Topic: Bitcoinica stolen coin returns - page 5. (Read 13143 times)

Why would you think that?

As much as it pains me to admit I think this idea of tainted coins will lead bitcoin to it's death.

The sad reality is most people are afraid of freedom.  Freedom is scary.  They may talk about freedom, and being free of the man but the first time something happens (they lose coins) they suddenly don't want freedom.  Tainted coin registry is all about control.  The "Oh Noes someone got coins they don't deserve WE need to stop them". Honestly it is just one step above chargebacks.  I mean if a thief steals 18K from 1 person we should block that via tainted coin registry?  What if a scammer steals 18 coins from 1000 people?  Why not just implement chargebacks into the protocol to get rid of the need for a taint registry with millions of coins and thousands of participants.

[/b]The cowards who can't handle the freedom that Bitcoin represents (and the risk that comes with it) are the single greatest threat to Bitcoin.[/b]

Tainted coins devalue all coins even the untainted ones.  I sell wireless pincodes for Bitcoins.  I would imagine the "cash like" nature of pincodes would make it an attractive option for someone looking to unload coins.  What if the thief buys some with tainted coins?  I should take the loss?  I should follow the thread of every irresponsible idiot who lost their coins and block orders involving them in realtime?  What about in the case of "false claims"?  What about cases where the theft is reported AFTER I accept the coins?  Can no-one see that makes businesses less likely to accept Bitcoin.  It makes them even MORE risky.

"Bitcoin: no chargebacks ever*"
* except if you accept coins through no fault of your own which someone else later reports as stolen with no proof due to their own incompetence, in which case you take the full loss for their irresponsibility.

I think the "tainters" are failing to consider one question:
If I can take a full loss using Bitcoin, and if I need to pay for the processing cost of checking for "bad coins", and if I need to subsidize the irresponsible and pass those costs on to my consumers .... why should I use Bitcoin?  Paypal/CC works just fine under those constraints.

Even if I "could" block tainted coins that would incur a cost.  That cost is passed on to legit users.  The responsible subsidizing the irresponsible.  No different than credit cards and chargebacks.  No sir.  The day one of my coins get blocked at an exchange because of a tainted coin registry is the day I am done with Bitcoin and will support (at least monetarily) the development of an alt-coin (double blinding signing) which makes such registries more such lunacy more difficult to implement.

What about we stop with this tainted coin bullshit?

Trolling

What is this about?

Sorry for rustling your jimmies, developer of hacky widely-criticized no-fee patch.

Hahaha what a mess, scammy forum trolls making comments about something they are totally ignorant of.

Hahaha what a mess, the developers trying to return specific coins using hacky patches.

I was on at the time and went through logs afterwards.
There was about 32 transactions. The first was for 5btc after that the rest seemed to be for 1.x. (Allthough I did only check 10 or so,  but those 10 were all 1.x so i assume the rest where aswell).
Going on those figures I imagine only 40-50BTC were given. Not like it was 18k worth like I have seen people think in other threads..

*edit* I best not say anything..... now that the "police" might/will? be involved..............

Approximately, how many coins were sent by the hacker? My thinking is that if it was only a handful, then BitcoiniaHacker is just a troll, doing it for the lolz.

~Bruno~

Heh yeah.

Not just when you buy bitcoins either.

And the biggest criminals use the freshest dollars!

Why is nobody addressing the real elephant in the room? Any time somebody purchases Bitcoins with fiat money they are doing so with tainted money.

Let it go. Move on to something more productive in the world of Bitcoin.

Why does it matter if you give the tainted coins back instead of whichever your client sends? What is Bitcoinica going to be able to do to untaint them anyway?

Looking at the amounts of coins people got he didn't want to get rid of most of the money but to make sure more people have tainted coins.

So would it be reasonable for anybody lucky enough to receive refunds from Bitcoinica, via Luke-Jr's recovery of stolen coins operation from those handed out by BitcoinicaHacker, to request that they be suitably mixed first, e.g. http://www.bitcoinfog.com/
 .... since those coins that were once "tainted" are now no longer "tainted" having been returned to their original owners, albeit via many entity's addresses and sundry circuitous routes? Is it legitimate to "untaint" your own previously held coins "tainted" by the baddies?

Enquiring minds are wondering.

