MtGox Files for Bankruptcy, $480 Million Lost

40

Comments

+ Add a Comment
avatar

DirtModeler

Lol@bitcoins.

it's a spinning top held in place by wishful thinking.

and that top is wobbling more and more everyday as it loses momentum.

go ahead, call me a fool, show that the dollar isn't backed by anything..

clean out your bank account and invest in bitcoins because the dollar is a fake form of money.

bitcoins will fail, and you'll lose everything.

avatar

ApathyCurve

Lazy people always want to be convinced that they can get rich for doing little to nothing and are the classic prey of the confidence man. They can smell that prey from miles away, and Bitcoin is one of the biggest confidence games since Bernie Madoff was fleecing morons faster than sheep in a shearing shed.

So what have you learned, lazy people? Probably nothing.

avatar

Bullwinkle J Moose

They learned that sheep love to be shorn

https://www.youtube.com/watch?v=OAi1005K71g

avatar

Zstreek

I had a few thoughts.

1) If a company can loose this much because it didn't understand how BC works, how can a consumer have confidence in the currency?

2) Currencies all over the world are the same. Their value is driven by supply and demand which are directly effected by consumer confidence.

3) BC, as I understand it, is different because there are a fixed number of coins. Usually, government currencies are not fixed so that the governments can manipulate the number of notes (value). When you fix the universe of total notes, then the value of the currency is, theoretically, completely market based.

avatar

tristone

IMHO btc is a terribly bad idea as a currency.

Now everyone sees that the value fluctuates a lot. Today you can buy your lunch with $10. Probably same tomorrow, next month or the next year. But with btc you just don't have that confidence.

A good currency system should be fair to most people. That means, for the amount of service or products you paid in exchange of certain amount of currency, you should be able to get roughly equal amount of service or products back. It is obviously not true with btc.

Btc boasts being de-centralized and controlled by no one, hence no inflation. But is that a good thing? Or is inflation a bad thing? Go ask the Japanese. Sometimes a little inflation is just needed to get the economy going. Even if nobody wants any inflation, the amount of products and services a person, family, country, or the whole world produces actually changes! And that requires money to be printed or destructed to keep up. What happens if a country can't print money when there are too much goods in the market? Prices drop along with bank rates. Your deposit in the bank simply shrinks.

The worst thing and fundamental flaw of the btc, I think, is it's being decentralized and dependant on an algorithm at the same time. Because it's decentralized, it's difficult to track and control, and its algorithm is impossible to fix. When somebody eventually cracks the algorithm. It's all going to be worthless overnight or in just a few days.

Btc looks to me rather like some kind of products rather than a currency. Because of its scarcity, many were attracted to buy and sell. But the same goes for a lot of other things. In China there were waves to collect stamps, old coins that went out of circulation, plants, tea, antiquity of all sort. All they had in common is scarcity and a market lacking of transparency. And for once they all could almost be used as 'currency' but eventually all of the market died after a few years. And that probably is the last thing you want from a currency.

avatar

pastorbob

I still have that bridge in Brooklyn if anyone is interested.

avatar

Rift2

I'll buy the polluted water underneath it...

avatar

Baer

will you sell it for Bitcoin? No? Hmmm, wonder why.... :-)

avatar

glpeter90

In my concept of 'money'. The $10 bill the bank gives me doesn't gain or loose in value by the time I spend it at the store. I really don't understand bit coins, even after reading several articles about them. I understand their basic concept, and somewhat how the money is traded. But I don't understand the reason for the fluctuation in the value of a bit coin. I am thinking that the people who just lost their money, where hoping to buy low, sell high, and then get out, all without having any reporting to the government of their monetary gains. That is not to say it is just a pyramid scheme, as it is not much different that a normal bank transfer in concept.

avatar

wumpus

Hate to tell you, but "real money" can do that as well. After the Berlin Wall fell, there was a joke in Russia:

Q: What's the difference between Weimar Germany (between WWI and Hitler) and Russia (1990)?
A: The Germans had wheelbarrows.

