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Re: MtGox.com is offline

#551
post #306

Earlier quoted context omitted.

"Transacting under the auspices of a neutral, trusted third party is what money means." Can you explain this a little more? How do I need to trust a 3rd party when I use, say, gold as money?

Gold is not money... you should say "when I use dollars as money"

This brings up a point I've never really understood about the hoarding of gold. Why? Let's say there is some catastrophic meltdown of society and money is a thing of the past. What am I supposed to do with the bar of gold you trade me for goods? Rather than assume that everyone's still on board the "gold is valuable and not just rocks" train, isn't it far more sensible to trade goods or services for goods or services? I would think that, in that I am exchanging a thing that I cannot use just so I can later exchange it for something I Can use, I am using gold as money. (Same deal if I trade goods for shoes that are the wrong size or handfuls of scratch 'n sniff stickers.)

Re: MtGox.com is offline

#553

Earlier quoted context omitted.

Bitcoin exchanges will have a run - they resemble fractional reserve banking, because all exchanges dont have enough USD (or other currency) to cover every bitcoin that people might want to trade thru the exchanges (that could be every single bitcoin in existence). This obviously results in the crash of the exchange rates, and probably a reduction in the usage of the currency as well. Getting paid in something that h…

I thought that the bids/asks were all from individual people Unless the exchange is taking btc/money from users and investing it somewhere then every btc/$ should be totally within the system, yes? so you can either withdraw your btc or your $ as the case may be.

That's the problem with mtgox - there was a divorce of BTC and mtgoxBTC account values, and that divergence, due to poor accounting/theft/whatever ultimately lead to a situation where mtgox is now acting like a fractional reserve bank.

In theory everything at mtgox is fine, UNLESS everyone want their real BTC back now, aka bank run. As long as people just trade between mtgoxBTC or only withdraw in reasonable amounts, it might be ok.

But that won't happen, because of the expectation of full BTC convertibility, people are freaking out and wont cease to freak out.

There are so many parallels between the gold-backed currency and bank runs in that era. Just rumors, or facts of insolvency and inability to produce either specie or gold for deposit values could drive a run and that would be that.

All that annoying bank regulation is there for a reason. It's a good thing we don't have bank runs anymore. Right? RIGHT?

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