Mt. Gox Gone? Apparent Theft Shakes Bitcoin World 695
mendax was one of many readers to write with news about the apparent shutdown of Bitcoin exchange Mt. Gox, in the wake of massive theft. "The New York Times is reporting that Mt. Gox, the most prominent Bitcoin exchange, 'appeared to be on the verge of collapse late Monday, raising questions about the future of a volatile marketplace.' '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.' Maybe the U.S. Dollar isn't so bad after all." Forbes goes further, and says flatly that Mt. Gox has shut down; Wired calls it an implosion. Reader electron gunner links to the alleged leaked document which outlines the exchange's crisis strategy. Watch this story for updates, since there are bound to be new developments.
Vive le Galt! (Score:4, Insightful)
Re: (Score:3, Funny)
Re: (Score:3, Insightful)
So, I assume you propose a barter system then?
Be less ridiculous.
Re:Vive le Galt! (Score:5, Funny)
Re:Vive le Galt! (Score:4, Funny)
https://xkcd.com/512/ [xkcd.com]
Re: (Score:3)
I do: volunteer 7 hours per week of your expert knowledge (or your strength and vigor, if you have no expert knowledge) to your community.
Volunteering isn't bartering. Assuming you meant bartering... in exchange for what?
Re: (Score:3)
Except that in many areas you most likely could not find a local CE that was also a certified PE to do the engineering work necessary, theres lots of small areas in the US that have no engineering firms at all. You probably could not legally do the work without a certified PE or else the local government would be at fault when the bridge collapses and kills people
The most highly educated, doctors, engineers, etc, are going to be mainly focused around urban centers. Im not saying its not a nice idea, for small little community actions, party planning, things that dont require actual expertise this will work wonderfully. But for things that require an actual college education en-mass to do the work, it just cant happen in alot of america
Most civil engineers get a PE at some point. It is basically required for them to do their jobs. When I sat for the test it appeared to be 60% civil engineers, 25% land surveyors, and 15% electrical/mechanical engineers. I talked to a few and they said that without the PE, job progression beyond entry level drafting work was impossible.
Re: (Score:3)
How would you propose that we distribute resources to people in a way that's fair, and gets the resources to the most in need and most capable?
Re: (Score:3, Insightful)
Re:Vive le Galt! (Score:5, Insightful)
Re:Vive le Galt! (Score:4, Interesting)
It's the best system to do that to date. If you have a better one that is better at it, then by all mean propose it. Don't propose systems that have already been proven to be worse then the current system.
Re: (Score:3)
But if you're 17 and have no grasp of history, it sounds fantastic.
Re: (Score:3)
The fundamental reason why humans have developed currency is because no other system is equipped to properly cope with the complexities of goods and services. Bartering already was not feasible thousands of years ago on a large scale, and it's even less realistic a model today.
Let's say you want to buy a car. How do you barter for that? Drive up with a truck load of corn? Or do you take a job at Ford and build your own car? Are you also going to stamp your own steel, mix your own paint, manufacturer your ow
keep your perversions to yourself (Score:5, Funny)
I have a goat
nobody likes a braggart.
Re:Credit (Score:5, Funny)
Re: (Score:3)
Huh? First of all - define 'wealth'
It's [assets] - [liabilities] = wealth. The IRS already has a form for calculating it.
then define what it means to: "hoard wealth"
Well define it how you want. This is something the progressives have been complaining about when they excoriate the wealthy for causing income inequality [huffingtonpost.com].
explain to me why taxing ONLY somebody's 'wealth' would eliminate the incentive to hoard it.
Right now, since you have a significant tax liability for income, but not for idle money, people leave their money idle, or they store it somewhere considered "safe" like treasury bonds, which earn low rates (less than 1% for under 5 year notes). If income is not bein
Re:Vive le Galt! (Score:4, Funny)
For maximum irony, the strategy doc states that they're toying with "we're too big to fail" as a PR angle, going cap-in-hand to other bitcoin exchanges to get bailed out.
Re: (Score:3)
Re:Vive le Galt! (Score:4, Informative)
MtGox is dead (or down), so their rate is irrelevant. All the other exchanges are still trading at a little bit over $500. That's not down by 92%.
Re: (Score:3)
It is if your bitcoins were held in MtGox and you couldn't withdraw them to another exchange.
