Bitcoin drops 7 per cent on New York Attorney General's allegations of $850m fraud by Bitfinex The price of Bitcoin has dropped seven per cent after New York's Attorney General accused leading exchange Bitfinex of trying to hide $850m in missing funds. The accusation came in a legal filing [PDF] on Thursday that claims Bitfinex raided the reserves of Tether - a digital currency that is kept at parity with the US dollar …
How does it compare to fiat as a store of value since inception in 2009? I would proffer rather well. If you can't stomach volatility or don't understand the basics of hedging then it's probably not for you but given that the average fiat currency lifespan is 30 years and fiat is constantly depreciating in value I would think it's foolish not to hold a little as part of a balanced portfolio.
BTW - what is a "measure of value"?
I would say very badly, given that a massive increase in value is actually worse for something that serves as money than a small fall in value.
Imagine if you had signed a rental contract in bitcoin 10 years ago. Several bitcoin per month would have seemed like a pretty reasonable sum of money back then, bit it would have bankrupted you by now.
You mentioned 'money', I mentioned Store of Value, it has outperformed 99% of assets as a SOV during the last 10 years. There is no downside to putting a fraction of your wealth in BTC. People will learn, it takes time but they will.
https://www.newsbtc.com/2019/05/31/only-3-months-exist-where-buying-bitcoin-resulted-in-losses/
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"Actually that's cobblers, the Government is the one to fear because they can make and break the rules."
Which rules are being broken by the Government (which I assume is capitalized here like 'The Man')? Bitcoins are being seized left, right and centre because they are being involved in money laundering and fraud left, right and centre. When an exchange loses all its money, it's because either:
1) they committed fraud and legged it with the cash;
2) someone else committed fraud and legged it with the cash;
3) everyone has been committing fraud and now one country's authorities have seized the cash.
Since 2012 it has been my opinion that only wildly impetuous people set up bitcoin exchanges.
It was highly amusing to read about for years, I lost interest a while back.
I recall Amir using his personal bank account to operate Britcoin. The days when mtgox frequently fell over quite often, if Karpeles was asleep people on the bitcoin IRC channel would call his mobile phone until he woke up. He appeared to do no testing of changes to his software before making it live.
I recall the Polish exchange that disappeared one day, the young men running it tried to increase the RAM on the single virtual server it ran on and accidentally reinstalled it. They had no backup and the private keys for about a hundred thousand BTC were lost. They went silent for a couple of weeks, when they reappeared they claimed they had got drunk for a few days when they lost hope of recovering the bitcoin.
Several hacks of bitcoinica, culminating in the time the source code was deliberately released but contained an important password which was rapidly used to steal the bitcoin.
Nefario setting up his own stock market and being genuinely surprised when he got some legal advice and was told that there are lots of regulations that he should have been following.
There was the exchange that thought they were super secure because only a few laptops could access the servers. The laptops had windows, microsoft office and skype installed. A staff member accepted a document from a phisher on skype and ran it with macros enabled, bye bye bitcoin.
The risks, difficulties and regulatory uncertainty mean that only wildly impetuous people set up bitcoin exchanges resulting in bitcoin exchanges being run by impetuous people who commit terrible blunders and try to keep going.
If you want to store some bitcoin and conclude that keeping it in an exchange account or wallet run by someone else is a terrible idea then running bitcoin software yourself seems like quite a hassle. You need to figure out which version of the software to use if there is currently a battle between different factions over block size or something then download, verify (days of 100% cpu) and store 200GB of blockchain. If you want to receive some BTC and you have not run your software for a while then you may have to wait hours for it to get recent blocks.
A couple more bitcoin exchange anecdotes.
1)There are several bitcoin exchange services in the UK that operate their own ATM's so you can swap banknotes for bitcoin. The founder of one of the UK bitcoin ATM companies previously got five years in prison for torturing people during violent robberies.
2)Back in 2011 the Tradehill exchange was using a payment processor called Dwolla.The big problem of operating a bitcoin exchange is fraudulent money transfers. Fraudsters do thing such as list a sports car on craigslist for $2000, a daft buyer is told "do a bank transfer to this account using this reference number", the account is a bitcoin exchange. The fraudster attempts to get cryptocurrency out of the exchange before the banks try to reverse the transfer.
