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Author Topic: The Dangerous State of Bitcoin (.com)  (Read 8460 times)
49er
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October 27, 2011, 11:02:39 PM
 #1

As mentioned here and here, Tradehill, a business venture which has capitalized on the success of Bitcoins, has acquired bitcoin.com.  The power, control, and responsibility this domain name gives Tradehill is dangerous.  It's troubling that this official sounding domain has become property of a for-profit company that obviously intends to operate bank like services.  One potential but highly profitable outcome for this is as follows.



Tradehill aquires bitcoin.com.

Temporary site comes online.  Doesn't link to bitcoin.org.

New site is finally up.  It has "a community aspect" and "an open source feel."  You can download the official client from bitcoin.com, although it may just be a hotlink to bitcoin.org.  Oddly, no hyperlink back to bitcoin.org is easily reached on the site.

Due to the success of Tradehill's bitcoin.com "community aspect" or services, and due to Google's preference of a .com over .org, "bitcoin.com" takes first place for "bitcoin" searches.  This forces bitcoin.org to second place, and eventually third behind Wikipedia's own Bitcoin entry.

A new client with integrated Tradehill features is developed and released.  No harm here though, as the official bitcoind backend is still used, but GUI is more responsive, better designed, and well polished.  A couple other killer features are added, one being auto updating in the case of security vulnerabilities.

Tradehill releases official open source shopping cart software and it is widely adopted - think paypal - among internet stores.  People can buy items using credit cards and other such transactions in many currencies.  The store owner receives Bitcoins in bitcoin.com account!  You can also cash out to any currency for a small fee.

After years of both Tradehill and Bitcoin success, someone finally manages to break into Tradehill and steal it's wallets.  As news breaks the markets begin to panic and are quickly frozen due to the nature of the problem.

Since the exact transactions for stealing the wallet are easily identified, the whole problem can be easily reversed. Those few transactions in which the wallets were stolen are easily voided by a client update.  People using Tradehill's client receive the update automatically and immediately.  Instead of waiting for the official bitcoin.org client to catch up and reverse this potentially game ending disaster, people switch to the Tradehill client to ensure their money isn't ruined along with the theft, especially those with any BTC invested or stored with Tradehill.

Tradehill's Bitcoin client hits >50% of the network strength. Markets reopen a little shaky, but the crisis is averted.

Rumors the theft was staged are abound, but there's no proof.  "Afterall, why would Tradehill fake something like that?"  Most people quickly forget the incident, but other small transaction companies start to pop up as some people lose trust in Tradehill.

Tradehill cuts the cost to send from one Tradehill user to another, and no other company is yet able to hit critical mass to compete with the Tradehill.

Bitcoins grow in popularity and people become more Bitcoin savvy.  More and more people start doing transactions manually to avoid the small fees Tradehill had begun to charge for transactions.  Other open source shopping carts that allow direct Bitcoin transactions start to become as polished and professional looking as the officially published Tradehill shopping cart options.

Tradehill declares the Bitcoin network too weak due to the mass exodus of miners leaving when Bitcoins no new Bitcoins can be generated.  Or perhaps some new super computer China has can potentially override transactions in the Bitcoin network with pure brute strength.  Or some other possibly believable excuse is made to charge a much higher fee for Bitcoin to Bitcoin transactions to "encourage more transaction miners" and thus strengthen the network.

After such a declaration is made, Tradehill's client auto updates to the new higher transaction fee service.  Larger transaction miners who still "mine" for the transaction fees happily switch along with Tradehill users swept up in the automatic update.  With more than 50% of the network using tradehill's program, this fee change is forced on all Bitcoin users.

Tradehill's slowly growing transaction fees are now suddenly smaller than the transaction fees to send from one Bitcoin wallet to another.  Tradehill tracks your balance internally and doesn't need to push such transactions to the Bitcoin network, so it keeps all transaction fees for itself.  Tradehill only pays fees when you remove BTC from their system.