If you don't get the joke, try googling the Zimbabwe economy and inflation. One of the main design features of BTC was to put hard limits on this type of failure (I only know of hyperinflations due to printing excess money) by limiting the total amounts of BTCs. I agree that this isn't necessarily a feature: tulip backed currencies would have experienced a worse failure, and the Euro has similar issues in inability to change volume to meet economic needs.

PS. Hyperinflation has hit the US as well. I've never heard the expression "not worth a continental", but I've been assured by history books printed after 1976 that it was still in use 200 years after the inflation happened.

avatar

lordfirefox

That's because that $10 bill has no value at all, it's all in the Fed reserve debt pool. Fiat currency lives and dies by what's backing it. And since it's backed by nothing and the Fed has broken our trust and devalued the currency outright by trying to print their way out of debt that $10.00 spot you got there is worth nothing. Not even the paper it's printed on.

As for pyramid scheme you're right, it's not one as that would require someone at the top getting all the gains from having people at the bottom, however that's not the case. Bitcoin is decentralized, no one controls it, it's backed by user trust, the same as gold and silver. However outsiders don't seem to grasp that concept.

avatar

glpeter90

I understand that things will happen to make paper money worthless overnight. But here in the US it doesn't happen the fast normally :) I am not talking the extreme, I am talking the norm. That $10 I get from the ATM buys me $10 worth of food at McDonald's the next day. With a bit coin, that may or may not be true, that is a major difference in my concept of money and a bit coin. If your $10 bills are not worth the paper their printed on. Pack them up and send them to me, I will pay for shipping and handling. Now your statement that a pyramid scheme would require someone at the top getting all the gains, how do you know that isn't true ? You yourself say the coins are decentralized, so no one really knows who has what , right ? I don't get $10 from the ATM hoping that is value will go up and I can take it back the next day and get $11. You are right, I am an outsider. I am just not getting it.

avatar

Crackalackin

BTC (and all digital crypto "money") is based on a very clever algorithm which attempts to provide a completely autistic solution to a mis-defined problem. The theory of money which underpins the whole exercise is deeply flawed. Scarcity, artificial or otherwise, is not a sufficient property of a medium of exchange. It helps money retain its value once it IS money, but that's it. Any proposed medium of exchange needs other properties too. Among those are stability, predictability, security, fungibility, and representative value.

BTC isn't backed by anything, so it fails the value and security tests. "But USD is just unbacked fiat paper!" the libertards protest. Not really. See that little word in there, "fiat?" That is a statement of command. Who is making that command and what are they backing it with? THAT is the question you should ask. The answer is: the United States government and its authority as a global superpower. USD isn't backed by anything as trivial as gold. It's backed by hot lead, e.g. the most powerful military force on the planet. That's why it is the global reserve currency despite its many other failings.

So, the idea that you can replace a currency backed by the might of a global empire with e-cred on a card game server is worse than retarded. Particularly when doing so is in direct opposition to the interests of that empire and you yourself do not possess an army or nuclear deterrent. BTC is entirely dependent on the forbearance of its number one enemy. That's not a sustainable position.

Further, even if USG were to adopt its own digital currency, solving the first problem (to the bitter tears of libertarian nerds and drug dealers), it is too dependent on complex infrastructure to be a stable and secure monetary system. No power? No money. No network? No transactions. Hard drive failure? No recourse.

avatar

vrmlbasic

If only the US dollar _were_ still based on gold. I know that after FDR cast the die it was only a matter of time before a President followed through but why did it have to be Nixon? It would have been easier if we could have lumped all failings of the Executive Branch in the 1970s onto "Jimmah" Carter :(

BTW, it isn't the poorly-funded, underequipped and effete US military that has the "hot lead" in our country, but rather the civilian bureaucracies like the DHS, EPA & (most recently) USPS.

avatar

lacky32

"But USD is just unbacked fiat paper!" the libertards protest.

This was annoying.

