The real problem with Exchanges/Services...it's quite simple.

[flipstyle]

Jbreher: I agree with some of your points, though to me (may not be the same for all) it seems like you're trying to downplay the greater issue by staking blame of risk vs. reward at the end user when most have been essentially robbed blind without recourse.  Or are we all to just 'expect the worst' in the crypto community when entrusting our bitcoins in transactions?

Well, if the inevitable result of entrusting exchanges is getting ripped off, then yes - I suppose we each should expect the worst. It seems to me no different than any other part of life. If you are going to trust the untrustworthy, you're gonna get screwed. I'm not saying that the thievery is justified. I'm saying that we should regard it as inevitable that enabling scammers is going to result in scams occurring.

p2p? I've combed over that multiple times in other posts.  It's no different.  You're still putting your trust in another faceless entity over the internet with no verifiable name/address/location.  Go through an escrow? Lol.  What if the escrow packs of shop once they've hit personal economic hardship?

I guess this one is on me for not clarifying. How 'bout I say f2f - as in face-to-face. I've had a 100% track record so far with this. As have all of which I am aware.

You keep saying I'm blaming the technology.  No, I'm not.  

I must have misunderstood you then. Perhaps due to an earlier quote from your OP:

And this is precisely the reason why I believe bitcoin will ultimate fade into the sunset of obscurity along with failed techs like tablet pc's and palm pilots.

What good is fiat without banks?  Or are we all to just hoard coins in our personal computers and let them collect dust while maintaining a 'wait and see/trust no one' approach?  I'm sure that's the entire point of bitcoin, right? To just hoard and remain stagnant.  

I have no idea what you are indicating by "What good is fiat without banks?".

I don't think there is any particular 'supposed to do'. Crypto is a technology, not a director of human activity. Maybe start by asking what it is that you want it to do for you? Hoarding is a possibility, sure. If more of the planet comes onboard, you're likely to accumulate purchasing power by simply holding a fixed amount of it. Of course, with no activity, the world may not hop onboard. You can use it to purchase things.... the list of vendors is large and growing larger by the day. I personally feel that remittances (a multi-billion USD market with astronomical profit margins) will be the first real 'killer app', but I expect that it is dependent upon several more years' worth of infrastructure buildout.

Despite the cynicism I display in the opening sentences of this post, I am hopeful that crypto continues to grow, to the point where it overtakes fiat in gross global economic activity. I see this as more likely than not (your analysis may differ). A wonderous world awaits humanity if we can wrest monetary control from the hands of self-rewarding parasitic warmonger vampire-squids. (That last sentence should be a clue that I suspect that you and I likely could have an extended discussion on the merits or demerits of the fiat monetary system - but that should likely wait for another thread).

The problem is...how are people supposed to exchange bitcoin if we are not to trust exchanges...at all?  

F2F is of course the most foolproof method...but that's essentially destroying the entire point of crypto currency.  It's for the digital transfer of funds quickly and efficiently to people 1 mile away...or 8,000 miles away.   Having to seek out potential buyers in your local city, set up meet times/drive to meet...is a borderline archaic method in this day an age.  About the only time people do this is for the sale of tangible goods like furniture on craigslist.  It should not be the go-to means of digital currencies...or that's a very very bad sign.


I'd love to see alternative exchange technologies that have truly secure means, or are physically insured.  But I'm not sure they exist.  Or else I'd assume they'd be way more popular by now.  Either that, or they have some severe disadvantages that has prevented them from gaining large volume.

[jbreher]

The problem is...how are people supposed to exchange bitcoin if we are not to trust exchanges...at all?  

I'm not saying to not trust them at all. I'm saying trust them only in a prudent fashion commensurate with the risk they present.

Look - your initial thought about needing some trustworthy exchanges is good. Instead of despairing that none exist, why don't you seek them out? There are some that even I would trust with a chunk of change. Temporarily. In limited amounts.

F2F is of course the most foolproof method...but that's essentially destroying the entire point of crypto currency.  

Well, it works. Yes, it seems archaic. But really, this is only a gateway matter. To me, the point of crypto currency is not to be continually exchanging between crypto and fiat -- it is to completely get off of the fiat* rails (some work left to be done here, yes).

