Bitcoin Forum

After a few crazy days ($101 to $147 in 24hrs and back to $110) we can see a little bit of stability.
I wouldn't mind the price to linger in the 120's-130's for a few weeks! :)

Knowing the recent events that cause MTGox to go down and with lags going crazy (10minutes or above)
Please answer the questions in the poll

Why would the stability of Bitcoins depend on exchanges at all in the future?

Or is it the other way around?

Where are those decentralized exchange (https://en.bitcoin.it/wiki/Ripple_currency_exchange) and decentralized markets (https://en.bitcoin.it/wiki/Distributed_markets)? Sounds like really cool ideas. Will these be implemented any time soon?

We need a closed exchange open only to brokers to eliminate day trading.

I think bitcoin is too young to be stable at all. Stability will come with time.  :)

Will bitcoin ATMs help any?  Or will that just raise familiarity/awareness/availability and decrease stability for a while?

http://money.cnn.com/2013/04/04/investing/bitcoin-atms/

I thought day trading and speculators added stability to the market.

Apologizing for my ignorance, I'm new to this and kinda young....

But did panic selling bring it down, or did it going down cause panic selling?

I'd hardly believe that a temporary outage - even of the biggest exchange - would cause people to freak out and try and sell... but it's a well known fact that high volume will drag Gox under.

I'm still not breathing; bought in at 138.  ::)

Relax, you're not the first to buy in at or near a short-term peak. Long term, you'll be fine.

Why, thanks.  That actually did make me feel better. :P  But I will only breathe a little bit.

But then again when any new mining tech comes out the price soars which makes Gox lag...
So the actual cause of the instabilities is the reckless introduction of new mining hardware.

I must have missed the most recent one, but DoS attacks against Gox are nothing new.

That's kinda my point, They're under DoS all the time. This means that it probably wouldn't take much increased volume to tip it over. The kind of increased volume that results from a panic sell....

my vote is less exchanges, not more - you'll see smaller swings but of course mt gox needs fixing.

OK, let me ask you this:

If your exchange experienced a brief outage, your next action as soon as it comes back online is to:
A) Sell all your bitcoins;
B) Buy as many as you can with your available fiat; or
C) Do nothing.

If anything, the DoS caused a delay in the web interface, causing sell and buy orders to be executed automatically before they could be modified. Thus, when the exchange came back, the price had already moved as much as it was going to.

My answer is decentralized exchanges. A peer-to-peer decentralized exchange, like bitcoin.

How to make this work? I have no idea. One of the awesome coders here will have to figure that nightmare out...

However, if Bitcoin is the answer to our monetary problems today, then a P2P exchange is clearly the answer to our centralized exchange problem.

...Just like Bittorrent is the answer to our restricted information problems.

...Just like Mesh Networking will be the answer to our Centralized ISP problem.

...Just like DEFCAD Search will be the answer to our restricted products problem.

I believe that the answer to every major problem facing us today, in all walks of life from medicine to economics to space exploration, is always to make a Peer-to-peer solution and those who care about the problem will indeed solve it.

I think those panic sell offs are a sign of how small the market still is.
Most of the recent sell offs (and there were quite a few) were not related to attacks at all.
Almost all of the recent action in bitcoinland is related to ASICs being so much faster at mining than older hardware.
That includes the price rise and DOS attacks, but also the rise in interest and the stream of new users.
Just saying...

Hey man!

Don't question deathcode's wishful thinking/paradigms/pseudo knowledge!

If you do, then it is because you are an idiot that knows nothing about Bitcoin!

Instead, you should just accept the reassurances of the most arrogant pig headed clown on the whole forum (with a nose made perfect for being punched, may I add). If he says everything is just fine, then everything is just fine! Understand?

He'll have to work for that title. There are some pretty arrogant, pig-headed clowns who occasionally troll the Politics subforum. I think I've chased the worst of them off, though. So, you may be right, he might be the most arrogant, pig-headed clown left on the forum, but I doubt even that.

+1 for a lovely post.  Can anyone +1 on this forum?  I cannot. 
 Here's an imaginary canary then.  Enjoy!

If the free market is healthy it shouldn't stabilise until the coins are distributed among all the participants in the economy. (IE. The price should stabilise when Bitcoin adoption is complete)

There are no free lunches, all Bitcoin nouveau riche, including me, are parasites on the Bitcoin economy.

