Bitcoin Forum

This thread's purpose is to discuss the issues that reside with Mt. Gox being 95% of the entire volume of BTC traded as well as possibly a large portion of merchant solution services.

This in my opinion can be bad for bitcoin if Mt. Gox were ever shutdown in its corporate structure (if it has one).

Centralization of services for bitcoin is not a good thing. It gives less options to choose.

Anyways...just by 0.02 BTC...

i agree here.   mt gox will eventually be attacked by many governments. it has been attacked already by having its bank accounts shut down, getting hacked(which could be government spooks) etc etc.
we could even see a mega upload type of take down. this is big money interests, once "they"  realize what bitcoin is doing to the banks control "they" will stop at nothing to take down mtgox. once this happens it will be a major hit because mtgox had such a high percentage of market share.

Everyone agrees, it's finding a safe alternative that's hard.

Even a few major exchanges isn't ideal. We need a way to completely decentralize the exchange between fiat and Bitcoin but that is far easier said than done. People are working on it and I'm sure better solutions will come along. I'd personally like to see 100,000 people offering to trade it in person. Essentially anyone that uses it buying / selling on a spread. I think mobile clients will be key for this.


P.S. not a stab at Mt Gox. I think Mark himself will agree that centralization goes against the concept of Bitcoin.

Is this an anti-MtGox thread?
Like a protest? :)
Then I'd rather take no side - just my own.
The truth is, they are winning the market, because so far there have been the smartest one in this game.
If you were smarter - you could have beaten them.
Obviously none of you was - sorry :)

+1
I deposited a load and they didnt show up, they don't answer on support so I'm stuck :(
For both reasons I use small exchanges, or just the forum.

The exchange problem is chicken & egg. Traders want to use the exchange with the most liquidity, so they avoid new exchanges.

The completely-distributed model is ideal, but there is probably an in-between solution that ties together many of the smaller exchanges.

Alternatively, new exchanges (or existing ones) could boost their apparent liquidity by creating bots similar to those on MtGox. It's a tough proposition for a trader to stare at an almost-empty order book. Filling out the book and reacting to the other exchanges' prices automatically with your bots is a step in the right direction.

Another angle is the feature offering and fee structure. MtGox is launching new features all the time, and the other exchanges aren't really competing on the fees. Most charge the horrendous 0.6% each way. So, again, what's my incentive to switch away from the liquid order book when all I have to look forward to is the same high fees, an empty book, and fewer features.

I guess that's 0.08 BTC (4 random thoughts*0.02 BTC).

I don't take it as that. I don't have anything against Mt Gox personally at all.
What I don't like and I think everyone will agree is having a single point of failure in Bitcoin.
Anyone is capable of making mistakes or having really bad luck / target of a crackdown etc.
If Mt Gox fails and is doing 5% of the Bitcoin exchanges taking place then it's tolerable.
If they're doing 95% (not counting OTC) and fail then the blow to Bitcoin is huge.
It's not that it can't be recovered but it would be devastating and becomes more likely as the monopoly makes them a target.
I don't care what company it is, we don't benefit from a monopoly.

-Jered

It's a free market so it's up to us as adopters to choose. Mt. Gox is not the only option either for exchanging or merchant services. For example Bitpay is expanding to Europe with their merchant services right now and their service is gargantually more convenient for European merchants than the Mt. Gox solution.

Using Mt. Gox services requires having a Gox account and SEPA transfers at Gox require notary/apostille documents to be sent. With Bitpay the merchant can handle the money in their own way by either taking in bitcoins directly or fiat directly, it's much more convenient overall.

I like the fact that Mt. Gox is providing services but at the same time it's up to us to make sure we don't have all our eggs in one basket. Bitcoin users, merchants and services should make sure that they're not entirely dependent on Mt. Gox. Mt. Gox doesn't have an enforced monopoly on anything, they simply provide a good service that is very well known. Their position will get smaller (relatively) once the Bitcoin economy gets bigger and competition gets tougher.

They are so good that they basically become a monopoly in itself. Maybe, they don't offer the best services in the world and so on, but it is very attractive and as bitcoin grow, so does mtgox's strength. Also Mtgox's strength also come from the owner's pre-existing hosting business, allowing them to bankroll mtgox's growth.

I think the best way to achieve this is to increase liquidity between all the exchanges, like what bitinstant is doing right now. This ease the ability of exchanges' ability to compete and differentiate.

