Unlikely. You should expect the worse. The multiple-withdraw issue would make real coins land outside of MtGox. Even if the thief has been identified, he has no more bitcoins than the amount he repeatedly withdraw each time in the account.


Most people speculate that they are buying cheap choins now, and they have no reason not to. You should instead hope they bought enough coins with fiat (which shouldn't be stolen) to pay back everyone, so that they be solvent at the cost of panic sellers. - Notice the latest press release is intended to provoke panic sell. This way the panic sellers will be angry (when they discover it) but the story ends with the usual way that cause least disturbence to the market - the way that who at fault go  unpunished.

Roger Ver spoke in a youtube video a few months ago. But he did not see how much is left in the wallet: he sees MtGox have big numbers on their bank account, and he has no way to know if the digits add up to the total incoming transactions - too easy to cook and hard to verify. Even if he is sure the fiat is there, he didn't mention the coins are there. Besides, he said MtGox doesn't have liquidity problems to offer fiat withdraw, that is a bit different than solvent.
http://www.youtube.com/watch?v=4pSYJiXQgbM

Andreas Antonopolos didn't say anything related to MtGox's solvency recently. He did mention the opposite in another youtube video, that the transaction on MtGox happens on the book, not in blockchain (implies that he doesn't know), and he mentioned in a fraction-reserve system transaction also happens only on the book - a bad way to express it, hinting MtGox is reserving only a fraction of funds which he didn't mean.
http://www.youtube.com/watch?v=JP9-lAYngi4

So I cannot take these information as Andreas/Roger claiming MtGox being solvent. Did I miss something? Kindly add more information:)

Think about it, they know they are so screwed up that a positive announcement tomorrow won't even keep their customers after-crash, and lots of cheap choins to buy / arbitrage by making another negative announcement. So predictable that the announcement is negative.

Nay, it's joking.. I didn't expect negative news.

It's not a currency by the people, because you can't issue it. Bitcoin is governed by math, that is far from 'by people'. History was of bad records of authorities governing currnecy, and bitcoin removed the authority, but it did not give power back to the people - the true 'by the people' means you can issue I-O-U as much as you like, and the value of these I-O-U in compare to math-governed hard currency (bitcoin), is based on how much the community trusts you. e.g. MtGox's I-O-U is currenly valued 40% of real coins. A currency system that designed I-O-U into it is a currency can be called a currency 'by the people'. Bitcoin is a foundation for such a system, providing a digital rigid value to back against, but itself is not a currency 'by the people'.

"Democratic currency" is a wrong name for bitcoin, even 'anti-authority currency' or "discipline currency" or "democratic currency's foundation" are better. There is quite a distance to cover from discipline to democracy. The author may think the alternative crypto-currencies floating around in China menas "you can issue your currency" - it does not, none of the alternative hot new brands in China allows you to issue I-O-U. Duplications of a system is not extending the system, and they are better called anarchy instead of democracy.

It is commonly agreed among economists that a rigid discipline currency as the only currency is a bad idea - think about the 30s' recession - don't worry, this will never happen: bitcoin is either complementary to fiats (now), or fiats will be complementary to bitcoins, or a new crypto-currency representing I-O-U issued by the people will be complementary to bitcoin. A pure bitcoin-only world is disasterful, but it is so easy to correct that it is impossible to really happen - by issuing complementary currencies. We are closer to the ideal model but we are not there yet.

I think the word "Democratic currency" revealed more about Chinese people (disclose: I am) than about the currency. Under a strong government we are so thirst of democracy that we hurry to label any anti-authority ideas with it. It is also dangerous, because we (Chinese people) long for something (democracy) that we don't have much experience and knowledge about - not knowing true water we risk drinking sea water to quench thirst - and this will be a major issue after the down-fall of the current China communist party.

If you observe the forum today, it is about what you described. By the way, why anguish and not sadness? Anguish is a form of denial, sadness is accepting failure.

Clear and prompt. I'll save the time of double-checking, thanks for the info. I am native Chinese, as seen in my previous posts. I was for once so confused how does Bobby Lee, a Chinese, come with liquidity rebate feature - consider the Chinese hubris is growing at the moment, few would want that kind of refinement. Being ABC explained it.

That's possible but too simple, IMHO. I don't think they think this invention or the effect of it would be even noticed by the government.


