Bitcoin Forum

I was just thinking of the 2008 bank bailouts, then I thought of the money lost in MtGox. I'm curious what you think. The bank bailouts seem to have cost us (citizens of USA) 21 billion dollars. MtGox lost stole 240 million dollar's worth of bitcoin (valued at $1200 each). Is bitcoin really that much riskier than cash? I would say no.

the difference is that the "money lost" in the 2008 crisis was caused by centralized banks playing musical chairs. We, the people, could do nothing about it.

The "money lost" in mt. gox was due to idiots keeping their bitcoin on an exchange. We, the people, could do something about it. I.e., be your own bank.

the 2 issues aren't the same though, but if you want to conflate them, go for it.

I just wanted to bash people for keeping their money on centralized exchanges when the whole point of bitcoin is to be your own bank.

BLOWS MY MIND.

Oh, yeah. Of course they're both different situations, I just think they're comparable, is all. To over-simplify, both situations were caused by organizations mishandling people's money, and it cost people (the taxpayers of the US / the people that had bitcoins in the exchange) lots of money. But I must recognize that I am highly ignorant on both situations, so thanks for correcting me  ;D

that's actually in favor of bitcoin isn't it?, because in the second example about bitcoin, there was something that could have been done, to prevent that incident

in the second case not so much, because your money aren't in your control totally

so once again decentralization has proven to be better, in the case of a disaster

No need to underestimate the Bitcoin losses incurred by the Mt Gox users.

The Gox users lost a total of BTC850,000 in crypto, of which BTC200,000 was later found. At that time, the exchange rate was $575 per coin, which makes the losses worth some $375 million.

Also, the Gox users lost around $55 million worth of fiat cash. So the total losses comes to $430 million.

When you are comparing banks and bitcoin exchanges, remember one thing; banks will do business as they always did, while exchanges advance preventing another disaster.
Anyways "magic the gathering" was never supposed to be largest exchange that it was forced to be at the time, so when it failed to advance (terribly), it got replaced by better alternatives.
Bitcoin is not that risky when you know how to use it and secure it, but it sure does attract people who exploit those who don't.

cheers

The bank bailouts are just theft from the tax payer, we didn't want to bail anyone out at our cost.  Let the banks die and new banks who are competent take their place.  Now we are stuck with the same morons who made mistakes the first time.  No lessons have been learnt its fking BS.  I lost money in gox and it hurts but exchanges have got better as a result.

yep, simply who is cause of problem can't be part of solution. from one side, I'm unhappy for all common people loosing their hard earned money, on other side, it is just another impulse for all start leaving traditional banking system..and join us:)

Not only the exchanges, but the users have also become smarter. Not many people store their coins on exchange sites now, and most of them store their coins in offline mode. And at the same time, the exchanges have introduced new security measures, and have decreased the amount of coins which they store in hot-wallets.

Considering the recent failure of the popular bitcoin exchange Mt.Gox—which caused the loss of almost $500 million—and the dramatic price fluctuations for the currency, it's no wonder people might be afraid of adopting it.

"I think its a big problem for consumers," Lucas said. "If a bank fails you get your money back, or at least part of it, but when Mt. Gox failed, there was nothing there. ... This has to discourage people who don't understand a virtual currency."

Courtesy: http://www.cnbc.com/id/101589145

As a matter of facts this is quite untrue to compare both of this. Banks and exchangers serve a different purposes as banks are meant to "keep your money" ( and use it to lend another people and get interest from it ) but exchangers arent meant to be used as a platform to secure your coins. No matter how secure an exchanger is people still shouldnt be putting their coins there to "secure" it.
Another note, banking system is an old fashioned system that seems couldnt be undergo anymore improvement. These banking system may varies throughout each country however all of them are pretty much the same.


Not everyone, traders still loves to store them at exchanger because it is much more convenience that having to move your coins back and forth each day


Are you pointing this to multisig? I doubt that many exchangers are using this already

MtGox was not bailed out, that is what we want.

In a bailout, all the people, rich or poor, have to give some, and at the same time the money system itself is being destroyed.

You can care about those who lost their money, but we want the market to keep the banks (MtGox viewed as a banke here) in check. Learning the hard way is the only way.

I was not just referring to multisig. Nowadays, most of the exchanges don't keep large amounts of coins in their hot wallets. This has helped to reduce the loses, when some hacker gains access to their BTC stash. For example, in January 2015, when Bitstamp was hacked, the thief was able to steal some BTC18,977. This amount would have been much higher, had not the Bitstamp guys moved most of their coins to offline storage.

Mtgox heist slowed bitcoin revolution for 2 years.  :P

Yes, but at the same time we need all the problems we can get, to make bitcoin antifragile, and to show that it is.

Just 2 years? it is more like 20 years. I personally know a few of my friends, who lost their life savings in the Gox fiasco. All of them were early adopters of the crypto-currency, and before the robbery, many were vocal advocates for Bitcoin usage. It was one of these guys who introduced me to Bitcoin in 2012. Everything changed after the robbery. Most of the people who lost their coins are out of the Bitcoin scene. They have become dejected, and feel cheated. None of them want anything to do with BTC now.

Besides the fact exchanges arent secure to store BTC long term because you dont own the private keys as long as they are there, MT Gox was the first ever exchange, so it was obvious the first one would suffer from everything possible. As always, that happens when something is mega new, it fails and then gets fixed.

No. Mt Gox was not the first ever Bitcoin exchange. That honor must got to the New Liberty Standard, which was established in 2009. Mt Gox was established almost a year later, on July 17 2010 by Jed McCaleb. And again, everything was going on really well with Mt Gox, until McCaleb sold the exchange to Mark Karpeles in March 2011.