The Critical 1000X Question Nobody Asked...

[CasinoBit]

You can't have a decentralised exchange. Where would you store the flat?

You can't store fiat but you can store debt, you could theoretically create a decentrillized system where debt is being circulated like bitcoins in different currencies, exchanges can pay out the debt.

Almost. But again who is going to make sure the Fiat payment is actually completed?

You could implement functions within every worker to determine whether a transaction is completed or not.

[1714162440]

1714162440

[1714162440]

1714162440

[1714162440]

1714162440

[silzero]

You could implement functions within every worker to determine whether a transaction is completed or not.

Problem is there no way for other workers to verify that transaction is indeed complete. Then other part is the fiat currency is held outside the Bitcoin network, so there is no guaranteed way to verify a successful transaction.

[Bitmeat]

Biggest problem with decentralization is that each individual broker has to do a ton of work to meet their local financial regulations. People aren't going to want to go to jail for trading bitcoins for paper money.

People just need to grow a pair and stop using MtGoxxed. It's a pretty poor exchange compared with real world financial exchanges, but saying they caused the first bubble to pop is laughable. The market just decided that exponential price growth wasn't really working. There were dozens and dozens of other exchanges happily trading away while the boys at Mt Gox unplugged their servers and went to pout.

[Zangelbert Bingledack]

You can't have a decentralised exchange. Where would you store the flat?

You can't store fiat but you can store debt, you could theoretically create a decentrillized system where debt is being circulated like bitcoins in different currencies, exchanges can pay out the debt.

Almost. But again who is going to make sure the Fiat payment is actually completed?

Here is where Western Union can help, if they do decide to adopt Bitcoin as they are apparently considering.

This is perfect timing.

[DastanX]

work on it

[etotheipi]

I too believe that Mt.Gox failed at their "duty", but they really have nothing to do with the crash.  At all. Get over it.

The Bitcoin bubble was driven by speculators.  And hype.  Media attention.  Millions of people wanted to get involved and started pouring their money in.  The price goes up and more people want to get in -- but the Bitcoin infrastructure isn't there yet.  It doesn't actually support $3 billion in economic activity.  The system simply corrected itself to a more-reasonable value, and Mt.Gox only made that correction a little more turbulent.  But they didn't cause it.

Bitcoin isn't ready for mainstream.  Personally, I'm looking forward to a little more stability in the system as people tune out for a bit and tune back in when it's actually ready.  I agree that Gox "failed", but they failed their own business, not the Bitcoin system.

[rpietila]

I too believe that Mt.Gox failed at their "duty", but they really have nothing to do with the crash.  At all. Get over it.

The Bitcoin bubble was driven by speculators.  And hype.  Media attention.  Millions of people wanted to get involved and started pouring their money in.  The price goes up and more people want to get in -- but the Bitcoin infrastructure isn't there yet.  It doesn't actually support $3 billion in economic activity.  The system simply corrected itself to a more-reasonable value, and Mt.Gox only made that correct a little more turbulent.  But they didn't cause it.

Bitcoin isn't ready for mainstream.  Personally, I'm looking forward to a little more stability in the system as people tune out for a bit and tune back in when it's actually ready.  I agree that Gox "failed", but they failed their own business, not Bitcoin.

Bitcoin's growth rate has been very high. During the time it has been traded against fiat in an organized way (since Mt.Gox), its exchange rate has appreciated at a 30.5% average monthly rate.

ANYTHING growing this quickly has a risk of overextending itself. If we continue to grow at this speed another 5 short years, the exchange rate would be more than 2 billion USD / BTC. Even Alexander the Great did not conquer the world in 5 years, though...

The infrastructure for anything bitcoin, was terribly behind the exchange rate. Not as bad as 2011, but still. The 100%+ monthly growth rate from the beginning of 2013 is too high. Something has to break. We can still see $10,000 per coin before Christmas, but there is a lot of work to do before it will be sustainable.

[Odalv]

IT IS JUST BEGINING. 'Fasten your belt!'

[Bitmeat]

IT IS JUST BEGINING. 'Fasten your belt!'

what's beginning is the end of the first bull trap

[gradient vector]

Bitcoin was on the verge...

We need a decentralized exchange.  We need it now.

A decentralized exchange is an oxymoron but the closest thing to it I can see is localbitcoins.com

[bitbadger]

I too believe that Mt.Gox failed at their "duty", but they really have nothing to do with the crash.  At all. Get over it.

The Bitcoin bubble was driven by speculators.  And hype.  Media attention.  Millions of people wanted to get involved and started pouring their money in.  The price goes up and more people want to get in -- but the Bitcoin infrastructure isn't there yet.  It doesn't actually support $3 billion in economic activity.  The system simply corrected itself to a more-reasonable value, and Mt.Gox only made that correction a little more turbulent.  But they didn't cause it.

Bitcoin isn't ready for mainstream.  Personally, I'm looking forward to a little more stability in the system as people tune out for a bit and tune back in when it's actually ready.  I agree that Gox "failed", but they failed their own business, not the Bitcoin system.

Exactly how I see it too.

In fact the more efficient and speedy the exchange is, the faster the market can move and the quicker the price can drop.

The price crash is the result of more people wanting to dump and sell than there were wanting to buy and hold.