Re:Vive le Galt! (Score:4, Insightful)
No it is not. The original claim was "Bitcoin just lost 92% of it's value", when in fact, it has not.
The "bitcoins" in Mt. Gox are not, in fact, bitcoins, they are account balances, which means promissory notes by Mt Gox to pay out this amount of bitcoins.
Re:Vive le Galt! (Score:5, Informative)
My bitcoins at their height, were worth about $1200. Right now, they're worth about $600. That seems closer to half to me.
At the beginning of the end of Mt. Gox, they were only worth about $800, so I only lost about 25%. Considering how bad this news is, it really doesn't seem that bad.
Re: (Score:3)
Re: (Score:3)
BitcoinAverage [bitcoinaverage.com] is probably the best place for "the" price of bitcoin. It mains a weighted average of all the exchanges, based on volume. They also document which exchanges have been excluded from their list, and why. In the case of Mt Gox, it hasn't been included in the weighted average for a while, as withdrawals have been dead / dying for a very long time.
Re:Vive le Galt! (Score:5, Funny)
It's as if a million bitcoin owners suddenly cried out in terror and were suddenly silenced.
Re:Vive le Galt! (Score:4, Funny)
Yeah, I suppose you'd rather have a fiat currency. Well whatever the economist say, a currency based on nothing except shitty Italian cars is worthless and personally I only accept canned food as any form of payment because I know the big crash is coming.
Re:Vive le Galt! (Score:5, Insightful)
Waiting for the libertarians here to demonstrate why this shows how Bitcoin is such a wonderful idea.
Where else would a bank be free to disappear with your money ..... Oh wait ... apart from Madoff, Icelandic banks, BCCI, ....
Re: Vive le Galt! (Score:5, Interesting)
Re: (Score:3)
And many of your deposits in traditional banks are insured against failure by the government.
Re: (Score:3)
Easy to insure a worthless product, the government just hands out paper.
It may just be paper, but I've been successfully using it to purchase goods and services since I was five. It's hard to see how something that has been so reliably useful can be worthless, unless you've redefined the word "worthless" in some irrelevant way.
And since the government makes the rules up as it goes, there is actually no real guarantee of that
And yet its actual record for reliability is still much higher than that of BitCoin's (or just about any national fiat currency for that matter).
Re: Vive le Galt! (Score:4, Informative)
Huh? If an USican makes a deposit at at TD Bank branch in New York, that's certainly FDIC insured. All those banks operate in the US through US subs, which are US regulated and FDIC insured.
Re: (Score:3)
Yes, becasue Britain never ran Hong Kong...
Re: Vive le Galt! (Score:5, Informative)
You realise they were set up by British corporations to handle British merchant trader funds in East Asia during the British Empires hay day, right? Just because they have foreign placenames in their name doesn't mean they are owned by entities in that locale.
Re: (Score:3)
Much of the money "lost" in the Madoff ponzi scheme never existed -- it was just a made-up number on a statement.
Re: (Score:2)
It looks like a classic market capitulation. If no-one buys the low now, then Mt.Gox is finished as a Bitcoin exchange.
Unless BitCoin is backed by a tangible asset, then it must fail eventually.
Re: Vive le Galt! (Score:2, Insightful)
There is no "low" if you can't ever withdraw your BTC. If there were any chance of buying at MTGOX extra-low prices and being able to sell elsewhere, the arbitrage opportunity would have attracted enough interested parties to equalize the market prices (the law of one price). MTGOX doesn't actually have the BTC to sell you; if you buy from them, you're buying scrip that's worse than fiat.
Re: (Score:3)
This is like a bank checking its vault and finding that someone made off with all its reserves long ago
Other than the part about being insured, you mean.
Re:Vive le Galt! (Score:5, Funny)
Waiting for angry libertarians to demand that the government pass regulations to stop this from happening again.
Re: (Score:3)
Re:Vive le Galt! (Score:4)
Another person making a snarky comment about Atlas Shrugged while clearly never having read it.
John Galt is a major proponent of the gold standard. As in, seriously major. It's one of the main economic themes of the book. Bitcoin would have horrified him (had he been real).
Atlas Shrugged may not be "right", but it is much harder to dismiss than the average college undergrad leftie assumes.
Re: (Score:3)
And not even a bad implementation of the currency itself, a bad implementation of the exchange. This is nothing new, people have been finding ways to scam systems since systems existed to be scammed.
