Another day, another inexplicable, indecipherable Bitcoin drama.
Lots of folks don't even get what the whole thing about Bitcoin is. Here you go in a nutshell:
Bitcoin is a virtual currency (think gold in an MMO). When it was established, it was set that there would only ever be a finite amount. Computers can "mine" Bitcoin by solving equations and therefore unlocking some. The more that's unlocked, the harder it is to unlock more; this means computers have to work longer to gain more Bitcoin.
With me so far? Okay, good. Bitcoin transactions are all loosely documented in a chain. By "loosely," I mean that the chain for example records that 3 Bitcoins were moved from one wallet to another, wallets being a digital storage locker for Bitcoins. It also documents when someone unlocks more Bitcoins. What it doesn't do is establish a paper trail as to ownership of said wallets. Someone, somewhere can access that wallet, but who that person is remains anyone's guess.
That's the appeal of Bitcoin; anonymity, no central authority, no regulation. If a lot of you dispute my use of the word "appeal," then you're probably a sane person. In terms of Bitcoin's anonymity, it's already being used to enable anonymous extortion via malware, and sneaking bitcoin miners into other people's computers. Thanks to its lack of central authority, no one is capable of stopping a consortium from banding together to manipulate the underlying structure of how Bitcoins move from place to place. And (in my opinion) what mostly appeals to fans of Bitcoin is the lack of regulation; if you lose money via nefarious means, tough. You can't go get some enforcement entity involved. Maybe you can sue, if you know who to sue in the first place. Maybe. Law of the jungle, baby!
If this sounds familiar to some of you, it probably is; it's essentially the Anarchist paradise of EVE Online translated into the real world. EVE Online is a completely cutthroat MMO, where more or less anything goes. Your shit can be stolen. Players can lie to and cheat one another. The bottom line is profit, and the developers actively encourage any and all behaviors outside of actually hacking the game itself.
While that's all well and good for a game, the fervor of Bitcoin fans to move that mentality into real-world markets is frightening. It's ideology trumping common sense, where falling prey to predatory behavior isn't a cause for sympathy but some form of moral judgement on one's worth as a person. (Obviously if you let your things get stolen, you didn't deserve them, etc.)
However, in practice it's already starting to look like bands of gangs led by warlords and pirates creating their own digital Somalia. That's actually a good thing, in terms of the whole Bitcoin movement acting as a sociology experiment. Everyone who's balked at regulation and cheers completely free markets without any intervention is getting a front-row seat as to what that would look like.
Ghash.io represents a large group of people who banded together and now have the power not just to control Bitcoin, but to prevent Bitcoins from moving anywhere without their say-so, and erasing transactions entirely. They haven't done it as of yet, but they could. We merely have their word that they won't ... and note, they already gave their word that they wouldn't put themselves in the 51% position to start with, so take that for what it's worth. There's no law enforcement agency or regulatory body to stop them, so the response has been very EVE Online as well: DDoS attacks, the digital version of a siege. I suppose this is their idea of "market correction."
Folks, anyone who ever tells you people will act rationally and in their best interests when it comes to "important" stuff like finance is an idiot. We sit on the rubble of one recession with banks already fighting to pull down what few regulations were put in place to avert it from happening again. Never underestimate the awesome power brought into play by a combination of greed, arrogance and stupidity ... which honestly is what the entire Bitcoin affair has seemed to me.
But hey, you go throw your all your money into a mining rig and call it your retirement investment. Thankfully in the real world there's a (tattered) social safety net to save you from your own idiocy born of ideology so at least you won't starve in your old age. You're welcome.