No I don't. I thought Bobby Lee remained a Chinese citizen (is him?) Even if he joined other nationality, his TV presence is pretty Chinese, as Chinese as the "you know what i mean" catchword:) (TO NON CHINESE READERS: 'you know what I mean' （亲，你懂的） is a typical way of ending a post in China)

I was a long time BtcChina user and only noticed BTCChina's withdraw voucher a few days ago:

Quote:

The volucher, or "promise-to-pay", is essential to the fractional-reserve system banks use. An easy way to check the value of these promises, is to see how they are traded on black-market. Right now, there doesn't seems to be a black market for these voluchers, at least not found with a search engine. The reason could be that withdrawing cash is as easy as withdrawing the voucher, thus there is no market, and the volucher's value is 100% of the reach cash. This may not hold true in the long run. Can anyone reveal when is your last withdraw from BtcChina and how many days it took?

There is a reason why BtcChina wishes to issue volcuhers: that it removes the 0.5% transaction fee involved in cash-withdraw. But, few should need it. If I wish to give fiat money to someone-else's account on the same exchange, I would exchange my fiat with bitcoins, transfer the coins, and ask him to change it back. With Btc-E the cost is 0.2% trade fee two times, that is 0.4%. With BtcChina, with their liquidity rebate, you can do it with two times ±0.3% fee (yes, you may gain instead of pay).

So the voucher service is useful to a very limited extent. With so many things going around it is a bit strange BtcChina would spend some energy doing the feature. The only other rational execuse is that those who have fiat account on their account can sell the deposite service to others, thus working around the lack of online deposite measurements - e.g. China's alipay, the world's largest payment service (the second largest being paypal) refused to help process bitcoin payment. But I didn't see such activity going on yet.

How much would you weight 'withdraw voucher' as a possibility of insolvency? 20%? 50%? And is there any other exchange issuing promise-to-pay in-place of or along with real payment?

P.S. I reveal this: Back a few months ago, my BtcChina withdraw was processed in 2 days; while in MtGox I requested cash withdraw for more than 5 months, and canceled my withdraw because the account to receive it expired before I my withdraw can be processed.

P.S. It is a well known culture in China Mainland that if you have trouble in your business you should conseal it. Honesty doesn't receive much praise here, not until the two very recent years. I am concerned that we don't have much bitcoin larceny story in China yet. It's too quiet, the probability is highly against it. In other words, some exchange was hacked and coin stolen, we don't know who.

I was wrong. More homework showed bitcoin foundation tried to do that:
http://www.coindesk.com/bitcoin-tracking-proposal-divides-bitcoin-community/

The strong objection of blacklisting theif's bitcoin address is I guess two-fold.

First, the community wish to maintain anonymous nature of the network at the cost of tolerating thefts, or accept losing some justice to get some freedom, like the early U.S. (There are so many bad stories of U.S. outside of U.S. - it's hard to see if now is better).

Second, the question is who should be the judge. The foundation has not done enough positive things to let the community believe that when they do negative action it is in the postive interest. If the foundation did a lot of services (there are a lot missing!) since it receives donation, the comunity may be softened a bit. But even though there lack a framework to produce a judge.

Not sure if my reading is correct.

What... ! Sending a youtube link to a Chinese is trouble some enough (our government bans it), and after some struggle I finally get the video, and it is someone saying "Office Space - What Would You Say .. You Do Here" -- you could have said that. Oh I envy the rest of the world who can use a video to save the typing...

Then it gets very unfair share of media coverage. News from the foundation affects the market, but they don't do anything to affect bitcoin except immature PR. This is far from protecting bitcoin.

Okay, you found a bug in the question, so you don't provide arguements unless the question is correct, right? Investing since 2011, I am not blind of the p2p nature of the currency and the fact bitcoin foundation did not invent or manage the currency. Hence I change my post to the following so you can properly answe:

There are lots of reasons that currency cannot be purely p2p the foundation cannot be p2p like the currency do. First, information is not balanced, some p2p member knows more than you do, and second: resource, bitcoin foundation can get media outlet post their announcement when you can't. and last: human weakness (needs a garantee from someone instead of relying on their own judgement - the backdrop of existance of strong governments like the China government and U.S. govermnet). You cannot correct major design issue (feature or flaw) with a single patch (bitcoin), you need to live with these features thus you need to run a non-p2p foundation.