However, that they allowed their bankroll go so low before they realized there was a problem, they should have been looking to shut down the exchange and fix it long before it got that bad.
Re:Vive le Galt! (Score:4, Insightful)
But bitcoin is money.
No, it isn't.
And people steal money.
People steal lots of things - groceries, clothing, cars - that doesn't make those things "money" though.
The paper trail (Score:2, Interesting)
https://blockchain.info/address/1Drt3c8pSdrkyjuBiwVcSSixZwQtMZ3Tew?offset=0&filter=0
Where's the bailout? (Score:4, Insightful)
Re: (Score:2)
Re:Where's the bailout? (Score:5, Interesting)
Actually MtGox is looking for a bailout as their main recovery strategy, according to the document. They argue that their insolvency would destroy bitcoin as a currency and therefore it's in everyone's best interests, Bitcoin exchange and end user alike, to donate to them until they're solvent again.
Re:Where's the bailout? (Score:5, Funny)
Re: (Score:2)
Mt.Gox has a long history of problems, Bitcoin not (Score:5, Interesting)
Re: (Score:2)
I thought the take-home message from Lehman Brothers was "the whole [economy] is bad".
Re: (Score:3)
Re:Mt.Gox has a long history of problems, Bitcoin (Score:5, Insightful)
Re: (Score:3)
Re: (Score:2)
Depends on what it's being used for. For small-scale transactions in time and value - e.g. turning $7 into BTC to immediately buy a CD - a relatively unstable currency is fine. Frankly, the while decentralisation of bitcoin made me assume that's the only way it would ever be used.
For anyone holding any significant amount of cash for any significant amount of time - e.g. a Bitcoin exchange - the instability is a nightmare.
Re: (Score:2)
Comment removed (Score:5, Insightful)
Re:Mt.Gox has a long history of problems, Bitcoin (Score:5, Funny)
Something something cloud something network something something wizards.
Re: (Score:3)
Re:Mt.Gox has a long history of problems, Bitcoin (Score:4, Informative)
Frankly, I'm shocked it has gone on as long as it has. I thought it was going to be a flash in the pan scam, with the original guys selling their horde of early mined coins and then leaving the suckers to hold the bag, but it seems like the suckers were much better at finding other suckers than I expected.
Re: Mt.Gox has a long history of problems, Bitcoin (Score:2)
Re: (Score:3)
That is precisely the scam of BitCoin.
It has pretended to be an "alternative currency" when in fact, it just was an investment scheme based on theoretical nothingness.
Otherwise educated folks bit on it as a "get rich quick" scheme hook, line, and BitCoin - because a bunch of techno-babble and theory that sounded like smart folks knew what they were talking about lured them in, coupled with the "The Man" view of the government held by (mostly) young and inexperienced people who think the sky is going to
Re: (Score:3)
Bitcoin isn't a currency and never will be - it's just a gambling scheme like playing roulette is.
Re: (Score:3)
Pity it's nearly useless as a currency. The wild swings in value on a minute-by-minute basis make it impossible to use as a currency for anything other than black market goods.
Re: (Score:2)
Mt.Gox is like a bank
Where do you need a bank for when you have Bitcoins?
The principle behind Bitcoin is that it is a distributed system, and payments can be made in a "peer-to-peer" fashion.
Re:Mt.Gox has a long history of problems, Bitcoin (Score:5, Informative)
Re:Mt.Gox has a long history of problems, Bitcoin (Score:5, Informative)
Ding! We have a winner. Anyone who uses an exchange as a bank didn't grok the point of a distributed P2P transaction log in the first place. I would have thought it would be a key point for all those libertarians as well - personal responsibility n'all.
Keep your own wallets, keep your keys backed up, and keep them offline unless you need them. ALL these Bitcoin theft stories have one thing in common - the wallets were accessible from a public server. You would have thought that all the Bitcoin banks would have crashed right after the first story as people transferred their balances into personal wallets, but apparently people really do value their convenience much more than their hard-earned Bitcoin.
At a minimum, have a "current account" wallet that you maybe carry around on your personal devices like a phone, and a "deposit account" which you keep the wallet for OFFLINE. You can still transfer TO it any time you like - you only need the keys to transfer FROM it. Store multiple redundant copies of the keys somewhere secure - you might even want to go as far as storing a paper wallet in a real safe deposit box, but a USB memory thumb in your desk drawer and a backup thumb somewhere else is probably secure enough - you do remember your passphrases, right? And they're not the same for each copy of the wallet, right?
