An exchange failed on its incompetency and now they are trying to liquidate and giving back their customers' money.
The market works even if the consequence is quite sour and painful.
This will means that exchanges will tend toward competency rather than incompetency.
Regulations is something that you will have to design first or else you get regulatory capture or "TOO BIG TO FAIL" or some kind of unjust monopoly. Adding a regulator means that we will have to shift our focus in making sure that the regulators are doing its job rather than ruthlessly killing off companies that can't keep customers' money safe.
Except with a lost wallet.dat there will be a lot of BTC that cannot be given back. Customers are likely going to take a haircut because an incompetent exchange lost their money. In the real world the people running the exchange would be going to jail.
I don't understand the point you are trying to make.
Incompetent exchange goes out of business. Said exchange try to compensate their customers. Customers learn better to scrutinize other exchanges for their backup policies and how they run their business.
Of course, this is the free market. Failure to be competent, either as an investor, user, or exchange, result in monetary loss.
To others, this is horrible. To me, this is the way I like it.
I wish for the accurate consequence of my decisions, not a jacked up distorted picture of reality. This prevent crisis from becoming a minor blip in the bitcoin economy into something that fundamental destroy the bitcoin economy.
Adding regulators who have a hold on the whole Bitcoin economy with no alternative for said regulators, with no incentives to for regulators to regulate the market right is a recipe for disaster. You want regulation and regulators? Show me the incentives for them to make things right. Show me why they will not fall prey to regulatory capture. Give me precise details of how this is all suppose to work and what the rules are.
This is an inefficiency of the market. You must have some level (perhaps not rigidly set) of inefficiency at which you would conclude that some type of government regulation would make the market more efficient.
Otherwise you'd accept any level of inefficiency as the market working, at which point it's just an ideological label.
Although it's not clear that regulation of bitcoin is even possible, we can still consider losses due to its absence.
What makes you think the government can run an economy?
Our economy, despite recent "deregulation" is the most regulated, especially when you count criminal and civil law as well, in the world. There are countless laws against selling known-bad products (lemon cars, toxic mortgages, etc) and we could have almost everyone involved in the recent collapse behind bars if we tried.
We pay through the nose for the regulation, especially in the collateral damage from false positives and economic friction, and it's totally worthless at catching the biggest criminals (in terms of dollars stolen) in world history.
If I want regulation I can use a regulated exchange. Or rather, if I felt like using beta-software I'd be doing it and would be thankful to be allowed even if I had just lost my test fund. Forced regulation would remove the choice.
And ultimately regulation implies that rules stop the bad guys and we know that's true. Thanks, but I'll wait until an open-source and audit-able exchange comes along, and then I'll listen to the experts I respect.
That there's not a regulated option... To use BitCoins you have to go into the underbelly where you're quite likely to be stolen from and have no recourse. While it's great you enjoy the ability to be mercilessly preyed upon, it's not great that there is no safe option.
This one was just (apparently) incompetence. Wait until the real crooks get going.
The safe option is to use an established government backed currency, I want bitcoin to succeed, but I can't honestly tell people about it without describing it as an incredibly risky investment (right now).
Bitcoin has unique properties in terms of exchanging wealth. If you don't actually need those properties though you probably shouldn't be using bitcoin for anything other than playing with it.
There is a movement among the users to exchange lost bitcoins into bitomat shares so the owner compensate for his errors with parts of his own company.
I disagree. Regulation has given people a false sense of security, leading to them trusting these unknown and untested entities.
Instead of regulation what they need is more transparency. Tell your customers who you are, how you are building your service, what you will do in the case of a disaster.
In this particular case you have someone who is playing with the technology without having even a basic understanding of how to build the required infrastructure.
What's to prevent a firm from lying about who they are and what they are doing? Without regulations (and accompanying penalties for breaking the rules), it's the wild West. It sounds good on a libertarian check list, but in practice the people who can least afford it get absolutely destroyed.
In theory, you'd have trusted independent third-parties that would verify and vouch for your company if you asked them to. Rating Agencies are an example of those.
That's a good question. I don't think regulation really improves things though, it just adds another layer of obscurity and involuntary regulation (is there any other kind?) goes against my libertarian sensibilities.
As for the people who 'can least afford it', well they need to learn how to be paranoid, the sooner the better.
Reputation is, to me, the best way to ensure trust. Build a public reputation through transparency and actions. Of course this takes time, but in the end is better than than an external entity imposing regulations.
