Comments on: Can bitcoin capitalize on the death of Mt Gox? http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Auros http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49358 Fri, 28 Feb 2014 21:16:11 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49358 I’ve come to believe that a cryptocurrency that is designed to include a central bank, in which the size of the “mining” transaction in each new block could be adjusted through broadcast software updates from the central bank, might actually have some viability. Under this system, the central bank would have control over the rate of money supply growth. You could also tweak things so that the mining transaction was required to make deposits to two wallets — one belonging to the mining collective, for distribution to their members who contribute computational power to help process transactions; and one to the wallet of the central bank itself, thus retaining some of the value of seigniorage. You’d probably want to have some kind of system for rotating through central bank wallets, so that you weren’t accumulating too much value in one place. Maybe the bank would broadcast a new wallet ID every week or so, and would empty out the old wallet on a regular basis.

I still think there could be problems with scaling the volume of transactions in a way that doesn’t risk frequent forks in the blockchain.

One way to process more transactions is to make it easier to find a valid block (put looser constraints on a valid hash). Go too far in this direction, and you’ll hit a point where the first valid block can’t spread to the full network fast enough to become entrenched before an alternative valid block is found. The system can cope with this if it doesn’t happen often, and doesn’t tend to result in subsequent blocks getting attached on both sides of the fork before the fork is resolved. Speed is the enemy of stability.

The other way would be to simply include more transactions in each block, but it seems like this could be a serious problem if you tried to scale existing bitcoin volumes up to the kind of volume that exists in dollars today — several orders of magnitude. It’s not clear to me what kind of pressure this would put on mining hardware.

There’s also the fact that if quantum computing ever solves the problem of testing many hashes at once, whoever owns the first computer that can do that will instantly be able to compromise the entire cryptocurrency system. But they would probably pose a non-trivial threat to existing networked banking systems too. :-P

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By: TFF17 http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49356 Fri, 28 Feb 2014 14:31:11 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49356 @blath, you haven’t thought through your comment carefully. What this (and the other thefts) illustrate is that Bitcoin is just as open to hacks/thefts as credit cards. The difference is that Bitcoin losses fall on the consumer, while credit card losses are carried by the merchants.

Those horribly expensive chip/PIN cards cost what? Fifty cents apiece to mint? Sure, it will require an upgrade of terminals and systems, but that ought to happen on a five year cycle regardless.

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By: matthewslyman http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49355 Fri, 28 Feb 2014 08:53:42 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49355 …Whether or not MtGox undermines the thesis of BitCoin, it certainly undermines the thesis of “Too Big to Fail!”

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By: matthewslyman http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49354 Fri, 28 Feb 2014 08:09:16 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49354 Check out the cynicism toward BitCoin being expressed on this technology news site:
http://arstechnica.com/business/2014/02/ leaked-just-before-bitcoin-catastrophe-m tgox-dreamed-of-riches/?comments=1

It’s a fad. Don’t let the hype carry you away into the vain believe that it’s all different this time…

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By: blath http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49352 Fri, 28 Feb 2014 06:27:16 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49352 Funny how Felix Salmon has become a lot less dismissive of Bitcoin in the last few months. It used to be a ponzi scheme, a bubble that would soon burst and leave every investor feeling like fools. It was something to ridicule with his on-air talk show hosts like Warren Olney. Maybe its because his peers on Wall Street who are a thousand times richer than him are promoting it. Maybe he has seen how credit card payments are becoming more expensive with the all the hacking and the push to burden merchants with expensive upgrades to chip/pin cards and terminals when Bitcoin payments are ten times cheaper to the merchant. Maybe he has had a sudden empathy for poor Mexicans who the banks do not want to deal with who pay 5% to Western Union to send money home when they could do it free with Bitcoin. Maybe he seen Bitcoin ATMs and the Bitcoin payment logo a little too may times and has said to himself– “I’d better get on the right side of this issue and I’ll do it gradually so no one will notice.”

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By: blath http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49353 Fri, 28 Feb 2014 06:27:16 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49353 Funny how Felix Salmon has become a lot less dismissive of Bitcoin in the last few months. It used to be a ponzi scheme, a bubble that would soon burst and leave every investor feeling like fools. It was something to ridicule with his on-air talk show hosts like Warren Olney. Maybe its because his peers on Wall Street who are a thousand times richer than him are promoting it. Maybe he has seen how credit card payments are becoming more expensive with the all the hacking and the push to burden merchants with expensive upgrades to chip/pin cards and terminals when Bitcoin payments are ten times cheaper to the merchant. Maybe he has had a sudden empathy for poor Mexicans who the banks do not want to deal with who pay 5% to Western Union to send money home when they could do it free with Bitcoin. Maybe he seen Bitcoin ATMs and the Bitcoin payment logo a little too may times and has said to himself– “I’d better get on the right side of this issue and I’ll do it gradually so no one will notice.”

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By: markhahn http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49351 Thu, 27 Feb 2014 23:13:10 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49351 mfw13 is fortunately quite wrong in how btc works. you can’t freeze a btc account (address, really, a PK pair). what mtgox did was freeze custodial accounts – btc or fiat that customers had transfered to mtgox’s ownership for the purpose of trading. the fact that mtgox lost the money really has nothing to do with the rest of the btc world.

btc doesn’t require the use of custodial accounts – it exists pretty much for the purpose of eliminating the need for that kind of trust.

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By: UScitizentoo http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49349 Thu, 27 Feb 2014 04:19:59 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49349 There are a LOT of coins on the market. The Cryptocoin market is about 10 billion dollars today. It’s going to get a LOT bigger, put that in your pipe and smoke it.

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By: Twinkbait http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49348 Thu, 27 Feb 2014 03:41:10 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49348 Thanks Felix-

The situation is clearly fascinating as it’s unfolding and at the time I write this missive, is still in flux as MtGox folks have posted an update I just saw that kinda implies, “I’ll be back [read w/an Ahrnold accent for the full effect]” That’s hard to believe at the moment, unless they can recoup/recover the funds they lost on their watch. We…shall see.

On another note relating to investing in general; if you want what’s secure, buy T-bills and accept a meager if any return vs. inflation. If you want to make some serious cash with your investments, you WILL…embrace risk, lose some cash and hopefully gain way more than cover those losses with a few potential hits like Bitcoin represents, and has done for many others.

Caveat emptor; GiddyUP!

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By: mfw13 http://blogs.reuters.com/felix-salmon/2014/02/26/can-bitcoin-capitalize-on-the-death-of-mt-gox/comment-page-1/#comment-49346 Thu, 27 Feb 2014 02:10:55 +0000 https://blogs.reuters.com/felix-salmon/?p=23185#comment-49346 For anything to become a viable currency it has to meet three basic tests:

1) It has to be liquid.
2) It has to be somewhat stable in terms of day-to-day value.
3) It has to be widely accepted.

Bitcoin meets none of these three tests.

Any with the collapse of Mt. Gox due to theft, its going to be even more difficult now to convince people to accept as currency something that is illiquid (since accounts can be frozen), easy to steal, and not subject to regulation.

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