With increased fees for transaction mining, some miners incorporate.  Special hardware is designed to compute transactions hundreds to thousands of times faster than the unspecialized hardware regular users have.

With over 50% of the computational power using the "Official Tradehill Bitcoin Client," Tradehill and the Transaction Miner companies - which are increasingly being bought by the Tradehill conglomerate and banks who now see profit in Bitcoins - continue to slowly raise transaction fees, justified as protecting the currency.

A minimum transaction fee is set. To send small amounts without losing most of it in transaction fees, people use Tradehill's internal system, or deal with other banks - and possibly even Bitcoin credit/debit cards - who in turn deal directly with each other.

Transaction fees continue to increase until the Bitcoin client is too expensive to even be used by large businesses, and finally, even too expensive to be used by the banks themselves.  A new encrypted system is put in place using newer technologies and possibly even secret keys.  The details aren't release to the public.  Only large banks can use this system.

Bitcoin lives on in name, but is dead in spirit.  People everywhere trade btc for goods online, and maybe even in person.  You can still easily trade bitcoins for other currencies.  If you want to send btc to someone, you do it through a bank, even though the system may actually be more similar to paypal than a traditional bank.  But Bitcoins are controlled by the banks.  Banks can decide to "print" more bitcoins to keep up with population growth.  They can loan out any amount they so desire.  They can cancel transactions for things they don't like, and completely bankrupt someone they don't agree with, or who is speaking out against the power they've now accumulated.
"Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own." -- Satoshi
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Democracy is vulnerable to a 51% attack.


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October 27, 2011, 11:09:21 PM
 #2

If Bitcoin dies out, we will learn from the experience and replace it with something superior and the world will be a better place for it. Fall in love with the concept, not the implementation.

I am an employee of Ripple.
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October 27, 2011, 11:11:52 PM
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Your future projections are not very realistic.  Any business will live or die on its merits.  If a .com name is all that is needed, then you are giving way too much credit to the amazing business plans of pets.com, space.com, and my favorite IPO of all, drkoop.com

You are also forgetting that Mt. Gox has bitcoins.com

We tried to register bitcoinss.com as a joke but someone else already took it.

If they build a viable business, people will use them.  if not, it will be ignored.  


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October 27, 2011, 11:13:35 PM
 #4

OP - interesting narrative, but to the extent Tradehill became the center of Bitcoin-land it would also become the center of bitcoin liability. As the system gains adoption, the international legal systems would hone in on Tradehill specifically.

In other words, pursuing the course you lay out may be more of a liability for the company than an asset.
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October 27, 2011, 11:13:46 PM
 #5

OP shows a misunderstanding of how the network works.

No miner can set the network transaction fee. They can only set the rate they will include a transaction in the block.  If TradeHill's miners (hypothetical and non-existent) won't include transactions in a block w/o high fees as long as at least a single node will then transactions will eventually be confirmed for lower cost or free.
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October 27, 2011, 11:14:50 PM
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This is how socialists actually think.
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October 27, 2011, 11:15:47 PM
 #7

The interesting question is:

What will bitcoin.bit be worth?  Cool

First they ignore you, then they laugh at you, then they keep laughing, then they start choking on their laughter, and then they go and catch their breath. Then they start laughing even more.
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October 27, 2011, 11:16:12 PM
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Dystopian bitcoin future stories are fun!
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October 27, 2011, 11:21:44 PM
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This is how socialists actually think.

And you need to falsely demonize socialists in this thread because?


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October 27, 2011, 11:23:48 PM
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bitcoins.com is owned by MtGox. Does this change anything?
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October 27, 2011, 11:33:54 PM
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You would be a good fiction writer.

As far as I'm concerned, TradeHill is the closest I've seen to a responsible Bitcoin business, especially when taking into account the scale on which they do business.  Are they the largest Bitcoin business behind Mt. Gox?

Anyway, I've emailed them on at least 4 different occasions...and that's not including follow-up emails with things I had forgotten to mention or new concerns I had; frankly, it could have been seen as annoying.  They have responded timely to every email, even the follow up ones.  They have consistently addressed every problem or question I have had, and I believe I may have actually been the catalyst for TradeHill's implementation of permanent deposit addresses on every account.  

