Mt. Gox Halts Bitcoin Withdrawals, Price Drop Follows
coindesk.comInteresting comment on Reddit:
"I had a job interview with MtGox a couple of weeks ago for a frontend developer position. After talking about their technical environment I declined the position. Contemplated publicizing my story, but I have zero proof that the interview took place. But fuck me is their environment fucked up. Either way, I have been recommending to my friends to move any BTC away from Gox as soon as possible, and regret not bringing this advice into the open. I'm a Tokyoite, so if you want to talk to me about the job Interview, or just drink a beer, send me a DM."
"I was told that up until a few weeks [at time of the interview] ago, there was hardly any development environment to test changes. Most changes were done straight on the production environment. Typing this made me throw up in my mouth. The guy who interviewed me was very friendly, but I felt like a psychiatrist more than a job candidate. The dude went on about how shitty the atmosphere is at the offices, and what he told me about Mark seems to be spot on from what OP has said. Interview guy, if you read this, sorry yo."
I believe it.
I've talked to a backend developer at Coinbase, he said their codebase is a mess and that he wouldn't hold any in their system. Also I submitted: https://news.ycombinator.com/item?id=7169114 a couple of days ago based on what I found on Reddit. And this is Coinbase, the good guy. MtGox has always been a clusterfuck.
This feels like the internet used to feel like. Back when you just used to assume that a credit card transaction wouldn't go through. Why? "Because internet". Bitcoin is so young and immature.
I've talked to a backend developer at Coinbase, he said their codebase is a mess and that he wouldn't hold any.
This, and a few other things I've witnessed firsthand makes me wonder if Y-Combinator doesn't need better technical intelligence or some form of auditing. It could be done in a non-intrusive spirit of openness. Basically position it as a "show and tell" focused on technical process. Just have companies show what they're proud of, and if they so choose, show what they're ashamed of/what extent of technical debt they're in.
I think that YC embraces technical debt. Exponential market growth means you can hire developers to re-write the problems in a couple years.
Unless, of course, you are a company like Mt Gox and your technical debt is so huge that it sinks you.
This is not a dig at Coinbase. I'm just suggesting that endorsing technical debt in the finance sector may not be smart.
There are many types of technical debt. It's something that accumulates organically in any real world project, because the real world doesn't care if your code is a paragon of programming excellence or not. It's expected, and simply part of the process, to develop technical indebtedness. The important part is controlling that indebtedness so that it doesn't cause major disruptions -- this usually means periodically cleaning up old debts and ensuring you have a robust system of monitors and failsafes. In a niche like finance, you certainly have to be more aggressive to ensure that no serious breakages or irrevocable indebtedness make their way into critical transaction code.
It's something that accumulates organically in any real world project, because the real world doesn't care if your code is a paragon of programming excellence or not.
Which is short-sighted, really. Technical debt has somewhat the same properties as financial debt, which is why public companies have to disclose monetary debt and have plans for dealing with it. It's high time that the culture caught up to technical reality and started to treat technical debt in the same way. This is especially true for finance!
In a way you are basically saying the same thing, but the warning sign to note is your observation that "the real world doesn't care." It would be insane for the real world to not care about a company's financials, particularly its debt. It's just as insane with technical debt.
Yes, I agree to an extent. I guess the problem is that quantification of technical debt is not so straightforward as financial debt.
When I say the "real world doesn't care", I don't necessarily mean that as a bad thing. The realities of shipping a product urge companies to make compromises. Like financial debt, technical debt is a useful tool, as long as it's used responsibly and kept under control.
Yes, but when the real world doesn't care so much about financial debt, things start failing. Witness 2008. This happens with tech debt too, it's just not well understood by the mainstream. I'm pretty sure when Alamo got acquired, it was in part due to their crappy software making them less convenient to visit and uncompetitive. I think it was them. I remember years ago one car rental company's agent terminals were so bad it just took twice as long to get through their line.
I think that YC embraces technical debt.
And there's nothing wrong with technical debt in and of itself. Just like financial debt it's a tool of leverage and time-shifting costs. However, just like financial debt, it can bite you, so it's generally a good policy for companies to be open about what debts they have and their plans for dealing with it.
Relevant to the discussion, a level of debt for one company may not be appropriate for another kind of company, and this is especially true of financial companies.
