The problem is that when these experiments fail, our ACist friends insist that "well, that wasn't REAL free-market capitalism."

Like, we've experimented with unregulated banking in the past. It didn't work.

Well yea that works well for speculation but not for a currency. I don't think crypto currency is a bad thing in and of itself, but I think what it takes to make a cyptocurrency what anarchist utopians want it to be is antithetical to an anarchist utopians end goals.

If you cut out the steps of trust needed, you certainly have a better situation. For example, to fund Mt. Gox in the past, you had to either wire money or set up an intermediary like Dwolla. Then that shut down, money was seized there. So there's an extra risk factor. It's like the poker days where you had to WU cash to some shady person in the Philippines to get your poker account credit, then you get shady checks back from some third party intermediary. Certainly that is far more risky due to the number of possible bad actors along with those actors trying to skirt the law or step around it. If you have a system where it's tolerated but not supported or discouraged, you allow the field to open up to more actors, and not just the shadiest ones (basically pvn's point).

Mt. Gox also ran into a lot of issues as well as they were unable to send USD to customers. This would almost certainly not have been an issue if they were in the US and were tolerated. Coinbase (not an exchange, but close enough) does this and has little trouble both getting money to and from customers accounts. This has only occurred because the revenue potential for Coinbase is sufficient that they can meet regulatory burdens, where it wasn't even something that would have been possible 2 years ago.

The risk was also almost exclusively born by those who kept funds/coins on exchanges, who would mostly be those trying to trade and participate in an obviously risky endeavor. There are mechanisms to easily control and own your coins securely following a few basic steps. The whole point is to avoid getting goxxed, but if you want to day trade, you need to have someone else hold coins.

The long term comedy here is that wall street is getting into the Bitcoin game this year in a pretty big way and the only ones who dont like this are ppl like TC and pvn. Until the bubble bursts and they get to blame a government (somehow) but dogecoin etc are totally going to learn from the mistakes of BTC.

Self-regulation works when there are already minimum standards and when the self-regulation is backed up by the thread of a business being dismantled if and when it proves inadequate. Self-regulation backed up by the Kahnawake Gaming Commission has a very different track record.

When BTC-E also takes the money and runs, will that also be a success story? What about if Bitstamp does too? 50% of the next generation of exchanges already have "scam" all over them. I know your answer to this is "don't keep money on an exchange" but the options for using BTC are quite limited outside of the exchange unless you pay a very large markup.

At any rate, "you gonna get goxed [if you attempt to convert money into BTC or vice versa and then ever trust any financial institution to handle the intermediary step for over an hour]" is just...not a very efficient, user friendly or technologically advanced way of doing things compared to using fiat.

lol

have any actual humans said this in this thread? or just the cartoon imaginary ACist friends in your head?

mt gox isn't a bank (is the mini-storage place down the street from me a "bank" if I decide to put a bunch of $100 bills in a trunk in a unit there?), but regardless, I'm not really sure what the point is here. Unregulated fractional reserve banking is in fact a disaster. Not sure who would disagree with that.

Yeah, let's get back to that. What the **** are you talking about?

So because individual citizens saw the US government bail out car companies, they decided to make risky investments?

When did they(who?) get "used" to being bailed out? Man you gotta be deeply immersed in the echo chamber to think that argument works.

Tom I think the coterie of bumpkins and creationists who taught you everything you know about law, history, and economics may not have been the best source to learn about the psychology of risk taking!

Because, for example, they might come up with some vague nonsense trying to blame Obama for tricking LIBERTARIANS into trusting the wrong BTC exchange. How embarrassing that would be for you.

These experiments simply do not exist, or are not failures. You need failures for capitalism to succeed, and that does not make capitalism a failure.

It does work incredibly well for speculation, which is why a lot of the junk coins still have value. I'm curious what you mean in the second sentence. I also disagree that it doesn't work as a currency, but curious if you could elaborate.

The money seized by the US was on the order of $5M. The press release says Gox is currently short about a hundred something million, possibly due to a protocol flaw and (as you say) possibly due to a coverup involving a hundred million embezzled dollars. We've seen this story before. While the seizure might have gotten the ball rolling it really had very little to do with the overall loss.

Americans in general are overly trusting. People that come from more corrupt cultures are far less trusting. This is obvious. It's easier to con people when they are not used to suffering consequences from bad decisions or not performing due diligence. If they buy a lemon from a car dealer without getting it inspected, it's the car dealers fault and they fight until there is a law to force them to perform refunds.