This implementation was added less than 24 hours after I had exchange of emails with TradeHill about an error I made during a BTC deposit -- using the old method, I requested to deposit 3.5 BTC but accidentally deposited 3.72 BTC because that was all the BTC I had in my wallet rounded to the nearest bitcent.  I wrote to TradeHill about the accident, and not only did they quickly cancel the transaction and refund my BTC, but they implemented permanent deposit addresses so you no longer had to request to deposit a specific amount.

Keep in mind I'm very skeptical of the Bitcoin community, especially people trying to sell me a product or service.  I guess it's risk assessment.  Anyway, I'm not saying I 100% trust TradeHill...that will probably never happen with any Bitcoin business unless my BTC are FDIC insured or something.  All I'm saying is that they have done the most to earn my trust, though I realize my sample size is rather small.

If TradeHill wants to get large enough to the point where they can afford to put up collateral to back our BTC, that's fine by me.

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October 27, 2011, 11:42:39 PM
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You would be a good fiction writer.

As far as I'm concerned, TradeHill is the closest I've seen to a responsible Bitcoin business, especially when taking into account the scale on which they do business.  Are they the largest Bitcoin business behind Mt. Gox?

Anyway, I've emailed them on at least 4 different occasions...and that's not including follow-up emails with things I had forgotten to mention or new concerns I had; frankly, it could have been seen as annoying.  They have responded timely to every email, even the follow up ones.  They have consistently addressed every problem or question I have had, and I believe I may have actually been the catalyst for TradeHill's implementation of permanent deposit addresses on every account.  

This implementation was added less than 24 hours after I had exchange of emails with TradeHill about an error I made during a BTC deposit -- using the old method, I requested to deposit 3.5 BTC but accidentally deposited 3.72 BTC because that was all the BTC I had in my wallet rounded to the nearest bitcent.  I wrote to TradeHill about the accident, and not only did they quickly cancel the transaction and refund my BTC, but they implemented permanent deposit addresses so you no longer had to request to deposit a specific amount.

Keep in mind I'm very skeptical of the Bitcoin community, especially people trying to sell me a product or service.  I guess it's risk assessment.  Anyway, I'm not saying I 100% trust TradeHill...that will probably never happen with any Bitcoin business unless my BTC are FDIC insured or something.  All I'm saying is that they have done the most to earn my trust, though I realize my sample size is rather small.

If TradeHill wants to get large enough to the point where they can afford to put up collateral to back our BTC, that's fine by me.

They aren't responsible as should be clear by the fact they're trying to make a bitcoin client with integrated tradehill, preventing the free market from working.
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October 27, 2011, 11:44:36 PM
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they're trying to make a bitcoin client with integrated tradehill, preventing the free market from working.

This is the beauty of bitcoin.  Anyone can make their own client app, or wallet app, or any app they want, with whatever integrated features they want. 

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October 27, 2011, 11:44:43 PM
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You would be a good fiction writer.

As far as I'm concerned, TradeHill is the closest I've seen to a responsible Bitcoin business, especially when taking into account the scale on which they do business.  Are they the largest Bitcoin business behind Mt. Gox?

Anyway, I've emailed them on at least 4 different occasions...and that's not including follow-up emails with things I had forgotten to mention or new concerns I had; frankly, it could have been seen as annoying.  They have responded timely to every email, even the follow up ones.  They have consistently addressed every problem or question I have had, and I believe I may have actually been the catalyst for TradeHill's implementation of permanent deposit addresses on every account.  

This implementation was added less than 24 hours after I had exchange of emails with TradeHill about an error I made during a BTC deposit -- using the old method, I requested to deposit 3.5 BTC but accidentally deposited 3.72 BTC because that was all the BTC I had in my wallet rounded to the nearest bitcent.  I wrote to TradeHill about the accident, and not only did they quickly cancel the transaction and refund my BTC, but they implemented permanent deposit addresses so you no longer had to request to deposit a specific amount.

