Yes of course businesses built around the Bitcoin protocol will melt down occasionally, as many businesses do within the course of operation -- but don't you see how your attempt to conflate Bitcoin businesses (Exchanges, specifically) with a discussion about the new model of trust employed by the p2p network is probably a bit deceptive?
Yes, Bitcoin is scarce and therefore commands a market price. Commanding a market price has some qualities that suck. One of them is that you have to deposit assets in a market to keep an order book to discover a price. This is fallible. But it has nothing to do with how we (the human race) have discovered a way to create a scarce and transferrable peer to peer asset over the internet. Perhaps you should stop and consider how you can personally deconstruct some of the negative bias you have against Bitcoin in your public discussions of such.
Much love.
[Edited for grammer]
You don't _have_ to trust a counterparty with your money for price discovery. Take Counterparty for example: a P2P derivatives and stock market using Bitcoin as the transport layer [ǂ]. It enables trustless betting on anything from asset prices, to weather events, to Superbowl results [ɵ]. Two companies have already issued publicly tradeable shares [ɸ].
Data feeds are a public, competitive market:
Order: give 55.0 XCP for 0.5 BTC in 11 blocks, with a provided fee of 0.0001 BTC and a required fee of 0.005 BTC (bcf02fb66565d984a136fc55e1085f5cc782e8630dcfdbe9bbddb3312beb8f2c) [valid]
Broadcast: ‘Block Hash (0000000000000…cdbe902b4698e) Even/Odd’ = 2.0 from 15cdAQmmBrz1BEVtipaQ1dVHtTwmfcxzw5 at 2014-02-20T20:00:03-08:00 with a fee of 0.1% (7bd292f02c41740150b2ed2e7cf739566c900092e892e4a3a5d7dd142c00df8b) [valid]
Broadcast: ‘CoinDesk BPI USD’ = 555.26 from 1CeQHd59TFKWQzsWYDXc9NDX2ooMSRpiqi at 2014-02-20T22:00:03-08:00 with a fee of 0.1% (65c7162d69664008e4e0fe3be9122fb02c3e98901cd975d6d179e85a945fd916) [valid]
[ɵ]: http://blockscan.com/tx.aspx?q=3155
I noted your argument, along with many others on the GP's sub-thread which make this very distinction between Bitcoin as a concept and Bitcoin as an actual thing. In so doing, you suggest that failure to make the distinction is misleading and you align yourselves with the idealistic praise heaped on by the original article.
But, I would agree with patio11's insinuation: i.e. that the real fallacy is in this praise. It's misleading, because at some point, the protocol must be implemented in the real world, consisting of exchanges, wallet services, payment services, etc. These are all points where bad actors can attach. To say, "well, that's not the Bitcoin protocol" is to point out a meaningless distinction. When you find a way around these implementation limitations, then it matters.
TL;DR: as implemented, Bitcoin in practice solves exactly none of the problems espoused by the article. We need look no further than real-world events to see this.
This is a neat trick, in that it defines Bitcoin's
security model such that all of the successful attacks
are out of scope.
Meanwhile, the central actors (which Bitcoin doesn't
have) who have received the trust (that Bitcoin doesn't
require) ran into a smidgen of trouble running the
bank (that Bitcoin makes obsolete) and now their
depositors (that Bitcoin doesn't acknowledge) are
praying that the government (that Bitcoin undermines)
will hit them with the legal process (that Bitcoin
structurally avoids).They seem to be a single identity to you, and the differences appear to become lost. The misunderstandings and errors of logic in your argument come from treating two distinct concepts as if they were one. For instance, the term "security model" has a distinct meaning when used in the context of a distributed computing system, but that doesn't seem to matter to you.
This is a good description of patio11's Bitcoin arguments. He ignores the problems Bitcoin does solve and focuses on the aspects of the community that are broken and still need work.
Gates called Bitcoin a techno tour de force. It has potential and solves some real problems, but it has a long road before becoming anything like a usable currency. Patrick tweeted about HN comments of this sort last week and it sums up exactly how I feel about his Bitcoin comments: https://twitter.com/patio11/status/435315147427430400
Mtgox is not a centralized bank in the Bitcoin economy, has steadily been deprecated due to its ongoing problems, and long ago lost even a bare majority of Bitcoin/fiat turnover as people moved away from it (just as a distributed currency lets them easily do). Its problems are now between it and the customers who decided to bet on it in trying to take advantage of the famous Mtgox risk premium.
Bitcoin: working as designed.
Decentralized exchanges are in the works that should prevent similar situations in the future.
Mt. Gox has been a poorly run company as long as it has existed; it didn't help that its custom bitcoin wallet implementation didn't take transaction malleability into account, even though it's been known about since 2011: https://bitcoinfoundation.org/blog/?p=418
Remember that Mt. Gox has about 20% (down from 80% back in the day) of Bitcoin's trade volume; the other major exchanges properly addressed malleability and didn't have the same problems.
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Those are two very strange statements to put beside each other, Patrick. It makes it seem as if you genuinely believe that processing digital payments is something that should cost society a significant amount of money.
I'm still flummoxed that people keep thinking I'm part of the Global Banking Conspiracy rather than, say, a geek who makes a living on the Internet who came to his own conclusion.
You know as well as any of us that criticism of your Bitcoin tirades (in general and in this thread) does not come from people who think this.