A stable price before full adoption is reflective of an artificial balance, and implies supply and demand will have no affect on the Bitcoin economy.   

Could the DoS attach actually be all the new users trying to login at the same time?

Stability will come with maturation.
The market is still tiny, where even single individuals dumping or buying their moderate fortunes can drive the price up or down a few dollars. It takes only a few thousand individuals together to drive the price up or down 10-20% in a matter of hours.

With a much bigger market, we will get more stability.

Secondly, in this early phase of mass growth, stability will never happen. The price should in fact increase at a dramatic rate, as it does. The whole world is learning about bitcoins and jumping in for various reasons (ideals, quick profit, etc). The rate may feel uncomfortable, but it will stabilize eventually. Probably, we will overshoot a stable value at first, and oscillate around it for a bit at a large scale (as we do now on a smaller scale after every spike/dip), but eventually, we you should settle around a more or less stable price eventually. This moment is still years away though.

I'm pretty sure gox could handle the traffic if that was all it was. More likely it is some traders looking to make quick profits by shutting gox down temporarily.

So your contribution to the forum is now following deathcode around and calling him names? ;D

As for stability of Bitcoin prices I think simple maturity will do wonders for stability. Each time some early adopter/big hoarder decides to cash out and drops a big amount of BTC on the exchanges, it gets divided between more and more people. Less people with comparatively big holdings of BTC --> the less volatility. Also the bigger the market cap, the less of a hiccup caused by someone deciding to buy a huge amount.

Meanwhile Gox needs to get its shit together and improve their engine, other exchanges need to step up so we have a bit more healthy competition.

The best option imo would be a trustworthy method of direct P2P exchange. No idea how to pull this off, though. Maybe a crowdfunded public exchange (as has been mentioned in wall observer thread) would do the trick, but it would still represent a certain degree of centralization. Best to just provide a way how to connect buyers/sellers and let them figure out how to do their transactions themselves.

Just for the record I was grouping myself with the parasites, I dumped most of my coins for an average of $13

The beauty of making unprovable claims is that you can't be proven wrong, either.

Bitcoin economy by itself is a parasite of the fiat economy so i don't see your point.

Then prove to me that the DoS caused a panic sell.

I'm not sure any of the options will lead to complete stabilization, though I'm not arguing that it won't help in the long run.

My thought is that Bitcoin will stabilize when there are more Bitcoins on the market. For example, the vast majority of people are holding onto their coins instead of trading. If you were to hypothetically sell off 500,000 Bitcoins all at once at the lowest price right now, you'd cover just about every major Bid (under Mt. Gox anyway)...yet that 500k is only, what, 4.5% of all Bitcoins that have ever been created so far?

The more coins on the market, the harder it becomes to create the wild swings we've been seeing.

Let's assume that they're telling the truth, as they see it. What did they say?

So the attacker sells a large number of coins, then destabilizes the exchange. Is it the original sell-off which triggers the panic sell, or is it the destabilization? Might the destabilization actually be harming the goals of the supposed attackers, by hampering others who also want to sell as fast as they can?

And regardless, This doesn't constitute "proof" at best it is "supporting evidence," but not proof. It's not even facts from Gox, just their theory.

Do I need to define "proof" for you?

You have proven two facts:
There was a panic sell.
There was (and presumably still is) a DDoS attack on Gox.

What you have not proven, and this is crucial, because it is your claim, is the causal link between the two. By their own statements, the sell-off starts before the destabilization. Unless you can prove the destabilization made the sell-off worse, I'll have to assume that it is equally probable that the instability of the trade platform reduced the severity of the sell-off, by hampering other panic-sellers.

Of course finding proof is "not easy." You're making unprovable claims.

Sure, I'll highlight it for you:

It's clear that this is a time-ordered list. The attacker:
1. waits until the price of Bitcoins reaches a certain value
2. sells
3. destabilizes the exchange
4. waits for everybody to panic-sell their Bitcoins
5. waits for the price to drop to a certain amount
6. stops the attack
7. starts buying as much as they can

The selloff begins, by definition, with that first big sell. Now, you tell me, was the panic generated by the sell, or the destabilization? Did the destabilization make the panic worse, or did it prevent sellers from making their transactions, thus reducing the severity?

And yet, they're not even saying what you are: that the DDoS caused a panic sell.

MtGox would be smart to follow this path. Let BTC-E, Bitstamp, Virtex, and the other small exchanges bear the brunt against the 50 cent army.