Dwolla was a fairly new company, they promised no chargebacks. They discovered that processing payments for bitcoin results in a significant amount of fraud. They didn't tell tradehill and just manually deducted money. Tradehill didn't notice until they had a high six figure amount of money unavailable. Tradehill closed down not long after. I don't know what the outcome of the lawsuit was.
> 1)There are several bitcoin exchange services in the UK that operate their own ATM's so you can swap banknotes for bitcoin.
One of the UK bitcoin exchanges was looking for a good place to put an ATM, emailing the London Hackspace to enquire.
Sounded like a good idea. One member was (unfortunately?) nice enough to clarify back along the lines of "Are you sure placing a bitcoin ATM in a hackspace with 24 hour access, spotty camera coverage, and hand portable plasma cutters downstairs is a good idea?".
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Surely virtual currencies are, in the large, used by the kind of people who don't want publicity, especially in court cases (yes, I'm suggesting organised crime and money laundering) so if one set of crooks steals from another set, let them sort it out among themselves the good old fashioned way.
"That's like saying "debt is an asset"."
Debt is an asset. Not all assets are cash, in fact almost all are not. Some are, for example, antiques, art, houses, bonds, shares, currency, patents, and debt. Each of these is worth a figure on paper, which might not be correct when you realize that asset. For cash, that is true if it is not in the currency that you want to realize it. Debt can be sold, but at some discounted rate from face value. If you have booked it in your accounts correctly, you should get more or less what you have written down.
But $100m debt is not worth $100m in most situations, because of risk. Just the same as $100m of Richter paintings aren't worth $100m, because if you need to sell them it would generally crash the market in Richters.
"But $100m debt is not worth $100m in most situations, because of risk. Just the same as $100m of Richter paintings aren't worth $100m, because if you need to sell them it would generally crash the market in Richters."
I should correct myself here. They are not 'Just the same'. The second is risky because the art market is too shallow to accept that amount of extra artwork, so the price drops markedly to clear it. Probably not as far as you would think, because once it gets down a reasonable amount you will get new entrants who think they can smell a bargain.
On the other hand, the first case is straight-up default risk. Bonds and debt are essentially the same thing. They pay out and there's a risk of default. Shares are similar but not exactly the same, because they often pay out dividends but there is a risk of losing your capital.
"But $100m debt is not worth $100m in most situations, because of risk."
It most cases it's possible to hedge or insure that risk with a third party effectively significantly reducing that risk.
I'm not aware of any method of offloading bit coin risk in this way.
"I'm not aware of any method of offloading bit coin risk in this way."
That's an interesting point, but perhaps more a sign of the fact the Bitcoin is immature and ill-regulated than anything intrinsic to the notion of a digital currency in general. If Bitcoin is a currency then you should be able to hedge against it falling in value. Some banks were starting to dip their toes into the water, but then there was a massive collapse, and I don't think we will see it again soon.
Money Transfer is so easy using virtual currency. If you live in some backwater part of the world (Like the USA), it can take weeks or months if your unlucky for money to be transferred from A to B. I sent ~5k to the USA last year and it took a few hours to reach the USA, then about two weeks to reach the final bank, plus I had to pay transaction fee's on every bank it passed through with an additional wait on the funds being held so they could make sure it wasn't claimed back.
TransferWise can do it in about three days, a physical check will be anywhere from a week to a month plus fees.
I once had a bank freeze my account when I deposited a check drawn from the Federal Reserve. They waited about 4 weeks to make sure it was clear and valid, I also had to pay "special" fee's as they don't deal with the fed lol...
There's also a LOT of fee's attached across the world to people who have little in their accounts. So while large laundering probably is taking place with virtual currency, there's also the great view that people who cant afford much can get around these fees. Laundering and Avoidance takes place now so this mechanism really shouldn't be looked at as something that's by and for that only. I don't think that this type of currency will ever take off (I view most as a large Ponzi scheme).
Ditto across Thailand, from and to different banks.
It takes no time (by the time I receive an SMS informing me that the money has left my account, the other account has been credited; and I receive the SMS before I have removed my card from he ATM machine).
But there are fees:
- 10 baht if the transfer goes across different provinces
- 15 baht if the transfer goes across different banks
I sent ~5k to the USA last year and it took a few hours to reach the USA, then about two weeks to reach the final bank, plus I had to pay transaction fee's on every bank it passed through with an additional wait on the funds being held so they could make sure it wasn't claimed back.
