As MtGox trading remains suspended, bitcoin price falls from $160 to $60

by gabemart • 13 years ago

48 85 13 years ago

minimaxir2• 13 years ago

The reactions on r/bitcoin, are interesting and tragic. The title of the top thread with 515 comments: I think this subreddit should seriously consider having suicide hotline info posted

http://www.reddit.com/r/bitcoin

drivebyacct27• 13 years ago

To be fair, most of those are from 6+ hours ago.

minimaxir2• 13 years ago

True. That just means it's going to get worse once the 60% drop today is accounted for, and looking at the new posts, people are in a panic.

IgorPartola• 13 years ago

So one thing I've noticed and have been logging for a while is the fact that there is huge disparity between prices on various exchanges. My first inclination was to create an arbitrage bot that would buy on one exchange, then transfer to another, and sell again. There are numerous problems with this approach, not the least of which is that you can only really transfer BTC between exchanges and not other currency.

My next thought was this: watch MtGox and assume that it drives the market price. Then buy/sell on another exchange, taking advantage of the fact that there is a delay.

Long story short, it's not as easy as this. However, there is definitely an opportunity for arbitrage here as for example currently BTCe is showing $65, while BitStamp is showing $61.

mikeash3• 13 years ago

Are transaction fees small enough for that to work? $65 versus $61 is only about a 6% difference, and you need two transactions for each trip, so the fees would have to be under ~3%.

dfc• 13 years ago

Fees are under 1%. Mtgox's highest fee is 0.55% and bitstamp's highest is 0.5%

PaperclipTaken3• 13 years ago

Generally, exchanges take less than 1%. Mt. God takes .6%, and at least one exchange (bitcoin24?) takes 0%.

So there is definitely room for this.

bdr• 13 years ago

Don't forget to look at the bid/ask instead of just the last traded price. Big spreads lately might make it look like there's an arbitrage opportunity when there really isn't.

Helianthus15• 13 years ago

Please. Bitcoin fanatics, come out and tell me that Bitcoin will change the world.

That there will come another rise, and this time it won't be a bubble.

Because I know you think these things, that you're true believers, and you think that an unregulated currency with a track record of insane volatility will replace our means of commerce somehow.

Here's the thing:

The majority of people that have Bitcoins now are the people that don't want to sell them. Ever.

The mainstream media watched you this time. It saw just how dysfunctional Bitcoin is.

You lost.

drcode• 13 years ago

I for one would be happy if the MSM would stay out until bitcoins are ready for prime time (another year perhaps)

pyre3• 13 years ago

  | ready for prime time (another year perhaps)

Could this become another "Year of the Linux Desktop" meme? ;-)

drivebyacct27• 13 years ago

"You lost."

I don't know if I'm more annoyed by your smug attitude (and the attitude that many others here have regarding Bitcoin), or if I just feel sorry for you that you have to be this smug and condescending about having been "right" that it is in a slump.

Helianthus15• 13 years ago

I'm gloating like mad because I'm tired of the cloud of idealism that crops up in every Bitcoin article.

I want to be rid of this financial magical thinking. I ain't gonna apologize for that.

And I rather think your smug/condescending quota doubles mine.

baddox3• 13 years ago

Well, he has probably been careful to ensure that he can't lose according to his rules. If the USD to bitcoin exchange rate doubled every week for the rest of his life, he can easily maintain the claim that it will still eventually crash. If the exchange rate does crash, then he can say he was right. I can make the same claim about the US dollar. Without a time frame and price in the hypothesis, saying "it is doomed to crash" or "it is doomed to failure" is not a falsifiable statement.

seanalltogether2• 13 years ago

"The majority of people that have Bitcoins now are the people that don't want to sell them. Ever."

You may be right, however I don't think the inverse is true.

"The majority of Bitcoins are owned by people that don't want to sell them. Ever"

There are some big players now that absolutely want to continue selling coins as they're being earned.

Nursie• 13 years ago

Have you seen an actual analysis of this? Around 80% appear to be long-term dormant.

pyre3• 13 years ago

  | You lost.

Would you really care to wager money that Bitcoin will never rise in price again? Regardless of whether or not it will 'take over the world,' it's too soon to say what will happen to Bitcoin.

