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"... to prove how valuable governmental regulation can actually be to the system as a whole." Conversely, if Mt Gox had been regulated more like a major bank,
by crazy1van 13y ago
"... to prove how valuable governmental regulation can actually be to the system as a whole."
Conversely, if Mt Gox had been regulated more like a major bank, right now we'd all be getting out our checkbooks to bail them out. Then, a similar organization like Coinbase would have even less incentive to keep their house in order. In the worst case scenario, they'll just be bailed out too. And then there is the consumer, who will have no incentive to only bank with solvent institutions. Who cares? We've got FDIC. The amount of ignorance and moral hazard created by this style of system adds up pretty quickly.
The current bitcoin system is definitely messy. But when something goes wrong, the damage is largely contained. Mt Gox died. People who had value stored there lost it. But people with bitcoins are Coinbase were fine. And the average tax payer didn't have to spend a dime.
All in all, I find the whole thing to be a fascinating test case for unregulated finances. I could be totally wrong and bitcoins exchange rate with dollars could drop to zero because of this. However, the biggest "bank" just failed and the system itself seems remarkably stable.
- Phlarp 13y agoJust because the specific regulations imposed by a mostly corrupt government led to failure and a subsequent bailout does not mean all regulations are inherently flawed.
- crazy1van 13y agoOf course not, but governments view this as a finance / banking system and will tend to regulate it the same way. They will fit that square peg through the round hole.
- rayiner 13y agoIts less telling an experiment than you think. The Bitcoin economy isn't that sophisticated. There aren't complex Bitcoin denominated contracts that could cause ripple effects from one bank failing. But those things are useful and will arise in the Bitcoin ecosystem as it grows. And when that happens, a bank failure won't be an isolated thing like it is now.
- danielweber 13y agoThe minimum -- THE BARE MINIMUM -- that any regulator would have demanded of MtGox was an outside auditor coming in occasionally to make sure their books balanced. If you believe the "slow leak" story, even that threshold was not met.
- harryh 13y agoThis wasn't a test case for unregulated finances. It was a test case for immature and unconnected finances.