A Great Disturbance in the Pixel-Money Force

On Monday night, a number of leading Bitcoin companies jointly announced that Mt. Gox, the largest exchange for most of Bitcoin’s existence, was planning to file for bankruptcy after months of technological problems and what appeared to have been a major theft. A document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins in a theft that had gone unnoticed for years. That would be about 6 percent of the 12.4 million Bitcoins in circulation.

While Mt. Gox did not respond to numerous requests for comments, and the companies issuing the statement scrambled to determine the exact situation at Mt. Gox, which is based in Japan, the news helped push the price of a single Bitcoin below $500 for the first time since November, when it began a spike that took it above $1,200.

But at the same time that the news about Mt. Gox was emerging, a New York firm announced plans to create an exchange that could draw the world’s largest banks into the virtual currency market for the first time…

But plans for any new venture will be tested by the collapse of Mt. Gox, which could shake the faith of early Bitcoin adopters. Ryan Galt, a blogger who writes frequently about Bitcoin and was one of the first to circulate the news about Mt. Gox, wrote on Monday: “I do believe that this is one of the existential threats to Bitcoin that many have feared and have personally sold all of my Bitcoin holdings.” …

To be fair, not all (small l) libertarians are douchecanoes, nor are all bankers. But of the intersection of the two sets, I remain stubbornly convinced that nothing good can come!






49 replies
  1. 1
    Villago Delenda Est says:

    To be fair, not all (small l) libertarians are douchecanoes, nor are all bankers. But of the intersection of the two sets, I remain stubbornly convinced that nothing good can come!

    Not all.

    But most. And the intersection is a disaster in the making.

  2. 2
    Wallis Lane says:

    I may be an Luddite, but I’m just baffled by the idea of investing in an ersatz commodity, stored by a former gaming site, that consists of nothing but ephemeral 1’s and 0’s, and existing in the most unsecured medium of commerce. I marvel at people’s inability to resist anything starting with an e followed by a hyphen. Sometimes progress just isn’t progress.

    At least with tulip bulbs, you’d have something nice and colorful for your garden . . . or edible if you were desperate.

  3. 3
    NotMax says:

    But, but – it’s all digital and computer-y.

    When it crashes, you just have to reboot, right?

    /Joe Sixpackpixel

  4. 4
    Glocksman says:

    As I’ve said in the past, the fact that ‘MtGox’ was an acronym for ‘Magic: the Gathering Online Exchange’ told me all I needed to know about bitcoin and the types pushing it.

    I have no desire to be the greater fool left holding the bitcoin bag after the speculators cash out.

  5. 5
    NotMax says:

    @Wallis Lane

    POGs.

    There’s a resurgence just around the corner and over the horizon… (Not.)

  6. 6
    Joseph Nobles says:

    What the?!

    https://twitter.com/BoloBoffin/status/438201484199469056

    It’s almost as if currency should be only issued by institutions with tangible existence in the real world like countries or banks #MtGox

    I tweeted that at 12:39 AM! I wuz robbed! I was….

    Oh, he tweeted that at 11:50 my time. How freaking weird.

  7. 7
    max says:

    @Wallis Lane: I may be an Luddite, but I’m just baffled by the idea of investing in an ersatz commodity, stored by a former gaming site, that consists of nothing but ephemeral 1′s and 0′s, and existing in the most unsecured medium of commerce. I marvel at people’s inability to resist anything starting with an e followed by a hyphen.

    You’re not a Luddite. You (and I!) would not have trusted Mt. Gox or any of those other folks if they were playing with real dollar bills.

    Sometimes progress just isn’t progress.

    Sometimes a con job is just a con job.

    max
    [‘Albeit one good enough to fool the creators.’]

  8. 8
    NotMax says:

    @max

    Sometimes a con job is just a con job.

    Yuppers. Those who do not learn from history and all that.

    “The sun shone, having no alternative, on the nothing new.”
       – Samuel Beckett, Murphy

  9. 9
    wetcasements says:

    Libertarians are adorable!

  10. 10
    Baud says:

    Now all they have to do is blame the NSA for this and the circle will be complete.

  11. 11
    txoter says:

    OK – “douchecanoe”… is that pronounced like one just erupted, or one just went over the waterfall?

