Should bitcoin markets be regulated?

[kkaspar]

I vote that the bitcoin markets should have regulations and audits done by third parties to keep market integrity.
With the current situation, no exchanges could be held responsible on presenting false data, or stealing coins under the cover of being a cyber-attack victim. The word of mouth is spreading among certain elements of the society, that bitcoin is the financial wild west. You can scam people or plainly steal from people, without being held responsible.
If the bitcoin community and the development team doesn't want the government to take over the regulative function, then there needs to be public responsibility. Subjects on how to prevent market manipulation, scamming or plain out stealing, should be discussed more.
You just can't have unregulated market system for a deflative currency, that is very attractive to speculative interests. The outcome is a turmoil, that will attract the ugly part of humanity to seek their fortunes at the the misfortune of others. The current bitcoin market system is like Tombstone without a strong lawman.
If bitcoin doesn't change direction with it's market system policies, then bitcoin will soon lose it's most valuable asset - trust. Trust is the only thing that keeps people buying or hodling. If scandals should break out, that big exchanges are presenting false data to stimulate the trades, then there will be solid credibility on calling bitcoin a scam. Plainly speaking: bitcoin will lose it's value to single digits or lower. There should be available overview about the actions of markets, so it would keep the integrity and would keep the wrong element in place. People's trust, in the integrity of markets, should be in par with the trust that they have for bitcoin's technological security capabilities.

Don't just wait for the disaster to happen, but give some contribution on stopping it.
Thank you for reading.

[nastybit]

I vote that the bitcoin markets should have regulations and audits done by third parties to keep market integrity. < You are one big step ahead, they first have to recognize bitcoin as a currency/commodity and then try to regulate it.
You can scam people or plainly steal from people, without being held responsible. < only from greedy people
If bitcoin doesn't change direction with it's market system policies, then bitcoin will soon lose it's most valuable asset - trust < this could be resolved soon with a distributed exchange

I voted yes

[Ibian]

Bitcoin specifically does not rely on trust - it relies on proof. Check out how the 1k party people are handling tickets, it's pretty brilliant.

Getting scammed involves willingly sending people your money or giving them control over them. Learn to value ownership.

We don't need regulation nearly as much as we need to raise the general level of intelligence.

[Peter R]

Isn't this what we already have, kkaspar?  For example, YOU could choose to form a group (say a bitcoin exchange) and implement the rules and regulations that you see as important (perhaps independent audits).  Anyone that invests or trades with your group would have to follow your rules or you can kick them out.  If other individuals like what your group has done (e.g., the exchange audits) then they will want to work with your group and play by your rules.  If not, then, like you said, they can live by their own rules without the support of your group.  

So I don't understand what you are proposing.  You mentioned something in one of your posts about the core developers forcing the exchanges to behave a certain way, but I didn't understand what that would look like or how that could be accomplished.  

Peter R, I think that you have a very good idea, but sadly I see that I am a little too late for that. To take on an project like that, so that it would generally change the bitcoin exchange scene, would take time and effort that I can't afford. There is the time issue, where a new exchange not only has to be built, but needs a proper run in to gain the confidence of traders. When I see that bitcoin has probably 1 or 2 years to live, then that project would be on a very tight schedule. If you have about 2mil.$ to spare on a very risky venture, where there is a possibility of no return, then I'm in and we can start tomorrow.

First thing I would like from the core developers and the community leaders is that the subject should be talked about. People with expertise and experience should start thinking of different options how to improve the integrity of markets. The threat that unregulated markets present to the future of bitcoin is real, and it should be taken as real. Maybe bitcoin can be classified as an product or an brand, then there are always legal ways to set the terms of it's usage. Maybe a public rating system should be made to grade the exchanges in depth... these are just some ideas that popped into my mind. All I am asking is that people who are interested in the growth of bitcoin, would do the same and start throwing ideas around. The market integrity crises will be a big one, but all problems can be solved. The community should start early on thinking of an solution for this crises that will come sooner then most think. If all hell breaks lose, then there is no time to fix anything and confidence fades quickly. Bitcoin only needs a couple of weeks of waves of bitcoin exchange scandals, and the value will be back to single digits and it probably won't rise again.. And this will come in waves and with rapid speed. If one exchange is using dirty tricks in the market, then be sure that the others do the same. Only the level of dirtiness will varie. Soon greed will take hold and one exchange will leak the material that is needed to hurt the integrity of an competing exchange. This will be answered by a counter-attack that will leak shady doings and will probably spice them up a little with some made up stuff. When people are already unsure about bitcoin because of the previous scandal, then the next one will hit even harder. If the exchanges are corrupt, then greed will make them destroy themselves like this.

Kkaspar, I moved our previous discussion to your new thread.

NOTE TO READERS: we are discussing regulation of exchanges, not regulation of the bitcoin network.  

