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Bitcoin Security The Almighty Buck

BitCoin Value Collapses, Possibly Due To DDoS 605

Posted by Soulskill
from the disrupted-just-like-real-currencies dept.
hydrofix writes "The Bitcoin-to-USD exchange rate had been climbing steadily since January 2013, from around 30 USD to over 250 USD only 24 hours ago. Now, the value bubble seems to have burst, at least partially. The primary trading site MtGox reported a drop in value all the way down to 140 USD today, a loss of almost half in real value. With many sites unreachable or slow, there are also news of a possible DDoS attack on MtGox: 'Attackers wait until the price of Bitcoins reaches a certain value, sell, destabilize the exchange, wait for everybody to panic-sell their Bitcoins, wait for the price to drop to a certain amount, then stop the attack and start buying as much as they can. Repeat this two or three times like we saw over the past few days and they profit.'"
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BitCoin Value Collapses, Possibly Due To DDoS

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  • unregulated (Score:2, Insightful)

    by Anonymous Coward

    so they wanted an unregulated market. this is what they get...

  • by Anonymous Coward on Wednesday April 10, 2013 @04:46PM (#43416563)

    Today's high was $266, the low was $105 and currently it is trading around $180

    • by JesseMcDonald (536341) on Wednesday April 10, 2013 @05:02PM (#43416717) Homepage

      Today's high was $266, the low was $105 and currently it is trading around $180

      Note that final figure. Despite the continued DDoS, the price is already halfway back to the previous high. The drop was just a short-term effect due to the impact of the DDoS on liquidity and a mild amount of panicked selling. Another point to keep in mind is that the price was under $15 at the beginning of January—even at the low of $105 we were still up by 600% YTD, and 200% over the last 30 days (from $35).

      • by Goaway (82658)

        Note that final figure.

        I am not sure why I should, since it is now $130.

      • by number17 (952777)
        Those people who panic sold will probably not buy back in. If the people who caused the DDoS still have currency in Bitcoins, how much do they have and are they planning on selling tomorrow? When other exchanges are DDoS'ed it will be interesting to see if the price recovers again.
      • by dwywit (1109409)

        It seems that Bitcoin is being treated more like, and reacting more like a company or commodity stock. It's constantly being valued against the USD (which is convenient but not useful in terms of what a Bitcoin can actually do for you), and it's reacting to market pressures, e.g. value dropping on panic selling. In other words, traders see it as just another thing to be manipulated for their own gain. I was considering cranking up a mining client on one of my spare machines, souped up with a decent GPU, but

        • by Sycraft-fu (314770) on Wednesday April 10, 2013 @08:05PM (#43418115)

          One where there's lots of speculation. These kind of shifts are NOT what you want for a currency. When a currency changes value by 10% in a YEAR that is a problem governments try to deal with (2-3% is the normal target), never mind doubling or halving in a day. Even a normal stock or commodity would be having some extreme problem for that kind of movement to happen.

          It shows all the signs of sever speculation and a bubble. People playing it to try and make a big short term gain, at the expense of others.

    • by hydrofix (1253498)

      Today's high was $266, the low was $105 and currently it is trading around $180

      If that was directed at the submitter (underwritten), I put [slashdot.org] "over 250 USD" in the scoop, which covers $266. Also, I did not want to put a low value, because the market is very, very unstable right now. All that could be said was that MtGox was reporting 140 USD when the scoop was submitted.

      Now the martket seems to be regaining, possibly with news that the fall was connected to a DDoS.

  • by Alain Williams (2972) <addw@phcomp.co.uk> on Wednesday April 10, 2013 @04:50PM (#43416603) Homepage

    have found another target. Having bankrupted several major economies they are looking for virgin lands to grab.

  • by Hentes (2461350) on Wednesday April 10, 2013 @04:56PM (#43416675)

    It's funny how people believe that their imaginary currency would have grown 10x in value in a few months weren't for those evil hackers.

