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MtGox Files For Bankruptcy Protection
Sockatume writes "The beleaguered MtGox bitcoin exchange has officially filed for bankruptcy protection in Tokyo. According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors. They state that they have over $60m in liabilities against just $30m in assets, and confirm the loss of over $500m worth of Bitcoins, split between customers' balances (750,000 BTC) and company assets (100,000 BTC). Owner Mark Karpeles said, 'There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble.'"
And so the libertarian unregulated money dream dies.
According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors.
Bitcoin held an impromptu press conference? Did the Dollar and the Peso attend as well?
Oh, you mean Mt. Gox held an impromptu press conference. Yeah, well, whoever trusted an online card trading portal as if it were a bank deserves whatever they got, IMO.
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
Fail for who, lets face it - people who were in prime position to steal all bitcoins from mtgox were mtgox owners/employees. If you had half a billion dollars in cash sitting in front of you, wouldn't you make off with it? I know i would.
Failed exchanges are supposed to die. This is how a free market is supposed to work. I have been warning against using MtGox since April 2013 and you can all go check my Bitcointalk posts to see that this is true. If you request a withdraw from an exchange and it suddenly takes two weeks instead of a few days before you get your money then it is time to get out. If the delay increases to four weeks then six then months then it's clearly time to not only get out but also warn others about this exchange. A whole lot of extremely stupid people ignored all the red flags and alarmbells and they lost money when this exchange went bankrupt. This is very good. A small percentage of the people who lost money at MtGox will learn from this and be more careful and picky as to where they place their money in the future. If you do not have control of the private keys of a Bitcoin then you don't have the Bitcoin, you have an IOU with someone who may or may not hold Bitcoin for you. The demise of MtGox will sadly make many of the idiots who lost money there cry for more government, more regulation and more fascism. Fascism is not a good solution, more personal responsibility is the solution. As I said, there were dozens of red flags yet people kept using this clowncar exchange. "but but but I can arbitrage because the price is 25% higher there" said a lot of people who ended up loosing their money. Well duh, why do you think that 25% premium was there in the first place, stupid? In short: Fools and their money are usually separated. If you can't bother to do five minutes of basic research of the place where you plan to place thousands or millions of dollars then you get what you deserve. This is, in my opinion, a good thing.
9/11: Never forget it was a false-flag operation
Indeed they do. And some 400000 coins Karpeles publicly moved two years ago to prove ownership, still sit where he put them.
So it seems someone forgot their wallet password. Probably they didn't notice until people rushed to get out and they tried to dip into cold storage.
Making a mistake is one thing. Not realising that something is wrong when over $500000000 slowly disappears from your accounts is the criminal thing. I mean, in practice this must mean that they constantly noticed their hot wallet is empty (when it should not be) and filled it from the cold wallet without investigating anything. Over and over and over again.
Amazing.
Too bad you don't know who 'he' is...
Real Bitcoin users don't keep their bitcoins in an exchange but on their device.
No True Scotsman lost money on Bitcoin.
It tells me they were not following accounting principals and balancing the books at the end of the month. (Which I suspected long ago when I closed my account with them)
Any company that I question the accounting practices on is one that I run from screaming. Stocks, jobs, bitcoins, does not matter.
"Well, there’s a fair amount of privilege built directly into the currency: In order to buy the sometimes wildly expensive currency, Bitcoin users need to be wealthy."
It was hard to pick the stupidest sentence from that article, but I think I managed.
Actually, no money today "just works". Yes, the old coins did. They were minted out of precious metals and because of that they had some value. You could essentially cut off parts of it and sell those parts if you felt like it. That actually did happen.
Roman coins are actually a rather bad example because they, at least for some of them, already had the same effect money has today. The value is less the intrinsic value of the coin itself (made of bronze they were not that valuable), but because of the trust people had into the issuing entity (the Roman senate, or later the emperor). In early medieval times, people returned to the system of intrinsic value because there was no entity that you could (or rather would) really rely on that could say that copper in your bag is worth more than the metal is worth. That only came into existence again when countries were strong enough to give money its symbolic value again. And that's where we are today.
The coin (or bill, for that matter) itself isn't that valuable, but its symbolic value is what gives it its value. It represents something. When I hand you a dollar bill, it's worth one dollar. Why? Certainly not because the paper with the funny print on it is worth a buck. The material value of a dollar is negligible. And it gets even more absurd with a 100 dollar bill.
The value of modern currency is in the trust the person receiving it has in it. If you allow me to buy something worth 100 bucks with a 100 dollar bill, you trust that bill to be worth those 100 dollars (ok, you might want to check whether it's genuine because you do not trust me, but if it's genuine and the Fed printed it, you trust that bill), you rely on getting something worth 100 dollars again with that bill.
Why do you do that? Because you trust the entity issuing the bill that they can back it up with something. In case of the US, probably you trust it because you rely on the US' economy to produce enough to prop up the bill's value.
That our current currency has zero intrinsic value can easily be seen when states start to fail. Take most of the European countries after the war. The money bills were essentially worthless. They printed insane denominations on them (up to a billion, and with a hint of luck you could probably get a loaf of bread with it), but they still lost value pretty much by the second simply because nobody trusted the money anymore.
So essentially, the value of contemporary currency is in the trust people put into it. The trust that they will get something in exchange for it. As long as that trust applies universally, a currency will continue to work. When that trust is lost, the currency becomes pretty much worthless.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
2) Joe Public now knows about BitCoin ("no such thing as bad PR" and all that); and
There is such a thing as bad PR. It is when the first impression is negative. Joe Public is learning about BitCoin in the context of "million of dollars have been lost because BitCoins have been stolen". The general public now knows about BitCoin as "That thing that people keep losing their money in because it is always getting stolen". People don't want to lose money.
There is no "-1 offended" or "-1 you don't agree with me" mod options for a reason.
Is there some script or something that we could run that would scan for commenters that reference pyramid or ponzi in a bitcoin article and just automatically band them from future comments on bitcoin?
No. Slashdot infrastructure isn't here to respond to your personal belief that Bitcoin isn't a pyramid scheme.
No, client funds are not company funds. If you run a parking lot and a car gets stolen from the lot you're not liable for replacing the car. You might get that liabilty if your valet wrecked the car, but not in general. Same with deposit boxes, storage lockers, mail packages and so on if you want to get your money back in case of theft you need insurance. Which is what FDIC is for bank accounts. No insurance, then you might not even have a claim against MtGox. First you'd have to take them to court and win to make them liable for damages. And even if you do, well there won't be any money to collect there anyway.
In accounting, generally deposit accounts with customer money are considered liabilities. If a depositor shows up and asks for their money, you are obligated to give it to them. You seem to be confusing legal liability (a "duty of care" to do or not do something) with financial liability (an obligation which must be paid back).
Mt. Gox didn't have storage boxes without knowledge of what was inside them (safe deposit box analogy). They had computerized accounts for each customer, with money in each account. Regardless of whether they were a "bank" they were holding money for other people and that money is a liability in the financial sense.
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.