> This feels like the internet used to feel like. Back when you just used to assume that a credit card transaction wouldn't go through. Why? "Because internet". Bitcoin is so young and immature.
I feel like the "immaturity" argument is just an excuse. Bitcoin itself is young, but we know how to handle encryption materials safely, we know how to process online transactions, we know how to write exchanges, etc. Mt. Gox wasn't taking on any new problems here. Most of the new stuff that goes into Bitcoin is abstracted away by the Bitcoin protocol.
It'd be very nice for newer players with extensive experience in this area to step up. If not with a new service, then maybe fortifying an existing one (like Coinbase).
The difference is actually the VCs. They invest in people that have never built a stock exchange before.
>'ve talked to a backend developer at Coinbase, he said their codebase is a mess and that he wouldn't hold any in their system
I usually wouldn't jump in on hearsay or be negative in this way. But Coinbase apparently proudly uses MongoDB as their database. Which is just, like, bizarre.
But hey, I'm a rather satisfied customer. Although I'd be much more satisfied if they'd have let me buy earlier in 2013, instead of having an opaque systemwide cap system and not providing helpful responses.
Yeah, like I said, I haven't seen first hand, I'm just repeating what was told to me. And frustrated developers can sometimes call something "a mess" that is really just par for the course for financial apps.
But MongoDB? Man, we used that at 500px, and while it is fast for 99% of usage, I don't know if I'd trust it with financial data.
Up until a few days ago, I had been too lazy to go through the trouble required to ensure that I trusted my ability to administer and recover my own personal Bitcoin wallet, instead deferring the responsibility to the online service that I stored them with. Though I realize the flaws in this method, I just didn't feel up to it. With all of this news about MtGox, I've accelerated my transitioning process.
Yes, this lesson has been learned dozens of times in the Bitcoin community by now. Never store significant quantities in web wallets of any kind, even if it presents as an "account" at an exchange. Move all significant quantities of coins to a local wallet and make a million secure backups of that wallet. When you want to use these coins, send them from your local wallet.
There is no reason not to have a local wallet. There have been major coin thefts from online services, even very reputable services, sometimes sinking the entire thing. Cryptocoins are worth a lot of money and people will steal them from you if you leave them vulnerable. Cloud coin storage is always vulnerable.
The problem for me wasn't learning the lesson, it was having the proper motivation to get off my ass and do it. But I agree. If you cannot trust yourself, give yourself a reason to, and then do it.
I worked at Gox as a PM for about three weeks before walking out. Currently looking for a new job. sigh.
Would be willing to share my story, with proof, but sadly I'm not a good writer. :(
But I can confirm that it is as screwed up as the commentor on Reddit wrote. Not even the developers would trust their money or BTC to Gox.
Consider this a reminder that while Bitcoin may be an interesting technological achievement, as a tradable asset it is still basically a toy. Crappy exchange technology combined with low liquidity is a perfect recipe for this kind of volatility.
While I am in no position to predict the future of bitcoins, all new markets have these problems. At an early point in their history, stocks also had low liquidity and crappy technology. Both of these conditions will improve as an asset becomes more popular. It is a chicken-and-egg problem.
I think your sentence has too much of a tone of inevitability. "... will improve as an asset ..." should surely be "will improve if an asset ..." or perhaps "... in order for ...".
There's plenty of new markets which failed to take off, and died after a few years of use. Confederate dollars aren't quite the useful currency they once were, as an obvious example.
Otherwise it cuts too close to survivorship bias: is there a popular asset where the market has "low liquidity and crappy technology"?
> is there a popular asset where the market has "low liquidity and crappy technology"?
Yes, real estate.
Point taken. Speaking of liquidity, water rights are likely another, at least in the southwest where the relevant laws date back to Spanish colonization.
You are right. I should have added "will continue to improve, unless they implode.".
There's also the question of where the money will come from to improve the technology. One of the benefits of BTC is the low transaction cost. But it might be that those transaction costs are exactly what's needed to fund exchange development.
I think you've hit the nail on the head here - scaling up a real exchange is incredibly difficult and the kind of talent you need to hire probably has a price tag hugely in excess of the revenue of all BTC exchanges combined. These guys are probably struggling to even understand the problems they're experiencing, so it should come as no surprise that they're having technical difficulties.
