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Yes, this is exactly right, but you should clarify: Step 1: create USD_FAKE out of thin air. Step 2: buy BTC at 1200 USD_FAKE on MtGox. Step 3: sell BTC at 1
by drcode 12y ago
Yes, this is exactly right, but you should clarify:
Step 1: create USD_FAKE out of thin air.
Step 2: buy BTC at 1200 USD_FAKE on MtGox.
Step 3: sell BTC at 1100 USD_REAL on Bitstamp.
Step 4: profit!
- panarky 12y agoWhoever sold you BTC in Step 2 isn't going to accept USD_FAKE for their coins. Doesn't this scam fall apart right there? There's something like $600M missing. Were people really leaving that much fiat on account at Gox?
- thefreeman 12y agoI don't follow your argument. The person selling the bit coin in 2 assumes that when the number in their account balance goes up by USD_FAKE that there was really money to back it up. They have no way of knowing that Mt Gox didn't ever have that money. I think that is the point they are trying to make.
- patio11 12y agoMt. Gox didn't let you withdraw real currencies other than JPY, most interestingly the dollar, from approximately last August. This meant that when you were selling BTC for USD, you were actually accepting a USD liability of Gox -- Bitcoiners sometimes called them GoxBux or GoxUSD. It's a number in a database and now, apparently, something which you'll eventually be allowed to assert as a claim in their liquidation, but it is not actually a dollar. The failure to allow withdraws in currencies they supported is why many people were speculating that Mt. Gox was insolvent, for much of the year prior to them admitting insolvency. As it turns out, we were probably right.
- pmorici 12y agoI think that is called quantitative easing.
- baddox 12y agoThe Bitcoin community has had a term for your USD_FAKE concept for a long time: GoxBux.
- brianpgordon 12y agoAlso: Step 1: Spend users' deposited BTC until you can no longer cover withdrawals. Step 2: Freeze Bitcoin withdrawals. Step 3: Wait while the internal Gox BTC price plummets as people try to get their money out. Step 4: Buy up the "bad" BTC at the deflated prices until it's all gone. Nobody will ever know the difference.