
As MtGox trading remains suspended, bitcoin price falls from $160 to $60 - gabemart
http://bitcoinity.org/markets/btce/USD
======
IgorPartola
So one thing I've noticed and have been logging for a while is the fact that
there is huge disparity between prices on various exchanges. My first
inclination was to create an arbitrage bot that would buy on one exchange,
then transfer to another, and sell again. There are numerous problems with
this approach, not the least of which is that you can only really transfer BTC
between exchanges and not other currency.

My next thought was this: watch MtGox and assume that it drives the market
price. Then buy/sell on another exchange, taking advantage of the fact that
there is a delay.

Long story short, it's not as easy as this. However, there is definitely an
opportunity for arbitrage here as for example currently BTCe is showing $65,
while BitStamp is showing $61.

~~~
mikeash
Are transaction fees small enough for that to work? $65 versus $61 is only
about a 6% difference, and you need two transactions for each trip, so the
fees would have to be under ~3%.

~~~
dfc
Fees are under 1%. Mtgox's highest fee is 0.55% and bitstamp's highest is 0.5%

~~~
mikeash
Better than I expected, obviously. Thank you.

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minimaxir
The reactions on r/bitcoin, are interesting and tragic. The title of the top
thread with 515 comments: _I think this subreddit should seriously consider
having suicide hotline info posted_

<http://www.reddit.com/r/bitcoin>

~~~
drivebyacct2
To be fair, most of those are from 6+ hours ago.

~~~
minimaxir
True. That just means it's going to get _worse_ once the 60% drop today is
accounted for, and looking at the new posts, people are in a panic.

~~~
drivebyacct2
I'm definitely just waiting to see what's up when Mt.Gox comes back online.
Wish I had some money in btce to buy a few though.

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PaperclipTaken
Bitcoin is not dead, it will come back. Technically, it won't even disappear.

Bitcoin has many fundamental uses as an exchange of value (note the
vernacular) that is not done properly by anything else. It is the reason that
markets like the Silk Road can exist. The "fundamental" flaw of bitcoin is
that it is deflationary. This causes mass speculation, which causes
instability.

It's instability means that it is not a good store of value. It is good for
exchange of value under certain conditions (anonymous, distributed, trust
required, cryptographic, etc.). Bitcoin is taking a hit right now because all
of the speculators are cashing out (or panicking, or whatever). Most of the
people who use bitcoin for it's fundamental strengths only hold on to bitcoin
briefly. This is one of the (perhaps unintended) features of the commodity.

Bitcoin is not good for measuring value. You would never set a price in terms
of bitcoin. You would set the price in terms of dollars or euros and then use
a conversion to figure out what the price in bitcoins should be. This will
probably always be the case for bitcoin transactions, because that's just how
bitcoin is.

But as long as bitcoin does 'distributed, anonymous, and cryptographic' better
than everybody else, it will be used for those strengths, and this will keep
it alive. Bitcoin is not dead until there is something to replace it. A market
crash does not count.

It just makes for some sad speculators.

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obilgic
Speculations affect every currency or share. But it affects bitcoin stronger
because of its low market cap.

Think bitcoin as a some random micro cap manufacturing company located
overseas, one news coverage and everything changes.

~~~
InclinedPlane
Can you describe the mechanisms in the bitcoin system which will drive down
the investment-based and speculation-based trading and drive up the currency-
based trading?

It seems to me that the exact opposite trend is more likely. The use of
bitcoin as a currency will become increasingly swamped by speculative
investments and the swings in value will only get larger and larger, not
smaller.

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akcreek
The link in the article has BTC at $65 right now and
<http://realtimebitcoin.info> has it at $124.90. How is that possible?

Edit-

It looks like <http://realtimebitcoin.info> is using mtgox for their data,
which explains the discrepancy.

~~~
gabemart
That site is pulling data from Mt.Gox, the largest exchange. Mt.Gox suspended
trading a few hours ago, and has been showing a "last price" of $124.90 since.
On other exchanges (where trading is not suspended), the price is currently
hovering at $60-$65.

Mt.Gox reopens at 02:00 UTC. (This comment was written at approx 22:25 UTC, so
when this comment is about 3.5 hours old. When that happens, I predict, all
hell will break loose.

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pmorici
So I don't quite understand is the falling price because mtgox is down for
maintenance (if so why does it have that effect, I don't run into the street
and burn my cash just because the banks are closed on Sundays) or is that just
a coincidence?

~~~
yebyen
Imagine what it would be like if there were bank holidays, but they are not
predictable in a calendar sense in advance like our holidays... and every bank
has their own list of holidays. And also there are only five banks.

I think the price is falling because there's been a speculative bubble rising,
and the speculators' confidence is a fickle thing. Maybe up until now, you
were a speculator and you didn't think you needed to go anywhere else. Now
Mt.Gox has frozen trading and they are also not processing withdrawals. Most
people stop trading too.

So, it's a fire sale, because nobody knows if our bubble will blow itself back
up again, or how long it's going to take for that to happen. If you were
keeping 2/3 of your money at Mt.Gox and now you're afraid that it's utterly
gone (at least you know you won't be trading it today), so you've only got 1/3
of what you had, and everyone in town says it's worth 1/7 what it was
yesterday.

A few people would surely take the money and get rid of it.

------
krcz
Recent research has shown that placebo works even when patient knows (s)he's
getting placebo.

Now it looks like the economic bubble works even when everyone knows it's a
bubble: <http://imgur.com/jvSKdEv>

~~~
illuminate
"Recent research has shown that placebo works even when patient knows (s)he's
getting placebo."

