Bitcoin Plunges After Mt. Gox Exchange Halts Trades

krakman writes with this excerpt from Bloomberg News: "Bitcoin plunged more than 8 percent [Friday] after a Tokyo-based exchange halted withdrawals of the digital currency, citing technical malfunction. Mt. Gox, claimed in a blog post it needed to 'temporarily pause on all withdrawal requests to obtain a clear technical view of the currency processes.' It promised an 'update' — not a reopening — on Monday, Feb. 10, Japan time. This is day after Russia's Prosecutor General concluded Bitcoin and other digital currencies are illegal under current law."

Yet trading goes on

[mc6809e]

Things have taken a bit of a dive. [bitcoinity.org]

Re:Magic the Gathering Online Exchange

[Anonymous Coward]

When I choose financial institutions, I prefer those named after children's card games.
Seriously though, the exchanges are an obvious chokepoint that can be regulated, putting the lie to cryptocurrencies being securely decentralized.

You have no idea what you are talking about.

Re:paste this to cut the BETA

[guises]

Is this still necessary? They've already acknowledged that people don't like the beta and stated that they won't make it mandatory in a few months as they had planned. The goals of the boycott seem to have already been met, it doesn't look like there's a good reason to go through with it at this point or to continue with these posts (barring further news on the matter).

Re:To explain what seems to have been missed.

[Skal Tura]

well - the thing is that difficulty can go down as well.
Therefore it is self balancing, sure if 80% of mining power disappeared all of sudden, it would take a LONG time before reaching difficulty recalculation, but it would eventually happen.

It is self balancing over:
Mining costs (electricty + hardware + human time) and Bitcoin value

Costs go significantly upwards -> Bitcoin value is bound to follow -> BTC value doesn't follow, miners are stopped or moved over alternative cryptocurrencies
Bitcoin value drops -> Miners are being stopped or moved over to alternatives -> Mining costs go downwards
Bitcoin value increases -> More miners will be purchased -> Mining costs go up -> BTC Value eventually follows

Very simple really.

Even hosting business has diminishing returns, yet, that industry is larger than ever, growing at ever growing pace.
Same for networking business (Those who lay the fiber), returns are diminishing, yet they continue on investing

Infact ... Almost every single business follows the same pattern of diminishing returns, for some industries, it's the inflation which does it, and for most technological innovation
When the diminishing returns and growth reaches an equilibrium -> There is barely growth, and the returns don't diminish significantly anymore, it's called a mature industry. ie. farming is a mature industry
When the returns diminish faster than growth it's a industry dying, the MAFIAA would like you to be believe entertainment industry is like so, but they are in a huge growth period right now.
Gone industries in the past are things like steam engine builders (barely any steam engines are being produced today), automotive phones (everyone has a cell phone, and having a phone just for the car doesn't make any sense, it was a fad to begin with), and what else has gone by the way of technological innovation.

If the diminishing returns is stopped, innovation is stopped, progress is stopped.

I think eventually bitcoin mining will reach a stage where it's roughly 2 years for hardware break even including operational costs, and the additional years is your profit. That's when ASIC manufacturing has reached the same processing node and complexity as CPUs today and been there for a significant time. and we are there already, with newest chips being 28nm, just like the latest AMD CPU series - intel is at 22nm now.

It is possible that large processing node, like 65nm ASICs will stay marginally profitable even then for some time - when compared to electricity and human resources costs.

As a comparison point i'm using dedicated hosting industry, some 5 years old servers are still being sold today, and many are in production still todate.
Hell, the bulk of our cheapest option is with Q1'10 launched CPU, and we are still taking high end servers into use older than that (Intel L5520, which is 45nm) :)
Tho, in our use every single drive is new and minimum 2Tb size, not decade old models :) Lifespan for those is 3years and then phase out, 60%+ is expected to survive the 3 years, and target average lifespan of disks is 3years, so there will be some disks being used for more than 4 years, but a marginal group.

Re:Magic the Gathering Online Exchange

[Crosshair84]

"there is far far far less bitcoin than there is gold, and there always will be far far far less bitcoin than there is gold. Limited to 21million coins."

Total quantity in existence is completely irrelevant. People could create a currency backed completely by by copper if they wanted to. Copper historically WAS used as money for very low value transactions where dividing silver or gold was not practical. Being rare is not the be-all-end-all of currencies, it's an advantage, but not required. It is an advantage in that the resulting physical coins carry significant purchasing power.

Money has 7 characteristics and the more characteristics something has, the better it will serve as money.

(1) It must be durable, which is why we don’t use wheat or corn or rice.
(2) It must be divisible, which is why we don’t use art work.
(3) It must be convenient, which is why we don’t use lead.
(4) It must be consistent, which is why we don’t use real estate.
(5) It must possess value in itself, which is why we don’t use paper. (The US dollar was originally backed by gold, which is the reason people accepted it in the first place.)
(6) It must be limited in the quantity that is available, which is why we don’t use aluminum or iron.
(7) It should have a long history of acceptance, which is why we don’t use molybdenum or rhodium.
Bitcoin fails 1, 3, 5, and 7.

It is not durable in a practical sense because it relies on a global P2P network to work. Governments have taken their countries off the internet before. How do you spend your bitcoins during civil unrest when you can't access the network? It is also vulnerable to a 51% attack, which is well within the technological capabilities of many governments.

It is not convenient because it relies on both parties having setup a bitcoin wallet and having an internet connection. If I want to buy a used car for 3 ounces of gold, all I have to do is hand the seller the gold and they can verify firsthand that it is real and then I get the title to the car. I've gone to estate sales where there was no cellular or other data service and was not aware of this beforehand. Someone trying to buy via Bitcoin would be SOL, people using gold, silver, or paper money would go on with business as usual.

It does not posses value onto itself. Lets say that one day, nobody wanted to use gold as money, perhaps everyone decided to use Platinum instead. Would your gold's value drop to zero? No, because gold has uses beyond being money, especially today with its many industrial uses. If people stop using bitcoin as money, the values goes immediately to zero.

Bitcoin does not have a long history behind it at all while gold has a record that spans almost all of human history. 5,000 years of use and gold has never gone to zero. I have cans of SPAM that are older than bitcoin. (and still edible too) Once it earns a reputation that lasts a few decades, perhaps it will gain more widespread acceptance, but it might as well be a .com stock at this point, perhaps it will survive, perhaps it won't.