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Comment by drcode | Hacker News Reader

Unfortunately true. I'd hate to tell everyone with money in mtgox that it is time for a bank run, but...

Luckily, everyone with deposits in Mt.Gox can convert them to bitcoins and send them to some other address. This is one of the benefits of Bitcoin.

If mtgox crashes bitcoin crashes, at least temporarily. You'll end up with your bitcoins safe, but they won't be worth $100+ anymore (if ever again).

Unfortunately, nobody will be willing to sell bitcoins for USD on mtgox if they can't ever get their USD out.

Right, but my guess is people who have dollar holdings on mtgox aren't going to find it as easy now to sell them in order to do such a transfer.

This assumes they haven't already spent some of their depositors' bitcoin and can run out. (Not claiming they have done this, just pointing out this scenario is possible)

> Luckily, everyone with deposits in Mt.Gox can convert them to bitcoins and send them to some other address.

If you have US dollars on Mt.Gox, and no one can take US dollars out of Mt.Gox now and there is very low confidence that this will change in the future, its going to be very hard to find anyone give up any other currency or virtual currency for US dollars -- whether you want bitcoins, yen, slips of latinum, or triganic pu, no one is going to give you them for dollars on Mt.Gox if dollars deposited on Mt.Gox are trapped.

Sure they will, coinbase will quite happily turn them back into USD for you.

If you have bitcoins on Mt.Gox, sure, you can get USD for them elsewhere.

The issue I was raising was that if you have USD on Mt.Gox and people don't think USD will be able to be extracted from Mt.Gox, you will have trouble converting your USD to bitcoin to get it off Mt.Gox, because people who have bitcoin on Mt.Gox will be reluctant to convert it to USD on Mt.Gox.

That's true, but I'm unclear why you'd store USD for any length of time on mtgox anyway.

It takes a long time to transfer money into MtGox and with the wild price fluctuations it might be prudent to wait for a better price instead of buying at the current market price the second the transfer clears.

> That's true, but I'm unclear why you'd store USD for any length of time on mtgox anyway.

The same reason you'd keep any currency in an account tied to a particular marketplace: liquidity that allows you to trade without the delay of getting money into the marketplace from somewhere else.

Exactly what I did when I heard about dwolla no longer offering withdrawals for MtGox....I love coinbase! It's so simple and the UI is clean.

That seems to be what's happening at the moment. I initially assumed this announcement would cause a panic sell-off, instead it seems as if a lot of users are now converting their USD back into BTC in light of the hiatus. The exchange rate has ticked up pretty steadily as a result.

If it was just a MtGox only issue, then bitcoins on MtGox ought to be at a premium compared to the other exchanges. But if you look at http://bitcoincharts.com/markets/ it seems like MtGox is perfectly in line with the other markets - within half a dollar of Bitstamp and actually cheaper than BitBox etc.

This is true, but Mt. Gox historically has the lowest exchange rate as they have far more liquidity than other exchanges. Gox is also the primary indicator against which other markets rise or fall, today is no exception.

In an unrelated note, big fan of your site.

Check again -- look at http://bitcoincharts.com/markets/currency/USD.html. There's a significant premium on MtGox. At the time that I'm writing this, the values are

    mtgoxUSD:     112.99
    bitstampUSD:  107
    btceUSD:      106.87
    cbxUSD:       106.12
    vcxUSD:       105
    bitoxUSD:     95

I get a different version checking now - MtGox isn't even the most demanding of Bitcoin:

    icbitUSD    100
    bitstampUSD 103
    btceUSD     106
    cbxUSD Camp 107
    mtgoxUSD    109
    rockUSD     109
    bitboxUSD   118

It's tied with rock, and as I said, below BitBox. Looks like Bitstamp has diverged more, though.

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