What's to stop this from happening?

[molecular]

Thanks for the input devphp,

Afraid you might be right - even though I wasn't thinking in terms of investments..

In my naivety I had hoped that crypto would release us from the claws of the financial industry - and, if it doesn't - then what is the point? - do we really want these entities to have even greater control than they have today?

I think crypto will indeed release us from those claws.

I think this thread is missing an important point: had crypto been used instead of fiat, those big banks would no longer exist. They would've gone bankrupt long ago, because bitcoins can't be printed. The would've had to suffer the consequences of their actions (death, in those cases).

I think crypto will have a decentralizing effect, because the use sound money favors efficiency and flexibility, things that large corporations aren't typically good at. These large corporations/banks can only exist because of regulatory capture and corruption in concert with a "managable money supply" (i.e a printing press they can use to bail themselves out in the name of some made-up common cause ("too big to fail")). Even governments will be forced to act in a fiscally responsible manner.

I believe these entities will not have greater control, but they will have greater responsibility (for their own actions) and less protection, because they will have to play by the same rules as everyone else: you run out of money => you're out, try try again.

[IrishFutbol]

Thanks for the input devphp,

Afraid you might be right - even though I wasn't thinking in terms of investments..

In my naivety I had hoped that crypto would release us from the claws of the financial industry - and, if it doesn't - then what is the point? - do we really want these entities to have even greater control than they have today?

I think crypto will indeed release us from those claws.

I think this thread is missing an important point: had crypto been used instead of fiat, those big banks would no longer exist. They would've gone bankrupt long ago, because bitcoins can't be printed. The would've had to suffer the consequences of their actions (death, in those cases).

I think crypto will have a decentralizing effect, because the use sound money favors efficiency and flexibility, things that large corporations aren't typically good at. These large corporations/banks can only exist because of regulatory capture and corruption in concert with a "managable money supply" (i.e a printing press they can use to bail themselves out in the name of some made-up common cause ("too big to fail")). Even governments will be forced to act in a fiscally responsible manner.

I believe these entities will not have greater control, but they will have greater responsibility (for their own actions) and less protection, because they will have to play by the same rules as everyone else: you run out of money => you're out, try try again.

I think you're looking at the idealistic positives while ignoring the negatives.  The banks going under wouldn't have been a house falling.  It would have been a house falling, and then the bricks from that house smashing down every other building around them.

[devt]

I don't see ops image, but I just want to say that if it ever comes to a situation, where a few people control most of the miners, people would notice that long before. And they would do something about it.

[IrishFutbol]

I don't see ops image, but I just want to say that if it ever comes to a situation, where a few people control most of the miners, people would notice that long before. And they would do something about it.

The issue would be who would do something about it?

Would you be willing to mine at a loss (cost of computers + electricity > value from mining) to stop this?  If companies in China, and their low cost of goods / cheaper electricity made it so mining in the US/Europe was not profitable, would people just still mine for the good of BTC?

Would individuals in China still mine if large companies could undercut their value as well?

[HeliKopterBen]

Thanks for the input devphp,

Afraid you might be right - even though I wasn't thinking in terms of investments..

In my naivety I had hoped that crypto would release us from the claws of the financial industry - and, if it doesn't - then what is the point? - do we really want these entities to have even greater control than they have today?

I think crypto will indeed release us from those claws.

I think this thread is missing an important point: had crypto been used instead of fiat, those big banks would no longer exist. They would've gone bankrupt long ago, because bitcoins can't be printed. The would've had to suffer the consequences of their actions (death, in those cases).

I think crypto will have a decentralizing effect, because the use sound money favors efficiency and flexibility, things that large corporations aren't typically good at. These large corporations/banks can only exist because of regulatory capture and corruption in concert with a "managable money supply" (i.e a printing press they can use to bail themselves out in the name of some made-up common cause ("too big to fail")). Even governments will be forced to act in a fiscally responsible manner.

I believe these entities will not have greater control, but they will have greater responsibility (for their own actions) and less protection, because they will have to play by the same rules as everyone else: you run out of money => you're out, try try again.

I think you're looking at the idealistic positives while ignoring the negatives.  The banks going under wouldn't have been a house falling.  It would have been a house falling, and then the bricks from that house smashing down every other building around them.