Sooooo.....

Still waiting to see the PROOF that there was panic selling. Because as far as I can see, it's been the usual weekend selling, BUT this weekend the value has STILL increased. Regardless of the retarded ddos attacks.

Stability will come to the bitcoin economy via distributed exchange of colored bitcoins and other similar currencies built on top of bitcoin (and thus driving up bitcoin values even further(. I personally doubt whether bitcoin itself will ever be stable enough to use for your groceries.

This.  I'm actually going to start putting some (not all) of my 401k allocation into bitcoins.  I'll purchase each payday, and that might mean purchasing at new highs.  But I also know that these "new highs" will net me awesome gains down the road (much better than my 401k ever will).

This is a danger with any attempt to panic the market.

Now that is a provable assertion. So prove it.

Unless we make bitcoin "credit cards".

Sorry to be a buzz kill, but what Bitcoin needs for stability is people buying shit in Bitcoin. Which we have, to an extent. We need moar of dat.

The more people switch to BTC fully, the less need there is to trade BTC to fiat and back over and over, the less need there is for mtgox and friends.

You're not even going to prove your assertion that there was not a BIG sell that started it all? Seems like that's a very easy assertion to prove... and your refusal implies that you can't.

To clarify: proof is data. Not somebody making a statement on their website. Thankfully, that data is available. Feel free to provide it.

Correction: I do not know whether this sell was large or small. You, presumably, have looked at the charts, and thus determined where and when the selloff started, and should thereby know the value of the original sell. Right? Or are you basing all of this, your entire argument, on the statement from the guys at Gox?

Presumably. Of course, we only have Gox's statement to that effect.

Given that this is the motivation behind all sell orders, large and small, malicious or virtuous, I think we can take that at face value.

Presumably. But again, we only have Gox's statement to go by, for that. Unless, of course, they're willing to provide IP logs.

Yes, that is what we're discussing here.

I believe this has been established. A large sell order can trigger a panic. Thus, the special feature of this sell is it's size.

The return question:
Websites (especially ones under near-constant DDoS attacks) experience outages all the time. What makes MTGox so special that being unable to log in, or make a trade, would cause someone to panic and sell all their coins using that very system?

You might be wise to take your own advice, here.

All of your claims are unprovable because they all just amount to your opinion and/or your personal will on the matters being discussed. Opinions cannot be quantified and proven. It may turn out that you are right in the long run, but for all the wrong reasons. In which case, you wouldnt be 'right', you would have just gotten lucky, which would make all the arrogance in your replies and condecension towards other peoples comments who have a different view from you, even more intolerable.

See, in my opinion, the fundamentals underpinning the Bitcoin boom are frighteningly weak. The transactions involving real goods and services have always accounted for a very small fraction of the total USD volume in Bitcoins, and that was before the price jumped 700% in 5 months. That means the vast majority of the money in Bitcoins is speculative capital chasing large profits. Now, as I understand it, your opinion differs in that you believe something more along the lines of the boom in Bitcoins being largely due to capital fleeing the collapsing petrodollar system, towards a safer, anonynmous, yet still highly convenient digital currency. However, the fact that you, despite being an early adopter, openly boast of your ever so ingenius 'exit strategy', suggests that your main motivation is, or has become, to seek maximum speculative USD profit.

Now, it is a well known human trait, that traders (that is what you and 99.95% of the other bitcoin participants are or have become as a result of this mega bubble) are much quicker to sell stocks that have gained in value, in order to lock in profit, than they are to sell stocks which have stagnated and/or declined in value. The big question is, when does the Bitcoin rocket run out of juice? That will be a matter of two things.
 
a) When the herd stampede organically peters out.

or perhaps more crucially.

b) When the powerful hands with the might to drive the market up or down, decide that it is time to let Bitcoin plummet back down to Earth.

As soon as enough of the specualtive herd get a whiff that the top is in. They will drop Bitcoins like a burning lump of dog shit.

Of course, with Bitcoins characteristic volatilty, the coin can drop in value by 40% in a few hours without it being cause for mass hysteria, which could both serve as the factor that prolongs the bubble and also the factor that causes the amateurs to fail to jump of the train as it goes over its final cliff edge.