I bet they're having even more legal difficulties though, as just running a regular share exchange requires a team of top notch lawyers to keep abreast of the huge volume of exchange laws. I doubt poor MtGox even has 1 full time qualified lawyer and they're dealing with entirely new legal ground.
Whatever happens, the market will set the price. Perhaps the current transaction costs are too low to enable high-quality scalable exchanges with the necessary tools (whatever they may be). However, if such exchanges are advantageous, the transaction cost will rise.
There are plenty of talented people who believe in BTC enough that they would work to get in on the ground floor of an exchange. Who do you think are designing custom ASICs for mining?
http://www.cringely.com/2013/09/30/doubts-bitcoin/
^ points out some nice parallels between the "Bitcoin rush" and the California gold rush. One of the points he makes is that it wasn't the miners, by and large, who ended up rich. It was the people who sold equipment and supplies to the miners. The namesake of Stanford University was one of them, interestingly.
As far as I know, the guys making custom ASICs for mining are selling them to miners for real dollars. I don't think that helps your point much.
Why do you think that?
The top sellers of mining hardware that I could find on Google (Butterfly Labs, Advanced Miners, Cointerra) all accept Bitcoin for payment.
Are you referring to some group upstream of the hardware sellers? I'm curious where you're getting this information from...
Do they "accept bitcoin" in the way that many big services do, where they get their payment out of bitcoin and into cash as soon as possible?
Maybe, what's your point?
I don't think its valid to call the buying and selling of Bitcoin a "new market." Bitcoin itself brings new idea, but the exchanges around trading them don't really solve any new problems in the way Bitcoin did. Its all old hat, and it just requires proper execution, not innovation.
You are talking about the future of bitcoin, he is talking about the present.
There may eventually be a time where trading in bitcoins is productive, but for now it is a bit risky.
This is more about a crappy exchange that has been crappy for most of its existence than about Bitcoin itself. The sky is not falling. MtGox may fall after this, but IMO that would be a good thing.
No, this is more about the freedom (and naivety) of the Bitcoin community. When you don't have any type of regulation or oversight in place, you get this type of free market free for all. There is no one single authority out there that can force Mt.Gox to clean ups it act. The only people with any power over the exchanges are their customers. But the customers aren't pushing for change for a variety of reasons. They either lack knowledge of these issues, knowledge about how these technical issues can cause problems, or have a vested enough interest in Bitcoin to overlook (or even down play) these issues.
I don't think his statement was with regards to Bitcoin itself. Calling it "a real tradeable asset" implies more about the market around buying, selling, and storing Bitcoin than the Bitcoin protocol. And its hard to argue that market is anything but immature.
I would imagine that similar things happened in the early days of online equities brokerages.
Not even just the early days - Microsoft's fairly recent attempt at providing software for the London Stock Exchange met with disaster and frequent downtime [1]. This from a major tech giant, not just a card game exchange. Running a real exchange is a very difficult thing to do once the scale starts to ramp up.
[1] http://www.telegraph.co.uk/finance/markets/4676369/Seven-hou...
This. I don't get why everyone is harping that one private company being completely incompetent has any reflection on the technology it acted as an exchange for.
MtGox never had their shit in order, exploded overnight because Bitcoin is awesome, and hopefully we are finally seeing their inevitable collapse so that someone with more competency can take over.
It wasn't Microsoft providing the software. It was software running on Windows. The actual software was an in-house developed matching engine called Tradelect. LSE eventually switched away to a 3rd party matching engine with their acquisition of MilleniumIT.
True, but Microsoft had a big role in it.
"The new technology platform has been developed using the Microsoft .NET Framework, with support from Microsoft and Accenture, and marks the final phase of the Exchange's four-year Technology Road Map project. "[1]
I was also told that there were Microsoft engineers on site doing training and review through the project. Either way, my point is that building a trading platform is extremely difficult even with top talent and enormous investment.
[1] http://www.onwindows.com/Articles/LSE-TradElect-system-goes-...
Good points. The only other Windows based matching engine I know of is Direct Edge in the US, and I think even they are going to switch over using BATS' Linux-based matching engine once the BATS-DE merger completes.
The interesting thing about bitcoin is that you can just trade your friends for some p2p, you don't need a central exchange. You don't need a bank account to send someone bitcoins or to get some. You can just hand someone $20 and your address and they can send it to you p2p. No banking infrastructure involved.
