 (http://en.wikipedia.org/wiki/Nathan_Mayer_Rothschild#Legend) is supposed to have gone down.

Belz...
5th October 2012, 02:41 AM
Not according to the information I have seen so far. "Double spending" might become possible if the receiver doesn't wait for block confirmation of the transaction but once the transaction has been confirmed, nothing in the bitcoin protocol makes it possible for anybody to take the coins off you (although data files can still be stolen).

What does that have to do with the 1% vs 50% thing ?

I think you would have to do more than just "pump and dump" to make money this way.

Why ? Sell a chunk of BTC, watch the price go down, buy as many BTC as possible, price go up, etc.

psionl0
5th October 2012, 02:42 AM
So what is relevant? Just the fact that the crypto hasn't been cracked yet?Yes.

psionl0
5th October 2012, 02:45 AM
Why ? Sell a chunk of BTC, watch the price go down, buy as many BTC as possible, price go up, etc.You got the order wrong. It's put a big chunk on the market, watch the price go down, sell for bugger all.

shuttlt
5th October 2012, 04:24 AM
Not according to the information I have seen so far. "Double spending" might become possible if the receiver doesn't wait for block confirmation of the transaction but once the transaction has been confirmed, nothing in the bitcoin protocol makes it possible for anybody to take the coins off you (although data files can still be stolen).
Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
Prevent some or all transactions from gaining any confirmations
Prevent some or all other miners from mining any valid blocks

https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power

Preventing other miners from mining, or at least reducing the effectiveness, might be worth doing..? It just seems like a bit of a **** up in the design that such large blocks of compute power should have formed. Presumably there is some game theory advantage in bitcoin that encourages this.

psionl0
5th October 2012, 07:43 AM
The attacker can't:
Reverse other people's transactions
Prevent transactions from being sent at all (they'll show as 0/unconfirmed)
Change the number of coins generated per block
Create coins out of thin air
Send coins that never belonged to him
It seems that the most an attacker can do is minor mischief.

John Albert
5th October 2012, 07:44 AM
So what is relevant? Just the fact that the crypto hasn't been cracked yet?

Yes.


Well I'm sorry, but that's empirically wrong. It's like saying the motor is the only relevant attribute of a car.

It's also very very foolish to rely entirely on a single aspect of a security model while ignoring other aspects that have been proven untrustworthy.

Bitcoin without exchanges is nothing but a networking protocol. It would lose all value and disappear from the economic landscape overnight if there was suddenly no way to exchange BTC for real money.

That you refuse to acknowledge that fact demonstrates your intellectual dishonesty in this discussion.


I'm a little skeptical that John Albert doesn't know what I am referring to. One of the oldest tricks (fallacies) is to say, "I don't understand you therefore you must be talking nonsense".


In the face of an accusation like this, I demand that you point out exactly where I've done any such thing.

Throughout this discussion you've been making obtuse statements and refusing to back them up. Don't try to turn that around now and spin it as if I'm the one positing an argument from incredulity.


It seems that the most an attacker can do is minor mischief.


Reversing transactions, double-spending (stealing, basically) and waging DoS attacks on transaction processing and monetary expansion amount to rather more than "minor mischief." That kind of activity undermines the integrity of the whole system.

Psionl0, throughout this discussion you've never failed to either minimize or outright deny every single one of the many significant shortcomings of Bitcoin without even thinking twice. Why are you advocating so fervently for this thing?


You got the order wrong. It's put a big chunk on the market, watch the price go down, sell for bugger all.


:boggled:

What the hell are you talking about? That's a recipe for losing money!

The object is to buy low and sell high.

After dumping a big chunk on the market, the price will be down. Why would you want to sell low?

I can understand why an investor with your level of financial acumen would be drawn to a contrivance like Bitcoin.

Belz...
5th October 2012, 08:09 AM
Yes.

You can't be serious.

You got the order wrong. It's put a big chunk on the market, watch the price go down, sell for bugger all.

I seldom assume that people are complete idiots, especially when the earlier assumption is that they are con men.

Are you actually discussing this subject, or are you on auto-nay-say mode ?

psionl0
5th October 2012, 08:10 AM
(deleted)

John Albert
5th October 2012, 08:36 AM
Are you actually discussing this subject, or are you on auto-nay-say mode ?


By this point I'm getting the impression he's just trolling for argument's sake.

That last post about investing must have been intended as sarcasm.

psionl0
5th October 2012, 09:18 AM
By this point I'm getting the impression he's just trolling for argument's sake.

That last post about investing must have been intended as sarcasm.Dump too much of anything on the market and the price will collapse long before the sell order is completed. What is sarcastic about that?

Korren
5th October 2012, 09:26 AM
Dump too much of anything on the market and the price will collapse long before the sell order is completed.

Of course, but so what? You're still making money and you're still crashing the market.

psionl0
5th October 2012, 09:31 AM
Of course, but so what? You're still making money and you're still crashing the market.How are you making money if the price has collapsed? At best you are only going to fill a couple of buy orders at the original price. You won't get anything for the rest of the sale.

Korren
5th October 2012, 10:00 AM
How are you making money if the price has collapsed? At best you are only going to fill a couple of buy orders at the original price. You won't get anything for the rest of the sale.

That's not how exchanges works. When you place a large enough sell order with a low enough minimum price you fill all the outstanding buy orders, each one at its previously set price point.

You basically vacuum up all the money backing the outstanding buy orders from the exchange and run, leaving behind you a dry carcass and a price that's collapsed to the lowest point you were willing to sell for -- in the case of Bitcoins, probably as close to 0 as make no difference.

John Albert
5th October 2012, 10:00 AM
How are you making money if the price has collapsed? At best you are only going to fill a couple of buy orders at the original price. You won't get anything for the rest of the sale.


When the price has collapsed, that's the time to start buying back in, not selling!

Geez, man, are you really that ignorant about this stuff?

Assuming one already possesses enough market share to effectively influence the entire market, I'd think the best way to maximize returns would be to wait for the price to reach a high water mark, start selling small with a relatively high minimum. Keep repeating with small amounts of shares for as long as you keep recovering the maximum share price, only gradually raising the volume until you find the "sweet spot," ie. the market's current appetite, at which you can hopefully continue to mete out your sales at a steady enough rate to continue to sell high for awhile without causing saturation.

