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Marginalizing Mt. Gox: "Bitcoin Is Becoming Serious; And Serious Means Accountability"
Submitted by Mike Krieger of Liberty Blitzkrieg blog,
I was going to start this article by stating: “Mt. Gox needs to get its shit together.”
But its too late for that. Much too late.
Mt.Gox has been the dominant Bitcoin exchange pretty much since the beginning. In its brief history, it has suffered several bad setbacks, with the one last spring an incident I am intimately familiar with. There were plenty of reasons to give them a pass in the past, and many of us did. It was early. It was a complete and total Wild West and all of us interested were learning this thing together. There were bound to be some major growing pains. Gox made some changes, came back up and a great deal was forgiven. Not this time.
Bitcoin is no longer in Phase 1 of its evolutionary cycle. I believe Phase 2 for Bitcoin began in earnest back in November 2013, when the Senate Committee on Homeland Security and Governmental Affairs held its first hearings on the topic. Those hearings made it clear that, at least for the moment, no significant roadblocks would be put in place to prevent people from transacting with one another using the crypto-currency. Phase 2 also saw the largest Bitcoin investment to-date, a $25 million infusion led by Silicon Valley VC firm Andreessen Horowitz, as well as acceptance by major U.S. retailers, with Overstock being the most significant. Bitcoin is becoming serious, and serious means serious accountability.
As a free market currency, the market will decide the products required to keep the Bitcoin protocol open and functioning to its highest potential. The disruption of Mt. Gox will be another test for Bitcoin. A test which certainly represents a psychological challenge, but probably not much more than that. Bitcoin will survive and come out of this stronger than it was before, just as it has done so many times in the past. However, I do not believe Mt. Gox will be so fortunate.
Mt. Gox is likely to continue to lose customers on its way to ultimately becoming marginalized as an exchange. In fact, Bitstamp is already trading more volume than Mt. Gox and I’d expect this lead to grow going forward. It also provides opportunities for more market players, although the various government rules and regulations out there have definitely stalled such growth, particularly in the U.S., which is not host to any exchange of significance.
Personally, I do not see how anyone is going to feel comfortable trading or holding sizable BTC balances on Mt. Gox after this fiasco. After all, being able to move your bitcoins from one place to another is the most fundamentally important part of the protocol. If people begin to question the ability to do this, they may start to question the usefulness of Bitcoin itself, which is not something any of us want to see.
That said, Mt. Gox’s decline is nothing new, as it had already begun following the serious issues early last year. Coindesk reports that:
For example, on 16 April, the number of bitcoins traded on Mt. Gox alone equaled 572,186 BTC (90% of the total of the three exchanges).
In contrast, on 18 December there was a roughly equal dispersion across BTC China, Mt. Gox and Bitstamp, with a volume of 93,934, 109,723, and 137,070 BTC respectively.
Now here’s a really powerful graph showing the volume traded on the top three exchanges that demonstrates what I am talking about:
Graph courtesy of Coindesk.
As you can see, Mt. Gox has already been in decline, and I expect that to accelerate going forward. In fact, the price on Mt. Gox usually trades at a significant premium to Bitstamp, but is right at this moment trading at a $40 discount. This is not good.
Graph courtesy of Coindesk.
What I really want to see is Mt. Gox resolve this issue as soon as possible so that the Bitcoins tied down with them are released and can be freely moved around by their owners. If this happens soon, Bitcoin will rapidly emerge from this difficult moment much stronger and hopefully with some more important lessons learned.
For Mt. Gox though, I think it’s pretty much game over.
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Its called a colored coin and you can use the technology to break a bitcoin into parts or shares.
"BTC" are the units of account on the decentralized/distributed ownership ledger that the Bitcoin protocol provides. The primary use of those units today is as a currency which can be securely exchanged between participants. However there will be other uses of those units in the future. Basically they can acquire "backing" such that a particular traceable BTC unit can represent a stock share or a land deed and can be traded between individuals like currency.
