Bitcoin Luminary Series: Jeffrey Tucker

The Bitcoin Luminary Series is an ongoing feature of Real Virtual Currency in which we reach out to the individuals who are making a splash in the digital currency pond. The purpose of the interview is to ask roughly 50% Bitcoin questions and 50% personal questions, and as such, the tagline of the Bitcoin Luminary Series is: “More interesting than Bitcoin itself, are the people it attracts.”

Today we speak with Jeffrey Tucker. Jeffrey is the executive editor of Laissez Fair Books; a Distinguished Fellow of the Foundation for Economic Education, an adjunct scholar with the Mackinac Center for Public Policy and an Acton University faculty member. He is past editorial vice president of the Ludwig von Mises Institute and past editor for the institute’s website, Mises.org. A quick convert to the wonders of Bitcoin, Jeffrey has been busy writing about ways to educate new users on how to use Bitcoin securely and interviewing fellow Bitcoiners about their experiences. We thank him for joining us.

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1) Tell me about your childhood, where you grew up, and what your hobbies were.

My family has been in Southwest Texas since the 1830s and I spent most of my childhood in El Paso but we were always visiting family in that region which is now serious oil country. The people there have a strong independent streak, and my extended family was certainly that way. My father was an academic, historian, and musician. I spent most of my childhood cultivating music skills, and I was forever transcribing music from LPs, mostly from jazz and classical records. For reading, I found nothing as exciting as encyclopedias actually.

2) Were there any defining moments in your youth that lead you to pursue a career in writing, editing, and think tanking?

I was sure I was going to be a musician until my senior year in high school. We were all kind of required to be in marching band, but I hated this aspect of things. One day I walk off in personal protest of the conformism that was required in that sector. I just turned around in rehearsal and walked away. I marched straight into the registrar and said “what do I need to do to graduate” She said I had enough hours already. I said, then I want out. That was it. It was a great feeling to just toss away something that you hated. I felt completely free.

That was a big moment for me because it made me realize how much most people accept their lot on life and how liberating it can be to suddenly decide: hey I have the right to make a decision on my own and I can go a different direction. Two months later, I was in college and studying economics.

Another thing that shaped me were the endless string of jobs I had in the commercial world: roofing, digging wells, moving pianos, tuning organs, working maintenance, busing tables, selling furniture and clothing, washing dishes, whatever. I learned so much in these jobs, and I fell in love with commerce.

3) What are your three greatest strengths?

Well, I’m a pretty fast writer. I can process information pretty quickly. And I’m told I have a wild imagination.

4) What are your three greatest weaknesses?

I’m bad at fitting into other people’s plans for my life. I can get careless about details. And I’m really, really bad about taking breaks and relaxing. The only way I can really enjoy vacations is to think of of them as work.

5) When did you adopt your iconic bow-tie getup, and do you wear one when sleeping at night?

I never really thought that the bow tie was anything important. I started wearing one when I was about 16 or so because it kind of stays out of the way. As for dressing up all the time, it’s just what makes my comfortable.

6) You were already a high-profile character in the libertarian movement when you discovered Bitcoin, and you have told me that your existing views on capitalism and freedom were in large part responsible for your interest in the new currency. However, quite a few hard-money advocates have not shown such enthusiasm, even though they share many of your philosophical ideas. Why do you think this is?

The most beautiful thing about markets is that they are constantly surprising us with new possibilities. Intellectuals aren’t always comfortable with that, not even pro-market intellectuals. Bitcoin challenges many entrenched theories about how the world of money and banking are supposed to work. Bitcoin invites everyone to be a student. Not everyone wants to be relegated to that status.

7) Are you actually as pleasant and optimistic as you appear in your videos?

Ha, well, I’m not sure I am always pleasant in my videos. I’m always rather surprised by how people describe me.

8) What are your personal goals for the next 10 years?

Mostly I want to be part of social change, to be involved in the birth and development of a new world. Every day I’m grateful that I’m alive in our times so I can see it, and I’m so honored that anyone cares what I have to say about it. I hope I can continue to make sense out of things in a way that helps people.

9) When was your first “aha!” moment with Bitcoin?

