What to do when MTGOX gets shut down ? Are we ready for coincalypse ?

[ShadowOfHarbringer]

I share your sentiment, Shadow, but I don’t believe anything can be done about it since it is less profitable and more difficult in the immediate future to use less liquid and fractured exchanges.

Yeah, i guess you are right, nothing can really be done.
Waiting untill shit hits the fan in progress...

[ribuck]

It might even be better for MtGox to stay big. Presumably they will then be paying a lot of tax to the Japanese govt, who might resist demands from others to shut them down.

[SgtSpike]

Free markets are reactive, not proactive.

Is that a rule that is always fixed in space-time continuum, or perhaps people could actually change that if they started working together at least a little ?

It is difficult to change human nature. Noone is really going to care until shit hits the fan since it’s not really worth worrying about it when it is so far in the future, and people believe they won’t be affected anyway.

So i guess we will be waiting until "shit hits the fan" instead doing something (even something small ?).

But what is the harm of actually doing something instead of sitting still and waiting until that happens ?

What is the harm in waiting until it happens?

Because we could do something, and we do not. Doing something could decrease the future disaster which will happen after they close MtGox.

Simple:  If MtGox gets shut down, I'll start using a different exchange.  There's several others out there, so what's the problem?

The people who lose their money will become a problem.
They will keep going around the internet and ranting that Bitcoin is unsafe because blah blah blah (which is obviously false, but still).

Eh, yeah, I suppose that's a good point.  Loss of BTC would be no good.

MtGox should have an emergency button.  In the event of a government takeover, all they have to do is execute one command and it sends all BTC of account holders back to said account holders.

I think the best thing to do is just continue to encourage people to not store funds on external servers.  Put the funds in your own wallet, not someone else's, and then the government can't do anything unless they come talking to you.  I use MtGox to sell some of my mined coins, but I always have a sell order created before the funds even hit the account, and withdraw the funds to Dwolla as soon as the trade happens.

Of course, encouraging people to use other exchanges is always good, but in practice, doesn't work well, since the trading margins are so wide on the smaller exchanges.  It's not a sacrifice many are willing to make.

Someone needs to make an exchange with automatic arbitration.  It'll buy and sell on their own exchange, but also on MtGox's, if the prices are better.

[SgtSpike]

It might even be better for MtGox to stay big. Presumably they will then be paying a lot of tax to the Japanese govt, who might resist demands from others to shut them down.

I don't think they make a large amount of money.  Last time I calculated, it was less than a million over the year, based on trading volume and the fees they take.

[FreeMoney]

It might even be better for MtGox to stay big. Presumably they will then be paying a lot of tax to the Japanese govt, who might resist demands from others to shut them down.

I don't think they make a large amount of money.  Last time I calculated, it was less than a million over the year, based on trading volume and the fees they take.

Gox will never pay enough tax for that to matter. Maybe they'll pay off individuals with 'campaign' money. I don't know how that works in Japan. But also, Japan doesn't fight with Us gov after, uh, the incident.

[Littleshop]

The main problem with gox going down is no 'price' for bitcoin.  Yes, we can work without a central price but it will be harder.  I have not needed gox for a while now mostly doing local.  I am glad they are there, but as bitcoin gets more diverse , they are needed less.

[Technomage]

These threads are pointless, it's just useless FUD. Mt. Gox is pretty much the most solid exchange out there and very cooperative with regulation. It's highly unlikely that they would go out just like that, because they are doing nothing illegal. We would know well in advance if Bitcoin was starting to have serious legal trouble. But just to make sure, always take care of your own money. At least most of it, so the losses are acceptable. I hold some coins at Mt. Gox but it's a minority of my Bitcoin savings and I could live with it if something happened.

Even if something happened to Mt. Gox it's not the end of Bitcoin, far from it. It would take a major hit to its reputation but at the end of the day Bitcoin is as strong as its technology and its usefulness. Bitcoins can be bought and sold even without centralized exchanges although it would be inconvenient. But talking about that is irrelevant at the moment, afaik the exchanges are doing perfectly fine, with the exception of US based exchanges. Nothing has changed and speculating on "what could happen" is just FUD.

It doesn't mean that people shouldn't prepare for this "coincalypse", that's actually Bitcoin 101. Keep your private keys safe. Trusting them to 3rd parties, any 3rd parties, is not necessarily a good thing. This is not always true though, for some users Mt. Gox could be the safest place to keep them, especially if you use a yubikey for the login. It's centralized but at least you can't fuck it up yourself. That's why I actually think it's OK to keep some coins at Gox but never put all your eggs in one basket.

[Nefario]

Intersango is pretty bloody solid as far as exchanges go, they've not had any of the security vulnerabilities that Gox or others have (actually the point them out to others). And they're the second largest exchange overall after gox.

