Defending Bitcoin, Andreessen Says Mt. Gox Is 'Like MF Global' | Hacker News Reader

Defending Bitcoin, Andreessen Says Mt. Gox Is 'Like MF Global'

dealbook.nytimes.com

42 pointsrajbala78 comments

it's not much like MF global when you think about it, other than a financial institution failing.

MF global collapsed due to risky behavior by management team. left a lot of assets, and operates in a regulated sphere where principals are known and subject to courts. the scandal of MF global was that the former governor of new jersey, and goldman sachs bigwig, was so arrogant that he though he could prop trade with customer funds...and lost.

Gox collapsed due to incompetent security procedures, if i understand the story correctly. a bank robbery of a sort. outside of the jurisdiction of many of the victims.

we now know that something around 6-7% of the total bitcoins in circulation are now owned through theft. that's a staggering amount. in any normal currency - the heist of a millennium. there's no court system to adjudicate this or try and recover assets for those who lost money.

we know who is responsible for MF global and we know where to go to recover assets. John Corzine might be politically connected, and the folks who lost money might have a hard time overcoming "the system" to get funds, but they know where to go.

And - quick google search - there was $1.5bn in missing funds, which apparently will be recovered: http://dealbook.nytimes.com/2013/11/05/mf-global-customers-w...

With Gox? Tough luck I guess. (I lost a token sum, FWIW).

It's enough to make you wonder - if digital currencies are now well understood, flaws analyzed and hacked... and we are starting to know enough to say - digital currency is awesome...

Maybe we should start over with another alt-coin. i'm not particularly thrilled about putting real money or time behind a coin which now has a large chunk of it owned through theft.

You're talking as if it's possible for "we" to make a decision to start over; it isn't, the very nature of distributed means any talk of what should be is pointless. There is only what happens, no one is in charge. Bitcoin has the first mover advantage and has gained the network effect, it's extremely unlikely to be replaced by an alt no matter how good the alt is.

The capacity of Bitcoin is capped.

Care to elaborate? That's not really enough to continue a discussion.

My thinking on this issue continues to evolve, but roughly: The number of Bitcoins is capped. For it to have any semblance of price stability, the amount of users would be roughly fixed. Without price stability, the number of users would decline. So either an equilibrium amount of users, or constantly rising until scarcity makes the price unstable, at which point people stop using it until the point at which it becomes stable again.

It doesn't have to be a successful currency to be a successful distributed peer to peer payment network that extracts it's value from eliminating the likes of Western Union for international payment processing. Bitcoin is better seen IMHO as a utility rather than a currency. It can function along side official currency as a means of exchanging wealth online globally for relatively little in fees with the risk or trust required by credit cards. As a commodity, it's infinitely divisible to any number of people, so while it's value with always slowly deflate, it doesn't really matter.

> it's infinitely divisible to any number of people, so while it's value with always slowly deflate, it doesn't really matter.

The problems with deflation have nothing to do with lack of divisibility.

I'm well aware of that, deflation is a bad thing for a currency; I agree. I just said Bitcoin makes a bad currency, but it's an excellent commodity and service. Gold is a terrible currency as well, that doesn't remove its value.

Bitcoin partisans seem to have an overly categorical approach to the concept of first-mover advantage and network effects. These effects are real, but it's a matter of degree.

Creating a viable new credit card for instance, would require dozens of billions of up front dollars invested in marketing, incentives, and infrastructure rollout. It would still be a risky bet that customers would see a need. These are network effects and first mover advantages in extremis.

Creating a viable crypto-currency only requires a funny picture of a dog, and/or a good story. For all the hype, the spread of bitcoin into the real world economy is a rounding error. For the 99.999% of the world population that has never held any crypto-currency, who's to say that any of them should prefer bitcoin over any other? If the benefits of bitcoin are every bit as disruptive as supporters claim, then what makes bitcoin immune from the disruptive effects of new improved crypto-currencies, or for that matter innovations in nation-state-backed currencies?

What makes anyone think that 99.999% of the world's population will hand over a portion of their wealth to 100,000 cool nerds, because those cool nerds decided for everyone else that bitcoin was their one and only?

