Mt. Gox may have lost 750,000 bitcoins

There is a lot of irony to be had in the world of Bitcoin. From security to stability to manipulation.

I believe they are suggesting that. The question is who picks up the tab. As long as it's not a publicly funded bailout, I can't say as I really care.

JP Morgan did it. So can Satoshi.

Assuming for a moment the leak is accurate, the document could be a memo from an organization like the bitcoin Foundation that has been leaked from within Mt Gox. I didn't get the impression that MG management were necessarily the authors of the document.

One would hope that they would periodically compare coins on hand vs coins reportedly held.

At the risk of drastically oversimplifying... This seems hauntingly familiar to a pattern I've seen dozens of times in MMO's when the right sort of exploit falls into the hands of the right group of people. Once you've found out about it, the damage is done, and usually now obfuscated in such a way as to be unfixable(e.g. laundering); now a handful of players can control the bulk of currency in a market. "the right people" aspect is the "keep quiet" aspect; and is necessary for the impact to have sufficient time to really grow in magnitude. (right people doesn't have to != normal people)

Perhaps I'm just overfantasizing the whole thing in my head; but I like to think (and probably in doing so coloring my perceptions) that there are similarities between certain events in cryptocurrency and game-currency life cycles.

>I have to wonder what it looks like when a person suddenly becomes very rich without any explanation for it. Wouldn't at least some of these people have attracted a lot of attention?

There's no reason they had to actually spend the money. DPR had $85M in BtC yet shared a flat with unsuspecting room mates.

I think a cynical view would suggest it is exactly what it appears to be.

It's tempting to buy some bitcoin from mtgox just on a lark since the selling price is so low there. It's a heck of a gamble but would be a steal if they manage to pull themselves out of this mess.

It all started as "Magic the gathering exchange", so... yeah. Pretty much everything is possible.

There is a story about the country hick who comes to the big city and gets a checking account. A couple weeks later, the bank manager call him up to tell him that he has overdrawn his account, that he has no more money. "That's impossible!" says the rube. "I still have 3 checks left!"

Too many programmers are woefully ignorant of how to write systems that handle money. Too often I have seen systems that treat money as floats, or have primitives that allow the creation and destruction of money. Accounting and banking have their own special set of rituals.

I think most programmers can understand this if they think about it a bit. Think about the lower quartile of coders [1] you know jumping in and writing a system to handle many kinds of money, including a novel kind that is poorly understood. Now put them under conditions of massive growth, conditions in which there is a shit-ton of money, fiat and crypto, arriving and departing in buckets.

I once saw a cartoon where a bank teller is saying to a worried-looking customer, "I'm sorry sir, there's not enough money in your account. Let me see if there's enough in somebody else's." I could easily believe that's what happened, here, the Dunning-Kruger effect writ large.

[1] I have no knowledge about MtGox's developers; this is just a though exercise.

> I really do not understand how it is possible to run a system size of MtGox without some kind of reconciliation.

It's very easy. It's actually easier than doing a reconciliation.

Its quite possible that MTGox thought "everything has to balance, because we're only giving out money that people have deposited, therefore what would be the point of a reconciliation?"

Do you have any reason other than their own claim at credibility to trust this random blog on the internet?

>Coinbase or BitPay losing their customers' money would be an existential threat to Bitcoin. MtGox? Not really.

If MtGox was still the massively dominant exchange that it once was, I would say that it would be at least an equal existential threat to BTC. To this point, BTC has survived (even thrived) without much use as a payment currency (relatively speaking). It's been more about trading.

So, to the extent that a MtGox failure is survivable for BTC, it's because there are now other exchanges with significant market share to support liquidity and trading activity until its use for payments takes hold (if ever).

> Once it becomes widespread knowledge that merchants can accept Bitcoin with no fees (up to $1M) and get the exact dollar amounts in their bank accounts, they will accept Bitcoin, and they'll prefer it.

Completely glossing over the fact that nearly all consumers have credit cards and have never heard of bitcoin. And that consumers won't have any of the consumer protections they enjoy with credit cards or those fancy cash back rewards (consumers really like cash back cards). And that whole 15 minute confirmation time, which would make it extremely difficult to use in retail.

Now that a document, real or fake has been posted, the price is going to go down whether this is real or not.

8-0

Bonus: download the PDF and change the highlighting page 11 to 20% (or just change teh color) to look at their internal balance sheet and projections out to 2016.

MtGox would have to disclose all wallet addrs used for incoming deposits, hot and cold storage for that.

Given the holy fucking mess they're in already, they should provide full transparency - i.e. not only disclose the wallet addrs, but also the total amount of fiat cash they hold and which account ID holds how much BTC/fiat.

That would allow an independent entity to either resolve the clusterfuck (since obviously MtGox is unable to) or fairly wind down MtGox by evenly distributing the remaining BTC/fiat amounts, a small amount set aside for some lawyers to try to unfreeze the Dwolla funds.

The question, as always with markets, is how much of this is already priced in. The MtGox BTC price has diverged for quite some time and is currently at $115 which tells me that a lot of people are already assuming a low probability of ever seeing any of the money in MtG accounts again.

So, basically there are two scenarios and combinations thereof if they indeed lost all of the coins: 1) Most of a complete loss is already priced into the general BTC market and nothing much happens. 2) Once this gains more (mainstream) attention and the general public realises what has happened, the trust BTC had been able to gain evaporates and there will be strong sell-off.

I don't think it's possible to say which one it will be.

You mean by giving it to MtGox to keep them solvent? That would be a crazy day.