That boggles the mind. It is impossible for bitcoin to become fully illiquid as long as people believe it has value, because there is no infrastructure to approve transactions. The approval happens p2p.
Everything can be traded as long as people believe in its value. Currencies are proxies. Proxies function best with stability in value and wide awareness of relative values for goods and against other currencies.
Bitcoin and its ilk are going to repeat the issues the US had when small and regional banks all printed their own bills. Their info infrastructure were large books, updated monthly that provided info to determine exchange rates/values. People didn't like getting burned everywhere on transaction costs and their value going poof when unsavory characters ran the underlying banks into the ground or rumors about the stability of far off banks were spread.
Centralized. government-backed fiat currencies solve many issues that most Bitbugs are coming to grips with the hard way. It's those issues which are exposed publicly and quickly which will keep it the most amazing speculative financial invention to a group of fiercely, independently minded folks who have the skills and means to gloss over all the failings of such a device being a proxy for fiat currency. It's just another layer of abstraction, not a replacement. And it's a leaky abstraction.
All currencies involve a level of trust: a gold-backed currency unregulated by a central bank still requires you to trust the bank that printed the bills. Bitcoin requires you to trust the mechanisms by which it's traded and stored -- not the algorithms involved as much as the mediums through which you're exchanging them. As Glenn Fleishman noted, Bitcoin addresses the problem of counterfeiting, but it doesn't prevent fraud.
I suspect regulation of various kinds will come to Bitcoin not through authoritarian government fiat (see what I did there?) but the way most regulation actually comes to pass: the public calls for greater regulation and transparency. It's possible that Bitcoin markets will accomplish this with minimal government intrusion, and I'm sure that's what they'll all aim for, given the underlying philosophy. I'm just not sure it'll happen.
Funny enough, I can just give my friends cash and it works pretty well too.
That is exactly my point, of course. That it is still cash-like even without centralized exchanges, if for whatever reason such exchanges aren't very accessible (or don't exist.)
I'd sooner consider your comment a reminder that people will apply whatever possible interpretation to the facts is necessary in order to appear right. It's hard to even understand what it is you think you're contributing to the conversation. A dad-from-Growing-Pains-style chat on where to put our money? Reminding us that Mtgox -- which has a story on HN about them every other day -- is a clunky Rube Goldberg machine?
This comment really seems like poorly disguised crowing and nothing more. Not a reminder, certainly. Maybe a reminder of your great prognosticatory abilities -- you took the default position on 99% of new technologies, products and innovations. Where do you find the courage?
Sorry I hurt your feelings. Did you lose money or something?
No. It's really not obvious what it is you think you're adding to the conversation.
I think all of us veteran Bitcoin users saw this coming for awhile now. It's all the new users (<1 year) that are affected. They tend to disregard our advice to steer clear of Mt. Gox (and holding their BTC in an exchange like a bank). They're probably the same people who keep supporting scammers like BFL.
I bought some Jalapeños from BFL after my January order was not shipped until August, in the Black Friday sale.
The sale was advertised as "units in stock, ready for immediate delivery"
When they came (something like a full month later) they were approximately double the spec of the devices I thought I had ordered, but still for the same price. Thanks, I guess?
I can't say if they're shipping any faster now, but if the trend of decreasing wait times has continued, I'd expect that by now, they'll be competition for Amazon's rumored new "ship before you order" practices.
Honestly for the new customers, if their ASIC parts were actually delivered in less than two weeks, I would have to say you're not getting the full BFL experience anymore, and you should probably ask for a refund.
I will probably not order from them again.
The BFL gear is cute and all, but there's a simple fact with selling Bitcoin mining hardware that is probably never going to be overcome. Why would you sell something you could make profit on if you kept it for yourself? This is pretty much the reason why we have ASICminer, KNCminer and Bitfury all either running or building mammoth sized facilities of their own.
I particularly liked this juxtaposition on their store — http://i.imgur.com/uZVKRBX.png
I asked the same thing on BTC StackExchange a year ago: http://bitcoin.stackexchange.com/questions/5975/why-there-ar...
The most popular reply was:
It is not guaranteed that purchasing mining equipment will generate in its lifetime more than it cost to purchase. That depends on the future of BTC price and the difficulty, both of which are hard to predict.