The answer is: the United States government and its authority as a global superpower. USD isn't backed by anything as trivial as gold. It's backed by hot lead, e.g. the most powerful military force on the planet.

This is when I stopped reading. All I could see you typing from here on in is 'Merica! If you want to be thought of as intelligent, have intelligent conversations. Oh, and if your theory were true, the Dollar wouldn't be worth less than the Euro.

avatar

Crackalackin

"The answer is: the United States government and its authority as a global superpower. USD isn't backed by anything as trivial as gold. It's backed by hot lead, e.g. the most powerful military force on the planet.

This is when I stopped reading. All I could see you typing from here on in is 'Merica! If you want to be thought of as intelligent, have intelligent conversations. Oh, and if your theory were true, the Dollar wouldn't be worth less than the Euro."

You didn't actually rebut anything I said.

Also, since you brought it up, please tell me how the relative value of currencies have anything to do with what I posted, and how that has anything to do with the USD being the worlds reserve currency.

avatar

vrmlbasic

The Euro only has worth because of the few countries (or is it just one-Germany?) that are bailing out the ever-broke other states. o_0

BTW, since the Euro is worth more than the USD, why does it seem to fall to the USA to fend Putin off of the Ukraine? Clearly Europe has more to lose and more "wealth" to fund a push. Yet the Ukraine, which was even trying to join the EU, isn't getting any help from those pansy europeans.

avatar

lordfirefox

" Now, with the bankruptcy filing of MtGox, the value is about $548 and still dropping."

Wrong. The Value is increasing again. It's not increasing in leaps in bounds but It's increasing in a more slow and steady upswing. With Mt.Gox Mt.Gone we can now have some stability in the Bitcoin economy. The volatility was making it hard for people to commit to investing.

Also:

Mt.Gox is not Bitcoin. It will survive without Mt.Gox and it IS.

avatar

KenLV

Not "Wrong.".

It was correct at time of publication and just goes to show the unpredictability of this volatile "currency". Volatility that will continue for the foreseeable future.

avatar

Baer

PONZI anyone???

avatar

lordfirefox

Idiot anyone?

Seriously you don't even know what Ponzi scheme means.

avatar

kiaghi7

Well the actual events that went on with MTGOX may not fit the description of a ponzi scheme to the letter, however it's just shy of a certainty that the bitcoins are still very much in existence since they don't actually "disappear" in the first place.

Add to that, the profoundly likely culprit being a simple embezzlement of the coins under a flimsy smoke screen of a bankruptcy... For an organization that made profit on every trade, whether it good or bad, every single time a trade was made, and on top of all that their operational costs were a pittance on the level of a child's allowance in comparison to the revenue stream they had access to...

And yet, still they manage to go bankrupt?

OR

Someone decided to steal nearly half a billion dollars worth of bitcoins that are not legally protected from theft... In fact precisely because they are antithetical to government currency, and no government recognises them as such, the big selling point of bitcoins being so free from government is almost certainly the principle reason that so many were very likely stolen.

The idea was to get enough presence and clout, and when the moment seemed right, slink off into the night with a king's ransom worth of bitcoins...

Granted the action shook the bitcoin markets up, and so what I believe was stolen was simultaneously harmed in its perceived value at the time, however that too was likely part of the scheme. The game was likely to get them, disrupt the market and make it all seem like a situation where people would say "well since they aren't really stable anyway it's not worth getting concerned about" scenario, while merely waiting for the bitcoin market to rebound and recover any lost worth.

Please keep in mind, while I have fiddled around with bitcoins a tiny bit compared to some out there who have gone full-bore at it, I have no interest nor investment in MTGOX whatsoever, thankfully so it seems now. I've been fortunate enough to just trade what little I've earned/had for gift certificates and items directly rather than trying to "cash them in" for real money. I genuinely feel for those that have lost bitcoins to MTGOX's dubious actions, but I deeply fear that they will not see any compensation or recovery of their assets.

avatar

wumpus

"not legally protected from theft".

