Contrary to Mt.Gox’s Statement, Bitcoin is not at fault - Gavin Andresen 10/2/14

[darkmule]

The price has already stabilized, so far as I can tell.

Yes, but at what price? The Mt. Gox dollar price is only about 60% of the Bitstamp price.

Who cares?  I can get the Bitstamp price.  The Gox price has been fictional for well over a year.  It needs to be disregarded utterly.

[hgmichna]

The price has already stabilized, so far as I can tell.

Yes, but at what price? The Mt. Gox dollar price is only about 60% of the Bitstamp price.

Who cares?  I can get the Bitstamp price.  The Gox price has been fictional for well over a year.  It needs to be disregarded utterly.

Not by those who have funds on Mt. Gox. And they are many. For them it is highly interesting to predict what will happen.

Last I looked the Mt. Gox dollar price was down to near 50% of the Bitstamp price.

I am wondering what this means. Apparently people are dumping bitcoin on Mt. Gox, although bitcoin withdrawals have in the past worked very much better than fiat withdrawals. Many seem to believe that Mt. Gox is giving up and will not re-enable bitcoin withdrawals.

So far I cannot follow this line of thinking. If Mt. Gox would not fix their bitcoin withdrawals within reasonable time, they would be signing their own death certificate. It would mean and become obvious that they are fraudulently stealing the funds, which could quite literally lead to some Mt. Gox people's death.

My personal guess is that Mt. Gox will get their bitcoin withdrawals going withing a week or two. This would mean some significant outflow of bitcoins, but it would not sound Mt. Gox's death knell.

I could imagine that, given Mt. Gox's limited programming skills, they would initially process bitcoin transmissions slowly, checking transactions manually, but they cannot hold up bitcoin transfers for long. The longer it takes, the more Mt. Gox's already deeply damaged reputation would suffer.

So my personal recommendation is, if you still have fiat on Mt. Gox, buy some bitcoins. Perhaps not with all your dollars, if that is your entire pension, but at least some, hoping for the likely outcome that you will be able to pull them out soon and sell them at a higher price somewhere else.

Of course, as that happens, the price on the other exchanges will fall somewhat, which could be reinforced by early selling by others who also foresee this. But that could be temporary and can possibly be counteracted by keeping your bitcoins for a couple of weeks or months, until the waves die down.

[Bitcoinpro]

how can Gavin Anderson have any credibility, he too is on the Foundation board and it has TF's logo on it ?

[DeathAndTaxes]

Does this mean that many Gox customers believe the price will fall that far on the other exchanges before Gox gets their bitcoin transmission going again? Or does it mean that they believe their dollars are safer on Gox than their bitcoins? Or what? I find it difficult to explain the price difference.

The later.  MtGox doubled paid attackers for who knows how many times and this has could have been going on for a month.  How many Bitcoins does MtGox owe customers?  How many do they have?

[darkmule]

Not by those who have funds on Mt. Gox. And they are many. For them it is highly interesting to predict what will happen.

Good point.  People who have funds on Gox probably do have an interest in that number.  I have a name for those people.  I call them "fools."

[roslinpl]

Not by those who have funds on Mt. Gox. And they are many. For them it is highly interesting to predict what will happen.

Good point.  People who have funds on Gox probably do have an interest in that number.  I have a name for those people.  I call them "fools."

Greedy fools

Gox was never anything good for me.

[erik777]

The price on MtGox is $238, $634 on Bitstamp, $400 less!  There is a lot of speculation on why the price is so low.  Some speculate that everyone stuck in MtGox has been moving to cash.  That's possible.  But, the opposite is also possible.

If everyone buys BTC inside MtGox, eventually, you run out of buyers.  Let's imagine that very few have cash in MtGox.  Now, when someone tries to sell it, the price will drop, because the few who still have cash are not willing to buy at all or at least not buy unless it is cheap. 