Recharge your current account from currency exchanges, or from your deposit account. Transfer any balances that are too large for comfort to your deposit account. Now the only thing that can destroy the value of your coins is... oh, everyone else who's still dumb enough to value convenience over personal responsibility. Que sera.
Sad (Score:2)
Re: (Score:2)
Re:Sad (Score:4, Interesting)
I agree. I still like the idea of bitcoins. I still think there might be a future in it once all the bugs have been gotten out of the system. The reason that we still need the exchange-places is because, like it or not, bitcoin are not a legitimate currency. As long as they are not recognized as one you will all ways need someone willing to take the risk of converting bitcoins in to cash.
People wanted bitcoins to be free from any kind of government oversight or interference. Well that is never going to happen. As long as there is anything acting like money you are going to need some kind of oversight to keep things like this from happening. Bitcoins are a great idea if everyone is on the same level and is honest about it. But not all people are honest.
As we have seen the need for exchanges have turned out to be the weak point in the bitcoin system. Until that need is eliminated or is under some kind of regulation, you will always having someone gaming the system and stealing from other people.
Regulation is a must, not an option.
Re: (Score:3)
Pyramid collapasing? (Score:5, Funny)
I've never personally been part of a Ponzi scheme collapsing before. But as the proud owner of a fraction of a Bitcoin, I guess this may be my big chance.
Not Dead Yet. (Score:3)
What I'm saying is there is a slew of non-tech money out there about to prop up the price.
Even gold is worthless in a famine, but if enough people covet something it will hold value.
Maybe a bit unclear on security? (Score:5, Insightful)
A programmer who would implement an ssh server in PHP [reddit.com] may be part of the problem?
BTW, the article linked from that reddit comments thread really is beautiful. In the absence of the later disasters, I might have speculated that this was parody.
Facepalm. DNS too - wikipedia uses PowerDNS, MySQL (Score:3)
That's a face palm. He mentioned he wrote his own half-ass DNS server so that he could use MySQL as storage too. Apparently he didn't take five minutes on Google to discover PowerDNS. Pdns is used by major sites like Wikipedia, has a MySQL backend, and takes security seriously. I found and reported a security flaw in Pdns once and their response was textbook perfect.
Re: (Score:3)
It's not always the case though, it depends what the "thing" is. I've encountered plenty of situations where there's an existing library or selection of libraries for a problem but that frankly the options available have all been terrible such that I knew without question I could create my own better.
For something like a DNS or SSH server you're absolutely right though! Some problems are common enough to have been solved near perfectly a thousand times over, others however are still not common or advanced/s
Acquisition hinted by Web page HTML source (Score:5, Informative)
From mtgox.com:
<html> <head> <title>MtGox.com</title> </head> <body> <!-- put announce for mtgox acq here --> </body> </html>
Re: (Score:2)
Why do people use online wallets? (Score:2)
Most people around me say it's better to keep your coins in an online wallet because it's easier to set-up, but I didn't do that, because then it would be the exchange that controls my money.
If people had kept their bitcoins in offline wallets, Mt. Gox wouldn't have been able to take them.
phantom transactions 2 weeks ago (Score:2)
For some reason only Slashdot reported no money was lost. In the phantom transactions obviously bitcoins were transferred, yet cancelled before cash could come.
On other sites like neowin it is reporting the values are sinking below $300 a coin!
Long Term Con? (Score:5, Interesting)
Sounds to me like someone was running a long term con here. Act like a legitimate business for a few years, get people to trust them. Maybe think of them as a bank and a safe place to actually cash, not bitcoins. Then once that trust is built up and you have a nice supply of money sitting in some off shore bank. Vanish like a thief in the night.
Not unexpected (Score:2)
Well, you can't say it was unexpected. There have been problems with Mt. Gox for months now, ever since dollar withdrawals were stopped, so anyone using them was doing it at their own risk.
Cautious people would have sold their trapped dollars at a discount while they still could, and taken out all their bitcoins, so they wouldn't have lost too much. The unwary... well, they'll pay some stupid-tax.
Comment removed (Score:3, Interesting)
Re: (Score:3, Informative)
Never ascribe to malice what can adequately be explained by incompetence. This just looks like a sheer case of incompetence by Mt.Gox (which after all is a Magic The Gathering exchange, that's what it stands for - so run by gamers - not that this is necessarily a bad thing - but it's not an exchange run by people who are experts in banking, markets and computer security.