This may be true (I know almost nothing of Japanese law), but if so, this was a decision by the founders of Mt. Gox to put the "money" some "place" where it wouldn't be considered money. In the US, if someone steals something with such a high value, you can expect it to be considered theft unless you can afford the type of lawyer that can convince a judge otherwise. I suspect that there are plenty of other places that would legally protect it from theft as well.

What is true is that it is physically (or in modern currencies, mathematically) not protected from theft. Those coins are gone. They are in anonymous hands (and likely were heavily mixed in a system similar to what the Silk Road uses) and gone.

avatar

kiaghi7

MTGOX has satellites within the US, one of them was even raided if you recall...

Beyond that, there have been a few large thefts of bitcoins from within the US to which a whole lot of nothing has come of it because it's nearly impossible to effectively track them, especially when someone stealing them from person "A" who they likely knew already can just put them on a thumb drive the size of a postage stamp, and hide it...

The ability to trace the transaction would then just disappear, no different than if someone stole a wad of cash and hid it away.

I'm not saying the people who've been stolen from haven't been wronged, and indeed may well have a "case", however even if you have a case, you still have to simultaneously prove guilt which is profoundly difficult to do... It is the pinnacle of "he said she said" situations which few if any courts would waste their time on, all the bad guy has to do is say "I didn't do it" or "I don't know" and frankly that's plausible deniability at its finest. It's not good, but it's again the reality of the medium.

Also being that it's a civil matter not a criminal matter, even if the thief is proven guilty they aren't going to jail, so then how are you going to enforce recompence? Even in civil court, you have to prove damages, and bitcoins are a moving target on their best day. Add to that, you have to prove that your address was the one stolen from, which is fairly easy for you to demonstrate that your coins were sent from you, but how do you prove that the coins made it to him specifically, you'd need his end-point wallet which again can be so easily hidden.

avatar

Ghost XFX

The faster cryptocurrency dies, the better off we'll be

-Gamers everywhere

avatar

vrmlbasic

+1. Wish I could upgrade my GPUs but I cannot, thanks to cryptocurrency's demand exceeding AMD's supply (and Nvidia just, well, being Nvidia lol).

My GPUs are, judging by their sale prices, too anemic to mine so even if I wanted to jump into the byzantine world of mining, pools and all that rot that seems to rival Stock Trading in tediousness, I don't believe that I really could.

avatar

wumpus

Not an issue (for long).

I would say that in the long run, cryptocurrencies are the thing GPUs need to keep going. Moore's law is dying (on processors, it seems to keep going for SSDs) and how many generations of GPUs can we get on a single process node? The cryptominers drive demand, thus keeping the R&D going. Nvidia is claiming 4 time the efficiency on the same node, and since chips tend to be limited by power (battery power in mobile, heat limited for high performance chips) that is a good sign.

It can't be an issue for long. GPUs are only a stopgap means for unestablished cryptocurrencies. Even AMD gpus are essentially useless for Bitcoin*, you won't be able to compete with ASIC miners. Litecoin (and such) don't have such competition and are what GPUs mine. The catch is that such currencies have to either grow to the point where the ASIC miners take over or die. I suppose there will always be somebody trying to launch a new cryptocurrency (or mining away on barely used currencies), but don't expect that to be driving GPU prices.

Of course, if you don't like the framerates of current games and your money is burning a hole in your pocket, I can't help you. Just be patient, who knows? Maybe AMD will make a high end ALU? (Just kidding, the power envelop just isn't there, even if they wanted it).

* My understanding is that you haven't been able to make back the money on the GPU for quite some time. With the rise of ASICs, you can't even break even on the electricity, which is likely moot since litecoin (or dogecoin, or whoknowswhatelsecoin) should be more profitable.

avatar

vrmlbasic

As I understand it, the "DoggyCoin" and other post-bitcoin cryptocurrencies have been engineered to be difficult for an ASIC to run, keeping the GPUs on lockdown. I'm not sure that what the GPU market needs to spur innovation is a pressing demand to calculate hashes; I don't see that building GPUs to mine currency would necessarily make them better at processing graphics.

