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Bitcoins! Cargo Cult Economy of the Future!
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Arc Tempest



Joined: 28 Jan 2007
Posts: 4925
Location: Oregon

PostPosted: Mon Aug 05, 2013 6:03 am    Post subject: Reply with quote

In a desperate attempt to get this thread back on track: parts of the bitcoin community are looking at self-regulation.

This may prove entertaining.
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anti-prophet



Joined: 19 Feb 2012
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PostPosted: Mon Aug 05, 2013 6:09 am    Post subject: Reply with quote

That would drive away many of the anti government and seedier uses of the bitcoin that may be a significant chunk of the user base causing a decreas in solvency but may stabilize prices to a degree. The aforementioned parties would move on to a bitcoin clone in the end though.
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Monkey Mcdermott



Joined: 10 Jul 2006
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PostPosted: Mon Aug 05, 2013 5:32 pm    Post subject: Reply with quote

If you aren't seedy, or anti-government, there's really no reason to ever use bitcoin. The fact that it can be used for seedier things, and people are all crazy about unregulated anti government "currency" is the only reason the thing has any value.


It ossifies your money pretty terribly, the exchanges are clearly not safe from tampering, it's value is crazy volatile, and there really aren't THAT many places you can spend it.
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Sam



Joined: 09 Jul 2006
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PostPosted: Tue Aug 06, 2013 3:40 am    Post subject: Reply with quote

Arc Tempest wrote:
In a desperate attempt to get this thread back on track: parts of the bitcoin community are looking at self-regulation.

This may prove entertaining.


Stuff like this is actually why I have adopted Cargo Cult Economy as a way to describe Bitcoin,

Quote:
To understand the phenomena surrounding the illustrious Bitcoin, one has to first understand the original cargo cults that sprang up in post-WWII Melanesia and similar Pacific islands. Essentially, Japanese and Allied soldiers were stationed on the island, bringing with them all manner of supplies, from food to clothes to vehicles and more, and shared a bit of these with the native islanders, who, due to a lack of missionaries present in a warzone, weren’t informed of the reason behind this sudden flurry of wealth.

After the war ended and forces withdrew, cults developed on the islands; leaders promised their followers a return of the wealth and benefactors. People imitated the now-gone soldiers in dress and behavior, and constructed elaborate life-size replicas of things such as planes, Jeeps, air traffic control towers, runways, and more. It was believed that these items and mimicking the troops’ drills and behavior would bring back the planes and materiel, and that the various forces who were stationed on the islands were related to either deities or ancestors, and used this power to bring great wealth.

Bitcoin operates in a similar fashion. Take, for example, institutions like the NYSE, NASDAQ, IPOs, and large banks. Buttcoiners see these systems and want their toy 'currency' to function the same way, so they imitate these major economic forces in the most hilarious, ridiculous, and drama-filled ways possible. They see CEOs and CFOs and other C-level execs, and want to play businessman with their Internet money.


Quote:
They’ll imitate and mimic these things, acting like they have companies and stocks, trading imaginary shares and abbreviating Bitcoin as “BTC.” One of them, now long branded with the scarlet letter “SCAMMER,” even set up a credit rating service, imitating S&P, and handing out ratings that resembled eBay feedback more than it did actual credit ratings. Bitcoiners essentially build replica airplanes and runways, hoping desperately to have their scrip recognized by the rest of the world that already has banking, stocks, and various other financial systems.


Quote:
The Global Bitcoin Stock Exchange was allegedly the first Bitcoin “securities exchange,” where buttcoiners would trade “shares” in their “companies” with each other, making “IPOs” for their mining pools, buttcoin casinos, and various other Bitcoin disasters. This, of course, was plagued with issues, the most prevalent and destructive being the “Pirate Pass Through,” which was a Ponzi scheme stacked on top of another Ponzi scheme and ended up collapsing a great many of these fake companies.


