Bitcoin virtual currency is on verge of collapse

[jsr]

http://www.latimes.com/business/la-fi-bitcoin-collapse-20140226,0,5968430.story

Bitcoin virtual currency is on verge of collapse
The closure of the world's largest bitcoin exchange triggers a massive sell-off and may have scared investors away from it for good.
By Chris O'Brien and Andrew Tangel
February 25, 2014, 7:31 p.m.

It was supposed to revolutionize the global monetary system. Instead, the bitcoin virtual currency that has captured the imagination of investors and financiers is on the verge of collapse.

In a stunning blow to a novel way to buy products and services, the world's largest exchange for trading bitcoin currency shut down Tuesday, triggering a massive sell-off and sending many prospective investors away — perhaps for good.

"This is extremely destructive," said Mark Williams, a risk-management expert and former Federal Reserve Bank examiner. "What we're seeing is a lot of the flaws. It's not only fragile, it's fragile as eggshells."

The mysterious circumstances that triggered the failure of the exchange, Mt. Gox in Tokyo, is only adding to the renewed anxiety over the virtual currency, which just a month earlier had been gaining momentum and supporters.

[Renew Deal]

1. Another successful libertarian "idea"

People should realize why libertarians have been marginalized for so long. Their economic ideas are ideological fantasy. They have binary thought (yes/no, good/bad, black/white). The world doesn't work that way.

Bitcoin has proven regulation of markets is needed. Republicans and libertarians are proven wrong again.

[wercal]

3. There are plenty of Bitcoin supporters here

And when I ask honest questions about Bitcoin, the response always has an air of 'you just don't understand' to it.

[Hoppy]

9. An old investing addage --

If you don't understand it, don't buy into it.

I never understood bitcoins.

[1StrongBlackMan]

11. The more I heard about Bitcoin ...

the more I thought it a 21st century "Pump and Dump" scheme. And when I heard that one of it's "best" features, per its promoters, was the fact that it was a "truly market-based, non-regulated currency", I was convinced.

I wonder how badly burned the scheme's initial promoters got? I suspect there are some pretty large deposits happening in the Grand Cayman's.

[liberal N proud]

2. Will it be a virtual collapse?

[madrchsod]

4. tulip bulbs!

do`t be left behind!

get in early on the exploding market of tulip bulbs.

who said "there`s a sucker born every minute"

[ZombieHorde]

5. This has been an interesting story.

I wonder if it's at the end, or if they will figure out a way to renew it.

[rsmith6621]

6. How Do You Control Counterfeiting

How Do You Control Counterfeiting?

Who regulates this.

I gather this is the equivalent to LOCAL DOLLARS?


Yep just another libertarian fantasy.

[lumberjack_jeff]

7. Would you describe BerkShares as a libertarian fantasy?

http://www.berkshares.org/whatareberkshares.htm

Cryptocurrencies are berkshares on a larger scale.

[Cayenne]

10. The blockchain

The blockchain is the ledger open to everybody. Every transaction references all its predecessors so every coins history is fully accountable.

[Xipe Totec]

8. The best part about bitcoins...

The best part about bitcoins is that you get to watch libertarians slowly discover why financial regulations exist to begin with.

– Pocius Pocius (@The_Pocius) — Feb-17 7:15 PM

https://twitter.com/The_Pocius/status/435568115791826945

[unrepentant progress]

12. The failure of bitcoin isn't in the lack of regulation

The failure lies in what bitcoin is -- an 18th century understanding of currency, value, and the relationship between the two. Bitcoin is ultimately doomed to failure because it is inherently deflationary -- there are only so many possible bitcoins. So over time as the bitcoin pool reaches saturation, even while there is more stuff and services to buy, you either have to say, "Bitcoins can be used to buy this, this, and that, but no more," or you have to deflate prices across the board so the limited pool of bitcoins can encompass everything people want to buy. To Bitcoin's designer's, this was a feature, not a bug, because they believe currency should be "hard" like gold -- limited, and hard to come by. They believe currency is value in and of itself, rather than a mere token of value.