In this scenario, if the majority possess BTC, and a small percent of them want to sell, you can still very easily have more people willing to sell than buy.  E.g., let's say 95% is in BTC, and 5% is in fiat.  if 10% of the BTC holders want to sell, that is still double the amount available in fiat. 

In short, MtGox is currently suffering a massive liquidity problems.  Since no one can buy or sell items with their currencies in MtGox, other than currency itself, you eventually run out of liquidity to support trading.  The price will naturally move to one extreme or another.  Previously, where liquidity was limited but you could still get money, especially BTC, in and out, the price was abnormally high due to the restraints on the fiat side.  Now, that BTC withdrawal is plugged, it is abnormally low. 

Add to this that those with fiat now have an incentive to wait to see how low the price will go.  Like a dutch auction, they are risking that opportunity being gone forever in the hopes they can get the best price. 
 

[hgmichna]

The price on MtGox is $238, $634 on Bitstamp, $400 less!  There is a lot of speculation on why the price is so low.  Some speculate that everyone stuck in MtGox has been moving to cash.  That's possible.  But, the opposite is also possible.

If everyone buys BTC inside MtGox, eventually, you run out of buyers.  Let's imagine that very few have cash in MtGox.  Now, when someone tries to sell it, the price will drop, because the few who still have cash are not willing to buy at all or at least not buy unless it is cheap. 

In this scenario, if the majority possess BTC, and a small percent of them want to sell, you can still very easily have more people willing to sell than buy.  E.g., let's say 95% is in BTC, and 5% is in fiat.  if 10% of the BTC holders want to sell, that is still double the amount available in fiat. 

In short, MtGox is currently suffering a massive liquidity problems.  Since no one can buy or sell items with their currencies in MtGox, other than currency itself, you eventually run out of liquidity to support trading.  The price will naturally move to one extreme or another.  Previously, where liquidity was limited but you could still get money, especially BTC, in and out, the price was abnormally high due to the restraints on the fiat side.  Now, that BTC withdrawal is plugged, it is abnormally low. 

Add to this that those with fiat now have an incentive to wait to see how low the price will go.  Like a dutch auction, they are risking that opportunity being gone forever in the hopes they can get the best price.

Does not sound right, because lots of people have fiat currency on Mt. Gox. Why? Because they cannot get it out.

I also find the Gox prices ridiculous. My explanation is that there are many users who are simply uninformed. They have not read the forums or the Mt. Gox announcements. They are panicking.

I guess we are hitting the bottom around now. I think the price cannot go down to $200 while it is $600 on the other exchanges. There must be some people with some reason who buy at prices below $250.

Moreover, Mt. Gox will issue another announcement tomorrow, which will influence the markets. If it sounds positive, like stating that bitcoin transfers will be switched on later this week, then the price on Mt. Gox will rise. The price on the other exchanges should fall somewhat, but perhaps these considerations are already partly reflected in today's price, which has gone down a bit over the last few days.

[pleiotropik]

MtGox does as it pleases: Without the onus of accepting deposits or withdrawals they will fool around inside their black box to get an edge against their customers, anything to survive, right?

As an aside, -but more importantly- what MtGox is doing is a little puppet theater experiment for what's about to happen to the banking system worldwide in 2014-15.

As the hitchhiker's guide to the Universe says "Don't Panic".    ...Have a towel handy.

[BitCoinNutJob]

bitcoin foundation is probably in on the scam

[erik777]

The price on MtGox is $238, $634 on Bitstamp, $400 less!  There is a lot of speculation on why the price is so low.  Some speculate that everyone stuck in MtGox has been moving to cash.  That's possible.  But, the opposite is also possible.

If everyone buys BTC inside MtGox, eventually, you run out of buyers.  Let's imagine that very few have cash in MtGox.  Now, when someone tries to sell it, the price will drop, because the few who still have cash are not willing to buy at all or at least not buy unless it is cheap.  

