Bitcoin Forum

If all the major exchanges (bitcoinica, mtgox, etc..) were to be taken down and no longer served as exchanges.. what would happen to bitcoin?  Would that be the end of bitcoin? 

No. bitcoins would still exist, however of course they would not be nearly as useful. People would be trading bitcoins using p2p methods, such as cash exchanges, decentralized exchanges using bank transfers, bitcoin-otc etc...

I highly suspect that taking all the bitcoin exchanges down will ever succeed. Maybe single ones, but that is excepted. After all, there are already numerous bitcoin exchanges operating in different jursidictions. And there are no laws related to bitcoins, so it is highly questionable if goverments can organize any kind of international cooperation to shut down btc exchanges.

If mtgox got shut down bitcoinica would be unable to operate since AFAIK they're simply a layer on top of mtgox.
Other exchanges would simply gain volume.

I dont think it would be that simple.. mtgox sets prices and controls the majority of the market... the majority of the market uses mtgox to set btc->usd prices

This is why I've been promoting a decentralized bitcoin price evaluation system. We need to report the trade value of each transaction in standard currencies or commodities and average them into the block chain as the current price.

thats interesting.. is anyone even developing anything like this?

Traders set the price, I'm not saying that mtgox shutting down wouldn't impact it, but simply that there is demand for Bitcoin trading, this demand would just have to get satisfied elsewhere on other exchanges.

Just because mtgox has an important influence *today* doesn't mean it is necessary at all for Bitcoin to be traded by the people who want to trade it.

There hasn't been any interest yet. The idea is based on decentralizing the notion of fiat. Make math itself the fiat.

Again.. I dont think it would be that simple as we would go elsewhere to sell our btc or buy it.. taking mtgox as an example.. if they were wiped off the face of the earth tomorrow we would all be looking at each other trying to figure out a price at which to trade our btc and where to trade it.   I dont see any positives from having a large exchange as this and I hope I am not the only one who thinks this is dangerous to bitcoin and could possibly destroy it.  There doesnt seem to be anything that fixes this little problem and I dont see anything coming in the near future.

I hope I am not being a "doomsdayer"  ;D

I don't really worry about the market, I'm sure it can take care of itself :)

True... now that I think about it.. the illicit drug market does pretty well without an exchange  :D :D :D :D

shouldn't be too hard to adapt the market bots on #bitcoin-market to do a sum, and then VWAP on last block, possibly a sliding 24hr VWAP across the last 144 blocks then sign a message into the blockchain.

marked

It is pretty trivial to code a fail-back mechanism to your code, which uses automatically alternative exchange rate if one isn't available.

If you are a merchant and setting up a bitcoin web shop, you can fro example have a process, where you first take the rate from bitcoincharts.com (which is aggregate from all exchanges), first fallback is mtgoxUSD, second fallback is intersangoEUR etc...

Of course mtgox takedown would hit the bitcoin market hard, but it is already possible to code your systems in a way that is not depandant on any single exchange.

People have a huge vested interest in the price of bitcoin.  People would create fake trades (trade with themselves etc) to alter the price if that became the 'standard' price.  Many people think there are large efforts to move the price now (both ways) on mtgox and that is harder to manipulate due to fees and accounts.

Yeah, the fee structure could be changed to keep people for trading too much too cheap. Statistics would keep the price from changing too fast. I think the fluctuation is caused by huge trades with virtually no fees on mtgox by large volume HFT. We can't do a lot about that, but math and reasonably small (0.5% or so) fees can probably keep folks pretty honest on the open market. The psychological effect of a math based fiat should not only stabilize price, but push it upward.