Keep in mind I'm very skeptical of the Bitcoin community, especially people trying to sell me a product or service.  I guess it's risk assessment.  Anyway, I'm not saying I 100% trust TradeHill...that will probably never happen with any Bitcoin business unless my BTC are FDIC insured or something.  All I'm saying is that they have done the most to earn my trust, though I realize my sample size is rather small.

If TradeHill wants to get large enough to the point where they can afford to put up collateral to back our BTC, that's fine by me.

They aren't responsible as should be clear by the fact they're trying to make a bitcoin client with integrated tradehill, preventing the free market from working.
Tradehill is not putting a gun to anybody's head and telling them to use their client. Nothing is stopping Gox from making their own Bitcoin client.
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October 27, 2011, 11:45:22 PM
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they're trying to make a bitcoin client with integrated tradehill, preventing the free market from working.

This is the beauty of bitcoin.  Anyone can make their own client app, or wallet app, or any app they want, with whatever integrated features they want. 
No, the neckbeards control the means of production. We need our fair share.
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October 27, 2011, 11:49:09 PM
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You would be a good fiction writer.

As far as I'm concerned, TradeHill is the closest I've seen to a responsible Bitcoin business, especially when taking into account the scale on which they do business.  Are they the largest Bitcoin business behind Mt. Gox?

Anyway, I've emailed them on at least 4 different occasions...and that's not including follow-up emails with things I had forgotten to mention or new concerns I had; frankly, it could have been seen as annoying.  They have responded timely to every email, even the follow up ones.  They have consistently addressed every problem or question I have had, and I believe I may have actually been the catalyst for TradeHill's implementation of permanent deposit addresses on every account.  

This implementation was added less than 24 hours after I had exchange of emails with TradeHill about an error I made during a BTC deposit -- using the old method, I requested to deposit 3.5 BTC but accidentally deposited 3.72 BTC because that was all the BTC I had in my wallet rounded to the nearest bitcent.  I wrote to TradeHill about the accident, and not only did they quickly cancel the transaction and refund my BTC, but they implemented permanent deposit addresses so you no longer had to request to deposit a specific amount.

Keep in mind I'm very skeptical of the Bitcoin community, especially people trying to sell me a product or service.  I guess it's risk assessment.  Anyway, I'm not saying I 100% trust TradeHill...that will probably never happen with any Bitcoin business unless my BTC are FDIC insured or something.  All I'm saying is that they have done the most to earn my trust, though I realize my sample size is rather small.

If TradeHill wants to get large enough to the point where they can afford to put up collateral to back our BTC, that's fine by me.

They aren't responsible as should be clear by the fact they're trying to make a bitcoin client with integrated tradehill, preventing the free market from working.

That prevents the free market from working...how?

I actually made a thread where I suggested that the client should be a client, wallet, miner, and exchange account rolled into one.  Realistically, this is one of the many things needed for Bitcoin to catch on.  It needs to be ergonomic and people need to be amused, not irritated.

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October 27, 2011, 11:54:34 PM
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You would be a good fiction writer.

As far as I'm concerned, TradeHill is the closest I've seen to a responsible Bitcoin business, especially when taking into account the scale on which they do business.  Are they the largest Bitcoin business behind Mt. Gox?

Anyway, I've emailed them on at least 4 different occasions...and that's not including follow-up emails with things I had forgotten to mention or new concerns I had; frankly, it could have been seen as annoying.  They have responded timely to every email, even the follow up ones.  They have consistently addressed every problem or question I have had, and I believe I may have actually been the catalyst for TradeHill's implementation of permanent deposit addresses on every account.  

This implementation was added less than 24 hours after I had exchange of emails with TradeHill about an error I made during a BTC deposit -- using the old method, I requested to deposit 3.5 BTC but accidentally deposited 3.72 BTC because that was all the BTC I had in my wallet rounded to the nearest bitcent.  I wrote to TradeHill about the accident, and not only did they quickly cancel the transaction and refund my BTC, but they implemented permanent deposit addresses so you no longer had to request to deposit a specific amount.