"Those who believe, for whatever reason, that it will indeed be profitable, will purchase devices. But most companies selling mining hardware are in the business of designing hardware, not of speculation and running datacenters - in terms of both risk profile and expertise. So long-term they should just sell the hardware."
and also
"In the gold rush the people who made the most safe/constant returns where not the miners but the people who sold them the shovels"
>Why would you sell something you could make profit on if you kept it for yourself?
This question has been answered an immeasurable amount of times.
Several groups organized ASIC production projects. Avalon, BFL, and a couple others I can't remember. None of these initial groups had the capital to finance the NRE (Non-Recurring Engineering) for the ASIC, nor were traditional venture capital sources willing to do so. The ASIC production process has a relatively a high NRE, but low incremental cost. So, Bitcoin folk organized and participated in pre-sales to finance the NRE for these ventures. They had to sell the things or they would never have been able to afford to produce the initial units.
Additionally, even if some group would've had the capital to spin their own ASIC, it would have been a bad bargain for them to monopolize ASIC mining when competing against FPGA miners. Their capacity would have been limited to some fraction of the much smaller total network capacity in the FPGA era. Also, a single party swamping the network would've earned enmity from all of the other miners and Bitcoin users who could possibly have forced them out of the network, rendering their investment useless.
The same reason that people would package and sell mortgage-backed securities, but not keep them for themselves.
I can think of one reason: long term risk. It's probably an easier ROI calculation to determine that selling a miner will be profitable vs deploying your own and hoping you'll get large enough returns over a much longer period of time. This is especially true if you take pre-orders.
Why? How about lack of faith in BTC long-term price stability but existence of faith in people buying mining hardware?
Depending on your evaluations on those things, it'd make sense to sell none of the miners you manufacture, or all of them, or some of them to hedge your bets.
Also, short-term liquidity. You need to pay for manufacturing in hard currency, and you may want to hold on to your own BTC or have other reasons for not wanting to pay for manufacturing with USD converted from BTC.
Well, just as with disk storage, scaling up doesn't mean things get cheaper per unit, because you'll have to pay for infrastructure that you take for granted at low scale (cooling, storage, security, power, network, etc). Many customers mining at different locations could therefore be more profitable as a whole than one company doing all the mining, especially since many hobbyists don't count their hours like a company has to.
Also, BFL will benefit from the share of users that will not use their equipment to the max for whatever reason and they may not have the equity required to do the upfront hardware investment.
Completely different situations. Actually building an ASIC design is expensive, has a lot of cost in research and development, and the batch sizes are in the millions of dollars. You do benefit from scale of supply in the chips themselves, and you don't need to worry about pretty consumer cases and electrical safety certifications. Once you've paid off the R&D cost you're basically in the green (bitfury sold his up until this point, then abruptly stopped).
>>Why would you sell something you could make profit on if you kept it for yourself?
Anyone building a bunch of good mining rigs could certainly have a decent amount of bitcoins - but lots of people don't want to hold a large amount of a currency that is risky, volatile, possibly illegal, difficult to exchange for their local currency (that their taxes and rent need to be paid in), impossible to pay their vendors in, etc.
If you want gold, mine gold. If you want dollars, sell shovels.
I think a more appropriate question is, why would you ship on time when all of your previous customers' viability depends on your delaying new shipments as long as possible?
Because you already have their money?
> I bought some Jalapeños [again] ... after my January order was not shipped until August > I will probably not order from them again.
Do you have it already now, are you completely sure of that?
Two different but related businesses. That's like asking why does Ford/Toyota/Honda manufacture and sell taxicabs when they could make more money hiring a fleet of drivers and operating the cabs themselves?
In reality though, the ASIC companies are probably doing a mix of both - selling the hardware until they've reduced their exposure to BTC/USD to their desired levels, then keeping the remaining miners for "testing."
Is there anyplace I can go to get the summary of advice from the Sage Old Veteran Bitcoin Graybeards?
bitcointalk.org or the bitcoin subredit has this info plastered all over the place.
Also before you do business with any BTC company you should probably search Google and Pacer for pending lawsuits. BFL has had lawsuits pending against it in state and federal court alleging fraud since at least late Nov. 2013 but no one noticed until yesterday because they named BFL as "BF Labs" which is an uncommon way of referring to them. Some other mining equipment manufactures have federal lawsuits pending against them for fraud as well.