I don't know what the hell you did, but I used to do international money transfers into and out of the US on occasion, and they never took more than a couple of days at worst. For that matter, the last time I sold stock on the LSE and had the funds deposited into one of my US bank accounts - about 18 months ago - I believe the entire set of transactions, from when I spoke with the broker to confirm the sale to when the funds were available to me, took less than 24 hours.
Yeah, because it always pays off to insult the Attorney General. Looks like they handle lawsuits just about as well as they handle their responsibilities : badly.
In any case, this is just one more in a long list of either incompetent or criminal bastards. I have long been convinced that all virtual currencies are just a front for criminals, and to date I have nothing to prove me the contrary.
Persons with a certain level of IT knowledge would be fascinated by the elegant solution to the Byzatine General's Problem, the protocols for reaching consensus in a decentralised distributed system, and the game theoretic balance of incentives to miners to support the security of the network over self-interest. Usually these are the type of people that search beyond the headlines and soundbites and have a genuine intellectual curiosity.
There are 10s of thousands of experienced IT professionals in the cyrpto space now. It's easy to draw malformed opinions if one reads articles in the mass media. There is a wealth of accurate information and resources available to those who seek,
If we look at say GBP which is based upon the GDP of the UK( with the BREXIT situation adding a unknownable factor), do the US require the UK to hold reserves in the same manner and how are these reserves more solid that bitcoins?
The reality is that all money is just a shared dream, when they say it is backed by X then X is always going to be worth less if anyone actually insisted on pay out, how is Bitcoin any different?
I am not saying that Bitcoin's management are any better than say UK banks (given their recent failures), so again is there some real difference between bitcoin and the "offical" currencies.
The US has been making efforts to discredit cryptocurrencies for years and sneering because all they have to pay with is credit in the event that "confidence" in their currancy is reduced is a definate kettle/pot situation
I am not saying that Bitcoin's management are any better than say UK banksThere is no such thing as "bitcoin management". It's the wild west and everyone's out to put one over on everyone else. There are two kinds of people in kleptocurrency: scammers, and marks who think they're the scammers.
The US has been making efforts to discredit cryptocurrencies for yearsThey've been doing no such thing, and it would be completely unnecessary anyway given the conduct within the industry itself (if you could call it that).
Very simply - yes, all other currencies and businesses are held to the same accounting rules.
If a company has debts (which is very literally what this was, people "had" bitcoins owed to them by the exchange), and there is no realistic way the company can pay those debts, the company is insolvent. If that company then raids a different source of money (in this case a ring fenced currency, but a similar example would be companies raiding the pension pot) that they don't have the right to do so, they have committed fraud. There are many examples of this happening with other companies, and it is treated entirely the same way.
Is it the same with national currencies? Yes, if a bank did this with pounds, it would get the same treatment, just faster because there is more transparency.
Most currency transactions are not guaranteed at a specific rate (other than where you might buy it at a kiosk or something). Large bank transactions are purchased and sold instantly so there's no "stocking" of one currency or another "generally". In terms of "deposits", if you live in the UK and have a USD bank account (HSBC are a top pick for multiple currency accounts) then they are required to hold reserves in the UK based on the UK£ amount. So my "Guess" would be that they hold enough to cover any swings in currency value.
Like a language, it has an Army (Navy/Air Force/Marines) behind it as well as some taxing authority.
Of course Bitcoin has none of these, and is just a piece of paper (or bits somewhere). Of course one might trade Bitcoin for wonderful swap land in New Jersey (or Florida).
The good news is that the ransom for people "not telling" about taxes is a little cheaper now (if anyone is stupid to pay for it!).
"It really isn't a currency unless like a language, it has an Army (Navy/Air Force/Marines) behind it as well as some taxing authority."
I don't even know where to begin. Which marines are backing up Breton? And Costa Rica doesn't have any armed forces.
Bitcoin is a pile of obvious shit, but not for your reason.
Typical: Company A's funds are being seized or bank-accounts being frozen by shady Government B and then coincidentally Government C accuses company A of not allowing it's customers to withdraw funds!
From what I see the "Portuguese Government" are the thieves here. It wouldn't surprise me that this was instigated by Government C with the help of Government B to destroy the credibility (and the company itself) of A.
What have we learned (again)? NEVER TRUST POLITICIANS!
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