EFF Stops Accepting Bitcoin, Regifts All Donations 391
Gendou writes "The EFF issued a statement that it will no longer accept Bitcoin donations, has not used any of the donations, and will transfer all past donations to The Bitcoin Faucet. See also additional and forum threads."
Currency not accepted is currency no more? (Score:2, Interesting)
Please stop posting Bitcoin stories (Score:2, Interesting)
Please stop posting Bitcoin stories. No one cares about Bitcoin. We don't give a rat's ass about Bitcoin. We could not care less about Bitcoin. We have no interest in Bitcoin. Bitcoin does not concern us.
Bitcoin ended up as a pyramid scheme (Score:5, Interesting)
The Bitcoin thing has gone off in a different direction than its promoters anticipated. They were thinking "payment system", like gift cards. The idea was that most Bitcoins would be tied up in people's "wallets", and spent slowly. All that static value would anchor the currency.
That's not what happened. Bitcoins turned into a speculative vehicle, with "miners" grinding away solving hashes and generating more Bitcoins, and flaky "exchanges" offering on-line trading. The exchanges are tiny; today's worldwide Bitcoin trading volume is comparable to the sales of one supermarket. The daily volatility is huge, even on days when there isn't a break-in. So no major retailer can accept Bitcoins; they don't know what they will be worth at the end of the day, let alone the end of the month.
In a speculator-dominated system, Bitcoins are a pyramid scheme. The scheme by which it becomes harder over time to generate Bitcoins favored early adopters by a huge margin.
It's already too late to get in. The difficulty level has reached the point where buying and powering the new hardware is not cost-effective. And that was before the price of Bitcoins crashed. (The current price is around $13.)
Then there's the flaky exchange problem. Mt. Gox (formerly Magic, the Gathering Online Exchange) turns out to be two people in Tokyo. Tradehill is some company in Chile. All the other exchanges are too dinky to matter. Not one of them has the organization and resources of a typical small-town bank. Worse, they're not just "exchanges". They're depositary institutions, holding customer balances. Mt. Gox customers are now very aware of this, because they can't get at their money while Mt. Gox is down. Some people are worried over whether the money will be there when Mt. Gox comes back up.
The "exchanges" represent a mis-design of Bitcoin. There should have been a way to do an exchange in a distributed way, without the exchange holding customer assets. The NYSE and NASDAQ don't hold customer balances. Brokers do, but you can have your cash swept from a brokerage into a bank daily, or more often if the numbers get big. The Bitcoin exchanges are slow at delivering money - Mt. Gox has a daily transfer limit, and even when they were up, many users reported delays.
The EFF was right to bail.
Some Actual Text From The Announcement (Score:3, Interesting)
1. We don't fully understand the complex legal issues involved with creating a new currency system.
2.We don't want to mislead our donors. When people make a donation to a nonprofit like EFF, they expect us to use their donation to support our work. Because the legal territory around exchanging Bitcoins into cash is still uncertain, we are not comfortable spending the many Bitcoins we have accumulated.
3. People were misconstruing our acceptance of Bitcoins as an endorsement of Bitcoin. We were concerned that some people may have participated in the Bitcoin project specifically because EFF accepted Bitcoins, and perhaps they therefore believed the investment in Bitcoins was secure and risk-free. While we’ve been following the Bitcoin movement with a great degree of interest, EFF has never endorsed Bitcoin. In fact, we generally don’t endorse any type of product or service – and Bitcoin is no exception.
Re:Please stop posting Bitcoin stories (Score:2, Interesting)
>We have no interest in Bitcoin.
But a few Slashdot higher-ups have *financial* interests in Bitcoin. That's the only logical explanation for the stupid thing suddenly having articles all over /. and for it having its own goddamned icon.
Re:Bitcoin ended up as a pyramid scheme (Score:4, Interesting)
The Bitcoin thing has gone off in a different direction than its promoters anticipated. They were thinking "payment system", like gift cards. The idea was that most Bitcoins would be tied up in people's "wallets", and spent slowly. All that static value would anchor the currency.
Citation?
That's not what happened. Bitcoins turned into a speculative vehicle, with "miners" grinding away solving hashes and generating more Bitcoins,
Which in general is good. The more miners there are, the more secure the currency is against double-spending.
The exchanges are tiny; today's worldwide Bitcoin trading volume is comparable to the sales of one supermarket. The daily volatility is huge, even on days when there isn't a break-in. So no major retailer can accept Bitcoins; they don't know what they will be worth at the end of the day, let alone the end of the month.
There's no reason retailers have to wait until the end of the month or even the end of the day before cashing out their bitcoins. A retailer could cash out their bitcoins immediately, or after the first confirmation block. The volatility of Bitcoin is only a problem for speculators.
The difficulty level has reached the point where buying and powering the new hardware is not cost-effective. And that was before the price of Bitcoins crashed. (The current price is around $13.)
No it isn't. An average ATI graphics card will still net you $100 per month profit, even at the current difficulty.
Worse, they're not just "exchanges". They're depositary institutions, holding customer balances. Mt. Gox customers are now very aware of this, because they can't get at their money while Mt. Gox is down. Some people are worried over whether the money will be there when Mt. Gox comes back up.
Why anyone would store money in Mt. Gox and not immediately take it out after a trade is beyond me. Clearly some people do, but that seems like asking for trouble.
The "exchanges" represent a mis-design of Bitcoin. There should have been a way to do an exchange in a distributed way, without the exchange holding customer assets.
It's not a "mis-design". Acting as an exchange is beyond the scope of the Bitcoin protocol. If you want a distributed exchange, that's an entirely separate project.
However, I can't see how a distributed exchange would work, unless it was just some manner of trust network and actually making the trades was up to the individuals. That doesn't seem particularly user-friendly to me, so I suspect that exchanges will have to be centralized websites.
That said, it would be better if (a) people used alternative exchanges more, and (b) the exchange source code was open sourced.
The EFF was right to bail.
The EFF bailed for entirely different reasons. If the future legality of bitcoin is contested, they want to be able to fight without also being the one of the ones being prosecuted.