The Voice of Harvard

What comes through most clearly is raw incomprehension (with an undertone of panic):

It would really be something if intelligent people chose to invest more trust in a currency system built and managed, in large part, by anonymous computer hackers than they did in currency systems built and managed by governments of the people, by the people. Fortunately, we are not there yet.

April 16, 2013admin 11 Comments »
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11 Responses to this entry

  • Handle Says:

    Trust and Capabilities:

    1. There are already mounting cases in Japan (home of MT GOX -used to be Magic The Gathering Online eXchange) of people making complaints to the government getting scammed while either getting into BTC, or getting phished out of them. I imagine scammabilitiy is proportional to age, and Japan is full of old people. What people want is purchasing power stability and low volatility, and BTC doesn’t offer that. And how trustworthy is the infrastructure? Not very.

    2. Fundamentally, BTC traffic is being driven by the same folks who use the Octopus (Hong Kong), miscoded credit / gift card transactions (Former Soviet sphere) or Liberty Reserve (Costa Rica) methods. Now they use a combination of all of these. But, ahem, those folks are now getting arrested all around the world (talk about undernews).

    3. Let’s talk about capabilities. First of all, with issues like this, it isn’t the all-USG, all-the-time channel. Other major sovereigns with their own large, sophisticated IT-intel conglomerates (i.e. even India’s NTRO-Info. Dominance Group is increasingly world-class) are very interested in the subject for their own reasons. Fundamentally, the structure of BTC is fixed for study and exploitation by these groups. Maybe indefinitely. Will their knowledge and technological capability never catch up?

    4. I judge that BTC is probably now already vulnerable to multiple organizations. In time, perhaps private / criminal groups will also have that capability. At least with a currency you only have to worry about one devil. The problem is that all of these actors have to keep their powder dry (publically) or else everything folds like a house of cards immediately.

    5. The question is therefore, given that the needs of secrecy would likely suppress or shield governmental counter-BTC behavior, what evidentiary tests should an ordinary person use to come to a guess of the likelihood of BTC vulnerability?

    [Reply]

    Christopher Reply:

    “I judge that BTC is probably now already vulnerable to multiple organizations.”

    In what sense of “vulnerable”?

    [Reply]

    admin Reply:

    That puzzled me too. It’s at least possible (and my guess is very probable) that the core Bitcoin algorithm is invulnerable, irrespective of how much hacking activity gets thrown at it. This is another aspect of ‘motivation does not imply capability’ (offensiveness does not imply vulnerability).

    [Reply]

    Nick B. Steves Reply:

    It’s as vulnerable technically as SHA-256 public key encryption, which for now is to say not very. I suppose it can evolve, via open source contributions, to exponentially more difficult to crack forms, as computing resources evolve to match it. But my impression is that we’re at least a human generation away from any danger at the moment.

    Posted on April 16th, 2013 at 11:12 am Reply | Quote
  • fotrkd Says:

    The more “established” an economist is, the more likely they are to be wrong about bitcoins.
    Thoughts on Bitcoin #13529872, Genomicon

    [Reply]

    Nick B. Steves Reply:

    Thanks for that link. As US-based, USD-denominated observer, I tend to focus only on the elimination of paypal/CC fees for vendors. But the FX loss is much more than that. BTC is an even bigger game changer for internat’l commerce.

    [Reply]

    admin Reply:

    ‘Established’, in this case, is the perfect word. (None of the other ‘experts’ drawn upon in the article drip with quite the same Cathedralist condescension.)

    [Reply]

    Thales Reply:

    Point 5 there doesn’t get nearly enough sunshine down here in the basement, but it is important.

    Anyone who has even so much as looked at a branded product can tell you that the single most important marketing decision you’ll ever make is your name. Does Bitcoin have a good name? I dunno, but with a primary moneychanger like “Magic: The Gathering Online Exchange”, they might as well be called gold pieces or galactic credits. “I’m thinking about blowing some cartel coins on galactic credits during double XP weekend . . . and maybe saving for retirement.” It’s all the same schema.

    Despite the androgynous voice-over ads for vanilla-flavored wish-fulfillment, banking is just one generation removed from the image of stogy old white guys with lists containing (a) names and (b) numbers. Also, cash in a vault. Maybe put the list in there too, you know, at night. Folks expect that beyond the starbucks/lobby, that guy’s still back there, somewhere, minding the store while the teller’s watching pr0n.

    They want John Houseman for their banker, not Chuck E. Cheese.

    [Reply]

    Nick B. Steves Reply:

    Good point. Is John Houseman available anymore?

    Bitcoin has already has more than 3 strikes against it. The only thing it has going is that it is very well designed, crowd-sourced by smart people. It is an experiment to find out if design alone if enough.

    [Reply]

    Posted on April 16th, 2013 at 12:35 pm Reply | Quote
  • Nick B. Steves Says:

    Gavin Andresen, chief scientist of Bitcoin Foundation, and early collaborator with Satoshi Nakamoto says in interview at Huffpo:

    The other big challenge is that no one knows the answer to, how will governments react? There’s a lot of thought that bitcoin will be a huge threat to existing tax systems or existing ways governments have of controlling currency flows across their border. I personally think governments will do what governments have always done: they will adapt.

    There’s something else that “governments have always done”… kill the competition. For your sake, Gavin, and for ours I hope you are right.

    [Reply]

    admin Reply:

    Great interview.
    ‘Forced eventually, burnt and humiliated, to agonizingly adapt’ would be good. Then again, if the Cathedral-State’s choice is ‘adapt or die’ then adaptation is only the second-best alternative.

    [Reply]

    Posted on April 16th, 2013 at 6:47 pm Reply | Quote

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