Mt. Gox has filed for bankruptcy protection

[btc237ftw]

Restructure means the CEO/management and/or employees etc will probably be replaced.

Don't forget, that us, the Gox customers who have fiat/bitcoins on record (right now as debt) will gladly login to our new accounts where we can see our debts and resume trading.
When we resume trading, they will gain commissions.
If they allow BTC withdrawals, limited at first, but allow it - then people will report successful btc withdrawals, others will report successful fiat withdrawal, there will be more transparency in the way the company works and at first, the prices will be lower than the other exchanges. But with time, people will realize it is working in terms of withdraw and trade.. therefore people will want to put more fiat in this "new" exchange to gain some arbitrage opportunity and/or buy cheap for the long run. Therefore new money will find itself landing on the new exchange.

[cbutters]

I think a HUGE clarification is needed on whether these coins were LOST as in STOLEN, or LOST as in DESTROYED.



Here is the difference:

If they were stolen, market thought 850K were on gox (which they weren't), but the other 850K have been in the ecosystem the whole time.

If they were obliterated,  market thought 850K were on  gox (Which they werent) and 850K wasn't in the market the whole time which makes bitcoin more rare.


Yes I know that either way it is bullish, since now 850K bitcoins won't be released and come out flooding the other exchanges, but it makes a big difference in both terms of scarcity of bitcoin, but also.... how does it feel to know that roughly 1/12 of bitcoins are in a criminal's pocket?

I hope for the sake of all of us that these bitcoin were accidentally destroyed. I'm sure its probably a mix of stolen and destroyed though...

Either way we NEED clarification on this point. Anybody have any idea? did Karpeles specify?

[SpeculateThis]

I think a HUGE clarification is needed on whether these coins were LOST as in STOLEN, or LOST as in DESTROYED.



Here is the difference:

If they were stolen, market thought 850K were on gox (which they weren't), but the other 850K have been in the ecosystem the whole time.

If they were obliterated,  market thought 850K were on  gox (Which they werent) and 850K wasn't in the market the whole time which makes bitcoin more rare.


Yes I know that either way it is bullish, since now 850K bitcoins won't be released and come out flooding the other exchanges, but it makes a big difference in both terms of scarcity of bitcoin, but also.... how does it feel to know that roughly 1/12 of bitcoins are in a criminal's pocket?

I hope for the sake of all of us that these bitcoin were accidentally destroyed. I'm sure its probably a mix of stolen and destroyed though...

Either way we NEED clarification on this point. Anybody have any idea? did Karpeles specify?

And..... you expect them to just openly state that they stole the coins? 

[cbutters]

And..... you expect them to just openly state that they stole the coins? 

Do you think that just stating the coins were "LOST" is sufficient? In bitcoin world, things don't get lost, the private keys are either stolen or private keys are "Lost".

Either the coins are lost forever and we should be able to be given a list of BTC addresses that the funds should NEVER be moved from since the private keys are not in existence any more, or they worked their way into a mixer and are gone. Bitcoin is the ultimate paper trail, these answers should not be that hard to find out unless gox completely wiped their database.

Which is it? any company filing for bankruptcy has an obligation to provide details on how the coins went missing. whether stolen or "burned"

My guess is the majority went missing due to karpeles accidentally dropping a table on a database of private keys.
 

[Ibian]

Fraudsters have no benefit from releasing clear info. It's not a matter of what's possible.

[dynodog]

Bitcoin might not be dead, but until they figure out a permanent solution to prevent exchanges from dropping like flies, I'd say Bitcoin is in a deep coma.

Self-regulatory organization (SRO), the board of which would be elected by exchanges and perhaps the bitcoin foundation, which would be voluntary for exchanges to join, which would provide supervision and guidance.  Exchanges that didn't join the SRO could still exist, but the public would have the option of purchasing bitcoin from one that had that extra layer of supervision.

[Rawted]

Please don't forget that this was not Karpeles alone.

There are tons of Bitcoin's elite that manipulated the market, lied, and vouched for an obviously inept organization.

[anu]

Miners invested in equipment. That's more than electricity. Some get electricity for free or flat. So they'll keep mining.

But you are right - should the price drop extremely low, we may never make it to the next adjustment of difficulty. But frankly I can't see why the price would drop to sub $1 levels. As plausible as gold dropping to sub $1 levels / ounce.

The algorithm for Bitcoin Difficulty change is not one way.  If miners stop mining and the number of blocks solved per hours drops below parameters, the difficulty will adjust downward to keep the number of blocks solved per hour within parameters.

