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Bitcoin Exchange Had Too Many Bitcoins

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Re: Bitcoin Exchange Had Too Many Bitcoins

#91
"There is no single obviously correct solution to these issues. Instead, each decision was sort of weird and contingent and reversible: not the immutable code of the blockchain, but just humans sitting around and trying to figure out which approach would cause the fewest complaints. In that, it's a bit like the Dole settlement process -- only instead of a neutral judge making decisions based on written contracts and established precedent, it's the people running each exchange making their own judgment calls."

This is what I'm always repeating about blockchains: they're very valuable if and only if you cannot use the protection of contracts and laws when making a transation - for example because you're doing something illegal. In Every. Other. Case. systems based on trust, contracts and law (such as the banking system for example) are more efficient.

It doesn't mean that there isn't room for improving existing systems, just this is probably best done with regular servers and databases rather than a blockchain.

Re: Bitcoin Exchange Had Too Many Bitcoins

#92
post #66

Earlier quoted context omitted.

Except your clone doesn't have miner support, community support, and get listed by major exchanges. I hate that people are acting like anyone can just go and make a fork for free money.

The point is, what's the threshold for "enough support"? Already for Bitcoin Cash, different exchanges have come to different conclusions on whether it's sufficiently supported to list on their exchange.

Enough support that someone's willing to exchange cash for a "coin" from your bitcoin fork.

Re: Bitcoin Exchange Had Too Many Bitcoins

#93

Earlier quoted context omitted.

Sure, but their youthful experiments are involving billions of dollars worth of money. Or at least they claim it does.

And why is so much money getting dumped into these constructs? AFAIK, it is speculators that are inflating that economy, not the coin devs hyping it as an investment. If it's any consolation, money doesn't disappear, it just becomes someone else's. It's still in the economy. Think of it as an overpriced research project, that the media went nuts over.

But if it works...

Re: Bitcoin Exchange Had Too Many Bitcoins

#94

Earlier quoted context omitted.

Sure, but their youthful experiments are involving billions of dollars worth of money. Or at least they claim it does.

And why is so much money getting dumped into these constructs? AFAIK, it is speculators that are inflating that economy, not the coin devs hyping it as an investment. If it's any consolation, money doesn't disappear, it just becomes someone else's. It's still in the economy. Think of it as an overpriced research project, that the media went nuts over.

If you swap out "the coin devs" for "Ty Inc.", then your comment would be relevant about Beanie Babies.

Re: Bitcoin Exchange Had Too Many Bitcoins

#95
post #33
post #4

Great writeup. Almost anything written by Matt Levine is worth reading. This is a concise and accurate description of the fun that occurred with Bitfinex's handling of the BCH fork. At least, it's fun if you weren't involved. If you naively held BTC on Bitfinex and were hoping to receive an equal amount of BCH you probably didn't think it was fun. If you carefully read Bitfinex's statements and decided to take advant…

Matt sums it up well in a footnote: Imagine if I announced tomorrow that I had created a new blockchain, called Bitcoin Matt, and that everyone who owned a BTC today will tomorrow own both a BTC and a BCM. Fine, great, you all own BCMs, congratulations. But also anyone short a BTC today will be short a BCM tomorrow, and will be forced to go buy in those BCM shorts. Even with no economic support for BCM -- with nobody…

Can somebody please fix blockquotes on HN on mobile?

Re: Bitcoin Exchange Had Too Many Bitcoins

#96

It is hilarious watching people try to reinvent financial institutions without any knowledge of or respect for history.

Maybe I'm too "left wing", but if you ask me short selling, complex products and high frequency trading are among technological "improvements" that have led actual stock exchange to an ugly mess where biggest profits are made by "scamming" efficiently other users. Should regulators forbid (or tax more) some (or all) of this mechanisms markets will quickly resume to what they should be, places for people to invest money on companies that produce value.

So yeah pretty impressive to see that currencies based on unicorn blockchains of the future jump right into the old bandwagon of making up complex financial instruments that few people really understand on top of an experimental core concept.

Re: Bitcoin Exchange Had Too Many Bitcoins

#97

Earlier quoted context omitted.

I'm not sure what you're saying here. Are you claiming that Bitcoin Cash doesn't have those things? Or are you saying that those things are important factors which differentiate Bitcoin Cash from other forks?

"Nothing stops me from just announcing that I've cloned a copy of the bitcoin blockchain for BCM" You can't just make random forks and have them be worth something. This is the culmination of years worth of debate and has a significant community following.

Aren't all the alt-coins examples of this happening? That anyone can fork a blockchain and give it their own rules?

The market value of a coin isn't limited to a strict mathematical function of mining power or exchanges backing it. That's the point Matt is making.

Re: Bitcoin Exchange Had Too Many Bitcoins

#98
post #59

Earlier quoted context omitted.

1. Organization implements foolish policy 2. Thousands of people make trades according to foolish policy 3. Organization changes terms of foolish policy, telling nobody. 4. Organization then waits until after the fact to tell everyone that they have changed the policy, which dictate d the actions of a non trivial percentage of their customers. If you're going to try to look like a legitimate exchange, this kind of th…

If you're going to try to look like a legitimate exchange, this kind of thing looks pretty unseemly. Oh I agree! The whole thing has bitfinex looking a little foolish. It was step #1 that was the problem though. Steps 3 and 4 were them fixing it as best they could. Those parts weren't mistakes, it's just them keeping you from stealing Bitcoin Cash from their other customers.

Yeah, really. At this point, I don't think anyone should be surprised that an investment involving bitcoins is high-risk.

If Bitfinex violated it's own terms with this change, then there might be a case for suing in civil court, but something tells me that Bitfinex covered this with their lawyers before making the change.

Re: Bitcoin Exchange Had Too Many Bitcoins

#99
post #59

Earlier quoted context omitted.

If you're going to try to look like a legitimate exchange, this kind of thing looks pretty unseemly. Oh I agree! The whole thing has bitfinex looking a little foolish. It was step #1 that was the problem though. Steps 3 and 4 were them fixing it as best they could. Those parts weren't mistakes, it's just them keeping you from stealing Bitcoin Cash from their other customers.

I don't really see how it's stealing from their other customers when anyone with a nonzero BTC balance could have shorted BTC with BTC in their margin account. Somehow I'm penalized for trying to maximize my profit based on the terms that were stated, even though that's what every single other person on the exchange is doing. Basically they chose to favor those who didn't understand the terms or what was going on in…

A bunch of people did what you did. That (before their correction that has you so riled up) lowered the coefficient used to distribute BCH from 0.8539 to 0.7757.

The BCH you attempted to acquire for no cost would have come from other customers in the form of that smaller coefficient.

Re: Bitcoin Exchange Had Too Many Bitcoins

#100
post #98
post #59

Earlier quoted context omitted.

If you're going to try to look like a legitimate exchange, this kind of thing looks pretty unseemly. Oh I agree! The whole thing has bitfinex looking a little foolish. It was step #1 that was the problem though. Steps 3 and 4 were them fixing it as best they could. Those parts weren't mistakes, it's just them keeping you from stealing Bitcoin Cash from their other customers.

Yeah, really. At this point, I don't think anyone should be surprised that an investment involving bitcoins is high-risk. If Bitfinex violated it's own terms with this change, then there might be a case for suing in civil court, but something tells me that Bitfinex covered this with their lawyers before making the change.

I certainly agree. tpallarino seems a little surprised though!
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