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Author Topic: Watching amateur finance types flail  (Read 33777 times)
amincd
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June 27, 2011, 04:39:56 AM
 #201

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The main new thing about Bitcoin is the generation mechanism.  DigiCash was equally anonymous, and had a comparable anti-double-spending mechanism. But it used a central "bank" to keep the transaction list.

It's also an illusion that Bitcoin isn't centralized. Some of the policy, such as transaction costs, is embedded in the client. The constants that drive the coin generation rate were set centrally at launch, and are embedded in the early coins. Those locked-in policies favored early adopters and set a ceiling on the number of Bitcoins which is not that far away.

The main new thing about bitcoin is that it's decentralized. Digicash could fail if the company that owned the servers got hacked, went bankrupt or was shut down. Bitcoin cannot be shutdown because it is completely decentralized. There is no SPOF. As for how the protocol was originally created, that is about as relevant to whether it's decentralized as how TCP/IP was created and whether the internet is decentralized.

You don't even grasp the basic point about the technology and here you are criticizing it. This is FUD, pure and simple.
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cmh
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June 27, 2011, 04:48:56 AM
 #202

I'm curious what attracted John's interest in bitcoin. It's interesting to see so many financial experts are watching it. I see the main difference from previous attempts at digital cash is that there is no way to stop people from using it and its at least as untraceable (and untaxable) as regular cash.
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June 27, 2011, 05:01:01 AM
 #203

I'm curious what attracted John's interest in bitcoin. It's interesting to see so many financial experts are watching it. I see the main difference from previous attempts at digital cash is that there is no way to stop people from using it and its at least as untraceable (and untaxable) as regular cash.

you answer your own question:

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I'm curious what attracted John's interest in bitcoin.

...thusly:

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...there is no way to stop people from using it...

he can't make any money from Bitcoin, other than as a miner or a participant.  "professional" finance types don't like exposure to <s>risk</s> reality.  they want to make money without touching, earning, or creating it.  and if one of their investments tanks, they were only advisors - not vested.

hence; naked credit default swaps.

Bitcoin isn't like that, is it?
hawks5999
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June 27, 2011, 05:05:37 AM
 #204

I'm curious what attracted John's interest in bitcoin. It's interesting to see so many financial experts are watching it. I see the main difference from previous attempts at digital cash is that there is no way to stop people from using it and its at least as untraceable (and untaxable) as regular cash.

What attracted John's attention is a crowd of people talking about finances that he could exploit to drive traffic to his own moribund site. Combine that with the likelihood of slow business and John is hoping that he can drum up some clients if he talks pseudo-intelligently about finances. This joker is all over the map though. In here he decries the bubble/ponzi/pump and dump nature of BitCoin while over here: http://forum.bitcoin.org/index.php?topic=21384.0 he gushes over the stability of the currency at $15.
He's either a) bipolar b) several people who aren't comparing notes or c) playing every side of the argument in hopes to attract a dupe to his services.
Whatever one of those things he is, he is primarily a troll.

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BkkCoins
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June 27, 2011, 05:18:29 AM
 #205

You're thinking of Bitcoin as the modern equivalent of "the free and unlimited coinage of silver". (Read up on the Free Silver movement.) That was a different problem, though. That period had a growing economy with a fixed money supply tied to gold. The result was severe deflation. That's not the problem in the current US economy.

Right. Now we have a stagnant economy (limited by oil resources) and a wildly out of control money supply managed by criminals in designer suits.

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June 27, 2011, 06:17:09 AM
 #206

You're thinking of Bitcoin as the modern equivalent of "the free and unlimited coinage of silver". (Read up on the Free Silver movement.) That was a different problem, though. That period had a growing economy with a fixed money supply tied to gold. The result was severe deflation. That's not the problem in the current US economy.

Right. Now we have a stagnant economy (limited by oil resources) and a wildly out of control money supply managed by criminals in designer suits.

Oil scarcity is not our biggest economic problem. Not even close. What scarcity there is is exacerbated by poor policy rather than dwindling reserves.

insert coin here:
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June 27, 2011, 07:03:16 AM
 #207

Oil scarcity is not our biggest economic problem. Not even close. What scarcity there is is exacerbated by poor policy rather than dwindling reserves.