* Fiat being, of course, the only form of money whereby every participant except the financiers are absolutely _guaranteed_ to have their purchasing power slowly but steadily stolen from them, and placed into the pockets of selfsame financier class.

Once out of fiat, I personally have no reason to convert back to fiat. Exchanges are not something I have repeated need for. Exchanges be gone.

[cbeast]

The problem is...how are people supposed to exchange bitcoin if we are not to trust exchanges...at all?  

I'm not saying to not trust them at all. I'm saying trust them only in a prudent fashion commensurate with the risk they present.

But that's not how gambling addicts think. A few bad apples make all the headlines. Bitcoin needs to be child-proof.

[psybits]

There are already decentralized answers like XCP and although many argue it is too centralized Ripple also solves this problem.

So basically the problem is already solved.

Next!

Plus there are other solutions in Bitcoin itself like multi-sig transactions. OP I think you need to learn a bit more about how BTC works

hmmm... You say this is a solved problem? Maybe I need to learn more.

Assume I have a fistful of US Dollars, and I want ... oh ... Bitcoin. There is someone else on the other side of the planet that has Bitcoins he wants to dump for USD. Pick your favorite system -- be it XCP, Ripple, or something else -- and walk me through the capital and information flows, including all third parties, that this system uses to execute such a trade. Please.

In that case just find your nearest Bitcoin ATM.

[jbreher]

There are already decentralized answers like XCP and although many argue it is too centralized Ripple also solves this problem.

So basically the problem is already solved.

Next!

Plus there are other solutions in Bitcoin itself like multi-sig transactions. OP I think you need to learn a bit more about how BTC works

hmmm... You say this is a solved problem? Maybe I need to learn more.

Assume I have a fistful of US Dollars, and I want ... oh ... Bitcoin. There is someone else on the other side of the planet that has Bitcoins he wants to dump for USD. Pick your favorite system -- be it XCP, Ripple, or something else -- and walk me through the capital and information flows, including all third parties, that this system uses to execute such a trade. Please.

In that case just find your nearest Bitcoin ATM.

Non-responsive response noted. I'll take that as 'I have no idea how XCP, Ripple, or any other decentralized mechanism might solve this problem'.

[fonenumba]

The problem is...how are people supposed to exchange bitcoin if we are not to trust exchanges...at all?  

I'm not saying to not trust them at all. I'm saying trust them only in a prudent fashion commensurate with the risk they present.

But that's not how gambling addicts think. A few bad apples make all the headlines. Bitcoin needs to be child-proof.

Bitcoin was not designed to be child proof. It was designed for the "novice" user to have an advanced understanding of how bitcoin works.

The problem is that even now the Bitcoin protocol has not gotten any more child proof however various applications have been designed so that they are more user friendly which is causing more people to end up loosing their money

[stevenh512]

Do you think a company such as Apple or Samsung could just get away with being ran by anonymous CEO's that simply go by an internet screenname?

The public internet didn't exist when Apple was founded, but other than that, let's think about your question. When Apple built and sold its first personal computer, nobody knew who Steve Wozniak was and by all accounts I've heard Steve Jobs was some college kid who used a lot of LSD and made his money building and selling devices to defraud the phone company. They didn't start out as a multi-billion dollar international corporation with a huge corporate headquarters. They were two almost completely anonymous guys in a garage. If the public internet were around and as popular as it is today, Apple's achievement obviously wouldn't have been as big a deal as it was, but I wouldn't be too surprised if Woz and Jobs ended up announcing their new product on some online forum, where they may or may not be using their real names.

I don't know much about Samsung's backstory, but I'd be willing to bet almost any amount of money that they also didn't start out as a multi-billion dollar international corporation with a huge corporate headquarters. The world just doesn't work like that, and Bitcoin doesn't change that fact. Most likely it was a couple guys in a garage or a university dorm room (same can be said for Microsoft, Facebook, Google, Dell).

Once you become a big company like Apple, Samsung, Microsoft, Facebook, Google or Dell it becomes a lot harder to hide your identity.. but I seriously doubt anyone with the possible exception of a few investors had ever heard of the founders or CEOs of those companies before they became big household names.

