Major Bitcoin Exchange Ceases Operation

First time accepted submitter Sabbetus writes "On Monday the CEO of prominent Bitcoin exchange Tradehill announced that they are shutting down. Ars Technica ran a story on this stating that 'After Monday's news, the currency's value fell from $5.50 to $4.40, a decline of 20 percent.' Tradehill is returning all funds and meanwhile their competitors are fighting over who gets Tradehill's customers."

Comments

Re:Bizarre and Confusing Summary

[subreality]

Mt. Gox being the only other exchange

MtGox is the only exchange bigger than TradeHill, but there are lots of smaller exchanges: https://en.bitcoin.it/wiki/Category:Exchanges

Quite simply put, no BitCoin exchange -- neither Tradehill nor Mt. Gox -- is going to be able to comply with the Bank Secrecy Act.

First, Bitcoin is pseudonymous, not anonymous. Second, the important part: while it's very difficult to positively identify who sent you some Bitcoins, the exchanges know exactly who receives them, trades them back and forth to fiat currencies, and then sends them back out. They have names and bank account numbers, or they're using fiat payment services that have bank account numbers. Know Your Customer is not a problem for most exchanges.

Major?

[sexconker]

Tradehill was never a major Bitcoin exchange.
MtGox is the only one anyone ever used. Tradehill was started by some guy who got mad that MtGox was raking in the cash. He started throwing out accusations about security holes, the owner (of MtGox) not actually having all of the BitCoins backing his market, etc. Then he threw up Tradehill and it was shit.

All Bitcoin exchanges are shit. They're for speculators. Bitcoin as a currency is fine, and it will be fine if every exchange dies off.

Why money has value

[betterunixthanunix]

Money is not fiction, it is a mechanism that governments and banks can use. Dollars not valuable simply because people believe they are valuable, they are valuable because the US government requires a large group of people to use dollars (i.e. to pay taxes and other debts). People believe dollars are valuable because all the tax-paying and otherwise indebted citizens around them demand dollars as payment, because they need those dollars if they do not want the government to take their property or freedom. As long as people agree to be governed by the US government, currency issued by the government will have value.

Nobody is required to use Bitcoin, which is why it is so volatile (its value is based entirely on speculation) and will ultimately fail (as people demand dollars and other currencies more than they demand Bitcoin).