Thats not the point - the thing is that difficulty does not get adjusted after 14 days. It gets adjusted after 2016 blocks. Should the hashrate drop significantly, the time to the next downward adjustment will also be very long. During that time, TX processing can be so slow that it affects Bitcoin price. That may make the remaining miners give up mining. TX processing would come to a halt and Bitcoin would die.

This scenario  isn't realistic, though - at least those miners who don't pay for power will keep mining. As will those miners who simply want Bitcoin to survive.

[Zule]

Miners invested in equipment. That's more than electricity. Some get electricity for free or flat. So they'll keep mining.

But you are right - should the price drop extremely low, we may never make it to the next adjustment of difficulty. But frankly I can't see why the price would drop to sub $1 levels. As plausible as gold dropping to sub $1 levels / ounce.

The algorithm for Bitcoin Difficulty change is not one way.  If miners stop mining and the number of blocks solved per hours drops below parameters, the difficulty will adjust downward to keep the number of blocks solved per hour within parameters.

Thats not the point - the thing is that difficulty does not get adjusted after 14 days. It gets adjusted after 2016 blocks. Should the hashrate drop significantly, the time to the next downward adjustment will also be very long. During that time, TX processing can be so slow that it affects Bitcoin price. That may make the remaining miners give up mining. TX processing would come to a halt and Bitcoin would die.

This scenario  isn't realistic, though - at least those miners who don't pay for power will keep mining. As will those miners who simply want Bitcoin to survive.

And everyone will know that as soon as the the 2016 block is done everything will be back to normal...

[BitcoinAshley]

Ah, a few pages back I see some people who only have half of the price equation (very important to have the whole equation when we are discussing the infamous topic of "What bitcoin prices will do if it is made illegal [in an unspecified number of countries] partially due to Gox's stunt")

The basic economic misconception is that price = demand.
Using that equation, demand will go down since "Joe Schmoe" listens to his government and doesn't want to go to jail.

Reality? Price = supply vs. demand.

Will making bitcoin illegal affect demand but not affect supply? Absolutely not, this is preposterous.
Supply will also go down. (Yes, technically speaking supply is fixed, but bear with me here.) Some exchanges would have to shut down, either having been made illegal, or having no legal funding/withdrawal methods. This would technically reduce supply (yes I know miners are the supply, but exchanges serve an important role as middleman. In the same way that poppy fields still exist, but drug stores do not stock heroin, therefore, price goes up due to reduced ACTUAL supply to consumer.) Institutional miners/mining farms would have to shut down as their operations would be illegal. Only "criminal" anonymous miners and "criminal" OTC dealers would be significant suppliers of bitcoins, and liquidity would be an issue. Sure, roughly the same amount of bitcoins could be created, but it would be harder to get it to the consumer. You could grow huge fields of marijuana... and then get arrested.

And since we love drug analogies so much, what is another way that supply would be reduced? Well, what does the government do when they seize thousands of kilos of cocaine and marijuana? They burn it, destroy it. Sure, occasionally they smuggle it in and sell it themselves, but for the most part it is destroyed. What will they do whenever they uncover some teenager's basement mining farm? Will they sell the bitcoins on the ILLEGAL open market? No, just like with drugs, they will send the coins to a trash address using proof of destruction (yes, proof of destruction is possible in the protocol.) There is no reason to believe they will treat it any differently. While it is still legal, yes they can auction off DPR's coins. But what about if DPR's coins were not coins but a stash of home-made bombs or methamphetamine? Would they sell those on the open market? No, they are illegal, so they would be destroyed. Yet another way supply would be reduced is by the government confiscating coins and destroying them.

Supply would be reduced to - "criminals" and "criminal" miners.
Demand might be reduced, yes, but by how much is not so apparent. People currently risk jail time in Argentina to buy a currency that inflates less than the Argentinian Peso. And the dollar black rate there is more then the legal rate... Already people risk jail time to sell drugs (made illegal, supply dried up, prices skyrocketed, and demand DID NOT dry up) and they risk lawsuits to download music and films on bittorrent (made illegal, supply is a little harder to get at, bandwidth skyrocketed, demand skyrocketed).

