Bitcoin falls from $266

It's rumored that flagging something when the majority don't want it flagged will likely backfire.

I thought the flagging system used a scale of importance based on the users history. If you show good history of flagging, your action is more important. Same goes if you show poor history of flagging.

Also, it seems to be down below 70 now, so another 50% drop since yesterday, depending on what time you're talking about.

You can keep drinking the "everything's fine" koolaid, or get with the reality that currency manipulators have arrived on the Bitcoin train, and are using all the tools they have available to do their job.

Just try loading mtgox.com -- it's slow. Try using it to trade. Even slower. Service is being denied. Confidence undermined. I would not take this as a vote that once the server issues are resolved, the price will continue to soar, but if I said that, it's possible that later I would be able to "told you so".

The efficient-market hypothesis does not have an asterisk excluding cryptocurrencies.

Keynes may have been mistaken on a lot of things but he got one thing right: "The market can stay irrational longer than you can stay solvent."

http://www.facebook.com/MtGox/posts/453409538076792

"There are a few things that we can implement to help fight the attacks, such as disconnecting the trade engine backend from the Internet. By separating the data center from the Mt.Gox website, we will continue to be able to trade"

Of course this is bad design, but you have to remember that this website started out as Magic the Gathering Online eXchange. It was built to trade playing cards, not to serve as a multi-million dollar currency exchange. The trading engine was retrofitted for bitcoin, and was stuck with several bad design decisions as a result. While I agree this should have been fixed long ago, MtGox has had its hands full recently. The massive growth in its userbase, the ever-growing verification queue, and the fact that it is expected to be online 24/7 have made things difficult.

However, I suspect the main cause of today's massive has to do with this: https://mtgox.com/press_release_20130409.html

It will interesting to see what effect this policy change will have.

[1] https://www.facebook.com/MtGox/posts/455962117821534

[2] https://www.facebook.com/MtGox/posts/453409538076792

[3] https://twitter.com/MagicalTux/status/320043013420249088

What exactly gave you the right to call me "paranoid"?

The fact that I said the US might ban the Bitcoin?

For one, the Bitcoin is NOT like the Euro or the Yen at all. It doesn't have any government to back it, and it has properties that make it not very likable to any large government.

Banning bitcoin wont be like banning Euro or the Yen, which are legitimate, sovereign national currencies.

It would be like banning or freezing assets in off-shore accounts (which governments have been known to do). Or like banning the private buying of gold (which the US had done, from 1933 to mid-seventies:

"Executive Order 6102 is an Executive Order signed on April 5, 1933, by U.S. President Franklin D. Roosevelt "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States". The order criminalized the possession of monetary gold by any individual, partnership, association or corporation."

http://en.wikipedia.org/wiki/Executive_Order_6102

Private / alternative currencies have been banned in several cases all over the world. One example from Wikipedia:

In Australia, the Bank Notes Tax Act of 1910 practically shut down the circulation of private currencies by imposing a prohibitive tax on the practice. It was later repealed and a fine imposed for private currencies (Commonwealth Bank Act 1945). Many other nations have similar such policies to eliminate private sector competition.

Or:

The co-operative society Jord Arbejde Kapital was founded in Denmark during the Great Depression in 1931. The society issued a popular local currency which was subsequently outlawed by the Danish government in 1933.

Not to mention that the whole idea that the US doesn't care at all about Yen and Euros is flawed BS. The US would very much like to keep the dollar unthreatened as the "golden world standard". But those currencies belong to very large economies and countries for the US to be able to do anything about it. Not to mention that the Yen is tied to the dollar in intricate ways nowadays (Chinese own trillions of it).

Still, when any third world or developing country expresses a desire to do business in Euros (something that happened oftentimes before the Euro crisis), the US exerts as much political and diplomatic pressure as it can to have them revert course.