> What makes anyone think that 99.999% of the world's population will hand over a portion of their wealth to 100,000 cool nerds, because those cool nerds decided for everyone else that bitcoin was their one and only?

A fair question, because bitcoin has the network capacity to work securely and is less vulnerable to attack than all other coins by virtue of its sheer size. 51% attack on Bitcoin is much less likely than with any other coin. Payment processing requires using the best available network, Bitcoin wins.

I agree that's one of the strongest arguments in its favour. All the now useless ASIC devices out there also make any new coin that uses SHA-256 vulnerable to attack. It's likely that only one blockchain/coin per algorithm can ultimately succeed.

> It's likely that only one blockchain/coin per algorithm can ultimately succeed.

Exactly. The nerds win because they got there first. Doge loses because it's merely a worthless clone. Popularity with users does not make a secure coin, popularity with miners does.

Yeah, but popularity with miners doesn't make a coin desirable by people who are already pretty happy with cash.

Even if bitcoin takes over the world, the shines won't care. They choose on the moon.

Bitcoin is extremely likely to be replaced by design: it's a deflationary currency with a wicked value curve which makes pets.com look stable. In practice, this means that anyone who buys into Bitcoin now is giving huge amounts of money to the early adopters.

Speculators were buying in for the kind of returns you normally see on penny stocks and pre-IPO options rackets. That's not what anyone sane wants in a currency and it's a particularly tough sell when it's so easy to setup a competitor.

You're wrong, it's not easy, the value is not in the code, it's in the network, and no one has shown they can replicate the power of the bitcoin network. All alt coins combined are but a fraction of bitcoin.

Also, early investors always get rewarded disproportionately, that's compensation for taking the risk, it's not something wrong, it's something right; they should be rewarded for giving you a peer to peer distributed payment system that's better than western union and better than credit cards for online use.

> You're wrong, it's not easy, the value is not in the code, it's in the network

What is that network, though? It's a few stores which accept many forms of payment and a bunch of people who use a little bitcoin but not for anything vital. Every party involved can switch to a new system in minutes and these days it's very fast to bootstrap networks using mobile devices and existing social networks. The reason the alt coins haven't seen rapid uptake is that most of the speculation is happening in Bitcoin while everyone waits to see whether the concept will get significant mainstream acceptance

If Apple, Google, Facebook, Amazon, PayPal, etc. launched a payment system it'd have more users than Bitcoin on the day it launched. If someone like Square did it, they'd have more stores accepting payment by multiple orders of magnitude and far more credibility in the business community with a proven track record on things like support and fraud prevention.

> Also, early investors always get rewarded disproportionately, that's compensation for taking the risk

Again, you're talking about Bitcoin like it's a stock — which is exactly the problem, because people have different requirements for currencies than stocks. In particular, holding a stock waiting for the value to go up is fine for a company but disastrous for a currency.

> It's a few stores which accept many forms of payment and a bunch of people who use a little bitcoin but not for anything vital.

You clearly don't yet understand Bitcoin. No, the network is all the people mining Bitcoin with ASIC's that create the security necessary to prevent double spends.

Pretty much everything else you said is wrong.

> If Apple, Google, Facebook, Amazon, PayPal, etc. launched a payment system it'd have more users than Bitcoin on the day it launched.

Irrelevant, users don't create the security necessary to prevent doubles spends; miners do.

Quite simply, you need to study more, you don't understand distributed crypto-currency yet. You think it's easy to replace bitcoin with an alt coin, you have no idea what you're talking about.

> Pretty much everything else you said is wrong.

and yet you're unable to explain why, although you can repeat the same insult repeatedly in the hopes that repetition will make it true. Telling…

I didn't insult you anywhere and I did tell you why you were wrong; you have a misunderstanding of where the value comes from and you need to learn what makes a coin secure.

You went off on a pedantic tangent: from the perspective of anyone interested in using a payment system, the network they care about is the network of people who they can exchange things with. What you're talking about is like arguing that people use US currency because of the special paper used to print dollars – it's an important implementation detail but not something a normal user thinks much about.

Whether it's something like Bitcoin's distributed ledger, trusted third parties or a central record keeping system just isn't a detail the average user cares about as long as they can buy a cup of coffee when they want to. If something shiny comes along, the only questions will be “how much will it cost?” and “who accepts it?”

