What the heck just happened to bitcoin? And what the heck is bitcoin, anyhow?

The price of the virtual currency bitcoin plummeted this week after a leading bitcoin exchange, Mt.Gox, shut its doors. The Tokyo-based firm already suspended customer withdrawals two weeks ago, citing a possible flaw in the system. But on Monday Mt.Gox suddenly closed its website and disappeared.The site is now blank aside from this brief message:

What the heck just happened to bitcoin? And what the heck is bitcoin, anyhow?

"In light of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly."

Mt Gox

This seems rather troubling for bitcoin. I'm not personally invested in it but I had the opportunity a long time ago when it was still fairly new. Like less then a dollar per bitcoin. I'm still kicking myself that I didn't at least throw a little into it but what's done is done I guess.

I know a few people here at ATS must be personally invested and must have some comments about this situation. Anyone care to chime in?

ETA more links:
Reuters
USA Today

reply to post by thov420

What happened to bitcoin?

Well, not so coincidentally, bitcoin has begun to encounter a series of anomalies shortly after the government intervention of Silk Road.

All of a sudden, bitcoins are being heisted, exchanges are "disappearing" and there have been wild fluctuations in its value.

From a conspiratorial perspective, it would seem that governments have put in enough time, research and money to learn the intricacies of bitcoin, so much so that they (or some related entity) is now able to wreak havoc.

As usual, finding out the truth can be very elusive.

reply to post by thov420


I used some when I needed to hire a hit man.

Just kidding.

I know Bitcoin is used in the 'deep web' for less than legal transactions.

"Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by pseudonymous developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money.[5] Conventionally, the capitalized word "Bitcoin" refers to the technology and network, whereas lowercase "bitcoins" refers to the currency itself"
Wiki:bitcoin

The main exchanger for Bit Coin is gone, the exchange rate of bitcoin is pretty low. I read somewhere you can cash out but you cant buy bitcoin. Weird isnt it ?
Yesterday you have USD10 worth of BTC, today you have USD1.3

If you want conspiracy, heres something.
Somebody bribe MtGOX to stop its operations, destroy the bitcoin value and the market follows suit.

Somebody with really big bucks and hate bitcoin.

reply to post by gladtobehere


That's an interesting angle to look at it. I hadn't thought of it like that before.

reply to post by Lucid Lunacy


Yes it has. It is also accepted by lots of legit businesses as well. Just like cash is used in the real world, but obviously without the popularity yet.

And the question in the title came from the news site I found this on. I've kept an eye on bitcoin for quite a while, even did a bit of mining back in the day but that never really got far. But thanks for the link anyways for others who might not know.

Magic the Gathering online exchange was not a good place to start with. They've been a problem for a long time.

And they don't control the currency, simply cause panic.

To be sure there is a concerted effort against bitcoin, but there have been detractors all along, and it's still there. Stormy waters at the moment.

it's currently $542USD. I have no idea where someone gets 10 down to 1.3.

reply to post by NullVoid

reply to post by sn0rch


That's a good way to look at it as well. I read somewhere that the FBI supposedly own a percentage, I think it was like 6%, so maybe it was the government trying to scare people away from the market.

I hadn't heard the part about not being able to buy bitcoin, only cash out. Got any links? There are lots of other exchanges out there but I see this as a sign from what I read at the Reuters link:

Mt. Gox was a founding member and one of the three elected industry representatives on the board of the Bitcoin Foundation. A bitcoin exchange since 2010, Mt. Gox is a relatively old player, having grown quickly when there were few alternatives.

reply to post by NullVoid


I think a major flaw/security fault was found, MOX realized that they incubated the flaw and as a result many people were going to lose a significant amount of their investment.

Instead of publicly releasing information regarding the flaw and causing panic
Instead of admitting responsibility for not discovering and fixing the fault earlier

the owners/money makers decided to shut up shop and disappear with the money letting everyone else figure it out on their own.

reply to post by Agit8dChop


That could very well be but the way it's worded on their website says it's temporary.

I guess we'll have to wait and see on that one.

