Bitcoin Forum

The MtGox fiasco is indeed tragic, and is making far reaching headlines. Many of Bitcoin's critics are predicting its downfall and one US senator used the opportunity to call for an unbelievable ban.

Caught up within our small niche it's easy to forget what happens in the wider world and financial system.

Please help remind everyone, politicians and critics alike, of necessary perspective:

Bernard Madoff in a heavily regulated financial environment cost investors 18 billion USD, while the MtGox situation is estimated at a sizable, but far far lower loss of under .5 billion.

http://en.wikipedia.org/wiki/Bernard_Madoff#Size_of_loss_to_investors

Former congressman and presidential candidate Ron Paul giving his opinion on the matter said matter of factly the government shouldn't interfere with Bitcoin. Paul said there's no need to regulate bitcoin, because the markets will. "I think the market is much tougher," he said.

http://thehill.com/blogs/regwatch/199214-ron-paul-feds-shouldnt-interfere-with-bitcoin

Indeed, our community is already discussing measures to limit the ability of such a tragic event from occurring in the future, including more transparent records for exchanges.

A decentralized exchange, if we ever see one should solve this.

A big part of the problem is people were unwisely using MtGox as a storage wallet. I and many others have often warned people against doing that but it's not easy to reach everyone.

A real help would be easier methods for people to secure their own coins. We're working on this as a community, but progress is slow. Regulatory uncertainty at state level for money transmitter compliance complicate the issue, as competent services which might focus on secure management of coins for users are hindered from entering the market.

With so many methods of making your own cold storage these days, this is the peoples' fault. Whoever lost coins there, has very low knowledge about the crypto world.
Since the issues, that occurred back in '11 (He never really explained what happened), I haven't touched MtGox. The result? I didn't lose any coins.

If your ecosystem lacks regulation, there needs to be transparency in a way that the customer KNOWS their money/btc/whatever is safe. The transparency would need to be like going to a bank and depositing money into a safe that has multiple cameras running at all times.

No regulation and little transparency is just as bad, if not worse, as poorly executed regulation.

But even storing your coins on your computer come with serious risks. I think as we initiate people into cryptocurrencies, we should hold their hands through the process and make sure they are using their own wallet with a backup.

I think I am seeing a new business is virus detection software specifically at bitcoin viruses...

In conclusion, regulation is effective like a lucky rabbit's foot protects.

At least Madoff went to jail. Other scamsters like John Corzine got off scott free. Then again Madoff stole from the very rich, Corzine stole from the middle class. Makes a world of difference.

Apples and oranges, do your research. Madoff didn't run off with 30% of the currently available fiat on the market.