So, Bitcoin can facilitate a return to a gold standard. So&So Vault can split a bitcoin into 1000 pieces and cryptographically sign into each piece the message: "Redeemable for 1 oz. So&So gold." The bitcoin network provides protection from counterfeits and an exchange mechanism while the faith and credit of the Vault provides the backing. And hey, if So&So skips town or is shut down by the Gov't, you still have your 1/1000th of a bitcoin!
> ... you still have your 1/1000th of a bitcoin!
I donT think that's how colored coins work.
I think you get stuck holding the digital tulip, not the BTC.
When the music stops, you frantically search for a chair...
Edit: have done some reading. You do get to keep the BTC. After all, you paid way too much for it! And you never saw the tulip. you were only holding an option on a tulip.
"you were only holding an option on a tulip."
Aye, this is the achiles heal of any gold standard. Who provides the standard? Gov't can provide the backing but they can also fail and, suprise suprise, commit fraud. BTC in its current manifestation is backed by nothing except supply and demand.
we could just use GPG to sign a message vouching for gold with no bitcoin at all, saves a lot of overhead, has no loss of security & also adds privacy by having no blockchain.
The bitcoin network adds no security to this, it actually removes security by publishing transactions.
Nothing about your above-mentioned scheme ties particular gold atoms to particular tokens, vouchers or bitcoin so it's up to the original PGP web of trust model to handle it - bitcoin can not.
It's called "fragments". Just like your Family unit.
Decimals, being fragmentented. BTC doesn't have value.
BTC doesn't set president.
I think that we can all agree that BTC did not set up Precedent Obama...
;-)
:p
|;.!
I think that we can all find common ground?
We just did!
History does not come down to one man - especially President Barry Obama.
History comes down to the masses ability to stand against tyrany - that and luck - and we may have luck on our side, but I don't want to bet on it.
Buy silver and crash JPM!
Bitcoin is an international digital currency. Fuck DHS. Why is DHS the currency police of the world, too? If the US shuts down Bitcoin to be pricks to American citizens the rest of the world will still move ahead like it will when the USD collapses.
Gold is still the worlds' reserve currency but Bitcoin has a lot of utility, especially if gold kiosks take Bitcoins.
When the US economy catches a cold,
the World economy gets the flu.
flu? The world economies already have herpes & keep fucking each other in every hole available and you can think of that 100:1 leverage as 100 to 1 gang-bangs, dirty nasty scheisse gang-bangs.
Now we're just waiting to see if one of the participants turns out to have ebola.
Remember kids, "Buy the fucking dip" is only appropriate on this site when discussing gold.
I suspect that the brave who are able to BTFD will do very well now w/ BTC.
there's more downside to come.. old money needs to get spent and the spigot for inflows is crimped pretty tight with AML controls..
second market is taking applications for sellng 25BTC or more to them though.. should be interesting
Serious question here. If people are getting hacked left and right in Russia at the Olympics, does that mean it's possible for their bitcoin wallets to get nabbed? Not sure I even stated that in the correct venacular, but again, it's a serious question. I am trying to learn something about this stuff.
Just encrypt your wallets and don't store them online with a third party.
Fone, Village Idiot!
Let's discuss the pragmatism of BTC chits!
If I were in Sochi, I would not even use the internet...
They're not gettng hacked right and left. That story was bogus.
http://blog.erratasec.com/2014/02/that-nbc-story-100-fraudulent.html
http://www.businessinsider.com/richard-engel-hacking-2014-2
http://newsbusters.org/blogs/ken-shepherd/2014/02/07/security-expert-nbc...
In answer to your question, if you have a wallet stored on your computer that's either unencrypted, or encrypted and you've loaded the password while a keyboard logger hack is active, then yes, your wallet could be stolen. "Best practice" for safe storage of bitcoins is to store any bitcoins you're not actually using in an offline wallet -- typically either a computer that has no network connection and never will, or a paper wallet.
So what's to stop the U.S. govt or any other govt from simply entering your home and confiscating your computer that stores your bitcoins? Seems like you are SOL. What happens if a common burglar steals that computer? So, this magical new source of wealth that will defeat the evil central bankers is stored on a fragile device that can be easily carried away?
If you back up your files, and I steal your laptop, can you not retrive everything that was lost? Except the physical computer device?