Quote:
he repeats the right magic words: options, futures, stocks, bonds, and funds, and people inexplicably flock to his site and do “business,” passing meaningless numbers back and forth in a misguided attempt to make the numbers bigger and screw other users in the process.


Quote:
In the “business” side of things, we have the ironic mining pools, in which Bitcoiners band together to create large, centralized operations to help generate and manage financial transactions… Moving on, these are prone to failure as well, especially the ones that like to advertise themselves as having stocks, IPOs, and other Wall Street-speak in an attempt to appear legitimate. Often they all “invest” in each other, leading to a string of “debts” that never get repaid. Ultimately this is all pointless, as again they’re repeating magic words back and forth: securities, stocks, bids, investments, shares, escrow, profit. None of it actually does anything, none of it goes anywhere, they’re trading chits because that’s what they’ve seen the real investors do.


And now, the Unregulated Currency, like a retelling of why our financial systems are regulated today playing itself out in fast forward, follows in the footsteps of those before it.
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WheelsOfConfusion



Joined: 09 Jul 2006
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PostPosted: Tue Aug 06, 2013 4:13 am    Post subject: Reply with quote

Sam wrote:
Stuff like this is actually why I have adopted Cargo Cult Economy as a way to describe Bitcoin,

Quote:
Bitcoin operates in a similar fashion. Take, for example, institutions like the NYSE, NASDAQ, IPOs, and large banks. Buttcoiners see these systems and want their toy 'currency' to function the same way, so they imitate these major economic forces in the most hilarious, ridiculous, and drama-filled ways possible. They see CEOs and CFOs and other C-level execs, and want to play businessman with their Internet money.
...
They’ll imitate and mimic these things, acting like they have companies and stocks, trading imaginary shares and abbreviating Bitcoin as “BTC.”

Speaking of which, MTGOX just announced a huge and expensive new trading system for processing over half a million transactions a second. Despite the fact that trades technically take 10 days to go through the deposit process with their real bank on the other end.


Last edited by WheelsOfConfusion on Tue Aug 06, 2013 7:47 pm; edited 1 time in total
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Sam



Joined: 09 Jul 2006
Posts: 9589

PostPosted: Tue Aug 06, 2013 7:18 pm    Post subject: Reply with quote

god, even assuming perfect knowledge of a net increase in the worth of bitcoin over a 5 year period, I would be so fucking nervous all of the time about the security of my investment. About where to keep my bitcoins, or what I might be at risk of in terms of the compromise of my ability to withdraw or have ownership of the data that says I own what I own, etc.
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WheelsOfConfusion



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PostPosted: Wed Aug 07, 2013 5:28 pm    Post subject: Reply with quote

In the case of a man accused of running a Bitcoin ponzi scheme (Bitcoin Savings and Trust), a federal judge has just decided that Bitcoins do indeed qualify as "currency" for the purposes of US law and regulations.
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WheelsOfConfusion



Joined: 09 Jul 2006
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PostPosted: Mon Aug 12, 2013 3:49 pm    Post subject: Reply with quote

Meanwhile a flaw in Android means all Bitcoin wallets created on phones running it are insecure. It's already being exploited in the wild.
Quote:
Currently, the flaw appears to affect any and all Bitcoin addresses generated on any and all Android Bitcoin apps, including popular apps like Bitcoin Wallet, BitcoinSpinner, Blockchain.info, and Mycelium Bitcoin Wallet. These apps generate insecure private keys with the broken SecureRandom function. Developers of the apps are aware of the issue, and new versions are being rolled out (Blockchain's new version is already available; others are in development right now).
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WheelsOfConfusion



Joined: 09 Jul 2006
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PostPosted: Mon Aug 12, 2013 6:33 pm    Post subject: Reply with quote

Aaaaaaaaand then there's this: New York financial regulator hits 22 Bitcoin-related companies with subpoenas
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anti-prophet



Joined: 19 Feb 2012
Posts: 73

PostPosted: Thu Aug 22, 2013 4:56 pm    Post subject: Reply with quote

http://www.cgpgrey.com/blog/on-bitcoin-first-impressions

CGP Grey wrote:
"What's this Bitcoin thing that's used for drugs and illegal stuff on The Internet?" My father recently asked me.