The failure of MT gox for the cryptoworld was arguably equivalent to the 2008 financial crisis in the legacy financial system.  More than 1 out of every 20 bitcoins were "lost" or "stolen."  Do you believe the crypto-economy would be better off if MT gox had been bailed out and Mark Karpeles was given 10s of thousands of counterfiet (read: quantitative easing) BTC in bonuses for helping to avert a crisis?  Bitcoin solves the "Too Big To Fail" problem.  Did the gox failure help or hurt bitcoin?  Well, the price is higher now than when gox issued its formal insolvency statement on feb 28.  While the worst may not be over, bitcoin has worked as intended so far.

[TTM]

Bitcoin currently is not perfect, because crypto world is still in early stage. It need to be improved continuously, just like many other technology innovations.

Let's be optimistic, Bitcoin is open project, everyone can join and contribute. Every potential technical/financial/political problem will be discussed and solved by a lot of people around the world, not only by few people of Bitcoin Foundation. Source code can be changed, protocol can be modified to make it better. Cryptocurrency is only 4 years old baby, it need time to grow up.

[IrishFutbol]

Thanks for the input devphp,

Afraid you might be right - even though I wasn't thinking in terms of investments..

In my naivety I had hoped that crypto would release us from the claws of the financial industry - and, if it doesn't - then what is the point? - do we really want these entities to have even greater control than they have today?

I think crypto will indeed release us from those claws.

I think this thread is missing an important point: had crypto been used instead of fiat, those big banks would no longer exist. They would've gone bankrupt long ago, because bitcoins can't be printed. The would've had to suffer the consequences of their actions (death, in those cases).

I think crypto will have a decentralizing effect, because the use sound money favors efficiency and flexibility, things that large corporations aren't typically good at. These large corporations/banks can only exist because of regulatory capture and corruption in concert with a "managable money supply" (i.e a printing press they can use to bail themselves out in the name of some made-up common cause ("too big to fail")). Even governments will be forced to act in a fiscally responsible manner.

I believe these entities will not have greater control, but they will have greater responsibility (for their own actions) and less protection, because they will have to play by the same rules as everyone else: you run out of money => you're out, try try again.

I think you're looking at the idealistic positives while ignoring the negatives.  The banks going under wouldn't have been a house falling.  It would have been a house falling, and then the bricks from that house smashing down every other building around them.

The failure of MT gox for the cryptoworld was arguably equivalent to the 2008 financial crisis in the legacy financial system.  More than 1 out of every 20 bitcoins were "lost" or "stolen."  Do you believe the crypto-economy would be better off if MT gox had been bailed out and Mark Karpeles was given 10s of thousands of counterfiet (read: quantitative easing) BTC in bonuses for helping to avert a crisis?  Bitcoin solves the "Too Big To Fail" problem.  Did the gox failure help or hurt bitcoin?  Well, the price is higher now than when gox issued its formal insolvency statement on feb 28.  While the worst may not be over, bitcoin has worked as intended so far.

Comparing Mt. Gox to 2008 is like comparing a slingshot to a nuclear bomb.  Imagine the BTC market if every exchange out there kept their coins in Mt. Gox and you'd start to have an accurate comparison.

If AIG or the banks went down, everything would have followed.  There would've been a run on the banks, and most people would not be able to get their hands on their cash.  Credit and debit cards wouldn't work.  Stores couldn't pay to stock shelves.  Companies couldn't pay to make goods or to meet payroll.  Every company from Goldman and GE to locals at farmer's markets would have been devastated. Most people would have been forced to live off of handouts.  The economy is far more widespread and far more powerful than it was during the late 1920's, and the destruction of the economy would cause far more damage.  You are horrendously trivializing what would have been the worst disaster since World War 2.

And if you think that BTC is magically immune to this, you're delusional.  Economies of scale will always cause consolidation, and it will always cause large corporations to have an innate advantage over small ones.

[molecular]

Thanks for the input devphp,

Afraid you might be right - even though I wasn't thinking in terms of investments..

In my naivety I had hoped that crypto would release us from the claws of the financial industry - and, if it doesn't - then what is the point? - do we really want these entities to have even greater control than they have today?