And if in those files that were stolen was a password protected file that no one else could open, then it doesnt matter if you lost them AS LONG AS YOU BACKED THEM UP!!
Place your backed up private keys (bitcoins) onto a new computer, and move them from the old password protected wallet to a new password protected wallet.
Or use electrum.
electrum.org
Electrum is a natural occuring alloy of silver and gold.
Electrum doesn't need a back up file.
Stack On
Ancient lydian electrum coins were heavily debased. Many merchants charged a heavy premium to accept electrum coins of a more silver color. Trade was hampered. Thankfully bitcoins can't be debased. Stack on but watch our for those debasable metals. :)
We have thousands of years of history of debasement of metals. We should learn from history.
it's called acid-testing but we can also magnetically test them. No one needs to get stuck with a lower purity than expected in a trade.
Bitcoins just got debased more than 50% in the last 24 hours: purchasing power went down that much in that period and that's another form of debasement, not to mention just assigning value to the fractions, each satoshi, instead of whole btc, another form of debasement.
Bitcoins are intangible. If they exist at all, they exist in the blockchain, copies of which are on millions of computers across the planet. You are responsible for the keys to access your bitcoins on the blockchain.
Alright, fine. Access to your private property (your keys) are protected by the same rights and personal security as is your gold and other belongings. An additional layer of security can be added by encrypting your keys with a strong password. This is equivalent to needing to crack a safe where gold might be stored, but strong encryption can require more energy to crack than is available today. Being just a number, it is possible to store a bitcoin key only in your brain.
Backups and encryption. I probably have over 20 copies of my keys to many wallets, most of which are offline and distributed widely geographically. I use some very secure whole disk encryption, to the point I'm confident I could simply hand over a drive to anyone without worry that it would be decrypted.
In this sense bitcoin is actually more secure that phyzz. But the general rule of securing anything valuable applies, be it phyzz or bitcoin -- if it's valuable, hide it well in a secure location and STFU.
Thanks for the reply and thanks for the link to that article. Go figure, an MSM concocted story.
I'll see you all at BTC $10k :)
You haters have been calling for the death of Bitcoin ever since it became mainstream just like you have been calling for the price of gold to jump ever since QE started. Neither of which has happened. Give it a rest. Besides, the price of BTC will increase more than the price of pms during the next crisis anyway because BTC is a superior currency.
Hah, not too long ago it was BTC $1M, then it was BTC $100K. Now it's BTC$10K? Your bar is getting lower. The chart tells me "No".
http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv
I've never said BTC would reach $1M. My bar has only gone to $10k.
It will no longer get priced in Fiat once Fiat dies , so I can easily see btc being worth a million at today's fiat prices , but once Fiat goes into it's final death throes it could go into the billions , Trillons , Zimbabwe style.
Iz gonna be a berzillion fwazeeeelyun dollerrrrs. Fonestar said so & fonestar is melded with the Satoshi side of the force.
Only sitting at 532 right now - down a mere $668 from the all time high, nothing more than 55.6% loss, just a flesh wound.
Bitcoin will be to currency
what Biometrics will be to ID
Hand in hand they lead us
to cashless we will go:
Proverbs 23:23 Buy the truth, and sell it not; Yea, wisdom, and instruction, and understanding.
Only truth in God > truth in gold.
Fone Clown? I'm waiting!
http://bitcoin.clarkmoody.com/
phase #3: bitcoin is going down the drain
but wait... what about freecoin theory from Fone of a Fone of Another?
This is just the spot price for bitcoin, what about the real price for premium on physical delivery?
Fhone Clown lets "dialate some charts". Your ignorance is really testing my patience!
The fact that I'm imbibing you really? It's testing my patience!
Every <focal> point of BTC Transmission . TTHe cyber chits wil be rendered useless. Bitcoins will have value on the secondary market!
I'm pretty sure Mt Gox's operations run on a single raspberry Pi without backup power. Maybe they could upgrade to real PC.
Running the exchange part is difficult, but it's not rocket science. The bank relationship OTOH is the part I don't understand. That part of the equation represents a tremendous opportunity for some enterprising company or bank.
