This is a bit bigger than Silk Road in terms of the amount of money people will probably lose but it wouldn't surprise me if something similar to the rally that followed the Silk Road take down happens. It's going to put Bitcoin in the news, this is the best entry price in the past 4 months, and Mt.Gox going under means the unethical players continue to shake out which can only be good.
Apparent Theft at Mt. Gox Shakes Bitcoin World
21–30 of 84 posts
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#22hypothetical 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.
> since bitcoin is an experiment
I don't know where you get the notion that Bitcoin is an "experiment". It's not. This is less knowledge of Bitcoin than it is knowledge of economic theory and what the words "money" and "currency" mean.
> what happens if it completely fails? what does a total failure scenario even look like, in terms of symptoms?
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#23Wow. 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.
Another 4700. About $2.3 million.
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#24hypothetical 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.
Hardware makers who accepted dollars for graphics cards and ASICS would still have dollars. Electricity companies would still have dollars. VCs who invested $100 million of OPM in Bitcoin companies would still have dollars. Employees of those companies would, one hopes, have been paid in dollars.
And then the biggie: people who sold before the pump-and-dump hit "dump" would still have dollars.
Who loses? People holding hardware which 90%+ depreciates, GPs of funds investing in bitcoin companies, and a whole lot of people who bought into the pump-and-dump at or after "dump."
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#25hypothetical 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.
First off: money isn't "real". It is itself a representation of real property (land, minerals, houses, plant and equipment, books), subject to its own supply and demand. Part of that is based on faith in the currency itself. What provides the basis for that faith is itself interesting, and I'm increasingly drawn to the suggestion that it's payments which must be made in specific currencies, such as tax obligations and petroleum purchases, which play a huge role in supporting the US dollar.
Secondly: the "real money" went at the time the BTC were bought (if they were bought and not mined). If they were mined, then the "real money" went to pay mining expenses: plant and resources, which is to say, processors and electricity.
What would have vanished should BTC lose its acceptance as a currency and value store is the market in which bitcoin are traded and valued, and any significant price within that market. More specifically, if the offered price for BTC falls below the present mining costs, it's likely that few will be created, though there might exist some sort of zombie market for what bitcoin already exist, likely at a small fraction of recent prices. This is what has happened with other currency and coin whose value has disappeared. At best you have the underlying worth in specie (or CPU cycles for BTC).
The question about where the coin went and whether or not they're of any use to the present holder is a good one, and my understanding of bitcoin and transaction logs isn't sufficient to answer it. But if the original coin holder could track the coins they'd at least be able to see who's transacting them. I'm not sure that this would be sufficient to have them recoverable.
Seems another useful feature might be to be able to repudiate a coin: if someone steals it, publish a revocation key. Though of course, this would have to not be exploitable in legitimate, authorized, transactions, and you'd then have to be able to distinguish authorized from unauthorized transactions.
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#26All those arguments about whether or not they ever traded Magic: the Gathering cards look kind of frivolous now, DON'T THEY. Sounds like Bitcoin is about to have its Enron moment...
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#27It's interesting to watch ordinary people attempt to dabble in currency. How many criminal organizations, governments, and financial institutions (redundant?) the world over have people who wake up everyday just to manipulate the value of currency? For example, a common criticism of China is that they purposely manipulate their currency to devalue the US dollar. In which ways could such organizations impact a new currency like bitcoin? Simple theft doesn't work very well unless immediately converted to cash, just like tangible goods being fenced, often below true value. Was it really just theft?
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#28hypothetical 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 si…
No. Its a closed system. For every dollar that someone spent on a bitcoin, that dollar was received by someone else.
Now, you can certainly say that the money was spent on things like electricity, or GPU hardware, that has little/no value now. But thats irrelevant - the money most certainly spent, rather than "evaporate" into thin air.
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#29Earlier quoted context omitted.
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 si…
No. Its a closed system. For every dollar that someone spent on a bitcoin, that dollar was received by someone else. Now, you can certainly say that the money was spent on things like electricity, or GPU hardware, that has little/no value now. But thats irrelevant - the money most certainly spent, rather than "evaporate" into thin air.
Oh you mean like how millions of Bitcoin market cap disappeared when people jumped off the hype train? Does that look like a closed system to you?
Re: Apparent Theft at Mt. Gox Shakes Bitcoin World
#30It's interesting to watch ordinary people attempt to dabble in currency. How many criminal organizations, governments, and financial institutions (redundant?) the world over have people who wake up everyday just to manipulate the value of currency? For example, a common criticism of China is that they purposely manipulate their currency to devalue the US dollar. In which ways could such organizations impact a new cur…
Not to be nitpicking but a common criticism of China is that they manipulate their currency to _increase_ the value of dollar not devalue it.