I think crypto will indeed release us from those claws.

I think this thread is missing an important point: had crypto been used instead of fiat, those big banks would no longer exist. They would've gone bankrupt long ago, because bitcoins can't be printed. The would've had to suffer the consequences of their actions (death, in those cases).

I think crypto will have a decentralizing effect, because the use sound money favors efficiency and flexibility, things that large corporations aren't typically good at. These large corporations/banks can only exist because of regulatory capture and corruption in concert with a "managable money supply" (i.e a printing press they can use to bail themselves out in the name of some made-up common cause ("too big to fail")). Even governments will be forced to act in a fiscally responsible manner.

I believe these entities will not have greater control, but they will have greater responsibility (for their own actions) and less protection, because they will have to play by the same rules as everyone else: you run out of money => you're out, try try again.

I think you're looking at the idealistic positives while ignoring the negatives.  The banks going under wouldn't have been a house falling.  It would have been a house falling, and then the bricks from that house smashing down every other building around them.

The failure of MT gox for the cryptoworld was arguably equivalent to the 2008 financial crisis in the legacy financial system.  More than 1 out of every 20 bitcoins were "lost" or "stolen."  Do you believe the crypto-economy would be better off if MT gox had been bailed out and Mark Karpeles was given 10s of thousands of counterfiet (read: quantitative easing) BTC in bonuses for helping to avert a crisis?  Bitcoin solves the "Too Big To Fail" problem.  Did the gox failure help or hurt bitcoin?  Well, the price is higher now than when gox issued its formal insolvency statement on feb 28.  While the worst may not be over, bitcoin has worked as intended so far.

Comparing Mt. Gox to 2008 is like comparing a slingshot to a nuclear bomb.  Imagine the BTC market if every exchange out there kept their coins in Mt. Gox and you'd start to have an accurate comparison.

If AIG or the banks went down, everything would have followed.

2008 wouldn't have arisen in the first place. If Bitcoin had been used, these banks wouldn't have maneuvered themselves into such a situation in the first place. They knew they would be bailed out, so they had a "get out of jail free" card if you will, that enabled them to be reckless and party hard full risk with no tomorrow.

[IrishFutbol]

Thanks for the input devphp,

Afraid you might be right - even though I wasn't thinking in terms of investments..

In my naivety I had hoped that crypto would release us from the claws of the financial industry - and, if it doesn't - then what is the point? - do we really want these entities to have even greater control than they have today?

I think crypto will indeed release us from those claws.

I think this thread is missing an important point: had crypto been used instead of fiat, those big banks would no longer exist. They would've gone bankrupt long ago, because bitcoins can't be printed. The would've had to suffer the consequences of their actions (death, in those cases).

I think crypto will have a decentralizing effect, because the use sound money favors efficiency and flexibility, things that large corporations aren't typically good at. These large corporations/banks can only exist because of regulatory capture and corruption in concert with a "managable money supply" (i.e a printing press they can use to bail themselves out in the name of some made-up common cause ("too big to fail")). Even governments will be forced to act in a fiscally responsible manner.

I believe these entities will not have greater control, but they will have greater responsibility (for their own actions) and less protection, because they will have to play by the same rules as everyone else: you run out of money => you're out, try try again.

I think you're looking at the idealistic positives while ignoring the negatives.  The banks going under wouldn't have been a house falling.  It would have been a house falling, and then the bricks from that house smashing down every other building around them.

The failure of MT gox for the cryptoworld was arguably equivalent to the 2008 financial crisis in the legacy financial system.  More than 1 out of every 20 bitcoins were "lost" or "stolen."  Do you believe the crypto-economy would be better off if MT gox had been bailed out and Mark Karpeles was given 10s of thousands of counterfiet (read: quantitative easing) BTC in bonuses for helping to avert a crisis?  Bitcoin solves the "Too Big To Fail" problem.  Did the gox failure help or hurt bitcoin?  Well, the price is higher now than when gox issued its formal insolvency statement on feb 28.  While the worst may not be over, bitcoin has worked as intended so far.

