Bitcoin exchange operator charged with embezzlement


#1

[Read the post]


#2

#Blitkoinz: now, more than ever!


Sony filed a trademark application for "Let's Play"
Blitkoinz
#3

I am shocked, shocked to learn that a currency beloved of libertarians, anti-government preppers and anti-tax protestors should prove to also be beloved of frauds, cheats, and con men.


#4

You may like to know that any currency is used for frauds, cheats, and con men. By volume, I’d bet the US dollar is orders of magnitude more popular.

You can find entire fake banks, built around official state-sanctioned fiat currency.


#5

Sounded like a long-con scam from day one, especially the “buzz” it generated, and the unquestioning media attention it got. Stayed well away, and I don’t know anyone who got involved who is happy with the way it’s going. The concept is interesting, and actually a good one, but the way it has been executed leads me to think that it has always been a game.


#6

Yes, in absolute terms, the US dollar is going to be the biggest for almost any use.

But by percentage?

Bitcoin has had an awesome fraud-to-transaction-volume ratio.

I think only the in-game currency for Second Life even comes close.


#7

True that.

Does the stock market casino count too? Does the derivatives market qualify?


#8

Some friends of mine had a really good time with it and Silk Road, so there’s that. But, yes.


#9

#10

I am going to treat your questions as sincere instead of a lazy rhetorical shot.

Yes, the same math is used to describe casinos and stock markets. Both have seen more than their fair share of deceptive behavior and even outright criminality. And a lot of people are a threat to themselves in either environment. So your analogy has merit.

But the similarity pretty much ends there. Casinos are especially designed to identify potential gambling addicts and suck them dry. Not much else happens in those “gaming establishments.”

Stock markets, unlike casinos, produce a massive social surplus: relatively efficient capital allocation. If you want large scale organization and/ or innovation, you’re going have to tolerate something like a stock market to facilitate risk-sharing. History is clear: Despite all the the hanky-panky happens, every other capital allocation system that has been tried has done worse over time.

Our current markets can certainly be improved (abolish most of Reg NMS, for example). In particular, the way government guarantees work in practice can be deeply troubling. We never could have gotten the massive real estate bust of 2007 with government guarantees on home loans, for example. But the alternative isn’t abolishing stock markets – unless you like the thought of living in a Medieval economy.

Does the derivatives market qualify?

Derivatives are everywhere. Your car insurance is a derivative. If you have an American bank account, your FDIC is a derivative. . Every time you use your credit card, you create a derivative.

It’s pretty much impossible to define a non-barter economy without making extensive uses of derivatives. These things have been around so long, we just have more useful names for most derivatives. Thus, it’s mostly the newer, less familiar stuff that gets formally called “derivatives.” Little surprise more problems turn up there: that’s where the new stuff gets prototyped.

Bringing this around to the original point, yes, Fraud occurs everywhere. Certainly in stock markets. But Bitcoin seems to have an exceptional number of high profile participants whose principal aim was fraud. Mt Gox was but the latest example.


#11

Deception? In my trustless currency? :joy:


#12

Bitcoin does not act like a currency, it acts more like a penny stock: not backed by any thing or any authority to tax any things, and consequently very volatile and kind of a joke. Also beloved of scams.


#13

Bitcoiners hate “the Bankers”, meet the new bosses, same as the old bosses.


#14

It’s a good alternative to cash when physical transaction cannot be performed. The Man loves to snoop into things and track and spoil them.

It’s generally good to have options. It’s also good to be aware of their drawbacks and risks.


#15

So is PayPal, or a million other online payment processors.

The only use case I can think of that it does “well” is drug purchases, and even that can still be performed with good old filthy fiat currency.


#16

Who tend to be capricious, require a ton of personal identification which not everybody is necessarily comfortable with even for entirely legal transactions, and getting a recourse when something goes wrong is often more costly than the amount in question, in terms of time/effort/stress. That quite balances out the fraud risk with BTC, for many applications, especially for lower-amount transactions.

In direct face-to-face transactions, yes. When distances are involved, not so. When non-tangible goods (information, data files, contract work involving these…) are involved, the availability of no-hassle no-trace (okay, trace but at least no-direct-personalization, and there are more anonymous flavors of crypto-currencies) no-paperwork option is certainly a positive.

It’s generally good to have options.


#17

Ah yes, the difficulty in chargebacks IS balanced out by completely nonreversible transactions, how silly of me to not consider that.


#18

Sounds like cash, doesn’t it?


#19

I don’t use cash for online transactions of the sort you brought up as an ideal use case so no?

Bitcoin is great for DNMs and donating to Wikileaks but crap for all the other use cases compared to traditional services.


#20

I don’t use many things. It doesn’t mean they aren’t good. It means just that I don’t use them for some reason.

Depends. If bitcoin ATMs were more common, Western Union could take their fees and stick them where they belong.

(Also, what’s DNM? Defence Nuclear Materials?)