This brings up two areas where Bitcoin's system is a threat to its growth: the huge blockchain increasingly stymies mobile or poorly connected participants and the requirement that miners acknowledge transactions adds latency to the transaction time which will be a challenge for speed-oriented businesses.

> from the perspective of anyone interested in using a payment system, the network they care about is the network of people who they can exchange things with

No it isn't; the network they must care about is the network that actually works and allows them to securely exchange things.

> What you're talking about is like arguing that people use US currency because of the special paper used to print dollars

If you think that's like what I'm saying then you aren't listening to what I'm saying.

> Whether it's something like Bitcoin's distributed ledger, trusted third parties or a central record keeping system just isn't a detail the average user cares about as long as they can buy a cup of coffee when they want to.

Which they can't do unless the network is secure and double spends aren't possible. And we're not talking about a cup of coffee, we're talking about an Internet payment protocol for transferring wealth trustlessly online.

> This brings up two areas where Bitcoin's system is a threat to its growth: the huge blockchain increasingly stymies mobile or poorly connected participants

Red herring, you don't need to download the blockchain to use the currency.

> and the requirement that miners acknowledge transactions adds latency to the transaction time which will be a challenge for speed-oriented businesses

Bitcoin isn't built for speed-oriented businesses, it's built for Internet commerce. That it doesn't suit a domain it's not intended for really doesn't matter.

Visa has a better user story than bitcoin and they barely even bother to secure their network. Credit cards are easy to use and not all that bothersome when someone misuses them (this sounds dismissive; I do realize that it sucks to be the person on the receiving end of cc fraud, but in terms of fraud dollar / dollar spent they do pretty well).

Anyway, can a well secured bitcoin network keep up with a Visa that is paying attention and actually trying to compete on price?

Credit cards are not easy to use for users or for merchants; especially for merchants who have to conform to PCI requirements. They are extremely bothersome when fraud becomes an issue, require trust in the merchant and loss of personal information, charge-backs are very hard on merchants and they would much prefer not playing this game at all. Merchants accept cards because they have to, not because they want to, they despise the fees associated with them and the inherent fraud and risk of doing business with them.

So no, Visa doesn't have a better story than Bitcoin.

Credit cards are quite simply the wrong solution to online money, they pull instead of push and are rampant with fraud and risk. Bitcoin fixes all of that.

I hope it isn't controversial that Bitcoin still has the occasional issue with risk and fraud.

Anyway, let's resolve this in 5 or 10 years when hindsight lets one of us point and laugh, instead of arguing opinions in circles.

Bitcoin has different kinds of risk, i.e. the risk of having your coin stolen. That's a much better and easier to manage risk than the risk of having someone keep making charges to your card because of an inherently flawed pull based system. Or the risk of having to give every vendor you deal with your personal information and card number. The risk of trusting that those vendors have good security practices.

Leaks of personal information are only painful because the CC processors don't bother much with security. If they start paying attention, leaks will only get less painful.

With Bitcoin, you either have to trust a third party to supervise your transactions or have a really solid understanding of the protocol. And you have to be very security conscious to handle more than a few coins.

Anyway, like I said, time will tell.

> Leaks of personal information are only painful because the CC processors don't bother much with security.

False, leaks of personal information are possible because every single vendor is required to secure that information since they're the ones collecting it. This has nothing to do with card processors.

> With Bitcoin, you either have to trust a third party to supervise your transactions or have a really solid understanding of the protocol. And you have to be very security conscious to handle more than a few coins.

With dollars, you either have to trust a third party to supervise your transactions and store your wealth. And you have to be very security conscious to handle more than a few thousand dollars if you don't use a bank.

That last statement basically says nothing; with both you either use a third party to store your wealth or you secure it yourself. This is not interesting information.

I didn't say leaks of personal information were not possible or would become less possible, I asserted that the credit card system can be improved to be less sensitive to the leaks. This is obviously true.

You're right that dollars are still hard to manage, but I trust Amex a whole hell of a lot more than I trust Coinbase (and to be clear, that's the problem bitcoin has to solve, getting trust from normals). I realize there will be disagreement about such assessments.

> This is obviously true.

