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Apparent Theft at Mt. Gox Shakes Bitcoin World

nytimes.com

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Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#11

hypothetical question for someone who is knowledgeable about bitcoin: since bitcoin is an experiment, what happens if it completely fails? what does a total failure scenario even look like, in terms of symptoms? where does all the 'real' money go? i don't understand how 6% of bitcoin can disappear when one of the supposed selling points is that you can verify all the transactions.

What happens if it fails then you have a bunch of worthless coins. It's unlikely to 'fail'. Again, there has been a chorus of bitcointalk, reddit, *chan and IRC users warning people to stay away from being Goxed since 2011 so this exchange imploding due to incompetence is not a surprise at all.

The bitcoins did not disappear. They are on the blockchain just somebody used a bug in Gox's custom php wallet to pillage all the coins for themselves. The official client bitcoind/bitcoin-qt is not affected, and none of the other major sites like blockchain.info or localbitcoins who keep large escrows were affected, just Gox and a drug dealing site who also rolled their own wallet and lost everybody's money.

If you want to work with the raw bitcoin protocol you should pay a Bitcoin developer to help you, then these problems would be avoided. Karpales was making 6 million per month at one point, yet did everything himself (badly). You don't even need to pay them, log into bitcointalk.org and post in the dev base your custom implementation and ask them is this fail y/n?

Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#12

hypothetical question for someone who is knowledgeable about bitcoin: since bitcoin is an experiment, what happens if it completely fails? what does a total failure scenario even look like, in terms of symptoms? where does all the 'real' money go? i don't understand how 6% of bitcoin can disappear when one of the supposed selling points is that you can verify all the transactions.

Failure is just people stop believing in it and the price falling to zero. Given the buzz and investment capital, I think it's unlikely the price actually goes to zero as there will be buyers stepping in when it falls.

The coin disappears because it was stolen, or possibly deleted (less likely). It's not that different from someone taking cash out of your wallet.

Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#13

hypothetical question for someone who is knowledgeable about bitcoin: since bitcoin is an experiment, what happens if it completely fails? what does a total failure scenario even look like, in terms of symptoms? where does all the 'real' money go? i don't understand how 6% of bitcoin can disappear when one of the supposed selling points is that you can verify all the transactions.

"what does a total failure scenario even look like, in terms of symptoms?"

The value of Bitcoins is determined by what other people are willing to pay for them, which is determined by their confidence people will exchange them for tangible goods or services, or other forms of money, in the future.

Total failure means people lose confidence in the system, due to technical flaws, regulation, competition, etc.

The value would approach $0/bitcoin, though I don't think it would reach zero for a long long time. I'd happily pay $10 for a million bitcoins just for the hell of it.

Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#14

hypothetical question for someone who is knowledgeable about bitcoin: since bitcoin is an experiment, what happens if it completely fails? what does a total failure scenario even look like, in terms of symptoms? where does all the 'real' money go? i don't understand how 6% of bitcoin can disappear when one of the supposed selling points is that you can verify all the transactions.

You don't need to be knowledgeable about bitcoin specifically to know what happens, at the last financial crisis we got the same lesson.

Value is perceived, and value can evaporate.

If bitcoin completely fails, the value evaporates.

It's a bit like buying a house in Detroit a decade ago for a hefty price, and trying to sell it today. Your money wasn't eaten by the house, no-one ran away with it, but it's now worth significantly less than it was and effectively the value just disappeared.

(PS: And I hope you bought the house with cash you could afford to lose rather than debt you now owe someone.)

Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#15

Wow. Check out the people who lost serious money on MtGox: http://www.reddit.com/r/Bitcoin/comments/1yv26o/gox_horror_s... One person lost 1998 btc. That was anywhere from $500,000 to a million bucks.

On one hand I feel really bad for a lot of these people, but there were so many flashing lights and warning signs around MtGox that these people had to see putting money into this company was a bad idea right? The exchange was a cobbled-together technical-mess that was originally supposed to be used for trading cards. They made a quick pivot and tried to wing it as a financial institution. Hopefully the BTC and finan…

Yeah, the only possible excuse is if you were new to Bitcoin and went with Gox because it is what was mentioned in the media most often. When I first got into it a year ago I used Gox for a couple weeks before I realized it was totally FUBAR and got out.

Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#17

I really wish I had some BTC just to separate some fools from their money. Either through trading on the market or some sort of BTC based gambling. BTC isn't very liquid but I'd bet you could extract 50K in USD from it a year without too much trouble.

ahahahahahahahahahahahahahahahahahahahahah

ahahahahahahahahahahahahahahahahahahahahah

ahahahahahahahahahahahahahahahahahahahahah

Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#18

hypothetical question for someone who is knowledgeable about bitcoin: since bitcoin is an experiment, what happens if it completely fails? what does a total failure scenario even look like, in terms of symptoms? where does all the 'real' money go? i don't understand how 6% of bitcoin can disappear when one of the supposed selling points is that you can verify all the transactions.

> i don't understand how 6% of bitcoin can disappear

The didn't disappear, they were stolen. Someone else has them.

(Coins can disappear if the owner forgets the password. They are still there, just no one can ever spend them.)

Re: Apparent Theft at Mt. Gox Shakes Bitcoin World

#19

Wow. Check out the people who lost serious money on MtGox: http://www.reddit.com/r/Bitcoin/comments/1yv26o/gox_horror_s... One person lost 1998 btc. That was anywhere from $500,000 to a million bucks.

From that same thread: "I'm still hopeful that something good will happen. If not, I would not be unhappy if someone ordered a hit." Wow.

Not a good time to be Mark Karpeles.
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