Nvidia is always going to engage in BS like limiting supply and always holding back when releasing their "top of the line" product as they have the clout to get away with it. AMD doesn't. I'm surprised that they haven't been able to up the supply rate of R9s after all these months :(

avatar

mdude

This epic failure has nothing to do with a problem with cryptocoins. It has to do with incompetence at mtgox and greedy "investors" who are looking to make a buck by day trading.

The only difference between mtgox and a conventional bank is the conventional bank is backed up by the banking cartel "banksters", who have mostly bought the governments of the world, so they are backed up by tax dollars. So when a bank does something stupid, they are bailed out.

Do you think USD or any other "conventional" currency isn't digital? Do you think your money is safe in a conventional bank? Think again. (Bailins anyone?)

M

avatar

darkstorm977

I heard about a recent suicide in japan recently of a businessman who i think jumped of a building or something, could it have been related? hell, how does a company just lose 850,000 bitcoins, jesus.

avatar

kiaghi7

That's just it, bitcoins can't actually be lost, the way the program actually functions is that they ARE credited to someone somewhere (or many many someone's).

What has clearly happened here is much like the horror story of the guy who had a fairly large amount of bitcoins in his bitcoin wallet on an old computer of his, and he forgot about them and threw the computer with the hard drive away, so now over a million dollars (several million by the estimates I've heard) were basically thrown in the dump...

What's happened with MTGOX just tells me that my suspicions about it from day one, that it was crooked as a dog's hind leg, were completely true.

The more than 800k bitcoins aren't lost, they are stolen. Embezzled, pilfered, or simply absconded with through creative bookkeeping.

I would wager that this was the game for MTGOX all along, to get enough clout in the bitcoin world to garner a vast amount of its clientele and transactions thereof. Then, once the value of the coins reached a good enough point that it seemed viable to steal a profound amount of money all at once in the bitcoins, which have little to no legal protection from theft to begin with, then they just simply "go bankrupt" at an operation which profits from every trade already and whose overhead is akin to money found in couch cushions compared to their revenue stream.

Ockham's razor quickly cuts to the quick of all this nonsense, the most likely and probable cause of all this is the fact that half a billion dollars in bitcoins (approximately) sounds like a decent amount of money... At least I think I could struggle by on that...

avatar

Bullwinkle J Moose

But I....I don't understand what happened...

I put your money right here in my vault and left the doors open all night without a security guard so anyone could check anytime and see that there money was still there....

Let me promise you all that if the value of these missing coins collapses sufficiently, I will personally compensate you all for this loss

Let me now bow down and humbly apologize with a wry smile to show my concern

avatar

firefox91

$480 million of the average Joe's money... poof, gone. While I know that there are people out there that will still continue to standby this foolishness, I hope the smart ones will realize that a virtual currency void of regulation and created out of thin air is a bad idea.

avatar

froggz

Mexican Cartel boss got arrested and all of a sudden 480 million dollars of bitcoins mysteriously disappears.

avatar

Chronologist

Kim Yuna lost gold, syrias a mess, nvidia released Maxwell, and the world is still turning.
Listing unrelated news is pretty fun.

avatar

Carlidan

Hmmm... kinda of related. Isn't he still talking about bitcoin?

avatar

froggz

Yep. talking about bitcoin and how is suppose to be a currency that is impossible to steal and all of a sudden $480 million dollars worth of bitcoin disappears.

avatar

mix0plix

lolz

avatar

Carlidan

Yeah read this on Yahoo. I think I also read that Mt.Gox is insured for double the amount it lost.

avatar

Ninjawithagun

...meaning that MtGox secretly engineered the hacking of their website in which they split the profit with the hackers and then turned around and filed bankruptcy and then claim the insurance to cover their losses. Wow. I'm actually impressed by their cleverness to make some big money. Nicely done. Now if anyone can actually prove this was done. Another nice fact/flaw about BTC, is that there is no convening legal authority to do anything about criminal actions directly.