Bitcoin Forum

I have a new product called Casascius Mickey Mouse dollars.  I will sell them to you for $1 USD.  In order to start selling Mickey Mouse dollars, I moved to a faraway island so I don't have to worry that you'll sue me.  It will be too expensive for you.

You can use my Mickey Mouse Dollars to buy Bitcoins from me (as long as I'm selling Bitcoins and can actually deliver the Bitcoins).  In fact, they are the only things you can use to buy Bitcoins from me.

I will also buy your Mickey Mouse dollars back from you, for $1 USD (as long as I can afford it).

You can trade Mickey Mouse Dollars in real life by getting on my website and requesting a "Mickey Mouse Dollars Code".  They look like this:  DISNEY-MM$-X28AF-98B16-8037Z-42353.  Use the redeem function to get Mickey Mouse Dollars back onto my website.

I also issue Mickey Mouse Bitcoins, and they work the same way, just off the block chain.  They look like this:  DISNEY-BTC-197FW-C07XD-Z3FFW-NZC17.

But when you go to sell me your Mickey Mouse dollars, I will actually do any and all of the following without informing you in advance:
* Delay
* Stall
* Demand more information from you
* Wait until someone else buys more Mickey Mouse dollars so I have money to buy yours
* Go on vacation
* Claim that I am following the law by not buying your Mickey Mouse Dollars
* Claim that wires from my island are now going to take a week instead of a business day because everyone is here too busy singing

Do not ask any of the following, I won't acknowledge your question.
* How many Mickey Mouse dollars are in circulation
* How many US Dollars I have to back up the Mickey Mouse dollars
* How many bitcoins I have to back up all the asks on my trading site (don't blame me, although I'm genius enough to write my own custom bitcoind, using the message signing feature to prove I own bitcoins is beyond my ability)
* Whether I'll allow an auditor to verify I'm solvent (I won't - and don't need to - because I comply with the laws of Disney universe and have been approved to do business here by a mermaid, that's all that matters)
* Whether I offer a "Fast-Pass®" for withdrawals.  Sorry!  I have a queue^TM for a reason, as I already explained, there are four steps (processing, verifying, approved, completed), but actually getting your money isn't one of them.
* In fact, don't even call me.  Ever.

Toodles!


NOW... GIVEN ALL THIS... WHAT IS THE VALUE OF A MICKEY MOUSE DOLLAR?

Spot reserved...

to make the point more elaborately...

that our concept of the value of a Bitcoin is denominated not in US dollars, but some other kind of dollars that work very much like Mickey Mouse Dollars.

If a Casascius Mickey Mouse dollar could be traded on an exchange and is determined by the market to be worth 90 cents, then wouldn't that mean that a Bitcoin sold on a Mickey Mouse dollar exchange for MM$5.50 is probably really trading for 90% of that in USD?

I got it, the Micky Mouse BTC and USD are actually MtGox BTC and MtGox USD. :o

In all honesty Mike, do you believe MtGox is insolvent? And if yes, how/when do you think did they become insolvent?

(1) YES, (edit: by this, I believe they probably don't have all the money to back customer deposits) because they are delaying withdrawals for unconscionable and totally indefensible reasons and offering up little more than excuses.  Their doing this is totally incompatible with any plausible plans to remain in business for much longer.  There is no other good reason to take a perfectly thriving profitable respectable business and nosedive it into the ground.  Why is MtGox allowing me to go on the forums and make posts like this that would damage their business - totally undefended - if there were a legitimate defense to them and they actually cared?  I have no e-mail from anyone from Gox saying "Mike, cool it bud, let's talk, since you care so much I'll show you everything you want to see, and then you go back to the forums and say the ship's tight and all's A-OK."  Why not? (EDIT: update: received a message about 1 hour after this post)

(2) EASY, it is very tempting to dip into funds held on behalf of your clients when your normal operating expenses exceeds your income and nobody is holding you accountable for ensuring you are covering your liabilities.  It's also tempting to make trades with other people's money.  If they didn't do this, they should have no problem hiring a 3rd party auditor to confirm that to the world on their behalf, like my real life (non mickey mouse) company has to.  On top of that, mistakes happen, you get hacked, you get stolen from, your bank accounts get frozen, you need lawyer money you didn't expect etc... and no matter how hard you try to safeguard your clients' funds, something goes wrong, and the temptation to solve your problems "fractional reserve" style is irresistible.  After a while, when the going gets really rough, if you know the shit's going to hit the fan some time down the road, might as well enjoy it while things are still good, right?