Sooner or later though, the sheer amount of trade volume will cause the price to drop. At that point you can either stop selling and wait for it to rise again, or else dump a large share on the market to precipitate a crash. Once investors see the price beginning to drop, a panic will usually ensue as people try to cash in before the price falls too far. The price will plummet, then you can commence buying back into the market at a far lower price.

It's really not rocket science. The dynamics are simple, provided you have a big enough market share to sway the market.*

The small size of the Bitcoin market and the extreme wealth imbalance is especially problematic because the market is so extremely volatile and transfers are not instantaneous. It can take 10 minutes or more to execute a single transfer of bitcoins, and during that time frame your stock price can lose a significant amount of its value. The crazy dynamics represent a much worse drawback to Bitcoin's usage as a currency. Imagine being a merchant and selling something to a customer paying with bitcoins. The product is worth $100.00 USD, but after the sale goes through you see that the price of BTC has plummeted so much that the payment you just received only amounts to $6.50 USD. You just got reamed out of 93.5% of your sale price just because some douchebag decided to bugger the market for his own personal gain. So now your money is tied up in useless BTC for an indefinite amount of time until the market price creeps back up high enough for you to recover your $100.00 sale price.

Gaming the market like that effectively amounts to ripping people off big time. That's why it's so very illegal in most countries with modern economic systems and publicly traded securities.


*which is impossible for most traders of any real-world currencies and most real-world commodities

Belz...
5th October 2012, 11:35 AM
Dump too much of anything on the market and the price will collapse long before the sell order is completed. What is sarcastic about that?

The fact that I talked specifically about dropping a large enough amount to affect prices but not more. Even if they symply dumped the whole thing, they'd make a small fortune compared to what they invested (zero).

psionl0
5th October 2012, 07:51 PM
Do not edit quotes without making it very clear what you have changed.
I think you guys are naive if you think the market will let you get away with this strategy. Bitcoin buyers might be less savvy than the usual investor but generally, attempts to corner the market end disastrously (Silver Thursday (http://en.wikipedia.org/wiki/Silver_Thursday)).

psionl0
5th October 2012, 08:07 PM
That's not how exchanges works. When you place a large enough sell order with a low enough minimum price you fill all the outstanding buy orders, each one at its previously set price point.

You basically vacuum up all the money backing the outstanding buy orders from the exchange and run, leaving behind you a dry carcass and a price that's collapsed to the lowest point you were willing to sell for -- in the case of Bitcoins, probably as close to 0 as make no difference.At least you have an idea of the mechanics.

Assuming that the dump pans out as you say, would still get an average price for the sale of something like half of what it was before the dump (still a big profit if you got the bitcoins for nothing but a huge "paper loss").

If you then put in a huge market buy order you are going to hit some limit sell orders with quite a high price. I doubt that you would end up with a profit from this. In fact, I'm sure that a lot of bitcoin holders would make limit sell orders with an exorbitant price just to capitalize on people trying this strategy.

You could try to do this more gradually but I don't think it will have any more success. If you make orders big enough to affect the price of bitcoin then the market will notice and react with hostility. If you make the orders smaller than that then you are no longer "manipulating the price".

Laeke
6th October 2012, 02:08 AM
Otherwise, the GLBSE is closing down.
Apparently the "CEO" took user money to pay for a lawyer relating to an unspecified problem. And is now setting up a system where he will refund the users if they provide personal ID... like pirate, who ran the largest ponzi, did recently.

The bitcointalk forum administrator, "treasurer" of the GLBSE, has opened a thread about the "CEO" in the Scam Accusations section of his board... but said administrator himself is under scrutiny: he tried to dump all his GLBSE shares 10 days ago, and admitted that the pirate "investment" looked very dodgy but since he made money out of it (he entered the ponzi very soon), well, he didn't mind.

Coming up: Will Butterfly Labs -which one of the executive used to ran a mail fraud in the past-, manufacturer of mining rigs, actually deliver on its new ASIC products in time?

shuttlt
6th October 2012, 12:04 PM
What has any of that got to do with Bitcoin?

Belz...
6th October 2012, 01:40 PM
I think you guys are naive if you think the market will let you get away with this strategy. Bitcoin buyers might be less savvy than the usual investor but generally, attempts to corner the market end disastrously (Silver Thursday (http://en.wikipedia.org/wiki/Silver_Thursday)).

Reported.

You are truly desperate, now, if you think changing people's quotes constitutes an argument.

shuttlt
6th October 2012, 01:41 PM
Hypothetically, if one wanted the price of bitcoins to drop... would it be possible for someone holding a large number of bitcoins to dump them on an exchange and then buy them straight back themselves? Wouldn't the only cost of doing this be the commission of the exchange? You could then hoover up any bitcoins people are foolish enough to panic and sell.

Would this work?

Korren
6th October 2012, 01:56 PM
Reported.

You are truly desperate, now, if you think changing people's quotes constitutes an argument.

I don't think he intended that to be read as direct quotes, but him paraphrasing what (he thinks) we've said.

shuttlt
6th October 2012, 02:02 PM
Isn't the problem with attempts to corner the market something along the lines of such interests not having the resources to maintain their position? In the case of the Silver thing, they'd borrowed heavily in their attempt to corner the silver market. If you could find a way to corner the market for next to nothing, what could stop you? Most of these examples seem to go wrong when somebody is forced to unwind their position and everybody knows they have to sell, so they unwind a huge position at a huge loss. If I had $5million in bitcoin, I don't see that much could happen in the bitcoin market to force me to sell it all, and presumably I'd need a lot less that $5million to be able to manipulate the price.

Laeke
6th October 2012, 05:31 PM
What has any of that got to do with Bitcoin?

The GLBSE is a stock exchange for bitcoin "companies". ASIC computer are destined to mining. The absolute trainwreck of the "community" of the bitcoin actors, as I said, may be the sign of a flaw in the concept itself. Or that it doesn't lend itself well to certain activities.

Belz...
6th October 2012, 06:49 PM
I don't think he intended that to be read as direct quotes, but him paraphrasing what (he thinks) we've said.

It's irrelevant. He's quoting us from an actual post, without making it clear what he's altered, and that's a violation of the membership agreement.

psionl0
6th October 2012, 07:53 PM
Hypothetically, if one wanted the price of bitcoins to drop... would it be possible for someone holding a large number of bitcoins to dump them on an exchange and then buy them straight back themselves?I still think you would have the problem I referred to earlier (http://forums.randi.org/showthread.php?postid=8670354#post8670354). You don't know how many sell orders have limits of $100 or $1000 or more. The highest sell limit is what you will be paying for the remainder of your purchase.