  • bottleneck (Score:4, Insightful)

    by Max DollarCash (2874161) on Wednesday April 10, 2013 @04:58PM (#43416685)
    The whole issue here is that there is just ONE major exchange and they own 80% of the trades. Hitting one exchange impact the whole currency. The exchange rate has been manipulated for weeks now. Its time for other exchanges to pop up or this will continue. Its easy money so they will keep doing it untill & unless there is multiple exchanges!
    • Re:bottleneck (Score:4, Interesting)

      by Linsaran (728833) on Wednesday April 10, 2013 @05:20PM (#43416895) Homepage
      There are multiple exchanges, it just happens that MtGox has the 'Microsoft monopoly'. They're the de facto standard, primarily because they were one of the first to hit the scene, their service is for the most part 'good enough', there was enough widespread adoption that people are familiar and comfortable with it, and there's no one else who's got something significantly better to entice people to switch.
  • Long-term view (Score:5, Insightful)

    by Todd Knarr (15451) on Wednesday April 10, 2013 @05:04PM (#43416733) Homepage

    The solution's the standard one: take the long-term view. If you think Bitcoins are actually going to be worth that much long-term, don't sell. Hold onto them, and buy during the drops. If you think Bitcoins aren't worth their current value long-term, sell before another drop happens and don't buy back in. The speculators (because that's what's driving any manipulation) depend on people dumb enough to do short-term trading while lagging behind the curve. They're professionals with all the tools, so as a non-professional the only way you can win is to not play their game.

    Rule of poker: there's always a sucker at the table. If you look around and don't see one, it's you.

  • by Panaflex (13191) <convivialdingo AT yahoo DOT com> on Wednesday April 10, 2013 @05:05PM (#43416749)

    Either the Spanish Inquisition or Goldman Sachs. Either way, it sure was unexpected.

    • Unexpected, hardly. If you look at the graphs and the development of buy/sell orders, it's a bit of a miracle that it took so long.

  • talk (Score:4, Insightful)

    by M0j0_j0j0 (1250800) on Wednesday April 10, 2013 @05:05PM (#43416757)

    you can talk the shit out of bitcoin you want, but this unregulated market may provide us with data about currencies that we never observed before, we can get real good data from this experiment.

    • Re:talk (Score:5, Interesting)

      by Animats (122034) on Wednesday April 10, 2013 @05:27PM (#43416955) Homepage

      we can get real good data from this experiment.

      From that perspective, Bitcoin is fascinating. The Bitcoin world, tiny though it is financially, has seen just about every classic scam. Ponzi/HYIP schemes, pump and dump schemes, fake bank schemes, fake exchange schemes, fake stocks, and ordinary theft - it's all there. It makes the penny stock market look legit.

      Someday, assuming they haven't lost them, the people who generated Bitcoins in the early days when it was easy will cash out. Most of the early Bitcoins are not being traded. Somewhere there are early adopters with substantial value. They can't exit yet without clobbering the price, though. Not enough suckers putting in real money.

      • Re: (Score:3, Interesting)

        by roman_mir (125474)

        I think Bitcoins have value, I don't know what it is. Whoever wrote TFS here doesn't understand what 'collapse' is doesn't know anything about economics or mechanics of trading.

        The volume is thin and there is no good way to take a short position, this is what MtGox needs to do if they are interested in a more stable current price against most currencies. People have to be able to take a short position, that's part of the balance that's missing. The Bitcoin protocol allows for trades, but it doesn't allow

  • Just today (Score:4, Informative)

    by fermion (181285) on Wednesday April 10, 2013 @05:08PM (#43416787) Homepage Journal
    I was reading an article published yesterday about How to Buy a Bitcoin [slate.com].

    Really, once the general public is aware of 'get rich quick scheme' it is going to collapse.

    I am not saying Bitcoins is such a scheme, just that some people interpret it as such. Currency speculation is not a good get rich quick scheme. It seems to best with people who have taxes in 30% range, or otherwise need to launder their money.

  • This is steady? (Score:4, Insightful)

    by Anonymous Coward on Wednesday April 10, 2013 @05:13PM (#43416841)
  • by gman003 (1693318) on Wednesday April 10, 2013 @05:22PM (#43416913)

    MtGox owns too much of the Bitcoin conversion market. They need a solid competitor.

    Right now, if you can harm MtGox, you harm the entire Bitcoin network. Slow it down and you slow down Bitcoin trades. Manipulate it and you manipulate the entire market. Regulate it and you regulate most of the market. Destroy it, and Bitcoin may completely die, at least in the short term.

    I'm not saying any of this is MtGox's fault - they're doing a good job at what they do. But they're the closest thing Bitcoin has to a single point of failure. We need redundancy.

    • by Animats (122034)

      We need redundancy.

      Most of the competing exchanges were scammers, incompetent, or both.

  • a loss of almost half in real value.

    Thus proving (like any currency, ultimately) that they have no value.

