2012-10-11 loper-os.org - Bitcoin, or How to Hammer in Nails with a Microscope.

[julz]

Pretty obvious from the title that this isn't exactly going to be a glowingly positive piece.

This is pretty snarky & hard-hitting, with some interesting points - but boringly... guilty of tarring the entire community with one brush, and prognosticating that particular failed models / experiments /disasters / frauds involving Bitcoin will inevitably set the tone for the entire Bitcoin ecosystem.  

Bitcoin, or How to Hammer in Nails with a Microscope.


Stanislav
2012-10-11

http://www.loper-os.org/?p=939

...
Can you, dear reader, ferret out from the above text the general trend which dooms Bitcoin, firing squads or no firing squads?  And this incident is certainly not the first of its kind. Or even the most destructive in purely financial terms.  A hint: the secret does not lie in the abundance of fraud artists which have flocked to Bitcoin: traditional currency has attracted fraudsters for as long as it has existed.  Nor is it the absence of the customary legal mechanisms for keeping honest people honest (police, courts, prisons.)

The answer instead is that, while the unknown inventor of Bitcoin was quite clever, most of its users are alarmingly dull.  This includes the “pioneers” who set up Bitcoin-based financial services of every kind.  Why? Because they are pounding in nails with a microscope. These fools have been handed a technology so clever, so disruptive and revolutionary, that the rulers of the world would have to fully unmask themselves as ruthless tyrants in order to suppress it, — or give up their thrones on their own free will — if it were used correctly, that is. But at present, the microscope again and again goes “clang!” against the table, the nails slowly and crookedly creep inward, and tiny shards of the world’s finest lenses fly in all directions.

Bitcoiners are pounding in nails with a microscope, because they have insisted on faithfully re-creating the financial institutions of the meatspace world – banks, stock markets, derivatives trading, and the like – without any of the familiar meatspace law enforcement mechanisms (police and courts) or the best-known traditional black-market alternative to these mechanisms: the threat of immediate physical violence as an incentive to promise-keeping.
...


And on the positive side, a few die-hard activists might thus avoid facing the firing squad.  Using Bitcoin will become its own punishment, the way sniffing glue is.
...

[kiba]

More interesting than most blog post on bitcoin.

However, I have to admit, individuals in the bitcoin community are embarrassing the rest of everyone, especially those who got taken in by ponzi scams operated by pirate.

It makes us look like idiots.

[marcus_of_augustus]

I thought he might have recalled the mons pubis bitcoin tatoo episode for some dramatic effect ... pounding nails and all that.

When all's said and done how is bleating impotently (or even waxing poetically) going to help? Why isn't he out there building something positive?

[Foxpup]

He has a valid point, though.

[paraipan]

He has a valid point, though.

Lool, this was real funny and true at the same time  

[Stephen Gornick]

The real laugh is that there is no solid reason to believe that the world’s national banks have seen it fit to sweat so much as one drop to vanquish Bitcoin through discreditation

It is easy for banks to mess with under-capitalized Bitcoin-related businesses which intersect with dollars.  They've been messing with exchanges beginning well before Mt. Gox made its case against its bank in a French court. Probably PayPal's freezing of Mt. Gox's PayPal account (in Oct 2010, back when Jed was the operator) was probably the first confrontation.  And the banks are now showing their teeth.   Metro Bank in the UK (Intersango), Barclays (Mt. Gox), Chase bank (re: BitFloor), Wells Fargo (re: BitFloor), BitPiggy's bank in Australia, ....  you name the exchange and there are stories of banking woe.  

Unfortunately, all the bank needs to do is push a button and the targeted exchange nearly gets put out of business as a result.  They don't need to break a sweat to deliver hurt, but that doesn't mean they aren't well aware of Bitcoin's potential to change the game.

But this angst about what the government will do, ... he's definitely over doing it.  When Phillip R. Zimmerman was creating PGP, he fielded the same question from the press and from colleagues asking him what he would do "when the government came after him" (as encryption software are munitions).  And what did he do?   Nothing.   Well, nothing as far as breaking the law.   He figured out how to distribute software in a legal way (in book form with scannable pages.).  He says the government never even contacted him.

Contrast that with:

A bitcoin stock market, will involve 0 law,

And then proceeding to confront it head-on, in their space, before realizing that doing so has real consequence.

Either way, GLBSE is not Bitcoin and Bitcoin is not GLBSE.  GLBSE simply ended up not being able to figure out a sustainable path to run an equities market outside of regulation.   It was a startup that had a flawed model and closed.  Big deal, that happens every day.  It really has little to do with Bitcoin and Bitcoin doesn't need a GLBSE to thrive (or exist even) to become successful as a digital currency.

But the down-side is that we won’t learn just what sort of world is possible given a functioning, decentralized cryptocurrency

How many people leave the stadium in the middle of the second inning?

[Wekkel]

I fail to notice what the author had in mind when arguing that BTC users are hammering in nails with a microscope. They are poineering, not sitting on the couch fearing the demise of a virtual currency that has only been conceived 3 years ago.

I must say that I enjoyed the read, but I fear my fellow-man a lot more than all dangers the author put forward. BTC won't set people free; only people themselves can set people free. That has always been the case (and boy, have we the people been asleep for a century).

[TraderTimm]

I threw my hat into the ring, don't know if he'll post it - so here it is:

I was ready with knives and a roasting thermometer when I first learned of this article, however, some time spent considering your well-crafted essay has obviated the need for such implements.

You are correct in that technology implemented by well-meaning yet unsophisticated users is futile at best, especially when creating services that require strong security measures from the ground up.

Most horror stories center around lapses of users, admins and hopefuls that haven't done their homework. At the same time, it points to the scarcity and increasing value that bitcoin has - if it was considered worthless, there wouldn't be hackers and others out to get it.

I firmly believe that bitcoin will not be shut down as described in your article. I base that belief on the existence of other networks that continue to flourish, such as torrents, despite active measures at the internet level and legal avenues to restrict their activity.

Personally, I think the evolution of this hybrid payment-system-and-currency will go from exchanges transferring BTC (bitcoin) to other currencies to dying off all together as their services will slowly not be needed. As for governments not allowing such free commerce to exist, perhaps it would be a force to enact change - as taxes would become a more voluntary nature where we would only contribute to specific items that we actually need. (Instead of a flat 'fee' that is then distributed without the taxpayers consent.)

Bitcoin is a financial revolution that will change everything. Even if the current system falls under some unknown future threat, its existence has shown that there is another way to create a financial system that isn't dependent upon the failings of human decision processes and politics.

I don't agree with the article where he thinks it is inevitable that bitcoin gets squashed out of existence by collusion with banks and governments. I think it is more versatile than that, especially when users are given absolute power of their own finances.