So, using the fact that the US does not ban the Yen and the Euro as an "argument" why it cannot ban bitcoin? Really, not the very best in informed thinking. To call one "paranoid" about arguing the possibility of the bitcoin ban? Even worse (and rude to top).

You might as well say that since the US hasn't entered a war with China or EU, it will never enter a war with a terrorist group operating outside any government. Seeing that China and EU are huge countries/unions, whereas the Bitcoin community is just an ad-hoc random assembly of people investing on an alternative monetary system.

Spoken like a person who has never tried to launder millions of dollars in gold. You don't just go down to the pawn shop and redeem millions of dollars in gold.

For one, the US government has banned gold for decades. So it's not that "OK" with it. It also closely monitors gold deals for money laundering purposes. Not to mention that there are governments all over the world that still forbid the private gold ownership.

>Basically the US government is totally fine with side markets that they cannot control directly and that exist in parallel with the USD (whether it is EUR, gold, Bitcoin, whatever).

The US government is totally NOT-fine with anything it cannot control, especially side markets. Gold is a bad example: they already have banned it once in the past. EUR is also a bad example, because its a legitimate foreign currency (of 400 million people), not some "side market". And bitcoin is also a bad example, because it's insignificant at the time -- a very small niche. There are small software shops that make more money annually than bitcoin has at this point.

>You say it can be used for money laundering, but gold and cash can already be used for money laundering (and even more discreetly since trading gold or cash does not leave a trail like in the Bitcoin blockchain). The US govt does not make gold and cash illegal because they realize it is silly/unenforcable/pointless and would hurt the economy more than it would manage reducing illegal activity. Case in point: the US did attempt to criminalize possession of gold in 1933, but they eventually realized how silly and stupid this was, so they decriminalized it!

It's not that "eventually realized how silly and stupid it was". Like "oh, snap, why did we ever do such a thing? We are never to take the same decision again". It was just that another government, 4 decades removed from the one who took the original decision, and in different circumstances and economic climate, reverted the decision. We are 4 decades after that again, and things can change again if similar occasions to 1933 occur (which was in the "Great Depression" era).

Plus, the US still keeps very close tabs on gold, especially as it related to money laundering.

Something that they are willing to do for Bitcoin also. From the Wall Street Journal: "the U.S. is applying money-laundering rules to "virtual currencies," amid growing concern that new forms of cash bought on the Internet are being used to fund illicit activities. The move means that firms that issue or exchange the increasingly popular online cash will now be regulated in a similar manner as traditional money-order providers such as Western Union Co. They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000. Moreover, firms that receive legal tender in exchange for online currencies or anyone conducting a transaction on someone else's behalf would be subject to new scrutiny, said proponents of Internet currencies".

>No. The world economy is not a zero-sum game. It is possible to create wealth (wealth is stuff we want, not money, see http://www.paulgraham.com/wealth.html ) and Bitcoin and its economy would certainly create extra wealth.

The economy might not be a "zero-sum game", but currency pretty much is. You kill a currency, activity and wealth migrates to another.

Plus, wealth is also destructed every day. A 0.0001% drop on Wall Street will destroy more wealth than all current bitcoins combined (which is a laughable amount, $150M, IIRC).

In my eyes, bitcoin is a geeky and early-adopter obsession slash fad, that attracts the wrong kind of people (the "gold-rush" types and techno-naive) and gives them false assurances.

The value of the dollar is "guaranteed", in theory, by the law that states that anything for sale inside the borders of the united states can be bought for dollars, without exceptions.

As to how guaranteed that makes a dollar, that is a matter of opinion. It is a lot better than Bitcoin imho.

On that basis I would say that the word of the United States is far more intrinsically valuable than any physical object.

Ergo, a dollar today is guaranteed, on the average, to buy just under a today's dollar worth of things next year.

Ergo, a modern dollar is about the closest thing to a guaranteed exchange value that the world has ever seen.

To say that the word of the United States is worthless is to ignore reality.

