TBH is anyone certain that MtGox, Bitstamp, and BTC-e aren't owned by the same principals? I know MtGox, Bitstamp, Bitcoincharts and Bitcoinwatch all use Cloudflare and nginx. Are we sure this is a coincidence?

TBH there is a serious vacuum in the bitcoin marketplace for as you say basic necessity. I'm sure that when the market cap breaks 5 billion US you will see someone, most likely a financial institution looking to get in early, start offering automatic bill pay using bitcoins. They will offer some exchange rate based on the most reliable exchange, probably coinsetter by that time. There's a real opportunity here for a few visionary people to start developing a new municipality somewhere where all the merchants and utilities will take bitcoins. Imagine a bitcoin city built with all the latest green concepts. Could have one in every country.

There is always the possibility that they are using "attacks" as an excuse for incompetence or worse. It does seem odd that MtGox starts having consistent problems with "attacks" just about the time Ripple is ready for open beta. Who owns Ripple again? oh yeah the same people as MtGox.

When a company chooses a country from which to base their operations it's rarely an accident. Having multiple data centers in multiple countries means submitting to multiple sets of rules and regulations. They likely chose Japan for some friendly regulations that let them operate at greater profit.

If I'm concerned about the fact that MtGox has proven completely unreliable just about the same time their competing currency Ripple is ready to launch, and I'm also concerned as to just how much more control they may be able to exert, The smart move would be to move all my business and that of anyone I know away from MtGox and any other exchange not based in the US or UK where regulations should offer some shelter for investors. Placing my bitcoins in cold storage only means that when whatever damage they intend is done I'll be holding worthless Hex strings. I'm not saying they ARE intentionally crashing their site or that it IS a conspiracy to reduce confidence in bitcoin and push people toward Ripple. However, if it quacks I generally expect to see a duck.

If you are looking for a legit exchange campbx has proven extremely reliable with all the functionality of a normal forex including stop-loss and FOK orders. They also offer Dark Pool trading for those who are trading larger numbers and don't want to be at the mercy of speculative manipulation. I've been using them for about a week and I have never failed to connect or had an order not execute as it should.

Ok I know that not everything that looks like a coincidence is one just as not all things that appear nefarius are a conspiracy. I'm just wondering though if it has occurred to anyone else that an inordinately large number of the main bitcoin websites and exchanges all seem to use cloudflare and nginx. I suppose it's possible that those just happen to be the best options for service and price. I still can't help but admit it sets off my spidey senses too. We know MtGox and Ripple have the same people pulling the strings, how many of the other pages or exchanges do they control? I wonder.....   

I am a true believer in what bitcoin has to offer the world at large, a world so much different from the one I grew up in. This world of ecommerce, where borders are simply lines on maps and the average child today is more culturally aware than the ambassadors of my day, needs a unifying currency beyond the greedy manipulation of governments and financial institutions. That said, we have to work as a community and accept that some of it's earliest adopters did so in an attempt to manipulate what they saw as an emerging market, rather than a true change in the way we do business on a global level. As a community, we are dependant on an exchange that has massive problems with reliability, and in all fairness has questionable allegiances. Ripple, a competing currency is controlled primarily by the founder of MtGox. I'm not suggesting that competition among crypto currencies is dangerous, but allowing someone with so clear a conflict of interest to hold such a vital role within the infrastructure is. Transparency is the mantra of Wall Street for a reason..... with so much money at stake it is foolish to trust in the motives of men. There needs to be some transparency to prevent the fleecing of honest investors. I think that in large part the recent panic was caused by a lack of trust brought on by this lack of transparency. I urge anyone serious about the long-term future of bitcoin not to trade on any exchange that is either unreliable or has a conflict of interest. There are options now, several in fact that are US based and completely above board, with stop loss orders and all the functionality one expects from a legitimate exchange. Spread the word, talk to anyone you know who trades bitcoins, we need to strengthen trust in this currency if it will survive. Thus far it is the strongest of the crypto currencies and that is not by accident, it has the strongest community, support, and most of it's proponents are true believers in what it can bring to the world: An end to corporate and governmental abuses of currency to enrich themselves at the expense of others.