If MtGox is forward thinking and willing, they should cooperate because it is in the collective interest of bitcoiners to do so. They might have to compete harder now and in the future, but if they're good entrepreneurs, they should welcome the challenge.

It's voluntary centralization so I don't care. If they screw us over, we are all free to go somewhere else. Until this choice exists I don't really mind their share of the market.

+1.

The people who say that MtGox is by far the best exchange have never used anything else. There are really good alternatives out there and some of them are better than MtGox. The problem is that there isn't enough liquidity because everyone trades at the same place.

Doesn't mean that our situation can be improved. The point of decentralization is resilience, after all.

+1

There is strength in having many exchanges, sure. But, Bitcoin is still small, and there is also strength in one exchange being relatively strong and powerful. Gox is pioneering many things, lots behind the scenes in the legal realm, which they could not do if they were small.

Naturally, more exchanges will spring up as aggregate trading of Bitcoin increases. As of now, the market isn't deep enough to permit half a dozen massive exchanges - the spreads would be too wide, the volume too low.

And again, market-based (voluntary) centralization shouldn't get anyone upset. Strategically, it'd be nice to have more, but any of you who are concerned with Gox's market share is very free to use other exchanges, or make your own.

+

Seems like as time goes on, bitcoin looks more and more like the dragon it was meant to slay.

Strategically, that should be our main focus.

It what allows the bitcoin system to survive hit after hit and keep on running. Keep in mind that mtgox and other exchanges were absorbing failed exchanges. It's proof of our resilience.

But to survive and to thrive, we need more, and much more.

No, it doesn't. It looks more and more like the knight who can slay the dragon after all.

Again, there is all the difference in the world between "forced, coercive centralization" and "voluntary, market-based centralization." There should probably be different terms for each, because it leads to terrible confusion. So long as Bitcoin isn't heading toward the former, it is nothing like the dragon we're trying to slay.

Gox is pioneering, you say?
If you call pioneering to buying something that already exists(MtGox was bought) and copying bit-pay, only integrated into their exchange, then yes, they are pioneering... ::)

I usually listen to what you say and agree with you, but pioneering, really?  :o

Such market centralization often trade convenience for resiliency. I prefer to err a little bit on the safe side, but that's not what the market decide.

Anyway, I think resiliency will come from having a stronger market. Right now, we're still peanuts.

Has anyone taken a look at the Dark Exchange (https://github.com/macourtney/Dark-Exchange) project?  Appears stalled now, but was an attempt to build a decentralized P2P bitcoin exchange on top of I2P.

Well, MtGox was beaten when the first bitcoin exchange appears. MtGox won by being more convenient than others. They're also one of the first to implement mutli-factor authentication. Now they're competing with bitpay, which provide competition.

Not exactly original, but winners are often decided on execution, not the most original idea.

Being better is not a sign of being pioneers(original). I was only disagreeing on his choice of words. I know that MtGox is the biggest, and so far it isn't for lack of competition, I think it's more the "beaten wife" syndrome, we just got used to it :)

Well getting away from centralization is the opposite of how networks naturally evolve.  In almost all networks, from electrical distribution systems, website linkages, "Six Degrees of Kevin Bacon (https://en.wikipedia.org/wiki/Six_Degrees_of_Kevin_Bacon)", and the bitcoin network itself.  Many networks are scale-free (https://en.wikipedia.org/wiki/Scale-free_network) small-world (https://en.wikipedia.org/wiki/Small-world_network#Network_robustness) networks and I don't think bitcoin is any different at this stage.

If you want a less centralized network, what you are saying is that you want a network where a few hubs do not have most of the connections.  It would take a lot of work to change our ability to form centralized networks.  Maybe a P2P exchange would work.

So if someone hangs me, that's bad...but if I hang myself, it's all good!  Got it.

No one coerced/forced anyone to use Visa/MC/AMEX/PayPal/etc. either.

PS: Bye Bye bitpay.  We'll miss you.

Testify!  ;D Some "completely decentralized currency" this is turning out to be, with MtG doing 90% of the trades, and Deepbit doing at least 1/3 of the mining.  :D :D :D

Once Bitcoin is popular enough, it will be very convenient for whatever entity to take over MtG along with all the B that's in its wallets at any given time, under whatever pretense...

Then it will be very clear to all of us how short-sighted and stupid we were to put so many of the eggs of the golden goose in the same old centralized baskets...  :D

Happy dwelling in the "completely decentralized currency" delusion! Party on!  :D
 

The big problem about a P2P exchange is neither the concept nor the BTC side - it's the problem that it's _really_ hard to "upload" USD, EUR + co. to a cheap (low/no fees), trustworthy (no chargebacks, no running away with the account) and accessible location.