Look at it this way if you must: the rich and the powerful, in the US, have vast amounts of wealth stored in USD and USD-demoninated instruments. It is therefore in their best interests to preserve the value of the USD, or at times slightly inflate it.

The risk of your second paragraph cuts both ways. If the euro collapses tomorrow, you might need only US$13 to pay that debt.

- the financial system is a huge disappointment (worldwide financial crisis)

It's not that we love Bitcoin (sure, it is an interesting piece of technology, but it's money, and money is a dirty word), we just dislike the alternatives.

Huh? What does this mean? This phrase can be applied to government bond ("The US gov't promises to pay you back") or to FDIC insurance ("The US gov't promises to refund your money if your bank closes"). But it doesn't have any meaning for dollars, unless it were to mean that the gov't would exchange it for gold, which of course is false.

And that kind of backing is what the community is TRYING to build for BTC.

But I disagree that you need taxation as a bootstrap to get you to the equilibrium. Indeed, in the actual history of the US it was the backing by gold that established the dollar; initial taxation was minimal. Now that backing has been removed, and the dollar still functions. Then, I infer, you would argue that taxation has replaced gold-backing as the stabilizer.

Your penultimate paragraph is an interesting suggestion, but I'm not convinced. Could you point me toward some place where it was fleshed out? I can easily imagine a world where people keep writing new contracts denominated in dollars, whose street value is set by the process that I described. Where is the motivation for people to defect? One answer is that a new currency (like Bitcoin) comes along that has special properties that make it useful enough for people to absorb transaction costs and to start exchanging alongside the original fiat currency. Then things could unravel. And indeed, taxation could suppress this by providing additional friction like I mentioned in my original comment. But in the absence of such a new currency I don't expect the dollar to spontaneously start to unravel on its own simply because there are no taxes. People would continue to need a medium of exchange and the dollar is very good.

i think legitimacy is more correct than value - value is a result of what people demand in exchange for their goods/services. Legitimacy is the trust that people have on the currency (ie, the trust that others woudl also accept the currency).

That seems like a fairly artificial mental exercise. Why would market value be zero if intrinsic value is greater than zero? I suppose the only situations would be if a good has a unique property that can provide utility to you but no one else, like a food that for some reason only provides nutrients for you, or any good in a truly post-scarcity society or region, or if the market is extremely uninformed or irrational.

I think the real problem is with the metaphysical implications inherent in the word "intrinsic." You can always go "one level higher" and say that the value at the previous level was not intrinsic or "as intrinsic." Does an apple have intrinsic value if there are no humans alive anymore, and if not, is the value really "intrinsic" in the apple?

As far as I can tell, the specific term used in finance is based on predictions of the future value that can be derived from the good, regardless of its current market price. Of course, I would suspect that most market participants already make predictions about the future and that those predictions affect the price they are willing to buy or sell a good at. Granted, some people will be able to predict the future more accurately than other people, but does that mean we can only tell what the intrinsic value of something was in hindsight?

Cost of production should be a price ceiling, not floor: if I can make it for $X, why would I buy it for $Y >> $X?

Edited: To hopefully head off further misunderstandings, by "should" here I mean "it makes the most sense to expect" - not any ethical imperative - and I'm speaking in broad terms, in the long run.

If 80% of bitcoin sites unrelated to each other are down at once, there's obviously some sort of attack going on. Several unrelated sites (but sharing a common theme) don't normally go down ... unless there's an Amazon outage :P (which there wasn't..).

The question was, whether the DDOS was caused by a large volume of trades. The answer is, no, because there wasn't a larger than normal volume of trades occurring, it wasn't possible due to the lag on the exchanges.

I don't know why all those bitcoin sites were down, but the fact is that the largest bitcoin sites were all down for at least a few minutes each.

The intention though was probably to trigger a market reaction to buy in at lower prices. It appears to have worked temporarily.

My point is simply that it's pretty easy buy international currencies on the forex. IMHO easier than buying bit coins.