Isn't the problem with attempts to corner the market something along the lines of such interests not having the resources to maintain their position?You're right. I was looking for the history of commodities that were successfully cornered but data on that is thin on the ground. What happens after that would probably depend on the nature of the commodity and be not directly applicable to bitcoin.

Since tactics that are illegal in the stockmarket can still be used for bitcoin, I looked up a couple of stockmarket scams (http://www.incrediblecharts.com/trading/pump_and_dump.php). However, it seems that you can't manipulate prices just by using buy and sell orders. Every scam invariably involves putting out false information about the company concerned. It is difficult to put out false information about something that has no utility.

I'm a bit of a noob when it comes to being a criminal myself but it seems to me that any marketing scam involving bitcoin would probably start with rumours of a big buy up or big sell off.

John Albert
6th October 2012, 08:53 PM
Isn't the problem with attempts to corner the market something along the lines of such interests not having the resources to maintain their position?


You're right. I was looking for the history of commodities that were successfully cornered but data on that is thin on the ground. What happens after that would probably depend on the nature of the commodity and be not directly applicable to bitcoin.


The difference is, Bitcoin was obviously designed to be cornered right from the get-go. A small group was allowed to accrue market share exponentially greater than anyone who would ever come after them, so the market was effectively cornered for over a year before the first Bitcoin exchange (Bitcoin Market) even opened.


I looked up a couple of stockmarket scams (http://www.incrediblecharts.com/trading/pump_and_dump.php).


Some of the stories of those scams are really interesting. I remember back in the '90s there was a teenage kid who became a major influence in the AOL financial forums by running pump-and-dump scams. When he was eventually caught, the media described him as a "computer hacker."


However, it seems that you can't manipulate prices just by using buy and sell orders.


Bitcoin is a lot different than the stock market. Even "penny stocks" are largely capitalized by shareholders with a personal interest in the company (besides just the money) who are in for "the long haul." Those kinds of investors add stability. Stocks also have a fundamental value backing them that adds stability and tends to insulate them against sudden major swings. Also with stocks, one does not already possess a huge, dominant majority share from the start before the company ever goes capitalized, as happened for a small number of early adopters with Bitcoin.


Every scam invariably involves putting out false information about the company concerned. It is difficult to put out false information about something that has no utility.


The false information is the disingenuous marketing hype about its utility, about how widely it's accepted, about it being the "revolutionary money of the future," about it being useful for buying illegal contraband anonymously and evading taxes, etc.


I'm a bit of a noob when it comes to being a criminal myself but it seems to me that any marketing scam involving bitcoin would probably start with rumours of a big buy up or big sell off.


From what you posted here, you've already been involved in at least two popular investment scams (Airplane and Bitcoin). But what you seem so reluctant to even consider is how closely Bitcoin itself resembles a number of other historical scams.

psionl0
6th October 2012, 09:18 PM
Bitcoin without exchanges is nothing but a networking protocol. It would lose all value and disappear from the economic landscape overnight if there was suddenly no way to exchange BTC for real money.Since there is no law requiring anybody to use bitcoin exchanges, I had a look to see if there were any other ways to acquire bitcoins.

Sure enough, you can buy them on ebay (http://www.ebay.com.au/sch/i.html?_trksid=p3907.m570.l1311&_nkw=bitcoin&_sacat=0&_from=R40) using paypal. The price is a lot higher than at Mt Gox and they are only available in small quantities but it is an alternative if you don't trust the exchanges.

From what you posted here, you've already been involved in at least two popular investment scams (Airplane and Bitcoin).I'm tempted.

shuttlt
7th October 2012, 11:24 AM
Since tactics that are illegal in the stockmarket can still be used for bitcoin, I looked up a couple of stockmarket scams (http://www.incrediblecharts.com/trading/pump_and_dump.php). However, it seems that you can't manipulate prices just by using buy and sell orders. Every scam invariably involves putting out false information about the company concerned. It is difficult to put out false information about something that has no utility.
If you can't impact the price through cornering the market, what is the point? I thought the Silver corner and the Onion one were in part to do with generating conditions of artificial scarcity and thereby raise the price.

Perhaps this is going on on planet Bitcoin already, but the main difference that struck me between the stories of stock market corners and bitcoins is partly the complicated ways in which people financed their positions, but also the extent to which the strategies involved options trading.

John Albert
7th October 2012, 12:18 PM
If you can't impact the price through cornering the market, what is the point?


Who said you can't?


I thought the Silver corner and the Onion one were in part to do with generating conditions of artificial scarcity and thereby raise the price.


That's true, yes.

shuttlt
7th October 2012, 01:28 PM
Who said you can't?
I thought that is what psionIO meant when he said:
However, it seems that you can't manipulate prices just by using buy and sell orders.
He seemed to me to be saying that you needed to spread false stories to manipulate the price. I may well have been wrong.

Incidentally, I think I said "options" when I obviously meant "futures" earlier. I guess it would be hard to do this in bitcoins as you couldn't really enforce anonymous people to make good on the contract.

psionl0
7th October 2012, 10:33 PM
If you can't impact the price through cornering the market, what is the point?Bitcoin is already cornered so what now? It seems counterproductive to me since it will only make the market wary if the ownership is concentrated into too few hands.

Of course, it is always possible that cleverer minds than mine might find a way to make concentrated ownership work for the 1%ers. All I'm saying is that the tactics discussed so far are unlikely to make them a profit.

I thought the Silver corner and the Onion one were in part to do with generating conditions of artificial scarcity and thereby raise the price.True, if you have a monopoly on something then you can name your own price if demand for the product is inelastic enough.

The problem is that there is no demand for bitcoin. The only reason for buying bitcoins is to hopefully be able to sell them later for a profit. If the profit is not there then nobody will buy. ("Gresham's Law" seems to have reduced the "medium of exchange" function to a relatively minor role).

Perhaps this is going on on planet Bitcoin already, but the main difference that struck me between the stories of stock market corners and bitcoins is partly the complicated ways in which people financed their positions, but also the extent to which the strategies involved options trading.
Incidentally, I think I said "options" when I obviously meant "futures" earlier. I guess it would be hard to do this in bitcoins as you couldn't really enforce anonymous people to make good on the contract.One of the unique things about bitcoin is that it is just as easy to deliver "x bitcoins" as it is to deliver an IOU for "x bitcoins". With other commodities, we deal with "futures" (IOUs) because the commodity has not yet been manufactured or it is too difficult to ship it around willy nilly.