It's lurking there like a ceiling that we'll bump against each time the economy gets on track and tries to push up through. So it doesn't get noticed or given attention except by the more abstract observers who don't have a vested interest in keeping the status quo and so aren't quite so blinded by mankind's arrogance.

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June 27, 2011, 07:14:39 AM
 #208

Oil scarcity is not our biggest economic problem. Not even close. What scarcity there is is exacerbated by poor policy rather than dwindling reserves.

It's lurking there like a ceiling that we'll bump against each time the economy gets on track and tries to push up through. So it doesn't get noticed or given attention except by the more abstract observers who don't have a vested interest in keeping the status quo and so aren't quite so blinded by mankind's arrogance.

[sigh] We didn't start using oil because of peak coal. There is reason to believe that the transition from oil will be based on the development of a new, superior technology rather than depletion of oil reserves. It's not a ceiling we will "bump" against. Marginal utility means that other technologies will slowly come on line and increase in use as the price of oil rises.  This will more likely be an orderly transition that a disruptive, abrupt change.

Not to say there isn't substantial risk of disorderly, abrupt change- just that it is likely to have little to do with oil.

insert coin here:
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Open an exchange account at CampBX: options, lowest commissions, and best security
https://campbx.com/register.php?r=0Y7YxohTV0B
BkkCoins
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June 27, 2011, 07:21:54 AM
 #209


[sigh] We didn't start using oil because of peak coal. There is reason to believe that the transition from oil will be based on the development of a new, superior technology rather than depletion of oil reserves. It's not a ceiling we will "bump" against. Marginal utility means that other technologies will slowly come on line and increase in use as the price of oil rises.  This will more likely be an orderly transition that a disruptive, abrupt change.

Not to say there isn't substantial risk of disorderly, abrupt change- just that it is likely to have little to do with oil.

Well, you're entitled to your view. I won't comment further here as it's getting off topic.

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June 27, 2011, 08:05:10 AM
 #210

The condescension and smug superiority in the title of the OP's thread alone are insulting enough. He then compounds it with scorn, direct insults, belittling, and expressions of pleasure at unfortunate events. Inability to distinguish between a hack of an exchange and the operations of the bitcoin network itself are dead giveaways.

Bitcoin's elegance, distributed nature and the math behind it are powerful forces he doesn't begin to grasp, which is evident when he equates it with Digicash and Beenz.  I have my own doubt and misgivings about Bitcoin, but an attitude of epistemic humility is much more fitting.

As for the allegation of the exchanges (repleat with scare quotes) being flaky: partially true, when the standard of comparison is institutions that have been in existance for decades in a gigantic multi-trillion-dollar financial system. But when you consider that until two months ago, the total value of all bitcoins in existence didn't exceed the market cap of even a single publicly traded micro-cap stock, only modest operations could have possibly existed, and they are necessarily very new. As Bitcoin matures and grows, the system around it will mature and grow. Witness Camp BX as a promising development in this regard. And MtGox may have learned some lessons, and their recent revenue growth will likely fund commensurate improvement in their own service.

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Yet they're acting as depository institutions for sizable funds belonging to others.
They are not a depository institution. Mt Gox has custodial relationship with account holders. The funds _are_ held in a depository institution, namely Sumitomo Mitsui Banking Corp.

The recent publicity brought what surely was a speculative blow off. There's a world of difference between speculative excess in valuation (which happens to many perfectly-valid asset classes), and collapse of the tulip bubble or a ponzi scheme.

His inept, mostly stale website is testament enough. But consider what he asserts.
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Only Ponzi schemes chart like that. When Ponzi schemes crash, they crash fast, and they crash all the way.
And if it doesn't rapidly finish its collapse, as predicted, "all the way" to zero, will we see a retraction, an admission of error, and apology for the insults he heaped on Bitcoin users? Don't hold your breath.
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June 27, 2011, 08:19:01 AM
 #211


The main new thing about bitcoin is that it's decentralized.


that's a nice feature and technologically impressive.
do you think this is what makes bitcoin a 1 billion dollar economy within 5 years, while other e-currencies failed completely? decentralization does it?
a feature that isnt even apparent to the end user unless there would be an attack on the "central bank", which AFAIK never happened with any of the previous e-currencies.

