
Schadenfreude - cstross
http://www.antipope.org/charlie/blog-static/2014/02/schadenfreude-1.html
======
corford
Rather than enjoying some shadenfreude (directed at MtGox and its users, not
Bitcoin itself), I'm bewildered by the users and upset that their stupidity
has allowed this predictable fiasco to happen.

Leaving the entirety of your BTC savings on an exchange provided and managed
wallet is utterly insane at the best of times but to have done so with MtGox
was just asking for it.

There are countless examples stretching back years that reveal MtGox was
nothing more than a badly run website put together by a bunch of amateurs who
took an early bet on Bitcoin and got lucky.

It's been obvious to anyone who performed even the most basic of research that
MtGox would one day blow up spectacularly and there have been vastly better
options available for a _long_ time now:
[http://www.bitstamp.net](http://www.bitstamp.net),
[http://www.kraken.com](http://www.kraken.com) and
[http://www.coinbase.com](http://www.coinbase.com)

It's sad people have lost money but MtGox users largely have only themselves
to blame. The writing's been on the wall since almost forever, better
alternatives have been available for a long time now and, regardless of the
exchange, they should never, ever have left significant chunks of their BTC
net worth on a wallet not under their exclusive control. If you leave all your
money on an exchange controlled wallet, you'll eventually end up like the poor
chumps who bought penny stocks from the Wolf of Wall street: robbed.

I just hope the entire BTC ecosystem doesn't come crashing down in the
fallout.

~~~
bunderbunder
The problem is, we're not all equally engaged in the issue. Nor can we be - I
can't simultaneously be an expert on every single thing that touches on my
life. For better or for worse, we all cut corners - we all _need_ to cut
corners on the caveat emptor thing; there's only so much time in the day - and
some of us will be more successful at it than others.

So I'm not interested in blaming the victims here. What happened to them was
perhaps predictable and certainly tragic, but like with the recent housing
crisis it's important to distinguish between people who we _wish_ had known
better, and people who actually did have a moral or professional
responsibility to know better. If anything, I'm way more interested in blaming
the relevant regulatory agencies for not being quicker to do their jobs by
ensuring that Mt. Gox was behaving responsibly. Perhaps this whole crisis
could have been averted if, 3 or 4 years ago when BTC first got big, someone
had thought to knock on their doors and said, "Hey, I'd like to meet your
accounting team."

~~~
defen
> The problem is, we're not all equally engaged in the issue. Nor can we be -
> I can't simultaneously be an expert on every single thing that touches on my
> life.

That's understandable if someone just bought a couple bitcoins on a lark when
they were under $100. But there are people who have lost a significant
fraction of their net worth - those are the ones who really should have taken
the time to know better.

~~~
PakG1
I'd say anyone who bought a house at the peak of the housing market also lost
a significant fraction of their net worth. Should we say those are the ones
who really should have taken the time to know better? Consider _just how many_
people lost a significant fraction of their wealth and now have underwater
mortgages. Do you see where I'm going here? Caveat emptor really does only go
so far. That's why at the end of the day, there's supposed to be regulation,
to ensure a safe place as possible for people to conduct their economic
activity, realizing that risk is still unavoidable. There's acceptable risk,
and then there's, oh-no-those-bankers-were-pulling-some-nasty-tricks-and-the-
public-suffers risks.

~~~
locopati
While the expectation of accountability holds for banking and mortgages (and
in that case was more or less ignored and hardly punished for it), does it
hold for MtGox and Bitcoin, where the foundation is built on the lack of
regulation?

~~~
PakG1
If we want to look at it that way, perhaps we can ask what the Bitcoin
Foundation was doing to make sure their members were more capable then? The
fact is that if you want Bitcoin to go mainstream, someone somewhere has to be
able to say that a service provider is reliable because normal laypeople can't
be expected to make that judgment call wisely.

------
ericb
Stross's disdain for bitcoin is existentially disappointing to me. The man
wrote the first book I read where distributed autonomous corporations
transacted on their own behalf. The idea of python based corporations and
legal denial of service attacks blew my mind.

Bitcoin is in some ways, the realization of that dream. But Stross is so
dismissive of it--no points for trying.

His disdain seems to be on the basis that Bitcoin is deflationary, but I don't
think that's an issue for 2 reasons. Primarily, deflationary assets can exist
side by side with inflationary ones with no problem. The existence of gold
does not cause everyone to abandon fiat. I would argue the deflationary aspect
is an elegant game theoretical solution to the bootstrapping problem and
gaining adoption in a double-sided market.

Secondarily, if you think of Bitcoin as a money transmission protocol, a lossy
protocol would be a lousy protocol.

If the argument is about intrinsic value, a Bitcoin is a token that allows you
to transact on the Bitcoin network and that is where it derives its value
from.

