The case for conspiracy: Bitcoins recent demise coincidence or attack?

[James-Cryptonomics]

Source: http://cryptonomics.io/news/the-case-for-conspiracy-bitcoins-recent-demise-coincidence-or-attack/

Bitcoin has received many knocks as of late ranging from Mt.Gox’s untimely closure to Charlie Shrem’s arrest. It has been a quick turn-around. Only a number of weeks ago bitcoin seemed safe and steady. Now its very foundations are being questioned by not only the usual ‘bitcoin doubters’ but also by some long time advocates too. To mark this change of fortune here is a list of major recent events in chronological order:


    10th January: Ben Lawsky, New York State’s first Superintendent of Financial Services, proposes regulation for bitcoin dubbed ‘Bitlicense’.
    23rd January: Wells Fargo announce places to host a public event to discuss bitcoin, only a week after holding a private summit on cryptocurrencies.
    27th January: Russia issues warning on cryptocurrencies.
    27th January: Bitinstant CEO Charlie Shrem is arrested on alleged money laundering charges.
    28th January: New York hearing on cryptocurrencies focuses on ‘regulatory goals’.
    31st January: Estonian Central Bank warn bitcoin maybe a ‘Ponzi scheme’.
    7th February: Mt.Gox suspends all withdrawals, site keeps operating.
    9th February: Russia announces intentions to crackdown on bitcoin.
    11th February: A JP Morgan report slams bitcoin as vastly inferior to fiat currency.
    11th February: Andreas Antonopoulos confirms a massive attack is being concerted on bitcoin exchanges.
    12th February: Bitstamp is forced to halt all bitcoin withdrawals.
    13th February: Canada’s finance minister outlines plans to regulate bitcoin.
    13th February: Bank of Greece issues warning on potential dangers of investing in bitcoin.
    14th February: Bitstamp resumes bitcoin withdrawals.
    19th February: Hungarian central bank warns citizens about the potential dangers of cryptocurrencies.
    19th February: Israeli regulators and the Israeli central bank issue warning on cryptocurrencies.
    20th February: Brazilian central banks outline risks associated with cryptocurrencies.
    21st February: Goldman Sachs is rumoured to be discussing bitcoin.
    21st February: UK Payments Body confirms it has been tracking bitcoin.
    22nd February: A new banking task force has been formed in the US to study digital currencies.
    24th February: Mt.Gox deletes its twitter comments.
    25th February: Mt.Gox website goes offline.
    25th February: Ben Lawsky says that the meltdown of Mt.Gox illustrates the need for greater regulation.
    25th February: SecondMarket confirms it is to launch its own bitcoin exchange. The New York Times reported that: ‘Barry Silbert, SecondMarket’s chief executive, said that he had already talked with several banks and financial companies about joining the new exchange, along with financial regulators, and that he hoped to have it in operation this summer’.
   

Conspiracy is word often delivered out of context. It is often used as a derogative term against people who doubt official versions of events. In reality though any agreement by two parties for dubious means is a conspiracy. The argument I am about to make has the foundations of a conspiracy theory – though I don’t necessarily believe what I am arguing and it certainly doesn’t reflect the views of Cryptonomics.

Andreas was right to say that bitcoin was under a ‘massive concerted attack’ – but who by? Was this attack conducted by underworld criminal elements hoping to profit by weaknesses in the bitcoin protocol? Or alternatively could this have been an attack orchestrated by malicious actors with more clandestine motives?

With recent events it is clear that somebody has profited by exploiting a problem within the bitcoin protocol – dubbed ‘transaction malleability’. Mt.Gox is rumoured to have lost 744,400 bitcoins due to this problem. Evidently it is proposed that this has been an ongoing attack, some say months, others years. Still the coordinated attack against bitcoin exchanges reported by Andreas on the 11th of February was anything but ongoing and was a phenomena observed only over a few days.