As for the ways in which you can finance your position, I guess that with bitcoin the only option is to borrow the money to buy them but you would have to be a nut to do that. If people are reluctant to accept IOUs for bitcoins then some of the "tricks of the trade" (like shorting) will be difficult to apply.

shuttlt
7th October 2012, 11:34 PM
One of the unique things about bitcoin is that it is just as easy to deliver "x bitcoins" as it is to deliver an IOU for "x bitcoins". With other commodities, we deal with "futures" (IOUs) because the commodity has not yet been manufactured or it is too difficult to ship it around willy nilly.
Surely speculating on the future price is another reason to do this?

psionl0
8th October 2012, 12:04 AM
Surely speculating on the future price is another reason to do this?Oops! You're right! Yes, gambling is the big motivator here.

John Albert
8th October 2012, 07:16 AM
I thought that is what psionIO meant when he said:

However, it seems that you can't manipulate prices just by using buy and sell orders.



If that's what he meant, then he's wrong.

Bitcoin is not the stock market. There are lots of reasons why stocks are more difficult to manipulate than something like Bitcoin (which has no intrinsic value, and extremely limited availability relative to demand).

Just look at the Bitcoin charts. It's obvious that the Bitcoin market is extremely volatile and sensitive.


He seemed to me to be saying that you needed to spread false stories to manipulate the price. I may well have been wrong.


The false stories and hype are already out there. Bitcoin is already insanely overvalued among the faithful currency cranks.


All I'm saying is that the tactics discussed so far are unlikely to make them a profit.


How do you figure this?


The problem is that there is no demand for bitcoin.


:boggled:

Of course there is demand for bitcoins! How can you deny that there's a demand?

If there were no demand then it would have no market value at all. People are willing to pay money for it, so that proves there's a demand.


The only reason for buying bitcoins is to hopefully be able to sell them later for a profit.


And that's exactly what drives the demand. As As Korren pointed out, it's the "Greater Fool" theory in action.


If the profit is not there then nobody will buy.


Correction: if the expectation of making a profit is not there, then nobody will buy.

You already said it yourself in the last sentence:

The only reason for buying bitcoins is to hopefully be able to sell them later for a profit.


It's the false perception that bitcoins have value, or at least the hope that somebody else will come along and buy this practically useless thing for more money, that drives the demand for Bitcoin.


One of the unique things about bitcoin is that it is just as easy to deliver "x bitcoins" as it is to deliver an IOU for "x bitcoins". With other commodities, we deal with "futures" (IOUs) because the commodity has not yet been manufactured or it is too difficult to ship it around willy nilly.

As for the ways in which you can finance your position, I guess that with bitcoin the only option is to borrow the money to buy them but you would have to be a nut to do that. If people are reluctant to accept IOUs for bitcoins then some of the "tricks of the trade" (like shorting) will be difficult to apply.


But this is workable only if you can trust the person you're dealing with.


Incidentally, I think I said "options" when I obviously meant "futures" earlier. I guess it would be hard to do this in bitcoins as you couldn't really enforce anonymous people to make good on the contract.


Exactly. There is no oversight, no regulation. I wouldn't trust anyone in the Bitcoin community enough to give them my money. One would have to be a damn fool to invest in this scam when there are plenty of valid and legal commodities, stocks, bonds, and funds you can invest your money in.

stevea
8th October 2012, 11:34 AM
My conclusion is that bitcoin is unsuitable as a currency because it has no long term growth.

That sounds like your conclusion too.

Yes. Bitcoin specific 'monetary policy' is the problem, but it can be addressed with modification.


Bitcoin could provide an interesting counter to Gresham's law (assuming it becomes a currency).

Traditionally, Gresham's law meant that people hoarded their gold while spending their paper money. The point being that paper money is easier to spend than bullion.


Mosty no. Gresham's law is over simplified in that it doesn't specify the domain where it works specifically. There are better restatements.

Although gold has been repeatedly driven "under the mattress" by fiat currencies that is certainly not the only or primary use of Gresham's law. Milton Friedman s book "Money Mischief" cites many examples including eras where gold and silver have had this relation to each other based on new mining finds and government policies.

With bitcoin, the opposite is the case. You can send bitcoins person to person at minimum cost and without involving a bank. Ironically, since it takes at least 10 minutes to do a bitcoin transaction, you would need banks to handle the small EFTPOS transactions that would take too long to do with bitcoin directly.

Not sure (and don't care greatly) what the technical issues are w/ bitcoin transfer. I think you must misunderstand the meaning of Gresham's law. No, bitcoin, if accepted at some exchange rate, would not be the dominant transaction currency so long as it was seen to be increasing in value compared to the alternative. It's the inflation/deflation of the relative currencies that drives one under the mattress and the other into the marketplace.

John Albert
8th October 2012, 11:46 AM
The idea behind Gresham's Law is that people will hoard the resource of greater value and spend the one of lesser value.

psionl0
8th October 2012, 04:43 PM
http://www.britannica.com/EBchecked/topic/245850/Greshams-law:
Gresham’s law, observation in economics that “bad money drives out good.”I have always interpreted that to mean that given the choice between two currencies, people will hoard the one they believe will hold its value better and spend the one they think won't.

However it seems to have a more narrow application than that:
More exactly, if coins containing metal of different value have the same value as legal tender, the coins composed of the cheaper metal will be used for payment, while those made of more expensive metal will be hoarded or exported and thus tend to disappear from circulation.I think that I won't mention "Gresham's Law" again. :boggled:

Thabiguy
9th October 2012, 03:42 AM
The difference is, Bitcoin was obviously designed to be cornered right from the get-go. A small group was allowed to accrue market share exponentially greater than anyone who would ever come after them, so the market was effectively cornered for over a year before the first Bitcoin exchange (Bitcoin Market) even opened.

I have trouble understanding this. You're saying that a small group was "allowed" to mine unfair amounts of BTC for themselves and that Bitcoin was "obviously designed" that way. In what way did the algorithm design allow a small group of users to mine unfair amounts of BTC?

I'd say this would have been obvious if the algorithm had been made public well after the "creators" had a chance to amass significant wealth. However, the algorithm (along with a ready-to-use mining application) has been publicly available since the first day that BTC mining commenced.