I've been interested in Bitcoin for a few years and gave him the bullet points:

Bitcoin is a digital currency.
Bitcoin is not backed by any government, it's 'backed' by its users.
Bitcoin allows anonymous transactions.

In effect, if you took cash, separated it from government control and put it on The Internet, you'd have Bitcoin.

It might not sound like a big deal, but in terms of positive, society-changing technologies: Bitcoin is on the same level as the Internet, though still in its larval form. Bitcoin in the early 2010s is as The Internet was in the early 1980s: usable only to a small group of hard-core geeks but screaming its potential to those willing to listen.

In the 1980s normal people still didn't use the Internet, but they might see a news story or two on it and get interested. The same is now happing with Bitcoin: normal people -- like my father -- are learing about it for the first time.

So, where did my father hear about Bitcoin? From this article in Forbes making the rounds which links Bitcoin with The Silk Road, a website that sells drugs.

First impressions matter and Bitcoin ≈ Crime is a damning introduction and something almost every mainstream article does.

Why?

Imagine you're a tech journalist. If you're good at your job, you've heard about Bitcoin and might want to write an article about it. But Bitcoin is a challenge to explain even to an Internet-savvy audience and near-impossible to explain to a general audience. Therefore, if you can't discuss the technicalities, you're going to need a different angle. Luckily there's a website that sells drugs using Bitcoin which is good news for you: everyone understands drugs and crime, scary stories get more traffic and your deadline is a few days away.

Here's two quotes from the article to give you the flavor:

Bitcoin-funded services deep within the dark Web, masked by anonymity tools… claim to offer everything from cyberattacks to weapons and explosives to stolen credit cards.

and

It's a rule as timeless as black markets: Where illegal money goes, violence follows. In a digital market that violence is virtual, but it’s as financially real as torching your competitor’s warehouse.

Now no ill will toward Andy Greenburg, the author of this particular piece -- he's a guy doing his job. But my concern is that articles like these are most normal peoples' introduction to Bitcoin and, given quotes like that, they're going to come away with negative thoughts about the new currency that can change their lives for the better.
Money & Power

There are two big forces that will oppose Bitcoin: governments and financial corporations. Governments stand to lose political power from competing currencies and financial corporations stand to lose money from decreasing transaction fees.

When government interests and financial interests align, there is a difficult fight ahead.

If a government like the United States says: 'Bitcoin is used for selling drugs (and maybe for funding terrorism)' and if the only thing normal people know about Bitcoin is from articles like the one in Forbes: then it's game over for digital currencies. Possibly for a decade or more.

Again, Bitcoin -- or something like it -- will ultimately triumph. Bitcoin has proved that the technology works and governments & corporations can't fight technological progress forever. But delays in technological progress hurt everyone.
A Man, A Plan

Were I in charge of marketing for Bitcoin my action plan would look something like this:
1. Ask The Silk Road to Shut Up

I would ask the operators of sites like The Silk Road to not give interviews about Bitcoin. Quotes such as this only antagonize the government:

[The Silk Road's owner] isn’t shy about naming... the cryptographic digital currency known as Bitcoin. “We’ve won the State’s War on Drugs because of Bitcoin,” he writes.

While exposure in sites like Forbes (possibly) brings with it an uptick in sales, in the long term it's damaging to the very currency they're using for business.
2. Ignore 'Normal' People

Normal people don't care and won't care about Bitcoin until it's as mainstream as Amazon gift cards. Positive news stories would be nice but, as explained above, journalists don't have incentives to run them.