I think I had three. The first was getting my first transfer in. It felt real. The second was selling my first thing for Bitcoin. I realized what was possible. The third was buying something with Bitcoin. I got up and did a dance for about 10 minutes. I will never forget these moments.

10) What are your three favorite Bitcoin properties?

The speed thrills me. The cyptography is dazzling. The ease of use and its mathematical purity is beautiful. Mostly I admire how it is a pure market creation, something so implausible that has become so wildly successful. It shows how people thinking creatively can solve the world’s problems.

11) What are the top three Bitcoin weaknesses that you can identify?

Not sure that this is a weakness but it is troubling that it is difficult to talk to “normal people” about it. The words are too complicated. The concepts are too abstract. It seems too geeky. And there is no real user-friendly interface as measured by normal standards. It will be a while yet before it can become accessible to the person on the street.

12) You have boldly claimed that Bitcoin has the potential to actually end nation-states. If a particular government felt threatened by Bitcoin, how would you expect it to react?

Satoshi seems to have thought of everything. I don’t worry too much about a “crackdown” or regulation because the whole protocol builds in as much invulnerability as one can have in this world. Honestly, I think banking establishments and states are just going to have to deal with that change. It will continue to grow as a parallel currency, and the state’s systems are going to gradually die.

13) You’ve been making lots of new friends. How would you describe the average Bitcoin user?

I just love Bitcoiners. They’ve seen things others have not seen. They imagine future possibilities others do not imagine. They contemplate beautiful worlds in the immediate future. They embrace change. They are forward thinking. They see how liberty works in the real world. These are very pleasant personality traits.

14) Do you think that using Bitcoin helps to improve people’s financial knowledge?

It’s a wonderful way for young people to embed themselves into the real world of finance and economics, not just as observers but participants.

15) Finish the sentence: For 1,000 BTC I would ________________.

Give up Twitter for a month!

16) Have you considered starting or becoming a part of any Bitcoin-based companies?

I have and I’ve talked to several. I think I might be of more use on the outside.

17) While the price of Bitcoin isn’t the most important factor, it is certainly a proxy for overall adoption. Make a prediction for the price of Bitcoin in 2023.

Wow, that’s hard but we all know where this seems to be headed. With a fix quantity, it can only grow in purchasing power. I think I’ll just say $10,000.

18) Tell us something about Jeffrey Tucker that most people wouldn’t know, but may find interesting.

I live a pretty open life. But most people might be surprised how much time I spend studying Gregorian chant.

RVC: Thank you for your time!

Prediction for a future event: “The Spike”

Lately the Bitcoin price hasn’t been moving much, at least by Bitcoin standards, and has provided a nice respite from the price parroting that we witnessed in the last big run-up. In it’s place has flourished renewed exploration and discussion regarding the technology itself, how it can be incorporated, implemented, and improved.

But don’t think for a minute that Bitcoin is going to plateau long-term around the $100+ mark. Observing the last two years, we can see that Bitcoin has two basic modes: steady-as-she-goes, and have-you-seen-my-beachball-bonkers. From late 2011 until early 2012, Bitcoin would sit still for months at a single price, occasionally ratcheting up or down depending on the news (i.e. “WordPress now accepts Bitcoin,” or “Bitcoin Savings and Trust is a Ponzi Scheme.”) It can do it! The catch is that Bitcoin only likes to chill out when nobody seems to be looking. From February to April of 2013, we experienced another “Bitcoin Unhinged” period, which is arguably finally calming down.

I would like to make a prediction that in the next phase of screws-loose-wheels-coming-off-the-trailer, we’re going to see a kind of price movement that is almost never seen in financial worlds: I’m going to call it “The Spike.”

I’ll define “The Spike” as a price movement upwards of 200% within a 1-month period, after which the price will not correct below the new level, ever.

It is essentially a reverse correction, an upside-down bubble pop. While 200% is clearly an arbitrary figure, I believe that there are 5 conditions that will eventually facilitate such a move.