Huh? Why would it be surprising that placebos work when the patient knows
they're getting the placebo?

<http://www.ncbi.nlm.nih.gov/pubmed/20091554>

------
leoh
I'm not terribly impressed with Bitcoin. But it might be possible to make a
few bucks on this downturn.

"A simple rule dictates my buying: Be fearful when others are greedy, and be
greedy when others are fearful." -Warren Buffet

------
awnird
You seem to have capitalized the name of the exchange incorrectly. It's not
MtGox (like a mountain), it stands Magic The Gathering Online Exchange, a
website where you can trade children's playing cards.

~~~
daeken
> it stands Magic The Gathering Online Exchange, a website where you can trade
> children's playing cards.

I'm not sure if you did it to drive the point or not, but Magic: The Gathering
is by no means "for children". The average age of players is way over 18 in
most areas.

(Slightly biased as someone who's been playing M:TG for over 18 years.)

------
DanBlake
Is it likely the mass sell off will come once mtgox reopens? Certainly many
have their bitcoins tied in there and will begin selling once open?

~~~
gabemart
While I'm not qualified to say, I certainly would predict so.

Many price-monitoring tools pull data from MtGox. For anyone using those
tools, the price has been stable at $125 for the last few hours and will stay
that way until the exchange reopens at whatever the price is then (currently
around $65).

When that jump happens, I can only imagine a vast quantity of BTC will be sold
and the price will crash.

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billpg
Is there a list of distinct URLs of Bitcoin charts, for next time the rate
goes crazy?

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teeja
Back up to 82 ... end of the milking machine for today.

------
Helianthus
Please. Bitcoin fanatics, come out and tell me that Bitcoin will change the
world.

That there will come another rise, and this time it won't be a bubble.

Because I know you think these things, that you're true believers, and you
think that an unregulated currency with a track record of insane volatility
will replace our means of commerce somehow.

Here's the thing:

The majority of people that have Bitcoins now are the people that don't want
to sell them. Ever.

The mainstream media watched you this time. It saw just how dysfunctional
Bitcoin is.

You lost.

~~~
baddox
Straw man army. Which bitcoin enthusiast said that "winning" requires
"replacing our means of commerce" or "changing the world" or even "never
having insane volatility"?

I consider myself a bitcoin enthusiast, and I have never made any of those
arguments, and I don't consider myself to have "lost." If the value of bitcoin
goes to zero and stays there, I don't consider myself to have "lost." It's
still an awesome idea that interests me from computer science and
economic/political perspectives, and everything we've seen happen in the
bitcoin economy is to me a cool proof of concept.

I don't understand why the "anti-bitcoin fanatics" are so vehement in their
criticism of bitcoin enthusiasts. You seem to deriving much more excitement
from the recent bitcoin price drops than I ever did from its price increases.
Honestly, I just think the decentralized transaction log based on proof-of-
work is a really cool idea, and the hypothesis that there could be a
trustworthy means of making and verifying transactions without a government or
central authority controlling the thing being transacted is compelling. I
would think that even if I just read the white paper and there had never been
a single bitcoin transaction in real life. The fact that there is a high-
profile bitcoin economy is just icing on the cake.

The anti-bitcoin fanatics have carefully constructed their position to ensure
that they can interpret literally _any_ event as evidence that bitcoin is
stupid or doomed or a scam. Is the price rising? That's obviously market
irrationality and pure speculation. Is the price falling? That's clearly the
market correcting itself. Is a certain exchange doing well and gaining a good
reputation? That's an evil monopoly that goes against the decentralized goal
of bitcoin. Is a certain exchange experience technical difficulties? Then
that's just a bunch of incompetent amateurs, or worse, malicious scammers
trying to distort the market. Is there a lack of people actually buying useful
things with bitcoin? That's clear evidence that there is no real bitcoin
economy. Is a business supporting bitcoin payments? Well that's still crap,
since they're tying the price to the USD exchange price, or using credit
cards, or the business owner is just some bitcoin shill, etc.

~~~
danjumasule
Dear baddox

My name is Danjuma Sule, one of the sons of major Gen Gumel Danjuma Sule, The
late Nigeria's former minister of mines and power in the regime of the late
former Nigeria's military Head of state, Gen Sanni Abacha. When my father died
he left me an inheritance of 13002422.34343422 bitcoins. Unfortunately bitcoin
exchanges are not yet set up in Nigerian currency and I am in need of a young
techno wizard with a bank account denominated in US dollars to assist me in
gaining access to my inheritance.

It is on this basis I am seeking for assistance. Your percentage is
negotiable. Please note; your age and profession doesn't really matter in this
transaction. Waiting for your immediate response and bank account specifics.

Regards, Danjuma Sule

~~~
PaperclipTaken
I would like to point out that there aren't even 13 million bitcoins in
circulation.

~~~
kbenson
I would like to think that number was chosen on purpose. :)

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ttrreeww
There really was no need for the hardware upgrade. The volume won't be coming
back anytime soon.