Are you mocking or offering an explanation? There are lots of reasons that currency cannot be purely p2p. First, information is not balanced, some p2p member knows more than you do, and second: resource, bitcoin foundation can get media outlet post their announcement when you can't. and last: human weakness (needs a garantee from someone instead of relying on their own judgement - the backdrop of existance of strong governments like the China government and U.S. govermnet). You cannot correct these 3 major design issue (feature or flaw) with a single patch (bitcoin), you need to live with these features. In other words, if you can't switch away from Microsoft Windows, then you get to install anti-virus software.

Since it gets a lot of media coverage recently, the things apparent are:

- Accepting donation through MtGox and their website
- Getting media coverage of member arrest without much response
- Response strongly against MtGox on Transaction Malleability

I had to look up what it does, in order to know better what I have invested. Predicting the reaction (or lack of it) of an important media news source is the homework of a speculator.

In fact I found very little what the foundation does. It seems although it receives a lot of media coverage, it react very little to the outside world.

The things I would assume bitcoin foundation do would be:

- Issue whitepapers about security flaws. It helps becalm investors.
- Maintain co-operation with important entities (MtGox) and help them with PR in order to reduce damage to bitcoin image. E.g. back entities from false accusation if can be confirmed.
- Establish a fund police to bail-out certain specific occassions - not necessarily by issuing more money but with a smarter framework, e.g. union of members of extremely large wallet to help each other.
- Create blacklist of addresses to make known heist harder to cash out, or effectivley force large scale stolen money out of circulation.
- Produce other community services, e.g. in the recent trouble, publish a list of exchanges that have correct implementation against TM hack, so that 1) other exchanges are less harmed with MtGox incident; 2) investors who wish to enter the market in the hard time (when we need them most) know where to invest.

It seems bitcoin foundation maintains the anarchism idea popular in opensource projects (e.g. libav project, where there is no leader), by doing nothing at all, or prevent a leading management to exist. In this case it perhaps better be named 'bitcoin no-foundation' and it perhaps can still receive as much donation as it were before, for there are people who wish to donate to maintain  'toal freedom'.

I only studied the foundation for one day, so this is a quick note. Criticism welcome, because that helps my homework.

A glance over their forum a few posts pops up to my eyes:

-  What would you think about removing temporairly MtGox as a gold member?
- Actions against environmental Issues of Mining
- We must advocate against a rushed protocol change

The second is about an action to take, the tone of the first and last post is not about what to do, but about what not to do - e.g. not engaging a problem but evading one (it's not our problem). They don't seem to realize since they claimed protecting bitcoin, every bitcoin problem is a foundation problem, only differ on size. Even if fighting against MtGox is the best interest of bitcoin, it should always and frequently be declared so, lest people think Bitcoin foundatin does nothing. It all look immature to me.

When I wonder why there are not many posts, I realized the forum has no registration link, later I realized I can be a member by paying a sum (measured in USD), so I guess if I pay I can post there, right?

Previous China's ban caused a panic that brings price down to 2xxx CNY level (3xxUSD). (I ordered at 19xxCNY and missed, but that was a close bet. Luckily I didn't announce that bet and lose face:) There had been no sign of bitcoin network failing by that time, and smart investors hedged against this already (I posted many a post saying it is impossible that Chinese government not to ban bitcoin when it reach significance, well before the 5th Dce ban.)

This time MtGox issued statement that it is not their problem: bitcoin network is failing (unless patched), bitcoin developers fire back on media, but soon Bitstamp failed bitcoin withdraw, and Btc-E too for a brief while. To a non-cryptographist, say a fund manager, the sequence of events look very much like that MtGox said the truth, that bitcoin protocol is broken, and bitcoin developers didn't realize its impact or was lying to the media. To them this is a sign of bitcoin network failing. It questions the future of the currency. Sure investors are more 'weathered' than a few months ago, but that is a weak factor.  There is no reason why this plummet should be less than the last.

MtGox's recent action do not look like a conspiracy to me. They suddenly face a good opportunity of insider deals, covering their lose if there had been any, at the cost of mistakes of panic investors, but there is no way to confirm that it is planed, so I'll keep speculating that this is an unexpected event. Along this line, from engineering point view, any fix within a week is already very fast, and you more or less know it from reading development notes on github. The fix is going to last for a while, so the panic wil continue. I don't know how long, may be a few days, or weeks, but now is not the lowest point. I am not seeing blood on the street yet. Lok out the window I am only seeing snow. (It is a Chinese joke, snow and blood pronounce the same in Chinese).

The boom after China's bad news be consumed called in a lot of new investors, it is about the time they quit. This makes new investors more cautious, which would delay the periodic spike for some months. Previously the time between each spike (spike = growth of more than 2 times in short while) is from one year to half a year and geting shorter. After this event the next spike may be postponed to April or even later.