It is not obvious to me which particular part of the Bitcoin algorithm is designed to keep competing miners away until the big boom occurs 2 years later. I do not see any particular measures preventing the big boom from occurring, say, 2 weeks after the launch of Bitcoin, in which case the wealth amassed by the "early adopters" would have been negligible and definitely insufficient to control the market.

I could understand that the creators might speculate that Bitcoin would not become popular until way later. But you seem to be saying the Bitcoin was designed this way and that something guaranteed that a small number of users would be given a chance to take control of a significant portion of the total BTC supply (as opposed to early widespread mining).

Are you saying that there was some specific mechanism designed to ensure such turn of events - or do you only mean to say that the creators speculated that things would unfold that way?

Belz...
9th October 2012, 04:02 AM
I have trouble understanding this. You're saying that a small group was "allowed" to mine unfair amounts of BTC for themselves and that Bitcoin was "obviously designed" that way. In what way did the algorithm design allow a small group of users to mine unfair amounts of BTC?

The fact that they mined for two years before the thing caught on, and that they designed it themselves ?

psionl0
9th October 2012, 04:09 AM
(deleted)

Thabiguy
9th October 2012, 04:10 AM
The fact that they mined for two years before the thing caught on, and that they designed it themselves ?

I'm sorry, I can not find a way how this can be interpreted as an answer to the question "In what way did the algorithm design allow a small group of users to mine unfair amounts of BTC?".

Maybe I'm just being slow today, in which case, please, be welcome to elaborate.

gnome
9th October 2012, 04:10 AM
They didn't need a guarantee... their initial investment was low, so if it hadn't worked out the way they hoped, oh well. The design allowed the first miners to get bitcoins at the highest rate. So the first people to mine would have the market cornered from the start.

I prefer not to use the term "unfair" as it assigns a moral value. But if you think about it in terms of market position, its value to other people compared to its value to the first miners becomes apparent.

Thabiguy
9th October 2012, 04:30 AM
They didn't need a guarantee... their initial investment was low, so if it hadn't worked out the way they hoped, oh well. The design allowed the first miners to get bitcoins at the highest rate.

This seems understandable...

So the first people to mine would have the market cornered from the start.

... but this only seems to follow if the early miners get a chance to amass a significant portion of the total BTC supply, which only seems to be case if Bitcoin is not widely adopted until well after a significant portion of the total BTC supply is mined, which I do not see a built-in mechanism for.

Of course, I could also be wrong in the reasoning in the paragraph I just wrote above (if for example one does not actually need a significant portion of the total BTC supply in order to have the market cornered), in which case I'll be glad if someone corrects me, as I freely admit that I am not an expert in these matters.

John Albert
9th October 2012, 06:55 AM
I'm sorry, I can not find a way how this can be interpreted as an answer to the question "In what way did the algorithm design allow a small group of users to mine unfair amounts of BTC?".

Maybe I'm just being slow today, in which case, please, be welcome to elaborate.
... but this only seems to follow if the early miners get a chance to amass a significant portion of the total BTC supply, which only seems to be case if Bitcoin is not widely adopted until well after a significant portion of the total BTC supply is mined, which I do not see a built-in mechanism for.


Do you understand how exponents work?

Belz...
9th October 2012, 07:23 AM
I'm sorry, I can not find a way how this can be interpreted as an answer to the question "In what way did the algorithm design allow a small group of users to mine unfair amounts of BTC?".

Maybe I'm just being slow today, in which case, please, be welcome to elaborate.

The algorithm makes it easier to mine for BTC in the early years, which is exactly what the early adopters and the founders had, in addition to putting none of their own money in to get bitcoins.

psionl0
9th October 2012, 07:43 AM
I'm sorry, I can not find a way how this can be interpreted as an answer to the question "In what way did the algorithm design allow a small group of users to mine unfair amounts of BTC?".The theory seems to be that in the early days, relatively few miners were in action and they managed to amass a few million before the rest of the world got in on the act.

I haven't seen any evidence to support this theory and I don't see the relevance. The fact that 1% of bitcoin holders have acquired 50% of the bitcoins is more of a concern if you are considering buying any but that is a separate issue to the technology itself.

Thabiguy
9th October 2012, 08:15 AM
Do you understand how exponents work?

I am familiar with properties of exponential functions, if that's what you're asking. The relevance of this eludes me, though.

Maybe our communication would be easier if you answered the post where I tried to explain in detail what I'm asking you, rather than my responses to other people.

John Albert
9th October 2012, 08:16 AM
The difficulty ramps upward on an exponential scale. Do you realize what that means?

The total amount of BTC that will ever be in existence is 21 million, and the system is programmed to take 24 years to reach that number of coins.

At the time of this posting—only 3 years and 9 months later—there are already 10.126 million coins in existence.

Nearly half of all bitcoins that will ever exist have already been created, and it's only roughly 16% of the way through the total time span of bitcoin creation. So the rate of new bitcoin issuance will dwindle more and more slowly until it grinds to a halt a little over 20 years from now.

If we trace back the bitcoin creation to the beginning using the same exponential scale, we see that:

Half of the bitcoins in existence today, about 5 million BTC (roughly one quarter of all bitcoins that will ever come into existence) were created within the first 7.5 months.

One quarter of the bitcoins in existence today, about 2.5 million BTC (roughly one eighth of all bitcoins that will ever exist) were generated within the first 37 days.

Looking at these numbers, are you starting to understand how the creators had virtually guaranteed themselves (and their friends on the cryptography mailing list) a corner on the market for this fake, valueless commodity a full year before the first professional Bitcoin exchange even opened for business to start taking money from investors?

Remember, once the money started pouring in from the Bitcoin Market, these people who had acquired their bitcoins for free suddenly had access to a huge windfall at absolutely no financial risk to themselves, simply by leveraging the money invested by others.

Belz...
9th October 2012, 09:09 AM
The theory seems to be that in the early days, relatively few miners were in action and they managed to amass a few million before the rest of the world got in on the act.

I haven't seen any evidence to support this theory

You don't see evidence that there were fewer adopters earlier on ?

and I don't see the relevance.

What a surprise.

Thabiguy
9th October 2012, 09:16 AM
The difficulty ramps upward on an exponential scale.

There are two distinct factors at play here.

First, the reward for successfully mining a block declines, roughly exponentially on a long time scale. However, the Bitcoin network hasn't been around long enough for the reward to decrease. Today, it is 50 BTC, as it was on day one. It would be a mistake to assume that the farther you go into the past from today, the greater the reward was (based on the fact that the reward declines exponentially on a long time scale). This might become a more useful approximation in the future, but not when we speak of times between the opening of the Bitcoin network and today.