Gox upgraded their Pi by adding 16k memory module from a Sinclair ZX81.
Damn I haven't thought about the sinclair in donkeys' years. Maybe that's a good thing. :)
Gox was probably just a case of absolutely incompetent fucking management. It won't be pretty for a while but it will be hopefully a good thing in the long term.
Hows that Bitcon suppository feel this fine day?
Some of you enjoy being invaded. Else, why would you trade good money for a series of digits stored on magnetic media.
K-Y time bros.
who's trading "good money" for it?
Gresham's Law in action.
I believe this is US Justice Dept. shutting down the transactions and freezing all assets until they can pull out the money they are after related to Silk Road and other ongoing investigations perhaps regarding licensing. Approx $5m have been confiscated via various FIAT venues including finds from gox subsidiary accounts at Wells Fargo.
I'm sure the holder of the largest Bitcoin wallet on the planet (Hans Gruber: The circuits that cannnot be cut are cut automatically in response to a terrorist incident. You asked for miracles, Theo, I give you the FBI.) will weigh in on this topic soon!
http://www.washingtonsblog.com/2014/02/bitcoin-savior-trojan-horse.html
I really think you imbeciles who are long bitcoin from 1200 need to find another hobby.
I really think you imbeciles who are long silver from 48 need to find another hobby... oddly litecoins also hit 48 and fell just like silver.. they are both a waste of time really
if you cant wipe yer ass with it, its a waste of time
Hey Krieger, it's a little late to call out Mt. Gox. It just makes you look like an apologist. If you didn't release a Mt. Gox warning post in advance of the disturbing revelations, then at this point you should just eat it. It isn't like anyone will trust you to point out problems in the future - except in hindsight.
You meant to say $12 right? Pray tell us what Ag was selling for at the time of TARP? How about Au? Or do all you kiddies merely follow fads? I mean, hey, I don't consider caring for my family a hobby.
'long' silver means having a margined cash trade in play.
I'm not long silver. I'm HOLDING silver, actual atoms, actual bars, of known purity & weight. It's not the same thing.
I don't know much about Bitcoin, certainly not enough to have a strong opinion on it myself, but it's been fun to watch the shit talkin'.
So any particular view aside, I'll note that the following sentence made me actually l-o-l, and maybe you will as well:
"Much as the S.E.C. and Commodity Futures Trading Commission regulate stock and futures exchanges, government regulators may require centralizing the trading in virtual currencies so that the market is less susceptible to manipulation."
http://dealbook.nytimes.com/2014/02/03/more-bitcoin-regulation-is-inevit...
I don't know much about Bitcoin, certainly not enough to have a strong opinion on it myself, but it's been fun to watch the shit talkin'.
I've observed the majority of 'shit talkin' comes from people who haven't investigated simple answers to their questions about bitcoin.
Here a video that explains some of the mechanics in a way I think laymen around here can follow:
http://youtu.be/Lx9zgZCMqXE
I think its once again worth reminding people about Reggie Middletons ULTRACOIN ...
If UltraCoin is successful then its the end of exchanges - because as one of its many functions, it creates a distributed exchange. So it will basically be a replacement for LocalBitCoins - except you wont need to leave your house to go meet someone in a coffee shop - you will be making that transaction instantly worldwide.
If Reggie gets it right, that is it works, and its cheap and easy - then all those exchanges are going away .. I think Reggie can get it right, but we will know more when UltraCoin is up and running.
The story of Mt Gox is very disappointing, especially for anyone who is stuck there and wondering about their fate - in the future, third parties are going away - so is any requirement to trust anyone, meaning the opportunity for fraud is getting removed from the system. I did one transaction with Mt Gox a long way back, and they worked ok - that was before the US Govt started getting into their business.
Please define: "distributed exchange"
Hypothetical situation:
i have $$, a PC and an internet connection.
You have BTC, a PC and an internet connection.
So, how do i electronically transfer my $$ to you without a middleman?
I propose, whatever Reggie is doing, "he is preparing to somehow be the middleman". Various middleman-models already exist and are not new. And we trust Reggie, right guys?
@bubblemania mentioned "colored coins" in a comment.