No it isn't because the leaks don't come from the credit card system; they come from vendors and it's not possible to make every vendor secure. PCI is an industry joke, everyone knows it; Target wasn't even compliant.

> but I trust Amex a whole hell of a lot more than I trust Coinbase

Yes, but you're ignoring the best option, trust no one, keep your own coins. The whole point of a peer to peer system is that you don't have to rely on a third party to keep your stuff.

> (and to be clear, that's the problem bitcoin has to solve, getting trust from normals). I realize there will be disagreement about such assessments.

I do disagree because normal's simply aren't necessary for bitcoin's success; it's already useful enough and used enough to be considered successful as a means of international payment and transfer of wealth. As a commodity, normals will be investing in it without even knowing it as soon as the ETF's hit Wall Street, so their explicit trust simply isn't required.

The reason leaks matter is because the credit card system uses magic numbers and later looks to see that everyone is okay with the transactions they list. They can move away from this to something with more built in security. That makes leaks matter less.

We disagree that managing a bitcoin wallet is a better option than traditional banking. That's fine.

edit: That last bit sounds smug now. I don't mean it that way, I mean I don't think we are going to get anywhere going back and forth over it.

I didn't think it smug.

> You're talking as if it's possible for "we" to make a decision to start over; it isn't, the very nature of distributed means any talk of what should be is pointless. There is only what happens, no one is in charge.

Even in the absence of authority, discussion of what should be can influence what people do, which then changes what happens. So while "there is only what happens, no one is in charge" is, in a sense, true, "talk of what shoul dbe is pointless" is not.

This presumes there's agreement on what "should" be, but there isn't and won't be. Talking about what Bitcoin should be is as useless and unproductive as talking about what political views you "should" have because people are going to be on every side of the issue; there simply is no "should", there's what is and what isn't.

> we now know that something around 6-7% of the total bitcoins in circulation are now owned through theft. that's a staggering amount. in any normal currency - the heist of a millennium. there's no court system to adjudicate this or try and recover assets for those who lost money.

You say that like it's a problem. Who cares if some people lose their Bitcoins? Nobody is holding Bitcoin involuntarily, after all. Not having a court system to adjudicate this or recover the assets is part of the point of Bitcoin! It's an experiment in anarcholibertarianism, and at least in theory, measures should arise organically in the Bitcoin community to prevent something like this from happening again. The stable price of Bitcoin suggests that the community is optimistic.

Though I have no interest in owning bitcoins, I agree with this. On with the experiment!

I don't see any particular reason why bitcoin thief could not be dealt with using existing legal systems. Yeah, you've got the "find the thief" problem, but that is nothing fundamentally new.

I mean, the US legal system seems to be handling the "bitcoin drugdealer" problem fairly well.

I see drug dealing using Bitcoin different than theft of Bitcoin. Silk Road involves using Bitcoin to subvert meat space laws. Stealing Bitcoin doesn't, any more than killing someone and taking their gold in an online game. In a narrow sense, the point of Bitcoin is that you don't need a centralized power issuing currency. But in a larger sense, the community embraces the idea that you don't need centralized power to make markets viable, in general. To validate those ideas, we should let Bitcoin evolve in a way where the government doesn't use its monopoly on violence to protect interests denominated in Bitcoin.

So you think it is right for people to steal Bitcoin because Libertarian-ism? So, it's okay with you if people take up the use of violence in retribution for Bitcoin theft? Part of the reason people willingly grant the gov't a monopoly on the use of violence is that the gov't will ostensibly attempt to use it to achieve order.

Stealing bitcoin does violate meatspace laws...

Also, I just realised there is an interesting parallel between IP/Copyright law, and Bitcoin ownership. I need to think on this some more.

Anyone wanting to use their stolen bitcoins will likely have to interact with people in meat space though. Be it going through an exchange which will necessarily need their information to get them their money, buying drugs, selling them locally, etc. I mean, how much of half a billion are these thieves going to spend on anonymous VPNs and tipping people on reddit? Sooner or later, somebody sitting on 500MM is going to start itching for a few kilos of coke or a new yacht.

And mixers? Anyone who's stolen 500MM worth of bitcoins probably won't trust mixers... I sure as hell wouldn't if it were me because if I were running a mixer and saw those coins, I'd steal them again myself. Why the hell not steal from a thief?