Keep in mind I'm very skeptical of the Bitcoin community, especially people trying to sell me a product or service.  I guess it's risk assessment.  Anyway, I'm not saying I 100% trust TradeHill...that will probably never happen with any Bitcoin business unless my BTC are FDIC insured or something.  All I'm saying is that they have done the most to earn my trust, though I realize my sample size is rather small.

If TradeHill wants to get large enough to the point where they can afford to put up collateral to back our BTC, that's fine by me.

They aren't responsible as should be clear by the fact they're trying to make a bitcoin client with integrated tradehill, preventing the free market from working.
Tradehill is not putting a gun to anybody's head and telling them to use their client. Nothing is stopping Gox from making their own Bitcoin client.

So what you're saying is that a client hosted on bitcoin.com is no more likely to get used than a client named "virus.exe" on a site called www.hotvirusandcrackdownloads.ru/virusdownloads.html" ESPECIALLY when google (the most used search client) puts bitcoin.com at the top of the ranking pages by virtue of being both bitcoin, and .com.

You're a fucking idiot.
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October 28, 2011, 12:02:36 AM
 #18

The interesting question is:

What will bitcoin.bit be worth?  Cool

Ooo I like this.  Quadratic speculation!
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October 28, 2011, 12:03:14 AM
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You would be a good fiction writer.

As far as I'm concerned, TradeHill is the closest I've seen to a responsible Bitcoin business, especially when taking into account the scale on which they do business.  Are they the largest Bitcoin business behind Mt. Gox?

Anyway, I've emailed them on at least 4 different occasions...and that's not including follow-up emails with things I had forgotten to mention or new concerns I had; frankly, it could have been seen as annoying.  They have responded timely to every email, even the follow up ones.  They have consistently addressed every problem or question I have had, and I believe I may have actually been the catalyst for TradeHill's implementation of permanent deposit addresses on every account.  

This implementation was added less than 24 hours after I had exchange of emails with TradeHill about an error I made during a BTC deposit -- using the old method, I requested to deposit 3.5 BTC but accidentally deposited 3.72 BTC because that was all the BTC I had in my wallet rounded to the nearest bitcent.  I wrote to TradeHill about the accident, and not only did they quickly cancel the transaction and refund my BTC, but they implemented permanent deposit addresses so you no longer had to request to deposit a specific amount.

Keep in mind I'm very skeptical of the Bitcoin community, especially people trying to sell me a product or service.  I guess it's risk assessment.  Anyway, I'm not saying I 100% trust TradeHill...that will probably never happen with any Bitcoin business unless my BTC are FDIC insured or something.  All I'm saying is that they have done the most to earn my trust, though I realize my sample size is rather small.

If TradeHill wants to get large enough to the point where they can afford to put up collateral to back our BTC, that's fine by me.

They aren't responsible as should be clear by the fact they're trying to make a bitcoin client with integrated tradehill, preventing the free market from working.
Tradehill is not putting a gun to anybody's head and telling them to use their client. Nothing is stopping Gox from making their own Bitcoin client.

So what you're saying is that a client hosted on bitcoin.com is no more likely to get used than a client named "virus.exe" on a site called www.hotvirusandcrackdownloads.ru/virusdownloads.html" ESPECIALLY when google (the most used search client) puts bitcoin.com at the top of the ranking pages by virtue of being both bitcoin, and .com.

You're a fucking idiot.

A market advantage does not guarantee market dominance.
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October 28, 2011, 12:06:10 AM
 #20

I'm a fairly happy customer of Tradehill who they have always treated well, and for that reason generally a supporter, but...

I do think that they should always (including now) make it front and center on any landing page that there exists a 'bitcoin.org' which is as official as it gets for the popular open source implementation of the Bitcoin software and network.  And that that may be what the visitor is looking for.

Unless and until they do that, I will have a lingering sour taste in the back of my throat about this.

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