And that's why denominating loans in an extremely volatile currency is not such a good idea.

Right, but in exchange, you get to offer the seller the currency they want most. If your assumption that people would much rather hold Bitcoins than dollars is correct, the seller should significantly reward you for giving them the currency they prefer. The costs you mention above are miniscule. There's no need for you to risk buying Bitcoins at a much higher price, you can buy them immediately. If Bitcoins are underpriced, you would have already funded your Mt. Gox account. The fact that you didn't shows you don't really believe Bitcoins are underpriced.

Right, but you'll pay much more for no reason. If your assumption that people would significantly prefer to hold Bitcoins over dollars is correct, you'd be giving the seller something they value much more highly. Unless the seller is irrational, they should make that well worth your while, and all your additional costs in doing so are miniscule.

That makes no sense. Why would you prefer this to buying your iPhone with Bitcoins and then just buying more Bitcoins?

If you really would significantly prefer to buy the iPhone with Bitcoins rather than dollars, that just means the price of Bitcoins relative to dollars is too low *today*. If that were true, people would be trying to buy Bitcoins for dollars and nobody would be selling them, which would cause the price to rise immediately. In practice, this simply never happens. The price of Bitcoins relative to dollars is already fair to the typical buyer and typical seller or it would already have changed.

That's very dangerous because there is no way to know when it has peaked and there's always a risk that the price will fall before you can sell the oil you held back. Certainly some people will do that, but it's not a universally winning strategy.

The problem is that the predictable aspects of the future price are already baked into the present price. If the price wasn't rising fast enough, people would hold back oil, and the price would just rise faster.

All of these affects are already cancelled out in the present price. The present price must be fair to sellers, or it would rise. The present price must be fair to buyers, or it would drop. For any reasonably-liquid commodity priced in any reasonably-liquid currency, the price will be tend towards the price that is equally fair to the typical buyer and the typical seller.

Maybe you'll see it more clearly if you look at the same argument in the context of an inflationary currency or good that's appreciating in value. Suppose the price of gas has been rising continuously and fairly predictably, either because the currency is dropping in value or because the demand for gas is increasing. Are gas stations going to close down for a few weeks so that they can sell gas for higher prices in the future?

The answer is clearly no. Because if they were going to do so, that would simply mean the price of gas wasn't high enough *today*. You don't see a gas station closing because they'd prefer to sell their gas later when the price is higher. The price is already high enough -- supply and demand ensures it.

The same is true of a deflationary currency. If it's actually encouraging hoarding, that would simply mean the price of goods wasn't low enough *today* to encourage people to buy them and the price would fall until it is low enough. But of course, that will have already happened -- having a deflationary currency means the price of goods has dropped.

Showing a statement "incorrect" by ignoring its context is gamesmanship. If have a hard time believing that you honestly understand that statement to be contradicted by a failure to do the impossible.

The only problem with this narrative is that there is nobody claiming that Jared ran off with significant amounts of their money. Unless I'm forgetting something, there were only two people who made that claim, both for very small amounts (both less than $1,000), and neither claim seemed credible.

Also, I'm curious why you think Tradehill is misrepresenting the Dwolla situation. My understanding was that it was pretty clear -- Dwolla specifically promised no chargebacks, but then Dwolla made payments disappear. Tradehill is not the only company claiming this. And they didn't use it to take other people's money, only to wind down their business -- something they could have done for no reason. Perhaps they exaggerated the problem so that they could try to get more money out of Dwolla (or more sympathy out of the community?), but even assuming that's true, I don't see why any Bitcoin people should particularly care. Dwolla was the company that built themselves on Bitcoin and then turned their back.

Moreover, my recollection was that none of this was controversial at the time. I had no idea there was another version of these events going around.

We're seriously faulting Tradehill for not paying back people who didn't contact them to make payment arrangements? What were they supposed to do, enclose dollars in an email?

Just like they control everything else on the Internet?

Quite possibly so, but only if Bitcoin doesn't ever succeed on a massive scale. And even if it doesn't, there's a good chance that it will pave the way for future crypto-currencies that will.

Perhaps the Internet is something of an analogy. It was grown by for profit companies who were looking to make money. But the net effect of the Internet is that even the most repressive governments in the world can't keep their citizens from reading Western media and blogging about conditions in their country. The people in the early days of the Internet had the idea that they could be changing the world, and there were certainly people telling them that those beliefs were unrealistic. But they did change the world.

In the early days, the Internet's development was filled with both with people who labored tirelessly trying to change the world and people who were just looking for a quick buck, and everything in-between. But they are all moved us in the same direction. There was nothing unholy about the alliance.

If I didn't think there's any chance at all the crypto-currencies will ever create significant value or benefit, then I would agree with you. But I think there's a very good chance that some future or present crypto-currency will change the world in a big way. In fact, I think it's as inevitable as the Internet. Of course, I have no idea which one or when.

I do, though as a practical matter, this risk is very small. 18 USC 1955.

I think it goes to the level of risk, not the legality. It comes down to an interpretation of 18 USC 1955(b)(1)(i), whether Satoshi Dice "is a violation of the law of a State or political subdivision in which it is conducted". That will come down to what locations are the ones "in which it is conducted" and whether it violates any laws of that subdivision. I can't specifically cite any subdivision in which it would be considered conducted nor any specific laws it violates, but if there are any, then anyone who "owns all or part of" the business is in violation of US law.

