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Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

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Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#11

Post by jonknee »

sillysaurus2 wrote: post #9

This is FUD. As incredible as it seems, MtGox's problems are, in fact, technical. And it was quite a relief to realize this. Also, there is minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. For anyone who wants the truth,…

> Also, there is very minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC.

What if the technical problems lead to a situation where they are short BTC? Your link mentions they could have double paid people which would lead to that situation. Then there's the issue of seizure which apparently has happened at least once.

Relying on your unlicensed money changer to be fair because "he is motivated to not go to jail" is precarious. Madoff's client's probably said the same thing... That's the beauty of the FDIC and the terrifying part about BTC exchanges.

Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#12

Post by sillysaurus2 »

jonknee wrote: post #11
sillysaurus2 wrote: post #9

This is FUD. As incredible as it seems, MtGox's problems are, in fact, technical. And it was quite a relief to realize this. Also, there is minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. For anyone who wants the truth,…

> Also, there is very minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. What if the technical problems lead to a situation where they are short BTC? Your link mentions they could have double paid people which would lead t…

The only reason I have confidence is because two years ago Magical Tux began transferring around 440k bitcoins in order to prove ownership of those coins: http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_b...

If he had 440k coins then, imagine how many he has now.

Yes, he could have lost a lot, but on the other hand we'd probably have heard if someone pulled off that kind of heist.

Here's how I expect things will happen: Gox will refund all "stuck" withdrawls. (Mine have already been refunded.) Then they will fix the technical problem, hopefully by Monday, but certainly within a couple weeks. Then they'll re-enable bitcoin withdraws. At that point, everybody will yank their bitcoin out of Gox. But then people will realize that there is value in trading on Gox as a platform, and Gox will be used for what it's meant to be used for: Trading, not storage.

EDIT: To clarify, I don't believe it's possible they had a technical problem that led to them losing more bitcoins than the profits they've made from trading fees. (This is me being hopeful that people can't be that incompetent.)

Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#13

Post by gamblor956 »

sillysaurus2 wrote: post #9

This is FUD. As incredible as it seems, MtGox's problems are, in fact, technical. And it was quite a relief to realize this. Also, there is minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. For anyone who wants the truth,…

Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC.

For those of you who are wondering, this is because MtGox is Japan-based. In Japan, virtual/digital goods are considered property that can be "stolen." There have been a few cases on this in Japan, though it's never been tested outside of the gaming context and AFAIK nobody's actually gone to jail for stealing a virtual good (yet).

Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#15

Post by ericd »

bpicolo wrote: post #3
cromwellian wrote: post #2

Looks like a Bank Run? Bitcoin exchanges that engage in some kind of fractional scheme need insurance coverage. I don't know if Mt Gox is doing that, but it kind of smells like they don't have enough BTC on hand to allow withdrawls. On the upside, Bitcoin seems like a perfect laboratory to re-run the experiments in banking leading up to the 1930s when you know, the "communist" FDR imposed banking regulations which ar…

How would they not have enough BTC on hand? It's not like they loan it out like banks.

It might be non-trivial to get large amounts of cold storage BTC up and running? This could be a good thing in the case of cold storage coins, for security reasons.

Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#16

Post by XorNot »

sillysaurus2 wrote: post #12
jonknee wrote: post #11

Earlier quoted context omitted.

> Also, there is very minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. What if the technical problems lead to a situation where they are short BTC? Your link mentions they could have double paid people which would lead t…

The only reason I have confidence is because two years ago Magical Tux began transferring around 440k bitcoins in order to prove ownership of those coins: http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_b... If he had 440k coins then, imagine how many he has now. Yes, he could have lost a lot, but on the other hand we'd probably have heard if someone pulled off that kind of heist. Here's how I expect thing…

It's not a technical problem. The problem is Mt. Gox is almost certainly doing arbitrage with the cash on hand, and the BTC on hand. The delays with withdrawals were almost certainly because they needed to liquefy some instruments to pay out.

Of course seeing their origins and backing, they've screwed up - and BTC being volatile it has probably moved against them - so low and behold "technical problem" while they try to figure out how to get solvent again.

Punchline: real cash gets refunded, the BTC will not be, anyone holding BTC is going to lose big as the price tanks.

Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#17

Post by [deleted] »

sillysaurus2 wrote: post #12
jonknee wrote: post #11

Earlier quoted context omitted.

> Also, there is very minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. What if the technical problems lead to a situation where they are short BTC? Your link mentions they could have double paid people which would lead t…

The only reason I have confidence is because two years ago Magical Tux began transferring around 440k bitcoins in order to prove ownership of those coins: http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_b... If he had 440k coins then, imagine how many he has now. Yes, he could have lost a lot, but on the other hand we'd probably have heard if someone pulled off that kind of heist. Here's how I expect thing…

[deleted]

Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#18

Post by jrockway »

XorNot wrote: post #16
sillysaurus2 wrote: post #12

Earlier quoted context omitted.

The only reason I have confidence is because two years ago Magical Tux began transferring around 440k bitcoins in order to prove ownership of those coins: http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_b... If he had 440k coins then, imagine how many he has now. Yes, he could have lost a lot, but on the other hand we'd probably have heard if someone pulled off that kind of heist. Here's how I expect thing…

It's not a technical problem. The problem is Mt. Gox is almost certainly doing arbitrage with the cash on hand, and the BTC on hand. The delays with withdrawals were almost certainly because they needed to liquefy some instruments to pay out. Of course seeing their origins and backing, they've screwed up - and BTC being volatile it has probably moved against them - so low and behold "technical problem" while they try…

The delays with withdrawals were almost certainly because they needed to liquefy some instruments to pay out.

I would guess this is a fraud-stopping measure. Time is a fraudster's enemy; you may have guessed someone's password, but if they read the email that says someone changed their email address, they can react before the money disappears into the ether.

Furthermore, Mt. Gox can probably predict in advance how much cash they'll need to fulfill withdrawals, and liquidate the instruments in advance to make withdrawals instant, if they so chose.

Everyone loves a good conspiracy theory, but the reality of running a money transfer business makes Mt. Gox look pretty normal.

Re: Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying

#19

Post by anigbrowl »

sillysaurus2 wrote: post #12
jonknee wrote: post #11

Earlier quoted context omitted.

> Also, there is very minimal danger of a bank run. MtGox makes a profit off of every transaction. Therefore they control more BTC than users are able to deposit. Hence, since Magical Tux (the owner) is motivated not to go to jail, he will not run off with people's BTC. What if the technical problems lead to a situation where they are short BTC? Your link mentions they could have double paid people which would lead t…

The only reason I have confidence is because two years ago Magical Tux began transferring around 440k bitcoins in order to prove ownership of those coins: http://www.reddit.com/r/Bitcoin/comments/n4a2o/someone_has_b... If he had 440k coins then, imagine how many he has now. Yes, he could have lost a lot, but on the other hand we'd probably have heard if someone pulled off that kind of heist. Here's how I expect thing…

But then people will realize that there is value in trading on Gox as a platform

What value is this, exactly? You seem to be assuming that having fixed this problem the platform will never break down again, ever.

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