(if anything, an end-user who wants to use bitcoin as a form of payment instead of speculation has disadvantages from decentralization)
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June 27, 2011, 08:27:45 AM
 #212


The main new thing about bitcoin is that it's decentralized.


that's a nice feature and technologically impressive.
do you think this is what makes bitcoin a 1 billion dollar economy within 5 years, while other e-currencies failed completely? decentralization does it?
a feature that isnt even apparent to the end user unless there would be an attack on the "central bank", which AFAIK never happened with any of the previous e-currencies.

(if anything, an end-user who wants to use bitcoin as a form of payment instead of speculation has disadvantages from decentralization)

Anyone who's had their paypal account frozen (rightly or wrongly) understands the value of decentralization.

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June 27, 2011, 08:38:54 AM
 #213

...and doesnt answer the question
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June 27, 2011, 08:50:42 AM
 #214

...and doesnt answer the question

Yea.  Decentralization does it.  Its not just a buzzword, it means no central authority can seize an account.

E-gold failed because the Feds took it down.  Bitcoin can succeed because the feds can't take it down (or will at least have a much harder time).

Paypal fails for some because paypal freezes their accounts.  Bitcoin can succeed for them because noone can freeze bitcoin accounts.

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June 27, 2011, 08:59:04 AM
 #215

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a feature that isnt even apparent to the end user unless there would be an attack on the "central bank", which AFAIK never happened with any of the previous e-currencies.

How about _failure_ of the "central bank", which is absolutely going to be noticed by the end user, as it was in the case of holders of beenz.
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June 27, 2011, 09:27:31 AM
 #216

Maybe John is just a doom-sayer because he's worked out some people are psychologically drawn to negative statements.  (plus I think his web site is hilarious)
I come across experts and their forecasts all the time.  Even this week I was re-reading an informed forecast of oil prices that suggested USD25 was an extreme value for the future (written in 2003).  Similarly, I have forex gurus tell me the cross rate to the USD should mean revert to the ten year average with no basis or likelihood.  If there is a fundamental, that's great, but saying it will crash (or anything else) is speculation on its own - certainly at this point in time.
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June 27, 2011, 09:39:01 AM
 #217

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so I'm looking at this neutrally.
K

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So what's wrong in the Bitcoin world?

Good way to start of neutrally.

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That just screams "bubble" to anyone who's seen one. Bear in mind that the Bitcoin system generates no revenue. All funds must come from new investors. This is not like a startup company. This is a zero-sum game. If you've been in the game for half an hour and you don't know who the patsy is, you're the patsy.

So the price went up, and back down, and a 'bubble' fashion. Big deal. As you said, amateur finance types flailed after the hack and all sold out... while now the price is steadily rising. Bear in mind, the only thing that bubbled here is a very alpha pegging of the BTC to primarily (nearly exclusively), the USD. You seem to be implying that because the price bubbled that it is doomed to not gain value again, thus investors have lost all return. You haven't event attempted to elaborate the consequences you propose from the price flux.

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Second, Bitcoin is supposed to be a currency, but it's actually a speculative vehicle. If Bitcoin were a successful currency, there would be many merchants using it for small transactions, with perhaps some speculation on the side. In practice, the speculation dominates.  This is the real problem with Bitcoin. If it had been launched as the payment system for something like music tracks or smartphone apps, it might have worked out better.  Or not; "Digicash" and "Beenz", the two previous rounds of this idea, also tanked.

You sound like you have no absolutely no idea.

Firstly, don't pull shit out off your arse. How many merchants have you talked to, have said they have heard about, researched and evaluated bitcoins for themselves (without your horse-shit of course) and speculated that it would fail.

Second, there are infact *many* merchants using bitcoins listed on the wiki, and many more projects, charities etc that go unheard, all which can classify to some degree as merchants. How many people do you really think have looked and researched bitcoins enough to make an informed decision as to whether their business model is appropriate or not.

Third, bear in mind this is an internet cash system and people doing small transactions generally do it by hand, thus physical cash is exchanged and no need for bitcoins is needed. That eliminates thousands of corner stores that have no need for such a system. However in the future when credit card type wallets are used, corner stores would accept bitcoins. Indeed millions of small transactions occur on the internet, however what proportion of those do you think have heard of Bitcoins thus far and is willing to invest 100% (that is all online transactions using BTC)?
There is also variable degrees to which people invest, so its not as black and white as you appear to think. 

