Major bitcoin exchange crashes, takes bitcoin prices with it

[Redfairen]

Source: LA Times

Bitcoin prices have crashed over the last few days--again!--this time because Mt. Gox, a major bitcoin exchange headquartered in Tokyo, abruptly announced it was suspending all withdrawals for "technical" reasons.

Mt. Gox said the suspension was temporary, but didn't say when customers' funds would again be available. It promised there will be an "update," though not a resolution, on Monday. 

On the news, bitcoin prices have plunged--the virtual currency, which had been quoted at $1,038 on Mt. Gox as recently as Jan. 26, fell below $700 Friday before settling in the mid-$700s.

Whether you're into bitcoins as an investment, a speculative play, a genuine alternative to dollars, euros or yen, or as a device to move money across national borders without worrying about currency exchange regulations, that's not the sort of price action you want to see in your financial instrument--especially not if it's caused by the problems of an unrelated operator in Tokyo.



Read more: http://touch.latimes.com/#section/-1/article/p2p-79212267/

[bobclark86]

1. What?!?

Money based on absolutely nothing with no regulations takes a nosedive when a minor hiccup throws a sabot into the works?

[Lasher]

4. Whouda thunk it?

They should invested in safe tulip bulbs.

[truedelphi]

5. Yeah bitcoin tanks, even though folks in

France, South America and China now depend on it.

Totally unlike our dependency on the greenbacks, which are regulated by the Uber criminals at the Fed and US Treasury. But at least our currency is based on the gold, er, silver, er, gambling exploits of our Wall Street money meisters.

[bobclark86]

9. Half my paycheck didn't magically disappear this week (not counting the porn buys)...

So I'd say the Fed is doing a better job than Bitcoin.

[truedelphi]

15. As we type these remarks of ours, Chinese economy

is showing some signs of massive distress.

Should it undergo a full-on economic collapse, with repurcussions here in USA to follow, you could be in the same situation that bitcoin holders are in.

[TeamPooka]

33. except there will alwasy be plenty of places to spend dollars unlike Bitcoins.

[villager]

40. ...and plenty of people without dollars to spend

n/t

[truedelphi]

42. Of course, those of us in the

98% portion of the economy are not often considered by those in the Upper 2% where there are indeed always dollars to spend in other places. (And of course, if worse comes to worse, those dollars will probably be "BailoutDollars.)

[DeSwiss]

46. +1000

- Exceptional volleys!

[Journeyman]

7. Hard to believe, isn't it? . . .

This whole bitcoin experience seems ripe as another chapter in Charles Mackay's seminal work, Extraordinary Popular Delusions and the Madness of Crowds.

[dotymed]

11. A local convenience store

advertised on their marquee last week, 'we take bitcoin."

How would that work?

[Art_from_Ark]

34. Good question

"So, you would like to pay for your slurpee and chips with bitcoin, sir? Your purchase comes to $3.95, so let me check the current minute's exchange rate for the bitcoin price. Uh-oh, looks like bitcoin just went down another $25, to $675. So that means the bitcoin price for this minute is 0.00585185 bitcoin. Thank you for your purchase and have a nice day".

[Rumold]

49. not to be snarky or anything but

it's trivial if you have a smart phone.

just saying

[debunkthis]

29. Ah,

until I reread your post and noticed the "no regulations" caveat I though you were talking about the paper being spewed out by the Fed.

[freshwest]

30. 'No one could have seen this coming.' Said the joker to the thief. n/t

[DeSwiss]

47. Yeah.

- Any clown knows that you need nuclear weapons to make that kinda shit work. An army and navy won't hurt the cause either......

[Fearless]

2. Simple supply and demand

If people see a currency as weak, it loses value. Same as ALL currencies.

[upaloopa]

6. I think more like fraud and demand

[Fearless]

23. No harsher than any other unrestricted capitalism.

[upaloopa]

3. Well mama always said if you play with fire

you'll get burnt. Good rule of thumb, if it sounds too good to be true it isn't or you don 't get something for nothing.

[TygrBright]

8. The Alphabets have been working on this for months. n/t

[Starry Messenger]

10. This is why currency is backed by governments, boys and girls.

[DonCoquixote]

12. YES

and that is why Libertarians LOVE bitcoin, which is why we should be happy about this. Only a government can provide certain things.

[Starry Messenger]

14. The techno-libertarians out here in Silicon Valley have been burbling like idiots over bitcoin

They wanted to create their own anarcho-tech colony now that we were "post-money." rofl.

[former9thward]

13. Then why is the dollar worth 1/6 of what is was 40 years ago?

How has that "backing" worked out?

[truedelphi]

16. Now now, these

Communist Party rants of yours are not really pertinent, are they?

intended.

[LeftyMom]

17. Because 40 years ago the US was pretty much the only industrial country

that wasn't still rebuilding itself from the devastation of the second world war. We'd had two decades of an artificially inflated prosperity as a result.

That's why statistics devoid of context are worse than useless.