Second, the difficulty of successfully mining a block increases, with increasing combined computing power of the miners. Is this growth exponential? Can it be expected to be? This is a much, much more difficult question, and generally requires a reasonably accurate modelling of the way a lot of people behave.

If we trace back the bitcoin creation to the beginning using the same exponential scale...

As I've explained above, that's not valid. You could at best trace back using some model of the combined computing power of the miners, but the exponential decline of the reward does not apply at all to the times between the launch of Bitcoin and today.

Furthermore, the combined computing power of the miners only affects the difficulty of mining a block for any individual miner, but not the rate at which Bitcoins are created.




Half of the bitcoins in existence today, about 5 million BTC (roughly one quarter of all bitcoins that will ever come into existence) were created within the first 7.5 months.



One quarter of the bitcoins in existence today, about 2.5 million BTC (roughly one eighth of all bitcoins that will ever exist) were generated within the first 37 days.



This is entirely incorrect. Between the launch of Bitcoin and today, Bitcoins have been created at roughly constant rate. You can easily check (http://blockchain.info/charts/total-bitcoins?timespan=all&daysAverageString=1&scale=0&address=) that the numbers you give are completely off.

ETA: Actually, it's interesting to note that during the first year, the Bitcoins were actually created a little slower than later on. This is somewhat surprising, considering that the network is designed to keep the rate of Bitcoin creation roughly constant. Without digging too deep into it, I would guess that the later faster rate might be explained by the delay it takes the network to adjust the difficulty while the computing power of the miners was quickly increasing.

John Albert
9th October 2012, 10:46 AM
There are two distinct factors at play here.

First, the reward for successfully mining a block declines, roughly exponentially on a long time scale.


The reward does not decrease. A block of bitcoins amounts to 50 BTC no matter when you mine it.

When Bitcoin was first published on Sourceforge and announced in the cryptography mailing list, "Satoshi" described the difficulty factor as "ridiculously easy" and said that using regular computer hardware (meaning a regular CPU; no fancy GPU mining setups were in use yet) blocks of BTC could be successfully mined every few hours.


However, the Bitcoin network hasn't been around long enough for the reward to decrease. Today, it is 50 BTC, as it was on day one.


I block of bitcions is always 50 BTC, no matter what date it's mined.


It would be a mistake to assume that the farther you go into the past from today, the greater the reward was (based on the fact that the reward declines exponentially on a long time scale).


No, it would not be a mistake, because that is in fact exactly how the bitcoin mining difficulty works. It adjusts itself at the completion of each block, according to a predetermined time scale and the amount of competition. By getting a head start on mining when competition was almost nonexistent, the early adopters set themselves up with a corner on the market.


Second, the difficulty of successfully mining a block increases, with increasing combined computing power of the miners. Is this growth exponential? Can it be expected to be? This is a much, much more difficult question, and generally requires a reasonably accurate modelling of the way a lot of people behave. As I've explained above, that's not valid. You could at best trace back using some model of the combined computing power of the miners


Here's a chart showing the mining difficulty increase as it relates to the market price:

http://forums.randi.org/attachment.php?attachmentid=26734&stc=1&d=1349803075

You can see that the difficulty remained low until after the price shot up sharply in June 2011. That supports my view that the mining competition remained relatively low until after Bitcoin exploded in popularity. The mining difficulty was negligible (indicating a very small pool of miners) until February-March 2011 when the Bitcoin Market exchange opened, initiating the capitalization of bitcoins and leading to a small mining boom wherein the difficulty crept upward a bit and leveled off. The difficulty remained plateaued for about a month until mid-April 2011 when the "Slashdot Effect" resulted in Bitcoin hitting the mainstream media, and mining interest suddenly shot up along with the price.


Between the launch of Bitcoin and today, Bitcoins have been created at roughly constant rate. You can easily check (http://blockchain.info/charts/total-bitcoins?timespan=all&daysAverageString=1&scale=0&address=) that the numbers you give are completely off.


OK, according to that chart, in August 2010 (7.5 months after the start of the blockchain) the total number of bitcoins was some 3.7 million.

By the time Bitcoin hit its peak value in June 2011 (10 months later), the total was already over 6 million BTC in circulation.

I stand corrected on my claim, but you can still see by the chart I posted above (of difficulty vs. $ price) that by laying low and mining for over a year before actively publicizing Bitcoin, the early adopters still managed to clean up the majority of BTC before it became capitalized.


ETA: Actually, it's interesting to note that during the first year, the Bitcoins were actually created a little slower than later on. This is somewhat surprising, considering that the network is designed to keep the rate of Bitcoin creation roughly constant. Without digging too deep into it, I would guess that the later faster rate might be explained by the delay it takes the network to adjust the difficulty while the computing power of the miners was quickly increasing.


That sounds like a reasonable explanation.


.

Thabiguy
9th October 2012, 11:01 AM
The reward does not decrease. A block of bitcoins amounts to 50 BTC no matter when you mine it.
I block of bitcions is always 50 BTC, no matter what date it's mined.

I'm afraid this is not the case. The reward is halved every 210,000 blocks (thus exponentially, but only over a long time scale). It is expected to decrease to 25 BTC this December.

Check for yourself here (https://en.bitcoin.it/wiki/Blocks) or here (http://en.wikipedia.org/wiki/Bitcoin#Initial_distribution).

When Bitcoin was first published on Sourceforge and announced in the cryptography mailing list, "Satoshi" described the difficulty factor as "ridiculously easy" and said that using regular computer hardware (meaning a regular CPU; no fancy GPU mining setups were in use yet) blocks of BTC could be successfully mined every few hours.

This would be the case of the difficulty of successfully mining a block rising due to rising combined computing power of the miners. I've talked about that.

No, it would not be a mistake, because that is in fact exactly how the bitcoin mining difficulty works. It adjusts itself at the completion of each block, according to a predetermined time scale and the amount of competition.

I'm sorry, but this is simply not true. Check some of the links above to learn how the difficulty adjustment works and how the exponential reward decline works. These are mutually independent aspects of Bitcoin operation.

John Albert
9th October 2012, 11:07 AM
It's been awhile since I read the white paper, but I got the impression that the reward decline was a subfunction of the difficulty. Regardless, the lack of competition for early miners still more than accounts for the extreme wealth imbalance inherent to the system.