Comparing Mt. Gox to 2008 is like comparing a slingshot to a nuclear bomb.  Imagine the BTC market if every exchange out there kept their coins in Mt. Gox and you'd start to have an accurate comparison.

If AIG or the banks went down, everything would have followed.

2008 wouldn't have arisen in the first place. If Bitcoin had been used, these banks wouldn't have maneuvered themselves into such a situation in the first place. They knew they would be bailed out, so they had a "get out of jail free" card if you will, that enabled them to be reckless and party hard full risk with no tomorrow.

Who knew they would be bailed out?  The shareholders in Lehman?  The shareholders in the bailed out Bear Stearns?  They both essentially lost everything.  The debt holders were bailed out, but that was about it.

If anything, the lack of a get out of jail free card would have screwed the debt holders (who have absolutely no say in what a company does) and the regular citizens (who also have absolutely no say in what a company does).

[DeathAndTaxes]

If AIG or the banks went down, everything would have followed.

Come on you are a smart guy, you know that is a load of crap.  There already IS a safety mechanisms for depositors called FDIC.  The banks didn't "need" to profit from the problems they caused so how about this instead.

The banks fail. FDIC puts them into receivership (like they do hundreds of banks a year).  In receivership:
a) shareholders are annihilated, as in stock is wiped out.  100% complete loss.  Shareholders get the profits, they should take the loss like in any other business.
b) CEO are tried for fraud and gross negligence.  Clawback of bonuses and other executive compensation occurs.  Shareholders sue and pierce the corporate veil for violation of fiduciary duty and fraud.  Personal assets seized in bankruptcy court.
c) Those responsible are sentenced to significant prison sentences.  No leniency is granted.  Something on the order of 25-50 years in prison would be a solid deterrent for future malfeasance.
d) FDIC puts sufficient capital into damaged banks, writes off worthless assets and then returns the banks to public sector.

Cost to taxpayer is essentially zero.
Losses to depositors is essentially zero.
Losses for the owners and operators is total.
Economy recovers much quicker and the moral hazard of "too big to fail" is avoided.

All of that could have been done under existing law and authority, yet you really believe the ONLY solution was to hand the banks trillions upon trillions of taxpayer dollars, then keep the borrowing rate at the fed discount window at 0% (borrow at 0% lend at 20% kinda hard to not make a profit) for years, keep all the bad actors in place and then allow them to receive billions in compensation?  Really?

You either a) don't believe the nonsense that banks can't be allowed to fail and are just pushing an agenda or b) are simply naive and swallowed a lie told to you by the very people who profited on a scale you can't possibly imagine.  The worst part if the profit was at your (and mine and everyone else not in the 0.01% club) expense.  They profitted, you lost and you are trying to convince everyone it was a good thing and the only way it could be done.

Want a concrete example.
http://www.bloomberg.com/news/2014-01-27/let-banks-fail-becomes-iceland-mantra-as-2-joblessness-in-sight.html

The banks in Iceland were wiped out, restored by the equivelent of FDIC and taxpayer funds, and then returned to public sector.  The cost to taxpayers was negligible and they are now at under 4% unemployment (and falling).  How well did bailing the too big to fail banks work out for the US?

[DeathAndTaxes]

If anything, the lack of a get out of jail free card would have screwed the debt holders (who have absolutely no say in what a company does) and the regular citizens (who also have absolutely no say in what a company does).

And?

Why shouldn't they?  When the bond pays off does the profit go to the taxpayers?  In what universe is private profit but subsidized losses a good idea.  If the bond holder of banks had taken losses, they would be less likely to trust the banks with money in the future.  That is how capitalism works.  You don't just get to keep the profits and pretend away the losses.

[HeliKopterBen]

Who knew they would be bailed out?  The shareholders in Lehman?  The shareholders in the bailed out Bear Stearns?  They both essentially lost everything.  The debt holders were bailed out, but that was about it.

They knew the possibility of being bailed out existed, just as they know the possibility (most likely probability) of being bailed out exists today.  We can say with almost 100% certainty that no bailouts can occur with bitcoin in the form of quatitative easing.

