BitCoin : Account hacked, coins dumped = BTC Crash

[silverpig]

Maybe to you it's an open question, but I like currency they I can spend anywhere and that is backed by a goverment.

You can't spend USD anywhere. Most places yes, but not anywhere.

"Anywhere" is a relative term in this context. If you're in Kansas, yeah, you can spend your USD anywhere. If you're in the middle of the Congo, maybe not so much. Certainly Mexican pesos are essentially not spendable in Serbia.

Rather than being a geographic delineation, bitcoin's "anywhere" is defined as cyberspace vs. the real world. Yes, the number of places that take it are small right now, but if it starts to prove itself some more, I could see it start to be accepted at more and more places. With an exchange that allows you to turn it into Pesos, USD, or Euros, you could start to see bitcoin accepted "anywhere".

 

[nobodyknows]

The whole point of all of this is that it ISN'T backed by a government to screw things up. No regulation at all. No overseeing authority. Just Bitcoins and their users. This whole MtGox being hacked thing really has nothing to do with BTC, but the people that don't understand this well aren't getting that. An exchange was hacked and money was stolen, that has nothing to do with the actual process of BTC mining or the currency in itself.

If the CME got hacked and millions of USD and EUR were stolen, would you fault the currency? I think not.

Oh I don't care if they were hacked, I'm just saying that IMHO bitcoins are a miserable excuse for a currency.

 

[nobodyknows]

You can't spend USD anywhere. Most places yes, but not anywhere.

I'm sure you could spend US dollars anywhere that has a bank, that's good enough for me.

I'm not going to waste my time "mining" bitcoins and I sure as hell am not going to spend my hard earned US dollars buying them.

 

[CLite]

Think of it this way. If a MAJOR stock owner of Apple decided to sell all his stock all at once suddenly, what do you think would happen to the Apple stock?

Don't look at $1000. I think from a trading perspective, the hacker tried to dump 275,000 bitcoins at once. That is about 5% of ALL bitcoins that currently exist. 5% of the currency was dumped on the market all at once.

What do you expect to happen in a free market when something like that happens? Hell, every major market has triggers that shut it down if something drastic happens. NYSE, NASDAQ, they all shutdown if something completely unusual happens.

Yes the OP article was quite misleading. I thought it only let you withdraw $1,000 at current present value, obviously dumping something for a penny on the dollar will drop price. I thought the price drop resulted from information that bitcoins was getting hacked. Additionally it appears thousands of accounts were compromised, not just one, and in total 100,000 bitcoins were dumped. Quite a fubar that shows the general fragility of a system that depends on a few key sites, and also large groups of shareholders to "mine".

http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+Full+Story/article21942.htm

 

[YoungGun21]

The only fault I see here is that BTC only had this one major exchange, which I've always thought was a bad idea. Nothing good enough came along to be an alternative though (well there was one but then Paypal killed that).

 

[CitizenKain]

The entertainment value of watching the buttcoin community flail around uselessly is worth far more then the coins ever would be.
Going to be some nice cheap videocards on the market soon when these guys have to sell everything to pay for rent and powerbills.

 

[Doppel]

The entertainment value of watching the buttcoin community flail around uselessly is worth far more then the coins ever would be.

lol

I don't understand why, by design, they would have created a "currency" that, should it find widespread adoption, will by its very nature become severely deflationary.

 

[nonlnear]

lol

I don't understand why, by design, they would have created a "currency" that, should it find widespread adoption, will by its very nature become severely deflationary.

To enrich the early adopters. Inflationary currency is only good for the issuing authority if it's debt based. Quite the opposite for a currency based upon real scarcity.

 

[Doppel]

To enrich the early adopters. Inflationary currency is only good for the issuing authority if it's debt based. Quite the opposite for a currency based upon real scarcity.