(3) as for WHEN, I don't know... nor does it matter a whole lot...  either I am wrong, and Gox has the burden of proof of showing otherwise, or one day we will wake up and read about how MtGox has been "hacked" taken offline without further notice for a "Security Investigation".

The REAL value of a Mickey Mouse Dollar I should put in the poll is: the number of BTC (real BTC) you can buy with it and withdraw while BTC withdrawals still come out without a "delay".

Wasn't Mt.Gox going to release transparency reports every 3 months? I remember seeing one at one point.

I decided to move this thread to Trading Discussion since it is alluding to MtGox.

Thanks for your insight, although personally I tend to trust MtGox. Here is a recent chatlog from #mtgox at Freenode:

http://privatepaste.com/e1fc69433e/mtgoxxed

tl;dr: legal problems with US(D) withdrawals only, to be resolved this month

My posting history (and my transaction history with Gox) will no doubt speak to the fact that I've tended to trust too.

Lately with all the complaints in the forum and the unsatisfactory/nonexistent answers from Gox, I have wanted to "trust... but verify..."

they are seemingly too busy to cooperate with any sort of "verification"...

all they have had to do is pick up a phone and engage an auditor and let the auditor do the heavy lifting... it was the same when I recommended this to them in January face-to-face at CES and it's the same today in June.  Had they done so (and should they choose to do so today), they could dismiss my concerns as easily as e-mailing me a PDF file, and be on their way back to being busy building their business.

The real world does business this way on a day-to-day basis... if one of my payroll clients doubts certain aspects of my business or just wants a feel for us being solid, I have a PDF file for him from my auditor, always less than a year old, so they don't have to waste my time or theirs doubting...


I don't hate you!  I want more than anything for your business to succeed.  You are an instrumental pillar in the Bitcoin ecosystem.  I don't want you to be insolvent.  I don't want you to be a failure.  I also don't want to see the kind of complaints I'm seeing in the forums, they are raising questions about your business that you don't seem to have a satisfactory answer for, and I'm rightfully troubled by it, as so should others be.

Let's assume that sending Dwolla and USD wires are indeed unavailable for a month.  How about mailing checks?

i actually find this hard to believe.  

first of all, they've always sucked at customer service.  extended USD withdrawal delays i can't comment on since i've never sold a Bitcoin.

secondly, tx volume is at all time highs and the order book depth at heights never seen before so why would they be under financial pressure now?  especially since Bitcoinica has disappeared and they've probably inherited alot of their business?

thirdly, the economy is growing with new businesses popping up all over the place that i'm having trouble keeping up with all of them in the Discussion forum.  this is one source of the increasing tx volume along with the run on fiat.

fourthly, a rising Bitcoin price will raise all boats with Gox being the biggest.

doesn't add up to me other than the fact that the lack of service is incredulous.

For any of the myriad reasons businesses with good revenue go under... they simply incur expenses that exceed their revenue.

This is my thought as well. MtGox has never been good at PR. I am willing to wait this one out.

However, I agree they could be a bit more forthcoming in alleviating our (not unfounded) fears.

doesn't necessarily mean they would go out of biz; it means they have to adjust.

They could do this in the course of 1 phone call by having an auditor come out (I have a couple referrals I can and have offered).  I have been tooting this horn like a broken record for 6 months, but if they had taken it seriously 6 months ago, I wouldn't have wiggle room a single complaint against them (and would probably keep a big balance there like I used to).

In the meantime my company here at home has undergone the entire process for 2012, and yet I don't think it took more than a few hours out of one day (of my personal time) to make sure the auditor had access to everything he needed to see.  There is no way they can be too busy for this, so I view it negatively that they don't treat this as important.

I consider it unfortunate that (in my estimation) they won't do this, or will continue to blow it off by saying "we are listed on the blah-blah-blah website in Japan" or "this doesn't apply to us, it's not required by Japanese law".  I would welcome being proven wrong.

one thing i do worry about is user error on Mark's part.

remember when he erased 2000 or so BTC last year?  that was b/c of me withdrawing a large load of BTC, more than his custom client could handle.  i was on personal IRC query with him right when he erased them b/c he was trying to write a macro to handle it and all of a sudden he says "shit" or something like that and disappeared for a minute or two while he discovered the problem.  i swear i almost crapped right there but to his credit he ate the loss and moved my BTC out after that.

personally, i have always wondered how he and his small team could secure and handle all the flow w/o more errors than we've seen. 

