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Author Topic: [Blog Post] Surprise: The US Dollar is a Virtual Currency  (Read 2145 times)
Richy_T
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February 12, 2013, 02:44:54 PM
 #21


I could definitely imagine a company like Mt. Gox, who is holding a lot of Bitcoins on account for people, accidentally locking themselves out of one of their reserve cold storage wallets (or having one wallet stolen by an employee).  At that instant, they have fractional reserves.  But they could easily set aside a small portion of profits each day to re-fund that wallet.

Which would be worse?  Announcing to the world, "We locked ourselves out of one of our wallets, but rest assured...." (potentially causing a run that puts them out of business), or to quietly build the reserve back up?

Pretty much this has already happened to one business (or that is his claim). I forget the name off the top of my head. His action was to suspend all accounts. The last I heard he's intending to pay everyone back but it's hard to see how, it was a lot of bitcoins lost.

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hazek
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February 12, 2013, 06:20:59 PM
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I could definitely imagine a company like Mt. Gox, who is holding a lot of Bitcoins on account for people, accidentally locking themselves out of one of their reserve cold storage wallets (or having one wallet stolen by an employee).  At that instant, they have fractional reserves.  But they could easily set aside a small portion of profits each day to re-fund that wallet.

Which would be worse?  Announcing to the world, "We locked ourselves out of one of our wallets, but rest assured...." (potentially causing a run that puts them out of business), or to quietly build the reserve back up?

Pretty much this has already happened to one business (or that is his claim). I forget the name off the top of my head. His action was to suspend all accounts. The last I heard he's intending to pay everyone back but it's hard to see how, it was a lot of bitcoins lost.

http://bitfloor.com/

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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February 12, 2013, 10:10:54 PM
 #23

love the last paragraph of the blog:

Quote
We see then that bitcoins, and other virtual currencies, are no more virtual than the money we’re already using every day. More interestingly, while dollars and bitcoins are both virtual, only one of them cannot be created out of thin air. One of them is manifestly scarce, and the other functionally unlimited in supply. One is created by limited mathematical functions – by the scarcity of specific numbers – and the other by the push of a button, by decree of an arbitrary creator. One can be created at whim, and one cannot.

So, while dollars and bitcoins are both virtual, which is actually more real?
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