All the negative press surrounding bitcoin has certainly played into legislator’s hands – with some using the Mt.Gox case as a reason to enforce regulation around the cryptocurrency. The events, as shown above all happened in a short burst – coincidentally just weeks after Ben Lawsky proposed his ‘Bitlicence’ and in-between whisperings of large financial institutions moving into the cryptocurrency market. SecondMarket after all has just confirmed its attentions to set up a bitcoin exchange, with the possible help of financial institutions.

Whilst these attacks and changes in the bitcoin landscape were occurring, many central banks across the world were warned their citizens against use of the currency; and financial institutions where secretly meeting to discuss the cryptocurrency.

It is more than possible that recent events have all been coincidental, and the powers-to-be have used them as a tool for political rhetoric. However, it wouldn’t be too big-of-a-leap to claim that some of the institutions that have benefited from bitcoins recent demise may have helped orchestrate its fall. We will probably never know.

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[James-Cryptonomics]

I was debating starting a new thread with this in, but thought I would add this to here.

I have heard about this for along time now - secret services discrediting potential threats and spreading disinformation. Again I am not saying I fully believe this but I think NONE of us should rule it out.

https://firstlook.org/theintercept/2014/02/24/jtrig-manipulation/

[corebob]

Not to worry, bitcoin is doing fine

https://blockchain.info/charts/market-price?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

seriously though, whatever happens with Bitcoin these days, it should have been expected.
If recent events has been due to a concerted attack, Bitcoin has shown its strength. ATMs and exchanges are popping up all over the place.

It all depends on what we expect Bitcoin to be at this point. Personally I'm quite impressed. It is beta software after all.

[James-Cryptonomics]

It all depends on what we expect Bitcoin to be at this point. Personally I'm quite impressed. It is beta software after all.

I couldn't agree more. It has proved itself to be resilient time and time again.

[skilo]

This is why sites like localbitcoins.com are so important, We need more cash based person to person exchanges via android apps like Mycelium wallet.

Cut out the banks completely and create an ad-hoc economy.

[DieJohnny]

People are naive if they can't see what is happening. Bitcoin is under attack and almost certainly by the USA. If you don't think bitcoin wasn't identified as a security threat two years ago and this plan underway since then then u r a fool. Govts don't sit around and wait for destruction to fall upon them wake up!

Playing nice with Govts, trying to be loved, regulated and accepted is stupid. Bitcoin has always been about war u are either on bitcoins side or u are serving the enemy

[steeev]

the climate of 'regulation' talk along with warnings about 'safety' around Bitcoin as it is does seem to lend itself to bigger interests trying to manoeuvre in the space to exert influence at a broad level, since they've clearly discovered the code is, in the words of Janet Yellen just the other day, 'difficult to regulate anyway'...

so i suppose if you mean there are interests trying to wrestle control along other lines, then yes i can see that...

if exchanges are going to be created and used in this way, it becomes about making sure the free market can offer opportunities beyond the 'official' options...

[James-Cryptonomics]

the climate of 'regulation' talk along with warnings about 'safety' around Bitcoin as it is does seem to lend itself to bigger interests trying to manoeuvre in the space to exert influence at a broad level, since they've clearly discovered the code is, in the words of Janet Yellen just the other day, 'difficult to regulate anyway'...

so i suppose if you mean there are interests trying to wrestle control along other lines, then yes i can see that...

if exchanges are going to be created and used in this way, it becomes about making sure the free market can offer opportunities beyond the 'official' options...

Legend - Couldn't sum it up better myself

Edit: And yes - this is exactly what I mean.

[Carlton Banks]

Some of these events were scheduled a while ago. Some, like the transaction mal-attack, were drawn out over a period of time, and brought to an apex in this period. And some of these events could have been deliberately delayed, and only announced when they could have maximum impact. When you're dealing with an innovation that heavily disrupts the world monetary and financial system, I don't think some high level gamesmanship & collusion is implausible.

But when you look at the real consequences of what's happened, it comes across like the financial incumbents are trying to hustle their way to a place at the table, and the governments are just managing sentiment amongst the general public (the two overlap to some extent). I don't think these attacks aren't intended as a coordinated effort to kill bitcoin off, much more decisive action would be needed for that.