So, this is just a wild guess, but I'm thinking that some government entity introduced a very sophisticated virus/malware into the TOR network and the bitcoin network.

Something akin to Stuxnet or Flame that would create problems over the long term that would scare the market into collapse.

It seems their plan is working. Otherwise, the simplest idea is the answer, which is that you really can put no faith in the price of bitcoin at any given time, because there is no central player.

~Tenth

Mt. Gox is reported to have lost (or were "heacked") out of 744,000 bitcoins. This coming on the heels of Silk road v2.0 also losing 6 million in bitcoins - allegedly.

Could be a hack, if you believe the news reports. Could be an inside job.

Mt.Gox is talking about filing for bankruptcy. An "insider leak" of papers from Mt. Gox exposes them as having known of the loss and covering it up, talking about dissolving the company and re-emerging under a new name - just "Gox."

Sounds shady to me.

I don't see this as a "gubberment" job, not when there are so many other cryptocurrencies around waiting in the wings to take over - dogecoin, litecoin, peercoin, primecoin, etc...

To me, this is just bad business and bad management, assuming it isn't deliberate malfeasance on the part of some of these exchanges. And since there is no "central bank", bitcoin will always be subject to manipulation. Just wait until whoever hacked/stole those coins starts dumping them, then watch what happens to the prices.

reply to post by Blackmarketeer


I don't see this as any conspiracy either,,, most likely an inside job. What thief on this planet wouldn't be interested in little virtually untraceable cash? The anonymity of bitcoin itself invites this type of behavior.

What laws have been broken?

What recourse to the losers have to get their "money" back?

I doubt even if they knew who did it, that charges would be pressed since bitcoin isn't technically a money.

Your honor, the defendant stole my bitcoin.

Judge: Whats a bitcoin?

it random code that represents cash..it looks kinda like this.....857uyq0234n85ynm0d bij- vij-w98th

Judge: Case dismissed,,,get out of my courtroom.

lol

I've got to say I agree with the couple posters above me. The MSM has mainly only reported the Silk Road bust but there have now been several of these underground marketplaces which have dissapeared with all the coin; exactly like Mt. Gox these people claimed techinical issues, hacking, and that they would return peoples money. It never happened and I honestly do not see anybody getting their money back who had anything tied up in that exchange.....

That being said, Bitcoin is definitely not dead, I trade a bit myself in the cryptocurrency world and Mt. Gox has been a moot point for weeks now - simply a plague dragging all the other exchanges down because people have been unable to withdraw.
Besides, Bitcoin spent the majority of the day on the front page of CNN and various other outlets such as Yahoo, etc...Granted these stories are mostly negative but in the end any press for bitcoin is good I believe. Honestly the dip in price to 500's provides a nice entry point for those new investors looking to take a nice risk....

Also, somebody above me mentioned this and they are definitely right there is an ongoing effort by various groups/governments to derail Bitcoin...I mean it defies everything TPTB stand for. As far as a virus being injected into the tor and Bitcoin networks, I really pray that is not true however nothing would surprise me with the power of our government. Personally - I believe the tor network may already be compromised. The Bitcoin network, I doubt that at this point in time. I think its just a matter of time though before all those folks involved with any of those tor marketplaces are getting their doors kicked in.

NullVoid
The main exchanger for Bit Coin is gone, the exchange rate of bitcoin is pretty low. I read somewhere you can cash out but you cant buy bitcoin. Weird isnt it ?
Yesterday you have USD10 worth of BTC, today you have USD1.3

If you want conspiracy, heres something.
Somebody bribe MtGOX to stop its operations, destroy the bitcoin value and the market follows suit.

Somebody with really big bucks and hate bitcoin.

None of this is true...

Gox is but one exchanger. There are others. It was not secure so they failed.

You can buy bitcoin at other exchanges. I bought it when it fell just below 200$.

The price of Bitcoin is EXACTLY where it was before this temporary drop due to Gox.

Gox does not have that kind of power over bitcoin.

Silk Road happened some time back. It is not that recent and does not effect bitcoin.