~~~
mercurial
> Stross's disdain for bitcoin is existentially disappointing to me. The man
> wrote the first book I read where distributed autonomous corporations
> transacted on their own behalf. The idea of python based corporations and
> legal denial of service attacks blew my mind.

I wouldn't read "Accelerando" as some kind of utopia, considering the eventual
outcome.

> His disdain seems to be on the basis that Bitcoin is deflationary

I think cstross' problem with Bitcoin stems from exactly the same things that
libertarians find so great about it: it's not taxed and nobody is in command
(no monetary policy).

The fact that a major actor turned out to be incompetent highlights another
area in which bitcoin is deficient: it lacks regulation (though I'll agree
that the real-life banking world could use much tougher regulation and
enforcement of existing rules).

~~~
throwaway420
Look at how hard it is to get a tiny twist on an old idea like AirBnB or Uber
legal in society. These are great things that the existing institutions that
benefit from government enforced monopolies try and use the law to smother.

I view the lack of regulation as a feature, not a bug.

Bitcoin is an arena for innovation and new ideas for micro transactions and
programmable contracts and probably lots of decentralized things nobody has
thought of yet. Were it left to the existing financial regulators and
institution, the pace of innovation would be glacial and they would prevent
most new ideas from coming into fruition. Why would they want innovation? They
have an effective monopoly and use regulations to prevent competition. And
these companies know that if they take major risks and nearly kill themselves,
that they'll almost certainly be bailed out by a magic bag of free money.

It's refreshing to see a financial system with no bailouts for companies that
crash and burn.

~~~
rosser
I don't think anyone's fretting over Mt Gox crashing and burning here. It's
all the individual BTC holders that it took with it. Yeah, they probably
should have known better than to use a wallet service on a cobbled-together
site like that, but you sound like you're suggesting that's sufficient reason
for them to be out their money.

I emphatically disagree. A site, upon offering a wallet-type service has (or
would have, in the presence of regulation) a fiduciary duty to its users to
protect their holdings. ISTM that in the Wild West of Bitcoin, the situation
is, instead, "Sucks to be you."

Maybe you're comfortable living in that world. I don't think that's remotely
grounds on which to suggest that everyone else should be comfortable with the
same level of risk.

~~~
throwaway420
> Yeah, they probably should have known better than to use a wallet service on
> a cobbled-together site like that, but you sound like you're suggesting
> that's sufficient reason for them to be out their money.

This was an expected outcome given what information was public about Mt. Gox,
but I'm not suggesting that the users deserve to be out of their money.

The only thing I like about what happened is that nobody is going to bail out
Mt. Gox's owners. And this incident should hopefully make people more cautious
about where they store their money.

> Maybe you're comfortable living in that world. I don't think that's remotely
> grounds on which to suggest that everyone else should be comfortable with
> the same level of risk.

I'm also not suggesting that everybody else should be comfortable with any
particular level of risk. The great thing about Bitcoin is that it's
voluntary. Nobody is forcing another human to use it - you only do so if you
feel it's the best avenue for you.

------
rayiner
For me the schadenfreude isn't about cryotocurrency versus fiat currency. To
me the whole Mt. Gox mess is a reminder that there are enough bad actors in
society to screw things up, and combine that with ineptitude and you have a
recipe for this sort of event. Sure its just one event, but its also a small
community, and the event is quite huge proportionally. And its not going to
get better. Indeed, as the stakes get higher, it will get worse. Its a
corrolary to the idea that DRM will always be broken, no matter how
technically sophisticated you make it.

There are a lot of idealists in the anarcholibertarian community who talk
about "violence" as something that can be taken off the table. And what this
shows is that violence is endemic. You can't take it off the table, you can
just think of different ways to manage it.

I would really like to not see Bitcoin regulated or protected, except to the
extent it is used to subvert meatspace laws. I just want to see what would
happen if, e.g., it wasn't considered a crime to "steal" bitcoin. Ideally, it
should also be legal to mug someone in real life for his bitcoin, so long as
bitcoin is the only thing taken. Because cryptocurrency or not, holding a gun
to someone and asking them to hand over the bitcoins they have under their
mattress is always an option. Then we could see if the community came up with
non-government based solutions to these problems.

------
weavejester
"A _real_ currency with a fiscal policy and the backing of a state that could
raise loans would be able to ride out this insult. It'd be extraordinarily
painful, but it wouldn't devastate the currency in perpetuity."

What if Bitcoin _does_ recover? Would that change your opinion?

"But Bitcoin doesn't have a fiscal policy: it wears a gimp suit and a ball
gag, padlocked into permanent deflation and with the rate of issue of new
"notes" governed by the law of algorithmic complexity."

Out of curiosity, what's your opinion on crypto-currencies that aren't
deflationary, or that rely on proof-of-stake rather than proof-of-work?