I think that the primary cause for the dichotomy in perceived value in bitcoin comes down to the most basic of dividers in perception. Most people want a currency or commodity to be something tangible with a need driven by consumption. The true value of bitcoin can only be seen as real and tangible by those who view value strictly as where the demand curve intersects the supply curve and have no need to add tangibility to the equation. I think once we can get small businesses in say 20% of the local markets to accept bitcoin payments (this could be achieved with 10% if they were high demand merchants like fine dining or boutique clothing) then it will stop being hoarded so much and we will see closer to 50% of the bitcoins currently in circulation getting in motion. That will be the take off point for this currency I assure you what looked like a "bubble" over the last few days won't even be a pimple in the long run. I'm not sure if I agree with the potential for bitcoin to trade at more than $10,000 USD in the near future simply because it would have to capture such a large percentage of consumer driven trade worldwide to get there. That said, $1,000 isn't an unrealistic exchange-rate if you can spend them directly without a middleman exchange.

The problem with processors like bitpay is two-fold. First and foremost it's a third party risk as to the exchange rate fluctuations. By that I mean that this is a volatile market if I take a bicoin payment and the price drops 30% in a day I would potentially lose all my profits on items sold that day as the third party processor exchanged my payments for later deposit into my fiat account. Worse yet there is the chance that a processor could use their capital to "float" the payment to me at a lower exchange rate holding on to my bitcoins untill the market corrected and making a profit at my expense. Next there is the fact that avoiding processor fees is the whole reason to switch to bitcoin in the first place. If Visa and MC charge 2.5 to 4.5 percent depending on the card and the transaction and bitpay charges .99 as it's lowest rate what has the merchant really gained by switching? At that point his only gain is avoiding chargebacks from contested charges and fraud.

When I say the market needs the ability to transfer payments instantly I mean that I need to be able to (if I choose) transfer the overhead portion of my bitcoin income into fiat in my bank account at the exact rate I accepted it at. In other words John Q buys a desktop computer from me for 12 bitcoins and the exchange rate is $100 per at the moment of the sale I need to be able to rout his payment to my exchange account sell the 7 or 8 bitcoins to cover my expenses and have that money in an account that I can make payment to my supplier within the hour. I would want to have complete control of the remaining bitcoins that were my profit so that I could choose to liquidate them or save them for a better exchange rate. This type of control without a third party is the only way small businesses will see the upside.


As to the assumption that stop-loss orders firing automaticly would have made the crash worse than it was I think you're forgetting the fear factor. People don't panic if they know they will be able to sell their bitcoins at the rate they want to (or at least close to it, I'm sure there would have been some slippage) The reason for the crash was panic due to falling prices and more than a minute of lag all day. You have to remember the herd mentality of an exchange. One person getting scared and clamoring to sell will only spook the other investors if they are:  1) already afraid 2) convinced this person knows more than they do 3) fearful they won't be able to place their trade at their risk tolerance level once the frenzy starts. If you have a stop-loss set up you don't have to panic, if no one has to panic, the market doesn't have a panic-driven rush to sell.

Seriously? Bitcoin needs people with the brains to reign in their balls. Testosterone isn't going to help shape an emerging market, common sense and persistence will.

Clearly the OP got in as an investment, not as an idealist.

I use localbitcoins.com and have done a transaction. I personally think it fulfills a vital role in the community. If you need to liquidate your bitcoins rapidly for some reason it's one of your only real options. As to the variance from current traded price and what they are charging, that has to be there to protect the parties to the sale from the volatility of the market. I can't speak for everyone, but I buy bitcoins based on the 24 weighted price. Think about it, when they place an order on the site the price is locked at whatever my formula says it should be at time of sale. Then it could take hours or even a day or two to finalize the sale in person. Meanwhile, I've taken cash from my account and carried it with me (along with my 10mil) to some coffee shop to make the trade. Going the other way I use current price + a hefty percentage because we all know the way this market goes by the time I get my cash the price is likely to be above what I'm being paid for them.

As with most "economists" (I use quotes because clearly he's a student) you operate on some broad assumptions based on principles you learned in macro and took as gospel. For something to be considered a currency rather than a commodity it has to fulfill the three roles that we debate endlessly. That said, it only has to meet the minimum criteria. Some currencies excel at one or more but few are best for all three. Take gold for example: great as a store of value through most of history, not so great as a medium of exchange for the day to day transactions since it's heavy and to ensure it's value it must be tested for purity and weighed, as a standard of value it's without compare. I only bring up that example to outline that all currencies have a weak spot. With gold it's heavy, and hard to divide or merge. With bitcoin it's a bit volatile and in the classical sense has no intrinsic value. So it scores low (at the moment) as a store of value (only on the short run, clearly it's over-all track record is nothing short of amazing) and it scores low as a standard of value due to it's lack of intrinsic value. However, as a medium of exchange it is arguably currency 2.0. Never in the history of the world has a medium of exchange like this ever been placed in the hands of the people free from governmental manipulation.