This of course just my opinion and instead of pouring scorn and derision on it, why don't you try to 'prove' that I am wrong. Clutching at random cherry picked 'facts' that just so happen to support your own personal paradigm does not count as 'proving anything. Oh yes, and bare in mind, my opinion is based on market behviour that has repeated itself time and time again over hundreds of years. Your is based on, 'ah, but this time it is different'.

Quite clearly. My question remains, though: If your confidence is shaken so much that you feel you must get your money out of that service, why would you, instead of withdrawing bitcoins, and selling elsewhere, sell there, and hope they have the USD to cover it? Certainly you're not implying that Bitcoin's stability is dependent on MTGox's?

Still waiting on facts - and not opinions - to be presented. I'll let you know once you present some facts.

You're assuming that they would. They would need concrete proof that the DDoS is coming from that person. Not just a coincidence of timing.

By "evidence," you mean the statement you linked to earlier? I've yet to see any other evidence presented.

By the by, you are aware that all Gox's buy and sell orders are a matter of public record, and easily accessible? I can look just as well as you can, and the longer this continues with you not presenting any hard facts, the more likely it is that I go do that. What do you want to bet I find a nice large sale right at the start of the "crash"?

The funny thing is, I agree that MTGox's central position is absurd.
I agree that the price is bound to be higher in the future.
I agree that MTGox's stability can affect the market price... at least on MTGox.

But you refuse to countenance the idea that the instability might have saved us from a deeper dip, and that's funny. And a little sad, because your only evidence to the contrary amounts to "MTGox said so."

So, we'll agree to disagree, so long you're OK with me considering you a moron.

It's only a new twist if you haven't actually been reading what I've been writing. I've used that at least twice. Which brings me to my second point. I'm not calling you names, I am making an observation of your perceived intelligence, based on your ability to accept new information, and your willingness to accept a PR statement as fact.

Let me sum up my theory that MTGox's instability prevented a deeper dip:
Panic sell starts. Instability prevents users from entering new sell orders, or altering their buy orders. Buy orders are executed automatically, panic sell hits wall, price stabilizes. Users get back on, see stable price, and cease panicking.

You'll note also, that this meshes well with the theory that the panic sell caused the instability... if a constant DDoS is on-going, and suddenly there's more legit activity, such as a panic sell, the servers may well be unable to handle it.

As is your right.
Nor any reason to take it as fact, either. It should be noted, of course, that it doesn't contradict my proposed theory, nor does it back yours up.

What makes more sense? That they're telling the god's honest truth, or that they're covering their ass? Let's ask Dr. House:

http://www.spring.org.uk/images/everybody_lies.jpg

Well, there you go.

The fact that he fails to see how the main exchange going offline could actually help prevent a panic sell, in much the same way as closing the banks, prevents runs on banks etc, shows that his whole line of reasoning is based on fulfilling what he desires the case to be. Probably, he doesn't even realise that he is doing it. He may even through pure chance (certainly not through accurate market insight), execute his 'exit strategy', before this bubble pops. If that is the case both his wealth and ego will swell to unfathomable heights, rendering him even more unbearable than he has already shown himself to be.



If someone could tell me for sure that 10% of the total Bitcoin trade volume is due to real economic transactions, then I would be jumping into Bitcoin face first, even at these prices. However, I suspect that to determine the percentage of Bitcoin trade volume that actually constitutes real exchange, that you would have to be looking at a decimal figure.   If I am correct, then under no conditions, could Bitcoin be considered a safe haven investment suitable for masses of fleeing capital.  Alongside the myriad of heuristics, which have the conceivable potential to bring down Bitcoin within a single day (some of which you have mentioned), all that Bitcoin can be considered at the present time, is as an incredibly risky speculative venture, with the potential to net investors huge gains, providing they don't already believe that the top has blown too high already. With that in mind, Bitcoin couldnt be any less attractive a proposition to any sizable business that is run with a modicum of risk aversion in its company ethos.

Until this bubble pops, and some stability is found at massively decreased prices, real world transactions using Bitcoin cannot expand in any meaningful way. In between now and then, is a high risk guessing game, trying to gauge the level of fuel left in the speculative movement into Bitcoin, both in terms of the 'innocent' speculators and those entities who are very probably knowlingly manipulating what is still a miniscule, and thus still a very easily pushed around market.

Yay, the idiots finally realized that they don't need to quote 9 feet of text in every reply! (took them a page or so of bickering to figure that out, though.)

Quote-pruning provides much-needed rest for my scroll finger.