I figure there are two ways this will play out:

1) The thief does nothing with the coins and goes uncaught, having performed the theft only 'for the lulz'.

2) The thief begins using the coins, and eventually somebody somewhere catches up with him. Hopefully for the thief, the law catches him first.

I don't think decentralized issuing authority is important to whether or not the legal system can effectively prosecute thieves. The general anti-government attitude may preclude victim cooperation with law enforcement, but I think in this particular case there is too much money at stake to bet on all of the victims taking an ideological stance against using every tool at their disposal.

(Keep in mind that by no means all* of the MtGox victims are crypto-anarchists or anarcho-capitalists. There are plenty of regular hapless "investors" too, or just regular old technology enthusiasts who like playing around with new technology. There isn't really a shared bitcoin mentality or political stance, only perhaps a majority that share vaguely similar libertarian-bent ideas.)

Why wouldn't a mixer steal from a thief? To keep their credibility? To continue to get business? If you're gonna get a 3% cut to launder a lot of BTC, are you gonna just jack the entire first 100BTC order? Or let it pass and keep your 3BTC and hope for repeat business?
Of course you wouldn't send all the BTC at once through the mixer in one transaction.

That's why a mixer wouldn't steal from a small-fry thief. But a chance at 6% of all bitcoins? Every man has his price, and mine is far lower than that. I'd sooner take even a fraction of that then continue a 3% cut of day-to-day transactions.
To avoid the mixer stealing from him, the thief could split the stash and send it to many different mixers, but he would be taking the chance that the mixers are not actually run by the same person, and that the people running the mixers do not communicate with each other. If I went through the hassle to set up a mixer, I would be sure to do it several times over just in case this very thing ever happened to me.
What would I do with the tainted bitcoins after stealing them from the thief? Probably just sit on them. Sit on them on the off-chance that I ever became desperate enough to attempt to use them.

Where do you get "6% of all bitcoins"? Why would the thief send them all at once? If I was trying to launder a ton of money, the first thing I would do is not hand the entire sum to other parties.
So, bit by bit, the "thief" sends 100 BTC through a mixer. A mixer only has the opportunity to steal 100 BTC and lose reputation/opportunity at any given time. There's no way to get "6% of all bitcoins".
It doesn't matter if one person owns all mixers. The thief doesn't have to send all the money at once. Send 100BTC a day. Maybe on 4 different providers. Max exposure: 1200BTC (assuming 100 BTC on 4 mixers, 3 days per mixer). And in a year, 100K BTC is laundered.
(This is assuming mixers actually work, which I'm skeptical of, especially for large amounts.)

> Where do you get "6% of all bitcoins"?
Is that not what was stolen? I haven't been paying much attention to the details.

Yes supposedly that's the stolen amount. I'm asking how you go from that to a mixer getting access to the 6% in its entirety. One would need to be colossally impaired to take _all_ their earnings and put them anywhere at once. Personally I'd keep 90% or more in an offline wallet stored in many places. Then slowly launder a bit of it at a time...

> Silk Road involves using Bitcoin to subvert meat space laws. Stealing Bitcoin doesn't
Bitcoins are intangible personal property. Taking control of other people's intangible personal property without their consent, or through consent obtained fraudulently, does, in fact, violate laws on the books. Hence the SEC prosecution of Bitcoin Savings and Trust for operating a Ponzi scheme in which both the the investments and the fraudulently promised returns were bitcoins, not fiat currency.
The whole idea that Bitcoin is outside the scope of "meat space laws" is, despite its popularity, false.

I should clarify: I'm not saying that Bitcoin is, as a legal matter, outside the scope of meat space laws. I'm suggesting it would be an interesting sociological experiment for courts and law enforcement to treat Bitcoin as something that is not protectable property. So it would still be illegal to sell drugs for Bitcoin (just as it would be illegal to give them away), but it would be legal to engage in a Bitcoin-denominated Ponzi scheme. And Bitcoin-denominated contracts would be legally unenforceable for lack of consideration. It would be fascinating to then see if the market could develop responses to deal with bad actors.