Thabiguy
9th October 2012, 11:29 AM
It's been awhile since I read the white paper, but I got the impression that the reward decline was a subfunction of the difficulty. Regardless, the lack of competition for early miners still more than accounts for the extreme wealth imbalance inherent to the system.

I don't think anybody disputes that early miners have advantage due to comparably lower competition, since even Bitcoin proponents acknowledge that (as a positive thing, motivating people to adopt early).

The question is whether the advantage is sufficient to give a small group of users control of a significant portion of the total BTC supply, such that would allow them to corner the market. And I'm not convinced that there is a mechanism for forcing that result inherent to the Bitcoin design. It seems to me that if it Bitcoin had gained widespread popularity quickly, the early adopters' advantage would not even qualify as extreme, let alone allow them to dominate the market.

The creators might have speculated that Bitcoin would not be widely adopted until a year later (which was the case in reality), which would give them the time to amass the Bitcoins they wanted, but I yet have to see evidence that some aspect of Bitcoin is designed to enforce such delay in widespread adoption.

John Albert
9th October 2012, 11:47 AM
It wasn't widely adopted until 2 years later.

The first Bitcoin exchange ("Bitcoin Market") wasn't opened until a year later.

To keep it from becoming widely adopted, all they would have to do is refrain from publicizing it.

Thabiguy
9th October 2012, 12:11 PM
To keep it from becoming widely adopted, all they would have to do is refrain from publicizing it.

Yes, there's no doubt that would have been effective, and also clear evidence of foul play. But no matter what their motives were, they did not do that; the algorithm and a ready-to-use mining application have been made publicly available since the day Bitcoin mining first commenced.

ETA: Umm, wait, I think I misinterpreted 'publicizing' as 'publishing'. Well, I guess they could try various strategies to keep things down and quiet even though the project was public, hoping to amass their wealth. That does sound more plausible, although technically it's not something inherent in Bitcoin design.

shuttlt
9th October 2012, 01:41 PM
How many bitcoin would one need to be able to single handedly influence the price?

shuttlt
9th October 2012, 01:51 PM
Pirate@40 allegedly stole 5% of the circulating bitcoin. Would this be enough to control the price? Is there any way to compare that to other economies? Nobody holds anything like 5% of the US economy.

shuttlt
9th October 2012, 01:58 PM
The top 9 bitcoin thefts from here

https://bitcointalk.org/index.php?topic=83794.0

plus pirate takes the total number of bitcoin in the hands of thieves at close to 800,000. That's got to be a good % of bitcoin in the hands of 10 individuals.

Rasmus
9th October 2012, 02:33 PM
The top 9 bitcoin thefts from here

https://bitcointalk.org/index.php?topic=83794.0

plus pirate takes the total number of bitcoin in the hands of thieves at close to 800,000. That's got to be a good % of bitcoin in the hands of 10 individuals.

assuming that we are looking at 10 individuals. it could easily be fewer or more.

psionl0
9th October 2012, 04:32 PM
Half of the bitcoins in existence today, about 5 million BTC (roughly one quarter of all bitcoins that will ever come into existence) were created within the first 7.5 months.

One quarter of the bitcoins in existence today, about 2.5 million BTC (roughly one eighth of all bitcoins that will ever exist) were generated within the first 37 days.Actually the generation rate in the first 4 years is roughly constant at 50 BTC every 10 minutes or approximately 2.5M per year. So a quarter of the BTC in existence today took 1 year to generate and half the bitcoins in existence today took 2 years. The early adopters would have needed that much time without competition to get to get the lion's share of the bitcoins generated.

In the first 37 days, 266,400 BTC were generated.
In the first 7.5 months, about 1.65M BTC were generated.

psionl0
9th October 2012, 04:46 PM
The top 9 bitcoin thefts from here

https://bitcointalk.org/index.php?topic=83794.0That site includes scams and simple losses as "heists". That falsely conflates the security of the bitcoin algorithm with the wisdom of some bitcoin holders.

psionl0
9th October 2012, 04:56 PM
The early adopters would have needed that much time without competition to get to get the lion's share of the bitcoins generated.The graphs at http://bitcoin.sipa.be/ show that this appears to be the case. The mining difficulty was relatively small until just before January 2011 when it started to increase dramatically.

Interestingly, the difficulty dropped after the MtGox heist suggesting a strong correlation between BTC price and mining difficulty.

gnome
9th October 2012, 09:03 PM
I don't think anybody disputes that early miners have advantage due to comparably lower competition, since even Bitcoin proponents acknowledge that (as a positive thing, motivating people to adopt early).

The question is whether the advantage is sufficient to give a small group of users control of a significant portion of the total BTC supply, such that would allow them to corner the market. And I'm not convinced that there is a mechanism for forcing that result inherent to the Bitcoin design. It seems to me that if it Bitcoin had gained widespread popularity quickly, the early adopters' advantage would not even qualify as extreme, let alone allow them to dominate the market.

The creators might have speculated that Bitcoin would not be widely adopted until a year later (which was the case in reality), which would give them the time to amass the Bitcoins they wanted, but I yet have to see evidence that some aspect of Bitcoin is designed to enforce such delay in widespread adoption.

It wouldn't need to be a forced delay... just a likely one. It's not like they bet the farm on it.

psionl0
9th October 2012, 09:57 PM
It wouldn't need to be a forced delay... just a likely one. It's not like they bet the farm on it.Maybe so but it was still people mining for worthless bits of data up until 2011. Nobody at the time would have been able to predict that what the bitcoin price would be in the future.

Belz...
10th October 2012, 03:28 AM
The top 9 bitcoin thefts from here

https://bitcointalk.org/index.php?topic=83794.0

plus pirate takes the total number of bitcoin in the hands of thieves at close to 800,000. That's got to be a good % of bitcoin in the hands of 10 individuals.

I still can't believe people trusted a guy named "pirate".

Rasmus
10th October 2012, 03:53 AM
I still can't believe people trusted a guy named "pirate".

Terry Pratchett has something to say on this ...

ETA:
Reacher Gilt

Korren
10th October 2012, 06:56 AM
Terry Pratchett has something to say on this ...

ETA:
Reacher Gilt

Twelve and a half percent! Twelve and a half percent!

balrog666
10th October 2012, 07:44 PM
Can we all just agree to let this thread die?

psionl0
10th October 2012, 11:39 PM
Can we all just agree to let this thread die?I suspect that this thread would be a lot shorter if there wasn't so much hindsight going on.

