Bitcoin Forum

This is not the first time Bitcoin has lost money to hackers, but the discovery that they have user information stored in unencrypted files might be what finally prompts a full-fledged run on the Bitcoin bank; no one’s eager to keep their money in an unlocked vault.

Mainstream economics writers are enjoying a good chuckle at the crushing of Bitcoin’s libertarian dreams.  Solidly centrist website The Atlantic was happy to point out that U.S. banks are FDIC insured in order to guarantee that in the event of a robbery, account holders don’t have to depend on the goodwill of the bank manager to get their money back. Bitcoin’s popularity as currency of choice for skeevy sites like drug-dealing marketplace Silk Road further ensures that getting robbed doesn’t win it much sympathy, and there’s no word on whether Bitcoin will turn to the government agencies it previously scorned in order to track down the thieves.

Bitfloor is shut down while Shtylman scrambles to repay users.  He promises that international users who wish to withdraw their money can send him an e-mail requesting withdrawal, a weirdly informal system for currency exchange which calls to mind disturbing images of Depression-era banks understaffing their teller windows so customers couldn’t take out all their money at once. There would be a certain delicous irony if the latest debacle reminds the idealistic libertarians of Bitcoin exactly why government currency regulations became popular in the first place.

Wait, no Bitcoin company? So who is empowered to issue Bitcoins? And if Bitfloor is just, like, some random trading exchange, is there any reserve where a holder of Bitcoins can be assured that he'll be able to exchange them for another currency?

I read the white paper, and it made so little sense I concluded there was a scam. If anyone can make Bitcoins, you've got a recipe for inflation. If everyone can make Bitcoins but there's a ceiling, you've got a recipe for even worse deflation. And either way, you've got no protection if something goes wrong, as it inevitably will. I'm eagerly awaiting the point where the Bitcoin story goes full Bioshock.

Good catch.
It's interesting to me that we're still seeing journalists in the tech field with massive misunderstandings around Bitcoin.

If the tech journalists don't yet even understand it (whether they like it or not is another thing), it seems we have a long way to go for more widespread adoption.

Where to begin? There are so many fundamental misunderstandings in the article and the author's posted comments I doubt I'll have time to address them all.

The author doesn't understand the technical underpinnings of bitcoin, or how it operates.

The author equates theft of currency to a 'failed' implementation of that currency. I suppose all those people who lose money on the streets of the USA prove the dollar is useless, right? How absurd.

The author admits he has an obvious cognitive bias by stating he's convinced bitcoin is a 'scam' in the comments.

The author makes assertions about inflation and deflation, with no backing points or references.

Perhaps the author should consider another line of work, as researching and writing intelligently on a subject seem to be out of his grasp.

If everyone can make Bitcoins but there's a ceiling, you've got a recipe for even worse deflation.

Deflation won't kill us, because we have to spend money eventually on food and water. There's always a demand that can't be squished by monetary incentives to save.