Disclosure, I work with Intersango.

[Spekulatius]

The main reason for people using MtGox right now is IMO, the superior volume.
By the time MtGox gets shut down (give it 2-3 years from now) Bitcoins marketcap will have grown. In conclusion liquidity on other exchanges will have improved as well, even with same market shares like now. Once reasonable large trades can be conducted on other exchanges as well, MtGox will loose its superior position. That way the closure of Gox wont have the same stark effect, it would have right now.

[Deafboy]

What about sharing volume between exchanges? Like one big decentralized exchange supported by many small account providers taking care of fiat bank accounts, transfers and communication with custommers. If one account provider is closed it would be sad and some people will lose money, but not a big deal. Show could go on.

[FreeMoney]

The main problem with gox going down is no 'price' for bitcoin.  Yes, we can work without a central price but it will be harder.  I have not needed gox for a while now mostly doing local.  I am glad they are there, but as bitcoin gets more diverse , they are needed less.

A price will emerge, if it doesn't it's free money all over the place.

[R-]

These threads are pointless, it's just useless FUD. Mt. Gox is pretty much the most solid exchange out there and very cooperative with regulation. It's highly unlikely that they would go out just like that, because they are doing nothing illegal. We would know well in advance if Bitcoin was starting to have serious legal trouble. But just to make sure, always take care of your own money. At least most of it, so the losses are acceptable. I hold some coins at Mt. Gox but it's a minority of my Bitcoin savings and I could live with it if something happened.

Even if something happened to Mt. Gox it's not the end of Bitcoin, far from it. It would take a major hit to its reputation but at the end of the day Bitcoin is as strong as its technology and its usefulness. Bitcoins can be bought and sold even without centralized exchanges although it would be inconvenient. But talking about that is irrelevant at the moment, afaik the exchanges are doing perfectly fine, with the exception of US based exchanges. Nothing has changed and speculating on "what could happen" is just FUD.

It doesn't mean that people shouldn't prepare for this "coincalypse", that's actually Bitcoin 101. Keep your private keys safe. Trusting them to 3rd parties, any 3rd parties, is not necessarily a good thing. This is not always true though, for some users Mt. Gox could be the safest place to keep them, especially if you use a yubikey for the login. It's centralized but at least you can't fuck it up yourself. That's why I actually think it's OK to keep some coins at Gox but never put all your eggs in one basket.

Keep preaching to the crowd baby. I absolutely agree with you.

[ShadowOfHarbringer]

These threads are pointless, it's just useless FUD. Mt. Gox is pretty much the most solid exchange out there and very cooperative with regulation. It's highly unlikely that they would go out just like that, because they are doing nothing illegal. We would know well in advance if Bitcoin was starting to have serious legal trouble. But just to make sure, always take care of your own money. At least most of it, so the losses are acceptable. I hold some coins at Mt. Gox but it's a minority of my Bitcoin savings and I could live with it if something happened.

Even if something happened to Mt. Gox it's not the end of Bitcoin, far from it. It would take a major hit to its reputation but at the end of the day Bitcoin is as strong as its technology and its usefulness. Bitcoins can be bought and sold even without centralized exchanges although it would be inconvenient. But talking about that is irrelevant at the moment, afaik the exchanges are doing perfectly fine, with the exception of US based exchanges. Nothing has changed and speculating on "what could happen" is just FUD.

It doesn't mean that people shouldn't prepare for this "coincalypse", that's actually Bitcoin 101. Keep your private keys safe. Trusting them to 3rd parties, any 3rd parties, is not necessarily a good thing. This is not always true though, for some users Mt. Gox could be the safest place to keep them, especially if you use a yubikey for the login. It's centralized but at least you can't fuck it up yourself. That's why I actually think it's OK to keep some coins at Gox but never put all your eggs in one basket.

Stop crying man, nobody is saying that end of MtGox is end of Bitcoin.
I am only saying it would be better if we encouraged people to use other exchanges more, so we can decrease the losses once Govt takes Gox over, that is all.

Centralization is certainly a problem, but Bitcoin will prevail. Still, it is better to be more prepared for it, rather than sit and wait for the disaster while happily keeping all money at MtGox (which is kind of stupid and irresponsible).

We cannot stop governments killing MtGox, but we can diminish the effect it will/would have on our economy. Every action we take counts. Hence my signature.

[Technomage]

I do agree with you, my only problem with this is that the kind of topic you chose and the way you presented this "issue" happens to cause FUD (Fear, Uncertainty, Doubt). And I believe it's not warranted. Everyone knows the exchanges are our weakest link but the issue is very problematic. High volume attracts speculators and like it or not, most Bitcoin exchange is speculative.

