[2016-08-15]Beware The Bitcoin Bail-In

[WishICanTurnBackTime]

Beware The Bitcoin Bail-In by Ted Bauman
Imagine that, just before you read this article, you received an email from a financial institution where you have a substantial trading account…
The email said other accounts had been hacked, but not yours. Nevertheless, the financial institution was deducting 36% of your holdings and replacing them with shares in its parent company — shares that you can’t trade. You just have to hold them and hope for the best.
How would you feel? How do you feel just imagining it?
Probably a lot worse than the clients of Cypriot banks, who had to forfeit between 6.75% and 9.9% of their account holdings as part of the infamous “bail-in” of 2013. Besides the fact that the percentage is much larger, your bail-in was totally unexpected. Nobody saw it coming.
And there’s nobody to whom you can complain. The financial institution is unregulated. There’s no backstop and no clear rules. You’re entirely on your own.
That’s the situation increasing numbers of us are in these days … a situation we were promised wouldn’t happen.

http://www.valuewalk.com/2016/08/bitcoin-bail-in/

[TraderTimm]

"Hi, I'm a retard writing about things that I have no idea about."

There's your summary.

[Yogafan00000]

There's your summary.

I'm interested in a real, logical rebuttal to the OP statement, not some bullshit ad hominem.  Do you have anything valuable to contribute to this thread?

[aigeezer]

The article begins with an irritating counterfactual headline and FUD-filled introduction.

At first, the approach seems to be pure FUD. The message (paraphrased) is that BTC is worse than fiat because... Bitfinex.

One is very tempted to stop reading and rebut on the grounds that exchange policies have nothing to do with BTC. Anyone who keeps funds on exchanges is of course exposed to the whims of the exchanges, but that's not a BTC issue.

The article eventually takes a more interesting turn: "But large-scale trading of cryptocurrencies has recreated the exact problem bitcoin was meant to solve: a “single point of failure.”" He refers to exchanges when used as banks, a straw man if ever there was one.

The fact is undeniably true, imho, but is easily resolved for most people by following the familiar maxim to never keep one's funds at an exchange.

Eventually the article offers a punchline - the author is excited that there will be Open Source non-centralized peer-to-peer exchange substitutes Real Soon Now. Well, yes, I'm excited about that too - the sooner the better.

After that bright spot, the author returns to FUD mode: "Until they succeed, my advice is to keep your bitcoin and other cryptocurrency investments modest. Unless, of course, you fancy a 36% haircut out of the blue."

So, imho, all that sound and fury - all that FUD - could just as easily be dealt with by reminding crypto users: your wallet, your coins - not your wallet, not your coins. Don't leave your coins on exchanges! It's not a BTC problem, nor a blockchain problem, nor a crypto problem, as the author suggests. It's a human error/judgment problem.

TraderTimm got it right, all in all.       
   

[TraderTimm]

There's your summary.

I'm interested in a real, logical rebuttal to the OP statement, not some bullshit ad hominem.  Do you have anything valuable to contribute to this thread?

aigeezer has your reply, you pompous bastard.

[RodeoX]

I think this is a little concerning. It may also be much more shocking to A capitalist audience. I know this was HongKong, but remember that China is a totalitarian communist regime and the idea of my money vs. our money is confused. Decisions like the one this exchange is taking are not bitcoin problems. Bitcoin does not allow for any entity to take from another. This is another reason to never ever leave money on an exchange. When you do you turn over your authority to someone you don't even know.

[Carlton Banks]

There's your summary.

I'm interested in a real, logical rebuttal to the OP statement, not some bullshit ad hominem.  Do you have anything valuable to contribute to this thread?

aigeezer has your reply, you pompous bastard.

Actual IRL ROFL'ing, thank you all.