Late last week, the price of the bitcoin plunged in value and days before that an account was hacked and $500,000 stolen. If that's not enough, here's the bigger problem.
Gavin Andresen, Bitcoin's lead developer has emerged as the unofficial spokesperson for the currency. He was just down in Washington D.C. at the CIA presenting Bitcoin to a digital currency conference, reports CNBC.
Donald Norman, the co-founder of Bitcoin Consultancy, advocates for Bitcoin's regulation, according to CNBC. "Norman is pushing to bring Bitcoin away from its roots and closer to a traditional currency — he is reaching out to regulators, looking to get legislation to oversee the system," says CNBC.
What are these guys thinking? The entire edge that bitcoin has is the ability to facilitate buy and sell transactions online with anonymity. Somehow briefing the CIA doesn't fit into that picture and neither does legislation. Does Norman seriously think that once legislators get their claws into something that they are going to allow anonymous transactions?
As I have said before, there may be some online currency down the line, many, many years from now, and there are some interesting aspects to bitcoin technology, but there are too many weakness, and talking to the CIA and a call for legislation pretty much makes bitcoin useless and a dangerous thing.
GoldMoney.com all the way - digital allocated gold.
ReplyDeleteMan I really hate being the Bitcoin "cheerleader" on this site, but once again there are a few points that need to be considered here:
ReplyDelete1) The hack at Mt. Gox is good for no one, especially the person who's account was hijacked. Keep in mind, however, that people need to take care when storing large amounts of Bitcoins in the cloud as they are not protected at all in a case against theft. It's like storing all of your gold at a friends pad locked barn shed. Someone breaks the little pad lock and all your gold goes missing. Not a good idea...their are far better ways of protecting your Bitcoins.
2) The advocation of Bitcoin regulation is news to me (learned about this today listening to The Peter Schiff Show) and I agree it is somewhat disturbing. However, I think the angle here is nothing more then recognizing Bitcoins as a legitimate means of currency exchange. Why? Well, in the case of the theft of Bitcoins on Mt. Gox, with some form of "regulation" or as I would prefer to say "legal recognition" the case could actually be pursued legally as theft. As it stands today, stolen Bitcoins are not in fact stolen as they have no recognition in the eyes of the law (sucks for the guy who got hacked on Mt. Gox).
3) Having the CIA look over the Bitcoin code is not news...it's open source and it's code is available for anyone to see. I actually like that the CIA is reviewing the code as it gives more validation to it's peer-to-peer design.
- Thomas J. Kingston, ME
@Andre... While I love goldmoney and bullionvault and have been using both for years, to compare either service to bitcoin indicates a profound misunderstanding of what bitcoin is.
ReplyDelete@Robert... So what if bitcoin gets regulated. The vast majority of bitcoin users will stop using the regulated bitcoin and start using a new branch of bitcoin (bitcoin 2.0?) that won't abide by the government's rules. It's open source. This is no more a "threat" than any of the other "threats". They are obstacles that, in fact, were foreseen long before the popularity of bitcoin.
@Thomas,
ReplyDeleteWell said. This "regulation" talk is nothing more than sugarcoating to feign a "reaching out" to regulators and buy time as bitcoin acquires more market share and works out the bugs. Those who understand it all know that bitcoin is unstoppable and here to stay.
It's a shame to see so-called "libertarians" and "free-marketeers" slam bitcoin because they don't understand it and don't take the time to think a little deeper about its nature and the revolutionary ramifications of its existence.
I know, when I first heard about it I, too, wrote it off because it wasn't "backed by gold". Fortunately I came back to it again and realized it doesn't need gold backing. It has its own inherent nature and value. It is truly revolutionary. When you can free the money you can free the people.
Yes, bitcoin is going through some serious growing pains at the moment but I believe it will come through it all stronger than ever. I am actually kind of glad that it is not being taken seriously as it gives the users time to make it better. The "Silk Road" press brought too much attention too quickly and bitcoin wasn't (and still isn't) ready for popular consumption. That is coming though - and quickly.
To Bob and other doubters: Don't write-off bitcoin too quickly. It is a force to be reckoned with. It has the potential to bring more freedom and liberty (to those who take the time to understand it) - faster than any political candidate ever could.
Bitcoin CANNOT be regulated. The only thing that can be regulated are sites and services that use it. Pushing for regulation of exchanges is good, as it reduces the chance of them being prohibited in the future.
ReplyDelete@anon 12:31
ReplyDeleteI am not so familiar with bitcoin so perhaps you can explain to me bitcoins nature and inherent value.
As Hoppe (building of Mises and Rothbard) has shown in his paper How is Fiat Money Possible? money proper must originate as a commodity. In order for bitcoin to be money proper and not a claim to money (money substitute), it must be shown that bitcoin originated as a commodity.
I believe this can be done but I'm interested in your take. I also believe the inherent composition of bitcoin makes it inferior to gold and in a free market gold would win out as the single money.
@Zach,
ReplyDeleteHere is a great explanation:
Further Observations on Bitcoin, Digital Currencies, Privacy and Liberty
http://tinyurl.com/3j3rxkm
Thanks anon.
ReplyDeleteI'm not sure if you are Anthony but I would add another weak point and answer as follows.
3) money must originate as a commodity.
Answer: A bitcoin is really (at least in my understanding) a "minted" digital bit. Its original non-monetary value is derived from the demand for storage bits.
I believe this point successfully answers David Kramer's criticism of bitcoin.
Above I stated that I believe in a free-market gold would win out as the single currency. But today we do not have a free-market and physical gold has proven quite costly to defend against the State. I think it reasonable to assume then that bitcoin (or maybe some other version of bitcoin) will be the predominantly used currency by the free market, at least until the State is gone.
I think another criticism that will arise will come from the recent crash. But any critics of this crash can not criticize bitcoin itself. The problem is the current monetary system itself which (as Hoppe identifies above) is still a system of partial barter.
@Zach,
ReplyDeleteYou wrote:
"Above I stated that I believe in a free-market gold would win out as the single currency. But today we do not have a free-market and physical gold has proven quite costly to defend against the State. I think it reasonable to assume then that bitcoin (or maybe some other version of bitcoin) will be the predominantly used currency by the free market, at least until the State is gone."
Agreed. Even then I think bitcoin could benefit gold by facilitating transfers across space and time.
You also wrote:
"I think another criticism that will arise will come from the recent crash. But any critics of this crash can not criticize bitcoin itself."
Yes, this was not a fault of bitcoin but, rather, several cases of "operator error". It was foolish for people to store large amounts of bitcoin (more than they could afford to lose) at mtgox.com considering it is a young exchange.
The second form of "operator error" is the widespread failure of people to adequately protect their bitcoin wallets with encryption and strong passwords for their various accounts.
People need to remember that bitcoin is electronic cash which requires careful safeguards. If anything, these "operator errors" highlight some of the main features of bitcoin: privacy and irreversible transactions.
@Zach,
ReplyDeleteOn another note: The attacks on bitcoin were predicted here:
The Coming Attack On Bitcoin And How To Survive It
http://tinyurl.com/3b6d823
On a humorous note, I've heard one person describe bitcoin as being backed by "the lack of trust in governments".
Bitcoin: A New Commodity To Serve Market Demand http://tinyurl.com/3e85xr8
ReplyDeleteor, if you prefer, a preview link:
http://preview.tinyurl.com/3e85xr8