[cbeast]

The problem is...how are people supposed to exchange bitcoin if we are not to trust exchanges...at all?  

I'm not saying to not trust them at all. I'm saying trust them only in a prudent fashion commensurate with the risk they present.

But that's not how gambling addicts think. A few bad apples make all the headlines. Bitcoin needs to be child-proof.

Bitcoin was not designed to be child proof. It was designed for the "novice" user to have an advanced understanding of how bitcoin works.

The problem is that even now the Bitcoin protocol has not gotten any more child proof however various applications have been designed so that they are more user friendly which is causing more people to end up loosing their money

Bitcoin is a protocol. It can be designed any way we want. In fact, it's the ideal currency for children to carry.

[Nagle]

Do you think a company such as Apple or Samsung could just get away with being ran by anonymous CEO's that simply go by an internet screenname?

The public internet didn't exist when Apple was founded, but other than that, let's think about your question. When Apple built and sold its first personal computer, nobody knew who Steve Wozniak was and by all accounts I've heard Steve Jobs was some college kid who used a lot of LSD and made his money building and selling devices to defraud the phone company. They didn't start out as a multi-billion dollar international corporation with a huge corporate headquarters. They were two almost completely anonymous guys in a garage. If the public internet were around and as popular as it is today, Apple's achievement obviously wouldn't have been as big a deal as it was, but I wouldn't be too surprised if Woz and Jobs ended up announcing their new product on some online forum, where they may or may not be using their real names.

They announced the Apple I in person, at a meeting of the Homebrew Computer Club, and they had a demo unit. They sold them through the Byte Shop in Santa Clara, California. The history of Apple is well known, and the founders were never anonymous.

I don't know much about Samsung's backstory, but I'd be willing to bet almost any amount of money that they also didn't start out as a multi-billion dollar international corporation with a huge corporate headquarters.

Samsung started as a grocery and noodle company owned by an old, well-known land-owning family. Then they were a woolen and trading company. By the time they got into high-tech, in the 1960s, they were already a big company.

The world just doesn't work like that, and Bitcoin doesn't change that fact. Most likely it was a couple guys in a garage or a university dorm room (same can be said for Microsoft, Facebook, Google, Dell).

Microsoft did start small, but Gates had been going to Harvard and his family was rich. Same for Facebook and Zuckerberg.  Page and Brin were both at Stanford, and both were the sons of college professors.

[Flashman]

Most of the crop of "microcomputer" software and hardware computer companies of the 70s and 80s, started up with shitty little mail order line ads in the back of electronics magazines. In Apples case, run out of Job's garage at the time, many others would have been run from living rooms and kitchen tables.

[flipstyle]

Do you think a company such as Apple or Samsung could just get away with being ran by anonymous CEO's that simply go by an internet screenname?

The public internet didn't exist when Apple was founded, but other than that, let's think about your question. When Apple built and sold its first personal computer, nobody knew who Steve Wozniak was and by all accounts I've heard Steve Jobs was some college kid who used a lot of LSD and made his money building and selling devices to defraud the phone company. They didn't start out as a multi-billion dollar international corporation with a huge corporate headquarters. They were two almost completely anonymous guys in a garage. If the public internet were around and as popular as it is today, Apple's achievement obviously wouldn't have been as big a deal as it was, but I wouldn't be too surprised if Woz and Jobs ended up announcing their new product on some online forum, where they may or may not be using their real names.

I don't know much about Samsung's backstory, but I'd be willing to bet almost any amount of money that they also didn't start out as a multi-billion dollar international corporation with a huge corporate headquarters. The world just doesn't work like that, and Bitcoin doesn't change that fact. Most likely it was a couple guys in a garage or a university dorm room (same can be said for Microsoft, Facebook, Google, Dell).

Once you become a big company like Apple, Samsung, Microsoft, Facebook, Google or Dell it becomes a lot harder to hide your identity.. but I seriously doubt anyone with the possible exception of a few investors had ever heard of the founders or CEOs of those companies before they became big household names.

I know where you're trying to head with this.  And very, very few companies start out as million dollar or billion dollar powerhouses.  

However, even when Gates and Jobs first started, they were still real individuals with real names with real addresses.  Even before the internet existed, you had to physically call a land line number associated with a person, and mailing items had to be done with an originating address or PO box associated with a person or persons.  There was still a sense of accountability.