~~~
cstross
_Out of curiosity, what 's your opinion on crypto-currencies that aren't
deflationary, or that rely on proof-of-stake rather than proof-of-work?_

Now, _that_ sounds like a good idea. But at that point, we're talking about a
cryptocurrency equivalent of real grown-up money, which would sort of kill its
appeal to a lot of the folks who rant on about the evils of fractional reserve
banking and hoard gold because they think it has some sort of mystical
inherent value -- the sort of folks who invest in what William Gibson termed
"Dunning-Krueger-rands".

~~~
JulianMorrison
Proof of stake is wildly anti-egalitarian: very literally, the rich get
richer.

~~~
mithras
Just as interest in the conventional economic system is wildly anti-
egalitarian: very literally, the rich get richer.

~~~
JulianMorrison
Agreed but a difference is that to profit by interest, you generally have to
invest, take risks, and put the money to work.

------
drcode
> A real currency with a fiscal policy and the backing of a state that could
> raise loans would be able to ride out this insult.

My bitcoins in my personal wallet seem to be "riding out" everything just
fine. What am I missing?

~~~
pjc50
The Harold Wilson argument: the numeraire of your wallet is indeed unchanged.
The value of what you can buy with it has fluctuated dramatically.

~~~
drcode
> The value of what you can buy with it has fluctuated dramatically.

In 2013 I would have agreed. So far in 2014, the price fluctuations have been
modest(though different people have different tolerances for risk, of course)

------
spindritf
I find all the Schadenfreude over MtGoX disgusting, especially here. Sure, it
was likely to fail, even more likely than your regular startup. And no, I have
like 0.0005BTC.

But it's just sad. There is no joy to be derived out any of that.

Why would you want a BTC exchange to fail? Or even the whole currency?

What's the popcorn for? You're gonna laugh at posts written by people who lost
money? Isn't there an endless stream of youtube videos where someone is
getting hurt because of their stupidity and with higher production values
(HD!) than a bitcoin forum?

A lot of commentary looks to me like a completely pointless exercise in
signalling that amounts to "I don't like those libertarians/nerds who are
pushing bitcoin. Dorks."

------
yummyfajitas
I don't understand what deflation has to do with this. Did the inflationary
nature (or "real" monetary policy) of the USD somehow prevent Madoff/MF
global/etc?

~~~
cwp
No, but Madoff went to jail, Corzine narrowly avoided it, and MF Global is out
of business. Governments can't prevent crime, but they do punish it.