1) Liquidity (or “Friction”): During the last two bubbles (“bubblettes”), Bitcoin was like a pond into which floods of dollars wished to flow. These waves of buyers were held back by the floodgates that represented the barriers to trading fiat currencies for Bitcoin on the exchanges. For every person yelling “I’m buying Bitcoin right now!” there were ten screaming “I can’t get US dollars into Mt. Gox!!!” By the time the frenzy was over, most people just retreated from the gates, dollars still in hand. Right now, while the waters are calm, Mt. Gox and new exchange entrants are tearing down the floodgates one by one, building canals and conduits that will enable unprecedented liquidity going forward. When fiat can flow more freely, Bitcoin will be capable of hitting new high water marks within breathtakingly short periods of time.

2) A Wake-Up Call: In 1933 US citizens received a wake-up call when gold was revalued from $20/ounce to $35/ounce. Granted, the analogy isn’t perfect, since in this case, the price of gold was artificially pegged to dollars, or more precisely, the price of dollars was pegged to gold. People who were paying attention to the rate of gold exports overseas were able to see that the true value of gold was much higher than $20/ounce, and if they were able to successfully retain their gold through the “confiscation” then they came out much better off on the other end. As you probably know, gold never looked back after $35, and is trading today at around $1,430/ounce.

3) Additional Milestones: So far, Bitcoin has blown through milestone after milestone in its quest to prove itself as worthy of mainstream acceptance: Dollar parity, survival after large Bitcoin scams, holding steady through a block reward halving, thriving after a blockchain fork was resolved within hours, chugging along with transactions after network processing power increased more than a million-fold in the transition from CPU to ASIC mining, and landing after each subsequent bubble upon higher valuations than before the run-up. Each milestone reached is one less in the diminishing grab bag of potential SNAFUs. Somewhere in that bag is the last milestone, the straw that will break the camel’s back and send Bitcoin into stratospheric valuations.

4) Dollar Weakness: This is related to point #2, but still deserves its own slot. Though probably unlikely, hyperinflation in the US would be devastating to lenders, savers, and bond holders. Conversely, it would be a boon to debtors, owners of commodities, and Bitcoin owners. In a hyper-inflationary environment, the violence of Bitcoin’s price movements would only be limited by the imagination of the Fed.

5) Investor Trust: After surviving two bubbles, Bitcoin is looking more and more robust. In the next run-up, the Bitcoin buyer pool will be more heavily represented by individuals who feel confident in the future of Bitcoin. The next time that Bitcoin rips open the ceiling, rather than trying to time the market and sell at the top, these buyers will have a more relaxed long-term perspective, trusting that Bitcoin will prevail as it has in the past, and will keep their coins off of the exchanges. I believe the community would label them the “strong hands,” and it’s probably not a bad term.

Trying to predict the future is a fool’s game, but it can still be fun. Observing the landscape, and recognizing the fact that Bitcoin is still a tiny drop in the financial ocean, I do believe that everything is in place for an obscene upwards move, that people will wake up and check the price, and be absolutely floored, but will refrain from panic selling. I don’t think this day is imminent, since we’re arguably still in for a prolonged cool-off, nor do I think it is inevitable. But I do think that the conditions permit such a leap, at least in theory.

What do you think? Are the crazy Bitcoin price fluctuations limited to plateaus, bubbles, and corrections, or can we also see something like “The Spike?”

Bitcoin Luminary Series: Jaron Lukasiewicz

The Bitcoin Luminary Series is an ongoing feature of Real Virtual Currency in which we reach out to the individuals who are making a splash in the digital currency pond. The purpose of the interview is to ask roughly 50% Bitcoin questions and 50% personal questions, and as such, the tagline of the Bitcoin Luminary Series is: “More interesting than Bitcoin itself, are the people it attracts.”

Today, we speak with Jaron Lukasiewicz, entrepreneur and CEO/Founder of Coinsetter, a US-based levered bitcoin trading platform. Jaron has recently been making well-informed and even-keeled appearances on Fox Business, and we thank him for joining us.

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1) Tell me about your childhood, where you grew up, and what your hobbies were.

I grew up in Las Vegas, NV and recently moved to NYC after living in Houston, TX for the past eight years. Whichever part of the country I’m in (east coast, Texas or the west coast), I usually miss the other two parts. I have always been strongly interested in tech, economics and house music.