  12. 12
    Warren Terra says:

    @Wallis Lane: sorry, pet peeve of mine: don’t disparage the noble name of General Ned Ludd. The Luddites weren’t campaigning against technological advancement, they were striking back against a society that viewed them as disposable, against an elite that wanted to seize for itself the great gains in prosperity industrial technologies offered, leaving the erstwhile workers to starve. Yes, they smashed looms – but the looms’ owners smashed them first! Americans are suffering today because we never learned the lesson the Luddites tried to teach us.

  13. 13
    Bruce K says:

    I’m put in mind of John Scalzi’s ruminations on the fate of the Objectivist theorists should their desires come to pass:

    “…turned into thin strips of Objectivist Jerky by the sort of pitiless sociopath who is actually prepped and ready to live in the world that logically follows these people’s fondest desires. Sorry, guys. I know you all thought you were going to be one of those paying a nickel for your cigarettes in Galt Gulch. That’ll be a fine last thought for you as the starving remnants of the society of takers closes in with their flensing tools….”

  14. 14
    Baud says:

    OT: The most awesome story of the year. Front page material, AL.

    Missouri Spelling Bee Hits Stalemate, Runs Out Of Words

    KANSAS CITY, Mo. (AP) — After 19 rounds in a Missouri county’s annual spelling bee over the weekend, only two of the 25 contestants who started the competition remained.

    Several hours and 47 rounds later, an 11-year-old and her 13-year-old adversary had used up all of the available words, forcing organizers of the Jackson County Spelling Bee to temporarily halt the showdown.

    “It was legendary,” said Mary Olive Thompson, a library outreach manager and co-coordinator of the Saturday spelling bee.
    …..
    But bee officials decided not to pull more words from the dictionary because they worried one speller might get a tough word and the other a relatively easy one, which wouldn’t be fair.

    Plus, Thompson said, at “about 2 o’clock, I think we were all really tired.”
    …..
    The contest will resume March 8 at an undetermined library site.

  15. 15
    Randy P says:

    At work they issued a warning about a particularly evil form of virus called “ransomware”, that apparently encrypts your files and demands payment of ransom in order to get a decryption password. The payment is typically in the form of Bitcoin “because it’s untraceable”.

    All virus writers and spreaders are evil, but this one struck me as one of the worst things I’d ever heard, virus-wise. As I read this story I was hoping that some of the ransomware people lost their shirts as well, but alas I suspect they exchange it for real money after collecting the ransom.

  16. 16

    Let’s just call them, “Dunning-Krugerrands”, instead.

    [Not original to me, but too good not to share.]

  17. 17
    OzarkHillbilly says:

    @Baud: I still blame you. ;-)

  18. 18
    BillinGlendaleCA says:

    @Baud: That was the “Best New Thing” on TRMS last night. Wonder where they’ll find new words.

  19. 19
    Penus says:

    @txoter: The latter.

  20. 20
    Penus says:

    @txoter: The latter.

  21. 21

    @Joseph Nobles:
    Welcome to why I have no truck with even seemingly reasonable conspiracy theories. The world is so damn big that bizarre coincidences happen all the time.

    @Bruce K:
    Well, Ayn Rand did publicly flaunt a crush on a man who committed an unnecessary and brutal murder. She praised the murder and the murderer because the man did what he wanted and fuck morality. So, yes, I think if objectivism were unleashed a number of objectivists would be made into actual meat type jerky and eaten.

  22. 22
    Baud says:

    @OzarkHillbilly:

    As you should….;-)

    @BillinGlendaleCA:

    Ah, I’m sorry I missed Rachel last night.

  23. 23
    OzarkHillbilly says:

    @Baud: Hey, it’s a dirty job but somebody has to take the blame.

  24. 24
    Botsplainer says:

    @Randy P:

    At work they issued a warning about a particularly evil form of virus called “ransomware”, that apparently encrypts your files and demands payment of ransom in order to get a decryption password. The payment is typically in the form of Bitcoin “because it’s untraceable”.

    I’ve long thought that it would be an enjoyable bit of entertainment to see video of a Spetznaz unit (sent in by an aggrieved Putin) crash a malware/virusware coding boiler room outside Minsk in order to machine gun every fucking greasy coder in the room prior to arresting and summarily executing every principal of said enterprise (along with selling their wives, mistresses and children into bondage).

    He does that, and I swear fealty to Ma Russia at a level which Snowjob and Griftwald could barely dream to aspire to.

  25. 25
    Keith G says:

    I have wondered about this sites interest in the bitcoin story. I never thought it was important enough to deserve more than two threads – one when the experiment began and one when it goes tits up.

    It’s not like there isn’t other news out there.

