Why Eve Online's economist thinks bitcoin could be a scam

[bananas]

Dr. Eyjolfur Gudmundsson is the in-house economist at CCP Games, and part of his job is keeping Eve Online and its multiple currencies running smoothly. Eve Online and Dust 514 incorporate a series of virtual currencies, such as ISK, Auram and Plex, that are all interconnected and in some cases can be purchased, or sold for, actual currency

The value of PLEX, which is redeemed for one month of game time in Eve Online, is relatively stable. CCP has experimented with allowing players to purchase video cards with PLEX.

At Fanfest this year players could even purchase things around the convention center by converting their PLEX into "ISK Coins," plastic chips with CCP's logo on them that worked like real currency at certain vendors around the show.

In many ways PLEX has become a working currency, and CCP has tried some experiments using that currency outside of the game. The line between the game's economy and the "real" economy can sometimes grow blurry, and that's by design.

I sat down with Dr. Gudmundsson to discuss the currency and to talk a bit about bitcoin, the much-hyped "crypto currency" that has seen such volatility in the last few years. PLEX has stayed relatively stable and, although it can’t be used as payment in many places, it’s relatively easy to move "real" currency into, and in some cases out of, PLEX.

Once the trust is there, they break the trust and profit from it

"I find it very interesting that people that are behind the cryptocurrencies, they seem to distrust governments. So they create a system that is supposed to be closed, just a fixed amount of money, and nobody can create fiat monies, no bankers will benefit from it. And yet, they don’t tell you who is behind it, and they’re telling you the code is secure," he told Polygon.

"I look at them say, ‘Don’t trust the governments,’ but they expect us to trust something because it’s code somebody wrote I don’t know who is. And there’s a notion of people who did this originally, who are sitting on millions and millions of bitcoins and will cash out at some point," Dr. Gudmundsson continued.

This is why bitcoin is so interesting when viewed through the lens of Eve Online: this is the cycle of all the classic in-game scams. A system is set up, value is promised, trust is gained and you may not know exactly who is behind any of it… and then the endgame comes when the masterminds cash out and everyone else loses everything.

"And all of these stories could all come from Eve," Dr. Gudmundsson said. "People trying to figure out a scamming system that they will actually build some value, make people trust it, and once the trust is there, they break the trust and profit from it."

"I openly talk to people about that and specifically with people that are very enthusiastic about this being the next big wave, and I just ask, can you prove to me that this is not a scam? And they say yeah because the code is safe," he said.

"And I say, OK are you absolutely sure that this code can’t be changed, because I don’t know the code and I don’t know the technology behind the code, but I have to trust it to use it so how are they going to convince people all over the world that this is trustworthy if there is no government behind it?"

In the case of PLEX, the "government" behind the currency is CCP Games itself. Since the value of PLEX is one month of game time, and that one month has a set value, that unit of PLEX will always be tied that particular value. As long as people want to play the game PLEX will have value to them, so a strong game will lead to a strong value for PLEX.

"That’s the trust. They know if they buy a PLEX, the PLEX will be redeemable for ISK in the future," Dr. Gudmundsson explained. "They would rather keep a Plex on their account than too much ISK because ISK fluctuates in value as well. We have inflation in Eve, and that can change over time. So we can definitely say that the trust that we have from the players is a big part of the success."

CCP Games has a selfish desire to keep PLEX stable; as the value of PLEX is an indicator in interest in the game and the amount of people who want to play it. Governments also have a desire to keep the economy stable and to provide certain protections against things such as money laundering, fraud and tax evasion.

The people who designed bitcoin? That’s an open question, and if you look at bitcoin through the same lens of virtual currencies in Eve Online, bitcoin is in the stage that takes place right before the scammers cash out. This is, of course, operating under the assumption that the real world will mirror the in-game economy of a title about online space ships.

