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This news went up around 2 hours ago and market prices haven't really budged. In bitcoin, these kinds of shocks are almost always instant, and usually happen da

by zanny 13y ago

This news went up around 2 hours ago and market prices haven't really budged. In bitcoin, these kinds of shocks are almost always instant, and usually happen days or weeks in advance with insider knowledge trading. Everyone with a brain knew Gox was dying a month ago. In relation to the panic you quote, this isn't a panic over the price falling - it is equivalent to one stock exchange back then stealing your money and going insolvent. Functionally, it is a private company failing, with the collateral that anyone stupid enough to have given them money is pretty much sure to lose it. But that just means that the business failed, and it doesn't reflect much on the overall bitcoin economy at all. Hell, I was into bitcoin 2 years ago and knew right away MtGox was an incompetent lot that were bound to crash and burn. I also always kept my coins in local wallets and only had USD on an exchange long enough to wire it out or buy BTC that I could then move to my own wallets.

encoderer 13y ago
I applaud you on your foresight and you should pat yourself on the back extra good tonight. But clearly others trusted MtGox. I haven't traded a bitcoin since 2011 so I don't know much about the community past what I'd absorb about anything that's on HN daily. But isn't the claim that MtGox lost like 6% of all BTC in existence? If you think this is going to sail by without impacting the larger community, I think the foresight that led you away from MtGox is failing you now. People are now $500+ million dollars poorer than they thought they were. That has ripples. That will erode confidence. And my bet is that it will erode confidence.
- bunderbunder 13y ago
  But isn't the claim that MtGox lost like 6% of all BTC in existence? If so, then that would further imply that MtGox has lost ~3.5% of all BTC that will ever exist.
  - Retric 13y ago
    Perhaps, however I suspect bit-coin is going to be forced to increase the long term cap at some point in the future as they keep being destroyed. Which might not seem like an issue but it adds a lot of instability as nobody knows how many bit-coins are still in circulation. PS: Don't forget holding bit-coins does not get you a vote it's the miners that decide how things evolve.
    - meric 13y ago
      A bitcoin can be divided into many pieces.
      - michaelq 13y ago
        There's no reason to issue more bitcoin. The forces of supply and demand will keep the value stable, regardless of the exact number of bitcoins outstanding. Issuing more bitcoin would only serve to invite fears that it would be issued in shady ways, or that such issuances might become routine and inflation would take place. This would only further undermine the currency's perceived staying power.
        valas 13y ago
        Why do you think "forces of supply and demand will keep the value stable"? Bitcoin is much more susceptible to huge valuation fluctuations than fiat currency, where central bank can step in to shift demand/supply.
        Symmetry 13y ago
        Unfortunately humans are famously loss averse[1] which leads to downwardly sticky nominal prices[2] in practice. In the face of deflation a lot of people just stop buying and selling and hope that prices go back up, or hold out for a nominal offer as big as what they think they "should" get even if the real value is the same. If your bitcoin economy is full of nerds who really understand the subjective value of money than that's fine. But if you were to start having lots of normal people using Bitcoin and denominating prices and contracts in Bbitcoin than deflation would be a huge problem. As long as most of the surrounding economy isn't using Bitcoin it still wouldn't have the positive feedback loops that caused the Great Depression under the gold standard, though. [1]https://en.wikipedia.org/wiki/Loss_aversion https://en.wikipedia.org/wiki/Loss_aversion [2]https://en.wikipedia.org/wiki/Sticky_prices https://en.wikipedia.org/wiki/Sticky_prices
      - varjag 13y ago
        So can gold. It's not the question of dividing it up.
  - ok_craig 13y ago
    The funds were likely stolen, not sent into the void.
    - intelliot 13y ago
      Even if they were sent into the void, bitcoins are highly divisible. Just shift the decimal point over a few places and you've got convenient units once again.
    - bunderbunder 13y ago
      Right, but with the blockchain being public, there's a certain parallel between stolen BTC and stolen art.
anigbrowl 13y ago
market prices haven't really budged Say what? They've fallen 10-15% over the last hour or so (depending on whether you look at Coindesk ot bitCoinTicket) and they're still going down.
mathattack 13y ago
In relation to the panic you quote, this isn't a panic over the price falling - it is equivalent to one stock exchange back then stealing your money and going insolvent. The challenge here is that the Bitcoin system is built on faith. If enough faith disappears, so does the value of Bitcoin. In this manner, it is similar to a bank run.