And the early adopters are already in place, so basically if you're not one of the few already in on the game with coins you'd be paying through the nose. It's amazing people defend this as anything other than an experiment, that is all it is and has no practical purposes without, at the absolute least, being completely started anew--and that's after the beta testing is finished (and it's clearly in beta).

 

[Doppel]

If the CME got hacked and millions of USD and EUR were stolen, would you fault the currency? I think not.

If that theft resulted in $15 being worth $.07, yes. You wouldn't?

CNBC has an article about this now: http://www.cnbc.com/id/43464477/

What’s more, the very nature of the virtual or peer-to-peer status of BitCoins may make them subject to massive inflation. In fact, BitCoins seem far more vulnerable to inflation, manipulation and vulnerability than either government fiat currencies or traditional alternatives such as gold and silver.

This may be the case in short term, but as the Wiki article points out if Bitcoins ever got any real interested their value would skyrocket and anything denominated in them suffer major deflation.

 

[silverpig]

I'm sure you could spend US dollars anywhere that has a bank, that's good enough for me.

I'm not going to waste my time "mining" bitcoins and I sure as hell am not going to spend my hard earned US dollars buying them.

I'm in Vancouver and there are plenty of places here which won't take USD cash...

 

[nonlnear]

If that theft resulted in $15 being worth $.07, yes. You wouldn't?

You would have a point if that were in fact the case. They are managing this better than the NYSE managed their recent flash crash.

 

[Greenman]

This is the first I've heard of bitcoins, perhaps one or two of you could help me fathom this.

I start by downloading something that solves some unnamed problem, and that generates a bitcoin?

I can then redeem this coin for goods, without having done any work?

Each transaction is made using an unbreakable code and attached to my particular coin?

If the above is correct (and it can't be), shouldn't I quit working and mine bitcoins to make a living?

I know I'm not getting something here, because in my model the currency can't have any value. So perhaps the only question that matters is where does the value come from?

Thanks in advance.

 

[halik]

If the CME got hacked and millions of USD and EUR were stolen, would you fault the currency? I think not.

When that happens, it's a crime. When someone steals virtual items, it's ????

 

[CitizenKain]

This is the first I've heard of bitcoins, perhaps one or two of you could help me fathom this.

I start by downloading something that solves some unnamed problem, and that generates a bitcoin?

I can then redeem this coin for goods, without having done any work?

Each transaction is made using an unbreakable code and attached to my particular coin?

If the above is correct (and it can't be), shouldn't I quit working and mine bitcoins to make a living?

I know I'm not getting something here, because in my model the currency can't have any value. So perhaps the only question that matters is where does the value come from?

Thanks in advance.

No, you download a program that helps track the bitcoin market and complete math things. At the end of completing a segment, a number of coins is given out at random to people who worked on it. As coins are mined, the difficulty in completing a segment increases, which means it takes more processor power to make new ones. Now, unless you live with your parents, its likely you have to pay for that electricity, so calling it free is a minor understatement.

Coins are attached to a wallet that you create when you join the network, so nothing is attached to you at all, but a record saying that your id was given a coin for doing X. If you lose your wallet, its gone for good.

Reasons why you shouldn't quit your job and mine coins is simple, the cost to generate coins will only increase, while the value of the coins will only decrease. Either through people discovering that internet money isn't the same as real money, or things like the Magic the Gather Online Exchange being hacked and your money stolen that way.
Either way, its not worth it.

 

[nobodyknows]

I'm in Vancouver and there are plenty of places here which won't take USD cash...

So do they take bitcoins?

 

[Doppel]

I'm in Vancouver and there are plenty of places here which won't take USD cash...

But not plenty of banks, dare I say none.

Reasons why you shouldn't quit your job and mine coins is simple, the cost to generate coins will only increase, while the value of the coins will only decrease.

The value will only INCREASE. More people fighting over diminishing supply = higher value. And since the absolute number of bitcoins allowed is pegged at some pretty low number their value will increase.