[bananas]

My thoughts:

1 - Yes, we have no idea who Satoshi is and he does not want to be known.
2 - We know who Satoshi "friends" are. Some are proven criminals, others are still in close relations with such crimnals. ALL are speculators.
3 - Yes, the code can be changed at will by people included above.

[bananas]

4 - While people people here denies it until death, it is proven that bitcoin price was manipulated to the value it is nowadays by Satoshi Friends Foiundation. If you analyze the top accounts from leaked MT Gox databse one of the largest accounts would only buy at very high prices and only sell at very low prices. Another large one was dedicated only to large purchases for years, never sold anything. Bitstamp belongs to the same foundation.

[crunchynut]

wise words. some might say "but it's open source". the recent asiacoin scam tells us a different story: nobody checked the code.

[AMVM]

Interesting indeed.

We do have too much faith in BTC's code. But provided it is safe now I doubt someone can change the code at will.
This person would've to change the code AND persuade nodes and users to change software, otherwise it would be only a fork, isn't it?
I'm not sure...

Does anybody has a better grasp on this matter?

[Meni Rosenfeld]

1 - Yes, we have no idea who Satoshi is and he does not want to be known.

And it doesn't matter.

2 - We know who Satoshi "friends" are. Some are proven criminals, others are still in close relations with such crimnals. ALL are speculators.

Bitcoin is bigger than the Bitcoin Foundation, so your conspiracy theories, even if true, have little weight.

3 - Yes, the code can be changed at will by people included above.

Yes, it can. It can also be changed by a trained monkey. But only the users can decide to use the new code.

In particular, most core developers have nothing to do with the Foundation.

4 - While people people here denies it until death, it is proven that bitcoin price was manipulated to the value it is nowadays by Satoshi Friends Foiundation. If you analyze the top accounts from leaked MT Gox databse one of the largest accounts would only buy at very high prices and only sell at very low prices. Another large one was dedicated only to large purchases for years, never sold anything. Bitstamp belongs to the same foundation.

So if someone (person/organization) only bought bitcoins at an exchange, this is evidence that the price is manipulated? I guess what you call "manipulation" is what I call "market forces".

And even if there's a grand conspiracy by some people other than those who created Bitcoin... So? Conspiracies only last so long, long-term the value of bitcoins will depend mostly on fundamentals, and this has little impact on Bitcoin's merits.

Interesting indeed.

We do have too much faith in BTC's code. But provided it is safe now I doubt someone can change the code at will.
This person would've to change the code AND persuade nodes and users to change software, otherwise it would be only a fork, isn't it?
I'm not sure...

Does anybody has a better grasp on this matter?

You are correct.

In practice most people don't review the code themselves so they place some trust in people who do, but if some egregious change is made it will be well known and cause resistance.


I'll be happy to see CCP condone Bitcoin (e.g. selling ETC for BTC, at least through an official reseller), and I hope next time Dr. Gudmundsson talks with someone about Bitcoin, it will be one who can explain Bitcoin's bigger vision.

[bitcoiner49er]

Interesting indeed.

We do have too much faith in BTC's code. But provided it is safe now I doubt someone can change the code at will.
This person would've to change the code AND persuade nodes and users to change software, otherwise it would be only a fork, isn't it?
I'm not sure...

Does anybody has a better grasp on this matter?

 

Nope. No one has bothered in the past 6 years to look at the code. We all just blindly trust Satoshi.

Do a little research before you post FUD. I wonder if anyone figures anything out for themselves anymore.
https://bitcointalk.org/index.php?topic=41718.0

[crunchynut]

in which way does this series of posts from 2011 proof that there is no backdoor in the compiled multibit or electrum wallet most people download without asking? what about using your brain before shouting "fud"?

[AMVM]

Nope. No one has bothered in the past 6 years to look at the code. We all just blindly trust Satoshi.

Do a little research before you post FUD. I wonder if anyone figures anything out for themselves anymore.
https://bitcointalk.org/index.php?topic=41718.0

All little knowledge I have is very conceptual. Technically I just can't understand BTC technology has nothing to do with my degree (Law).
Yes I'm talking only on my behalf, BUT as adoption grows there will be more people like me and less people capable of checking lines of code.

