BitCoin

fwor

ExremelyCautiousSocialist wrote: »

Yes but the important part is bitcoin is BY FAR the most decentralized/distributed which are the most important things to worry about with a crypto currency.

Of all of the things that worry me about Bitcoin, the thing that worries me the most is the interface to the "real world": the exchanges, where the big opportunities for fraud lie (for example Mt Gok).

So... can any of the people in this thread who really understand Bitcoin explain: Who sets the rules that Bitcoin exchanges must abide by, who authorises the exchanges, and who vets them to ensure that they meet appropriate standards?

Rather than there being "nobody in charge", it seems reasonable to assume that this is the responsibility of somebody. If so, to whom is this "somebody" accountable?

masonic

fwor wrote: »

So... can any of the people in this thread who really understand Bitcoin explain: Who sets the rules that Bitcoin exchanges must abide by, who authorises the exchanges, and who vets them to ensure that they meet appropriate standards?

Rather than there being "nobody in charge", it seems reasonable to assume that this is the responsibility of somebody. If so, to whom is this "somebody" accountable?

It's an unregulated market, and like other unregulated financial services, it's caveat emptor. Nobody should have an expectation of recourse if things go wrong.

AnotherJoe

fwor wrote: »

Of all of the things that worry me about Bitcoin, the thing that worries me the most is the interface to the "real world": the exchanges, where the big opportunities for fraud lie (for example Mt Gok).

So... can any of the people in this thread who really understand Bitcoin explain: Who sets the rules that Bitcoin exchanges must abide by, who authorises the exchanges, and who vets them to ensure that they meet appropriate standards?

Rather than there being "nobody in charge", it seems reasonable to assume that this is the responsibility of somebody. If so, to whom is this "somebody" accountable?

The answers are no one, no one, no one, nobody and n/a.

fwor

Ok - so anyone wishing to exchange their Bitcoin into a "real world" currency that they can spend in the shop down the road has no reason to expect that the exchange that they deal with will act honestly?

Fair enough, but what about the previous question:

Who decides how much effort is required to mine a Bitcoin?

This is important because it must be set centrally, and it has a fundamental effect on the "value" of a coin. Make it too easy and anyone can mine hundreds of Bitcoin on their 37 year old ZX81 - so their value would drop. Make it too hard and everyone gives up, meaning no computing power to process transactions and the Bitcoin infrastructure stops working.

So... who sets this value, and according to what authority?

ExremelyCautiousSocialist

Exchanges and Bitcoin 2 very different things. Exchanges can do any number of crazy things. Best thing is to ask around what are the current most trusted, use them quick and get out. Spread the risk sending "small" amounts at a time. I've had great success with kraken, money within hours tons of times - does not mean crazy stuff cant happen in future and i think they've quit the £ to BTC market so you have to get euro or maybe use coinbase.

fwor

ExremelyCautiousSocialist wrote: »

Exchanges and Bitcoin 2 very different things. Exchanges can do any number of crazy things.

Seriously?

We have to accept that the only way to turn Bitcoin into something that you can actually spend is via an exchange.

But we are also asked to accept that "exchanges can do any number of crazy things".

Why would anyone go near Bitcoin, given that this seems to be common knowledge among Bitcoin experts like you?

masonic

fwor wrote: »

Ok - so anyone wishing to exchange their Bitcoin into a "real world" currency that they can spend in the shop down the road has no reason to expect that the exchange that they deal with will act honestly?

The exchange takes their money and gives them some bitcoin in exchange, or takes their bitcoin and gives them some money. That's how exchanges work. As mentioned several times above, exchanges should not be treated like banks and used to store either money or cryptocurrency.

Who decides how much effort is required to mine a Bitcoin?

This is important because it must be set centrally, and it has a fundamental effect on the "value" of a coin. Make it too easy and anyone can mine hundreds of Bitcoin on their 37 year old ZX81 - so their value would drop. Make it too hard and everyone gives up, meaning no computing power to process transactions and the Bitcoin infrastructure stops working.

So... who sets this value, and according to what authority?

The way in which the difficulty is adjusted is part of the algorithm. There is no authority that sets it. It is computed every 2016 blocks in the case of bitcoin, such that blocks are mined at a rate of 1 every ~10 minutes.

masonic

fwor wrote: »

We have to accept that the only way to turn Bitcoin into something that you can actually spend is via an exchange.

No, you can use your bitcoin to pay for goods and services from merchants who will accept them. The main use cases are where you wish to pay for something without revealing your identity. I've used bitcoin to pay for a VPN service for example. There are various other things you might spend bitcoin on (both legitimate or illicit).

ExremelyCautiousSocialist

fwor wrote: »

Seriously?

We have to accept that the only way to turn Bitcoin into something that you can actually spend is via an exchange.

But we are also asked to accept that "exchanges can do any number of crazy things".

Why would anyone go near Bitcoin, given that this seems to be common knowledge among Bitcoin experts like you?

You can spend Bitcoin p2p, i have done this for some things. Volatility can be an issue if you do this but that is actually a different issue.


The trust level with exchange like kraken and coinbase is decent right now is why you might risk using them. If you are just buying a few k worth of Bitcoin you'll probably be 99.9% maybe 99.99% fine.


People go near Bitcoin for a few reasons. For me im happy quickly using an exchange with 99.99% chance everything fine. Also all my background is legit, im not selling drugs or weapons etc so only risk is gov shutdown exchange or exchange trying to rob.


There is a higher risk your UK bank has an issue with you and blocks your funds or something crazy like that vs those exchanges i mentioned. Kinda ironic.

fwor

masonic wrote: »

No, you can use your bitcoin to pay for goods and services from merchants who will accept them. The main use cases are where you wish to pay for something without revealing your identity. I've used bitcoin to pay for a VPN service for example. There are various other things you might spend bitcoin on (both legitimate or illicit).

Of course, I understand that. But the fact is that I'm like most potential Bitcoin "investors" - I have no legitimate way to earn Bitcoin directly, and there is nothing that I want to buy in Bitcoin without going via another currency (Sainsbury's does not yet accept them, I believe), so all my transactions would have to go via an exchange, which "can do crazy things".

I guess I could suspend my concerns if Bitcoin's price were still heading for the sky, but I think I'll steer clear for now...