Also see 31 USC 5362(10)(A), "unlawful Internet gambling means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made". While this doesn't apply to owners directly, like most Federal crimes, you can be charged with aiding, abetting, or conspiring to commit violations, being an accomplice to a violation, and so on.

As a completely passive owner, though, I would think the risk would be very small.

Even if you're right, you have the identity of the "small group" wrong. It's all the people who bought or mined significant numbers of Bitcoins when they were below $2. And, that's not really any different from people who founded successful companies or bought stock in them early.

The big question is this -- does the ability of Bitcoins to be quickly and cheaply transacted around the world add significant value? If so, then that value is being divided the same way profitable companies divide value -- those who start it and those who invest in it early get lots of it and everyone in the world gets some. It's only if you think Bitcoin -- the product, the system -- is really useless and has no potential to provide real value that your argument makes sense.

Because there's nothing that stops someone from filling a website with lies. If you can find something on the website that proves or strengthens the case that it's a scam, that's great. But there nothing a website can say (short of something independently verifiable) that distinguishes between an honest investment and a well-written scam.


Do you have any actual evidence or reasoning? Everything points to it being a scam.

Any answer to my questions: "How do new shares get introduced? How is the price set and where does the money go? Can people sell their shares back to the fund for their share of the fund's holdings under any conditions?"

This is the most basic question you can ask about this kind of fund.

No. All the equity owners must be accredited investors, the business must be an investment company, or assets have to exceed $5 million. Here's a link to the rules: http://www.sec.gov/answers/accred.htm

How do new shares get introduced? How is the price set and where does the money go? Can people sell their shares back to the fund for their share of the fund's holdings under any conditions?

It's easy to think, after the fact, that you would have bought and sold at the right times. But there's no bell that goes off to let you know the market has hit the top or the bottom. It's a lot harder when you can only see the chart to the left and not the chart to the right.

As for trying to manipulate the market, you lose money when you do. You can only manipulate the market by buying high or selling low. And then everyone has the same opportunity to take advantage of the manipulated price, not just you. So you bear 100% of the costs of manipulation and get maybe 5% of the profits if you're lucky. And the profits are miniscule -- it's hard to push something away from its unmanipulated price and it takes very little to get it back there. So it always costs more than you expect and you make less than you expect, even before you take into account that you only get a tiny sliver of the "profits".

You made no mistake. Self-defense includes defense of others and defense of property.

The problem with claims like "murder, unless in self-defence, is wrong" is that "murder" already includes elements of wrongfulness in it and self-defence already includes elements of rightfulness in it.

For example, I shoot someone because they were trying to take a car. Is that "murder, unless in self-defence"? Well, yes if it's his car but not if it's my car. So you can't even make sense of "murder, unless in self-defence" until you already have a full theory of rightful ownership of property.

Someone needs a job at my store or else they'll die of starvation. I don't hire them because I want them to die. Is that "murder, unless in self-defence"?

Someone needs a kidney transplant or else they'll die and I have the only matching kidney. I decide not to donate it. Is that "murder, unless in self-defence"?

This is the problem with the NAP. It seems simple and seductive. But you can't actually determine what is or isn't "aggression" until you already have both an absolute notion of property rights and a notion of a scope of moral authority.

Your views are Statist because they accept the validity of the state as representatives of the people when it comes to economic and social policy. For example:

You see the relationship between the voter and the State as part to whole. This is a Statist view. The analogous NAP view would be that the relationship is between victim and aggressor.

You draw no distinction between voting to reduce the State and voting to increase the State. When the State comes to you and says "your money or your life", you see no difference between saying "please take my money and do not kill me" and "please kill as many people as possible". This is a Statist view.

A victim may use whatever means they think best to defeat an aggressor. They share culpability with the aggressor only if they act to increase the aggression used.

Can someone explain to me what this fund actually is or does? You buy shares. They do something with the Bitcoins you used to buy the fund that generates more Bitcoins, and then they do *what* with those Bitcoins? Does it pay dividends? Or do they buy back their own shares? Or what?

Does the fund own some capital that each share holder owns some share of? If so, how do you tell what that capital is and how many shares are outstanding?

If there aren't answers to any of these questions, then it's not a fund at all and just a Stock Generation type Ponzi.

What source of revenue is there for investors other than other investors buying the shares? If the fund actually turns a profit by arbitrage or something, what does it do with that profit? How does it get to investors? Are there dividends?

I agree, and I reject all of your statist views.

Nonsense. If a criminal says "your money or your life", you can choose to give your money without losing your right to complain about that loss.

Nonsense. If someone asks you whether they should kill your family by shooting them or by setting your house on fire, you can choose not to answer without losing your right to complain about the choice and outcome.

Nonsense. If a mob is choosing whether to cut off both your legs or just one of them, you can use any methods available to you to get just one leg cut off without in any way legitimizing the mob or the range of choices.

I utterly reject all three of your statist views. An individual may defend himself from the State's threatened evils however he thinks best without thereby becoming responsible for those evils.