On 06/20/11 20:13, Jon Cox wrote:

Hold on a moment.

Because 100% of the worth of a Bitcoin is in its "gamed network value" (it has zero "intrinsic local value"), special importance is placed on faith its real-world institutions. Saying that it was "just mtgox" sounds absurd. They are the largest Bitcoin exchange.

Sure, but my point was that this wasn't a flaw in the bitcoin system itself. Yes, the value of bitcoin is defined by its external exchanges, but *bitcoin* is a system for tracking the ownership of resources in a distributed manner - which is a difficult problem that it, so far, seems to have solved securely.

Bitcoin is therefore a 100% faith-based immature currency with full code transparency but almost no institutional transparency or independent auditing.

For sure. However, it's got to start somewhere.

That's a recipe for trouble.

An institutional problem like the one at Mt Gox should not be able to crash the currency from $17.50 down to $ 0.01 in 5 min, then put the people who *do* buy in a state of uncertainty. All bets are that those who bought at $0.01 probably won't be able to cash out because of the rollback.

Why shouldn't it? The bitcoin economy is tiny; Mt Gox dominates it like the Bank of England dominates GBP. However, Mt Gox has no de jure power, and in due course, competitors will challenge it, thereby decentralising the economy again.

All currencies are systems; they need to be analyzed from a systems perspective, or else you'll wind up like one of those poor people holding Bitcoins: $17.50 to %0.01 in 5 minutes.

I hole 18 bitcoins; I'm not too worried that it's dropped like that - because I think it'll rise again. In fact, now would be a good time to buy some more... ABS -- Alaric Snell-Pym http://www.snell-pym.org.uk/alaric/ ----- End forwarded message ----- -- Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org ______________________________________________________________ ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org 8B29F6BE: 099D 78BA 2FD3 B014 B08A 7779 75B0 2443 8B29 F6BE