Wall Street didn't disappear because of the Great Depression, but I'll bet there were plenty of people right after the crash that were predicting doom and gloom.

  | Bitcoin fanatics

You just come off as either an anti-Bitcoin fanatic or a troll.

  | insane volatility

Do you really expect anything that is in its early stages to be stable? Nothing about Bitcoin is currently stable, and I don't exactly see people encouraging their grandmothers to use it for day-to-day transactions.

Helianthus15• 13 years ago

Yes! Yes I am an anti-Bitcoin fanatic!

Why? Because it's _so obvious_ to people outside the Bitcoin fixation that Bitcoin is crippled. And here you are saying "You don't _know_ it's not going to rise in price again" as if that constitutes a useful argument in favor of Bitcoin.

You just _assume_ that Bitcoin is in its 'early' stages, that it's similar to Wall Street.

Nothing Bitcoin does solves the problem money presents in the first place: its misuse by the greedy.

dragonwriter2• 13 years ago

> Wall Street didn't disappear because of the Great Depression

A whole lot of government regulations affecting the Wall Street and other parts of the financial sector were put into place to prevent a recurrence of the crash of '29 and subsequent panics affecting the financial industry, which is one reason why Wall Street, the banks, etc., didn't disappear.

Somehow, that seems less likely with Bitcoin.

InclinedPlane2• 13 years ago

The problem is that bitcoin is now dominated, at least it seems to me, by speculative investment. And that's not what currency is about. People value currency not because it appreciates but because it is stable. Runaway inflation and deflation are both bad for monetary systems, but here we have people imagining that deflation is fan-fucking-tastic for bitcoin.

And that's telling, because it indicates that bitcoin isn't a medium of exchange, it's an investment denominated in dollars. People are talking about the "price" of bitcoin more than anything these days, but that's not why people choose a medium of exchange. Bitcoins shouldn't be exciting, they should be boring, and dependable. As boring and dependable as a dollar bill.

obilgic2• 13 years ago

Yeap, it is like a microcap chinese manufactoring firm, high beta. don't depend on it, get in and out quickly...

pseudonym2• 13 years ago

SatoshiDice and the controversy surrounding it has pretty well emphasized that Bitcoin is not going to be as widespread a currency as some of the true believers want it to be. It has a niche use in SR and other semi/illegal things, but it's really useful only as long as the price remains stable (in fact, during highly volatile periods like this, most of the smart SR merchants pack up shop until the BTC-USD rate has stabilized).

However, the blockchain inherently limits BTC from being able to be used in the same way that, say, Paypal is right now, just because of it's inability to deal with a high volume of transactions, not to mention the confirmation time. And efforts to mitigate this through 3rd parties removes the distributed semianonymous merits, thus leading to a position where you're better off just using PayPal or a credit card anyways.

conanbatt• 13 years ago

Uhm. Bitcoin is still worth 150% what it was worth one year ago.

Thats like saying the lottery winner didnt win because he had to pay taxes for it.

jodrellblank2• 13 years ago

When Falkvinge put all his savings in, it was around $8.30/coin.

http://falkvinge.net/2011/05/29/why-im-putting-all-my-saving...

ghshephard3• 13 years ago

I'm curious as to whether you've purchased anything with Bitcoin? Or transferred money to someone in a different country using Bitcoin?

The first time I sent Bitcoin directly from my wallet, to someone else's I was amazed at how quickly, and easily it was done - and blown away by the fact that it had been done in a decentralized manner.

I think all Bitcoin users (as opposed to speculators) are highly annoyed by the volatility, but keep in mind, by and large, none of the transactional users of BitCoin care whether the nominal value of a Bitcoin is $1, $100, or $10,000. All we want is for it to be stable so we don't have to keep sweeping our local currency in/out of Bitcoin as we use it.

I'm really curious as to where you are coming from, both personally and professionaly, when you utter single word sentences like, "You lost."

Helianthus15• 13 years ago

>I'm really curious as to where you are coming from, both personally and professional, when you utter single word sentences like, "You lost."

Oh I'm really just not a nice person.

I actually appreciate the use of Bitcoin for the Silk Road. Sure, we need changes to our financial system.

>All we want is for it to be stable so we don't have to keep sweeping our local currency in/out of Bitcoin as we use it.

It's unfortunate that this will never happen.

Bitcoin is _fundamentally flawed_.

wcoenen• 13 years ago

I too watched the bubble mania in disbelief. But this wasn't the first time. In 2011 there was also an agressive bubble up to $30, with plenty of media attention. 6 months later the price was down to $3.