Re: (Score:3)
Bitcoin is not a currency, it's a token on par with casino chips or the tasting tokens you'd get a beer festival. Nor is it significant, it's total current value barely approaching about three days worth of Wal-Mart's annual income. (Heck, here in the US there are city budgets bigger than Bitcoins current overinflated worth.)
Outside of tinfoil hat land, there's absolutely no shred of evidence this
This kind of thing is why FDIC exists (Score:5, Informative)
Maybe this will be an object lesson for the libertarians (a very expensive lesson, for some of them). In the real financial world, we used to have "bank panics" all the time. People could lose their life savings if a bank was run poorly or crookedly. Worse, if there was a recession, people were more likely to need their money immediately, so they'd go to the bank to withdraw it – but of course a large portion of deposits had been loaned out and weren't immediately. And since people knew this could happen, they'd rush to withdraw their deposits at the first sign of trouble, since they didn't want to be the one left out in the game of musical chairs. These "bank panics", then, could happen even to well-run banks, and they made recessions far worse than they might otherwise have been. During the 19th century, the U.S. economy was repeatedly devastated by bank panics.
Finally, after the Great Depression and the mother of all bank runs, the government stepped in, because the "free market" obviously wasn't working well in this area and really never had. The answer was to create the Federal Deposit Insurance Corporation (FDIC), funded by insurance premiums charged to banks. This ensured that even if a bank did go broke, the FDIC would reimburse depositors up to a certain amount (originally $2,500, but now a quarter of a million dollars). Stockholders might be wiped out, but depositors would be made whole. As intended, this reform restored confidence in the U.S. banking system. There have been quite a few failed banks [fdic.gov] that went broke, but people with checking or savings accounts at those banks still get their money back.
But didn't that lead to "too big to fail"? Not really. The whole point of the FDIC is that you can let a bank go broke, let the stockholders be wiped out, sell the bank assets at auction, and the federal insurance will make sure the regular depositors – who didn't sign up for extra risk – will get their money back anyway. So why didn't that happen in 2008? It's extremely complicated, but it basically has to do with the repeal of Glass-Steagall. This was legislation passed in 1933 that basically said because banks are federally insured, risky investment activities have to be cordoned off into separate businesses from ordinary consumer banking. In other words, you weren't supposed to be able to run a bank, gamble on risky high-yield investments with the deposits, and then go running to the federal government for a bailout when things went south. They didn't want bankers privatizing profits and socializing costs. But that law was repealed by Phil Gramm in the 1990s. As a result, everything got intermingled – we had massive insured deposits being used to gamble on derivatives that no one understood, and everything was linked to everything else in such a way that one false move would bring the whole house of cards tumbling down. The fear was that if there was not a general bailout for the investment banks (not covered by FDIC) then the whole economy would collapse. Whether that argument was sensible or just self-serving, it's what happened. Since then there have been several attempts, only partially successful, to rein in the exuberant activities of Wall Street to try to stop this from happening again.
Now back to Bitcoin. People in Mt. Gox thought they were keeping their money in a bank. Well, they were – a pre-1933 bank, with no insurance and no guarantees. There was a de facto bank run on Gox a couple months ago, and now it's gone bust and everyone has lost everything. And the libertarians didn't see this coming because they thought FDR was the devil and that all banking regulations are unnecessary.
The new meme on Reddit seems to be that you need to keep your coins in "cold storage" – if you keep them on an exchange and something bad happens, you have only yourself to blame. Imagine the financial papers saying that you can't trust the banks, so y
Re: (Score:3)
Why in gods name people would leave a significant holding in a foreign web site when it is so easy to secure locally I will never understand...
Re:This kind of thing is why FDIC exists (Score:5, Interesting)
> Maybe this will be an object lesson for the libertarian
I'm sure it will be, but not the lesson you are thinking of.
Some attributes of this problem:
* The currency itself is not affiliated with the crashing "bank". so you have seen exchange rates dip somewhat, there is no fundamental crash for the cryptocurrency
* Numerous exchanges and other pseudo-exchanges have stayed open and operational for this whole saga, allowing liquididty in and out of the cryptocurrency
* Use/Exchange of cryptocurrency does not require blind trust in the fundamental sense, so those who kept their balances in trust exchanges minimal to nil, lost nothing
* This "crash" was not sudden or mysterious. Those with the slightest modicum of common sense got out long ago. Other's with a taste for danger kept in or bought in up to the last minute. But just like playing with penny stocks, the risk was very high.