If a purse snatcher gets caught the cop who apprehended him should keep the purse, otherwise that's really just bailing out the victim's lack of arm strength. Hit the gym, Grandma.

Edit: LOL I posted this before I saw Tom's response. Boldly staking out a pro-fraud stance there, Tommy. Makes me confident in those solutions you've got cooking.

If you want people to fail, stop making failure so horrible.

http://m.theweek.com/article.php?id=256927

See the Tom Collins post above? Or go back and read like every crappy argment you've ever made?

There is no press release from Mt. Gox. There is a document that is being floated without any confirmation other than some winks and nods from Karpeles, who benefits from FUD.

There was no protocol flaw in Bitcoin. There was a procedure flaw. Imagine if I went to a bank and used it's ATM and it gave me money. The bank didn't keep track of withdrawals properly from the ATM. I go inside the bank and claim it didn't send me money. So they give me another payment. Then repeat. That's what happened. It's entirely a problem in Gox. It also is even worse, that their refunds would happen automatically without oversight.

Remember, when there is a Ponzi going on, it only takes a small disruption to get the ball rolling. You could have hundreds of million of paper assets with nothing backing it, and $5M would represent 25% of your actual funds or more.

We still don't know how much is lost. I am skeptical that the full amount is lost just due to how incompetent you would have to be to not realize it. Gox basically can feign complete insolvency to lower its value of its debits to such a low level that it does not take much to repurchase it, and that document basically confirms that strategy exists.

Your inability to comprehend posts does not make your misunderstood position true.

You don't want people to fail though. You don't want people to take on excessive risks. You want people who knowingly take on excessive risks to feel the pain when such risks don't pan out.

Tom,

I will put up a bitcoin* against your fiat dollars that the amount that was lost is within a reasonable amount (as determined by the neutral arbiters of the 2+2 politics forum) of what the leaked draft (my bad) claimed. The reason I am making this bet is because I'm extremely amused that the same person who is arguing the merits of unfettered capitalism and risk taking also refuses to believe that a business can be this incompetent.

(I mean, remember when Full Tilt paid dividends in June, 2011?)

*actually just the value of a bitcoin because I'm not touching an existing exchange with a very long pole

Bitcoins are fiat fwiw

"People just need to be less gullible, the system works thanks to failures like this" sure sounds like a no true Scotsman to me. How many bitcoin have to go belly up before you conclude the experiment is a failure?

how does an exchange "lose" a bitcoin anyway? How do they lose 750K of them?

At this point, little would surprise me with their incompetence. They have already exceeded my already awful opinion of them (I've been strongly recommending not dealing with them for 3 years).

I am simply skeptical that we accept it as fully true, or would even be able to be verified. Simply there is a huge incentive to exaggerate the losses to be able to recoup a smaller number of coins lost. That seems consistent with their actions when trading was resumed but withdrawals weren't allowed.

Tom,

People from corrupt countries being less trusting is not a feature nor a thing to be encouraged by cheering on the organized, consistent scamming of as many people as possible.

They make a payment to a customer. They have a faulty mechanism for checking if the customer received payment. If customer does not receive payment according to them, automatically pay again. It's hilariously bad how this could have happened.

No. It is unbacked. This is not the same. Aren't you an econ major? Fiat is from Latin "it shall be", and requires governmental endorsement.

Those two statements are independent. People need to be extremely skeptical when dealing business.

Bad businesses need to die.

Those are two different points.

No bitcoins have gone belly up. Businesses have gone belly up. They are being driven and replaced by more professional and well run firms. This is one step on that evolution.

I am not cheering scamming. I am simply saying people need to be aware of the risks. Scamming has been constant for 3 years. Some people need to learn the hard way. Many people are learning. Systems need to be built to prevent relying on third party trust. This is gradually happening, and people that let greed get in the way will get hurt.

Tom,

Until they are well regulated, bitcoin businesses may best be divided into the twin categories of "will run off with your money" and "could run off with your money". Some of the ones in the second category are actually extremely trustworthy, run by good people and will perform well for their entire lifetimes - for example, I work for a business that has never scammed anyone regardless of whether it was regulated at the time.

The problem is you have no way of knowing this. The trust free system you want might well improve things, but IMO BTC is flawed enough that it isn't possible to make it work with that system (you need truly anonymous crypto for that) and in any event it doesn't currently exist. Barring that, every single person using BTC save the truly insanely, obsessively paranoid is going to get / already has gotten scammed at least once, and the only reason that anyone at all is still "up" is because there has been a bubble blowing up at the time. If and when it finishes popping, will anyone -but- the scammers have profited?