Bitcoins : Mt. Gox gone bankrupt

[MrJonno]

Macdoc is mining Litecoins, I think, which might still be economic.

It may only be economic because no one has made it illegal yet, or more accurately the police haven't classified it as an pyramid scheme yet (which is already illegal)

[pErvinalia]

There's a difference between "wealth" and "wealth creation". I'm not sure how wealth is being created here. When I buy for $100 and sell for $200, someone (or multiple someones) has to pay for that $100 in direct losses. Nothing is being created within the bitcoin system, as far as I can tell.

Something is being created. A mechanism for trade that (mostly) avoids the authorities. And that does have value to certain (primarily criminal) individuals in society, - though the value to those individuals may come, through their external interactions, to the detriment of society as a whole.

At the same time as you say, when you buy for $100 and sell for $200, some of that is coming from others in direct losses. What percentage is coming from other's losses, from value to individuals directly harming society, and from value to individuals for more positive purposes, is impossible to calculate. But it's not hard to make some reasonable guesses.

The extreme increases in wealth for those that may have been in it from the beginning compared with anyone who joined later, the volatility rending it almost useless for normal trade, the high incidence of criminal activity that has so far been found, and the collapses in the markets, all suggest that there is very little value being created that is beneficial to society. There probably a small amount, maybe around 10%, that is value to the benefit of individuals trying to avoid the authorities. The rest is speculative multiplication of that value in a big bubble, i.e. other's losses.

yeah, good point.

[mistermack]

Wealth is a very hazy concept, to me. I'm sure economists have a rigid definition, but I can't be arsed to look it up.
If you dug up a diamond worth a million, you would think that you've produced a million in wealth.
But diamonds are mostly hoarded. It's only a million, so long as all the other diamonds remain hoarded.
If they were all put on the market, it would be worth peanuts.
And with the limited demand for diamonds, each new one that goes on the market has a tiny effect on the market price.
So what your diamond fetches, is counterbalanced by a loss of wealth, of existing stock.

Are you wealthy, if your house is worth half a million, if it's costing you half a million to put a roof over your head? Or do people become less wealthy, when house prices rise?

[Svartalf]

Wealth is wealth only so long as it's reasonably liquid and useable economically.
I own a flat worth a million euro... if I can sell it, it's wealth, if I dwell in it, I get only the use value of a dwelling.

[mistermack]

Wealth is wealth only so long as it's reasonably liquid and useable economically.

Yeh. That's why people buy wine as an investment.

[JimC]

Wealth is wealth only so long as it's reasonably liquid and useable economically.

Yeh. That's why people buy wine as an investment.

The mad fools! I buy it to drink!

[macdoc]

Wealth is wealth only so long as it's.....useable

period full stop.....does not need to be liquid not economically productive ( tho that is open to interpretation )- simply useable.

one wag said the best possible wealth is a wheat farm not in a flood plain surrounded by woods with deer beside a year round small river.

True wealth tho you might need a stockade if the shit hits the fan
maybe add some accessible flint and iron ore.

That was viable even during the stone age. ( just watching early agriculture in Britain - fascinating.

[macdoc]

Yeh. That's why people buy wine as an investment.

more bubble shite...I'd rather own the vineyard.

[Hermit]

Another bitcoin bank has been completely emptied out. If Skepticus was still posting his bitcoin evangelism on this forum, I bet he'd be blaming the sites for negligence (all of them) rather than seeing a systemic fault in the unregulated, libertarian structure.

[pErvinalia]

It's going to the shit, by the looks of it.

[Hermit]

Yes. The Mt Gox disaster alone constituted the theft of 7% of the entire bitcoin currency. While it was the largest heist it's by no means the only one. I doubt that thefts from bank accounts, including thefts from credit cards, amount to anywhere near that percentage.

[macdoc]

And was unnecessary which casts a lot of suspicion on the owners who knew there was a security issue.
I see New York is instituting some regulation.
So far Litecoin has not face planted and has some advantages. Having a hard time keeping kid from speculating and keeping him focused on mining.
Cheap mining card out today for $150 for Litecoin

•••
The currency is small - there are billions of dollars in counterfeit currency in use in many currencies and that one bad trade by the junior trader in Japan almost brought down a major French bank on a single trade.
The whole speculative nature of exchanges needs fixing.

My buddy here in Aus makes a decent living doing tiny trades in currency movements.
silly monkeys

[PsychoSerenity]

Yes. The Mt Gox disaster alone constituted the theft of 7% of the entire bitcoin currency. While it was the largest heist it's by no means the only one. I doubt that thefts from bank accounts, including thefts from credit cards, amount to anywhere near that percentage.

I'm still not sure what happened to Gox. I've read a variety of different explanations. Some say they were simply hacked and all the money was stolen; others say there was some sort of weakness in the security of the transactions that was allowing people to steal coins over period of a year without them noticing; and others say it was their own business practices of keeping as little as 1% of coins in reserve for transactions while having "invested" the rest elsewhere, leaving them with an entirely predictable run on the bank.

Certainly the fact that people had been having trouble getting money out of them for a long time suggests it wasn't just a single theft. Withdrawals had apparently slowed to a crawl and a complete stoped nearly a month before they went bankrupt. By the sound of it Flexcoin thought it was the last reason:

We hold zero coins in other companies, exchanges etc. While the MtGox closure is unfortunate, we at Flexcoin have not lost anything.

Ironically this announcement may have been the reason they were targeted for a direct theft - they announced to the world that all their gold is kept in their vault. Or alternatively this could have been an attempt to get more people to deposit more bitcoins with them before they themselves cashed it out - because with bitcoin, who can tell?

[MrJonno]

Another exchange ripped off

http://www.theregister.co.uk/2014/03/06 ... ck_attack/

[mistermack]

Anybody think that there might be some government stealing bitcoins?

What an easy way to tax criminals, and fund undercover CIA operations without an official record of funding.
Two birds with one stone.

I would, in their shoes.