[twiifm]

FDIC only insures 250K on deposits.   Has nothing to do with 2008 crisis. Bear Stearns and Lehman collapse because they were overleveraged on MBS.   They couldn't unwind fast enough when investors pulled out because the securities were derived from toxic assets.   Reason being they were mortgage derivatives tied to subprime lending.

The function of banking is to provide liquidity so the economy continues to function.   The banks make money as liquidity dealers.   They borrow at a lower interest and lend at a higher interest.

Central banks exist because a central authority is preferable to maintain liquidity.   They are granted the power to lower or raise Fed Fund rates.   This is supposed to encourage or discourage lending.

Economies always swing from boom to bust.   When it swings too far Central Banks are needed to counteract.   The Fed can create or destroy money.   They do this bc economies always need liquidity.   If credit freeze up,  the economy will grind too halt.

Most bitbugs never studied economics or banking so they dont understand the role of banks.  

Bitcoin was designed to be decentralized, deflationary and disciplined.   Because of this it cannot serve the needs of modern economies.   Money needs to be elastic sometimes and disciplined other times

[Findus]

The bitcoin eco-system is designed to always balance itself. However, that is assuming that all players are rational and knowledgeable.

Therefore education is key.
We have to educate bitcoin users, that even a 20% (say) pool is not acceptable. Then the value of BTC would drop when a pool approaches 20%. That means pools and big miners would have the incentive to stay away from the dreaded 20% and small miners would have the incentive to stay away from big pools.

In other words, we should advertise to the community that 10% pools/miners are not a good idea, 15% pools/miners are slightly dangerous, 20% pools/miners are a threat to bitcoin's integrity, and 30% is absolutely not acceptable (because you only need to coerce 2 people to attack the blockchain)

[IrishFutbol]

If AIG or the banks went down, everything would have followed.

Come on you are a smart guy, you know that is a load of crap.  There already IS a safety mechanisms for depositors called FDIC.  The banks didn't "need" to profit from the problems they caused so how about this instead.

The banks fail. FDIC puts them into receivership (like they do hundreds of banks a year).  In receivership:
a) shareholders are annihilated, as in stock is wiped out.  100% complete loss.  Shareholders get the profits, they should take the loss like in any other business.
b) CEO are tried for fraud and gross negligence.  Clawback of bonuses and other executive compensation occurs.  Shareholders sue and pierce the corporate veil for violation of fiduciary duty and fraud.  Personal assets seized in bankruptcy court.
c) Those responsible are sentenced to significant prison sentences.  No leniency is granted.  Something on the order of 25-50 years in prison would be a solid deterrent for future malfeasance.
d) FDIC puts sufficient capital into damaged banks, writes off worthless assets and then returns the banks to public sector.

Cost to taxpayer is essentially zero.
Losses to depositors is essentially zero.
Losses for the owners and operators is total.
Economy recovers much quicker and the moral hazard of "too big to fail" is avoided.

All of that could have been done under existing law and authority, yet you really believe the ONLY solution was to hand the banks trillions upon trillions of taxpayer dollars, then keep the borrowing rate at the fed discount window at 0% (borrow at 0% lend at 20% kinda hard to not make a profit) for years, keep all the bad actors in place and then allow them to receive billions in compensation?  Really?

You either a) don't believe the nonsense that banks can't be allowed to fail and are just pushing an agenda or b) are simply naive and swallowed a lie told to you by the very people who profited on a scale you can't possibly imagine.  The worst part if the profit was at your (and mine and everyone else not in the 0.01% club) expense.  They profitted, you lost and you are trying to convince everyone it was a good thing and the only way it could be done.

Want a concrete example.
http://www.bloomberg.com/news/2014-01-27/let-banks-fail-becomes-iceland-mantra-as-2-joblessness-in-sight.html

The banks in Iceland were wiped out, restored by the equivelent of FDIC and taxpayer funds, and then returned to public sector.  The cost to taxpayers was negligible and they are now at under 4% unemployment (and falling).  How well did bailing the too big to fail banks work out for the US?

FDIC doesn't cover businesses.  They don't ensure that the banks still have capital to loan out.  Depositors would have been covered (though, an FDIC bailout takes time and is not instantaneous), but the companies employing these depositors would have been screwed.  Businesses would be unable to access lines of credit or their cash deposits, and wouldn't be able to buy supplies, make rent, or meet their payroll.  Pretty sure that has some impact on the economy.