Well luckily for this fantasy island you have moved to, I'm going to buy the island next door and open up Mickey Mouseonica where speculators can invest enormous sums to guess which way you will randomly spin the MM$, and then, just as MM$'s seem to stabilize, I plan to get hacked and lose all records.

Nope, nothing wrong with this scenario at all.

i have been on IRC with Mark multiple, multiple times and i get the sense he won't listen to anybody.  he does things the way he sees fit and if he doesn't want to do an audit he won't.  sure an audit would be something you or i might submit to via outside pressure but Mark has this independent streak in him that makes him unpredictable.  that could be bad i agree but it also may mean nothing.

Lets cut to the chase.  I picked $0.90 to $0.99.  I know for a fact that a MtGox dollar is worth <$1.00.  Our business model wouldn't work otherwise.  I would say on average 1 Disney/MtGox dollar is worth ~$0.96 to $0.98 on the dollar (hard fiat cash).  The number of people will to sell us Bitcoins or Disney bucks would indicate that we aren't the only ones.

I would take this position as well so long as I remain in the mood for acquiring BTC.  I'd take the MtGoxUSD and immediately buy BTC with it, as I gather you would as well given your outstanding generous offer to buy BTC from others.

If suddenly there were new "delays" withdrawing BTC, I gather that the practical market value of a MtGox dollar would experience a very sharp correction.

If MtGox were able to prove ownership of BTC commensurate with the asks on the orderbook, then they give confidence to their MtGox dollar, that it will be able to buy the BTC listed for sale.  If they could prove they have MORE btc, enough to cover the bids, then they would be able to satisfy much of the concern I bring to the table.

MtGox might be able to do this if it matters to their business... then again they might be too busy.  Only they know.

They still need an audit to be taken seriously.  Independent as Mark may be, I doubt he knows better than to, for example, challenge the laws of physics and jump off a building naked to defy gravity.  I am sure the value of an audit is not lost on him... that is, unless it would report bad news.

lmao...

Exactly..

mtgox is going down..  this is the sign Im taking from this..

Wait till they get "hacked" soon..

We don't want fractional reserve banking in BTC world.

This thread should be called: FEAR SPREADING

Its easy to calm these fears by proving they own all the btc on the books. Should be easy to prove.

I hope to avoid them untill it happens.

I agree to the need of an audit for MtGox.

It is a risk for them not to do it. Even if it might take a while, a competitor exchange will come up that does not delay withdrawals and then they will see their market share go down. Look at Nokia and Ericsson. They were the leaders in the mobile business and are now nowhere any more as they have missed the train.

This is also a call for BETTER and VERIFIED and TRUSTWORTHY BITCOIN EXCHANGES.  If you do it right, you can get a major share in this growing market.

I'm going to play devils advocate here for a minute..

I think people too quickly forget what Mtgox has done for Bitcoin, they have lead the way in my opinion in running a fair and honest platform enabling significant numbers of fiat currencies to flow in and out of our economy.  Not to mention operating probably the most profitable bitcoin business therefore catching the attention of other professional entrepreneurs.

Sure they had a few hacks early on, but they stepped up their security as you would expect and have been pretty rock solid security wise since then.  At their own expense they sent out Yubi-keys for free to all customers to enable better security.

They have invested significant time/money into development of other bitcoin services outside of fiat exchange with their shopping cart and money payment services..  I guess they could easily put up the commission on trades to increase profits but are instead investing in a better bitcoin economy even with minimal prospect for profits short term.

They always answer forum posts professionally without engaging in the immature antics that are usually associated with this forum.

From what I can see the majority of issues people are having and complaining about is the withrawing of fiat currencies in particular through Dwolla.. In my time using Bitcoin the one common problem with this whole thing is dealing with fiat currencies is a pain in the arse!  With issues like massive incoming fraud, AML issues, licensing, regulations, dealing with banks, governments, courts, bureaucracy, chargebacks, identification its no wonder there are so many issues and its these reasons why I love Bitcoin and want to do away with fiat altogether.  I have to give credit to Mtgox for providing the level of service they have for so long without blowing their brains out in frustration.