Lack of accurate market information through lags and unreachable exchanges adds an element of uncertainty and fear, but the reason for the crash was that the Btc price had become ridiculously over extended and had to move downwards.

[johnyj]

When it comes to financial stability, it's all about the confidence, currently there is just not enough confidence in the market and there are many speculative move. Since bitcoin have a very steep learning curve, it will take some time for majority of people to realize its true potential

[DrG]

Anybody who joined BTC in the last month witnessed the run up and regardless of where they entered seeing a drop from $250 to $60 something is unnerving knowing the market can be manipulated.  Until everybody forgets that and the confidence returns there won't be any aggressive aggregation. 

[Ekaros]

Even more critical 1000x question is: Can the protocol handle it? And if it can when does the limit come.

Exchanges are an issue, but it should solve it self as popularity increases.

[desired_username]

Even more critical 1000x question is: Can the protocol handle it? And if it can when does the limit come.

Exchanges are an issue, but it should solve it self as popularity increases.

That's the point. The forces behind the attacks clearly want Bitcoin to fail.

Popularity means money entering the economy -----> higher price ----> higher market cap.

If they keep attacking and abusing the only weak spot (mtgox) they will be able to keep bitcoin separated from the crowds.

Mtgox could easily implement protection against malicious trading activities. I cannot understand why they don't create simple rules. (trading frequency per user, etc.)

[sickpig]

Ripple

https://bitcointalk.org/index.php?topic=174854.0
http://opencoin.com
http://ripple.com

[Ekaros]

Even more critical 1000x question is: Can the protocol handle it? And if it can when does the limit come.

Exchanges are an issue, but it should solve it self as popularity increases.

That's the point. The forces behind the attacks clearly want Bitcoin to fail.

Popularity means money entering the economy -----> higher price ----> higher market cap.

If they keep attacking and abusing the only weak spot (mtgox) they will be able to keep bitcoin separated from the crowds.

Mtgox could easily implement protection against malicious trading activities. I cannot understand why they don't create simple rules. (trading frequency per user, etc.)

There will be more exchanges as price increases as they will be profitable to run. Then the best will survive. Though gox must lose major part of marketshare at one point. It's only natural end result.

[lukestokes]

When I hear the praises of "darknet" this or that being sung, I'm reminded of the cheesy movie "hackers." In the real world, if someone doesn't follow FinCEN guidelines and register as a money transmitter, they go to jail (e-gold anyone?). I've talked to FinCEN employees (they are a simple phone call away). I've talked to the government employees in my state who are responsible for registering money transmitters. From what I understand, it's not a big deal to get registered. I was told the FinCEN registration is free.

Please don't misinderstand me, I think governments around the world are corrupt and doing many evil things. I'm ashamed of what my tax dollars put into action. I do think darknets should be built, but as a backup plan. I'm not (yet) willing to go off the grid completely.

If we're shortsighted about this and build a system that doesn't follow "the rules" then every single person who uses that system takes on the liability of being attached to activity that could be deemed illegal. That is not the best road to adoption by legitimate businesses.

I agree we need more exchanges. I like the idea of decentralizing them as much as possible. I just want to remind those involved to think long term. Unless you're thinking the majority of the world is ready to fight their governments and break the law in order to follow the higher spirit of the law to support freedom... Unless that happens, we still have to play by the rules.

I'd like to see more posts here about those rules, the process of following them, and the liabilities they introduce.

[rpietila]

The physical silver dealing all over the world happens mainly in coin shops, which are generally mom-and-pop establishments doing a few million in sales yearly. They act as the intermediaries to the public, most can do about $10k-$100k or so orders from their own inventory, and if the order is greater, they dip into the "dealer network" (make a few phone calls, or use a dedicated market matching software, which is only open to the dealers, not to the public). This allows them to fill much larger orders, and charge a fee of typically 1-2% of the part that was acquired through the network. Their own inventory sells for 10% spread or more.

What is important, is that the prices can be locked in without any cash outlay. The members know each other, and it is a kiss of death (for the business, of course, not literally) if a price locked in is not honored. You are immediately out of the network if you do not honor your commitments, and then you may try your luck trading your peanuts in your hometown with no access to anything larger...

Bitcoin also needs an OTC dealer network! It would be easy to set up a members-only website that just displays the open orders. The participants agree on the other terms, although I am sure that some sort of "default terms" will quickly be formulated. Running the website is not a legal risk, and if it is DDoSed, the only thing that happens is that every dealer has his own orderbook in the notebook, and need to call each other for every deal. (Only for 10k-100k+ deals, since the smaller amounts they can just trade against themselves.) Dealers like calling each other, since that also distributes information. The others in Finland are not professionals and don't understand why I want to call them almost daily. I just picked the habit from silver 

Oh yes, I forgot to mention that silver DOES have regulated exchanges, futures, options and all that stuff. But it is as patently a joke as the exchanges in bitcoinworld. The manipulation runs rampant. I have never even seriously considered opening an account with a silver exchange, despite being in the trade full time for 7 years.

[ChristianK]

Thousands of users who are desperately trying to get fiat out of the banking system and into Bitcoin.

No, people wanted to speculate on the rising price of bitcoin.
They didn't try to buy bitcoin to buy goods with it.

Someone who actually wants to buy bitcoins to use it as currency won't get much demotivated from MtGox being down a day.