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Comment by bdcravens | Hacker News Reader

Everyone's quoting Mt. Gox eclipsing its previous high. However, it's pretty much impossible to cash out of Mt. Gox, and so it's trading at a premium to other exchanges. To this end, Mt. Gox beating its previous isn't an apples-to-apples comparison.

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Doesn't matter :-) Coinbase's exchange rate is currently matching and even slightly surpassing MtGox's: An hour ago I saw Coinbase's bid at $265.xx and MtGox's bid at $264.xx https://coinbase.com/charts

I usually check rates daily and today is the first day I saw MtGox not offering the highest bid(!)

My understanding is that Coinbase isn't 100% an exchange, though it does allow both selling and buying. I believe Coinbase bakes a profit into pricing; it's not a pure book.

A better point of comparison would be exchanges that were around at the previous peak, such as Bitstamp or BTC-E.

Coinbase is one of the top 3 highest-volume exchange in the US! This is where many people buy and sell. If their customers exchange bitcoins there, it is fair to say that Bitcoin "reached" the specified value it was exchanged at. Ignoring it is ludicrous.

Bitstamp is less than 5% away from gox (and has comparable volume) so instead you can think of it as 5% from an all time high.

I think there's something to this, and I say as much in my story. But with exchanges trading at different values, it's hard to know which price is the "real" one.

They are all real. And yet they are all fake. One might guess the lowest markets price is the closest to the actual value, but you most look at the volume of trades. And, this is what I think is partly due to the major gaps between Gox and Bitstamp and other markets, is the ease/fees of the different markets and actually going from say USD to BTC and back again.

Perhaps the Coindesk weighted index?

http://www.coindesk.com/price/

Among other factors, for inclusion in the index, money must be liquid within 7 days.

Also http://www.bitcoinaverage.com

Dollars that you can actually access are real, and ones that you can't access (e.g. in a MtGox account) are fake. A price denominated in fake dollars is a fake price.

It's true that Gox$ aren't US$. But that doesn't mean they're entirely fake.

The matter of the fact is that, some people are doing arbitrage between Gox and other exchanges. And this arbitrage keeps prices somewhat in line. If the arbitrage would not exist, then the prices would be all over the place and not correlate at all.

The question then is, if the Gox$ are all fake and nobody can get any, how come the arbitrageurs can keep in business? And the answer is: they couldn't. Some people get to convert their Gox$ to US$ and then use them to buy bitcoin on other exchanges to sell them on Gox.

But, not all people, for whatever reason, get to do that. And the process might be lengthy, and there's a risk that it might fail for you.

So the spread between Gox and other exchanges is the arbitrageurs estimate of the risk of selling BTC to Gox$ and be able to convert them in a suitable timeframe to US$.

The last thing I heard is that you can get money out quickly by paying a 5% fee, so I think you're right that arbitrage is keeping the price difference around 5%.

I've never had any problems cashing out at MtGox, but I also trade in yen.

How long does it take to cash out in JPY ?

Given that is where Mt.Gox is located, I would not be surprised to hear <5 days.

I have heard this before, "Mt.Gox is not a bad company to do business with if you're in Japan." They are not a sham company by any means, they are just hamstrung by US government intervention.

My cash out time was like a day once support corrected an error on my part I had made when setting up my bank account.

Doesn't this apply to anything you can buy from multiple places? Milk may be $1.50 from a corner shop but $2 from a supermarket. What price is the "real" one? Taking a mean average based on trade volume seems to be the most logical way to value it.

I guess as good becomes more liquid (like USD and gold) then the gap gets reduced.

They're all "real". Somebody, somewhere, traded that tick, fiat (or gox$) and bitcoin changed hands.

If you consider the 4 largest exchanges (together about 90% of the volume), then you can look at the price as this fuzzy zone somewhere between the highest and lowest tick.

If you want to know when a specific price has been surprassed comprehensively, it's when all of the top exchanges have gone over it (not just one).

But if you want to know if it's somewhat likely a specific price will be surpassed by all exchanges, then just one going over carries a lot of meaning.

Not impossible, but you're not getting your money in less than 4-6 weeks. Although, looking at various complaints on forums, some people have been waiting since June/July or longer for withdrawals. Gox really needs to get its act together on this. They're not the only exchange in town anymore; they're not even the biggest exchange anymore.

https://support.mtgox.com/entries/21649594-Withdrawals-and-D...

True, "impossible" is wrong word to use, but point is that there's still a premium on the price due to the illiquidity.

Is it possible MtGox is a ponzi-scam style operation, that can't pay out users in a timely manner because they no longer actually have the money they claim to have?

It's a good theory.

This is interesting because bitcoin is presented as a reliable store of value, but I bet a lot of people who trade on exchanges leave their coins with the exchange for convenience.

So - what if some operators hold less coins than they claim to have, and are shuffling around from a fractional reserve, as you describe?

There would be more coins in the system than actually exist. I get lost in the M1/M3 representation of volumes of money, but that starts to reintroduce some of the confidence problems with paper money.

But - if this problem exists - it will be temporary, and is not inherent to bitcoins. Either the ecosystem will evolve so people stop holding coins at the exchange, or there'll be a couple of run events causing a loss of confidence in exchanges for storage.

MtGox does not have the money, that is no secret, but it is NOT because they are a scam.

It is because US government poached their money.

Are you sure about all that.. I read they have a large stash of their own bitcoins..?

Here's more detailed speculation on MtGox's solvency: "The good news is that MtGox made huge bitcoin profits over its lifetime, which are more than enough to cover the holes in operating capital due to seized accounts and the lawsuit filed by Coinlab. The bad news is that no one knows if MtGox kept the bitcoin, or traded it for fiat." http://blog.standardcrypto.com/2013/09/07/who-will-buy-mtgox...

That is not true, however. While you can't withdraw dollars from Mt Gox, all other currencies work just fine.

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