I'd steer clear of /r/bitcoin. It's been declining in quality consistently over the several months. bitcointalk or /r/bitcoinserious or even /r/bitcoinbeginners should give you better advice
> As to get a better look at the process the system needs to be in a static state.
The fact they can't spin up a new MtGox environment with cloned data stores is troubling.
I also hope their technical competency beats their writing competency.
I'm not bitter that when bitcoin was ~ $1/btc I almost bought 1,000 btc ... no not bitter at all
:|
>I almost bought 1,000 btc
Are you just as bitter that you missed Apple, Microsoft, Tesla, Priceline, Intuitive Surgical or CNR?
Point being, these opportunities are everywhere, always. You're surrounded by them right now, they're just not obvious. But neither was BitCoin. And with the above you're actually buying into a real company, rather than speculating on a price change.
> Are you just as bitter that you missed Apple, Microsoft, Tesla, Priceline, Intuitive Surgical or CNR?
Great point and one that is easy to lose sight of. I think bitcoin stings a little extra because many people on HN thought at the back of their mind that it might be big, but never acted. Whereas, at the time many of these stocks were cheap, most people weren't even considering buying them.
>many people on HN thought at the back of their mind that it might be big
I don't think it's even that for a lot of people. What makes me feel stupid is that I considered buying a few coins just to play with, and if I had they'd be worth thousands.
It's a bit harder to get in on those opportunities at a good price since to get in before the IPO you have to be an accredited investor. Bitcoin has no such restriction and in that way really was/is a one of a kind opportunity.
> "to get in before the IPO you have to be an accredited investor."
Exactly, or a company insider with options, preferably an early-stage employee. Being an accredited investor or early employee in a successful company dramatically lowers the pool of potential candidates to strike it rich.
You could still make a really nice return post-IPO, but it means you need a certain minimum amount of wealth you can risk investing to begin with (i.e. being able to access say, $100k or $1m and hope for a 10x return. This implies you are already upper-middle class or wealthier). I made up figures here so that the return would be life changing for most people. You could hope to turn $1000 into $10k but it wouldn't be that life changing for many people. Again, being able to access, say, $100k in liquid assets would dramatically lower the pool of candidates. Bitcoin was likely a one off like you say.
>Bitcoin has no such restriction and in that way really was/is a one of a kind opportunity.
I disagree. No more than getting in as an early employee at Microsoft or Facebook or Google, or in on their IPOs, or even in early after the IPOs.
Apple returned 100x between 2002 and 2012. Tesla is up 300% the past 12 months. I've seen penny stocks go up 1000% in a day.
It's not like Bitcoin is perpetually turning out millionaires; the money has been made by the early adopters. It's not really any different than any other speculative venture.
Buying into a real company is not speculating on a price change?
Of course, all investments involve some degree of speculation.
But, to be fair I think your question is a bit pedantic. I think your parent is saying that with those companies, there is some way to impute value vis-a-vis products, management, history, etc. That calculus would then inform opinions on resulting price movements.
OTOH, when Bitcoin was at $1, forming an opinion on its price movement was almost pure speculation.
Well, even if the price doesn't go up you may be able to increase your original investment with a DRIP. BTC don't give dividends.
What else would you buy it for (assuming no dividends are being paid out)?
Bitcoin is not a stock, they are not comparable; stocks don't have the same growth curve as new technologies. Great opportunities are around all the time, but new technologies like Bitcoin are not.
I bought apple at 21. Sold right after the split. Ugh.
You would probably have sold when they got to $5.
That's a very good point. We have a tendency to think we would have gotten out at the highest price, with perfect foresight. In truth, a 5x increase would have felt like a huge, nearly irresistible payday. Even a 2x increase would.
that's how i sleep at night.
2 years ago i turned over my bitcoins at 5x return in 3 months. there's no way i would have held on to them for a 5000x return.
Cheer up, some of us actually had bit-fortunes and lost them at Satoshidice :)
Those were times, a gamble every 10 minutes, I didn't shave for weeks. I wonder why today lotteries are held only like once a week or so...
true enough. that would be an even worse feeling
I'm not bitter that I got rid of a hard drive with 20 $1 bitcoins that I got for free...No not bitter at all
I GPU-mined that much and spent it on BFL hardware at $12 :)
In US-dollars, over time, I profited, but there were no US dollars involved in any of those transactions, except what BFL surely got from BitPay for my orders. I traded basically 22 Bitcoins for a decent shot at about 12 Bitcoins.