There are 2 other links for this story since yesterday.

There has been a new update from Gox

February 26th 2014

Dear MtGox Customers,

As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues.

Furthermore I would like to kindly ask that people refrain from asking questions to our staff: they have been instructed not to give any response or information. Please visit this page for further announcements and updates.

Sincerely,
Mark Karpeles

So they are not admitting to throwing in the towel just yet. Considering the kind of clients that probably have money tied up in Gox that they cant get to id say Mark Karpeles currently has the life expectancy of a carton of milk

reply to post by RickinVa


you summed up my feelings about bitcoin exactly....nobody knows who controls the bitcoin algorithm data for it (an actual person had to write the program, after all), or, if it has a backdoor. nobody can nail down what actual real ACH account your money has been sent to, to facilitate the transaction. you're provided a "wallet" on some server, somewhere, maintained and run by somebody. and, you are given a long-ass encrypted password, that apparently you think no one else knows about, because, as we all know, the internet is 100% trustworthy (rolls eyes)....my opinion?...it's a modern day digital Ponzi scheme.....as long as people are putting in real money for bitcoin, they can handle transactions, but when the withdrawals become too much, shutdowns and stalls happen....I'm shocked, I tell you!!...just shocked!!

jimmyx
reply to post by RickinVa

 

you summed up my feelings about bitcoin exactly....nobody knows who controls the bitcoin algorithm data for it (an actual person had to write the program, after all), or, if it has a backdoor. nobody can nail down what actual real ACH account your money has been sent to, to facilitate the transaction. you're provided a "wallet" on some server, somewhere, maintained and run by somebody. and, you are given a long-ass encrypted password, that apparently you think no one else knows about, because, as we all know, the internet is 100% trustworthy (rolls eyes)....my opinion?...it's a modern day digital Ponzi scheme.....as long as people are putting in real money for bitcoin, they can handle transactions, but when the withdrawals become too much, shutdowns and stalls happen....I'm shocked, I tell you!!...just shocked!!

Wrong!

Bitcoin is Peer to Peer. No one owns it as a whole. IT is also OPEN SOURCE, meaning anyone can look into it. Matter of fact, many people have already used bitcoins source code to make other coins just like it with each their own personal tweaks.

I'm seeing a lot of disinformation from people who apparently don't know anything about bitcoin and also apparently has not looked into it. The government does not and CAN NOT own bitcoin. There are NO backdoors. IF there were, they would have been found by anyone digging through the source code which is free for all.

Learn more about it HERE. This is but one of many sites that might help you get a look inside and see what it's really about. There is no conspiracy.

When it comes to putting in money or taking it out... You're acting like only one place owns and sells/buys/trades bitcoins. This is totally false. I had NO problem buying bitcoin, selling bitcoin, or trading bitcoin at all durring this minor blip. Bitcoin is back to what it was the day before Gox's problem, not even a day after... Just hours after, as a matter of fact. Gox is only one of many places to buy and sell bitcoin.

I think Bitcoin is the creation of those set to lose out financially when the monetary system collapses so they have something to fall back on. Its about as valuable as monopoly money unless you are in a position where you can pull afew strings and breathe life into it.

I'd stay away from bitcoin lol.
they keep getting nicked ha ha ha

reply to post by StallionDuck


Thank you!!

I personally think that BitCoin is going to become more and more popular. I am all in favor and love that there are even some coffee shops that are using bitcoin as a currency option.

If you truly do not know what it is, it would be worth your while to do some research. Its really quite brilliant.

As for the current issues with it, here are some bits, pieces and links from the Coinbase blog (I get their emails)

From the Coinbase blog Joint Statement regarding MtGox

This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. Mtgox has confirmed its issues in private discussions with other members of the bitcoin community

blog.coinbase.com...

That was followed by a Coinbase Review by Andreas

Based on what I observed during my visit and my experience in security, it appears that the Coinbase system contains the expected funds and their cold storage system and process appear to be operating according to security best practices.

Andreas M. Antonopoulos

antonopoulos.com...

All is well. Gotta love a currency that is not ran by any government.