|Major Bitcoin Exchange, MtGox, Goes Offline|
|One of the biggest Bitcoin Exchanges, MtGox, has gone offline. |
The exchange has been hit by technical issues and recently halted all customer withdrawals of the digital currency after it spotted what it called "unusual activity".
The move is a setback for backers of Bitcoin, who have been pushing for greater adoption of the currency.
Meanwhile, six other major Bitcoin exchanges issued a joint statement distancing themselves from MtGox.Major Bitcoin Exchange, Mt. Gox, Goes Offline [bbc.co.uk]
I see this as the beginning of the end for Bitcoin. The governments of the world will not tolerate an alternative untraceable currency.
Mt Gox has been in trouble for a while.
You should not keep bitcoins on deposit somewhere. The Bitcoin website warns against some web wallets for this reason: hover over the two rightmost icons on this page [bitcoin.org ]
The failure seem nothing like as bad as a bank failure: $400m gone, but it has 1m customers, so just $4 loss for the average customer.
While it's a blow to confidence (which, of course, the currency is built upon, like all currencies), I don't think it will have any real impact on the long term value.
In fact, these issues are necessary stepping stones towards proving the concept as much as anything - people who left hundreds of thousands of dollars in the trust of other people have now realized not only was that not necessary, it was foolhardy.
There is no need to leave a large amount of coin in an exchange - you may wish to keep a small amount in an exchange for speed of transfer, but the bulk of your coin should be in cold storage - an offline hard drive, or piece of paper in a safe deposit box.
The value of bitcoin only dropped 15% or so because of this news, and is still trading at double digit multiples of last year.
Most people have not kept lots of money in the exchanges.
I wonder whether those who have are speculators who need to do so to trade large amounts frequently.
@travelin cat may be right in that governments do not like bitcoin and may use this as an excuse to regulate it out of existence.
I dabble in bitcoin mining" actually altcoins, as you got to be a total fool to mine bitcoin directly". Now my computers are portable space heaters, that make money.
It's nice to make a little extra money without any effort.
|The governments of the world will not tolerate an alternative untraceable currency. |
You mean like the US dollar, the fave of drug cartels worldwide?
Governments would love to get rid of paper money. Why do you think they keep encouraging experiments with electronic cash?
The cost of producing paper and coinage is killing Governments at the moment. That and the counterfeiting, too. Electronic is the future and I suspect that at some near distant time all newborns will be implanted with a chip that will serve as their ID, medical records, and financial responsibility. Mark my words. :(
And no, I'm not wearing a tin-foil hat.
Ibill, the Dollar is at least backed by the full faith and credit of the U.S. (Such as it us).
Bitcoins are backed by 1's and 0's.
Govts love electronic (or other) currencies they can control (aka print more of), and that ain't Bitcoin (not yet anyhow).
|the Dollar is at least backed by the full faith and credit of the U.S. |
Bitcoins are backed by 1's and 0's.
Am I supposed to choose the US?
|Ibill, the Dollar is at least backed by the full faith and credit of the U.S. (Such as it us). |
If my Dad was still alive, who was a kid during the great depression, he's have laughed so hard we'd all be deaf.
|Bitcoins are backed by 1's and 0's. |
The value of all currency is a mass illusion perpetrated by society: [en.wikipedia.org...]
The gold standard is a joke as gold has no actual value, you can't eat it.
Back when currency was real was when it was salt before they discovered large salt deposits as you couldn't live without salt.
Which is why it cracks me up with people getting so wound up on the billions being transferred in the stock market as it's all a big illusion that some manage to extract and the rest are left holding an empty bag, the majority actually.
Any time a currency system like ours goes beyond basic barter it becomes unreliable as there's no way to assign true value to the money.
The problem with BitCoin is the government doesn't like it when the people take power away from the government and currency control is a means of controlling the population.
|The problem with BitCoin is the government doesn't like it when the people take power away from the government and currency control is a means of controlling the population. |
Anybody who lived through the Rodney King riots (like me), would argue that... the population actually needs to be controlled. If I have to choose between a government that pulls a few tricks now and then, and me living in my bunker every night, praying that the insane masses don't decide to burn my house down... Sorry, I'm going to go with the government. I don't see too much improvement coming from any of these 'revolutions' that have occurred over the last couple decades. I've made a good amount of money in the market, and lived a pretty decent life, as compared to many other people in the world. Anybody who thinks it's so terrible, could always go try the Republic of Congo, or maybe the Sudan... See how that works for ya.
|brotherhood of LAN|
I agree with dpd, better the devil you know. It's not inspiring confidence that a quarter billion dollars has just disappeared into the ether.