In fact that's what I think too. Will hold.

Thanks for your comment. My old plan on Monday is to short sell and buy back at limit-order 400USD, with a buy-back stop-order at the exact price I sold - around 600USD. MtGox doesn't support stop order, but my bot do. However I observed strange behaviour from MtGox API and assume it would remain unstable until the dust sets, and for that reason I cannot trust my bot linked with such an API (what if it was HTTP-Error-500 when bitcoin resume withdraw?). A bug in the softare triggered the stop-lose order and bought back all coins by mistake, I reversed my position with a moderate lose. I decied for no more action. If I sticked my old plan, by now I would have gained 60% more coins than before, but exposed to the risk that stop-lose order doesn't work when it is really needed.

So now on MtGox I am full in (like my old position before the withdraw-problem: all coins, no fiat). Judging the current situation, what recommendation do you have to me?

There is no fractional-reserve happening here, because nobody is borrowing bitcoin form MtGox, and even if they do, MtGox has no reason to issue promise-to-pay-bitcoin in place of real coins, since real coins are equally trasnferrable and easily-validated. (Or maybe you meant something else with 'fractional-reserve', will you kindly explaind that?)

MtGox is an exchange. For every coin someone withdraw, some other one deposited the exactly same amount of coins into MtGox. At least this is what an exchange supposed to do. There could be no shortage of coins for MtGox for customer withdraw if they sticked to the game rule. If they are short of operational cost, they may sell some of the coins that they took as trading fee, but that happens on the Asset side, not on the Debt side, user withdraw should not be affected.

Following is my reading of the current event:

The most likely cause, if a shortage of bitcoins really happened, is that they have lost coins to other means (larceny), and can't compensate with their profit. But current evidence doesn't support that fully, because it can be reasoned that having detected larceny is a event strong enough to force close withdraw until the hole is fixed, even if you have more than enough to cover the stolen coins. On the other hand, the second announcement following weekend crash evinces larceny, almost fully.

The theft took away coins, and (in the spirite of western law) MtGox need to compensate with their profit. Since it is necessary to stop withdraw until the holes are fixed, they suddenly face an opportunity to short-buy coins and make a huge profit - an insider trade, and they probably seized this opportunity (not necessarily "if they don't do the insider deal they would be insolvent"). Since they irreversibly damaged their reputation and their position will be lost, their future profit will be short-lived, and they are more motivated to make a profit with insider-trade, once for all, even if they are far from insolvent. They could have missed the insider trade opportunity as well, amist the mess shit happening.

I am afraid that this game can't be explained with inflation / deflation and fraction-reserve concepts. It is a business story, not an economical one.

And this is my speculation advice:

For the worried and for the brave soul, now is the time to short-sell. The Friday announcement resulted a 2-day crash that eventually dropped 30% of the price, the current job is not that much yet, there is space to short. I did so yesterday when the price was 600USD in MtGox, but a bug in my home-made bot made me bought all these back at 620USD a few minutes later. When I realized this in GMT 0:00 11th Feb 2014, it was too late for a bolder move to short sell it again, worrying a sudden return of bitcoin withdraw would trap me there.

Since everyone wish to hold fiat in MtGox for now, and many did so, when bitcoin withdraw recovers, people rush to buy bitcoins for a quick exit away from the buggy market, causing a spike, and bringing other exchanges up too. If you bet that, you should have your hands full in coins now.  If your hands are tied in MtGox, you should worry about the half-year long cash-withdraw of MtGox, so you would buy coins back later when the spike is over, and quit gracefully. This of course carries the risk if MtGox go insolvent.

It was mentioned to me in a personal email to me from other members of this forum who suffer from Intersango's not-any-withdraw-proceesed-for-6-weeks like I do. Since you questioned about it, I looked up wikipedia and found that untrue. Amir Taaki is a British citizen. So, the question why they choose poland remain open.

That same email cited that Amir Taaki is no longer associated with Intersango, so now I have to question that as well, but couldn't find any source answering that. It is important to me personally, because there are 3-years worth of salary of bitcoins that I deposited into Intersango and as soon as people complain withdraws are put on hold (early January 2014), I requested withdraw, and the request is put on hold "Waiting for staff action" (still is). So you see I have an interest to find out what is happening.

Thanks!!

Then the interesting quesiton is, does SEPA withdraw delay equal to International Wire Transfer delay?