[former9thward]

19. I agree with your post..

but I simply point out "government backing" does not protect any currency over the long run.

[LeftyMom]

20. It's a better protection than none at all,

at least if there's reasonable policy behind it.

Bitcoin is tulipmania all over again.

[OneCrazyDiamond]

22. uh, 40 years ago was 1974

ww2 had been over for almost 30 years, and we were well past the space race. God I feel old at times.

[LeftyMom]

24. And it was the tail end of the recovery period.

Both in terms of rebuilding an industrial economy and in terms of rebuilding a population after losing nearly a whole population of young men. The utter dominance of the US economy wasn't over until seventies and the postwar recovery is why.

[Adsos Letter]

27. Nicely explained, LeftyMom.

Are you enjoying the rain?

[Art_from_Ark]

35. 1974 was a time of high inflation

which Gerald Ford called "Public Enemy Number One" in a speech he gave 2 months after becoming President. In fact, the 1970s were a time of high inflation in nearly all countries, regardless of their immediate post-war condition. And you would be hard-pressed to find any country today where you can buy daily items (excluding electronics) for anywhere near the same price in the local currency that you could buy them for in 1974.

[freshwest]

31. I'm glad you said that... n/t

[quadrature]

37. currency is not backed by gov't. the only thing...

for sure you can pay with currency
is your taxes

[Starry Messenger]

44. lol

[W T F]

18. Funny how John Stossel was pushing them Just last night on FBN, I take it that he'll be taking…….

tonight off.

[freshwest]

32. Yes, that know it all needs a break. n/t

[William Seger]

21. Waiting for the other shoe

... when Mt. Gox says why they suspended withdrawals.

[Dawson Leery]

25. There is a reason why currency MUST be backed and regulated by

government.

Despite having many libertarian leanings, I could never belong to them. Their outlook on the world and belief in no-regulation is irrational and dangerous.

Buying into this bitcoin fad makes one stupider than those who were buying gold the past few years (gold is down 33% from it's high of $1800).

[DeSwiss]

48. All monetary systems are ''irrational and dangerous.''

They're all part of the Granfalloon. The very nature of money is to act as a stand-in for something that is real and valuable. It's why it caught on in the first place. Gold is heavy, bulky and ruins your pants. However, we don't think like that anymore. And when the stand-in itself represents nothing (but an unstated yet understood threat to invade you and blow your shit up), that too makes no sense and is a danger to all those who continue to live by, add to and support what they know is a LIE and IMMORAL. Like killing babies and their mothers with drones.

Monetary systems use a concept of infinite probabilities to calculate profit margin potentials, although doing so within a universe of finite resources in which they can make that profit. It's an idiotic game of musical chairs where when the music stops only the 99%ers have nowhere to sit. In the end, no one does. And there'll be no one to care.

- Given such a formula, eventually something's got to give......

[Rumold]

50. gold traded at ~ $400 for two decades

its north of $1200 right now.

use a different example.

[TheMathieu]

26. Good.

I hope a lot of naive libertarians lost a fortune.

[debunkthis]

28. The value of Bitcoin will recover

as it has multiple times over the last 2 months. Just checked and it is already going back up, no worries.

[sendero]

38. That may be true.

.. but who wants their assets in a medium that fluctuates 20% up or down in an instant. That signals INSTABILITY.

Bitcoin certainly has its applications, but being a general-purpose currency for the masses isn't one of them.

[Heywood J]

39. I'm sure the new Zimbabwe currency is too. (NT)

[davidpdx]

36. Wow, some people got hosed on that one

[reACTIONary]

41. When they mention the Bitcoin Foundation...

"Loose oversight, but not any real governance, is provided by the nonprofit Bitcoin Foundation, where Mark Karpeles, the CEO of Mt. Gox, is a board member."

When they mention the Bitcoin Foundation and its officers they should also mention that the recently arrested "bitcoin evangelist" Charles Shrem was its vice chairman. Money laundering. Go figure.

[debunkthis]

43. For those of us who purchase Bitcoin to simplify online transactions

this matters very little as I can still go online, buy $25 worth of BTC and make my purchase with it. At that point, it does not matter at all if BTC is selling for $1 or $1000.

Although buying and then using BTC, combined, is often more effort than using a bank card to make the transaction, sometimes there are advantages to using BTC. A good example is one of the online precious metals dealers who offers their customers a discount, and faster order processing, for using BTC for their purchases since it lowers their overhead ( not naming the company here so that this does not appear to be ad for that particular company, but anyone interested should be able to find their site easily enough ).

[cemaphonic]

45. Ha, who didn't see this coming from those

techically, legally, and financially competent (not to mention not at all shady) folks at Magic The Gathering Online Exchange website? It's already been pretty much impossible to convert bitcoins to USD at Mtgox for months now (without going through secondary exchanges anyway.)

and the article is stretching things a bit by calling it an unrelated operator. Mtgox is a huge percentage of the bitcoin economy. (they do point this out later in the article.)