2) You seem to have a close relationship with your brother, Ardon. Tell us something embarrassing about him.

I’ll never tell! Just kidding, there actually are no embarrassing stories about Ardon. He’s the coolest guy I know.

3) What would you list as your 3 greatest strengths?

Extreme drive, high risk tolerance, detail oriented

4) What are your 3 greatest weaknesses?

I’d like to have better coding skills and I put others before myself too often

5) How has music impacted your life?

Hugely. I listen to music at least 12 hours per day.

6) You are fluent in Spanish and Portuguese. Do you get to use these languages often?

Less and less, unfortunately. I can’t wait to open Coinsetter’s Latin American arm so I can start using them again!

7) What makes an effective entrepreneur?

I think there are some basic qualities that all entrepreneurs need to have (determination, actually following through on your ideas, etc.) However, I think being an effective entrepreneur is more closely tied to what you don’t do. First time entrepreneurs make a lot of logical but misguided mistakes that you often have to learn the hard way. The most common one is focusing on creating a product and not solving a problem. Entrepreneurs need to create products that solve legitimate problems that real people have, rather than trying to fit a market into a cool sounding product.

8) When did you first hear about Bitcoin?

I first got into Bitcoin in mid-2012. My business partner, Yo, had been in it for years before that and was the person who first introduced me to it. I knew by November that I wanted to start a business around it (mind you, my friends still thought I was crazy at that time).

9) What goals do you wish to accomplish over the next 10 years?

I plan on building a large company that has true value to its customers. I’m extremely excited about the possibilities that Bitcoin and other emerging financial technologies bring to our generation.

10) How do you define “success?”

I define success by how empowered I feel. The fewer people that can bring you down, the better. And it all comes from within.

11) How is Coinsetter going to differentiate itself from the recent influx of new Bitcoin exchange players?

Coinsetter stands out from other options in many ways. First of all, whereas other exchanges and trading options were built logically by smart people, they were not optimized for financial trading and have substantial lag times. Whereas other platforms trade within in the second, ours performs within the millisecond. We also offer a better value proposition to customers by aggregating the feed of multiple exchanges, permitting us to always offer the most liquidity and the best price in the market. Finally, we have built our platform with customer usability in mind, and I believe anyone who uses our platform will see this.

12) What is your business philosophy?

Always take the moral high road. Always focus on quality over price.

13) What would have to happen for you to qualify the Bitcoin experiment as having gone “mainstream?”

Bitcoin will have gone mainstream when I am using it for non-trading purposes at least once a week.

14) What are your top 3 favorite properties of Bitcoin?

Irreversibility of transactions, freedom from outside control, and its robustness.

15) What are your top 3 concerns about Bitcoin?

Irreversibility of transactions, price volatility, and confirmation times.

16) Complete the sentence: For 1,000BTC I would _________ .

Let you hang out with me.

17) Try and predict the future. Will Bitcoin be used by your Grandmother at some point?

Heck no.

18) How do friends and family respond to your Bitcoin enthusiasm?

Mostly excitement. Lots of questions.

19) Tell us something about Jaron Lukasiewicz that people may not know, but find interesting.

I love music festivals.

Thank you for your time!

Bitcoin brings people of different political ideologies together and sparks meaningful discussion

It struck me this morning that Bitcoin is such a large, inviting tent, that those who have entered often find themselves surrounded by others who share in their Bitcoin enthusiasm, but not their political beliefs.

Yesterday I posted a vaguely philosophical article about “ownership” that wasn’t really intended to be provocative, but elicited a fairly lively debate about ethics, taxation, and social contracts.

Usually, the best dialogue occurs when people are brought together by a neutral forum such as an educational institution, allowing people to deepen their understanding of the issues and occasionally find common ground. In this case, the commonality is a general agreement that Bitcoin is interesting. But beyond that, if you read between the lines on the discussion threads, I think that even when people disagree on what political actions are appropriate, that they harbor very similar objectives and sensibilities.

Take, for instance, a controversial topic such as Social Security retirement benefits in the US. When I make the argument that these benefits are a bad idea, some people might mistake me for a cruel or uncaring individual, possibly selfish or greedy too.

