Well lets see if Ed's timing is late to the game or immpecable genius!!!
Mt. Gox is dying, and that's good for Bitcoin
The currency can do better than an overwhelmed website formerly known as a hub for trading 'Magic The Gathering' cards.
By John Aziz,
Bitcoin just took a body blow. But even though the virtual currency is staggering, the punch it just suffered will pay off in the long run.
Mt. Gox, originally known as Magic the Gathering Online Exchange, and now the industry leader in exchanging Bitcoins to normal currency, is offline -- taking more than 700,000 Bitcoins, worth an estimated $409 million, with it.
This follows several days of weirdness for Mt. Gox, in which prices on the exchange were hundreds of dollars lower than in the rest of the market. This was largely due to limitations Mt. Gox had placed on withdrawals.
Before its website and Twitter feed disappeared, Mt. Gox claimed that the limits on withdrawals were due to a "software issue." But rumors swirled that it was actually because the exchange was insolvent. Mt. Gox finally going offline will only strengthen these rumors.
The Week: Everything you need to know about the Bitcoin boom
Of course, the risk of a Bitcoin exchange running off with your money is a risk that Bitcoin exchange users have chosen to take. Bitcoin deposits -- unlike typical currency deposits at brick-and-mortar banks -- are not insured by any government or regulatory authority. While Mt. Gox users can potentially sue Mt. Gox's owners to try and get their money back, there is hardly a guarantee that such a strategy will yield success.
The Bitcoin Foundation, in an open letter trying to reassure users of other exchanges that their funds are safe, notes:
Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading. [Coinbase]
Now, it remains to be seen whether independent oversight through industry bodies like The Bitcoin Foundation will be sufficient to reassure currency users, and to prevent further Bitcoin disappearances. Bitcoin has a very libertarian user base that is hostile to the idea of government oversight. This user base is also very decentralized, suggesting that at least for now, oversight for exchanges will have to come from the Bitcoin community and industry.
The libertarian dream is that untrustworthy, nontransparent exchanges that fail to provide customers with adequate security will be put out of business by the magic of the free market. The reality, however, may be that such busts and breakdowns would likely give Bitcoin so much negative publicity that potential new users would be driven away from Bitcoins (and away from virtual currency in general) altogether.
All that said: In the long run, Mt. Gox's death will be a good thing for Bitcoin. Multiple times in the last year -- and especially back in the first half of 2013 -- the Bitcoin market has been massively disrupted by trading problems on Mt. Gox. It has been extremely difficult for this online trading card exchange to scale up to a world-leading virtual currency exchange. It should be no surprise that other exchange operations run by companies with more experience in the financial industry have arisen to replace Mt. Gox.
Still, in the meantime, Bitcoin's value is falling, now below $500 for the first time since last year. There is no limit to how far the Bitcoin price could plummet -- it came up from nothing and could conceivably go back there.
However, the belief in Bitcoin by the people in the Bitcoin community -- which is the thing that has really fueled Bitcoin's meteoric rise -- remains strong, and a decently long period of stability following Mt. Gox's shutdown will gradually reduce worries. This will be especially true if this episode forces the remaining exchanges into better security practices.
Major Bitcoin exchange said to be insolvent
2 hrs ago
Honest Johnson4 hours ago
Can you say ponzi scheme? Didn't see this coming.
6 4Replies (4)
phil993 hours ago
"Bitcoin can be used to buy ANYTHING (drugs, guns, credit card numbers, and even human slaves). For this reason there will always be a market for Bitcoin and it will not go away anytime soon."
Pffft. One can do all of those things with francs, dollars, pesos, etc. The real reason Bitcoin will not go away anytime soon is that P.T. Barnum was correct.
2 1Replies (1)
King Viper4 hours ago
Bitcoin is very valuable for those seeking anonymity. More vendors have been accepting it and while it will never replace hard currency it can provide a good hedge for some and be a speculative financial instrument for other. Anyone who knows about the deep web or silk road knows that Bitcoin can be used to buy ANYTHING (drugs, guns, credit card numbers, and even human slaves). For this reason there will always be a market for Bitcoin and it will not go away anytime soon.
2 1Replies (0)
King Viper4 hours ago
MT. Gox has been insolvent for months. Those early adopters of Bitcoin (before any mainstream article was published about it) have made massive amounts of money from it. At its lowest it was less then $1 and at its highest it was over $1,000. While no one suggests it is a stable investment if you were to have purchased bitcoin after any negative article about it came out and sold when any positive article about it came out you would be very rich.
Mt. Gox is dying, and that's good for Bitcoin
The currency can do better than an overwhelmed website formerly known as a hub for trading 'Magic The Gathering' cards.