The bitcoin fanatics should have "lost" back then. But instead bitcoin kept on chugging and expanded its user base.

The same will happen this time. The speculators will move on but the group of people with a genuine interest in using bitcoin will have grown.

dj2stein9• 13 years ago

Have you even tried transfering money around with bitcoins? It's amazing. Absolutely amazing. The price of bitcoins is irrelevant and uninteresting compared to the way it facilitates transactions. It is incredible technology, potentially the most disruptive technology ever invented. And if anything the recent press will ultimately make more people aware of bitcoin, and perhaps lower prices will convince more people to try it out.

BrianEatWorld2• 13 years ago

I think the speculators lost. Those of us who actually use bitcoins for transactions simply got a bit of free money out of the rise and knew to hold off until the exchange came back to reasonable levels. I still like bitcoin for what its good for and think that its real uses will keep it around for some time, whether the mainstream adopts it or not.

pg• 13 years ago

Would you please stop baiting people?

Helianthus15• 13 years ago

... Are you going to hell-ban me if I say no? I know HN has this odd focus on being polite, but I've found that a good honest brawl does more to express what people are thinking than timid conversation over tea.

I mean, I'm done in this topic, if that'll satisfy you.

baddox3• 13 years ago

Straw man army. Which bitcoin enthusiast said that "winning" requires "replacing our means of commerce" or "changing the world" or even "never having insane volatility"?

I consider myself a bitcoin enthusiast, and I have never made any of those arguments, and I don't consider myself to have "lost." If the value of bitcoin goes to zero and stays there, I don't consider myself to have "lost." It's still an awesome idea that interests me from computer science and economic/political perspectives, and everything we've seen happen in the bitcoin economy is to me a cool proof of concept.

I don't understand why the "anti-bitcoin fanatics" are so vehement in their criticism of bitcoin enthusiasts. You seem to deriving much more excitement from the recent bitcoin price drops than I ever did from its price increases. Honestly, I just think the decentralized transaction log based on proof-of-work is a really cool idea, and the hypothesis that there could be a trustworthy means of making and verifying transactions without a government or central authority controlling the thing being transacted is compelling. I would think that even if I just read the white paper and there had never been a single bitcoin transaction in real life. The fact that there is a high-profile bitcoin economy is just icing on the cake.

The anti-bitcoin fanatics have carefully constructed their position to ensure that they can interpret literally any event as evidence that bitcoin is stupid or doomed or a scam. Is the price rising? That's obviously market irrationality and pure speculation. Is the price falling? That's clearly the market correcting itself. Is a certain exchange doing well and gaining a good reputation? That's an evil monopoly that goes against the decentralized goal of bitcoin. Is a certain exchange experience technical difficulties? Then that's just a bunch of incompetent amateurs, or worse, malicious scammers trying to distort the market. Is there a lack of people actually buying useful things with bitcoin? That's clear evidence that there is no real bitcoin economy. Is a business supporting bitcoin payments? Well that's still crap, since they're tying the price to the USD exchange price, or using credit cards, or the business owner is just some bitcoin shill, etc.

danjumasule• 13 years ago

Dear baddox

My name is Danjuma Sule, one of the sons of major Gen Gumel Danjuma Sule, The late Nigeria's former minister of mines and power in the regime of the late former Nigeria's military Head of state, Gen Sanni Abacha. When my father died he left me an inheritance of 13002422.34343422 bitcoins. Unfortunately bitcoin exchanges are not yet set up in Nigerian currency and I am in need of a young techno wizard with a bank account denominated in US dollars to assist me in gaining access to my inheritance.

It is on this basis I am seeking for assistance. Your percentage is negotiable. Please note; your age and profession doesn't really matter in this transaction. Waiting for your immediate response and bank account specifics.

Regards, Danjuma Sule

Helianthus15• 13 years ago

I read:

>The bitcoin fanatics have carefully constructed their position to ensure that they can interpret literally any event as evidence that bitcoin is not stupid and not doomed and not a scam.

SkyMarshal2• 13 years ago

>Bitcoin fanatics, come out and tell me that Bitcoin will change the world.

I am no Bitcoin fanatic, just an interested observer, but imho it already has.

