Bitcoin’s Value Falls 10% as Faltering Mt.Gox Exchange Continues to Implode

http://techcrunch.com/2014/02/20/bitcoins-value-falls-10-as-faltering-mt-gox-exchange-continues-to-implode/

by JacobH • 12 years ago

33 53 12 years ago

techcrunch.com

anigbrowl• 12 years ago

It's worth noting that Mt Gox's new offices as listed on their support website appear to be in a hotel. Hmmm.

https://www.google.com/maps/@35.656428,139.698518,3a,75y,117...

sanswork• 12 years ago

The 4th through 16th floors are office space. The hotels up top.

pmorici7• 12 years ago

It's one of those virtual office services. The "new" address is also their original address which they used to use before they moved to their current, now former, location.

dustcoin• 12 years ago

This "office" isn't "new". It is their old address before they moved, I sent a document there in 2011.

matteotom2• 12 years ago

While this may be painful, it will be better for Bitcoin in the long run to shrug off the dependence on Mt.Gox.

camus24• 12 years ago

How can it be? do you really think the people that got screwed will continue buying and have faith in bitcoins? I wouldnt.

sillysaurus2• 12 years ago

Agreed. How could Gox imploding result in a better bitcoin world? I'd lose a ton of money, so my little world would be directly worsened. The price of bitcoin is now about $500, but it likely would've stayed >$650. And now people will forever use this as an example of why bitcoin is dangerous: financial unregulation is dangerous.

It will be just another page in history, yes, but it's a painful one. Personally I still believe Gox will ultimately be okay since everything still has a logical explanation, but hypothetically it seems hard to believe that Gox self-destructing would be anything but bad news.

zxcdw• 12 years ago

Because as you imply in your other comment, MtGox is not deemed as trustworthy exhange by many. It is good that Bitcoin doesn't rely so much on it for now.

After all, MtGox is not Bitcoin.

pmorici7• 12 years ago

This isn't the first time a Bitcoin company has imploded taking a large amount of customer funds with it. A lot of people have also seen this train wreck coming for a long time, like nearly 10 months ago it was obvious something wasn't quite right. Many people had already moved from Gox to more reputable exchanges like Bitstamp or Coinbase. This might effect Bitcoin in the near term while this shakes out but long term I doubt it will be more than a sentence in this history of Bitcoin's rise.

wmf• 12 years ago

The number of people who have not yet been "Goxed" dwarfs the number who are being screwed right now.

meowface• 12 years ago

This isn't going to kill Bitcoin. MtGox has been seen as an extremely unreliable exchange since 2012, despite the healthy growth and relative stability of a few other competing exchanges.

It's no shock that Gox would die due to technical problems like this; they're not run by a technologically competent staff (compared to, say, Coinbase, a YC startup).

matteotom2• 12 years ago

It will be a problem for a while, as the price drops, people get screwed, and people lose confidence in Bitcoin. However, it is probably best to not have the largest exchange be a disaster that has repeatedly shown its technical incompetence. For Bitcoin to move forward, Mt.Gox needs to go.

EDIT: in addition, hopefully people will learn from this, and not use exchanges as wallets, and not (try to) make trades on an exchange without doing their research first.

tlrobinson2• 12 years ago

I believe "That which does not kill us makes us stronger" very much applies to Bitcoin. It will be painful for those people, but this is par for the course with Bitcoin and somehow it's still thriving (see: https://bitcointalk.org/index.php?topic=83794.0)

Bitcoin is a decentralized system that relies on many centralized services, but it also enables decentralized versions of many of those services to be built. As each centralized service gets picked off for one reason or another (Silk Road, Mt Gox) people will realize why the decentralized and trustless versions are necessary and migrate to those.

This is exactly what happened with file sharing (Napster, Gnutella, BitTorrent, etc), and we're starting to see it happening with money (Bitcoin), messaging (Bitmessage), DNS/naming (Namecoin), coin mixers (CoinJoin), exchanges (Ripple), etc.

pyalot22• 12 years ago

Consider the people who haven't been screwed yet (in the future). If Gox manages to survive this and expand their customer base, it's wash, rhinse and repeat. Nobody wants that.

camus24• 12 years ago

To the ground ! So here is MtGox owners exit strategy, vulgar theft.

TrainedMonkey2• 12 years ago

Problem with mtgox is not that people think they are going to run with the money. Issue lies with the fact that they had some of bitcoins stolen with transaction malleability issue. Question is just how much got stolen. What market thinks with bitcoin price @mtgox is that they do not have enough bitcoins to cover all the people who want to withdraw them.

camus24• 12 years ago

That's what they said, i choose not to believe them. If i'm ignorant you are just naive. Do you think these people are stupid? they know what they are doing you are just drinking the kool aid.

derwiki• 12 years ago

Your reply would have been better without the first sentence :(

ihsw• 12 years ago

There is some speculation of insider trading, too.

http://i.imgur.com/qLYhzR3.jpg

buttcoinslol• 12 years ago

Bitcoin wanted an unregulated currency, Bitcoin got an unregulated currency.

lmg643• 12 years ago

regulation is not a guarantee of much. major banks in foreign exchange are in the middle of a scandal involving widespread collusion on fixing of prices.