And you forgot one -

6th February: Gavin visits the Council for Foreign Relations

And he got a reasonable hearing, all things considered. I'm not totally sure, but I get the feeling that the long term sentiment from the big influential classes will be "well, we did our best, but you can't hold back progress". And if they begin to take that line right about the stage where the whole category of coloured coins/smart property innovations begin to get into the public consciousness, then that attitude will be reflected in public perception too.

[DieJohnny]

But when you look at the real consequences of what's happened, it comes across like the financial incumbents are trying to hustle their way to a place at the table, and the governments are just managing sentiment amongst the general public (the two overlap to some extent). I don't think these attacks aren't intended as a coordinated effort to kill bitcoin off, much more decisive action would be needed for that.

It doesn't matter how things "come across" ...if anything the more it appears that the government has little to do with things the more unlikely the government has its hands clean. The internet while we naively trumpet as the great communicator is more of a tool of the government and incumbent powers than a revolution.

The US government is a paranoid NSA-FBI run institution.... and they ARENT actively executing a plan to control bitcoin???... think again. There is ZERO chance that a Bitcoin agenda isn't in full swing, zero.

Get ready for the onslaught. Bitcoin is about to face digital nuclear war.

[Carlton Banks]

But when you look at the real consequences of what's happened, it comes across like the financial incumbents are trying to hustle their way to a place at the table, and the governments are just managing sentiment amongst the general public (the two overlap to some extent). I don't think these attacks aren't intended as a coordinated effort to kill bitcoin off, much more decisive action would be needed for that.

It doesn't matter how things "come across" ...if anything the more it appears that the government has little to do with things the more unlikely the government has its hands clean. The internet while we naively trumpet as the great communicator is more of a tool of the government and incumbent powers than a revolution.

The US government is a paranoid NSA-FBI run institution.... and they ARENT actively executing a plan to control bitcoin???... think again. There is ZERO chance that a Bitcoin agenda isn't in full swing, zero.

Get ready for the onslaught. Bitcoin is about to face digital nuclear war.

Yes. That's a way of looking at it.

But it's a little too extreme, you're not taking account of the US government's disunited stance. Congressional hearings were positive, Federal Reserve luminaries have been positive (or neutral in Janet Yellen's case), Council for Foreign Relations were positive. The CFR don't invite the current Al-Qai'ida leadership to do a presentation under the umbrella of "Voices of the Next Generation". If bitcoin/cryptocurrencies are considered to be so threatening, there would have been no CFR Q&A.

Hunker down though, if you insist. It'll provide alot more psychological torment than the reality, mostly self inflicted.

[Gabi]

Bad things in the bitcoin world are happening since 2011, nothing new under the sun

[DieJohnny]

But it's a little too extreme, you're not taking account of the US government's disunited stance. Congressional hearings were positive, Federal Reserve luminaries have been positive (or neutral in Janet Yellen's case), Council for Foreign Relations were positive. The CFR don't invite the current Al-Qai'ida leadership to do a presentation under the umbrella of "Voices of the Next Generation". If bitcoin/cryptocurrencies are considered to be so threatening, there would have been no CFR Q&A.

Hunker down though, if you insist. It'll provide alot more psychological torment than the reality, mostly self inflicted.

I am not tormented, nor do i really give a crap since i cannot do anything about it. I am holding the bitcoins that I have. But my sentiments are negative because history says chances of success are small (no i don't think it has succeed yet).

As for govt intervention, a united front is just that a front. If anyone thinks congressmen or senators have any power in the United States then they haven't been paying attention over the last 30 years.

The NSA is unchecked for a reason, think about it.....

The NSA does as they please. Bitcoin is nothing more than their ultimate wet-dream play ground to let loose all of their brilliant hires. They invented cryptography, this is a game to them.

me, i am just a spectator unwilling to ignore the obvious.