So it goes with the preorder game!
so the question of the day I guess is will Dogecoin do the same thing? (it's "cheap" now)
I almost think that it will... in other words a bitcoin-like bubble will happen again, but maybe just once, and then not again (because there are so many people like me who feel like they missed out the "first time" on bitcoin)
I paid for Christmas for my family with the BTC I bought a year ago. Net win for me :)
Is this the technical way of shutting your doors to stop the run on the bank?
Buy when there's blood in the streets (assuming the fundamentals are still good, which it looks like they are...)
There could be even more blood on Monday.
Short term the price will drop even more dramatically, but once recovered, it should increase more, as main exchanges will get more busy. Or is there a flaw in my logic?
If Mt.Gox does implode like a lot of people are expecting then that is going to start a news cycle that is not favorable and probably cause the price to depress for a period. It will be a good time to get in though if you have been looking for a chance to buy at a good price.
Might be the best to sell on Sunday then.
Outside of Mt Gox prices haven't really changed since yesterday. The only difference is that Mt Gox's $100 premium is gone now.
On German marketplace bitcoin.de the price fell from roughly 605€ to 500€ some hours ago, but now it's "back" at 550€.
BTC-e dropped $100 compared to two days ago.
Localbitcoins ~50 pounds compared to two days ago.
If I recall correctly, prices have dropped around $30 on coinbase in about 24 hours.
Coinbase has already recovered some today. It had dipped below $700 when I woke up this morning.
Can you explain what you consider to be the more important fundamentals for bitcoin?
1. Number of users holding bitcoins
2. Number of users SPENDING bitcoins to purchase goods
3. Number of merchants accepting bitcoins for goods
4. Total $ value of bitcoins being spent to purchase goods
5. Total $ value of bitcoins being spent to perform international money transfers
6. Amount of press (bad press OK, good press is worth much more) that bitcoins are getting as it drives 1 and 3.
I'm sure others have their own list of fundamentals.
Is there anybody publishing reliable numbers for any of those?
IMO Bitcoin's limited amount incentivises speculation/hoarding over spending. Dogecoin, on the other hand, with its inflationary approach feels much more like something that can be used as a currency.
I don't know of anyone.
I sometimes estimate (3) and (6) by monitoring news stories. It doesn't give me absolute numbers, but some sense of scale. I sometimes see values reported for (2) or (4) from individual merchants, but they are rarely useful: the merchants report the great response they had in the weekend after first announcing their support for bitcoin, then we never hear numbers again. Occasionally we'll hear from sites like reddit about the total amount of contributions (not exactly goods, but close) being made in bitcoins: these are usually quite disappointing. I can think of no way to monitor (1) and (5) is likely kept secret on purpose.
So these are the fundamentals I care about and that I think affect the long-term value of bitcoin (as opposed to its short-term speculative value). But I don't have a way to measure them, except for guessing based on press coverage.
6 isn't really measurable as a number.
Blockchain doesn't have info for 1,2,3,4 or 5.
Number of users.
Integrity of the cryptography. It is the backing value of the currency, after all.
No, bitcoin depends on there being a majority of honest (or whatever you want to call it) miners.
> honest (or whatever you want to call it) miners
"mutually distrustful parties"
Oh no, my college fund investment!
But Dogecoin is doing well.
It really isn't, it's down to around 0.12 cents per doge. When Bitcoin goes down, it usually drags the rest down with it.
Is it just me, or does MTGox seem to be the BTC site that has the most problems? Maybe its just because of their size, but in comparison Coinbase and Blockchain have few problems.
MtGox badly needs a financial audit. It's easy to fund operations from deposits and, by having limited withdrawals, hide the fact that you are insolvent.
This is exactly why regulations exist. MtGox should need to register as a Money Service Business (MSB) in the US and as a Money Transmitter in each state that they support. That needs to happen even if they're not a US company. The same applies to the EU, Australia, Canada, and many other countries that have regulations around this kind of activity.
The purpose of the regulations are to protect consumers for companies that are either malicious or incompetent.
The problem is that the licensing process is expensive, painful, and long. There should be better ways. Nonetheless, there's a reason why the exist.
