There's an argument for that, and it's usually made about companies in the pink sheets, where penny stocks trade. The remnant stocks of failed companies can trade there for years.  For example, the remnants of General Motors after the bankruptcy trade under PINK:MTLQQ.  The price slowly declined from $0.75 right after the bankruptcy to $0.04 in March 2011.  Some people were hanging on hoping that somehow assets would emerge from the liquidation. They didn't. The market cap was still around $25 million at the point the stock was no longer quoted. That was what you ended up with if you owned General Motors stock.

The remaining questions are 1) what does the endgame look like, and 2) does anybody care?

In the venture capital community, there are successful startups that achieve over a 10x gain, and failures that go bankrupt. But those aren't the most common case. The most likely outcome is a "zombie", a company that generates just enough revenue to pay their operating expenses but has no hope of paying back their investment.  VCs usually have a stable of zombies, which they view as annoying; they need attention, but don't make money. The founders often continue to dream of a big win, and keep trying to get more investment capital.

The endgame for Bitcoin will probably look like that.

Bitcoin has been dropping about $4 per month for three months now. With the price at $5.80 today, the end is in sight.

Actually, it looks like today everyone is trying to figure out what happened yesterday when Mt. Gox failed and produced huge price swings while fulfilling orders out of sequence.

It's even more interesting if you go back further in Technomage's posts: "We'll be back to $13-14 by end of week. Know how I know?"  "I seriously doubt a price lower than $9 unless there is a further decrease in rate of adoption and more bad news."  --  Technomage, August 5, 2011.

Agreed. Mt. Gpx is so broken today that it's not clear that their information means anything. They might even try to undo trades again.

With Mt. Gox having a flaky period again, I'd suggest pulling all assets out of Mt. Gox. If you're not going to trade it in the next 24 hours, get your money out. You can always put it back in later if you want to trade.

(This can't cause a "run" on Mt. Gox, since they supposedly have 100% of the customer's assets. And if they don't, it's better to know sooner than later.)

Looks like a bug. If somebody found an exploitable error in Mt. Gox's multiple currency system and used it to make some money, that may be the cause of the huge volatility in the last few hours.

All it takes is for one of the currency prices to be a little off, and Mt. Gox can lose big. They're the counter-party in their FOREX transactions. Of course, when they lose big, they have been known to change their unwritten rules retroactively.

I'd suggest pulling all assets out of Mt. Gox for a while, just in case.

Currently the only withdrawal options on their site are USD and EUR. It's not clear that they fully support transactions in other currencies.

There's another thread on this, but Mt. Gox management, such as it is, isn't saying anything.

That's what I suspect.

Now that Mt. Gox offers trading in multiple currencies, they're effectively a FOREX market. That may draw the attention of people who aren't interested in Bitcoins, but can take advantage of Mt. Gox's general ineptitude. If Mt. Gox gets a currency conversion rate even slightly wrong, they can be clobbered.

Mt. Gox isn't saying what their FOREX fees and spreads are.  If they're buying and selling currencies with no spread and no fee other than their Bitcoin trading fee, they're exploitable.

That's correct. If Mt. Gox is honest, under the existing system they took on no trading risk. If they are doing currency conversion, they have exchange rate risk. Not much, if they settle daily, but some. Does Mt. Gox charge for currency conversion? What are their exchange rates? 

If Mt. Gox is becoming a foreign exchange broker, they face more regulatory problems in Japan.

I still wonder whether, as Bitcoin winds down and Mt. Gox has to pay out on all their cash deposits, if the money is actually all there.

Right. Trying to trade noise is futile. Read "A Random Walk down Wall Street".

Current Mt. Gox market depth

Wow. That's new in the last few hours. It looks like people got up today, checked the prices, and panicked.

(Yes, there will probably be some rebound, but in the last three months, the rebound never entirely recovered the previous drop.)

Bitcoin/USD, last 3 months. Any questions?

Bitcoin is over. If you're not out, get out. The last ones to leave will be the worst off.

I've been saying for months that this was a speculative bubble, a pyramid scheme. I said that when bubbles pop, they pop all the way. There were replies like "troll" and "hater".  "The bitcoin's value will inevitably increase." (Bazil). "Regular use of Bitcoins will pick up pace, it's inevitable." (Goodlord666). There are still people writing comments like that.

I was right. You were wrong. Now suffer.

Right. We're not hearing from the "green line" guy any more, I notice. No great loss.

There are no options, derivatives, or short selling for Bitcoin because there are no parties who can be trusted to pay up when they lose big, and no enforcement system to make them. Just getting the current parties to reliably pay up on ordinary transactions is hard enough.

Krugman must have written that article before the price started to collapse.

Bitcoin, last 3 months.

Since the bubble burst in early June, Bitcoin behavior has been quite consistent - the price drops about $4 per month.  There's volatility, but the 30 day moving average is a consistent downward line.  The "crashes" and "rallies" are just noise in a thinly traded market. The overall trend is a long, slow slide, as I've been pointing out for a while now.  After each bottom there's some recovery, but each bottom is lower than the previous one.

It's interesting that the decline is linear, not logarithmic. Now that we're down to $6, we can't go on losing $4 per month much longer, or the price would hit zero in late October.

Yes, calm down.  It's just noise.


Bitcoin/USD, last 6 months.

The overall trend, as I've been saying for some time, is a long, slow slide of about $4 per month since the bubble popped back in June. The purple line is a simple 30-day trailing moving average. With 30 days of smoothing, all the little "ralies" and "crashes" are filtered out, leaving a clear downward trend. Note that after each little "crash", there's a partial recovery, and the next peak is always lower than the previous one.

The real question at this point is what the endgame looks like.   At a steady drop of $4 per month, we're less than two months from zero. Will we have a hard landing or a soft one?

Nothing is wrong. Everything is great. We are all very happy here.

Reality check: It's only been 90 days since the Mt. Gox break in and crash.  Tradehill has only been operating for about 90 days.  In the last 90 days we've had the MyBitcoin collapse, the Global Standard Bank scam, the Dwolla reversals, the Bruce Wagner expose, and a steady decline of about 20% per month in the price of Bitcoins. There's still no outside audit to provide assurance that Mt. Gox has all the funds deposited with them.

Get real.