In reality, I probably want the same thing that my left-leaning compatriots do: a guaranteed standard of living and financial safety net for seniors. I just don’t think that this is accomplished – at least not sustainably – through Social Security. Even though I may want a guaranteed standard of living for seniors, I would probably argue that the best you can do is foster an environment where more people are better off as they reach their golden years.

Furthermore, I find Social Security upsetting because in many cases it actually exploits rather than helps the poor and indigent. Take an example of how it affects two very different people of the same age: Tom, who grew up in an upper-middle class family and went to college followed by grad school, and Sam, who grew up in a poor family and didn’t finish high school.

Tom starts his first job when he turns 25, earning $50,000 per year. Sam started working when he was 16, and currently makes $27,000 per year. By the time Tom receives his first paycheck, Sam has already been paying into Social Security for 9 years.

At 45, Tom makes $175,000 per year, but he only pays Social Security taxes up to the maximum income limit of $113,700, leaving $61,300 that goes into his pocket without being subject to Social Security tax, and effectively lowering the percentage of his paycheck that is dedicated towards this entitlement from 12.4% to 8.1%. Also 45, Sam makes $75,000, all of which is subject to Social Security taxes at 12.4%.

At 62, Tom looks at his portfolio and decides that he will not take early retirement benefits, but will rather wait until he turns 70 to receive the maximum monthly payment of $3,350. Being in generally good health, Tom lives to be 94, having collected Social Security benefits for 24 years. When Sam turns 62, he needs the extra income and decides to file for retirement benefits, receiving the maximum of $1,923 per month. Never being well-educated in proper health or nutrition, Sam has expensive medical bills due to chronic conditions such as diabetes, COPD, and CHF. Sam dies at the age of 70, having received Social Security benefits for 8 years.

Doesn’t that story make Social Security seem downright regressive? Keep in mind that I didn’t make anything up. Those figures are taken straight from the SSA website. Whether you lean to the left or the right, you can probably find something wrong with this picture. Clearly Tom, who was well-equipped to manage his own retirement, benefited from the system much more than Sam, who was unfairly encumbered by Social Security taxes and received much less money in retirement.

Social Security is just one example of many where we can spark meaningful discourse. We may differ on what should be done with Social Security: for instance, I might argue it should be abolished completely, whereas you might prefer to retain it, but raise the income cap and employ means-testing to disqualify people who have enough money to take care of themselves. That’s fine, at least we’re getting somewhere.

Regardless of your political persuasion, I hope you’ll agree that despite our differences, we all have a lot in common. In the meantime, I’ll be hanging out under the Bitcoin umbrella, looking forward to arguing with some new friends.

You don’t own your house, or your car, or your labor. Everybody should have some Bitcoin because it’s one of the few things you can truly own.

Within the brains of the slightly fuzzy hominids known as humans, the concept of property is hard-wired.

Just look at the vocabulary we employ from the mundane: mine, his, hers, ours, theirs, take, get, own, have, steal, sell, buy, keep, to the esoteric: confiscate, exchange, escrow, lien, tax, duty, capital, loan, debt, interest, stake, liability, asset.

It may be fair to postulate that some of the very first words were actually invented for the purpose of claiming, protecting, and managing property.

In today’s interconnected society, consider the things that you own. Perhaps you have a television, some clothes, some personal effects that are meaningful to you. You may have a car. But hold on, is that car leased or subject to a payment plan? Well, in that case you don’t really own it, but you still call it “yours,” you still treat it as your own and so does everybody else (provided they are being respectful, of course).

Naturally, the same applies to any real estate you own. Most “homeowners” have a mortgage. Yet, they still call the house “theirs” and treat it with care, take pride in it and its appearance, and enjoy it with friends and family.

But of course, here we can identify the same issue of true ownership. You don’t really own your house. Personally, as the recent purchaser of my first terrestrial dwelling (I’ve been living on a sailboat for the last 4 years), I was struck by the enthusiasm with which every single person involved in the transaction exclaimed: “Congrats! You are almost a homeowner!” First it was the agent, then the lender, then the title company…and eventually when I was handed the keys by the selling agent, I rolled my eyes and silently mouthed along with her words: “Congrats! You are a homeowner!”