Andrew Wiggin
10th October 2012, 11:51 PM
The GLBSE ("Bitcoin Stock Exchange") is offline until sunday:

Hacking?
Fraud?
SEC crackdown?

The fun never stops with Bitcoin...

Gotta love a currency that might just randomly lose all value and liquidity. :rolleyes:

psionl0
11th October 2012, 12:34 AM
Gotta love a currency that might just randomly lose all value and liquidity. :rolleyes:And the hindsight/thread continues. :boggled:

Belz...
11th October 2012, 02:59 AM
I suspect that this thread would be a lot shorter if there wasn't so much hindsight going on.

Yeah, looking back at the past to make observations is so... reasonable !

Rasmus
11th October 2012, 03:47 AM
And the hindsight/thread continues. :boggled:

How is that "hindsight"?

I think it is sound input if you want to answer the question "should I invest in bitcoin?"

gnome
11th October 2012, 04:18 AM
Maybe so but it was still people mining for worthless bits of data up until 2011. Nobody at the time would have been able to predict that what the bitcoin price would be in the future.

Just like they wouldn't need certainty to make designing such a system worth it, they also wouldn't need the price to go up very much to realize a profit.

Andrew Wiggin
12th October 2012, 12:13 AM
And the hindsight/thread continues. :boggled:

Every investment I've ever seen had a disclaimer along the lines of 'past performance is not a guarantee of future performance' but nevertheless you'd better look at the history, read the prospectus, and do your homework. All that comes under hindsight. Lose the hindsight and all you've got is someone's blue-sky claims and a dream. Might as well play the lottery in that case.

psionl0
12th October 2012, 02:58 AM
That sounds more like common sense than hindsight. Bitcoin is little more than a lottery to begin with and the possibility that an exchange might go kaput while handling a transaction for you adds to the risk.

If you do your homework (avoid fly by nighters) you might be able to minimize the risks from bitcoin exchanges and there are strategies that can be employed to insure against loss that way. Once you have the bitcoins of course, it only takes a little common sense to prevent theft.

A lot of fools will lose a lot of bitcoins but that is not a property of bitcoin itself.

John Albert
12th October 2012, 12:32 PM
Why would anyone invest in something like this when there are plenty of good investments to make?

For the level of risk one would take investing in Bitcoin, there are probably a lot of other investments of comparable risk that offer better prospective returns.

anduin
20th October 2012, 01:26 PM
I'm surprised this hasn't been posted yet. Study finds hoarding of Bitcoin.

http://eprint.iacr.org/2012/584

A better indication in my opinion is the fact that there is one single user with more than 2 million Bitcoins lying around.

Belz...
21st October 2012, 02:42 AM
Gee, I wonder how that happened.

John Albert
22nd October 2012, 07:04 PM
I'm surprised this hasn't been posted yet. Study finds hoarding of Bitcoin.

http://eprint.iacr.org/2012/584

A better indication in my opinion is the fact that there is one single user with more than 2 million Bitcoins lying around.


It actually finds a lot more than just hoarding. It shows vastly complex shifting of coins around from one account to another, all held by the same owner, with periodic dumping and buy-backs of of large numbers of coins on Mt. Gox.

psionl0
22nd October 2012, 11:13 PM
I'm surprised this hasn't been posted yet. Study finds hoarding of Bitcoin.

http://eprint.iacr.org/2012/584

A better indication in my opinion is the fact that there is one single user with more than 2 million Bitcoins lying around.Abstract: The Bitcoin scheme is a rare example of a large scale global payment system in which all the transactions are publicly accessible (but in an anonymous way). We downloaded the full history of this scheme, and analyzed many statistical properties of its associated transaction graph. In this paper we answer for the first time a variety of interesting questions about the typical behavior of account owners, how they acquire and how they spend their Bitcoins, the balance of Bitcoins they keep in their accounts, and how they move Bitcoins between their various accounts in order to better protect their privacy. In addition, we isolated all the large transactions in the system, and discovered that almost all of them are closely related to a single large transaction that took place in November 2010, even though the associated users apparently tried to hide this fact with many strange looking long chains and fork-merge structures in the transaction graph. No startling revelations here apart from the fact that splitting and recombining transactions does not guarantee privacy. In fact, you could be leaving quite a damaging audit trail if you try to conceal your business by using bitcoins.

PS The maximum number of bitcoins held by a single user was 500,000 not 2M (see table 4).

PPS The report says nothing about the "periodic dumping and buy-backs of of large numbers of coins on Mt. Gox". That addition to the report is just another John Albert special.

erwinl
23rd October 2012, 12:47 AM
No startling revelations here apart from the fact that splitting and recombining transactions does not guarantee privacy. In fact, you could be leaving quite a damaging audit trail if you try to conceal your business by using bitcoins.

PS The maximum number of bitcoins held by a single user was 500,000 not 2M (see table 4).

PPS The report says nothing about the "periodic dumping and buy-backs of of large numbers of coins on Mt. Gox". That addition to the report is just another John Albert special.

It says, larger than 500.000 in that table.

psionl0
23rd October 2012, 01:55 AM
It says, larger than 500.000 in that table.I didn't want to delve too deeply into the report since it is dated but nowhere does it mention a figure of 1,000,000 or more so that sets an upper limit on how much an individual owns at any time.

John Albert
23rd October 2012, 07:09 AM
PPS The report says nothing about the "periodic dumping and buy-backs of of large numbers of coins on Mt. Gox". That addition to the report is just another John Albert special.


There are numerous points in those charts where large sums are cashed out through Mt. Gox and then bought back by another address owned by the same owner. Look for the purple ovals labeled "MG."

Without the date and time information of those transactions, it's difficult to tell if they were intended to manipulate the market, or perhaps as part of a larger money-laudering operation.

Almo
23rd October 2012, 01:00 PM
Figures 8, 9 and 10 showing the attempted spreading out of a bunch of BTC is pretty funny.

John Albert
23rd October 2012, 01:19 PM
PS The maximum number of bitcoins held by a single user was 500,000 not 2M (see table 4).


http://i1354.photobucket.com/albums/q689/john_albert1/chart_zps2750d415.png

Take a look at Table 7.

There's a single "user" who has accumulated more incoming BTC than any other user. This user does not hold the largest number of coins at any one time, but has received the largest number, over 2.88 million BTC.