Other cryptocurrencies like NMC or so would of course work, but in reality people want to enter their credit card numer on a nice looking website and spend 100 USD/EUR on BTC or at least have 100 USD/EUR in their "wallet" to be spent.

Maybe it might even be worthy to lobby at a bank for some "Chaum money" to have some digital bills to trade?

Understandably, MtGox tries to market their coupons like something similar, these are however far too integrated into a Bitcoin centered business. I'd love to see something completele independent of BTC to offer this digital fiat cash...

Ideally bitcoin-only transactions would dwarf all the exchange with other currencies combined. Well, that's what happens with basically every normal currency in the world, and that would happen if adoption was even at 1% of the population. There would be enough ecosystem to keep bitcoins and use them directly most of the time, rather than converting them.

How much money, time, and effort have you spent setting the international legal precedents for how Bitcoin will be perceived by the globe? The legal work they are doing, and the legal attacks they'll inevitably encounter and deal with, are huge benefits to the rest of us. What they are pioneering is how Bitcoin integrates with establish payment networks and laws around the world. If Bitcoin succeeds in making that integration, then it's subsequent success is highly likely.

Besides, Gox is the first mega-successful Bitcoin exchange in the history of the universe. How much more pioneering can one be?  ::)

I quit reading the rest of the thread here. I like this post! The way I see it is that in the future, if it pans out as you describe, Jered, Mt Gox won't need to be in control of anywhere near 95% of the total bitcoins in circulation to be not only a viable Bitcoin entity, but a profitable one at that.

God speed to both of you.

~Bruno~

Obviously you missed the point of this thread. The point was to provide discussion of the issue of CENTRALIZATION of bitcoin services.

Moreso this has nothing to do with how smart one is or isn't. By your post above you are showing us that you're more likely not smart given you couldn't read the original post.

Your input is still welcome.  ;D

It is completely decentralized. You're free not to use Gox at all. Contrast this with a centralized money, like the USD, and you are not free to abandon the Federal Reserve. Big difference.

Lesson: don't store tons of coins at gox. Problem solved! If Gox was "taken over", a new mega exchange would spring up quickly. The need to exchange coins doesn't go away. Gox has no forced monopoly. Markets adjust.


Who's putting all their eggs in the Gox basket? Maybe you're the only one?


Don't be a douche. In which currency do you dwell? And how much of a delusion are you under, I wonder?

Gotcha! and about the legislation I absolutelly agree.

Mtgox is like yahoo when the internet was created...

Eventually Google will come along... but it may take a few years...

until then Yahooooooooooooo!

The importance of decentralization is that we can always withdraw from gox or in the future a bitcoin bank account and store the bitcoins in our own personal wallets where we can use them anonymously and safely secure them without anyone else having access to them. However, we lose a lot of convenience doing this so I would expect the majority of bitcoins to be held in some kind of centralized service in the future.

This is a great thread, but I don't see it all as an anti-MtGox thread. On the contrary, I see it as an anti-me-and-most-of-everyone-else thread. It points out the painfully obvious fact that, while most of us realize that there is a problem, we are not ready to sacrifice even a bit of comfort or money and solve the problem.

MtGox is currently the easiest and cheapest way for me to exchange to and from Bitcoins, and I am not seriously looking into alternatives, even though I realize this may not end up well.

I also realize that, to some extent, bitching about perceived problems in forums or political rallies only serves to vent the frustration so people can comfortably go back home and continue business as usual.

i have nothing against mtgox.  i think more active exchanges would be good.  i think multiple active exchanges, a p2p option, and a large amount of face to face (including retail) exchange would be optimal.

Good insight and perhaps you are right. In time things will smooth out.

I would like to see selling directly from the mining pools.

If MtGox was to offer an even lower fees on much higher volume of transaction that could stimulate the creation of other exchanges.
Exchanges like Bitcoinica but with actual reserve and USD processing.


IMO MtGox going down does not fundamentally threaten the Bitcoin network buy big pool like DeepBit may.

Should it go down I'd be more than willing help you get rid of all your bitcoins for 2$ each.

This is why bitcoin should build up presence in New Hampshire! Concentrate bitcoin in one location, and you get a lot of face to face usage and stronger network effect that will begin to spread across NH's border!