Therefore it was no FUD at all I was only talking about myself.

[greenlion]

Let's put this in perspective. This guy is a central banker, just for an online game.

His job is just as likely to be disrupted as anybody else's, because a friction-free digital cash that even interacts in the "real world" invalidates pretty much all he does for Eve Online.

[fudbuster]

While I can't see how anyone could be calling Bitcoin a "scam", the fact is that Satoshi's premine does exist and now we have the feds with their own massive hoard taken from the SR bust. It cannot be ignored that either one of these groups could cause some serious disruptions to the exchange rate depending on if/when/how they cash out.

[DeathAndTaxes]

While I can't see how anyone could be calling Bitcoin a "scam", the fact is that Satoshi's premine does exist and now we have the feds with their own massive hoard taken from the SR bust. It cannot be ignored that either one of these groups could cause some serious disruptions to the exchange rate depending on if/when/how they cash out.

and then they have no coins.  Problem solved.

[jonald_fyookball]

in which way does this series of posts from 2011 proof that there is no backdoor in the compiled multibit or electrum wallet most people download without asking? what about using your brain before shouting "fud"?

That is possible.  But unlikely because the community should be checking this
I use electrum and you've just inspired me to compile it myself,
verify, and bring any discrepancies to the attention of the community.

Open source projects rely on an active community.  Smart people understand this.

And really, the bitcoin community is extremely bright.
I thought I was pretty smart but there are some intellectual giants among us.
 

[odolvlobo]

While I can't see how anyone could be calling Bitcoin a "scam", the fact is that Satoshi's premine does exist and now we have the feds with their own massive hoard taken from the SR bust. It cannot be ignored that either one of these groups could cause some serious disruptions to the exchange rate depending on if/when/how they cash out.

In 2011, the exchange rate dropped 90% and Bitcoin is still here. In 2013, the exchange rate dropped 60% and Bitcoin is still here. Recently, the exchange rate has dropped about 60% and Bitcoin is still going strong.

I don't think Bitcoin really gives a crap about the exchange rate.

[MrWDunne]

wise words. some might say "but it's open source". the recent asiacoin scam tells us a different story: nobody checked the code.

Yes, Asiacoin. Not bitcoin as if in that coin which is currently peaking global interest from large firms and individuals alike.

[jubalix]

A system is set up, value is promised,

where was any value promised by anyone to anyone.....?

[TrailingComet]

The code is open source - no need to take the security professions on trust

Think he does not really understand how distributed trust works

[justusranvier]

While I can't see how anyone could be calling Bitcoin a "scam", the fact is that Satoshi's premine does exist and now we have the feds with their own massive hoard taken from the SR bust. It cannot be ignored that either one of these groups could cause some serious disruptions to the exchange rate depending on if/when/how they cash out.

In 2011, the exchange rate dropped 90% and Bitcoin is still here. In 2013, the exchange rate dropped 60% and Bitcoin is still here. Recently, the exchange rate has dropped about 60% and Bitcoin is still going strong.

I don't think Bitcoin really gives a crap about the exchange rate.

Exactly.

The same news cycle about Bitcoin repeats each time as well, and there's an entirely new generation of people who get get caught up in it because they don't bother to study (recent!) history.

N00bs gonna n00b, I guess.

[Bit_Happy]

The same news cycle...
Much of the BTC news has turned positive the last 10 to 15 days.
Either it's a "false positive" or things will be getting very exciting by this summer.

[Elwar]

His answers seemed to indicate that he is a Keynesian who does not understand the concept of not printing limitless money.

This is great for video game companies that want to print as much money as they want and benefit from it.

I recall when I first found out about Second Life a Linden dollar was equal to about fifty cents (or 2 Linden dollars to 1 USD)...how much are they worth now with the ability to print as many as they want?