Category Archives: News
Bitcoins are Peacock Tails
Edward Vielmetti studies Bitcoin as a signal of conspicuous consumption and conspicuous waste.
Bitcoins are almost the perfect expressinon of conspicuous waste, and in a benefit that Veblen might not have guessed at, they are liquid in a peculiar way such that it’s impossible to distinguish between someone who has purchased them vs. someone who has a mining rig going full bore creating them. How peculiar a commodity to have no intrinsic value that’s obvious right now, but that is a perfect signal either that you have consumed a lot of energy or a lot of money to have acquired them. In this sense they look like they are Veblen goods, where they are more in demand depending on them being more expensive.
Read more at Vacuum.
Peacock CC Image by Madison Berndt.
Top Bitcoin News Last Week: Bubble, Winklevoss Twins, Mt. Gox Attacks
Bitcoin News
A roundup of the top Bitcoin news from April 8 to April 14:
Monday, April 8
Tuesday, April 9
Thursday, April 11
Friday, April 12
- Did the Bitcoin Bubble Burst Already?
- Winklevii Bitcoin: Twins Secretly Own 1% of the Bitcoin Economy
Sunday, April 14
Winklevii Bitcoin: Twins Secretly Own 1% of the Bitcoin Economy
Winklevii Bitcoin: They Own A Huge Stake
Facebook’s arch enemies Cameron and Tyler Winklevoss have revealed a big financial secret: they hold about 1% of the Bitcoin economy. That’s a big Winklevii Bitcoin position.
Fresh with their cash from the Facebook settlement (worth well over $200 million), the Winklevoss twins have bought up about $11 million worth of Bitcoins. That’s about 1% of all available Bitcoins.
In an interview with the New York Times, the Winklevii provided some insights on their investment:
“People say it’s a Ponzi scheme, it’s a bubble. People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.”
The Winklevosses say this week’s tumult is just growing pains for a digital currency that they believe will become a sort of gold for the technorati.
“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss said.
The Winklevosses have paid in bitcoin for the services of a Ukrainian computer programmer who has worked on their Web site.
The brothers began dabbling in Bitcoin last summer when the dollar value of a single coin was still in the single digits. To keep their holdings secure from hackers, they have taken the complex codes that represent their holdings off networked computers and saved them on small flash drives, putting the drives, in turn, in safe deposit boxes at banks in three different cities.
It’s hard to verify how the Winklevoss holdings compare with other bitcoin players, given the anonymity of accounts, and the twins say they believe that some early users of the system probably have holdings that are at least as large.
Did the Bitcoin Bubble Burst Already?
Bitcoin Bubble May Be Over
Wow, the Bitcoin bubble blew up fast.
Bitcoins were trading for as high as $266 earlier this week and as low as $77 today.
Trading activity overwhelmed exchanges like Mt. Gox and trading was halted twice, as shown in the chart below from CNN Money.
“The rather astonishing amount of new accounts opened in the last few days…made a huge impact on the overall system that started to lag,” said Mt. Gox. “As expected in such situations, people started to panic, started to sell Bitcoin in mass…resulting in an increase of trade that ultimately froze the trade engine.”
This comes on the heels of Bitcoin theft and DDoS attacks on the exchange.
Bubble photo by Visual Artist Frank Bonilla used under Creative Commons license.
Bitcoin Theft: Mt. Gox Attack Pillages Investor’s Bitcoin Account
Will Bitcoin theft call into question trust and confidence in the system?
A Mt. Gox user bitbully was surprised to see his account suddenly pillaged, later learning that the Java chat client he had enabled was actually an exploit to steal Bitcoins. He reported his experience on the Bitcoin Forum.
There are mixed opinions on the web about who is to blame for this.
On Bitcoin Forum, there’s an empathetic view that suggests Mt. Gox should reimburse the loss.
I expect Mt. Gox to come up with an analysis and refund him and any other affected clients.
bitbully – I advise emailing a link to this thread to Mt. Gox support.
In the tech communities, they blame the user. Here’s one point of view from Hacker News.
Since I don’t have an mtgox account, and I have a fair degree of confidence that the code posted can’t possibly escape the Java sandbox, I decided to live dangerously and try loading the page.
Here’s the warning screen that comes up when you load it: http://i.imgur.com/sXDoFLt.png Note the self-signed certificate from “North Sumatra”.
Gotta say, I have no sympathy for someone who clicks through that warning screen and then complains that their credentials got stolen.
On Reddit, some users give advice about browser configurations.
1) Disable Java, it’s crap. 2) Enable 2-factor authentification.
Don’t use IE.
Here’s the challenge with this type of theft. It’s anonymous and irreversible by nature of the Bitcoin system. bitbully’s funds are gone.
But a bigger issue is trust and confidence. If an early adopter techie can be exploited, what about a regular retail investor? Exchanges like Mt. Gox will need to prove that they are safe for trading if they hope to grow.
