The bankruptcy hearing will be on 1st of April?
I see lots of April fools day jokes coming.
The embattled MtGox Bitcoin exchange has been thrown a lifeline by a US bankruptcy court in the northern district of Texas – which has shielded the company from litigation. Judge Harlan Hale granted a motion [PDF] to place the company under Chapter 15 bankruptcy, a classification that will help it fend off, for the time being, …
I see lots of April fools day jokes coming.
Lawyers still getting rich.
At least some things stay the same.
I don't have bitcoins, and never intend to, but this whole shebang makes me curious.
The bit I don't understand is this:
If I own some bitcoins, then surely all I need to do is store the bitpatterns somewhere. It might be a laptop, it might be in drop box or printed out and stored in a hole in the ground.
This is supposed to be a liberating financial instrument. Something like gold or whatever, but without the problems of physical existence and hassles moving it around.
Why would anyone want to park bitcoins in an institution like a bank, exchange or Mt Gox? It would be stupid to park, say, gold in a bank where they could slam the doors shut and loot the deposit boxes (or if I was a crim, shut down access). Surely parking bitcoin in an account defeats the whole purpose?
Ideally, yes.. you would keep Bitcoins somewhere safe, as in: not in an exchange.
The problem is, that bitcoins in and of themselves are completely useless and valueless, they have no backing of "the equivalent of...." anywhere in their description. This means that their value is determined by their going rate in exchanges, where they are traded for Stuffz that are actually worth something in Real Life ( be that in legal or "illegal" goods or services.) So like with a bank, you need an account with a positive amount of bitcoins with an exchange to actually convert your bitcoins in anythign other than a string of numbers. Unfortunately an exchange is not like a bank, but more like the wallet you leave on the bar in the pub because "you know the blokes here"... No-one will touch it...right? right!..
Compounding factor is that there's also an insane amount of speculation on the value of BC, which requires you to have serious amounts of "BC value" in accounts in exchanges, since actual transfers of BC need propagation through the chain, and are as such not really suited for cowboy-style shenanigans, *unless* they are in an exchange, which (presumably) evens out the transaction lag , so people can use the usual daytrading tricks using other peoples' money.
But hey...anyone with a sane mind stayed off BC even when mining them was way cheaper than their current perceived value. The tech is nice, but it's still based on a couple of impractical and insane notions, and the whole structure of the BC trade amounts to a rat race, with the usual winners. And a whole lot of losers starting useless litigation after their perceived wealth goes up in smoke.
This means that their value is determined by their going rate in exchanges, where they are traded for Stuffz that are actually worth something in Real Life
Theoretically you can make bitcoin payments without an exchange. The wallet application lets you transfer coins to someone else's address without any exchange involved.
One weak point of Bitcoins, however is the time this transfer requires. Usually you have to wait several minutes, until the transfer is finished.
If the two parties have both an account on an exchange, however, they can just swap the (virtual) money from one account to another. In this case the exchange is supposed to keep the coins in their wallet. Btw. an exchange should always keep all currency, entrusted to them in their custody. Otherwise it would be doing banking business, for which a licence is required.
Newer cryptocurrencies like litecoins, etc. are designed to allow faster transfers of virtual funds, btw.
Ok, so the only real value in an exchange is to overcome the useless transaction time of a wallet to wallet transfer?
If so, surely it would make sense to only keep a few $ worth there (eg. if you're pub crawling on bitcoins then a few quid's worth).
From what you say that is now an issue that litecoin addresses, so there would be no reason to keep litecoin in an exchange. Correct?
In this day and age, where even swiping a credit card takes too long, and NFC payment has emerged, any "currency" that requires multi-second, let alone multi-minute, transactions is doomed for day to day usage.
When bitcoin was, or was at least perceived by many to be, the One True cryptocurrency, it had some value. Now there are lots of them and there seems no reason why Mike down the road can't start Mike'sCoin in his mom's basement. This must surely undermine any "scarcity" value and erode confidence in bitcoin as a medium of transferring value.
The variety of cryptocurrencies now in existence doesn't really matter.
While I could easily start up "Richard12Coin" in my shed, it would have zero value unless a critical mass of people agreed that it had a value and began to accept it as payment.
It's the same as if I printed out notes with my face on.
Currencies work because people accept them as payment.
Bitcoin itself may or may not be doomed, but if it dies it'll be replaced by an alternative crypto currency because it's clear that there is a market for these.
It may be that a small number survive the next couple of decades and become at least as dominant as some smaller countries' "real" currency, or that they rise and fall in quick succession, with speculators losing big each time.
Who knows? I'm not going to put my money behind any of them, but others will.
"In this day and age, where even swiping a credit card takes too long, and NFC payment has emerged, any "currency" that requires multi-second, let alone multi-minute, transactions is doomed for day to day usage." - Depending on your definition of day to day usage, there's an important exception to this: Online shopping makes any delay irrelevant (unless you're buying purely digital goods and expect instant delivery - and even that's a grey area; download times might be comparable anyway).
Yes, pretty much everyone could start a new crypto currency, just as pretty much every country can start its own currency. If it has any value is a completely different issue. (Certain companies seem to think 1£=1US$, but that is another story).
Bitcoins, litecoins, dodgecoins or whatever have no value by themselves other than what the people are willing to give them.
Right now the market is driven by speculation. Yes - you can already buy some real world stuff with bitcoins, but this is mostly a gag driven by marketing, not by any customer demand. I haven't heard of any shop accepting litecoins, dogecoins or any other altcoins.
IMO cryptocurrency has mainly one big advantage. As long as you have access to your wallet, people cannot STOP you from transferring them. This means, even if the US of A decides, they don't like a certain web page and US based payment processors (-> pretty much all of them) stop fund transactions to that page, you can still transfer your cryptocoins.
