4 ms·

I don't believe so. There will be some downs for sure. The main difference with Bitcoin is that every coin is accountable. You know if you possess it or not.

by mattm 14y ago

I don't believe so. There will be some downs for sure. The main difference with Bitcoin is that every coin is accountable. You know if you possess it or not. Compare that to Tulipmania for instance where one of the reasons for the crash was that people would buy tulips from others that didn't exist. It's the same as a run on the banks. It happens when the bank has lent out too much money - money that it doesn't have. When people try to withdraw their actual money they put in, it leads to the bank going belly up because they actually created money out of thin air. I think this is a big difference with Bitcoin and a reason why it will survive the inevitable ups and downs and stick around for the long term.

zindlerb 14y ago
This is a really interesting point! Do you think if there was a run on the bitcoin exchanges they would be able to pay consumers back?
- mattm 14y ago
  They should be able to unless malicious intent is involved or their servers get overloaded but eventually everyone should be able to get their bitcoins out as long as security is in place. Even if everyone withdrew their Bitcoins from Mt. Gox into private wallets, it shouldn't cause Mt. Gox to go bankrupt as they are not a bank but an exchange and take a commission cut on each transaction. The only way that this would be a problem is if someone sets up an exchange but then gives people "fake" bitcoins to people that leave their bitcoins with the exchange. They would have real bitcoins around of course if people withdraw them but it would turn into a juggling act and eventually fail if too many people withdraw their bitcoins. I don't want to say it's farfetched but it's probably better to store your bitcoins yourself in your own wallets rather than leaving a significant amount in the control of someone else.
  - zindlerb 14y ago
    hmm I agree. But if there was a rush it seems like people wouldn't convert to private wallets they would attempt to exchange their bitcoins for a national currency. Mt.Gox seems to have a 10,000 max withdraw limit over a 30 day period. Something like that would hopefully prevent Mt.Gox from not having enough on hand national currency.

by mattm 14y ago

zindlerb 14y ago

This is a really interesting point! Do you think if there was a run on the bitcoin exchanges they would be able to pay consumers back?

mattm 14y ago
They should be able to unless malicious intent is involved or their servers get overloaded but eventually everyone should be able to get their bitcoins out as long as security is in place. Even if everyone withdrew their Bitcoins from Mt. Gox into private wallets, it shouldn't cause Mt. Gox to go bankrupt as they are not a bank but an exchange and take a commission cut on each transaction. The only way that this would be a problem is if someone sets up an exchange but then gives people "fake" bitcoins to people that leave their bitcoins with the exchange. They would have real bitcoins around of course if people withdraw them but it would turn into a juggling act and eventually fail if too many people withdraw their bitcoins. I don't want to say it's farfetched but it's probably better to store your bitcoins yourself in your own wallets rather than leaving a significant amount in the control of someone else.
- zindlerb 14y ago
  hmm I agree. But if there was a rush it seems like people wouldn't convert to private wallets they would attempt to exchange their bitcoins for a national currency. Mt.Gox seems to have a 10,000 max withdraw limit over a 30 day period. Something like that would hopefully prevent Mt.Gox from not having enough on hand national currency.