The distinction here isn't inflation vs deflation, but flexible policy set by
current leaders according to circumstances vs rigid policy set by past leaders
according to ideology.

~~~
yummyfajitas
I still don't understand - what does a leader-based monetary policy vs a rule-
based monetary policy have to do with businesses going insolvent? If the US
adopted some rule-based monetary policy (e.g. NGDP targeting or just plain old
"don't print more money"), would Goldman suddenly collapse like Mt. Gox?

I can see why external regulators ensuring Mt. Gox's solvency (or various
blockchain based surveillance mechanisms proposed by a number of people) might
have helped this situation, but that has little to do with a central bank
altering interest rates and purchasing assets to tweak the money supply.

I just don't understand the connection between monetary policy and fraud
prevention/bad accounting/etc. Explain like I'm a 5 year old child.

------
sneak
Authoritarian statists are disgusting.

I get along with most ideologies but blaming "bitcoin" when really it's just a
rulebook in cpp that a bunch of people voluntarily decided to run is somewhat
silly and misguided.

------
VMG
> "But Bitcoin doesn't have a fiscal policy: it wears a gimp suit and a ball
> gag, padlocked into permanent deflation and with the rate of issue of new
> "notes" governed by the law of algorithmic complexity."

I like that about the gimp. I don't want him to have compassion with MtGox or
those who've been told to stay away from MtGox for over a year.

------
julie1
the money first property is its volume should be controlled, preferably by
human beings. It should avoid arbitrary effect such as the money coining
belongs to an elite without any legitimity. Right now, bitcoin is a kind of
speculative ponzi like bubble based on hash of hash which has no other value
than the belief of the gullible :)

------
julie1
If charles stross talks about money, I would like the opinion of neal
stephenson :) (REAMDE was right about that too, and his opinion is that money
should always be indexed on resources, so that the economy is monetary bounded
the same way we are resource bounded.)

------
higherpurpose
What does having a fiscal policy have to do with anything related to this
issue?

------
pyalot2
Doesn't Charlie understand that real people got hurt here? I find it
incredibly insensitive to post something like that.

Yes people should not have kept their stuff on Gox. People have been warning
from Gox since 2011 (where has Charlie been there? Nowhere, ahyes, hindsight
20/20 and all that?).

But it happened, and now there's lots of angry and hurt people. Maybe not add
insult to injury mkay?

~~~
wpietri
I think there are a few kinds of hurt here.

There are people who have paper losses. Losing something you never had _feels_
bad, but it's not an actual injury.

There are people who put real money into a completely unregulated financial
instrument via a completely unregulated financial company named after a
trading-card game. Hopefully they took the advice that's in the first chapter
of any book on money management and didn't bet more than they could afford to
lose. If so, then there's no hurt.

There are the people who had no clue and took a bath. They did get hurt, and I
feel bad for them, but they are incidental to the drama.

Then there are a lot of people who have been hyping BitCoin to the skies.
Where they got hurt is in their egos. There, I think adding insult to injury
is _richly deserved_. They are the people who led the clueless into this, so
fuck them.

~~~
pyalot2
Point stands that are people who, for whatever reason, had assets on Gox. And
they got hurt real bad. Although people have been trying to warn everybody off
Gox FOR THE LAST FUCKING 3 YEARS, they still got there.

And insulting people who just lost real money in whatever fashion. It's just
not considerate. But, if Charlie had been there, the last 3 years, warning
people off gox, well, I would emphasize. BUT HE HASN'T. Stross the dickwipe
wasn't there, trying to wean people off Gox. He has only opened his piehole
today, because it's the hip talk of today. It's shameful and illconsiderate.
It's also showing an astounding lack of empathy as to be basically
psychopathic.

Stross is a walking talking psychopathic incident waiting to happen.

~~~
sentenza
How much did you lose? I'm sorry you got burnt, but in the end, maybe it helps
to think of the BTC and money inside that wallet as never having existed in
the first place. After all, it never was possible to withdraw all of it in
Dollars, so it really wasn't the equivalent money.

He has been warning about BTC in general and there are many, mainly
speculative, aspects of Bitcoin that are prone to people getting burnt.

