Sunday, March 2, 2014

See ya, Mt Gox

One of the highlights of the entire week has been the geek reactions to the collapse of the Mt Gox bitcoin exchange.

Bitcoin is, by its very nature, an unregulated, unmanaged currency, with no centralised authority of management, no guarantees of security and no means of assuring stability.  It exists specifically as a way to provide a transaction channel untraceable and untaxable by governments.

So, of course, what's the first thing the aggrieved users did when Mt Gox collapsed after a hostile hack?  They went crying to mummy the feds that the nasty men had taken their lunch money.

What a bunch of morons.  What did you expect would happen?

That's right up there with calling the cops to complain that you've just been ripped off on a drug deal, or that your weed has been stolen.  Which is in of itself a somewhat ironic analogy when you consider that probably the biggest use for the Bitcoin currency was the Silk Road illegal drugs market which got busted last year.

Quite apart from anything else, if the cops were to investigate the issue, they're only going to do so with the aim being a prosecution of the perpetrator.  That means understanding the Bitcoin systems, having access to the inner workings (if the NSA hasn't arranged that already), and generally gathering evidence to do something about it.  Um, hello people... do you want to maybe think about that first?

Mt Gox, of course, blame a weakness in the Bitcoin systems for allowing the hack.  Bitcoin says that Mt Gox's kung-fu is not so good.  Who knows?

Of course, the final irony is that each Bitcoin actually has a marker, which means that (unless the ledger logs have been erased), the transaction trail of where the Mt Gox Bitcoins are is theoretically traceable - thereby - which means that the whole point of anonymity of Bitcoin is a nonexistent farce in the first place.  All the cops would need to do is seize the Bitcoin account of an arms dealer, drug dealer, garden variety scumbag etc and look at the ledger transactions to see where their cash came from.  Even better than marked money, because it works in reverse!

And here I was wondering why the governments of the world had allowed Bitcoin to exist.   :rolleyes:

In the meantime, people are further illustrating their lack of understanding of exactly how screwed they are by suing Mt Gox, although exactly how they plan to do sue a Japanese company from the USA is unclear.  Not that that would stop your average litigation-happy American, I suppose.  I wish them luck - they're going to need it - the money is gone, the company is filing for bankruptcy, and any purported success will at best see them one step above your classic unsecured creditor in line for a few fractions of a cent in the dollar of capital that no longer exists.

The bottom line is that Bitcoin isn't real money, as some of the more well grounded commentators of the financial sector have commented (over the howls of disaffected true believers).  That may well relegate any claim against Mt Gox to even less than complaining to the filth your stash has been ripped off - it's right down there with trying to report your Sword of Smiting has been stolen in WOW.

Good luck with complaining effectively about both.  You're gonna need it.