I agree that increased transparency and third-party audits of the exchanges would be helpful.  And I have confidence in the free market that we will eventually get there.  I recently learned that I am one-degree of separation away from a great whale manipulator.  During this discussion I also learned that the exchanges are cracking down on blatant manipulation.  Of course, the exchanges don't really want to come out and talk about this.  So I actually think stuff is being done behind the scenes to improve some of the worries that you have.  Lastly, manipulation is becoming more difficult as the bitcoin market grows in value, anyways.

My bet is that we eventually see bitcoin traded as a digital commodity on something like the Chicago Mercantile Exchange, in the same way one would trade gold or pork-belly futures.  This would add legitimacy to the exchange process, since it would fit in to the existing commodity trading framework and regulated the same way.  The Winklevoss ETF will later get approved by the SEC, further legitimizing the bitcoin-to-USD exchange market.  

In conclusion, I see the current exchange limitations as growing pains that are working themselves out as we speak.


P.S: I didn't vote in your poll because I don't know exactly what you mean by regulated.  Yes, I think third-party audits and more transparency would be helpful, but I'm not sure I want some arm of the Japanese government meddling with MtGox.  

[kkaspar]

I recently learned that I am one-degree of separation away from a great whale manipulator. 

My bet is that we eventually see bitcoin traded as a digital commodity on something like the Chicago Mercantile Exchange, in the same way one would trade gold or pork-belly futures.

Remember, if you have 2mil.$ to spare on ventures, which are based on ideas that you strongly believe in, then PM me and let's start a new exchange together.

[LiteCoinGuy]

doesnt matter: they will.

[teukon]

... then bitcoin will soon lose it's most valuable asset - trust. Trust is the only thing that keeps people buying or hodling.

The entire foundation of Bitcoin is designed to reduce the need for trust.  I believe that the problems you are citing can be solved effectively by a sufficiently free market.

Don't get me wrong, the free market won't do anything to help people who choose to put their life savings on a shady new exchange.  I just don't perceive this as a problem.

[bitrider]

doesnt matter: they will.

+1 They can't help themselves.

[pjviitas]

All I need is a copy of the same books as everyone else on the network and I am happy with that...the day they change that I am out.

[Erdogan]

Please let us have strict regulation so that also we can have Bernard Madoff-like investment companies.

[Mike Christ]

As long as the auditors can't use force to shut any given exchange down, I see no problem with regulation.  Unfortunately, that's not up for debate, considering any given nation's monopoly on this service.

[Buffer Overflow]

Please let us have strict regulation so that also we can have Bernard Madoff-like investment companies.

We had plenty of those back in 2012.

[countryfree]

Amazing how so many people never learn and still believe in regulation.
Fannie Mae and Freddie Mac were both very regulated and highly regarded up to September, 6 of 2008. Check the history books to learn what happened the following day.

[Erdogan]

If you want regulation, go for fiat, pay your taxes, be afraid, kill some more people.

[Mike Christ]

Amazing how so many people never learn and still believe in regulation.
Fannie Mae and Freddie Mac were both very regulated and highly regarded up to September, 6 of 2008. Check the history books to learn what happened the following day.

Same effect as having police paid for by the state; it all depends on where the paycheck comes from, which dictates who the regulators work for.  We do not need to abandon regulators, we just need to directly influence their actions, which doesn't happen if their cash flow comes from theft.  In the case of competing regulators, nobody bothers to pay attention to the ones who are paid off by special interests.

[User_513]

I believe in a well regulated market, one being a market that is regulated by consumer demand instead of the whims of some central planner(s).

[ISAWHIM]

We already do regulate the market... We trade, we use it to buy and sell, and we value it.

Are you saying that you want a single entity to tell you what your holdings are worth? We have that already, it is called FIAT. They will always tell you your holdings are worth less and less, because they want more and more of what you have, and spend more of what you have to regulate it.

You want to regulate it... sell it when you see it is high, buy it when you see it is low... Instant regulation!

If you think the price is too high, feel free to sell me your BTC for less. If you think it is too low, feel free to buy mine for more. I'm game for that!

A dollar is never worth a dollar... Ever... The second you give it to someone, they owe taxes on what you just gave them. So if you gave them a dollar, you actually only gave them $0.93. (That is 7% tax.) SO for them to get a whole dollar, you would have to give them $1.07. So you see, a dollar is never worth a dollar, ever. It costs you to spend, it costs you to receive, it costs you to hold, it costs you to save. Some things just cost less to do... Unless you risk it in investments, and win.

Funny thing is... the more it loses value, the more qty you demand... the more qty you demand, the more they tax you... which is why they constantly lower the value, so you earn more qty to be taxed more.

That is your govt ripping you off, systematically, using "regulation" as an excuse, and as the "trust", which is false-trust. The reason they call it trust, is because they don't want you to see the truth. "Trust me..." When has that ever been said, except when it was said to mislead you into "trusting", instead of believing in the reality of the matter?