So to the OP I would say while your arguments are well thought out and well worded, they are invalid because they assume that bitcoin must fit your idea of what a currency should be in order to be taken seriously. Is hoarding a threat to bitcoin as a medium of exchange? Yes in the same way that being counter inflationary is. Yet, without the counter inflationary measures it would have no chance as a store of value and clearly if it's being hoarded it's satisfying that use for currency well indeed.

By definition if a failure in infrastructure causes a panic, it's a panic, not a bubble. Speculative bubbles pop when they reach a point on the supply and demand curves that is unsustainable usually when supply is choked off for some reason. When an external force like a major selloff is the main cause it's a correction, not a bubble. This was nearly criminal negligence at best and intentional fleecing of the flock at the worst by MtGox. I say it's possibly intentional because if their intent was to provide a reliable service they could have added stop-loss orders even if they couldn't fix their server lag issues. The only real reason not to protect your clients with a stop-loss is if you intend to use or allow someone else to use the panic to clean up.

Over the last three days I have heard "bubble" so many times I swear I think MtGox must have the best damage control PR team in the world. This was a panic plain and simple. It was caused by MtGox and their inability (giving them the benefit of the doubt by assuming it's not more nefarious than simple incompetence) to address constant trade lag on their API. Nor have they done as they should and at least added stop-loss orders to protect their users. So when the lemmings saw a major sale and a massive change in the market depth they assumed this must be that bubble everyone is talking about.

A bubble suggests that this was caused simply by speculative trading gone wild. To the contrary I don't think that the price of $260 comes close to matching the true value of a bitcoin as a tool for international transfer of wealth or as a store of wealth. Unfortunately though the Pundits who have to sensationalize everything to get a sound-byte or a headline keep shouting PONZI, PYRAMID, or LOOK OUT FOR THE BUBBLE. Sad fact is that people in this world refuse to research and make their own decisions based in logic, so long as they have "educated" men to tell them what to think.

This wasn't a correction, at least not in the classic sense. Were people questioning if the trend was driven by media hype and speculation? Certainly. Did the market settle in at approximately where it would have been without the "bubble"? Sure. But saying that makes this event either a correction or a bubble is making the facts fit your conclusion. The lack of faith in the trading price's validity was a key factor in the panic, and what price it equalized at is a matter of cooler heads taking advantage and doing some shrewd buying.

What we need is to educate people away from using trading engines that are not designed for speculative trading in that manner. The exchanges we have are for actually trading fiat for bitcoin or vice versa one way at a time. At least until someone who has a clue how to design and manage a FOREX site gets one up and running the speculative trading is just silly and will end up costing the community a great number of people who will become jaded and blame it on bitcoin instead of their own ignorance.

I don't think a panic driven by infrastructure issues should be called a bubble though. Bubbles pop because the groundswell behind some fad can't be sustained due to internal factors in the supply and demand curves.

This was a panic plain and simple. The second in several weeks that we have MtGox to thank for yet they still haven't fixed their massive trade lag. At the very least if they can't fix the lag they should code in stop-loss orders to ensure users won't have losses due to their server insufficiencies.

As usual I think the intellectuals in the community are over analyzing what is clearly a (Sling Blade reference) "It ain't got no gas in it"

It's only being used as a store of value because -> Merchants at large don't take it.
Merchants don't take it because -> the currency risk associated with a volatile commodity with no instant means of transfer into the fiat of your choice.
There's no means to transfer it into the fiat of your choice instantly because -> IT GOES AGAINST THE PLAN MAN!!!

In the end for bitcoin to move through this growing pain and reach adolescence someone (possibly coinseter.com) will have to give merchants the security of knowing they can instantly exchange the bitcoins received into fiat in their bank to pay overhead. At least until it reaches adulthood and they can pay their expenses in bitcoin.

Read the news man coinsetter.com The legit exchange is on it's way will be here in no time.

Seriously? "Why not just steal instead of helping to secure the network of a possibly world changing technology?" Are you that moronic?

Forget the moral problem everyone will have with your theft. If you steal a large block of bitcoins (assuming you get lucky on the first try) you have to liquidate them. Word gets out some guy got his wallet hacked by someone using an ASIC or whatever and hacking the keys to transfer the Bitcoins out and good luck selling your ill gotten gains. No one will want to buy bitcoins.

What do you consider stable?