In this scenario, if the majority possess BTC, and a small percent of them want to sell, you can still very easily have more people willing to sell than buy.  E.g., let's say 95% is in BTC, and 5% is in fiat.  if 10% of the BTC holders want to sell, that is still double the amount available in fiat.  

In short, MtGox is currently suffering a massive liquidity problems.  Since no one can buy or sell items with their currencies in MtGox, other than currency itself, you eventually run out of liquidity to support trading.  The price will naturally move to one extreme or another.  Previously, where liquidity was limited but you could still get money, especially BTC, in and out, the price was abnormally high due to the restraints on the fiat side.  Now, that BTC withdrawal is plugged, it is abnormally low.  

Add to this that those with fiat now have an incentive to wait to see how low the price will go.  Like a dutch auction, they are risking that opportunity being gone forever in the hopes they can get the best price.

Does not sound right, because lots of people have fiat currency on Mt. Gox. Why? Because they cannot get it out.

I also find the Gox prices ridiculous. My explanation is that there are many users who are simply uninformed. They have not read the forums or the Mt. Gox announcements. They are panicking.

I guess we are hitting the bottom around now. I think the price cannot go down to $200 while it is $600 on the other exchanges. There must be some people with some reason who buy at prices below $250.

Moreover, Mt. Gox will issue another announcement tomorrow, which will influence the markets. If it sounds positive, like stating that bitcoin transfers will be switched on later this week, then the price on Mt. Gox will rise. The price on the other exchanges should fall somewhat, but perhaps these considerations are already partly reflected in today's price, which has gone down a bit over the last few days.

The people I know with balances in MtGox are in BTC, because they thought they were buying low when it dropped and consider BTC withdrawal the only viable option -- their international wires were taking over a month prior to this fiasco.  As much as they wish they held out and bought at $250, they can't, just as the vast majority of us can't just inject fiat into our MtGox accounts and buy at this price either.  If you bought BTC at $500 in MtGox, and you are informed of the news, events and issues, you are likely holding.  

But, in the scenario I described, you would have to have a % of BTC holders wanting to sell... which fits your description of uninformed people panicking.  So, in that regard, we're on the same page.  The only difference is that if BTC balances are 20x fiat balances in Bitstamp price terms, then liquidity on the buy side is just critically low.  With no way to infuse fiat from the outside, you can't raise it short of selling your BTC at a price that 90% of BTC holders probably realize is ridiculously low.  

If I could get fiat into MtGox today, I'd do it in a heartbeat and buy as much BTC at $250 as I could.  Unfortunately, I can't.  

[darkmule]

I also find the Gox prices ridiculous. My explanation is that there are many users who are simply uninformed. They have not read the forums or the Mt. Gox announcements. They are panicking.

I guess we are hitting the bottom around now. I think the price cannot go down to $200 while it is $600 on the other exchanges. There must be some people with some reason who buy at prices below $250.

If it never opens again, that price is meaningless.  Similarly, when you can't actually get it out, it's not even Bitcoins you're buying, but a nominal Gox balance.  If they ever again start reliably processing withdrawals, the price will soon come into line with the other exchanges, but that's seeming pretty iffy right now.

I think a number of people are gambling that Gox will, in fact, come back up again at some point, and are purchasing people's Gox balances at a deep discount.  I've seen such offers floating around on BCT and elsewhere.

This is assuming there isn't more direct and deliberate price manipulation by insiders or others.

[turvarya]

My perspective as a MTGox-User.
I got a lot of money(USD) in MTGox, since I made some BTC and started trading with them on MtGox. I have withdrawn some BTC, nearly a year ago, which worked fine. I started my first EUR-withdraw about 4 weeks ago. MtGox claims that it takes 6 weeks for such a withdraw, so I have not seen that money, yet. So, that's my experience so far, with withdraws.