So when pondering the infamous "What will bitcoin price do if it is made illegal?," be sure that you are considering the price equation as "price = supply vs. demand" rather than just "price = demand." For if you only consider the effects of litigation on demand, and not the effects of litigation on supply, you will surely get Goxxed by your government when the time comes 

[flower1024]

And everyone will know that as soon as the the 2016 block is done everything will be back to normal...

depends. the difficulty will only be lowered to a max amount (i think 30%, but not sure). there are alts which suffered from that.

but i dont believe more than 30% of miners are quitting (are there even any quitting yet?) and i am sure we could make a fork to circumvent the problem

[V2Rocket]

Ah, a few pages back I see some people who only have half of the price equation (very important to have the whole equation when we are discussing the infamous topic of "What bitcoin prices will do if it is made illegal [in an unspecified number of countries.]")

The basic economic misconception is that price = demand.
Using that equation, demand will go down since "Joe Schmoe" listens to his government and doesn't want to go to jail.

Reality? Price = supply vs. demand.

Will making bitcoin illegal affect demand but not affect supply? Absolutely not, this is preposterous.
Supply will also go down. Some exchanges would have to shut down, either due to being made completely illegal, or having no legal funding/withdrawal methods. This would reduce supply. Institutional miners/mining farms would have to shut down as their operations would be illegal. Only "criminal" anonymous miners and "criminal" OTC dealers would be significant suppliers of bitcoins, and liquidity would be an issue.

Supply would be reduced to - "criminals" and "criminal" miners.
Demand might be reduced, yes, but by how much is not so apparent. People currently risk jail time in Argentina to buy a currency that inflates less than the Argentinian Peso. And the dollar black rate there is more then the legal rate... Already people risk jail time to sell drugs (made illegal, supply dried up, prices skyrocketed, and demand DID NOT dry up) and they risk lawsuits to download music and films on bittorrent (made illegal, supply is a little harder to get at, bandwidth skyrocketed, demand skyrocketed).

So when pondering the infamous "What will bitcoin price do if it is made illegal?," be sure that you are considering the price equation as "price = supply vs. demand" rather than just "price = demand." For if you only consider the effects of litigation on demand, and not the effects of litigation on supply, you will surely get Goxxed by your government when the time comes  

The supply = (all the bitcoins mined to date - bitcoins "lost" due to lost private keys etc.).

The local bubbles of scarcity are balanced by local surplus bubbles (a guy trying to sell bitcoins without interested buyers).

*As far as black market value of currency, it is driven by white market value of that currency.  If there was no way to spend the dollar, its black market value would be close to zero.

[murraypaul]

Don't forget, that us, the Gox customers who have fiat/bitcoins on record (right now as debt) will gladly login to our new accounts where we can see our debts and resume trading.
When we resume trading, they will gain commissions.
If they allow BTC withdrawals, limited at first, but allow it - then people will report successful btc withdrawals, others will report successful fiat withdrawal, there will be more transparency in the way the company works and at first, the prices will be lower than the other exchanges. But with time, people will realize it is working in terms of withdraw and trade.. therefore people will want to put more fiat in this "new" exchange to gain some arbitrage opportunity and/or buy cheap for the long run. Therefore new money will find itself landing on the new exchange.

They don't have enough money to allow withdrawals.
If they reopened, there would be a massive flood of withdrawal requests as everyone tried to be the lucky one who actually got paid, and then there would be no money left at all.
Only an idiot would send more money to an exchange which has openly admitted that they don't actually have any money.
What is the good of buying cheap BTC if they don't actually have any BTC to sell you?

[Bitcoin_is_here_to_stay]

There are a ton of investors waiting on the sidelines and all they want is some closure to this ongoing drama and for the bottom to be found and the worst priced in before they buy. So any end to the mtgox ordeal is bullish. There may be a short term downwards movement due to panic but ultimately upwards.

Who are these 'ton of investors'? Joe Sixpack turned on the news and thinks Bitcoin is dead. Any financial institution worth a damn won't touch Bitcoin with a 10 foot pole long after the dust has settled. Any present or future business that accepts Bitcoin is a net seller of Bitcoins, so count those out. Emerging markets are already painting it as an elaborate ponzi and in some cases banning it. There is still a ton of stolen coins waiting to be dumped.

The taint of this news will not be washed by some Reddit headline of a donut shop down the street accepting BTC. As far as the mainstream perception goes, Bitcoin has a crapton of PR to do until it can shakeoff this colossal fuckup - the fact that some stupid CEO is actually responsible for it has little meaning outside of the in-the-know folks who are already a part of the Bitcoin community.

I ask you again, who are these 'ton of investors' you speak of?