Politics of it aside, I hope there's room for these virtual currencies, but they really need to be enshrined in law and offer some form of protection from "sorry all your money is gone".
|enshrined in law and offer some form of protection from "sorry all your money is gone" |
Like the fine folks at Paypal do when the put an indefinite hold on your account and all your money is frozen? Might as well be gone.
The banks themselves needed such a law when the great depression hit and all the money disappeared, that's why we now have the FDIC.
Or how about all that money lost when the S&Ls crashed?
Or the stock market adjustment thanks to the "Internet Bubble"?
Or the recent toxic loan fiasco that rippled across the planet?
Did I mention Bernie Madoff? Net worth about -$17 billion!
The Devil we know doesn't provide me much confidence.
We already have FDIC insured banks, if people want that they know where to go get it. However, the FDIC only covers only $250,000 per account so if you've got any real money you need to spread it across several banks.
Even in our more recent banking crisis the FDIC was sweating over the toxic bank loans killing banks just a few years ago: [nytimes.com...] and the list of banks that went belly up: [fdic.gov...] might take a while to load.
No politics, it's facts that banks, the stock market and esp. bit coin are all risky business. There is no real protection as even the FDIC has limits.
Proceed with caution, spread it around, protect your assets.
|brotherhood of LAN|
I see where you're coming from Bill, but I can't see any easy comparison to draw. Can Mt Gox be compared to a bank and any FDIC-type insurance? (something similar to this in the UK btw). They're essentially a currency exchange service, but I don't know of any bricks and mortar services that'd keep your money on account with them.
The thing with those insurances about cash deposits in banks is that they're going to be utilised when the proverbial hits the fan, i.e. the wider economy is in serious trouble. They more or less exist to prevent the situations happening in the first place... ala bank runs. Mt. Gox is hardly a proud institution that's proudly banked for several hundred years that's "too big to fail".
To keep this short, laws/nations are simply saying that bitcoin is not even a currency, so it's not getting the length of assurances you'd get with regular currency at a regular institution. This 'Mt Gox' has simply filed for bankruptcy and a sizeable amount of bitcoins have just went walkies. Maybe that's where the Madoff comparison fits? :o) I'd certainly be keeping an eye on all parties involved.
From what I've read about it, the bitcoin community saw Mt. Gox as a weak link in the chain and aside from the negative press it's probably a good thing they're gone.
As you say, there's risk in it all. I'm not one to keep my money under the mattress. If the world economy takes a nosedive my bank account and property will probably be 'worth' a lot less, but still worth more than these bitcoin accounts with Mt. Gox.
As an aside, over $5 trillion a day is traded on Forex, and no doubt there'll be players that can bend the market (China)... but it's probably the closest thing to a capitalist ideal of a free market. There's just something really anti-climactic about this whole bitcoin event.
I don't see how anybody can compare some guy in a T shirt starting an online business, to somebody like Chase or Vanguard. Yeah, technically nothing is foolproof, but that's like comparing apples and pancakes. Honestly, there's being careful, and then there's being paranoid. Nobody can predict the future, but history has proven that most traditional financial institutions TEND to be fairly safe over the long haul. If you automatically rule out using any of those institutions, simply because there's the small chance that something could go wrong, I think you're probably losing yourself a lot of money. For better or worse, you put your money in the market and hope for the best. Short of a catastrophe, it usually works out over time. But at least you have SOME history to base it on.
@incrediBill, as economist Willem Buiter said, gold is a fiat commodity.
|history has proven that most traditional financial institutions TEND to be fairly safe over the long haul. |
Only because they are govt backed. In spite of that we have had major failures like Lehmans and Barings. There would have been many mroe without bailouts.
What risk is there to money in a bitcoin wallet?
And now this:
|Flexcoin, famous for making bitcoin banking as easy as regular banking, is no more. The company shut its doors on Tuesday morning after hackers stole 896 bitcoins (nearly $620,000) from its vault on Sunday. And the most unsettling thing? That wasn't even the only bitcoin heist last weekend. |
See the other thread for more on Flexcoin [webmasterworld.com ].