When MTGox stopped the withdraw of BTC and BTC-price went down, 2 options seemed really possible, regardless of what is really behind that decision of MtGox:
Either it is going down forever or it will recover.
There is no fast way for me to get my money out and if MtGox is going down I don't think, I would get my EUR after six weeks. So, the only option, that seemed plausible, was to buy BTC on at a low price and hope for the best.
So, today I put my last order into MtGox to buy me BTC with all the USD in there and am going to watch what happens.
I am pretty sure a lot of people think the same way.

[hgmichna]

My perspective as a MTGox-User.
[…]
So, today I put my last order into MtGox to buy me BTC with all the USD in there and am going to watch what happens.
I am pretty sure a lot of people think the same way.

I think that is the most reasonable thing to do. I am doing something similar.

But more people think just the opposite. If the majority thought like you, the bitcoin price would go up, not down.

[btbrae]

There is no fast way for me to get my money out and if MtGox is going down I don't think, I would get my EUR after six weeks. So, the only option, that seemed plausible, was to buy BTC on at a low price and hope for the best.

Seems like a sensible decision, I'm in your boat and decided the same.

[Syke]

My perspective as a MTGox-User.
[…]
So, today I put my last order into MtGox to buy me BTC with all the USD in there and am going to watch what happens.
I am pretty sure a lot of people think the same way.

I think that is the most reasonable thing to do. I am doing something similar.

But more people think just the opposite. If the majority thought like you, the bitcoin price would go up, not down.

Buying bitcoins on Gox is risky, but could be quite profitable.

So who are these crazy people that are selling bitcoins on Gox?!

[DeathAndTaxes]

So who are these crazy people that are selling bitcoins on Gox?!

People who believe MtGox gave most of their bitcoins to the attackers and are now insolvent.  If that is true (and I am not saying it is) then they may believe holding dollar "debt" in an insolvent Japanese company is better than holding bitcoins as AFAIK there have been court cases in Japan regarding the standing of bitcoins in a situation like this.  If you believe MtGox is insolvent, being owed USD "may" be safer than being owed BTC.  If enough people believe that sell BTC to hold dollars then you would see the price distort as it has.

Simple Version:
The exchange rate on MtGox may no longer represent the value of a bitcoin, but instead reflect the relative value of a MTGox IOU for USD vs a MtGox IOUT for BTC.

[taltamir]

If Bitcoin is not at fault, why are the Bitcoin developers working hard to fix the issue now... Yeah...  

Because the value of their assets dropped 50% and will continue to drop unless the problem is fixed.
And they worry that mtgox is too incompetent to fix it themselves

The price has already stabilized, so far as I can tell.

Enough people have heard and believe that a fix is imminent to help stabilize the price.
If too long passes without said fix materializing then more and more people will believe it to be a scam and bail out

[pleiotropik]

Karpeles will come up with another story... and refuse to show any proof for it.

"Those weren't bouncy balls we were sitting on: We are hatching blue messenger Pterodactyls and as soon as they spread their wings we'll send you your assets."

Afterwards we'll sit here and ponder endlessly on how probable or logical or doable the explanation is... Meanwhile, inside the black box of Mt.Gox, free frappuccino's for all.

After the pterodactyls fail to materialize, K. will say that the stress of withstanding so much negativity slowed down his staff's ability to distinguish 00.00 from O.0 and that he'll think of inviting the frozen dissenter outside his offices inside to show him how awesome his minecraft palace looks in his computer.
K. is buying time, nothing else. What he does with that time is for him to know and for us to find out.

[darkmule]

After the pterodactyls fail to materialize, K. will say that the stress of withstanding so much negativity slowed down his staff's ability to distinguish 00.00 from O.0 and that he'll think of inviting the frozen dissenter outside his offices inside to show him how awesome his minecraft palace looks in his computer.
K. is buying time, nothing else. What he does with that time is for him to know and for us to find out.

Perhaps they have some Magic: the Gathering cards left over from their previous business to pay off their debts.