- Every bear and bull who has sold and is waiting to rebuy.
- The ridiculously overextended short interest on bitfinex.
- Second Market
- Anyone who has become aware of bitcoin in the past 3 months but has been waiting for the boom, bust, and reversal to complete before buying in.
- My followers, who I have had on call about this. They are waiting with large sums of fiat.
- The insane buyers on Bitstamp who drove it up from 400 to 600 and put tons of fiat on the order book.
- The bitcoin bank in cyprus just opened.
- People who will start buying into the new ATM machines
- Any banker or wealthy person who has become aware and is waiting to take a gamble at this when the time is right.
- [ill let some bulls continue this list her, because im actually waiting to rebuy myself, so i wont put too much eeffort]

Screw what Joe Sixpack and Mainstread Media think. They are the ultimate contrarian indicator. Dont you get it? When public sentiment is low is the BEST time to buy. I want to buy low BEFORE public sentiment is good. Once public sentiment is good, prices will be driven up astronomically, and it will soon be time to SELL, not buy.
 
Eventually regulated exchanges in the United States which function like stock markets will be launched. When that happens, people will forget all about mtgox and those will be seen as bitcoin's kindergarten days, before the price blasts into space.

I have two major issues with Bitcoin being something that anyone would want to invest into at these prices:

1) The price has not gone down nearly enough given the recent light of events. The most well known Bitcoin exchange being now synonymous with one of the biggest financial thefts/losses in history is one step shy of the worst possible news that could happen - which is some flaw in the Bitcoin software itself.

2) Not only has Bitcoin's acceptance/breakthrough efforts have been set back significantly but the risk factor has also increased - who knows what will come of this development and the repercussions that governing agencies and others might impose. Such uncertainty, whether anything becomes of it, is still a factor that should weigh on the price because at a moment's notice some FUD could be created out of thin air relating to this situation and drive prices lower, which would be reasonable given the amount of fear in the air.

TLDR: Bitcoin price is still way too high given the calamity of the situation, the new risks now attached, and no foreseeable development in the near term that could entice investors to not 'miss the train'. Investing at these prices, IMHO, is pretty stupid.

This. I am a (not really wealthy) person waiting to invest fiat  in btc at the "right time", but I do not see the time as right at all now. At least couple months from now and considerably lower prices, to compensate the risks

[Bitcoin_is_here_to_stay]

^The market does not react spontaneously, otherwise stuff like trading and arbitrage would be impossible.  It's adjusting as we speak


It's a temporal world.  Change/time.

Yep and the same thing happened after the China debacle - took about 48 hours until the news really sunk in and people started selling.

Looks like you were right. Price is dropping, albeit very slowly.

[LostDutchman]

I've only been around since 5 December and I already feel like I've been through the wars.  

Get a helmet and body armour; it hasn't even started yet!

My $.02.

[YipYip]

I've only been around since 5 December and I already feel like I've been through the wars.  

...lolz welcome to crypto

This is my 3rd cycle..... if u are going to hang around you better get used to it

[btc237ftw]

Quote from: btc237ftw on February 28, 2014, 02:44:19 PM
Don't forget, that us, the Gox customers who have fiat/bitcoins on record (right now as debt) will gladly login to our new accounts where we can see our debts and resume trading.
When we resume trading, they will gain commissions.
If they allow BTC withdrawals, limited at first, but allow it - then people will report successful btc withdrawals, others will report successful fiat withdrawal, there will be more transparency in the way the company works and at first, the prices will be lower than the other exchanges. But with time, people will realize it is working in terms of withdraw and trade.. therefore people will want to put more fiat in this "new" exchange to gain some arbitrage opportunity and/or buy cheap for the long run. Therefore new money will find itself landing on the new exchange.

They don't have enough money to allow withdrawals.
If they reopened, there would be a massive flood of withdrawal requests as everyone tried to be the lucky one who actually got paid, and then there would be no money left at all.
Only an idiot would send more money to an exchange which has openly admitted that they don't actually have any money.
What is the good of buying cheap BTC if they don't actually have any BTC to sell you?

You should imagine the situation and see exactly how it folds.
Say they limit the withdrawal to 10BTC/DAY with 50 limit per month...
Then those who have 500 BTC will take 10 months to withdraw... what about those with 5,000 BTC? 100 months... in the current rate.
So yes, manye PEOPLE will withdraw, but not many COINS will be withdrawn,

So they dont need that many BTC to allow withdrawals, furthermore, they can limit BTC withdraw to only verified accounts.

Now, at that point where people withdraw successfuly, both fiat and BTC, others will want to put money in there, maybe small amounts, but they will want to put it there because they could easily arbitrage or just buy cheap and withdraw to an outside wallet.

Therefore, this will resume operations.