To very many people, this is no surpise. At this point, these people are quite
grumpy for having been laughed at by some members of the Bitcoin community.

~~~
pyalot2
I didn't lose any on Gox, I've been warning people off gox since 2011, and
more often since late 2012. Everybody who didn't have his head stuck in the
sand saw this one coming from a lightyear away.

But that doesn't mean you should insult the people who did get hurt by gox.
They lost $55m in fiat and 770kbtc (around $0.5b). They're in a bad place
right now, and they're gonna learn their lesson without pissing from on high.

------
michaelochurch
I want Bitcoin to fail, because to me it's a scam designed to enrich the few
who got in early. I understand that this is an important problem, but this is
just a very long con.

I also will enjoy it when the investors who funded duds like Lucas Duplan
(Clinkle) lose their entire investment and some degree of reputation.

I'm a regular reader of Valleywag and whenever some poser gets humiliated, I'm
glad to see it.

You know what this is _not_? It's not _schadenfreude_ and I wish people
wouldn't use that word.

I don't want these people (HN libertarians, top VCs, Silicon Valley scenesters
and idiots) to suffer. I just _don 't care_ if they suffer. And, so it is that
most of the best things for society right now hurt the people at the top of
that world.

~~~
aestra
Business A has an idea but needs people to invest in it to take off. Group B
takes a risk and invests in Business A. Business A succeeds and Group B is now
enriched.

Replace Business A with Bitcoin.

>I wish people wouldn't use that word.

Why? There is no English equivalent and it represents a concept that is a well
known phenomenon which has been subjected to scientific studies.

~~~
lutusp
> Why? There is no English equivalent and it represents a concept that is a
> well known phenomenon which has been subjected to scientific studies.

Psychological studies of the kind you're referring to aren't scientific. To be
valid science, a study must test a theory, an explanation, but the class of
studies to which you refer only describe. Sort of like saying, "The night sky
is filled with little points of light," and calling it astronomy.

~~~
aestra
>Psychological studies of the kind you're referring to aren't scientific. To
be valid science, a study must test a theory, an explanation

What the hell are you talking about?

[http://deepblue.lib.umich.edu/handle/2027.42/69046](http://deepblue.lib.umich.edu/handle/2027.42/69046)

Abstract: To test the _hypothesis_ that Schadenfreude, pleasure at the
suffering of others, will result when an envied person experiences a
misfortune

[http://psp.sagepub.com/content/28/7/953.short](http://psp.sagepub.com/content/28/7/953.short)

This study tested the _hypothesis_ that schadenfreude (or pleasure in
another's misfortune) would be more closely related to resentment and a wish
to correct a perceived injustice than to envy, and that sympathy would involve
different processes.

[http://psycnet.apa.org/psycinfo/2005-11932-007](http://psycnet.apa.org/psycinfo/2005-11932-007)

The present study tested the _hypothesis_ that Schadenfreude, pleasure at
another's misfortune, results when a misfortune is perceived as deserved.

[http://scholar.google.com/scholar?hl=en&q=Schadenfreude](http://scholar.google.com/scholar?hl=en&q=Schadenfreude)

------
corresation
Many with a vested interest in bitcoin are desperately performing damage
control, evident in every thread about this issue.

Mt. Gox was a, har de har har, Magic card trading site (and ebay is for pez
dispensers), and everyone knew that it was fatally flawed and fundamentally
incompetent...that it was often cited as the go-to if you wanted to get into
BC was just a lot of people who don't know what they're talking about, and
everyone burned deserved what they got.

That it was by far the largest such site, and its metrics were canonical for
BC was just an oversight, cheered on by ignorant people. And the fundemantal,
basic malleability flaw, that still existed in the _reference client_ , was
"clearly" documented in some wiki page somewhere in 2011.

And if another exchange falls, the excuses will appear immediately, making it
evidently clear that all was known to any in the know long before.

------
fuj
> and implemented in PHP!

Stop reading after that. For the millionth time, the problem is not in the
language but on the programmer. So if it was made, by the same person, in RoR
or <insert hipster language that makes your panties wet> it wouldn't suck?

~~~
mimog
> For the millionth time, the problem is not in the language but on the
> programmer

In all honesty it does seem like a bad language choice. A choice more likely
to be made by a bad programmer than a good one. At least in my experience it's
the sub-par programmers who choose to do stuff in PHP and tout it as being a
fantastic language. YMMV.