Of course, this assumes people keep caring about them; eventually everyone will realize they are worthless and as they jump out of this game then, yes, the value will decrease.

 

[nonlnear]

But not plenty of banks, dare I say none.

The value will only INCREASE. More people fighting over diminishing supply = higher value. And since the absolute number of bitcoins allowed is pegged at some pretty low number their value will increase.

Of course, this assumes people keep caring about them; eventually everyone will realize they are worthless and as they jump out of this game then, yes, the value will decrease.

The value of each Bitcoin will only increase assuming that the overall demand for them as a currency remains at least level. In that way they are no different from any speculative bubble. Tulip bulbs, anyone? Their value is only going to increase!

Who knows? Bitcoins might remain popular enough to sustain increasing value for a couple decades or more, but making assertions about their long term value as if it's a law of nature is just stupid.

 

[Doppel]

The value of each Bitcoin will only increase assuming that the overall demand for them as a currency remains at least level. In that way they are no different from any speculative bubble. Tulip bulbs, anyone? Their value is only going to increase!

Who knows? Bitcoins might remain popular enough to sustain increasing value for a couple decades or more, but making assertions about their long term value as if it's a law of nature is just stupid.

I presume that after enough people are burned by the unbelievable volatility in value and also come to understand the inherent systemic flaws in its model they'll leave the whole thing and then it will be even more fringe and the value will then drop until they just cancel the whole thing. Maybe they'll try again and let existing BC owners convert some of their BCs to the next generation, that seems quite plausible.

 

[BeauJangles]

The only fault I see here is that BTC only had this one major exchange, which I've always thought was a bad idea. Nothing good enough came along to be an alternative though (well there was one but then Paypal killed that).

TradeHill is another exchange.

BitCoin could remain viable for a lot of people simply because of its anonymity. In the world of hacking / cracking being able to send and receive a completely anonymous currency is worth the volatility and other downsides.

 

[Greenman]

No, you download a program that helps track the bitcoin market and complete math things. At the end of completing a segment, a number of coins is given out at random to people who worked on it. As coins are mined, the difficulty in completing a segment increases, which means it takes more processor power to make new ones. Now, unless you live with your parents, its likely you have to pay for that electricity, so calling it free is a minor understatement.

Coins are attached to a wallet that you create when you join the network, so nothing is attached to you at all, but a record saying that your id was given a coin for doing X. If you lose your wallet, its gone for good.

Reasons why you shouldn't quit your job and mine coins is simple, the cost to generate coins will only increase, while the value of the coins will only decrease. Either through people discovering that internet money isn't the same as real money, or things like the Magic the Gather Online Exchange being hacked and your money stolen that way.
Either way, its not worth it.

Thank you.

Would it be reasonably accurate to say that bitcoins are the currency for nefarious activity's?

 

[nonlnear]

Thank you.

Would it be reasonably accurate to say that bitcoins are the currency for nefarious activity's?

No. If you want to talk about the currency for nefarious activity, it's still the good ol' greenback.

 

[Thump553]

I'm in Vancouver and there are plenty of places here which won't take USD cash...

Is that a Vancouver thing? I've had no problem at all in the Calgary area and most of the major eastern cities in Canada. Usually the exchange rate is a bit painful, but that's common using a foreign currency anywhere.

PS-why the h*ll is beer so expensive in Canada? Isn't it your national drink? $15 or so per six pack last summer for Canadian brands.

 

[CitizenKain]

Thank you.

Would it be reasonably accurate to say that bitcoins are the currency for nefarious activity's?

As nonlnear said, nothing will beat a greenback, as you aren't snorting a line off a stripper's butt with a bitcoin.

However, in theory, bitcoins would allow for anonymous transactions across the network if you weren't able to tie someone's bitcoin address to them, as its a long string of characters. But getting money out of the system is where that would fall apart, as you'd have to go through an exchanger and tie that to a bank account.