Perhaps to even it out you could treat "sale" of drugs for bitcoins as merely one person 'gifting' drugs to another, since the payment would not actually be in something recognized as having value. You'd be left with nailing people for possession and perhaps distribution but not sale.
Honestly I think you've got it backwards though. Going after ponzi schemes and fraud is a much better use of resources than going after completely honest and on the level drug transactions^. Prioritize crimes with victims, not de-prioritize them.
^ Yeah, DPR was slime. Obviously he shouldn't receive immunity for hiring hit-men just because he also deals drugs. We don't arrest people for selling car insurance, but if an insurance salesman hires a hitman obviously that is still a crime that needs to be dealt with.

The usual charge for drug trafficking is "possession with intent to distribute" so it's irrelevant whether there is a sale or not. And I'm not arguing that prosecuting drug dealers is socially more valuable than prosecuting people running Ponzi schemes.[1] I'm saying the government should do it because it would make for a fascinating sociological experiment.
[1] The reason I draw the distinction is because society at large has decided it doesn't want drugs in their communities (whether you agree or disagree with this purpose is a different argument I don't want to get into), and has thus made it illegal to distribute them, and that shouldn't change because the transaction is denominated in Bitcoin. But people transacting in Bitcoin voluntarily can reasonably be put on notice that the government will not protect any property interest in Bitcoin and they will have to rely on the Bitcoin ecosystem for that.

> But people transacting in Bitcoin voluntarily can reasonably be put on notice that the government will not protect any property interest in Bitcoin
A property interest is a thing protected by government. If its not protected by government, it doesn't exist.

> I mean, the US legal system seems to be handling the "bitcoin drugdealer" problem fairly well.
The SEC is also prosecuting the "bitcoin ponzi scheme" problem, as well.

Whether or not they are unrecoverable has yet to be seen. The blockchain is public, if something can be identified as stolen, there may be a strong disincentive to accept bitcoins which have that mark. If all stolen mobile phones had giant signs attached saying "stolen", the market for those phones would be greatly reduced.
Bitcoin's anonymity and extra legal nature have been greatly exaggerated.

> Not having a court system to adjudicate this or recover the assets is part of the point of Bitcoin! It's
We have a court system to adjudicate this. Its the same court system that adjudicates everything else. Bitcoin has no magic anarchist fairy dust that makes it immune to the laws which govern other goods and services.

I'm not saying that courts couldn't adjudicate interests in Bitcoin, but that they shouldn't. Let's see if the anarchists are right: can viable markets exist without centralized power?

> I'm not saying that courts couldn't adjudicate interests in Bitcoin, but that they shouldn't.
The idea that courts should simply refuse to do what they are created (and paid) to do is, well, novel.
> Let's see if the anarchists are right: can viable markets exist without centralized power?
While some participants in Bitcoin markets may be "anarchists" who acted on the assumption that Bitcoin was outside of the law, its without doubt that at least some of them are not, and are people who participated with the expectation that they might avail themselves of the recourses in the law should the need arise. On what moral basis would you deny them their rights under the law, without consent or notice prior to the transactions from which the causes of action arise, to test this hypothesis?

I recognize this would be harsh to early adopters. C'est la vie. I still thing it would be an interesting experiment to let this play out unimpeded.

There's a vast difference between "it would be an interesting experiment" and "we should do it" in the social sciences. That difference is called ethics.

Yeah, because everyone who holds Bitcoin is an Anarchist, right?

I believe you mean that the courts shouldn't have to intervene. In theory, the market should create its own institutions to deal with these situations. But until then, the good old fashioned courts will do fine.

> In theory, the market should create its own institutions to deal with these situations.
Clearly, this is using "theory" in a sense other than the scientific one of a falsifiable model that has had some success in withstanding testing aimed at falsifying it.

Comments like this are why I wish "Shit HN Says" still existed on Twitter. Holy crap. The level of pie-eyed idealism is just astounding.
Yeah, it's a good thing this $400M theft just happened! It's a feature, not a bug! Now we can make Bitcoin better! Derp!

I think he may actually be coming from a "You guys made your bed, now lie in it" angle, though couched in the language of bitcoin evangelists to disguise the sarcasm.
I would sympathize with that, if not for the fact that buying into bitcoin does not require buying into ideologies.
Or he's sincere, in which case I disagree for the same reason.