The internet has allowed for much greater leeway when it comes to pulling off scams.  Proxy servers, vpn's...anon domain registrars...all allow (or at least make it extremely tough) for someone to know exactly who they're dealing with.  Compound that with the fact that bitcoin addresses do not have IP addresses or physical names attached to them, and it makes it a true game of blind faith when dealing with a lot (or should I say majority) of these bitcoin startups and exchanges.  

No.  Creating an exchange with just an internet screenname is not acceptable.  I don't care how much you try to rationalize it...we've seen this play out one too many times.  The system has to change.  With new technology comes greater responsibility.  And greater responsibility commands accountability.  You cannot have accountability and remain anonymous.  Those two are not synonymous in a non-ideal world.


It's really a tough situation.  Hardcore bitcoiners want a sovereign currency freed from the reigns of legislation and government control.  Yet those same users end up getting scammed because of the lack of government controls and regulation.   It's yet another case of 'you can't have your cake and eat it too.'

[Flashman]

internet screenname

Hello, AOL? We have an escapee from your walled garden... yes, if you'd send the goons with the batons and strait jackets that would be good, thanks.

[Jamie_Boulder]

Quite an uneducated post OP, nobody is forcing you to leave your coins with an exchange.

In fact it's highly recommended you do the opposite.

[flipstyle]

internet screenname

Hello, AOL? We have an escapee from your walled garden... yes, if you'd send the goons with the batons and strait jackets that would be good, thanks.

Ah yes, AOL chatrooms.  Good times!  Now tell me when was the last time you sent a guy on AOL $5,000 to hold for you in good faith while you went and slayed some troglodytes.   

[flipstyle]

Quite an uneducated post OP, nobody is forcing you to leave your coins with an exchange.

In fact it's highly recommended you do the opposite.

Such a well thought out response.  And wonderful diversion from the biggest problems facing bitcoin.

Yes, let's just completely put the blame on all the hundreds of thousands of users that lost money in the past 5 or so large exchanges that scammed.   Offering real world solutions seems to be your forte.

[mayax]

The most of these exchangers are ran by amateurs, hipters, scammers, kids, who think about their self that they are GODS.

That's why these things are happening. Look to their behavior. They think that they are a corporation; I am not sure why the most of these so called exchangers are posing as having large offices like Apple, Microsoft, Bank of America when it is not a shame to be modest.

You can run this business from a small and cozy office if you really want that. It's perfectly normal to do that because you don't need hundreds of employees.

You need someone(1-2 people) to reply to tickets (if you are a big exchangers), checking the incoming and outgoing transactions (by bank wire) and a part time programmer.He just have to take a look over it daily.

Mtgox or Moolah are only two examples of arrogance.

Look here : http://www.liveleak.com/view?i=e63_1404777061

https://www.youtube.com/watch?v=ob9Ak1t09Ao

This is a common behavior for almost all these "exchangers". They are "busy" people, full of the word's problems. Nobody can understand what  "burden" they carry but in essence they are some kids who saw a lot of money in their hands.

They are full of vanity....they know better than anyone how the "things" are in the financial industry even they have 25 years old.

They create FINANCIAL "scripts" on  knees and saying "it's the best"  even they only tested for 1-2 weeks. A financial software costs from few hundreds of thousands to millions of USD.

 That's why the banks and the real forex companies are paying fortunes for their software security and even so, you cannot be sure.

It is SO fucking funny when you see : "We are fully rebuilding our systems from the ground up so that customers can use Bitstamp with full confidence and trust (in 48 hours)"

https://twitter.com/nejc_kodric/status/552091195795845120

How can someone check and fix a hacking problem in days when it's about a financial platform?

Thousands of code lines must be checked and rechecked + the server configuration. It is impossible in 48 hours;not even in a week.

That's why all the hacks are happening. The greed and vanity will bring down all these so called exchangers.

Unfortunately, their clients will pay the bill.

[flipstyle]

The most of these exchangers are ran by amateurs, hipters, scammers, kids, who think about their self that they are GODS.

