Article in today's NY Times focusing on the Bitcoin and fraud.
http://dealbook.nytimes.com/2013/12/...=business&_r=0
Rich
"Failure is Not a Destination"
Coach K on the Dan Patrick Show, December 22, 2016
The Chinese clamped down further overnight effectively eliminating exchange between Bitcoin and RMB, and the value dropped below USD400 for a time. That's down nearly 70% from the peak.
An E currency may become part of our digital future but Bitcoin, a libertarian premise that operates outside the regulated international financial system, will not be it. Without the U.S. military providing the full faith and credit behind a means of exchange, a purported fiat currency like Bitcoin is worth nothing more than what the next person is willing to pay for it.
My prediction is that as the stupid money gets driven out, the value falls to and trades in single digits in 2014 which is, in effect, the option value of making a bet on the future value of any commodity.
http://www.nytimes.com/2013/12/19/bu...sits.html?_r=0
Looks like Mt. Gox is going down. They are the biggest BC exchange by far. I mean, they were.
Just goes to show that regulation ain't all bad.![]()
"By the time trading at Mt.Gox was halted entirely late Monday, the price of a Bitcoin there had dropped significantly, to $130. Meanwhile it was trading for more than four times that on other exchanges."
Wow, talk about an arbitrage opportunity.
Full faith and credit helps too!
Mt. Gox filed for bankruptcy protection overnight in Japan. Here's an irony of Bitcoin. To protect coin inventory from being lost or stolen, one needs to remove the digital wallet from an accessible computer and print out the serial numbers and store the paper record under the mattress just like paper money.
I'm still waiting on the BitSporks to appear on DBR. Hopefully it won't have the same outcome as Mt. Gox.![]()
So it really is Black Friday this time!
Presumably this means if you have bitcoins or cash tied up with mtgox you're now a creditor and get to go through Japanese bankruptcy court. This for a "currency" whose putative advantage is that it is outside the purview of government.
In most of the 2008-09 bank collapses depositors were kept whole, most obviously with WaMu and Wachovia. Even people with accounts at MF Global got paid back 100%, and that was outside the FDIC. I don't see overseas bitcoin bankruptcies shaking out the same way.
Technical question (and I appreciate the many responses to the questions above, this thread has helped me understand Bitcoins better than any single article):
If my Bitcoins are virtual, and I have them in my electronic wallet on my hard drive, how are they also trapped at Mt. Gox? It is not a hard currency that I deposit somewhere, it is on my machine. (Like the story linked somewhere above, IIRC, where the guy threw out his hard drive and "lost" a ton of Bitcoins).
Wouldn't the Bitcoin still be on my hard drive, and I can simply trade it somewhere else?
Owning a Bitcoin on an exchange is very different than owning a Bitcoin off of an exchange. On the exchange you can only do things with it on the exchange. I believe this is how the exchanges work... you can either deposit money or Bitcoins. Then from there you can use the Exchange to trade money for Bitcoins (or vice versa) with other people who agree to your terms. The exchange takes care of making these deals for you. However all of this money and all of these Bitcoins are basically sitting with the exchange, they have total control over them. All you are really doing is changing #s on their ledger.
I guess you can think of it like online poker... we both deposit $10k, we play heads-up, you win all of my money, now you have $20k on the poker site. This does you no good unless you can get the money off of the site. If the people who run the poker website took that money and bought trips to Hawaii and are now bankrupt... well you don't really have $20k do you?
That's basically what happened at Mt.Gox. The Bitcoins that they supposedly had to back the accounts are now gone. They stopped allowing people to withdraw money and then Bitcoins. The drop in the price of Bitcoin on the exchange was a direct reflection of the view that people felt they might be insolvent.
I'm no expert... but this is how I see it. Correct me if I am wrong.
As mentioned in earlier posts, each record of who own how many bitcoins (the blockchain) has a public and private portion.
The private part is what is kept in the wallets. This wallet can be taken "offline", which is to say, anywhere that isn't immediately connected to a bitcoin exchange. This can be a partition on a "live" hard drive, a floppy, a printout stuffed under a mattress, wherever. While the wallet is offline, the bitcoin in it can't be spent or traded. (Actually it can, if you tell someone else your private key.)
If your wallet (and its associated private keys) is truly offline, you should be OK, notwithstanding changes in the market price of bitcoin, and the effort required to go onto another exchange, get your wallet back online, wait for it to propagate through the system and so on.
If you kept your wallet online, or if you cashed out your bitcoin on mtgox and have been waiting to get to this cash, you're screwed.
It's similar to holding a physical stock certificate versus having your stocks in an E*Trade account. If you have a certificate you don't care if ETrade goes down. Now if ETrade does go down there's SIPC to eventually get your stock back, but if your 10,000 shares of Pets.com goes to zero while you're waiting, too bad.
Last edited by hurleyfor3; 02-28-2014 at 03:48 PM.
Thank you both, I will need to cogitate over this with some non-virtual wine tonight. But wanted to acknowledge the responses, as I said before I get a better understanding of the mechanics of Bitcoins on DBR than from any WSJ article I have read (and I read a lot of them).
Okay, so does that mean I have two options to trade Bitcoins -- either through an exchange (for money, lira, Magic The Gathering cards, Kugerrands, whatever is traded there) -- or I can also exchange directly from my private/offline wallet with someone? If I have two Bitcoins, I can put one into an exchange like E*Trade and the other I can send to hurleyfor3 in exchange for that Dick Vitale bobblehead you listed on Ebay?
Last edited by OldPhiKap; 02-28-2014 at 05:22 PM.