The Bitcoin community is getting another lesson in the importance of end-to-end thinking in systems.
As MtGox officially enters bankruptcy, with the usual real world consequences of lawsuits and loss of confidence, yet another exchange has problems. Cryptsy.com apparently had mysterious problems which delay payouts (i.e., you can’t convert your BC into worthless, immoral, old “fiat” currency).
The wobbly exchanges have nothing to do with the validity or security of the exchange protocol, or the mining systems. Hence, some consider them relatively minor issues, not relevant to the “real” cryptocurrency systems.
But faulty and slow exchanges have knock on effects. For example, Jonathan Saewitz reports how a mining pool, cleverly named “BlackCoinPool”, which can’t operate without exchanges. While Saewitz headlines this as a problem with cryptsy (the exchange), it is actually a problem with Bitcoin and cryptocurrency in general.
The end-to-end principle is simply this: the whole system has to work, end to end. The chain is only as strong as the weakest link.
These practical and reputational problems with cryptocurrency exchanges are contributing to the ongoing bifurcation of the Bitcoin narrative. (What religion worth its salt doesn’t have a schism?)
We are seeing the “suit-ification” of Bitcoin. All sorts of grown ups, vice principals, and wall street sharks are getting in the game. And they aren’t interested in the “rugged beauty” of offshore freebooters, they are interested in controlling the financial system for their own profit.
For example, Pete Rizzo reports on the announcement of yet another grown-up exchange, which is to be organized a lot like a conventional financial institution. Notably, it is clear that this project is a direct response to the catastrophic failures of the amateur exchanges.
I predict we will see increasing religious warfare between the utopian libertarians, who love the “rugged beauty” of completely offshore money, and the suits who want to make money off the conventional, regulated economy. Of course, the technology doesn’t care, you can do it either or both ways. But the Bitcoin brand will soon see a major crisis, due to conflicting narratives.
Meanwhile the Dogecoin narrative faces its own schism. Following the path of the sponsorship of NASCAR #99, Shibes are sponsoring a Mixed Martial Arts fighter. This stuff is pretty far from the utopian Robin-Hoodiness of many Shibes (e.g., this or this).
It will be interesting to observe the upcoming “Dogecon” in San Francisco (April 25, 2014). The program includes formal pitches and probably a lot of goofing around (a costume contest is advertised).
As Peter Spence astutely notes,
“It’s not clear that Dogecoin’s own userbase is keen for the currency to become a replacement for traditional money, or for it to be used as much else than a means of rewarding others on the internet for producing or sharing content.”
We shall see if there is a “suit-ification” of Dogecoin, or at least a NASCAR-ification.
On the Mazacoin front, there was never doubt that the nationalist narrative would encounter pushback, likely from many directions. I don’t mean to get involved in the internal affairs of the Lakota, I only want to comment on the public narratives about the cryptocurrency. These narratives will, no doubt, reflect many aspects of Lakota history, politics and culture, which I respect but do not have a personal stake in.
A spate of publicity has put forward an initial story for Mazacoin: it could be “the new buffalo”—definitely a trenchant cultural claim.
Alysa Landry reports with an interview which recounts the founding narrative quite clearly. “Developing currency is a way for tribes to maintain sovereignty”, and maybe to “alleviate poverty by propelling the Lakota Nation into the global market”. (Initial venues will likely be casinos and pow wows.)
However, Brandon Ecoffey reports that the Tribal Council and President are unaware of this “official currency”, though they have endorsed the exploration of the topic. The Council and President are the embodiment of the tribe’s sovereignty, so they will have to be on board.
To date, it is not clear how this will play out, but there is clearly a possibility of multiple narratives developing around the cryptocurrency technology. One council member is quoted to skeptically remark, “It looks kind of like a scheme to me”.
Got schism? Everybody’s doing it.