You're taking an extremely narrow viewpoint on this.

[IrishFutbol]

If anything, the lack of a get out of jail free card would have screwed the debt holders (who have absolutely no say in what a company does) and the regular citizens (who also have absolutely no say in what a company does).

And?

Why shouldn't they?  When the bond pays off does the profit go to the taxpayers?  In what universe is private profit but subsidized losses a good idea.  If the bond holder of banks had taken losses, they would be less likely to trust the banks with money in the future.  That is how capitalism works.  You don't just get to keep the profits and pretend away the losses.

You're right, but it's not a realistic concept. 

The economic damage from letting the banks go under would have been immense, and have affected far more than just people who dealt with the banks.  Everyone from safer banks that mostly avoided the MBS market to companies that had nothing to do with banks or mortgages would have been slammed.

It would be the equivalent of the fire department teaching a 1st grader not to play with matches by letting an entire school burn down.

[IrishFutbol]

Who knew they would be bailed out?  The shareholders in Lehman?  The shareholders in the bailed out Bear Stearns?  They both essentially lost everything.  The debt holders were bailed out, but that was about it.

They knew the possibility of being bailed out existed, just as they know the possibility (most likely probability) of being bailed out exists today.  We can say with almost 100% certainty that no bailouts can occur with bitcoin in the form of quatitative easing.

True.  But historically, this hasn't stopped businesses from screwing around anyway.  And as I mentioned before, regulated economies are the result of public demand.  If you want specific stories, look up the tales of farmers in the 1800s.  They blasted the evil banks for wide currency swings that devastated their farms, and wanted an economy where prices and inflation remained stable.  It was the banks that were making a ton of cash thanks to a non-stable currency, whereas the people were getting screwed.

[AnonyMint]

I just believe it's healthy to have a look at both sides of a 'coin', no matter how ridiculous that side may seem

I'm distinctly reminded of Christian "scientists" arguing that we should "Teach the controversy" and have creationism in our schools. Excuse me while I puke my guts out.

The only "coin" conspiracy theories are one side of, is superstition. Religion would be the other side of that moronic coin, and I say we throw the fucking thing right into Mt. Doom where it belongs.

And when you are proven wrong cocky mofo, then what say will you?

You talk but you have no clue about the details. I do.

You will soon be cast off my lawn.

Opinions are like assholes, everyone has one and not particularly interesting to look at a man's ahole. Rather a very few of us have the technical ability to understand what is really going on. All of you think you have have some technical ability, but you are deluded.

You can't change Bitcoin all you can do is fork it.  The hard part is convincing people to use your fork.  

Yes, but almost daily, we see that with the right machine behind you, you can convince the majority of the population of anything.

and?  A majority of people are NOT using Bitcoin today and it still has value.  If a majority of people decide to use inflatacoin it doesn't erase the existing Bitcoin network.

Yep. People really just don't get it. Once people get a taste of inflation (read: centralized-theft) free money, they'll never look back. Never.

It isn't just inflation. Rather it is giving the masses all the features they want such as instant transactions, centralized exchanges (i.e. fractional reserves just like Mt.Gox where you trade "Bitcoin" but nothing trades on the block chain thus it isn't limited to 21 million coines), chargebacks, consumer protection (so people can always get their money back when stolen, etc).

Bitcoin has no defense against the masses and what the masses want.

Your silly idealism won't stand.

There is a possible solution, but you wouldn't want to hear it, so go on.

Nothing worth talking to here. Just more of the same idiots that make the system work the way it does.

[cryptoanarchist]

OP's graphic is the result of a hierarchical system, cryptocoins are decentralized.

[romang]

Who knew they would be bailed out?  The shareholders in Lehman?  The shareholders in the bailed out Bear Stearns?  They both essentially lost everything.  The debt holders were bailed out, but that was about it.

They knew the possibility of being bailed out existed, just as they know the possibility (most likely probability) of being bailed out exists today.  We can say with almost 100% certainty that no bailouts can occur with bitcoin in the form of quatitative easing.

Let the chips fall where they may