It has provided the first viable model for a decentralized p2p [currency|medium of exchange|payment system|something as yet uncategorizable] embedded in the Internet, rather than operated by a third party.

The first iteration is imperfect, but subsequent versions that fix its problems are already being worked on. Some are scams, some are honest but flawed attempts at a better Bitcion, and eventually I expect a more sophisticated Bitcoin 2.0 to emerge.

Imho, Bitcoin represents an inflection point. It may not make it to the promised land, but one of its descendents may.

>You lost.

There is no finish line. This game never ends. And Bitcoin's success does not necessarily mean the end of government currencies. I fully expect they will co-exist for a long time.

Less emotional investment from both sides, less fixation on price/exchange rate, and more focus on the underlying ideas, technology, and their ramifications, both positive and negative, please.

Helianthus15• 13 years ago

See, I can respect the experiment of it.

The problem I have is that it is still going to be money, and it will still be subject to money's flaws.

Meet the new investment bankers, same as the old ones.

Ask yourself: if we had a global currency backed by the UN that was regulated a la NASDAQ (remember that guy complaining that mtgox was, essentially, unregulated), would that truly be less preferable to Bitcoin or similar?

Official things have a purpose. Someone, some entity to be accountable provides more of an indication of our affirmed agreement.

awnird• 13 years ago

You seem to have capitalized the name of the exchange incorrectly. It's not MtGox (like a mountain), it stands Magic The Gathering Online Exchange, a website where you can trade children's playing cards.

lordgilman• 13 years ago

They've changed the name, it is officially MtGox with no official acronym.

gabemart3• 13 years ago

> Buy bitcoin at Mt.Gox the world's largest and oldest bitcoin exchange! [1]

Regardless of their origins, they now use this CamelCase. In fairness, I did omit the period, inexplicably.

[1] https://mtgox.com/

daeken• 13 years ago

> it stands Magic The Gathering Online Exchange, a website where you can trade children's playing cards.

I'm not sure if you did it to drive the point or not, but Magic: The Gathering is by no means "for children". The average age of players is way over 18 in most areas.

(Slightly biased as someone who's been playing M:TG for over 18 years.)

mikeash3• 13 years ago

You should tell the guys at mtgox.com about this, as they appear to have this error all over their web site.

obilgic2• 13 years ago

Speculations affect every currency or share. But it affects bitcoin stronger because of its low market cap.

Think bitcoin as a some random micro cap manufacturing company located overseas, one news coverage and everything changes.

robinh• 13 years ago

Not only that, but MtGox handles over 80% of all bitcoin trade. No wonder it's plummeting; every currency would be greatly affected by something like that.

InclinedPlane2• 13 years ago

Can you describe the mechanisms in the bitcoin system which will drive down the investment-based and speculation-based trading and drive up the currency-based trading?

It seems to me that the exact opposite trend is more likely. The use of bitcoin as a currency will become increasingly swamped by speculative investments and the swings in value will only get larger and larger, not smaller.

DanBlake• 13 years ago

Is it likely the mass sell off will come once mtgox reopens? Certainly many have their bitcoins tied in there and will begin selling once open?

gabemart3• 13 years ago

While I'm not qualified to say, I certainly would predict so.

Many price-monitoring tools pull data from MtGox. For anyone using those tools, the price has been stable at $125 for the last few hours and will stay that way until the exchange reopens at whatever the price is then (currently around $65).

When that jump happens, I can only imagine a vast quantity of BTC will be sold and the price will crash.

ttrreeww• 13 years ago

There really was no need for the hardware upgrade. The volume won't be coming back anytime soon.

akcreek• 13 years ago

The link in the article has BTC at $65 right now and http://realtimebitcoin.info has it at $124.90. How is that possible?

Edit-

It looks like http://realtimebitcoin.info is using mtgox for their data, which explains the discrepancy.

gabemart3• 13 years ago

That site is pulling data from Mt.Gox, the largest exchange. Mt.Gox suspended trading a few hours ago, and has been showing a "last price" of $124.90 since. On other exchanges (where trading is not suspended), the price is currently hovering at $60-$65.

Mt.Gox reopens at 02:00 UTC. (This comment was written at approx 22:25 UTC, so when this comment is about 3.5 hours old. When that happens, I predict, all hell will break loose.

billpg• 13 years ago

Is there a list of distinct URLs of Bitcoin charts, for next time the rate goes crazy?

leoh• 13 years ago

I'm not terribly impressed with Bitcoin. But it might be possible to make a few bucks on this downturn.

