The Bitcoin Strikes Back

smitty777 writes "Slashdot readers are no doubt informed of the infamous crash of Bitcoin. In fact, its demise was followed closely here. Wired has a recent article tracking Bitcoin's climb out of chaos. Valued at $17 before the crash, it had lost 90% of its value due to the hacking incident, down to a low of $2. It climbed back up to $3 in December, and is currently valued at $4. From the article: 'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.' Still, Bitcoin has significant obstacles to overcome, such as covert mining, criminal uses, and other security issues." Amir Taaki of the Bitcoin Consultancy (who did an interview here a while back) disputes the reasoning and the conclusions in the Wired article.

Comments

Building a case...

[benjamindees]

Pay attention to what is going on here, because you will start to see it in other areas as well.

The establishment (through the media) is attempting to build a consensus that Bitcoin is not a legitimate currency, but a "money transfer service". "Money transfer" is a service that carries with it the implication of guarantee against loss of value during that transfer. It is a regulated industry.

By branding Bitcoin a "money transfer service" in the eyes of the public, powerful banking interests will then be able to begin loading Bitcoin down with regulations. Large Bitcoin institutions may even go along willingly. Regulations create monopolies, and monopolies bring higher rents.

This is the classical method in which the free market is subverted by government regulation, and creeping nanny-statism benefits large, risky centralized corporate interests at the expense of main street. It is the prisoner's dilemma in action. So pay attention as it plays out.

Re:Building a case...

[GameboyRMH]

Wow you've confused yourself by going into too many layers of libertarian paranoia. How the hell could Bitcoin be regulated or policed? Places operating on the web would just move to darknets and that would be the end of that.

Re:That's how money works - a shared hallucination

[PureFiction]

"It has value because we pretend it does."

absolutely true!

fiat currencies are just as much a shared hallucination as bitcoin.

    at least bitcoins may provide more privacy...

Re:Criminal uses?

[Dwonis]

True but bitcoins are completely untraceable

Ok, so here's how Bitcoin works:

• Step 1. Distribute the entire transaction history to everyone in the P2P network, much like how a git repository works.
• Step 2. Have a bunch of people do lots of expensive hashing so that anyone in the P2P network can tell which "branch" of the repository is the official one. ("The branch that was the most difficult to compute" is the one that wins.)
• Step 3. To see how much money you have, look at the transaction history for the accounts that you control.

Bitcoins aren't really a thing you can have. Even the physical "bitcoins" you can buy aren't really coins. They're just private keys that are allowed to sign transactions on behalf of accounts that have a non-zero balance.

The only reason why people talk about Bitcoin as being untraceable is that anyone can create accounts, and there aren't necessarily names attached to accounts, but it would be too hard for authorities with warrants to catch you if they suspected you. The entire transaction history is still there, forever, for everyone to see!