Bitcoin and Digital Currencies

Let's assume lots of companies agree to use it, and using it becomes easier for the average person. With bitcoin coexisting alongside regular money, what do you think will likely happen and why?

Here are some of the reasons why the fundamentals are against Bitcoin. Some of them are problems with cryptocurrencies in general, some of them are Bitcoin specific, and some of them are even considered advantages of Bitcoin by proponents.

• Electricity costs: This is the biggest one - someone has to pay for all that hashing power, and with Bitcoin, this is paid through transaction fees.
• Built in deflation and lack of monetary control - This isn't an absolute barrier, since people have used deflation prone currencies in the past (see the gold standard) but everyone knows it's a disaster so there will be powerful forces against adoption. Ironically, this is seen as an advantage by the less thoughtful Bitcoin proponents, mainly because it lets them get rich doing nothing, and they don't understand economics enough to realize that this isn't sustainable.
• Volatility - Presumably volatility will decrease with wider adoption, but the lack of central banking means this is a problem inherent to the system to some extent. Something with wildly varying values doesnt' make for a good currency.
• TX speed and throughput - The bitcoin protocol as currently designed can't scale at all. It handles a max of 7 transactions a second with 10 minute confirmation times. You can work around this by using banks as intermediaries and treating bitcoin proper as an ACH type system, but at that point, you've lost some of the main advantages of Bitcoin.
• Lack of chargebacks and fraud prevention - see above
• High transaction costs - see above
• Tragedy of the commons - The bitcoin protocol rewards only the one who mined the block, even though costs are borne by everyone in the network. This means that economic incentives are not aligned properly, and makes scalability problems even worse.

Ultimately, support for Bitcoin seems to rest primarily on the three pillars of libertarian anarchist idealism, misunderstanding of economics, and a desire to get rich quick. The fact that some of its most touted advantages are actually its biggest weaknesses just makes things worse.

Ross Ulbricht, accused of being the man behind the Silk Road online black market, a bitcoin using online black market, is claiming "it wasn't me, it was Mark Karpeles".

Karpeles is the former owner-operator of Mt. Gox, which was the world's largest bitcoin exchange until it collapsed spectacularly in February last year.

There's no honor among libertarians, I guess. Pass the Popcorn.

edited 16th Jan '15 4:44:24 AM by Fighteer

The only way things could get better is if Mark Karpeles turns out to somehow be Satoshi Nakomoto too.

It was a bit surreal reading yesterday's Economist article about the trial since it came out right before the big twist about Karpeles.

I don't think anyone is going to be dumb enough to believe that. He was literally caught red handed logged in under admin tools of the appropriate handle. This is the wheedling lawyer stage where they try and shift as much blame somewhere as possible because they know they are fucked.

Don't be over reliant on Bitcoin's tools of anonymity "Prosecutors Trace $13.4M in Bitcoins From the Silk Road to Ulbricht’s Laptop"

From what I've heard, his defense is pretty convincing. Among other things, they had testimony from an agent of the Department of Homeland Security involved in investigating DPR that he thought Mark Karpeles was DPR. Plus a bunch of circumstantial evidence.

His argument is that he founded the site but turned it over to Mark Karpeles early on. Then when Mark found out that the government was after him, he convinced Ross to come back and set him up as the fall guy.

The fact that he was caught red handed logged in is irrelevant if he wasn't DPR during the time when the crimes occurred.

edited 30th Jan '15 7:27:42 PM by storyyeller

The belief that someone else was DPR predates pretty much all the evidence and lacked any real evidence of its own beyond some limited circumstantial evidence. So far everything is pointing to him from journals he wrote, the block chain evidence, the FBI insider, the fact they caught him red handed. Yeah no the realistic observations is the defense is grasping at straws and has been doing so from the start. Trying to blame someone else and desperately trying to convince the authorities is really old hat. Trying to blame a prior suspect as setting someone up doesn't work so well when you have hard evidence that says otherwise.

The constantly growing body of evidence says it has been him from start to finish.

Well I haven't been following the trial closely, just going by what I heard.

I have been watching it a bit more closely. Every time his defense tries a hat trick the prosecution just drops another pile of evidence in everyone's lap. The block chain link is only the latest. Before that it was his personal journals, before that the insider, and so on. It really is not looking very good for him.

What exactly are his charges and what kinda sentence is he looking at?

Charges include money laundering, computer hacking, conspiracy to traffic narcotics, and conspiracy to have up to six people killed by contract.

His potential sentence I keep hearing 30-life. But the final sentence depends on the outcome of the trial and what ends up sticking in the end.

I hope it's on the harsher side, these kinda people piss me off.

Ulbricht is convicted. Guilty on all charges, after less than 30 days and a tiny amount of deliberation by the jury.

edited 5th Feb '15 4:17:57 PM by Achaemenid

Yeah, overwhelming evidence. Well, at least that's one more idiot behind bars.

Also, the bitcoin blockchain showed ALL of his transactions. Just use his name once in reference to his bitcoin wallet address, and then that gives any person who wants to snoop on him what they need to know.

So much for Super Sekrit Libertarian Money (tm).

His lawyer of course swears the trial was unfair and will appeal. Get the popcorn folks the idiot parade isn't quite done.

The only way he could have been more guilty is if he openly confessed and gave them the details himself.

Rand Paul on following the bad idea that is bit coin with the worse one of corporate money making Rand Paul using the future to drag us back to the past.

edited 13th Feb '15 3:50:06 PM by TuefelHundenIV

Business creating their own currencies.

Isn't that how like old mining companies made slaves out of their workers back in the day?

Yes. Very much so. Company script, company stores, and company towns.

And how every bank issued its own currency. Which also contributed to frequent bank failures.

Also how a similar scheme at the state level during the "Articles of the Confederation" days had helped almost end the US before it had really gone on for long.

Another prominent darknet market's gone; Evolution's admins shut down the service and took off with the BTC that was in it.

http://www.vice.com/read/dark-net-evolution-scam-394

As someone who used to be big on bitcoin and how it would transform the way we do business, I'm glad to hear these stories. Any way in which reality forces people with certain types of worldviews to realize their worldviews are wrong is a good thing to an extent.

Bitcoin's value drops yet again.

The irony of drug dealers complaining about criminal behavior.