by zanny 13y ago

encoderer 13y ago

I applaud you on your foresight and you should pat yourself on the back extra good tonight. But clearly others trusted MtGox. I haven't traded a bitcoin since 2011 so I don't know much about the community past what I'd absorb about anything that's on HN daily. But isn't the claim that MtGox lost like 6% of all BTC in existence? If you think this is going to sail by without impacting the larger community, I think the foresight that led you away from MtGox is failing you now. People are now $500+ million dollars poorer than they thought they were. That has ripples. That will erode confidence. And my bet is that it will erode confidence.

bunderbunder 13y ago
But isn't the claim that MtGox lost like 6% of all BTC in existence? If so, then that would further imply that MtGox has lost ~3.5% of all BTC that will ever exist.
- Retric 13y ago
  Perhaps, however I suspect bit-coin is going to be forced to increase the long term cap at some point in the future as they keep being destroyed. Which might not seem like an issue but it adds a lot of instability as nobody knows how many bit-coins are still in circulation. PS: Don't forget holding bit-coins does not get you a vote it's the miners that decide how things evolve.
  - meric 13y ago
    A bitcoin can be divided into many pieces.
    - michaelq 13y ago
      There's no reason to issue more bitcoin. The forces of supply and demand will keep the value stable, regardless of the exact number of bitcoins outstanding. Issuing more bitcoin would only serve to invite fears that it would be issued in shady ways, or that such issuances might become routine and inflation would take place. This would only further undermine the currency's perceived staying power.
      - valas 13y ago
        Why do you think "forces of supply and demand will keep the value stable"? Bitcoin is much more susceptible to huge valuation fluctuations than fiat currency, where central bank can step in to shift demand/supply.
      - Symmetry 13y ago
        Unfortunately humans are famously loss averse[1] which leads to downwardly sticky nominal prices[2] in practice. In the face of deflation a lot of people just stop buying and selling and hope that prices go back up, or hold out for a nominal offer as big as what they think they "should" get even if the real value is the same. If your bitcoin economy is full of nerds who really understand the subjective value of money than that's fine. But if you were to start having lots of normal people using Bitcoin and denominating prices and contracts in Bbitcoin than deflation would be a huge problem. As long as most of the surrounding economy isn't using Bitcoin it still wouldn't have the positive feedback loops that caused the Great Depression under the gold standard, though. [1]https://en.wikipedia.org/wiki/Loss_aversion https://en.wikipedia.org/wiki/Loss_aversion [2]https://en.wikipedia.org/wiki/Sticky_prices https://en.wikipedia.org/wiki/Sticky_prices
    - varjag 13y ago
      So can gold. It's not the question of dividing it up.
- ok_craig 13y ago
  The funds were likely stolen, not sent into the void.
  - intelliot 13y ago
    Even if they were sent into the void, bitcoins are highly divisible. Just shift the decimal point over a few places and you've got convenient units once again.
  - bunderbunder 13y ago
    Right, but with the blockchain being public, there's a certain parallel between stolen BTC and stolen art.

anigbrowl 13y ago

market prices haven't really budged Say what? They've fallen 10-15% over the last hour or so (depending on whether you look at Coindesk ot bitCoinTicket) and they're still going down.

mathattack 13y ago

In relation to the panic you quote, this isn't a panic over the price falling - it is equivalent to one stock exchange back then stealing your money and going insolvent. The challenge here is that the Bitcoin system is built on faith. If enough faith disappears, so does the value of Bitcoin. In this manner, it is similar to a bank run.