3 ms·

>(1) Split a $100 transaction into 10 $10* transactions executed incrementally (send $10 of BTC to Mt. Gox, exchange it, transfer it out, and only then send the

by Tenoke 13y ago

>(1) Split a $100 transaction into 10 $10* transactions executed incrementally (send $10 of BTC to Mt. Gox, exchange it, transfer it out, and only then send the next $10 of BTC over). This keeps exposure at any given time at a manageable level. The downside is it increases exposure to BTC/USD volatility. This is an old anti-scamming solution and is very useful in some settings but this isn't really one of them. The main problem here isn't really losing your money immediately after making the transaction. Just making the transaction in one swoop and immediately withdrawing your money after is much more efficent (in terms of both time spent and fees). Most people weren't screwed because they made one large transaction just before things went wrong - they were screwed because they kept money for long periods of time on gox. And yes, you can argue that some people just couldn't withdraw for months - but if they wanted to use gox and use your scheme it would've taken a year to execute all of those transactions.

michaelt 13y ago
Assume, a deposit-trade-withdraw transaction takes 1 hour, and the chance of an exchange failing in a given hour is 0.01%. If you perform a single $100,000 transaction, there is a 0.01% chance you will lose $100,000. So on average your loss is $10 but in the worst case your loss is $100,000. If you perform 100 transactions of $1,000 (taking 100 hours) there's (roughly) a 1% chance you'll lose $1,000 so your average loss is still $10 but in the worst case your loss is only $1,000. I agree that performing 100 transactions over 4+ days sounds like a right hassle, and prices might change by the time your trade finishes - whether this precaution is worthwhile depends on your taste for risk and whether you're trading $100 or your entire life savings in bitcoins :) Personally if I had a million dollars of bitcoins, the last person I'd trust with it would be a bitcoin exchange :)
- Tenoke 13y ago
  You are forgetting the extra fees. (Also the 'a deposit-trade-withdraw transaction takes 1 hour' assumption is nowhere near accurate, especially for Mtgox.)

by Tenoke 13y ago

michaelt 13y ago

Assume, a deposit-trade-withdraw transaction takes 1 hour, and the chance of an exchange failing in a given hour is 0.01%. If you perform a single $100,000 transaction, there is a 0.01% chance you will lose $100,000. So on average your loss is $10 but in the worst case your loss is $100,000. If you perform 100 transactions of $1,000 (taking 100 hours) there's (roughly) a 1% chance you'll lose $1,000 so your average loss is still $10 but in the worst case your loss is only $1,000. I agree that performing 100 transactions over 4+ days sounds like a right hassle, and prices might change by the time your trade finishes - whether this precaution is worthwhile depends on your taste for risk and whether you're trading $100 or your entire life savings in bitcoins :) Personally if I had a million dollars of bitcoins, the last person I'd trust with it would be a bitcoin exchange :)

Tenoke 13y ago
You are forgetting the extra fees. (Also the 'a deposit-trade-withdraw transaction takes 1 hour' assumption is nowhere near accurate, especially for Mtgox.)