Quote
Third, the organizations in Bitcoin's ecology are very flaky. Mt. Gox is two guys in Tokyo who are in way over their heads. We don't know much about Tradehill, which is somewhere in Chile. Neither of these "exchanges" has a published business address, a Dun and Bradstreet rating, published audits, or regulation as a bank or money transfer firm. Yet they're acting as depository institutions for sizable funds belonging to others.

Two organizations, by your opinion, are flaky. Bitcoins != Mt. Gox.

You state you dont know much about Tradehill but you say they are flaky, is that not you speculating that they are malicious? not trust-worthy? incompetent?
Flaky is a very general term and is no descriptive. Please choose your words wisely.
Shouldn't one greet others with an open heart? I'm not saying you must follow them blindly, however I am saying you can approach a situation with an open mind yet hold reservations.
Have you actually done business with them? Have they so far wronged you?
Would you not want others to greet you with openness as you yourself approach a new market with reservations?
No one forces you to do business with anyone so if you deem a party 'flaky', don't trade with them.

As for their credentials such as audits, regulation etc.. Do you really think the bureaucratic system as it stands can handle such a request for a Bitcoins based exchange?
Most governments want to eradicate Bitcoins because they fear losing power, they aren't going to say 'yeah here's some credentials for people to trust your Bitcoins exchange..'
If you reply saying that bcuz governderps think Bitcoins is evil, I will have great lulz.

You seem to oversee the fundamental concepts behind Bitcoins. Look from the system itself outward.
It is a beautiful design that could shake lot of peoples core held beliefs.

Have fun flailing.

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June 27, 2011, 01:06:52 PM
 #218

Actually, it's the third or fourth [of its kind]. Digital era predecessors in pseudo-currencies include Beenz, DigiCash, and frequent flyer miles.  Going back further in history, look into how the house of Thurn und Taxis got rich after inventing postage stamps. (They also built and ran the postal system).

The main new thing about Bitcoin is the generation mechanism.  DigiCash was equally anonymous, and had a comparable anti-double-spending mechanism. But it used a central "bank" to keep the transaction list.

I can tell, at this point, that you didn't read the article I suggested to you. Not nice. And yet you prattle on. Frequent flyer miles are a predecessor to bitcoin?!

It's also an illusion that Bitcoin isn't centralized. Some of the policy, such as transaction costs, is embedded in the client. The constants that drive the coin generation rate were set centrally at launch, and are embedded in the early coins. Those locked-in policies favored early adopters and set a ceiling on the number of Bitcoins which is not that far away.

Here you seem confused as to what "decentralized" means. The policies and protocols coded into software do not make the it centralized (or otherwise).

I'm particularly disappointed that you ignored my point about the morality of the current money system, which you seem to be defending. You are on the wrong side of history. Your Dun and Bradstreet world is immoral. You need to come clean of it.
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June 27, 2011, 01:14:47 PM
 #219

I'm particularly disappointed that you ignored my point about the morality of the current money system, which you seem to be defending. You are on the wrong side of history. Your Dun and Bradstreet world is immoral. You need to come clean of it.
Here Here.

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June 27, 2011, 07:42:26 PM
 #220

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Yet they're acting as depository institutions for sizable funds belonging to others.
They are not a depository institution. Mt Gox has custodial relationship with account holders. The funds _are_ held in a depository institution, namely Sumitomo Mitsui Banking Corp.

That's an interesting legal point. Whether funds held by a Bitcoin exchange are debts of the exchange or a shared interest in a custodial account isn't clear. This matters a lot when an exchange goes out of business.

For a bank, a deposit is a debt of the bank. For a brokerage, a deposit not invested in some security is funds held in custody. This really matters when a brokerage firm goes under.  (I've had that happen, with L. F. Rothschild. Founded in 1899, went bust in 1989.  Getting all my assets out took a few weeks of daily phone calls and threats, but I didn't lose anything.)

For a money transfer firm in Japan, which Mt. Gox is, a custodial account is required. Mt. Gox isn't registered as a money transfer firm, although they should be. So we have only rumors that they have all their customer's funds.
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