That makes it sound punitive. I just think it would be a fascinating sociological experiment to let Bitcoin evolve in a way that would allow anarchist ideas about the viability of markets in the absence of centralized power to be empirically tested.

I apologize if I misread your intent, you just don't really seem like a "fuck it, let them have their fun" kind of guy.
Anyway, I don't think that declaring bitcoin to be out of touch by the law would be any better an idea than saying that Idaho should do their own anarchist experiment. In both cases you have people who either do not buy into the ideology getting caught in the crossfire (as well as people who buy into the general idea but do not believe that the prerequisite conditions have been met, or do not believe that the required complementary technologies exist yet.)
You would at least need to give those people an opportunity to get the hell out of Dodge^W Idaho. Even then though you would be unjustly displacing those people. Imagine if you purchased a house in Idaho, only for the federal government to declare Idaho to be a lawless land set aside for all the 'sovereign citizens' to experiment with. You would not be to pleased.

All the upvotes on this one rayiner. All the upvotes in the land. ;-)

> there's no court system to adjudicate this or try and recover assets for those who lost money.
Umm, why isn't there? Just because Bitcoin "isn't regulated" does not make it a free for all. Theft is theft.

If they can catch the perpetrators, then there is. However, btc can be laundered rather efficiently and all contact with the exchanges can be done through tor. Have fun bringing the perps to justice...

>However, btc can be laundered rather efficiently
Can they? I think that remains an open question, and is rather unlikely to be strictly true.
>and all contact with the exchanges can be done through tor.
That's a lot of money to spend, and a lot of people are looking for it.

Actually, it is regulated. People like Andreessen and his portfolio companies (Coinbase, Dwolla) just like to pretend that it isn't.

Img643, exactly correct. Except I take it one step further. An aspect of Bitcoin's fundamental design (transparent transaction records) was supposed to prevent _exactly_ the sort of thing that happened with Mt. Gox.
History shows that states create markets. And that markets require states. This is true because only states, organizations which have monopoly control over the legitimate use of force, can effectively provide police protection for transactions to be consistent, reliable and trustworthy. Bitcoin's transparent transaction record, designed to make states obsolete in this traditional role, was not enough to fix the problem. It became too tempting to subvert this design, because there's no one who will handcuff you if you try.
Consider, perhaps Mt. Gox _itself_ was the perpetrator of this theft. There's no way to prove me wrong!

Idle question - what % of gold (or USD for that matter) do you think is owned through theft? I suppose we quickly get into the murky question of trying to define "theft" but even by the strictest definition I wouldn't be surprised if 6% of gold and USD are held off books and a direct result of illegal activity.

What's the back of the envelope math on that 6-7% number? I'm super curious...

774,000 / 12,000,000 = 6.45%

I don't understand why Mt Gox isn't able to pursue the thieves. You can only withdraw funds if you have a verified account. For verified accounts they would have proven the users identity.
It must be possible to work out which accounts have withdrawn more money than deposited.
Obviously the people who did this would have covered their tracks. However that being said, there should be ways that they can account for which user accounts stole coins. Go from there.

>You can only withdraw funds if you have a verified account.
This wasn't always the case for small amounts.
On top of this, forged documents can be purchased on the black market.

Are there even thieves? I mean, the whole story makes zero sense.
Supposedly the root of this was multiple withdrawals over the period of months. How is it remotely possible that Gox didn't have a real-time, if not at worst case daily, comparison between their wallet holdings, as reflected in the blockchain, and their outstanding "deposits"? How could that possibly be?
I just cannot buy that story. Saying "they were incompetent" doesn't explain it. The multi-withdrawal thing only makes sense if it was a mass exploit in a short period of time.

> How is it remotely possible that Gox didn't have a real-time, if not at worst case daily, comparison between their wallet holdings, as reflected in the blockchain, and their outstanding "deposits"? How could that possibly be?
Not to defend Mt. Gox, but they weren't the only company to be cyber-robbed recently:
http://www.ibtimes.co.uk/silk-road-2-0-pledges-repay-1-7-mil...
Apparently, in virtual currency dealings it's possible to be robbed blind and not see it. Pun intended. :)

Andreessen: "Mt. Gox has been obviously broken and possibly outright crooked for months."

Reply on news.ycombinator.com