300bps2• 12 years ago

Bernie Madoff's customers wanted a regulated market. Bernie Madoff's customers got a regulated market.

CMO buyers wanted a regulated market. CMO buyers got a regulated market.

I could go on for a while. But I'm left wondering - do you really think that your comment is insightful or are you just reveling in schadenfreude?

jerf• 12 years ago

As many have observed, it is not as if conventional currencies are free from this sort of problem either. But I do not draw an equivalence between the two types of crisis. What matters is that BitCoin faces the exact same question conventional currencies face when some sort of disaster strikes... what comes next? It should have been obvious to all, skeptic and advocate alike, that this sort of thing would happen in the "early days" of BitCoin. (Assuming of course that it survives long enough for this to be the "early days".) The question that determines whether it lives or dies is what emerges in reaction to solve this problem.

Don't chortle gleefully at the fact some disaster struck; it is a true and valid observation that conventional currencies still have disasters strike. Chortle if it proves that there's no practical solution to this sort of problem.

I have been and remain broadly skeptical. However, rationality forces me to concede that BitCoin has already gotten further than I would have predicted. The reaction to this crisis, moreso than the crisis itself, will be another interesting test of whether it has true staying power.

BTW... should BitCoin survive this, more disasters are absolutely sure to come. And when that happens, the question will be, what happens next?

tlrobinson2• 12 years ago

I believe we're in the beginning of a weird transitory period right now, but in the long term cryptography and cryptocurrencies have the potential to replace the need for certain types of regulation entirely.

For example, it's possible to build a decentralized exchange between different cryptocurrencies (or assets where ownership tracked on a crypto ledger) where no party needs to trust any other party at all (e.x. https://en.bitcoin.it/wiki/Contracts https://en.bitcoin.it/wiki/Atomic_cross-chain_trading)

computer• 12 years ago

Any chance the pdf file was up early and they simply guessed the URL? This announcement was named 20140220-Announcement.pdf (https://www.mtgox.com/img/pdf/20140220-Announcement.pdf) while the previous one was 20140217-Announcement.pdf (https://www.mtgox.com/img/pdf/20140217-Announcement.pdf).

Try it the next few days.

InclinedPlane• 12 years ago

Please form two orderly lines. People who are shocked, appalled, and surprised form to the left. People who are just itching to say "I told you so!" please form to the right. I hear refreshments and snack cakes are to be served and a bar will begin selling liquor soon (cash only).

Tohhou• 12 years ago

Third line: cold indifference.

briansmith• 12 years ago

It would be hard to convince them to line up.

Cbasedlifeform• 12 years ago

Does anyone know how much of the total BTC are still held within Mt Gox? If MG does indeed implode or go bankrupt, what happens to the BTC it still holds? I feel sorry for those who trusted MG with their BTC, but the writing was on the wall a while ago.

fingerprinter• 12 years ago

ELI5. How can a bitcoin on Mt.Gox be going for one price and the "general" bitcoing market be going for another? I feel like I'm missing something.

SerpentJoe• 12 years ago

Non-Gox bitcoins have higher utility, in that they can be withdrawn.

batiudrami• 12 years ago

Because the current price is just whatever a seller and buyer have 'agreed' to pay at any one time, if there are possible issues with bitcoins on one exchange (for instance, the real or imagined possibility that your bitcoins may go missing on MT Gox, or that there will be difficulties selling or retrieving the ones you hold in that exchange), people will be willing to pay less than the going rate for bitcoins on that exchange. Elsewhere, where this issue doesn't directly exist, people will still be willing to pay full price (though issues at MTGox may affect buyer confidence on other exchange, which leads to an overall decrease in Bitcoin price).

tb• 12 years ago

Default risk. The price for a bitcoin that is currently held by Mt.Gox factors in the market's expectation that said bitcoin will be able to be redeemed from Mt.Gox. Analogous to why your bank charges you a higher interest rate on a loan if you have a poor credit score, to compensate them for the perceived risk that you fail to repay the loan.

maxerickson• 12 years ago

Gox is holding both the bitcoin and the dollars involved in the trades.

They have been doing a questionable job of transferring dollars out to customers for months and recently they stopped transferring bitcoin out to customers (supposedly due to some technical issues).

So basically MtGox isn't very connected to the general market.

pyalot22• 12 years ago

Bravo, spot on headline. Wired, are you reading this, maybe take an example?

Bitcoin’s Value Falls 10% as Faltering Mt.Gox Exchange Continues to Implode

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