No, I’m not. I own a 20% stake in the home I just bought. But tell me, when I make my final payment on the loan, will somebody be there to congratulate me one, last, legitimate time on being a homeowner?

I doubt it. Because frankly, even then, I won’t be a homeowner. Why? Because I still owe taxes every single year, and substantial ones, amounting to roughly 2% of the purchase price. What happens if I don’t pay my taxes? Well at first it wouldn’t be so bad. I would get some calls, some offers to restructure my payment schedule, perhaps. But eventually it would get nasty, and a lien would be placed on my property, an immutable claim on my residence that must be paid off under threat of eviction and complete confiscation.

So I don’t really own my house, and neither do you. Nor do you own your car, since most states and countries require a yearly “registration” or “use” tax. Again, if you don’t pay your taxes, your property can be taken from you.

We are left with no true ownership over anything except for the trinkets mentioned earlier: our personal effects, things that nobody else would really want to bother with anyway.

It gets worse. You don’t even own your labor. Any gains you earn from your hard work is also subject to taxation, which may seem benign if it’s automatically deducted from your paycheck every month. You may even be lulled into feeling like the government actually sends you money every year in April if you are lucky enough to be due a refund.

But it’s not benign. Just try not paying your taxes. Things get nasty really quickly.

There is a difference between non-ownership (think Native American folklore), personal ownership (think “mine”), and collective ownership (think USSR). In most of today’s developed countries, we have a strange hybrid which conflates the latter two, but masquerades as the first. Yes, you own all sorts of things, like your house and car and television, but really they are collectively owned by “the people,” which is supposed to mean everybody, but actually means the government. However, when the spoils of taxation are distributed, they are done so with a non-ownership narrative. Even though you may feel like you could rightfully claim proprietorship over 2 square feet of central park, you’ll be told that nobody owns central park. It’s a common good.

So what do you own? Some things are easier to protect than others, such as gold coins. But we’ve seen precedent for confiscating even those. If you are thrown in jail for tax evasion, and a warrant is issued to rummage through your house for items of value which can be sold off on your behalf, then even gold coins are fair game.

Which brings us to my main conclusion, that Bitcoin is one of the few things that you can irrevocably own. In an extreme case, imagine you’ve stored your Bitcoins in a “brain wallet,” the strong passphrase to which only you know. As long as you own your mind, you will own your coins. You can be thrown in jail forever, and your coins will still be safe. Taking the logic further, it may take no less than physical violence and torture for you to be relieved of your Bitcoins. And if it comes to that, well, we’ll have some serious problems.

It doesn’t have to be much, but I really believe that everybody would be wise to own at least a small portion of Bitcoins, something to cherish and protect – something you can truly call “yours.”

Prepare for the Bitcoin doldrums

In middle school, I was introduced to a wonderful piece of literature called, “The Rime of the Ancient Mariner,” by Coleridge.

Surrounding the drama regarding an albatross and its untimely assassination, was a wonderful expose on the nature of humans when presented with a persistent, unyielding state of affairs known as the doldrums.

For the education of non-mariners: the doldrums consist of certain latitudes, during certain times of the year, where the wind does not blow. The ocean is flat as glass, and as calm as a hindu cow.

In 2007, I found myself in the doldrums, 500 miles west of Ecuador on a 43-foot sailboat. It was hot, and terminally insufferable.

I would like to make a prediction that we are about to enter another period of intolerable calm in the world of Bitcoin (it won’t be the first); that the wind responsible for blowing the virtual currency ship to new heights this year has eased, and that our ship has slowed, edging forth hopefully, but helplessly.

In the coming months, we will see an exodus of speculators (I use that word precisely, as “investors,” meaning those who allocate capital to a business venture, would be inappropriate).

Like the doldrums, the becalming of Bitcoin will be due to external factors, a natural progression, if you will. Like the ebb and flow of the tide, a recession must follow a progression. To swim against the tide is always counterproductive. We must find a rock an latch on to it.

However, fear not. For even when motionless, my crew and I knew that the doldrums were nothing more than the absence of wind – and furthermore, that the wind would eventually return.