The US will still know, that you transferred the coins, however. All transactions are registered forever in the blockchain.
"The US will still know, that you transferred the coins, however. All transactions are registered forever in the blockchain."
Surely all they know is that someone transferred the coins, not necessarily who?
Surely all they know is that someone transferred the coins, not necessarily who?
Your wallet has a unique ID, that will never change. As soon as you register in an exchange, they will ask you for a proof of residence and will have your wallet ID.
Depending on the country of residence of the exchange, the local three letter agency will have access your credentials. You think they will somehow not swap this information with each other?
Yes, no proof of residence is 100% sure. Organised crime can certainly find ways to provide a nice, good, false, proof of residence. But the question is - can you?
"In this day and age, where even swiping a credit card takes too long, and NFC payment has emerged, any "currency" that requires multi-second, let alone multi-minute, transactions is doomed for day to day usage."
I would challenge that.
You are forgetting that its only for the past year or so that same day clearing has been happening for consumers. Apart from a simple available funds check there are very few requirements for consumers to be updated on their balance instantly - for the last 20 years banks have been doing 3 day clearing and having their merry way with your funds in the meantime. No doubt in the future many Crypto Currency exchanges will do the same if they can get away with it.
Agree that super fast transactions are not always necessary.
If you are standing in the queue at WH Smiths at a train station then yes you want to pay and get the eff away.
But if you are making a purchase off Amazon even for next day delivery, or downloading a software purchase, does waiting 5 minutes for the confirmatory email, or the purchase to show up in your online account really make that much difference?
And a whole lot of losers starting useless litigation after their perceived wealth goes up in smoke.
I thought that was the point of BTC, lovely pungent thick smelly smoke. Slight whiff of feet, slight whiff of cheese. Mmmmm.
This doesn't really answer his question, and is rather inaccurate. You can use Bitcoin stored on your own computer just fine - you don't need an exchange to spend them in a pub, online shop, or whatever that accepts Bitcoin. The fact that the value is mainly determined by the trading on exchanges doesn't require you to store any on an exchange.
In fact, having money on an exchange in most cases would be useless for spending - you'd usually first have to transfer to a wallet (e.g., on a phone or your computer) to spend it.
Using exchanges with online wallets is the easiest way to obtain Bitcoin (though not the only way), but one can immediately withdraw.
The main reasons for having lots on an exchange are (a) laziness/stupidity, (b) someone who's filthy rich from Bitcoin anyway, so even a small proportion represents a large amount, (c) people who are day trading large amounts.
"Compounding factor is that there's also an insane amount of speculation on the value of BC, which requires you to have serious amounts of "BC value" in accounts in exchanges"
I don't understand this - the amount you want to invest in Bitcoin (whether on an exchange, or not) isn't affected by the price of Bitcoin.
As for "completely useless and valueless, they have no backing of "the equivalent of...."", they have uses; nothing has "inherent" value, other than what people give to it, and Bitcoin isn't backed in the same way that gold isn't backed by anything (and nor are modern currencies backed by anything else, either). Your last paragraph is just an ad hominem rant.
The time isn't for the transaction, rather it's to receive "confirmations".
Pubs I've seen accepting Bitcoin don't care about waiting for confirmations. Yes, theoretically this means someone could fraudulent buy beer with Bitcoins, but then they'd just come over to you a few minutes later.
It's true that Bitcoin is less suitable for a physical shop where you can walk away with the goods straightaway, but that's not really where people are expecting it to be useful. The potential uses are lower transaction fees for online ordering, international money transfers, and transferring money between individuals in countries that don't have as good a banking system as the UK (and not having to rely on Paypal for any of these).
As I say in my other comment, there are other reasons why people might end up having money on exchanges. Whilst eliminating the time for confirmations is an interest use of an exchange/online wallet, this requires the recipient to have an account of the same site, and I'd say is only of minimal use in practice.
"Now there are lots of them and there seems no reason why Mike down the road can't start Mike'sCoin in his mom's basement. This must surely undermine any "scarcity" value and erode confidence in bitcoin as a medium of transferring value."
But there is also value in how many places accept the currency. Even now, there are far more places accepting Bitcoin than your Mike'sCoin, so why would I buy any of Mike'sCoin? No doubt we may see several virtual currencies come into mainstream use, but creating new currencies doesn't automatically reduce the scarcity of existing currencies.
In addition, I expect there's a bit of "I don't Pherd van Tomskrat, so I don't know if I really trust to transfer direct to him, but I know Mt Gox. All my friends are using Mt Gox so I do trust them."
Granted you probably would have been better off trusting Pherd, but that's not the way herds tend to think.
You still haven't quite grasp one of the essentials of spying yet have you?
For all they abuse their own citizens, three letter agencies must at least genuflect to the laws of their country. It's the citizens of other countries where they don't give a rip snort about local laws. So the local three letter agency is more likely getting their data about its citizens from a foreign three letter agency. With a spot of cross verify from a sample collected about their own citizens.
"If people start shouting Ad Hominem, you know you've got them by the balls" to paraphrase an old teacher of mine.
Will the lawyers take Bitcoins for payment? I somehow suspect not.
At least one lawyer here in .nl does. But he is (AFAIK) not involved with the suits against MtGox.
"Sod the government, sod the banks, freedom FTW!"
*MtGOx goes titsup*
"Government! Government! Make MtGOx repay us in bank money for our lost pretend money!"
And they wonder why no-one takes them seriously.
Hey, at least Bitcoin logic is a lot less fuzzy headed than their plans to fund the government by selling litigation insurance or whatever they call it these days.
<hooting laugh>Janet Yellin</hooting laugh>
I did try to warn you chaps.
Can't we just give them all monopoly money and call it even? Don't think the difference (if any) would be realized.