Posted on 02/28/2014 9:21:04 AM PST by xzins
The Mt. Gox bitcoin exchange in Tokyo filed for bankruptcy protection Friday and its chief executive said 850,000 bitcoins, worth several hundred million dollars, are unaccounted for.
The exchange's CEO Mark Karpeles appeared before Japanese TV news cameras, bowing deeply. He said a weakness in the exchange's systems was behind a massive loss of the virtual currency involving 750,000 bitcoins from users and 100,000 of the company's own bitcoins. That would amount to about $425 million at recent prices.
The online exchange's unplugging earlier this week and accusations it had suffered a catastrophic theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.
It remains unclear if the missing bitcoins were stolen, voided by technological flaws or both.
"I am sorry for the troubles I have caused all the people," Karpeles, a Frenchman, said in Japanese at a Tokyo court.
Karpeles had not made a public appearance since rumors of the exchange's insolvency surfaced last month. He said in a web post Wednesday that he was working to resolve Mt. Gox's problems.
The loss is a giant setback to the currency's image because its boosters have promoted bitcoin's cryptography as protecting it from counterfeiting and theft.
(Excerpt) Read more at news.investors.com ...
This is, of course, completely different than a bank loaning out ten times the amount of actual cash it has in its vaults...
Unless you know of something new, this is a misrepresentation of an issue known as transaction malleability. Yes, exchange and wallet software developers need to be aware of it, but it does not allow the same coin to be transferred more than once.
If you know something new, we'd like the details.
Ultimately, no investment is safe against a corrupt government. If they can't control it, they'll just take it.
Anyone seen Jon Corzine around this one?
Or Bernard Madoff?
Yeah, I know the feeling. Sometimes I forget where I lay my pocket change too.
“Quick, dump the bit coins and buy me a ton of tulip bulbs!”
I’m not ready by any means to write off electronic currency, but tangibility has its advantages.
I want you to think long and hard about the statement you just made. Each of the words you used as a precise definition. I want you to pay particular attention to the words "worthy", "investment" and "currencies".
What is a currency?
What makes a currency worthy?
What does it mean to invest?
What kind of person invests in currency?
The answers are that "currency" is simply a medium of exchange. It can be anything that two parties agree to use as the medium.
The characteristics that make a currency "worthy" can only be defined by the user of the currency. Some different aspects that different users may consider are it's usability in a particular country, it's privacy, it's ease of use, it's portability across borders, it's amount of fees, it's security, it's vulnerability to manipulation, who is able to manipulate it, etc, etc, etc....
To "invest" is to take capital and place it in a position to grow. Do you trade capital to acquire Federal Reserve Notes in the hopes that their value will grow?
The person that hopes to get rich by "investing" in Bitcoin is a fool. The person that uses Bitcoin as a tool to conduct transactions because they value it's use as a means of conducting transactions is not a fool. At least no more than someone who finds value in engaging in political discussions on the internet.
I agree that tangibility has an advantage. Currencies are not tangible value unless they contain some kind of metal, and even then, it must have a type and quantity of medal equivalent to the exchange being made.
Everything fluctuates in value, I suppose. But some things do so wildly, and other things have no intrinsic value.
From the article...
In MtGox’s case, it appears that what happened is that the site was expecting transactions to show up in the public ledger under the specific transaction ID it had recorded. When those transactions didn’t show up – because the thief had edited the ID – the thief could then complain that the transaction had failed, and the system would automatically retry, initiating a second transaction and sending out more bitcoins.Transaction malleability is a flaw in bitcoin itself, and it’s not MtGox’s fault that transactions can be renamed in this way. But it’s also a flaw which has been known about since 2011, and one which can be rendered harmless with software which accurately reports balances and transactions.
Bitcoin is just another example of how the world separates the weak from whatever wealth they somehow acquire. If it hadn’t been Bitcoin, it would have soon been something else.
It is probably deemed sexist today but one piece of valuable, common-sense advice that remember from my youth:
Never invest in a scheme that you can't explain to your grandmother in a way that she can understand.
And once upon a time, Tulips were the new medium of exchange in Europe. Many invested in the new medium, there was a weird tulip inflation and then, poof. Crash of the Tulips. Many bankruptcies of people and firms that should have known better.
I believe that is what the pitiful investment comment meant. Buying up a new and rather strange medium of exchange was a tulip fad bound to fail.
“This is, of course, completely different than a bank loaning out ten times the amount of actual cash it has in its vaults... “
Well, it IS actually completely different if two (or more) people claim actual ownership of the same dollar (or bitcoin).
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