From my perspective the Mtgox USD or "mickey mouse dollars" has become the sudo standard for USD because it doesn't have all the issues I just mentioned in the paragraph above.. when you want to transfer Mtgox USD around or trade it, it is fast, easy and no bullshit.. if only real banks were that simple.

With all the FUD being spread around I was starting to get worried myself, so withdrew some bitcoin from Mtgox.. look at that.. received instantly, no fees, no delays, no problem..

Of course I could be proven wrong in a week/month if it all goes belly up, then i'll look like a douche, and an audit from them would probably help people to regain some confidence..  but just because one or two people demand an audit doesn't mean we need to rally the mob with pitchforks and torches!

Gox is waiting for the exchange to be set up so they can buy their liabilities back at 50c on the dollar.

So to disprove the FUD about USD you moved some Bitcoins?
Try moving from Gox dollars via Dwolla or send a $25K wire to yourself from your Gox account and then tell me how problem, and delay free it was.

Still the 37% who think it is worth "nothing" are idiots or trolling.  Tell you what I will buy every Gox dollar someone believes is worth nothing for an amazing $0.50 on the dollar.  If you believe it is worth $0.01 or less you just made 50x return on your money.  I imagine I won't get any takers.  The liquidity and transparency issues cause Gox dollars to be devalued slightly but it isn't anything more than maybe a nickle on the dollar.

Me2.

subbing for the popcorn :o

MtGox hacked ??? No way !

Because of the Dwolla hassles, I would argue that GoxUSD is currently worth about 90 to 95 cents on the dollar. Without the big D and some annoying verification, the hoop jumping needed for a simple withdrawal is too costly except for large amounts.

Being the biggest Bitcoin exchange, I dont think they would have any trouble getting investors on board. Such investors would take the blow and get a good deal. I have seen this before. Thus I´m not worried.

http://news.yahoo.com/back-oblivion-russian-fraudster-pushes-scam-062530584.html

The MMM guy is now in hiding apparently, maybe he missed a bribe payment?

Wut? There is no option for $69? You disappoint me. :'(

Based on market rates, I'd say a MtGox USD is ~0.95 a real USD. However, based on the amount of BitInstant business and the slowness of getting money into an exchange, there are definitely cases where a dollar on an exchange is worth $1.05 dollars not on an exchange.

I agree that Gox' actions seem to indicate a liquidity crisis. This crisis would correlate with either losses they are gradually recouping or possibly underlying holding investments that went south. A possible approach to figuring this out is to aggregate a best-guess estimate of the rate of flow of real USD out of MtGox as compared to the inflow of $ into MtGox and the percentage of USD Gox gets from the volume traded. BitInstant guys COULD provide useful data on that, but they may have an agreement with Gox that doesn't allow them to provide that data.

-bgc

The market rate of a MyBitcoin BTC was 1.00 BTC the moment before MyBitcoin started delaying withdrawals, meanwhile its actual value was no greater than 0.49 BTC.  The correction that brought the market and actual values in sync with one another was swift and unforgiving.

If you think about it though, just like a fractional reserve bank, MyBitcoin with only 49% capitalization could have continued to operate up until the point that >51% of the depositors demanded their money simultaneously, which might have been never.  Meanwhile, they could have introduced advertising and premium features as a revenue source, or sold themselves to some larger company that included making up the shortfall as part of the deal.  Question to ponder: if they did that instead of closing up shop, despite "losing" 51% of everyone's money, would we no longer consider MyBitcoin to have been a scam?  Would Bitcoin Magazine have listed MyBitcoin in the successes column, instead of the failures?

Very true mate ! They should have pretended nothing happened and just use some of the BTC to invest in pirate to get 100% back again !

Incidentally Mike, I think there's a lot of interest in having a fully audited exchange. I'm guessing you probably don't have the  time to set one up, but if you do I bet it would be useful. Alternatively, you could start lobbying with one of the two exchanges I'm switching to: bitfloor or campbx, to integrate auditing into their process earlier.

Auditing is so freaking easy, the hardest part is deciding it's really worth the cost and deciding to do it.  The easy part is to just call up an auditor and sign an agreement.  I know a couple who are itching not only to provide the audit, but to provide all the advice and resources one needs to put themselves in a position to pass it with flying colors.

My payroll company engages A-lign CPA out of Tampa, FL for an annual audit and we have nothing but good to say and their rates are very reasonable.  The doors it opens for us makes their audit worth every penny.  I feel no pain or remorse writing their check. http://www.aligncpa.com/