Any PR effort spent on converting normal people at this stage of Bitcoin's development would be wasted: the goal should be to keep Bitcoin out of the news. Leave peoples' minds a black slate on the new currency and focus on point #3
3. Target Small Business Owners

The only counter to a make-Bitcoin-illegal campaign is having a bunch of pro-Bitcoin votes. Given the (understandable) apathy of normal people, the focus must be on people who would directly benefit from using Bitcoin: small business owners.

Small business owners can benefit financially because Bitcoin allows them to accept payment over the Internet while avoiding transaction fees which can rage from 5% to 30%. What small business owner wouldn't want that kind of boost in margins?

In addition, Bitcoin also offers something else of value to small business owners: control.

Without warning, companies that process transactions can freeze your account. Indefinitely. (PayPal is notorious for this). Waking up to discover that you can't access any of your business funds is a bad day. (I'm speaking from experience here, being currently involved in a project with a month-long delay in transaction processing.)

The final pitch to small business owners is that Bitcoin users love the currency and are looking for places to spend it. This gives businesses that move first an advantage in finding new customers and this is good for the currency as a whole. Think hotel WiFi a decade ago: geeks first used it to differentiate hotels but as The Internet expaned and become more useful eventually normal people expected WiFi as standard.

If small business owners see Bitcoin affect their bottom line they will rally the normal people in their lives, their friends, their family to vote to support it.

The goal is make the first time someone hears about Bitcoin be from a family member saying how they've earned more money from their business or a store offering a 10% discount if they pay with Bitcoin.
Conclusion

The constant association with Bitcoin and drugs in the mainstream press is a real problem. Not because Bitcoin -- or something like it -- won't eventually succeed: it will. But rather because it takes a lot of effort to reverse a poor first impression and gives an edge to already powerful entities to delay Bitcoin's widespread use. A decade without truly digital currency is a decade without its benefits.

If you want Bitcoin to succeed: stop talking to the press and go forth to find small business owners who will benefit from using it.


Last edited by anti-prophet on Thu Aug 22, 2013 5:21 pm; edited 1 time in total
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Feiticeira



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PostPosted: Thu Aug 22, 2013 5:11 pm    Post subject: Reply with quote

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Dogen



Joined: 10 Jul 2006
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PostPosted: Thu Aug 22, 2013 6:39 pm    Post subject: Reply with quote

I would think small business owners would want a currency that was stable, secure, and easily turned around. It does them no good to have a stash of Bitcoins they can't use to buy products from vendors without first converting to actual currency. Since converting currency has a cost (you get less when you sell a BTC in USD than it costs to buy one - currently about 5% difference from what I can find), it's not exactly free of cost, and currently requires a lot more time than just using USD (which obviously take no time to convert).

So what's the benefit?
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anti-prophet



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PostPosted: Thu Aug 22, 2013 6:49 pm    Post subject: Reply with quote

The point was not so much in the now but future. The benefit will be for online transactions not having to be processed through credit card companies as they take between 5% and 30% from each transaction depending on the credit card company and the contract set up by the business.
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Arc Tempest



Joined: 28 Jan 2007
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PostPosted: Thu Aug 22, 2013 11:19 pm    Post subject: Reply with quote

Except, that future will never occur with bitcoin.

You know what your various credit card companies are going to charge and you can plan your bottom line around it. You never know when the bitcoin market is going to completely tank or how much it will cost you when it does. That type of risk is simply never going to be acceptable to most business owners.

Also: who the hell takes thirty percent? Back when I worked retail no one would take AMEX because they charged seven.
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Monkey Mcdermott



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PostPosted: Fri Aug 23, 2013 12:03 am    Post subject: Reply with quote

anti-prophet wrote:
The point was not so much in the now but future. The benefit will be for online transactions not having to be processed through credit card companies as they take between 5% and 30% from each transaction depending on the credit card company and the contract set up by the business.


The future of currency will not be decided by criminals and anti-government cranks.
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