Still I think your point is valid. We should work on growing the volume on a second exchange that could truly challenge Mt. Gox. So far none have been able to get anywhere close to Mt. Gox. The problem is that there is no other exchange that has been able to challenge Gox. We have solid exchanges such as Intersango but even they have small volume compared to Mt. Gox. Personally I support using Intersango and CryptoXchange and all the others but it's hard to get a lot of people there.

I fear that something bad would have to happen to Mt. Gox for people to start preferring a more decentralized approach. After the infamous hack it just happens that Mt. Gox has been doing very well so we can't blame them for the centralization. It's voluntary after all, network effects etc.

The problem is that many like the smaller exchanges but at the same time they are waiting for them to grow in volume so that they are more useful. It's one of those chicken & egg problems that seem to plague the entire Bitcoin economy. That's to be expected though, it's a long road.

[foggyb]

Taking megaupload takedown into consideration this scenario is IMHO not only probable, but inevitable.

This is flawed comparison. I think we can assume that 90+% of Megaupload's traffic was illegal/cracked apps/games/movies/music. If 70-90% of all bitcoin transactions involved illegal drugs/weapons, then you might have an argument.

Bitcoin {IS NOT} a Megaupload.

[ShadowOfHarbringer]

Taking megaupload takedown into consideration this scenario is IMHO not only probable, but inevitable.

This is flawed comparison. I think we can assume that 90+% of Megaupload's traffic was illegal/cracked apps/games/movies/music. If 70-90% of all bitcoin transactions involved illegal drugs/weapons, then you might have an argument.

Bitcoin {IS NOT} a Megaupload.

Of course it is not. And we are not even talking about Bitcoin, but MtGox, specifically.
But how does that matter to the US government ?

They don't care what is and what isn't. They just call you a terrorist, send you to guantanamo and that is all.

[Maged]

This thread is pointless. A year ago, this may have been an issue. Hell, it was an issue. With everything we have now, however, I feel that if MtGox were shut down at this very moment, the Bitcoin world would move slowly for a few weeks because the existing exchanges would be overwhelmed. But that's all that would happen. After a few weeks, the other exchanges will have fully picked up the slack left behind by MtGox. Any exchange that couldn't keep up would be replaced by the several more that will open. As long we are able to support the other exchanges (that we have now) enough to keep them open, this is a non-issue. All we need is the infrastructure to hold us over for three to four weeks, and I believe we have that.

[foggyb]

Taking megaupload takedown into consideration this scenario is IMHO not only probable, but inevitable.

This is flawed comparison. I think we can assume that 90+% of Megaupload's traffic was illegal/cracked apps/games/movies/music. If 70-90% of all bitcoin transactions involved illegal drugs/weapons, then you might have an argument.

Bitcoin {IS NOT} a Megaupload.

Of course it is not. And we are not even talking about Bitcoin, but MtGox, specifically.
But how does that matter to the US government ?

Right. MTGox {IS NOT} a Megaupload. THat's what I mean to say.

How it matters? No one is breaking any laws by transacting bitcoins using MTGox. Contrast that to uploading copyrighted material to a public server, which is by itself a direct criminal act in many countries.

[drakahn]

It is quite obvious that in (maximum) few years some of world's Governments are going to start perceiving Bitcoin as a threat.

is it really that obvious?

[shtylman]

Of course, encouraging people to use other exchanges is always good, but in practice, doesn't work well, since the trading margins are so wide on the smaller exchanges.  It's not a sacrifice many are willing to make.

Someone needs to make an exchange with automatic arbitration.  It'll buy and sell on their own exchange, but also on MtGox's, if the prices are better.

At BitFloor the way we solved this problem was to allow deposit and withdraw to MtGox codes through the trading API. This allowed traders to write bots that kept the two spreads between the exchanges closer leading to better prices for our users.

While it may bring better arbitration, I have qualms about an exchange running automated traders on their own platform. I do not engage in day trading or other market making activities on BitFloor (other than buy and sell what I need to use) because I believe it would be unfair to my users. I have insights about how the exchange is setup which they do not. I prefer to maintain and run a stable trading platform and provide the APIs needed for solid trading and market making.

Better prices is not the only thing that keeps users coming back. I regularly field support emails and calls helping users buy their first Bitcoins as well as constantly add features to make the entire process better. I think MtGox is good at being able to handle the volume of trading they do and the fraud they must deal with, however I also think they are not perfect and are doing some things wrong. This is why others exchanges exist. If you want to hedge against a MtGox collapse I would suggest you give some of them a try. Maybe you won't get the best price today, but who knows, maybe you will and it will surprise you.

cheers,
~Roman