  26. 26
    Commenting at Balloon Juice since 1937 says:

    Isn’t bankruptcy a concept based on laws that real countries make? You shouldn’t be able to have it both ways.

  27. 27
    NonyNony says:

    @Glocksman:

    As I’ve said in the past, the fact that ‘MtGox’ was an acronym for ‘Magic: the Gathering Online Exchange’ told me all I needed to know about bitcoin and the types pushing it.

    At least with Magic cards if you were stuck holding the bag when the speculator bubble popped you still had a game to play. And at least the goldbugs have gold, which has some intrinsic value so that even if the market in gold completely collapsed the “floor” of that collapse shouldn’t be a crater.

    I have never understood the appeal of bitcoin outside of the obvious use in markets that traffic in illegal goods. I can see why people looking to exchange money for drugs – or involved in human trafficking or kiddie porn – might want to have a currency like bitcoin around, but beyond that I don’t see the appeal. Gold I get, even if I think it’s a bit crazy to believe that if the US currency suddenly collapses your gold is going to be worth much. Video game currency? I kind of get it – as long as people are playing the game there’s a legit market for the currency as well as a speculator market. Bitcoin? Don’t get it. For speculation to work it can’t just ALL be speculators – there have to be some regular people interested in the item being speculated on. Whether we’re talking baseball cards, comic books, magic cards, beanie babies, pokemon cards, real estate, or currency, speculator bubbles are a side-effect not the intended purpose of the market.

    Maybe the Bitcoin speculators were hoping to make money off criminals engaged in illegal activities? Or off each other? Either way, it just seems like an odd speculator market to be in.

  28. 28
    OzarkHillbilly says:

    FINALLY!!! At last someone has decided to tackle one of the truly vexing problems facing the world. I give you….

    Wikipaella on mission to save rice dish from being lost in translation

    My wife is from Mallorca which, even tho it is due east of Valencia, is actually part of Catalonia. I have to wonder if her mother’s paella would have passed these guys’ muster. No matter, it certainly passed mine!

  29. 29
    NonyNony says:

    @Keith G:

    I have wondered about this sites interest in the bitcoin story. I never thought it was important enough to deserve more than two threads – one when the experiment began and one when it goes tits up.

    The Bitcoin story is a fascinating mix of tech, libertarian idealism, politics, finance, and the psychology of speculator bubbles working itself out on the Internet. It’s amazing to me to watch the Bitcoin people make every single move/mistake that every single speculator in every single speculator bubble has made at least since I started watching speculator bubbles (the collapse of the baseball card market in the late 1980s/early 1990s), and probably the same mistakes they’ve made since the Tulip Craze. And yet they do it over and over and over again.

    It’s fascinating psychology. It’s like watching a long con play out on a TV show, except that you only get snippets of what the con might be and you’re never quite sure who the marks are and who the cons are. (I’m fascinated by speculator bubbles – it’s like watching a person touch a hot pan over and over again, each time convincing themselves that it’s a different pan and this time they won’t get burned.)

  30. 30
    Botsplainer says:

    @Keith G:

    I have wondered about this sites interest in the bitcoin story. I never thought it was important enough to deserve more than two threads – one when the experiment began and one when it goes tits up.

    It’s not like there isn’t other news out there.

    Simple – it combines two glibertarian impulses. The first is the idea that it would be beneficial to have a medium of economic exchange that is finite (more or less like gold) with some mythical fix in value. This makes it resistant to inflation (which appeals to weird old cash hoarders) and can enhance and magnify the status quo (thus benefitting weird rich cash hoarders). The second is that they can mine it using technology, which negates the idea that they have to do any actual hard work to acquire it either by physical mining or regular economic activity.

    As dark comedy, it is glorious.

  31. 31
    humanoid.panda says:

    @NonyNony: There are some uses for it in some markets. For example, if one rents an apartment to a foreigner in Russia, one has to notify the police which notifies tax authorities, and unless that person has really good connections, his life becomes living hell rather fast. Currently, the way to avoid that hassle is to pay rent under the table, by wiring money from abroad, which is a hassle, involves ridiculous fees, and, in Russia, also is being reported to the authorities. Something like a bitcoin would be a great solution for this kind of grey situation.
    Another situation that might come about in the future are abortion providers in Deep Red states. How long before the states there start trying to cut the abortion providers off from access to payment and credit systems?
    The problem with Bitcoin is not the technology or the basic concept, but the toxic combo of sociopath and utopianism that surrounds it.