 ;D ;D ;D

Oh yes, and this reply: https://bitcointalk.org/index.php?topic=167277.msg1750004#msg1750004 which I stuck in my signature, exactly sums up my opinions regarding the bitcoin code/protocol and what we really need to do to allow it to succeed. Gavin and friends are like the momma bird not quite ready to let her little duckling leave the nest... we need to take bitcoin's training wheels (and concrete-filled tires, and retarded random magic numbers) off, extrapolate a protocol already (and stick to it) so other people can make better clients, get rid of buggy external dependencies, and oh yeah - P2P exchanges would just be the icing on the cake. I know there are a couple in development that I've been meaning to start testing. Let's get on this shit folks.
I would donate to the bitcoin foundation to help spur development but from what I've read, they aren't even remotely interested in what I'm talking about. I can't code so my only options are to donate money or complain; I guess I'll stick with the latter for now until the former becomes effective.

I have been using Bitcoins to make Silk Road purchases since 2010. The cheapest coins I bought were less than £3 and the most expensive around £15. Since I use Bitcoins for the purpose they were intended to be used for, and you see them only as a means to enrich yourself, I guess that kind of does make me a Bitcoin participant that contributes to the Bitcoin economy, whereas you, as a speculator, are parasiting from the whole Bitcoin economy. Which is what may kill it.

I have been very interested in the whole concept of Bitcoin and the opportunities it could offer mankind. The recent action in the Bitcoin market however, I view as highly negative for the long term health of the currency. Just to be quite clear, I am not riding any moral high horse due to the fact that I spend all my Bitcoins and have kept hardly any in my wallets, because obviously I am kicking myself that I never invested anything in them when I had every intent and opportunity to do so.

Regarding my 'bearish' attitude towards Bitcoin, only a fool could possibly think that Bitcoin isn't due for a heavy correction, if not indeed a near price collapse. That doesn't mean that Bitcoin may not triple or quadruple between now and then, because it might, and if it did, then anyone investing in them today (wont be me, that is for sure), would be rewarded with dazzling profit margins. Me personally, I would even be reluctant to use them to make any sizable Silk Road purchase as in my opinion, there always exists a huge risk that large chunks of the value of these coins can be wiped out in the time it takes for me to get the coins purchased, transferred to my Silk Road wallet, and then for the order to be processed. If I feel that way as a customer, I hate to think how I would feel as a vendor.

Look people, you won't get PROOF - any number of scenarios are possible depending on the actors...

Let's say Gox shuts down 20 out of 25 servers, announces a fake DDOS attack, and buys up coin themselves
only if/when people panic?  There is plenty of money to be made, so people will use their brainpower to scam...
A huge correction is likely - there will be big losers and big winners.

That said, I think deathcode is probably right, and the attack on him seems undeserved.

What he and MatTheCat have going is their own thing. I simply suggested that the "crash" could have overloaded the servers with legit activity, and he refuses to accept even the possibility. This fact, and the fact that his only reasoning for this refusal is "MTGox said they're under heavy DDos" is what has lost him my respect.

Dear OP,

You do not understand bitcoin, nor its potential (yet) and what it was designed and will achieve. Bitcoin is not a commodity, expecting 'lvl'ing' out and easier 'ups and downs' simply will not happen.

People who are trying to 'make a quick buck' by treating the exchanges like stock houses are badly mistaken about the 'essence' of btc.

Buy some, put some away for the future, sell some later, or preferably use it now or later on items.

Expecting bitcoin to 'level out' so you can play with it and 'win' money is like thinking you can make a snowman and have snowball fights with a few flakes of snow... when an avalanche is coming.

Blink and you'll miss it.

But what if someone understands what you write but think you're wrong?
Who, in that case, doesn't understand bitcoin or does.

Well, clearly, any who oppose the almighty DEATHCODE are in the wrong. Even to doubt that his statements are 100% TRUFAX is heresy. ;)

That said, Bitcoin is a digital commodity, and I expect that it will level out soon after we reach market saturation. Where the hell the price will be at that point is anybody's guess, though (I wouldn't trust proudhon on that one)

Have you sold yet?
No?
Then you're not "making money." Once you have sold, then you will have made money. Right now, you are holding a very volatile commodity. Be as excited as you like about the increasing price of that commodity, but don't call it "making money" until you have cashed out into something more stable. Like that motorcycle you were wanting.