Bitcoin debacle: 850,000 bitcoins gone or half a billions dollars

[Kramodlog]

Crypto-currency is a technology about securing and managing money transactions.

Not really. It is about anonymity from guberment and circumventing traditional financial institutions. So basically criminals and people who want to avoid paying taxes.It is a very subversive tech. Maybe be more than intellectual elites think it is.

I already only carry a debit card in my pocket. Anything I buy is paid for by transferring ones and zeroes via transactions that are no doubt encrypted from one account to another.Once banks offer their own form of money called "credits" that happens to be their version of crypto-currency, it's the same thing but different.

So why the need for cryto-currencies if you have a credit card and/or debit card?Assuming you exclusively deal in legal maters. And even then, buying pot with cash will do the trick.

I don't know what it'll take for a new currency to take hold. But security is probably the top order of business.

A central institution to back t might help too. But why have bitcoins and US dollars?

 

[Kaodi]

You must be talking about a different JP Morgan than the one I am used to. The JP Morgan I know was totally all up in that credit default swap or whatever stupidity that led to 2008. That they have their own cryptocurrency does not mean cryptocurrencies are not dumb. It just means they think some of their clients are dumber.

 

[Derren]

They're so dumb that JP Morgan filed a patent recently on their own crypto-currency.

As Bitcoins have shown, they are the perfect snowball system.

You can create something from nothing and sell it to speculates who take all the risks who in turn sell them to conspiracy nuts who buy into the "not government accountable" and "limited" advertisement.
There is quite a lot of profit in Bitcoins, etc. as long as you do not have any when people realize that they aren't worth anything.

 

[Janx]

As Bitcoins have shown, they are the perfect snowball system.

You can create something from nothing and sell it to speculates who take all the risks who in turn sell them to conspiracy nuts who buy into the "not government accountable" and "limited" advertisement.
There is quite a lot of profit in Bitcoins, etc. as long as you do not have any when people realize that they aren't worth anything.

I think you guys are fixating on BitCoin and it's particular problems a bit too much to see the big picture.

Crypto-Currencies aren't just about making a new brand of money. They are about making a new way of transferring money beyond 2 banks saying subtract 100 dollars from Janx's account and put it into Derren's account.

Because that's all banks have right now is lines on a spreadsheet.

Which means, the only thing keeping banks honest about how much money is in the supply is some auditing.

It would be very trivial to add $1,000 to my account, just by changing a value in a database.

Crypto-currency changes that mechanism from changing a value in a row in a database to something that is allegedly harder to forge and includes its own auditing.

So instead of 2 banks agreeing to subtract one one side if the other bank adds, the data itself enforces that.

That might be useful to making better online banking/debit card systems.

 

[Kramodlog]

Do you need to resort to crypto-currencies to resolve this rather dubious problem? Seems legislations on operating system would prevent banks from adding money your account.

 

[Janx]

Do you need to resort to crypto-currencies to resolve this rather dubious problem? Seems legislations on operating system would prevent banks from adding money your account.

Laws don't stop criminals.

Admittedly, BitCoin is trying to solve the technical problem AND become the new Euro (which until recently also didn't exist until some people made it up)

But the problem remains that there's a thin wall keeping your money at the number it is supposed to be at.

If each dollar you have carried the accounting validation inside of it, as its own atomic data element, then potentially they are self auditing. You have $1,000 because you have 1000 vDollar files, and each vDolllar file has its own history and validation of how it got into your account. So if somebody steals it or copies it, it won't work for them because it won't contain the transfer record entry to their account.

I don't own a single BitCoin or other crypto-currency. It ain't ready yet.

But it is interesting, and it has potential to solve some problems.

It is possible that the product called BitCoin will not make it. It is also possible that the future's version of electronic money will be called BitCoin (it's just a trademark), and work differently than today, maybe even backed by all the worlds governments.

Who knows.

 

[Kramodlog]

Laws don't stop criminals.

Yeah, that is shinny talking point of the NRA against gun control, but reality is, as always, more complex. Laws are a guide and a deterent, because if you violate them you risk facing consequences.