I guess, that is the answer i am seeking...
http://coloredcoins.org/about/faqs/
Executive Summary: anyone can be a tulip farmer.
https://ripple.com/distributed-fx/
A Universal Translator For Money"Trading currencies has never been so easy. Ripple’s distributed currency exchange allows anyone to trade currencies on a global network. Trades are peer-to-peer, automatic, and have no fees or added margins. The result iis complete currency choice: you can hold, send, and receive whatever currency you prefer."
The market maker is centralized and based on "trust": Gold.Sachs, JPM, Reggie, @LawsofPhysics (soybean options), etc.
Ripple is simply a gateway to a centralized market maker:
So you and I cannot enter into a contract, unless a centralized "authority" (whom we trust) has already emitted that contract first. We trade the market maker's contract, not our own. And we trust him, or at least, the buyer of the contract trusts its backer.
The contract itself is not P2P, not distributed. The contract can be traded P2P, but it is centrally backed (by someone we "trust").
You only need to extend "trust" in order to receive payments in anything other than XRP.
Trading is also another way to trade with perfect strangers without establishing any "trust" between users.
thanx.
I am likely putting too strong of a semantic definition on "distributed". It seems to be partly both- centralized and distributed.
Reggie claimed that Ultracoin would be an end-run around banks. I foresee the banks getting very involved in colored coins, but that doesnT make his claim wrong, i guess...
wifi? digital HAM internet? Laser-optic connection?
maybe there's some binary smoke-signal algorithm from inside of Minecraft.
Video about Mt Gox scam:
Bitcoin Plunges As Exchange Mt. Gox Pauses All Withdrawals Due To Technical Issues
Bitcoin Bubble is getting into the new stage of its development and we will see very soon what kind of technical issues are really holding the withdrawals from Mt. Gox. You can easily find a lot of allegations about the very sloppy service at least concerning withdrawals from this exchange on YouTube.Meanwhile the crackdown on Bitcoin continues, after China bans Bitcoin from all financial institutions and numerous warnings by the Central Banks, Russia is taking very strong stance against Bitcoin. "Gold 2.0" scam is losing this Financial War in countries, which are accumulating Gold and encouraging its citizens to do the same.
http://sufiy.blogspot.co.uk/2014/02/bitcoin-plunges-as-exchange-mt-gox.h...
Russia isn't taking that strong a stance against bitcoin.
so now we have irrefutable proof,
that bitcoin is a product of the NSA.
the CNBC-ification of bitcoin has arrived
all hail
how about that beiber?
Bitcoin is so 2013.
The tulip bulbs are dimming rapidly.
+1 for the lulz,
but if the socalled "colored coins" (like Reggie's Ultracoin) come into play, then the tulip mania has not even started.
Bubble Chronicles: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying
Joon Wong has published very good report on the Mt. Gox unfolding situation. You can find more videos related to the mounting problems at that exchange on the link below. Russia has made it illegal now even to own the Bitcoin wallet for its citizens. With other Central Banks mounting its attacks, is it the beginning of the terminal decline of the vapour currency?http://sufiy.blogspot.co.uk/2014/02/bubble-chronicles-why-mt-gox-worlds....
I'll keep beating this "drum"...
Until the FISA laws change and the NSAs/CIAs are held accountable for the abuse they wield on the unsuspecting through the more than cozy "inside out" they occupy through AT&T, Verizon and Qwest network(s), Bitcoin will have problems.
Until those entities decide to come clean beyond the $15 million (most definitely a higher figure than this ) that each of them allegedly take per month for the .gov black boxes installed on the core and edge of every network they build out and own and tell us what the next generation "commerical standard" of IP security will be for each of them and show their customers both domestic and international "how they will secure them" with "guarantees" who the fuck wants to own a bitcoin?
I still don't want a bitcoin, and those who do only want them b/c they dream of riches (priced in dollars).
This is a cartel (early adopters) who are losing control the more they sell.
You shound have been out of MtGox ages ago. For sure when they entered, then backed out of, the USA deal.
can you even make a new bitcoin for 600 these days?
you can make the equiv of a bitcon by sitting on a bowl and squeezing hard.