Daniel Cawrey has been writing for CoinDesk for an entire year now. Presumably, he’s known about and owned some Bitcoin for at least that long. But even if he started writing for CD since the second he heard about it, twelve months is long enough that he should know what’s what and who’s who. But he doesn’t. He has no fucking clue.i
While some of us have been getting in the WoT and reading logs for 6 months, Derpers With Attitude continue to expound braindamaged wisdom and faux “analysis” with all their pathetic might, refusing to open their eyes in the morning lest they have to go to school.
Cawrey’s latest, The Five Biggest Threats Facing Bitcoin, is too full of lulz to pass over. So, like the Moses’ plagues, for your enlightenment and entertainment, let’s have ourselves a little summertime roast:
Any new, disruptive technology will have its fair share of detractors doing their best to limit its potential.
The idea that people would need their own personal computer for work seemed ludicrous 50 years ago. Why would anyone need a device for making automated calculations? Today, though, it is almost impossible to function in modern life without using a PC.
The automated teller machine, or ATM, was thought to be a needless apparatus by many when it came out. Who would need access to money outside of bank hours? Now, more people use ATMs than go and queue in branches.
Bitcoin is a new concept edging its way into the mainstream, thus, it is not immune to negativity and unfavorable public perception. It is undeniable that the digital currency has its enemies, either real people or perceived notions. So what are some of the biggest problems it faces right now?
Danny starts us off with a reasonable enough foundation for his article: the old hates the new. This much we can agree upon. Then, suddenly, we diverge because Danny thinks that the public and its perception have any bearing on Bitcoin. Things can only go badly from here, as we’ll see.
The centralization of bitcoin
The idea of mining, for many who first come across the concept of bitcoin, seems bizarre. When broken down into a peer-to-peer way of confirming transactions, however, it makes a lot of sense.
It made a lot more sense, though, when any bitcoin node, on any computer, had a chance to confirm transactions and thus be rewarded a block. But that doesn’t happen anymore.
Although bitcoin was built with good intentions in mind, altruistic systems are often exploited. And this is what has happened to the bitcoin network.
The problem is that there is little incentive to run a node anymore. That’s because powerful machines built specifically for bitcoin’s SHA-256 proof-of-work algorithm have changed its decentralized and more open nature.
This has, in effect, concentrated bitcoin’s confirmation power, leaving it in the hands of only those who can afford thousands of dollars of ASIC hardware.
Danny seems to conflate mining with confirming transactions here, a pretty nooby mistake for someone who’s been around for as long as he has. You can still run a full node to confirm transactions, even if the Power Rangers fucked up the newer versions of the core client. Run 0.6.x and you’ll be laughing. And who knows, maybe someday, less derpy developersii will offer a superior product.
As for mining, SHA256 makes for a thoroughly secure and insanely competitive network. It’s brilliant really. All the “fair” CPU-favouring hashing algorithms are subject to botnets. Bitcoin isn’t. SHA256 requires capital investment, some know-how, and willingness to lose not-too-much money, exactly as it should be. CoinDesk writers and readers, however, want free money for keeping their laptops running while they sleep, which also explains their fascination with MaidSafe. Sorry kids, that was 4 years ago now and it was a once-in-a-lifetime opportunity. Let’s move on.
Bitcoin largely solves the double-spending issue. Despite that, remarkable technical achievement, it doesn’t cater for mistakes, theft and fraud quite so well.
Bitcoin “largely” solves double spending? How about completely?
The anonymous digital currency has sometimes attracted the wrong types of people – those looking to prey on others who fall under the spell of a never-ending upward trend for bitcoin’s price.
Whether it’s illegal online marketplaces, pump-and-dump schemes or shady crypto exchanges, they all create a black cloud over the industry. And, every time there is another bitcoin robbery or scam, it draws attention from the mainstream.
The Mt. Goxes of the space draw the attention of the fiat mainstream to the dangers of Bitcoin, as well they should. Bitcoin is a poisonous offering and should be treated with the utmost caution. This is also why reading logs for 6 months isn’t fucking optional. Also, the “shady crypto exchanges” are well documented and are most certainly to be avoided. As we’ve discussed previously, there’s MPEx and then there’s the play Bitcoin stock exchanges.