So my message to you, sailors of the Bitcoin seas, is to accept the oncoming stillness, the one that will follow the illustrious rally of early 2013.

Stay calm, play some cards, and buy a shit-ton of Bitcoins when they bottom out.

Then trim your sails. Because it’s going to be a breathtaking ride.

Bitcoin breakups: A tale of two soured relationships

Within 24 hours, stories of two high-profile Bitcoin business relationships gone awry have hit the interwebs, and with two very different outcomes.

1) Jeff Berwick leaves BitcoinATM.

2) CoinLab sues Mt. Gox.

In the first example, Jeff Berwick publicly announced that he had been unceremoniously ousted by his young business partners. Jeff is an interesting fellow, and was recently interviewed by Real Virtual Currency to discuss a range of topics, including the BitcoinATM project. In his words, the project evolved organically – which now we have come to understand means that he was approached by two young entrepreneurs who asked for his help in marketing their invention, which he agreed to render.

Jeff strikes me as somebody who would never trust any government in any country at any point in history, but is paradoxically quick to trust individuals. From my assessment, the BitcoinATM relationship was built from implicit trust from the beginning.

His public description of events served to display two of his idiosyncratic characteristics: First, he is human, and subject to the same emotions as everybody else. At its essence, through so many words, his writing managed to convey the simple feeling: “I’m hurt.” Second, he is unusually open, and while clearly harboring negative feelings about the deal gone bad, expressed two things that struck me: an inherent sympathy for the youthful incautiousness of his ex-partners, and an element of personal responsibility and self-reflection, to be applied to his future ventures.

Simultaneously, we can observe another Bitcoin business relationship devolving in a much more spiteful way. The once heralded CoinLab/Mt. Gox partnership which promised to improve access and legitimacy to Bitcoin exchange markets in the US has suddenly turned into a nasty lawsuit for $75 million in damages. This breakup seems more reminiscent of a divorce proceeding, where the scorned party wants the house, the Lamborghini, and the kids.

I don’t know the CEO of CoinLab, Peter Vessenes, personally. But I’m going to pick a fight with him. In his press release, he mentions a few things that I found curious, and they are all found in the 3rd to last paragraph:

“My continued hope is that Mt. Gox will do what’s best for U.S. and Canadian customers and settle this matter quickly, allowing our customers to transact in the U.S. with a fully licensed and registered company that meets American standards for service quality. It’s most important to me that customers are able to maintain uninterrupted flow of services, and I hope that Mt. Gox shares that goal and works to resolve this dispute.”

First, it is noteworthy that Peter identifies the common good of US and Canadian customers as his primary goal. When the surprisingly likeable and emotional Silk Road founder Dread Pirate Roberts tells his customers that “he loves them,” I’m inclined to believe him. But when CoinLab claims that they are looking out for parties other than themselves in the context of a lawsuit, then I’m much more skeptical.

Second, he mentions “American standards of service quality.” However, I’m not sure what he is referring to, since as far as I can tell, the Americans have delivered a negligible contribution on the Bitcoin exchange front. If I had a bitcent for every post I have read about Coinbase running out of coins or bitinstant not replying to emails for 2 weeks, then I would be able to quit my day job. Mt. Gox, run by an eccentric French hacker based in Japan, is the only exchange with any reputation worth soiling.

Third, he twice alludes to the notion that he wants to reconcile the lawsuit out of court: “…settle this matter quickly…resolve the dispute.” From this tone, it appears to me that CoinLab is not prepared to take this lawsuit beyond its initial threat. After all, it would be painfully expensive, and the CoinLab coffers are filled by investors, whereas Mt. Gox could probably weather a prolonged legal battle by virtue of its business income.

In conclusion, it saddens me that a digital currency based upon trust and voluntary exchange is now in the middle of a disagreement which may have to be sorted out via the clunky and outdated processes of US litigation.

In this article, with the limited information available to the public at the moment, I have arguably displayed Peter Vessenes in a negative light. And if he wishes to rebut my points, he has an open invitation to tell his side of the story on Real Virtual Currency. The same goes for the BitcoinATM founders.