That's why these things are happening. Look to their behavior. They think that they are a corporation; I am not sure why the most of these so called exchangers are posing as having large offices like Apple, Microsoft, Bank of America when it is not a shame to be modest.

You can run this business from a small and cozy office if you really want that. It's perfectly normal to do that because you don't need hundreds of employees.

You need someone(1-2 people) to reply to tickets (if you are a big exangers), checking the incoming and outgoing transactions (by bank wire) and a part time programmer if your platform is safe.He just have to take a look over it daily.

Mtgox or Moolah are only two examples of arrogance.

Look here : http://www.liveleak.com/view?i=e63_1404777061

https://www.youtube.com/watch?v=ob9Ak1t09Ao

This is a common behavior for almost all these "exchangers". They are "busy" people, full of the word's problems. Nobody can understand what  "burden" they carry but in essence they are some kids who saw a lot of money in their hands.

They are full of vanity....they know better than anyone how the "things" are in the financial industry even they have 25 years old.

They create FINANCIAL "scripts" on  knees and saying "it's the best"  even they only tested for 1-2 weeks. A financial software costs from few hundreds of thousands to millions of USD.

 That's why the banks and the real forex companies are paying fortunes for their software security and even so, you cannot be sure.

It is SO fucking funny when you see : "We are fully rebuilding our systems from the ground up so that customers can use Bitstamp with full confidence and trust (in 48 hours)"

https://twitter.com/nejc_kodric/status/552091195795845120

How can someone check and fix a hacking problem in days when it's about a financial platform?

Thousands of code lines must be checked and rechecked + the server configuration. It is impossible in 48 hours;not even in a week.

That's why all the hacks are happening. The greed and vanity will bring down all these so called exchangers.

Unfortunately, their clients will pay the bill.

Basically.

http://www.firstcoastnews.com/story/news/local/2014/12/22/lake-city-man-child-porn/20776261/

This is Robert Keith Christopher Jr., better known as DeviantTwo. I worked with him for some time between November and April of 2013-2014 at Hackshard. When he quit Hackshard he became a developer/owner of Cryptorush, which subsequently failed and lost hundreds of bitcoins. I think it's possible that some disgruntled customers who lost money on Cryptorush being hacked planted CP on his computer. The news article says the police received an anonymous tip.

How do I know this is the same person? Well he had the same name, lived in the same city, and was about that age and overweight, just like the guy in the picture. I also haven't been able to contact him since December 17th, 5 days before the arrest on the article.

[freebit13]

Hopefully projects like coinffeine will change the landscape soon. A decentralized solution is the most fitting.

[NEM minnow]

We need some exchanges that are run by a real company. If that happens, they will become "the bitcoin exchange" and the problem would be fixed... The problem of no rock solid safe exchanges.

Why doesn't blockchain add an exchange? they are funded by rich people like Richard Branson (My guess at his name spelling )


They have the investors to make it the spot to trade and buy bitcoin.

Agreed.  This is a vital requirement or these scams will continue happening.  Guaranteed.

Why do you think actual fiat banks around the world are able to work?  Because they are physical entities with verifiable employees/assets.  Additionally, most are FDIC insured.  Meaning, should the absolute worst case happen, they are backed by the federal government and all your funds would be replenished should they go bottom up or robbed.

This is a fundamental flaw in the bitcoin banking system.  The anarchists will claim 'BUT HAVING REAL NAMES AND REAL PEOPLE GOES AGAINST THE TRANSPARENCY OF CRYPTOS!'  No.  You can't have it both ways.  Either you have accountability or you get taken to the cleaners.  The 'blind trust' system never works on the internet.  Never has.  Never will.

The main reason Bitcoin was invented was to solve the issue of blind trust.  The funny thing is you can actually trust Bitcoin, it actually works.  Just most things built on top of it are still failing the blind trust problem.  I am wondering if maybe someday the blockchain advancements will solve this. 

Supposedly this is one of the great leaps of smart contracts, is that now, you can force third-parties to trust you via smart contracts. 

[Bitcoinpro]

All of this is necessary and to be expected. If we are to have truly reliable BTC exchanges they must necessarily emerge in response to spectacular fuckups. Market process, they call it.

market forces, sometimes u can also benifit more by actually losing the money too as opposed to someone that observes