When leaders in the bitcoin industry are discouraged over their inability to be banked in the US, bad actors are the ones who should be blamed.
There are absolutely zero “leaders”in “the bitcoin industry” who need US banking. If your “bitcoin business” needs a bank account, you’re doing it wrong. Anyone pretending otherwise should blame their own leaking brain, or perhaps just their own bad luck.
The bad actor problem creates a consumer protection issue for bitcoin. When people learn about bitcoin and are lured to products and services that do not follow best practices, as opaque as they may be in this industry, that’s a problem.
Bitcoin doesn’t have a “consumer protection issue,” but rather, a solution. Bitcoin breaks consumerism over its knee. This is precisely the point of this whole experiment. What’s left is trust and reputation, which many people find out the hard way, if they find out at all.
As a result, some countries are simply playing safe and pushing bitcoin away from their banking systems.
Seeing as how governments and banks are one in the same, this is hardly surprising. Bitcoin is an existential threat to both of their survivals and they can’t do shit about it. Some will come to their knees and decide that they want to matter, some won’t. As ever, some will win and some will lose.
According to CoinDesk’s 2014 Q1 State of Bitcoin Report, 12% of the 73 countries that have taken some regulatory action on bitcoin can be considered hostile or contentious.
A number of countries taking a stance against digital currencies appear to be more reactionary in their behaviour than seems justified.
Gotta love that Danny is now the moral authority on what’s “justified” and what isn’t. How did he get to be so wise? Oh that’s right, he speaks for “the community.”
One example is India, where a bitcoin exchange in that country was raided earlier this year, causing some bitcoin businesses to cease operating.
In China, the major operators there are talking about upcoming periods of hardship as the government cracks down on bitcoin activities.
Furthermore, amid rumors of a ban on virtual currencies in Russia, organizers recently felt impelled to cancelled a bitcoin conference that was planned to be held there.
These actions perhaps reflect more about the banking systems of those countries than anything a government official says. It reveals that many financial systems don’t want to compete with bitcoin; they would rather regulate it out of existence.
Again, countries will do less to regulate Bitcoin out of existence than they will to regulate themselves out of existence. This is to be expected and adapted to.
A patchwork of reactionary regulatory policies helps no one. This is especially true since international borders simply cannot restrict bitcoin, the decentralized nature of which makes it impossible to ban.
Danny groks this much: Bitcoin is impossible to effectively ban. Though such a law may be passed, its implementation isn’t feasible.
A better approach could be a wait-and-see attitude towards this new technology, since its advantages could end up befitting everyone. Countries currently taking this kind of approach include Canada and Israel.
Bitcoin’s advantages will most certainly end up benefiting everyone because it’ll free us from socialism, that road to serfdom.iv Plus, Canada has already clamped down, preventing major banks from dealing with bitcoin-fiat exchanges. Israel just has bigger fish to fry.
Poor mobile platform support
Since last year, Apple has taken a proactive stance towards making sure that users cannot send bitcoin via wallets in its App Store. Furthermore, Google does not allow in-app payments with bitcoin.
Although this has not deterred some developers from creating mobile applications for bitcoin, it’s harming the ecosystem.
Danny, can you demonstrate any harm done to Bitcoin since Apple took out the Blockchain app? Bitcoin doesn’t care if you have to buy an Android phone to buy your Bitcoin chai latte, or that you’re stuck using fiat. In fact, Bitcoin greatly prefers that you spend your fiat and hold your precious, precious crypto. It’s called Gresham’s Law, y’heard?
These larger technology companies do not want to compete with bitcoin. So they do the same thing as restrictive governments and use their power to regulate it out of existence – within their ecosystem, anyway.
Bitcoin is excellent as a method of remote payment. It could be a competitive credit card alternative – especially in remote transactions with mobile or wearable devices. And this is a much better way to receive and send payments instead of using of QR codes.
Bitcoin will never be a “competitive credit card alternative.” It wasn’t designed to be. It was designed to be a competitive gold alternative, and thus serve as the world’s reserve currency. Nothing less.