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." -Warren Buffet

pmorici• 13 years ago

So I don't quite understand is the falling price because mtgox is down for maintenance (if so why does it have that effect, I don't run into the street and burn my cash just because the banks are closed on Sundays) or is that just a coincidence?

dragonwriter2• 13 years ago

> So I don't quite understand is the falling price because mtgox is down for maintenance

It had already dropped considerably (below $130, IIRC) from the ~$200 it had bounced back to from the earlier drop from $266 by the time MtGox shut down trading. The shutdown of trading at MtGox may have encouraged further decline across other markets, but it doesn't seem to be the original source of the decline.

> if so why does it have that effect, I don't run into the street and burn my cash just because the banks are closed on Sundays

OTOH, you might demand more dollars for goods (or just be less likely to accept them at all), or, on the other side, accept less good for dollars and be more eager to get rid of them if the main outlet for trading dollars for other currency shut down on a day that it would normally have been open (e.g., not a regular Sunday office closure) after a day of high volatility trading where the dollar had lost half its value before the trading was shutdown.

pseudonym2• 13 years ago

MtGox is not the only exchange, although it might seem that way sometimes. It would be like your bank is closed on Sunday, but there's still banks from the same branch open next door.

Because the blockchain is shared, the only thing that mtgox being down prevents you from doing is buying/selling with money stored on mtgox itself-- you can still move money from your personal wallet(s) (you're not keeping 100% of your BTC on mtgox, right?) to another exchange and sell it there.

yebyen• 13 years ago

Imagine what it would be like if there were bank holidays, but they are not predictable in a calendar sense in advance like our holidays... and every bank has their own list of holidays. And also there are only five banks.

I think the price is falling because there's been a speculative bubble rising, and the speculators' confidence is a fickle thing. Maybe up until now, you were a speculator and you didn't think you needed to go anywhere else. Now Mt.Gox has frozen trading and they are also not processing withdrawals. Most people stop trading too.

So, it's a fire sale, because nobody knows if our bubble will blow itself back up again, or how long it's going to take for that to happen. If you were keeping 2/3 of your money at Mt.Gox and now you're afraid that it's utterly gone (at least you know you won't be trading it today), so you've only got 1/3 of what you had, and everyone in town says it's worth 1/7 what it was yesterday.

A few people would surely take the money and get rid of it.

krcz• 13 years ago

Recent research has shown that placebo works even when patient knows (s)he's getting placebo.

Now it looks like the economic bubble works even when everyone knows it's a bubble: http://imgur.com/jvSKdEv

illuminate• 13 years ago

"Recent research has shown that placebo works even when patient knows (s)he's getting placebo."

Huh? Why would it be surprising that placebos work when the patient knows they're getting the placebo?

http://www.ncbi.nlm.nih.gov/pubmed/20091554

PaperclipTaken3• 13 years ago

Bitcoin is not dead, it will come back. Technically, it won't even disappear.

Bitcoin has many fundamental uses as an exchange of value (note the vernacular) that is not done properly by anything else. It is the reason that markets like the Silk Road can exist. The "fundamental" flaw of bitcoin is that it is deflationary. This causes mass speculation, which causes instability.

It's instability means that it is not a good store of value. It is good for exchange of value under certain conditions (anonymous, distributed, trust required, cryptographic, etc.). Bitcoin is taking a hit right now because all of the speculators are cashing out (or panicking, or whatever). Most of the people who use bitcoin for it's fundamental strengths only hold on to bitcoin briefly. This is one of the (perhaps unintended) features of the commodity.

Bitcoin is not good for measuring value. You would never set a price in terms of bitcoin. You would set the price in terms of dollars or euros and then use a conversion to figure out what the price in bitcoins should be. This will probably always be the case for bitcoin transactions, because that's just how bitcoin is.

But as long as bitcoin does 'distributed, anonymous, and cryptographic' better than everybody else, it will be used for those strengths, and this will keep it alive. Bitcoin is not dead until there is something to replace it. A market crash does not count.

It just makes for some sad speculators.

teeja• 13 years ago

Back up to 82 ... end of the milking machine for today.

As MtGox trading remains suspended, bitcoin price falls from $160 to $60

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