Major Bitcoin Exchange Ceases Operation 208
First time accepted submitter Sabbetus writes "On Monday the CEO of prominent Bitcoin exchange Tradehill announced that they are shutting down. Ars Technica ran a story on this stating that 'After Monday's news, the currency's value fell from $5.50 to $4.40, a decline of 20 percent.' Tradehill is returning all funds and meanwhile their competitors are fighting over who gets Tradehill's customers."
Bizarre and Confusing Summary (Score:5, Informative)
Not sure where that came from, didn't find it in the Ars article. At the end they mention Mt. Gox being the only other exchange ... so there's one competitor. They didn't mention anything about fighting over customers.
Furthermore the third sentence in the Ars article was suspiciously absent from the summary:
He has pledged to open a new site once these issues have been resolved.
As well as the explanation of why all this happened (lack of proper money transmission licensing). I've asked this many times before but how do you track illegal purchases on BitCoin [slashdot.org] when, by definition, it claims to be an anonymous payment solution?
Quite simply put, no BitCoin exchange -- neither Tradehill nor Mt. Gox -- is going to be able to comply with the Bank Secrecy Act [wikipedia.org].
Re:Bizarre and Confusing Summary (Score:5, Informative)
Quite simply put, no BitCoin exchange -- neither Tradehill nor Mt. Gox -- is going to be able to comply with the Bank Secrecy Act [wikipedia.org].
Totally not true. They have to record cash transactions for negotiable instruments. They have to report cash transactions over $10,000. Most of them did not deal in cash at all, but in credit or debit cards and paypal, all of which is easily recorded. The act makes no mention of tracking the negotiable instruments (bitcoin) after they are sold.
Tradehill were the good guys (Score:5, Informative)
Tradehill was probably the best-run Bitcoin exchange. They didn't steal customer funds, like some of the other defunct Bitcoin services. [betabeat.com] They didn't go down much. They didn't have a monthly crisis [thebitcoinsun.com] like Mt. Gox. (formerly Magic, the Gathering Online Exchange. Really.) If Tradehill does in fact return all customer funds, at least they shut down honestly.
A basic problem with Bitcoin is that the ability to irrevocably transfer funds to anonymous parties is the scammer's dream. Bitcoin is thus a scammer magnet. Just about every known financial scam was replicated in the tiny Bitcoin world, from fake banks [globalstandardbank.com] to fake stock exchanges [glbse.com] to Ponzi schemes. [bitponzi.net]
Re:wtf? (Score:3, Informative)
Bitcoin is a decentralised computer currency designed by self-righteous Ayn Rand-reading nerds who despise looters and parasites like, er, you. It is used to purchase Internet services, illegal drugs and pictures of naked women holding video cards.
Bitcoin works by an emergent synergy of cryptography, peer-to-peer, anonymity, anarchism, libertarianism, wasting stupendous quantities of electricity, the marketing department at NVidia, the enduring exchange value of tulip bulbs and doing all of this instead of Folding@Home.
Bitcoin successfully harnesses a hitherto-unexploited Internet resource: the vast reserves of unexamined privilege amongst computer programmers. Coins are “mined” by stealing them from people who are able to comprehend this level of computer science but still keep their Bitcoin wallet in plain text on a Windows machine.
The Bitcoin system is robustly designed to continue past the inevitable collapse of the US dollar and the world economy, as the Internet, fast computers and reliable electricity are all expected to be readily available when barbarian hordes are wandering the burnt-out post-apocalyptic remnants of civilisation.
It is completely incorrect to describe Bitcoin as a “pyramid scheme.” Technically, it’s a “pump-and-dump.”
Many common products are still inexplicably not purchasable with Bitcoins. “It’s like they don’t understand the revolutionary wonder of Bitcoin,” says Debian developer Hiram Nerdboy, 17. “I can’t get chicks with Bitcoins either. Even with my slickest Pick-Up Artist techniques! It’s as if my knowledge of economics, game theory and Bayesian epistemology didn’t substitute for understanding anything about people. But that’s impossible, of course. They’re probably just theists. Hold on, I just gotta post to Slashdot about this.”
Bitcoin was invented by Internet libertarians, in the spirit of freely-chosen individual interpersonal interactions that will bring about the utter collapse of the oppressive taint of the dead hand of government, in order to make money at your expense.
from http://newstechnica.com/2011/06/18/bitcoin-to-revolutionise-the-economy/ [newstechnica.com]
Re:Speculation is all the Bitcoin has (Score:5, Informative)
How can I short this currency?
Right over here: https://bitcoinica.com/ [bitcoinica.com]
Be careful. Volatility cuts both ways.
Re:Why Bitcoin is doomed (Score:4, Informative)
which have already grown because of their use in previous transactions
This isn't actually true. Coins don't keep getting split into smaller and smaller portions forever. Every time you spend it takes several old coins and combines them into (usually) two new ones: 1, the payment you make, and 2, your "change" (which goes back in your wallet). The previous inputs are permanently combined and no longer needed going forward. The current software does not yet actually implement it, but obsolete coins CAN be "pruned" entirely, facilitated by the Merkle tree.
The blockchain will still undergo a lot of growth if more people begin using Bitcoin (since the currency base will be divided between more wallets, and there will be greater numbers of recent transactions that are not yet pruned), but it doesn't geometrically expand forever. When Bitcoin stabilizes at a certain level of market saturation the blockchain will also stabilize in size.
Whether that will be a reasonable and manageable size is still an open question.
all of Bitcoin's advantages without the serious disadvantages; those systems use a bank or other token issuing authority
I want to know that the central bank won't just start issuing more currency and devalue mine.
I want to send money to Wikileaks, but all the banks are forbidding it.
I want to pay someone over the internet without Mastercard or Paypal or whoever taking a 2% cut.
There is no other currency that currently has ALL of those advantages of Bitcoin. Some of the advantages are inherently incompatible with centralized, bank-operated currencies. It also has a long and substantial list of disadvantages too - no argument there. But on the whole it simply has a different set of tradeoffs than any other currency, and so it (or one of it's descendants; I don't expect Bitcoin is going to be the last word in decentralized e-currency) will be relevant for some time.