  32. 32
    The Red Pen says:

    @Botsplainer:

    a malware/virusware coding boiler room outside Minsk

    LOL. That reminded me of a couple of years ago, I went to Minsk bearing a graphics tablet (input device used by designers) for a friend’s wife. He tried to buy it himself, but they wouldn’t take payment from or ship to Belarus. “I don’t blame them,” he admitted, “credit card theft used to be the national sport of Belarus.”

  33. 33
    Will Twiner says:

    you know you’ve lost when your virtual currency has lost Mr. Galt (I’m just going to assume he does, in fact, live in a Gulch)

  34. 34
    HeartlandLiberal says:

    Money in today’s world economies is in fact, for those not still living in a third world bartering system, a fiat system consisting of paper money and coin money issued at will and in arbitrary amounts by governments; and representations of that money are stored electronically and transmitted electronically, in the trillions every day, worldwide.

    I may have cash and stock assets of let’s say a hypothetical half a million in the bank, but all of it is nothing but an electronic record in multiple accounts spread over my retirement fund management company and my credit union savings, checking, and a couple of IRA accounts. I also have money lying around in PayPal. The only tangible money I have are a bunch or certificates for stock that I need to file and convert to electronic bits so I can convert those stock electronic bits to cash electronic bit representations quickly at some point in the next 3 – 5 years, so that when I file my electronic tax bits with the Feds, I won’t take as big a tax bite as I will right now.

    So this really is a question for those who believe that government is required to cat herd the masses with regulation and laws vs. the Galtians Overlords and Libertarians, who fantasize that when Adam Smith referred to the free hand of the marketplace he meant anarchy and chaos would eventually resolve itself into a lovely ordered system, because no one would ever lie, cheat, or still, because the marketplace would instantly smack their hand and punish them.

    I will let how I wrote that last paragraph above speak for which side of the equation I am on.

  35. 35
    The Red Pen says:

    @HeartlandLiberal:

    Adam Smith referred to the free hand of the marketplace

    An interesting fact is that when Adam Smith referred to the “invisible hand of the free market,” he was talking about the benefits of a robust domestic manufacturing segment. People would get jobs, they would have money, this would improve their lives and build the economies in their communities and so forth.

  36. 36
    rikyrah says:

    To be fair, not all (small l) libertarians are douchecanoes, nor are all bankers. But of the intersection of the two sets, I remain stubbornly convinced that nothing good can come!

    Nothing good at all.

  37. 37
    Gex says:

    @Keith G: Christ, really? It’s not like the site doesn’t post about all those other news stories. Skip it if you find it tedious.

  38. 38
    Ferdzy says:

    @NonyNony: I’m assuming you have read Extraordinary Popular Delusions and the Madness of Crowds, by Charles MacKay. There really is nothing new under the sun…

    http://en.wikipedia.org/wiki/E....._of_Crowds

  39. 39
    Citizen_X says:

    Ryan Galt

    I would have to punch this person on sight.

    “I…have personally sold all of my Bitcoin holdings.”

    No nerves, Mr. Galt! That’s not showing the stuff of a Maker.

  40. 40
    Dead Ernest (Thought Wrangler) says:

    @Baud:

    Missouri Spelling Bee Hits Stalemate, Runs Out Of Words

    ” !!”

  41. 41
    Joel says:

    @NonyNony: You forgot assassinations!

  42. 42
    Roger Moore says:

    @Frankensteinbeck:

    So, yes, I think if objectivism were unleashed a number of objectivists would be made into actual meat type jerky and eaten.

    Probably by other objectivists.

  43. 43
    ruemara says:

    I went to Costco and they were all out of fucks for me to give.

  44. 44
    burnspbesq says:

    A “currency” backed by the full faith and credit of a sysadmin. What could possibly go wrong?

  45. 45
    Villago Delenda Est says:

    @HeartlandLiberal:

    I’m a huge Adam Smith fan, and it’s painfully obvious that glibertarians have never read his book, because if they had, they’d denounce him as some sort of socialist.

  46. 46
    different-church-lady says:

    @Botsplainer:

    He does that, and I swear fealty to Ma Russia at a level which Snowjob and Griftwald could barely dream to aspire to.

    Why would he want that more than his share of the ransom?

  47. 47
    C.V. Danes says:

    The Circle is nearing completion…

  48. 48
    Ksmiami says:

    @Va Highlander: hmm sounds like a tasty donut

  49. 49
    Bobby Thomson says:

    @txoter: There is no e in volcano.

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