Using Bluetooth Low Energy, Near field communication (NFC) or some other wireless technology could change the way people make payments.
Danny is once again using his fiat consumer lens and trying to impose it on Bitcoin. Sorry, ain’t gonna work here.
However, with billions of dollars relying on the outcome, the major players in the technology industry will do their best to restrict innovations that they do not control.
Meh, the giant American tech players can’t innovate so they don’t want anyone else to either. This shouldn’t be a huge surprise seeing as how no one in the USA has been successful at anything other than talking in a generation.
Given all of the above issues, it’s not incredibly obvious why the average person would want to use bitcoin. Sure, there are many theoretical benefits to using a distributed currency.
What is the value, though, to the everyday person who just wants to ensure that money is in the bank?
One issue is that banks often overstepped boundaries and the global economic situation has brought hardship for many since 2008. The appearance of bitcoin on the scene represents something new and offers hope to people jaded by traditional financial institutions.
The vast majority of people don’t care about and don’t understand finance. They don’t understand gold either, and so have little hope of coming to terms with Bitcoin. If anything, the longer the world takes to figure it out, the better, as this gives us a larger window with which to get our hands on as many coins as possible and to sort out our place in the new world. Think of it like a slow-cooked meal… why rush it?
Circle and Bitreserve are both bitcoin startups that have recently unveiled plans to bring the digital currency to the masses. They plan to do so by bringing the technology’s benefits to the consumer market by not exposing user to the bitcoin ‘layer’ it still depends upon.
I don’t know who the fuck Bitreserve is, and I frankly don’t care, but Circle sucks and will do little more than out-derp Coinbase. I guarantee it. Mass adoption is an illusion. Get over it. Bitcoin is privilege.v
Many startups in the bitcoin space tout the ‘wow’ factor of bitcoin. Yet negative events over the past year have left consumer sentiment less positive than the industry hoped for and this, in turn, has caused tension with policymakers.
For the umpteenth time, consumers have nothing to do with Bitcoin and neither does their “sentiment.” Bitcoin is here to break all that. And how.
In the end, it is possible the best way to get bitcoin’s benefits into the hands of people might be to not talk about it at all.
With a flourish of his non sequitous quill, our boy Danny single-handedly decides that we should stop talking about Bitcoin. This is actually advice that would benefit his CoinDesk readers, the forumites, and redditards alike. If you take only one thing from Danny’s writings, and it’s a bit hard to see how there’s much more to take, take his advice and STOP TALKING!
Instead, start learning – that you may one day be able to tell fact from fiction, threat from derpage.
It’s true, it’s easier to build a couch fortress and pretend, but getting in the WoT and reading logs is not an option if you want even a chance of mattering in the future. No exceptions will be made.
It’s not like anything I’ve said above sprouted accidentally from my own fertile mind, it’s a condensation of everything I’ve learned in #bitcoin-assets, just with my own flavouring. I didn’t invent the recipe, I just seasoned the dish.
Bitcoin doesn’t suffer fools gladly, so stop derping about threats to Bitcoin’s survival and start worrying about threats to your own survival.
Bitcoin’s future isn’t in question. Yours is.
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- Or else he wouldn’t be writing for CoinDesk in the first place, neh? [↩]
- Maybe Conformal with btcd? [↩]
- Hell, I can’t even afford the full meal deal and I’m very well off compared to the average “Bitcoiner.” [↩]
- If you haven’t already, read FA Hayek’s The Road To Serfdom. The Readers Digest version is quite well done as is only about 80 pages long. You can find it in PDF here. [↩]
- Bitcoin as privilege isn’t about to change any time soon. From Twitter:
@Mircea_Popescu: Ahaha funniest shit I saw all week. Hey noobster, #Bitcoin IS ALL ABOUT PRIVILEGE. @aantonop @30somethingST Examine your privilege.
@aantonop: @Mircea_Popescu Today, yes, bitcoin is an expression of extreme privilege, but it doesn’t have to be that way.
@Mircea_Popescu: @aantonop But if it doesn’t stay that way, I will find you and I will kill you with my bare hands, how about that. [↩]