By John Aziz,
Bitcoin just took a body blow. But even though the virtual currency is staggering, the punch it just suffered will pay off in the long run.
Mt. Gox, originally known as Magic the Gathering Online Exchange, and now the industry leader in exchanging Bitcoins to normal currency, is offline -- taking more than 700,000 Bitcoins, worth an estimated $409 million, with it.
This follows several days of weirdness for Mt. Gox, in which prices on the exchange were hundreds of dollars lower than in the rest of the market. This was largely due to limitations Mt. Gox had placed on withdrawals.
Before its website and Twitter feed disappeared, Mt. Gox claimed that the limits on withdrawals were due to a "software issue." But rumors swirled that it was actually because the exchange was insolvent. Mt. Gox finally going offline will only strengthen these rumors.
The Week: Everything you need to know about the Bitcoin boom
Of course, the risk of a Bitcoin exchange running off with your money is a risk that Bitcoin exchange users have chosen to take. Bitcoin deposits -- unlike typical currency deposits at brick-and-mortar banks -- are not insured by any government or regulatory authority. While Mt. Gox users can potentially sue Mt. Gox's owners to try and get their money back, there is hardly a guarantee that such a strategy will yield success.
The Bitcoin Foundation, in an open letter trying to reassure users of other exchanges that their funds are safe, notes:
Acting as a custodian should require a high-bar, including appropriate security safeguards that are independently audited and tested on a regular basis, adequate balance sheets and reserves as commercial entities, transparent and accountable customer disclosures, and clear policies to not use customer assets for proprietary trading or for margin loans in leveraged trading. [Coinbase]
Now, it remains to be seen whether independent oversight through industry bodies like The Bitcoin Foundation will be sufficient to reassure currency users, and to prevent further Bitcoin disappearances. Bitcoin has a very libertarian user base that is hostile to the idea of government oversight. This user base is also very decentralized, suggesting that at least for now, oversight for exchanges will have to come from the Bitcoin community and industry.
The libertarian dream is that untrustworthy, nontransparent exchanges that fail to provide customers with adequate security will be put out of business by the magic of the free market. The reality, however, may be that such busts and breakdowns would likely give Bitcoin so much negative publicity that potential new users would be driven away from Bitcoins (and away from virtual currency in general) altogether.
All that said: In the long run, Mt. Gox's death will be a good thing for Bitcoin. Multiple times in the last year -- and especially back in the first half of 2013 -- the Bitcoin market has been massively disrupted by trading problems on Mt. Gox. It has been extremely difficult for this online trading card exchange to scale up to a world-leading virtual currency exchange. It should be no surprise that other exchange operations run by companies with more experience in the financial industry have arisen to replace Mt. Gox.
Still, in the meantime, Bitcoin's value is falling, now below $500 for the first time since last year. There is no limit to how far the Bitcoin price could plummet -- it came up from nothing and could conceivably go back there.
However, the belief in Bitcoin by the people in the Bitcoin community -- which is the thing that has really fueled Bitcoin's meteoric rise -- remains strong, and a decently long period of stability following Mt. Gox's shutdown will gradually reduce worries. This will be especially true if this episode forces the remaining exchanges into better security practices.
Major Bitcoin exchange said to be insolvent
2 hrs ago
Honest Johnson4 hours ago
Can you say ponzi scheme? Didn't see this coming.
6 4Replies (4)
phil993 hours ago
"Bitcoin can be used to buy ANYTHING (drugs, guns, credit card numbers, and even human slaves). For this reason there will always be a market for Bitcoin and it will not go away anytime soon."
Pffft. One can do all of those things with francs, dollars, pesos, etc. The real reason Bitcoin will not go away anytime soon is that P.T. Barnum was correct.
2 1Replies (1)
King Viper4 hours ago
Bitcoin is very valuable for those seeking anonymity. More vendors have been accepting it and while it will never replace hard currency it can provide a good hedge for some and be a speculative financial instrument for other. Anyone who knows about the deep web or silk road knows that Bitcoin can be used to buy ANYTHING (drugs, guns, credit card numbers, and even human slaves). For this reason there will always be a market for Bitcoin and it will not go away anytime soon.
2 1Replies (0)
King Viper4 hours ago
MT. Gox has been insolvent for months. Those early adopters of Bitcoin (before any mainstream article was published about it) have made massive amounts of money from it. At its lowest it was less then $1 and at its highest it was over $1,000. While no one suggests it is a stable investment if you were to have purchased bitcoin after any negative article about it came out and sold when any positive article about it came out you would be very rich.
