Forgot your password?
typodupeerror
Bitcoin

Mt. Gox Shuts Down: Collapse Should Come As No Surprise 232

Posted by Unknown Lamer
from the virtual-currency-actual-losses dept.
New submitter Dan541 writes in with word that Mt. Gox has halted all operations indefinitely. A statement from the CEO: "As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues. ... In light of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly." MrBingoBoingo writes that we should not be surprised Mt. Gox appears to have failed "The recent closure of the famous Bitcoin exchange Mt. Gox has grabbed a lot of media attention lately, but people involved heavily in bitcoin have been raising alarms about business practices at Mt. Gox for quite some time now. With the Mt. Gox failure being Bitcoin's biggest since the collapse of the ponzi run by Trendon Shavers, also known as Pirateat40, it might be time to revisit the idea of counterparty risk in the world of irreversible cryptocurrency."
This discussion has been archived. No new comments can be posted.

Mt. Gox Shuts Down: Collapse Should Come As No Surprise

Comments Filter:
  • by medv4380 (1604309) on Wednesday February 26, 2014 @12:15PM (#46346581)
    It's like someone came up to their car siphoned off some gas. Then rather than report that the tank was half empty they ran things as if everything as "ok". As long as people kept putting in gas no one would be the wiser. But when people started taking their gas back, and stopped putting more gas in the tank eventually ran empty before it should have.

    Ether it was deliberate theft on part of MTGOX that was done to effectively make a ponzi scheme. It could have been a theft from unrelated parties, and MTGOX lied to effectively create a ponzi scheme to hide the damage. Or, somehow, it was theft from unrelated parties, and MTGOX was blissfully unaware until it all came crashing down.

  • by leuk_he (194174) on Wednesday February 26, 2014 @12:40PM (#46346861) Homepage Journal

    Forget the "non"anonymity of bitcoin. The problem is: every transaction becomes final. No reverse.

    If i buy a apple, give a (real) coin, i expect a apple in return. If i do not get the apple, I will hold the counter party responsible. (e.g. beat him up/ call the police / etc etc.)

    Now the counter party becomes the entire bitcoin public. I give a (fraction of) a bitcoin.... and I fail to get the apple. Now who do i beat up? Who do i call for? How do I tell that the reputation of the apple-seller is bad?

    That is where there is no counterparty in the bitcoin protocol. bitcoin only keeps track of the bitcoin transaction, but looses track of the counter-part of the transaction.

    For fiat money you can call someone (cop) to mediate the bad outcome of the transaction. For bitcoin you are lost. The coin transaction is deep down in the chain.

    That is where the idea of counterparty is born, some way of 2-way commit, or reputation system for party that receives the coin transaction.

  • Re:Is MtGox Bitcoin? (Score:4, Interesting)

    by alphatel (1450715) * on Wednesday February 26, 2014 @01:10PM (#46347203)

    Yes, in a rigged market, the price is controlled and doesn't drop on very bad news. You can contrast that with a free market like housing which took a drop after Lehman shut down.

    Those two objects are not correlated. The housing market collapsed because of bad debt that was loaded into paper held by banks, and Lehman happened to have some of the paper too. Note that Lehman was allowed to collapse because the impact to the housing market was a non-event. The impact to the US as a whole, and the housing market secondarily, by the bankruptcy of all solvent banks was much greater. And so we entered into a time when the government took a stake in the stock market and financial institutions.

    MT and BTC are the same scenario, luckily the US Govt has not stepped in yet. Which means the market is actually free.

  • Following the money (Score:5, Interesting)

    by goombah99 (560566) on Wednesday February 26, 2014 @01:11PM (#46347209)

    So given that bitcoin transactions are all known why can't they trace a suffient number of these back to wither a source or to nullify the recipient's income?

    that is even if the person doing it hid there tracks at some point they would have transacted those bit coins, possibly to some third party (e.g. to convert them to dollars or buy a pony). Or they might have transmitted them into some combined tumbler to anonymize the trail. But with real currency if I rob a bank and buy a car with the money the money can be seized from the car dealer if the cops so decide. With bit coin there's no mechanism to do that. The whole bitcoin ecosystem would have to agree to the seizure to unwind the transaction trail. It would also require a lot of new non-trivial calculations to do that back multiple years.

    But in principle these transactions are at least tracebale. Perhaps the problem is it's international and Mt GOx doesn't have the resources to trace this?

  • by endoboy (560088) on Wednesday February 26, 2014 @01:15PM (#46347285)

    Nice analogy... if you want a real world example of this happening, consider the storage facilities for fine wine in Manhattan-- flooded during hurricane Sandy
    For (largely unexplained) reasons the storage facilities still won't allow the customers access to (or even look at) the wine they're supposedly storing...

    http://www.nytimes.com/2013/12... [nytimes.com]

They are relatively good but absolutely terrible. -- Alan Kay, commenting on Apollos

Working...