Oddly funny, that the physical gold and silver buyer's mantra of "if you don't hold it, you don't own it" would apply to BTC.
There are a lot of similarities. I see a lot of pump and dump terminology used in discussions of both topics as well, such as:
If you buy only one single (bitcoin|oz of gold) now, one day you could be rich beyond imagination!
The potential future price of (bicoin|gold) is over $100,000.
There are only xxx (bitcoin|oz of gold) produced per year so it must be scarce and valuable!
I'm in (bitcoin|gold) for the long haul! Buy and hold! Keep on stacking!
The price of (bitcoin|gold) is manipulated downward. Buy now while it's cheap.
The global economy is going to crash soon! Buy (bitcoin|gold) now or you will die when the crash happens!
Ok, time to find another exchange. Considering http://www.coinnext.com and https://localbitcoins.com Other suggestions?
I've been using http://www.kraken.com of late and it's been great - no problem wiring money to/from my bank account, easy to convert between LTC and BTC and market orders close immediately.
I've only been trading in small BTC amounts though so not sure if you'd hit liquidity problems if trying to trade large amounts (kraken's volume is quite a lot smaller than the bigger established players like bitstamp)
I started using bitfinex recently. Other exchanges I've used have had miriads of downtime, and I just moved off campbx because their site is so slow (and their market cap has shrunk huge). The other plus is that their fees are often half of other exchanges, I went from a .5% comission on cbx for sales to a .15%.
Bitstamp is also good, I hear, but I just went with finex because their fees are lower =P.
I think it is important to use an exchange outside the US though, because I expect the fed to start going Orwell on any bitcoin company soon.
I've done most of my trading on https://btc-e.com/. Never encountered any problems. To my knowledge it is also the second largest exchange for BTC/USD by volume ( see: http://bitcoincharts.com/markets/currency/USD.html - MtGox' volume just jumped a lot in the past days).
Aren't they closing because of the Russia issues announced today?
I don't think so. Btc-e is based in bulgaria and withdrawals/deposits have only been stopped for one russian provider (QIWI). See: http://newsbtc.com/2014/02/07/btc-e-stops-russian-ruble-depo...
Bitstamp seems to be good.
There's also the Canadian https://www.vaultofsatoshi.com/, which seems to be top notch as far as the tech (multiple 2FA options, OpenPGP cryptography for email, etc.).
Coinbase.com is a great one, and they recently received venture funding
Coinbase recently imposed a kind of ludicrous $3000 a day outbound limit on accounts that had previously been limited to 50 BTC/day.
Removing the limit involves buying coin from them, waiting 30 days, and solving some seemingly impossible credit report based identity quiz (some people report passing after 10 tries, you're limited to one try per 24 hours).
We did that back in the online poker gambling days. The casinos would throttle USD withdrawals, so that the players would be forced to wait and end up losing their chips by playing more. Physical casinos do this by attaching hotels next to the slots. This sounds similar.
Coinbase is great for exchanging BTC/USD, but it's not a trading market like mtgox.
2 bad news day in a row, and BTC is sensibly at the same price level... This resilience is making me more skeptical of a upcoming crash event. Price stability is sinequanone for acceptance as a currency.
Well to be fair, the people most affected by this news can't do anything about it.
Why does anyone deal with MtGox? Nothing but drama.
So, is this really a technological issue or a liquidity crisis at Mt. Gox?
It seems a technical issue, they are saying they won't process BTC transactions not that they wont process fiat withdrawals, although those have been slow for months anyway.
Why would the price drop when there are other exchanges open?
MtGox is one of the biggest and most well known. As I understand each exchange basically sets there own price - but if one exchange lowers there buy price (they buy bitcoins for less dollars) then the others can do too?
This is great for MtGox, all buy transactions pending just lost a $100 of the cost to fulfil. Surely then they wait for the bottom, initiate all transactions possible.
Price rises and they can take in more dollars per bitcoin sold, speculating, that may be all that enables them to actually deposit the amounts on the transactions they "fulfilled" in order to make the price bounce.
Crazy business.
After some research (aka googling) I discover the price is not sinking because of mtgox.
It is sinking because of Russia.
When you freeze billions of assets markets react. People can't move their Gox btc out, they can't cash out, so a double digit percentage of the market just froze.