In our fictitious example, if banks, registered and well known entities, could be seized if they did not adopt the program you say it is needed to keep them in check, they would be... seized. Not something they want to happen.

Admittedly, BitCoin is trying to solve the technical problem

Bitcoin is not trying to do that. It wants to substract money from guberment oversight and control. That is different boatload of issues that it creates more than solves. The mtgox debacle shows the consequences of not having oversight and a central agency to help people who lost money.

But the problem remains that there's a thin wall keeping your money at the number it is supposed to be at.

If each dollar you have carried the accounting validation inside of it, as its own atomic data element, then potentially they are self auditing. You have $1,000 because you have 1000 vDollar files, and each vDolllar file has its own history and validation of how it got into your account. So if somebody steals it or copies it, it won't work for them because it won't contain the transfer record entry to their account.

Do you have examples of banks doing this?

It is possible that the product called BitCoin will not make it. It is also possible that the future's version of electronic money will be called BitCoin (it's just a trademark), and work differently than today, maybe even backed by all the worlds governments.

Who knows.

Crypto-currencies have a future, Bitcoin probably not because of its finite amount and the inevitable upstart that will out perform it.

Even if crypto-currencies fluctuate so much, represent security risk and aren't worth the trouble to use instead of traditional currencies, they will stay a marginal phenomenon useful to criminals and people who fear guberment. The cat is out of the bag now, but a marginale cat. Unless for some reason a lot of people decide to use them to avoid sell taxes and enough employers adopt them to pay their employees.

There is a very subversive element to crypto-currencies that elites who label them as useless gimmicks do not understand. If governments are not capable of collecting revenues they can't function and that creates another boatload of problems.

 

[Mustrum_Ridcully]

Maybe some people now can use BitCoin to circumvent taxes - that doesn't have to mean that this will always be the case. I suppose if BitCoin could inherently make this impossible or extremely difficult, but turns into a commonly used currency, then it might actually be ruled illegal, but could be replaced by something else that shares several concepts, but would allow at least the government to trace money transactions.

Example:
A three-way transaction system. You can only perform a bitcoin transaction if you use a transaction provider. The transaction provider creates the type of digital record that is needed for tax reporting, cryptologically safe so that only the "guberment" can read the data... Or whatever.

 

[Kramodlog]

Maybe some people now can use BitCoin to circumvent taxes - that doesn't have to mean that this will always be the case. I suppose if BitCoin could inherently make this impossible or extremely difficult, but turns into a commonly used currency, then it might actually be ruled illegal, but could be replaced by something else that shares several concepts, but would allow at least the government to trace money transactions.

It will/is or will be regulated. The Russian authorities have already said it is illegal, Chinese authorities prohibited banks from dealing bitcoins, Japan wants to regulate and tax them and a US senator is calling for it.

This will be difficult to implement with the nature of the beast. Of course, as I said, it only becomes an major problem, and not just a marginale phenomenon, if enough people ignore the laws.

 

[Janx]

Yeah, that is shinny talking point of the NRA against gun control, but reality is, as always, more complex. Laws are a guide and a deterent, because if you violate them you risk facing consequences.

In our fictitious example, if banks, registered and well known entities, could be seized if they did not adopt the program you say it is needed to keep them in check, they would be... seized. Not something they want to happen.

Why do you assume it's the banks that need to be kept in check in this case (not talking about all the other shenanigans they may be up to)?

It's cyber-criminals.

Mt. Gox fell because of hackers attacking it.

The only thing keeping your bank balance safe is the IT staff of your bank. Heck, even the goverment would be happy to have a security system that means they don't have to actually insure your money because nobody could steal it.

I'm simply saying, there are potentially useful components to this crypto-currency stuff that somebody (a government/bank) looking to stop printing paper might be interested in.

Otherwise, it is a matter of time before an attack occurs at a bank that involves changing balances in the records, instead of stealing paper or DoS. The mess might be just complicated enough that it will be less about stealing money, more about damaging money. And it will be hard to prove how much was in each account.

I supposed I could just ask the guy on my team who worked reasonably high up at one of those banks...