At the end of the day people valued Bitcoinica's service, whatever the hell it was. If they didn't value it they wouldn't have put their money into it.

Did anybody get defrauded? I am not sure, but I don't recall a bunch of people on the forum claiming they've been defrauded by Bitcoinica. Just the opposite.

If somebody DID get defrauded, who would they run to? Hopefully not the state, considering the entire existence of the state is based on fraud.

This brings up the topic of much needed voluntarily contracted dispute resolution organizations. Hopefully some get built sooner rather than later. I'm sure they will as state institutions continue to decline in legitimacy.

There are procedural and regulatory distinctions which separate forex brokers from the business Bitcoinica is engaging in, random link— but even so many people regard forex brokers of even the most reputable type as scams, just google around a bit.   If Bitconica had advertised itself as forex for Bitcoin rather than margin trading I think people would have somewhat more aware of the relevant risks.

Although bucketshops in equities were outlawed a long time ago, there are plenty of bucketshops around today in forex trading.

E.g. OANDA

What Bitcoinica does is not what Wall street does.  The trader's positions on Bitcoinica were not backed by actual (virtual) assets—  As their FAQ said: "To make things simple, there are no deliveries of Bitcoins."  Bitcoinica was not a brokerage, it was not a stock market, it was not engaging in margin trading of any kind most people are familial with. Nor was it a derivative markets with contracts backed by assets or at least strong, enforceable, obligations to furnish the assets.

Bitcoinica was a bucket shop, a kinda of gambling business that looks on its surface like a brokerage house.  Bucketshops had waves of popularity after the invention of live stock tickers allowed realtime stock data in hotels and bars all over the country. They were roundly outlawed in the US (and most of the world) in the early 1900s— because of their habit of bankrupting the unwary and because of the manipulation they caused on the actual markets.

In a bucket shop participants come to place bets against multiples of the change in price in stocks or commodities, with a house take added to the spread. There are no actual commodities traded at any point, however, and the commodities don't even have to exist (at least not at the quantities traded in the bucket shops). The operator of large long lived bucket shops may engage in moderate hedging to prevent regular volatility from putting them out of business to quickly— but the essential behavior is the same: You're not actually buying or selling the underlying asset and it's possible to end up short (or long) more of the asset than is actually available on the market.  The widespread mistaken belief that bitcoinica hedges 100% is now easily disproved by the lack of an enormous decline in MTGOX's volume— if that wasn't already clear enough from bitcoinica's frequent delays to pay withdraws, trading freezes, or the impossibility of hedging shorts using MTGOX.

Bucket shops are very risky— especially ones as narrow as Bitcoinica: A large bucketshop with many 'assets' for sale could potentially cover the losses should one become wildly successful. A single item bucketshop like Bitcoinica would rapidly bankrupt if there were large price motion against their favor.   So when people think about the risk/reward they often get the wrong ratio because highly successful trades are likely to never be paid— because there is no delivery of underlying assets there is no guarantee of being able to cash out your profitable trades.

Worse— Bucketshop operators have inequitable visibility into their markets and a financial incentive to abuse it:  A well timed but momentary increase/decrease of a few percent will wipe out the balances of people in "leveraged" short/long positions, converting their balance to the houses' balance. Between their ability to opaquely adjust the spreads and their holding of (apparently) a good hundred thousand btc of customer coins triggering these events would not be difficult.

Bucketshops also potentially have a distorting effect on the real market— to the extent that traders don't realize that its just gambling the fact that the buckshop exaggerates the supply of long or short positions is potentially a source of inefficient pricing (This is why on real markets there are rules abolishing or at least limiting uncovered shorts and regulating when short trade can take place).

I think Bitcoinica skirted the fine line of dishonesty about the nature of their business.  As far as I'm aware they did not outright make any dishonest claims,  but their appearance left many people with misunderstandings and they have happily sat quietly while other people told outright untruths in support of them.   Fortunately(?), their failure took a form that could have befallen a real brokerage created by completely inexperienced people— risks that the even the biggest rubes could have foreseen— instead of the specialized risk associated with bucketshops.

I will continue to caution Bitcoin users from participating in bucketshops, just as I would discourage them from participating in classic ponzi schemes, negative expectation gambling, apparent money laundering operations, pool defrauding attacks, and fractional reserve banking — especially in the nascent and unstable Bitcoin economy.