Can someone explain what we are watching happen. I know nothing about what Bitcoin is.

>> ^KnivesOut:

So did the entire market take a hit because one exchange as compromised?
On another note, is now the time to buy bitcoins?


Yes, but not much.

Mt.Gox is was the primary exchange with >95% of all BTC/USD trades taking place there. So it going down means:

1) All the active balances in USD & BTC are locked in Mt.Gox database until they reactivate.
2) If Mt.Gox decides that they can't cover their accounts they may go bankrupt, which means all the money in point #1 goes into legal limbo.
3) All trading has to move to a different exchange, probably tradehill.
4) Liquidity just disappeared for about 24hrs, which happens at least once a week in most markets, but BTC is accustomed to 24/7

Tradehill is already hopping, right now it's back at 15USD/BTC

So did the entire market take a hit because one exchange as compromised?

On another note, is now the time to buy bitcoins?

Lesson learned: don't use MTGox. It's going to be interesting to see what happens with Bitcoin because of this.

Fun side note: MTGox stands for Magic: The Gathering Online Exchange.

>> ^blankfist:

Interesting. It looks like MTGox (the exchange) was hacked specifically, and not the bitcoin itself.
Misleading title.


fixed it.

Yeah, and even then it wasn't "hacked" as such. Read about it here: https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback

Interesting. It looks like MTGox (the exchange) was hacked specifically, and not the bitcoin itself.

Misleading title.

http://videosift.com/video/Bitcoin-Course-Crashed-17-5-Dollar-to-1-Cent-in-Minutes

Tags for this video have been changed from 'bitcoin, drug, silk road, currency, drug way' to 'bitcoin, drug, silk road, currency, drug way, tor, the onion router, anonymous ip' - edited by lucky760

That sounds like you are saying all arbitrary valuation is a Ponzi scheme, which I don't think is exactly right. If people stop buying stocks, it doesn't cause the companies to crash, if people stop investing into bonds, the money doesn't crash either. Investing real money into money causes the money to increase in valuation without a need for continued investors. Any investing can lead to bubbles when fueled by speculation...Bubble != Ponzi. Bubbles to be had here for sure, just like any IPO for a stock. I think you are wise to be cautious, though, this is a pretty crazy new idea. In that, though, no risk, no reward. It would be akin to investing in gold before a major nation switched to the gold standard...chaching. Same here...if everyone starts using that currency, it will be in high demand making it more desirable.

I plan to read about how it creates additional units without causing inflation or not creating enough which causes deflation. I am interested how it maintains all that. It is all very very intriguing.


*edit grammar and spelling

>> ^Stormsinger:

>> ^GeeSussFreeK:
>> ^Stormsinger:
Sheeesh, talk about your Ponzi schemes...

I am confuzzled by this statement. Is China investing hundreds of billions in US bons any different than this? Buying money is a strange concept for me, but this doesn't look like a ponzi setup at all...as it is used as a tender not an investment that needs more investment. Akin to calling paypal a Ponzi scheme...unless I don't understand you completely.

A Ponzi scheme is one in which investors get returns not from any profit but only by being paid with the buy-ins of the later investors...which means that sooner or later, when there are no new investors, the last wave or six -cannot- be paid, because there is no profit. A scheme such as what Hybrid is discussing has no profit...it's nothing but pure speculation, and thus, has no profits to pay to investors. IOW, it's -all- bubble...and the last "investors" are going to be left holding empty balloons.

>> ^GeeSussFreeK:

>> ^Stormsinger:
Sheeesh, talk about your Ponzi schemes...

I am confuzzled by this statement. Is China investing hundreds of billions in US bons any different than this? Buying money is a strange concept for me, but this doesn't look like a ponzi setup at all...as it is used as a tender not an investment that needs more investment. Akin to calling paypal a Ponzi scheme...unless I don't understand you completely.


A Ponzi scheme is one in which investors get returns not from any profit but only by being paid with the buy-ins of the later investors...which means that sooner or later, when there are no new investors, the last wave or six -cannot- be paid, because there is no profit. A scheme such as what Hybrid is discussing has no profit...it's nothing but pure speculation, and thus, has no profits to pay to investors. IOW, it's -all- bubble...and the last "investors" are going to be left holding empty balloons.

>> ^Stormsinger:

Sheeesh, talk about your Ponzi schemes...


I am confuzzled by this statement. Is China investing hundreds of billions in US bons any different than this? Buying money is a strange concept for me, but this doesn't look like a ponzi setup at all...as it is used as a tender not an investment that needs more investment. Akin to calling paypal a Ponzi scheme...unless I don't understand you completely.

>> ^DerHasisttot:

Somehow i highly distrust all this libertarian propaganda... why? Because it clearly is propaganda.
And they all seem like giant douchebags.

I understand that position, I agree that these folks tend to reek of "fuck you", but this guy is generally accurate in his description of how bitcoin works.

The real compelling application, which he didn't bother to mention, is that the transactional cost is extremely low and the system security is extremely high. If the market growth stabilizes to a slow deflationary curve against the USD, then it will become useful for what it was designed for, allowing people to make digital transactions of funds with a very small non-percentage transaction cost.

I am currently running a few GPGPU servers on the bitcoin network, which while not as profitable as straight speculation at least is a realistic stable business model which is not dependent on beating a bubble burst.

Probably you weren't suggesting switching from dollars to bitcoins on a large scale, I guess. I can't remember whether or not you're the one always posting videos about how the dollar's going to vanish overnight.

Gambling on a potential investing opportunity, in case it does get big? I can understand that. Too risky for me, though. Just want to potentially get in on the ground floor of an idealist revolution? I can understand that, too, I guess.

>> ^blankfist:

>> ^direpickle:
Can you explain what makes bitcoins worth anything? Why can I trust that I will be able to trade a bitcoin for goods and/or services tomorrow, much less in five or ten or forty years? I really don't get it.
Also, what's peer-to-peer money? Money that one person give to another person? Like... any money that's not credit card debt?

It's a competing currency. What makes it worth something are the people willing to use it. You can't be sure it'll be around, so you could lose everything you invest into it. That's how currency works. You can't be sure the US dollar will be around in another ten years either.
You can read up on how it works in greater detail, but p2p means that your coins are stored anonymously across multiple user's machines. It's kind of like bittorrent. Here's their wiki page:
http://en.wikipedia.org/wiki/Bitcoin


I concede that it is possible for the USD to stop being worth anything, too, but I think it's likely to be a smidge more stable. Even if the world goes nuts, *probably* the store down the street will still give me a loaf of bread for a dollar or two, at least for a little bit. I think that any event that makes the USD so worthless so quickly that it's worth drastically betting against it as a citizen (not a rich person) is also going to make bitcoins (and any currency, really) useless. Better off stockpiling whiskey and ammunition.

I don't know. I just don't buy it. I imagine a large portion of the current bitcoin users are just the equivalent of oil or real estate speculators, trying to make a buck on the run-up. How many have you bought?