Hacker News Reader

Comment by dublinben | Hacker News Reader

This is terrible news for Bitcoin. The currency will die without the exchanges.

Heh, you summed up the stupidity of the current cryptocurrency rush in one sentence. Shouldn't they be self-contained and their success not be affected by exchanges?

I wouldn't call it stupidity. It's like saying that the internet wouldn't last very long without ISPs.

Without many real places to deal with USD <-> BTC, then of course it will be hard to deal with the cryptocurrency (the passage is needed to allow for a transition period in currencies).

It is more like saying houses would not last without doors if you want another analogy out of this world.

That doesn't make any sense. How do you obtain a new currency without an exchange?

You could use p2p transactions, get paid in it as a service, get it as a handout, sell something for it, or, in the case of Bitcoin, mine it.

By getting paid with that currency.

How do you self-contain anythng in this world of interconnectivity?

If you understood cryptocurrency you would understamd that their success is not measured in the price point. That is the most marketable aspect so that is what you know, the utility and use of the protocol is as good if not a better measure of their success. the relative speed with which issues are identified and resolved speaks to the success of the protocol not the daily/weekly highs and lows.

Why should they be self-contained and not affected by exchanges? An exchange is just a market where you trade one good for another, where both the goods happen to be currencies (fiat or crypto). It's like saying that a market where you trade Bitcoins for domain names or Bitcoins for food is stupid.

If you are payed in the currency that you spend, you don't need currency exchanges.

True, just like if you are paid in food, you don't need markets to exchange food for money.

Did you read my comment carefully?

If you are payed in the currency that you spend...

I read it carefully, and I understand. I simply disagree. Why, for example, do you think there are exchanges for essentially every pair of government currencies?

For global exchange of value which is what I thought Bitcoin was supposed to do all by itself.

Maybe we're talking about different things. My general point (which maybe you don't care about) is along these lines: A regular currency operates usually exclusively in one area, and in that area can be used for all spending. Strictly speaking, it could still run if currency exchanges suddenly vanished (and before informal replacements took over). A currency is after all not simply a commodity, it is the legally acceptable form of payment for all debts in that area (and must be accepted). Bitcoin, on the other hand, is not required to be accepted anywhere. In addition, most people value Bitcoin because it's worth a lot of US dollars. So its value seems more connected to the existence of exchanges than normal currencies, which at least can operate inside their own countries without any currency exchanges. (It's not quite as neat as that but the point is in the comparison to Bitcoin.) The further sensitivity to exchanges is because, since you are payed in other currencies, you are constantly evaluating Bitcoin's worth in terms of those currencies. (And being payed is a way to get currency without a currency exchange.)

Because of an easily fixed bug in the software of some exchanges?

Yes, confidence in a currency is very important to its survival. The crazy volatility, the inability to withdraw sometimes, the competitors, the uncertainty everywhere. Bitcoin is not helping itself.

It seems unlikely to me that, after surviving all the things you mention, Bitcoin's downfall would be the result of some temporary downtime from a couple of exchanges. I guess you could argue it's the proverbial final straw on the camel's back, though.

Because of the massive (and justified) collapse of confidence in everyone building web servies for this space.

It shouldn't surprise anyone that after months (years!) of BTC services absconding with millions of dollars worth of users money and now the exchanges starting to collapse in a similar fashion (users can't get money out) that the wider user base of bitcoin would begin to default toward not trusting services that purport to store coins 'securely'.

This is bad in the short term as the remaining exchanges prices show, but likely a positive progression in the safe use of crypto currencies going forward--

I generally agree that this is bad in the short term, but likely a net positive in the long run. Bitcoin's delivering some very harsh lessons in crypto-currency security.

Speaking from personal experience; I was driven to learn a lot about crypto and information security in general because of bitcoin.

As a developer I think the correct mindset towards security is important to have day in and day out; Perhaps that's the real social engineering of the NSA leaks. Nothing could be better for the distributed security of our country than each and every individual developer being more acutely aware of security concerns at every keystroke.

Being a Mt. Gox client which had some money on their server as they paused BTC withdrawals, this gives me hope that the flaw on their side was indeed purely technical and that they're not nearing bankrupcy just yet.

oh god you have no idea other than reading headlines and extrapolating nonsense.

This is not going to kill any exchange (except perhaps mtgox, but that is due to an accumulation of poor performance rather than this minor issue).

I think this will be fixed in next-gen protocols like Ethereum:

http://www.ethereum.org/

We need exchanges that are also P2P like Bitcoin.

Not too bad. It will encourage people to maintain control of their bitcoin

If you maintain control of both bitcoin and dollar, how could the exchange function? It requires storage of both.

Gambling exchanges have worked well for years, I wonder if the first serious competitor in the btc exchange space will be from one of those exchanges. (Unlike established financial exchanges they might be willing to risk a reputation hit for getting established in the space.)

Reply on news.ycombinator.com