* MtGOX itself was a form of ponzi scheme. You could also have a ponzi scheme based on chicken eggs, or bottle caps. This does not mean that eggs themselves are a ponzi scheme, and neither are bitcoins.
On the other side of the coin, any form for exchange is backed with trust. So long as people continue to trust in the cryptographic and stability of the network itself. Those appear to remain strong, and merchants accepting the currency semi-directly continue to operate.
The lesson learned: crypto currency can sustain major scandals denominated in itself and not be fundamentally broken. Also, its possible for exchanges and reserve banks to prove solvency cryptographically, and doing so will become the "FDIC" equivalent for the crypto currency world.
If anyone is interested (Score:5, Funny)
Re: (Score:3)
Oh c'mon, if that worked someone would've had that idea years ago!
My attitude (Score:3)
When bitcoins dropped below $200 and even knowing no-one could transfer anything out of Mt Gox, I transferred in some money to my Mt. Gox account (about $1500).
I knew it was a massive risk but the potential gain was correspondingly high too.
The money should have hit my Mt.Gox account about 8 days ago but never did. Of course I went through the formality of filing a support ticket but pretty much had already figured the money was gone.
Since I saw MtGox website is now just a message that clearly translates to "Goodbye and thanks for all the fish" I will waste nothing on guessing if I will ever see the money again, as losing it is OK too. I went in with my eyes open, knowing this was a massive risk and therefore only spending some play money that I could afford to miss.
Perhaps the most surprising thing to others may be that this won't change my positive view of Bitcoin itself one little bit, nor will I stop making other high-risk investments with amounts of money that I can easily afford to lose.
You all probably think I'm nuts, especially for even sending that money to Mt.Gox in the first place, but Grestsky said it best: you miss 100% of the shots you don't take.
Yes, the dollar is so much better (Score:3)
"Maybe the U.S. Dollar isn't so bad after all."
Because the regulated financial institutions that deal in U.S. dollars are so much more trustworthy. Perhaps I should keep my money with these guys [wikipedia.org]. Or this company [wikipedia.org]. Or them [wikipedia.org] perhaps? This guy [wikipedia.org] looks trustworthy, doesn't he?
Here [wikipedia.org] is what government-backed currency banks, lenders, investment firms, and the like have been up to recently. And here [rollingstone.com] is what they're up to now.
Re: (Score:3, Insightful)
...and you put it in the title of your comment, so nobody will notice it. :(
Re: (Score:2)
Which is to say, not much.
Re: (Score:2)
Re: (Score:2)
Why? I'm asking a serious question - what leads you to believe that (a) it's right to think of Bitcoins as an investment, and (b) that now is an attractive time to invest in them?
Re: (Score:3, Insightful)
Would you similarly suggest that diamonds are worthless if your neighborhood jeweler got robbed?
Funny thing, those diamonds. You go and buy a $10,000 diamond from a jeweler and together with the diamond you get an official certificate stating that the diamond was worth $10,000 on a particular date. The same day you take the diamond to another jeweler, and they agree that, yes, it's worth $10,000, and then offer you $6000 if you want to sell it.
Diamonds are nice status symbols allowing you to say 'look, I can afford to pay $10,000 for a sparkling rock' but they are worthless as investments as even when
Re: (Score:3)
Re: (Score:3)
Re:Ha! Ha! Ha! (Score:4, Insightful)
Anarchist societies fail for the same reason communist societies fail: Humans are greedy assholes who'd gladly kill you for a buck if they think they can get away with it.
It's also the reason why the capitalist system works out.
Still, I think it's sad that we base our financial and economical system on the bad traits of humanity. Actually, I'm sad that it works.
Re: (Score:3)
That's possible for a bank because they're expected to take the money deposited with them, invest it, and make more money from it. If the investments are worth less than the amount the bank's supposed to hold (e.g. subprime mortgages), or the rate of withdrawal becomes larger than the bank can support because their investments aren't liquid (e.g. oil pipelines and housing blocks) then they become insolvent. That's all well-understood.
Neither supposed to be possible for a Bitcoin exchange. They have no inves