  • by rasmusbr (2186518) on Wednesday April 10, 2013 @05:54PM (#43417215)

    AFAIK there hasn't been any evidence of an actual DDoS against any of the market sites. People who were using the biggest market site Mt.Gox reported 25 minute delays in their trade orders, most likely because of people scrambling to cash in on their bitcoins before it's too late and people looking to buy bitcoins at 'bargain' prices. The most popular chart site bitcoincharts.com crumbled completely, most likely under the load of people who were legitimately interested in viewing the data, or in my case semi-legitimately interested in it (it's fun to watch).

    Full discosure: I sold my small fraction of a bitcoin back when the price was at $235. I currently hold 0 BTC. I'm treating this like a game and I hope everyone else is too. I feel sorry for anyone who is investing real money now. Don't be stupid.

  • by istartedi (132515) on Wednesday April 10, 2013 @06:18PM (#43417373) Journal

    Pumpity-dumpity from the Great Wall.
    Pumpity-dumpity had a great fall.
    All the geek women and all the geek men
    Need to configure the routers again.

  • by Arancaytar (966377) <arancaytar.ilyaran@gmail.com> on Wednesday April 10, 2013 @06:45PM (#43417551) Homepage

    1. Not legal tender.
    2. Only exchangeable for other goods or currencies at a very small number of markets and merchants.

    The Bitcoin system cryptographically and decentrally secures ownership and continued scarcity of the currency. But the real value, as with all currencies including gold, lies in the ability to exchange it. Lose that, and you're pretty much SOL.

    (If a small number of actors can destabilize the currency like this, guess how resilient it is against the pressure that national governments can put on it.)

  • Lemmings (Score:5, Insightful)

    by m.dillon (147925) on Wednesday April 10, 2013 @08:01PM (#43418085) Homepage

    I shouldn't have to point out the obvious here, it will clearly fall on deaf ears considering the vast amounts of stupidity revealing themselves in postings on this topic. But hell, if it brings just one person to their senses I'll count it job well done.

    First, nobody is forcing anyone to hold their savings in US Dollars. You can hold your savings in whatever form you want, it's called a BROKERAGE ACCOUNT. Buy a commodity-tracking ETF if you desire, and keep just enough dollars around to service your monthly needs. The dollar, after all, is very definitely stable in the short-term. One month isn't going to destroy its value. Realize, though, the price of everything in real terms fluctuates. Someone who bought gold at $1900 is sitting on a 15% loss of value in dollar terms right now, for example. Real commodities generally maintain their value over long periods of time. Are you worried about buy/sell fees? If you are, then you don't have enough savings to even be AFFECTED by inflation in the first place.

    Second, Bitcoin isn't a currency. It's a commodity with a limited supply. Not only is it a commodity with a limited supply but it is a VIRTUAL commodity with a fixed supply. It isn't even real. It's not something you can touch. It doesn't even behave like a currency fod gods sakes! It may not be possible to counterfeit, but that doesn't stop anyone from creating their own virtual commodities and competing. In fact, there are MANY virtual currencies already in existance, primarily used in games, which are already far more stable than bitcoin.

    Third, Bitcoin's 'value' is fleeting. It's like tulip-mania but worse. It's worse because the market is so shallow it is trivial (and obviously trivial) to manipulate. Heavy manipulation by people selling high slowly, causing a panic, and then buying low. Rinse and repeat.

    I'm guessing that a large percentage of the exchange volume is from rinse and repeaters and very little is actual investment purchases or sales. It creates the illusion of decent volume when, in fact, there actually isn't any. Each time it cycles the manipulators are removing more real money from the system, leaving everyone else holding the bag.

    Think about what this means, folks. It isn't rocket science. Whatever cash was injected into the system by real investors is being leeched away by the manipulators. There is LESS real original cash remaining, yet all the remaining real investors believe that a Bitcoin is worth at least as much as they originally paid for it, because they see that magic exchange value in $USD 'Oh look, 1BTC is worth $166 BTC!'. What these investors do not understand is that they cannot ALL get that price if they were to sell. They can't get it even if they all paid that price going in because the manipulators have already squeezed out a considerable amount of cash from the system.

    The very definition of a Ponzi scheme. This will only end in tears.

    -Matt

    • There was an interesting paper last week at Financial Cryptography by Adi Shamir that examined the entire bitcoin transaction graph and what exactly is going on with the big piles of coins that early-adopters have. It's an interesting read if you have half an hour: http://fc13.ifca.ai/proc/1-1.pdf [fc13.ifca.ai]

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