
Why Mt. Gox, the World’s First Bitcoin Exchange, is Dying - beniaminmincu
http://www.coindesk.com/mt-gox-first-bitcoin-exchange-dead/
======
dgreensp
Dear god, I hope so.

Mtgox is the giant raging zit on the face of Bitcoin. The software and service
are so terribly, inexcusably bad, and they have always been that way. The
market price on Mtgox has been artificially high ever since I can remember,
because no one can withdraw their money. Users wait for their withdrawals for
weeks, and sometimes months. As a result, a dollar in your Mtgox account is
worth less than a dollar. Now it is artificially low, because people can't
transact Bitcoins either! The other exchanges, meanwhile, tend to agree pretty
closely, because it is actually possible to move bitcoins and dollars between
them.

Imagine if ETrade, say, was so bad at moving money that you had to pay an
extra $100 for a share of Google stock. That's what it's like. Or if everyone
used Google's DNS servers but they typically took 3 seconds to respond. And
yet people use Mtgox, and talk about it, and it's listed on all the sites and
apps that track the market price on different exchanges.

At first, everyone chalked up Mtgox's problems to the sheer difficulty of
running a Bitcoin exchange, and then, to the difficulty of running the
biggest. Well, now it's no longer the only or the biggest exchange, and no one
else is having the same problems, at least at this service-destroying level. I
can't comment on the difficulty of establishing relationships with banks to
move millions of dollars -- I'm sure it's hard -- but Mtgox has also had a lot
of plain old scaling issues, and the transaction load is not even that high by
web scaling standards. Last time I checked it was 30 per second or so. Their
security is nothing special; they've been hacked before. I have heard only
negative things about their engineering competence.

I'm a casual fan of Bitcoin but a big hater of bad software, bad customer
service, and companies that act in a sleazy manner. I hope Mtgox dies.

~~~
omilu
coinbase is just as bad

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sillysaurus2
This is FUD. As incredible as it seems, MtGox's problems are, in fact,
technical. And it was quite a relief to realize this.

Also, there is minimal danger of a bank run. MtGox makes a profit off of every
transaction. Therefore they control more BTC than users are able to deposit.
Hence, since Magical Tux (the owner) is motivated not to go to jail, he will
not run off with people's BTC.

For anyone who wants the truth, rather than speculation, here it is:
[http://www.reddit.com/r/Bitcoin/comments/1x93tf/some_irc_cha...](http://www.reddit.com/r/Bitcoin/comments/1x93tf/some_irc_chatter_about_what_is_going_on_at_mtgox/cf99yac)

~~~
smtddr
I don't know what will happen to MtGox, but you sound just like the
SheepMarketPlace defenders when they kept coming up with all kinds of ways to
downplay all the events leading up to SMP's disappearing act. I don't know how
you're so sure they won't fall into oblivion. They've been a big mess for
months.

Anyone else reading this who's new to crypto-coins, at the _minimum_ I do not
recommend you send any of your coins/fiat to MtGox at this time.

~~~
username223
For anyone new to crypto-coins, "fiat" is a derogatory term for "cash money,"
not a small European car.

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cromwellian
Looks like a Bank Run? Bitcoin exchanges that engage in some kind of
fractional scheme need insurance coverage. I don't know if Mt Gox is doing
that, but it kind of smells like they don't have enough BTC on hand to allow
withdrawls.

On the upside, Bitcoin seems like a perfect laboratory to re-run the
experiments in banking leading up to the 1930s when you know, the "communist"
FDR imposed banking regulations which are still hated today by some. :)

~~~
bpicolo
How would they not have enough BTC on hand? It's not like they loan it out
like banks.

~~~
jonknee
> The US Department of Homeland Security and the Secret Service seized three
> accounts linked to Gox containing more than $5m. As research from The
> Genesis Block shows, the executed seizure warrant was dated 19th June, the
> day before Gox announced it would halt dollar withdrawals.

Not to mention they're a huge hacking target.

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gojomo
There's plenty to warrant suspicion, but it turns out there _is_ a credible
explanation for the seize-up in BTC payouts being a technical problem that
will take some time to resolve:

[http://www.reddit.com/r/Bitcoin/comments/1x93tf/some_irc_cha...](http://www.reddit.com/r/Bitcoin/comments/1x93tf/some_irc_chatter_about_what_is_going_on_at_mtgox/cf99yac)

This analysis describes a Bitcoin transactional defect of which I wasn't
previously aware. However, from a vaguely-similar much-smaller incident
involving the default client, I know that having a local wallet confused about
what prior transactions are truly spendable can take significant time and
custom effort to unwind.

~~~
coldtea
> _There 's plenty to warrant suspicion, but it turns out there is a credible
> explanation for the seize-up in BTC payouts being a technical problem that
> will take some time to resolve_

Would you be as OK with your bank holding money like that?

~~~
gojomo
Who said they were "OK" with anything? It's just information for understanding
the situation.

I'm unhappy when ATM outages or erroneous fraud alerts prevent me from using
my cash or credit, but I understand that such situations are different from
dishonesty or insolvency.

~~~
coldtea
> _Who said they were "OK" with anything?_

The casual tone by which people (including you) were discussing this. If a
bank had even week long issues like that people would be frothing at the
mouths (and rightly so).

> _It 's just information for understanding the situation._

Yes, it's the "understanding" part that I don't get (except if it's pure
technical curiosity, but from the excuses people make in this thread it
doesn't seem so).

They messed up, they are not a worthy exchange, that kind of fiasco is
insurmountable -- end of story. I wouldn't try to "understand" a restaurant
that served my cochroaches in my pizza, I'd just avoid it and bad mouth it to
everybody I know.

~~~
scintill76
> I wouldn't try to "understand" a restaurant that served my cochroaches in my
> pizza, I'd just avoid it and bad mouth it to everybody I know.

This is Hacker News, where we like to "understand" enormous failures, even if
we don't have "patience and understanding" for them.

I think the point of the people talking about the technical glitch, is to
counter everyone saying "BTC is perfectly frictionless, therefore if Gox can't
give me BTC they must not have any!" nullc/gmaxwell gives credible technical
explanations for why spending thousands of BTC in daily volume from various
sources through a volume-necessitated custom implementation of Bitcoin, can
actually be non-trivial. You're free to think Gox is incompetent, or that the
pizzeria is unclean, but that doesn't mean you can't have interest in how they
got that way.

------
captainchaos
Reading this thread on Reddit actually puts in perspective how hard it must be
for governments to design and implement effective economic regulations. It's a
real balancing act.

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Tenoke
I can't really feel sorry for anyone who is having troubles with Mt Gox.
People have known for ages now that Mt Gox is unreliable and they kept using
it to take advantage of the higher prices which come with the higher risk.
Hell, If anything, they are the problem since things would've likely been
better right now if more people had moved away from Gox from before instead of
waiting for the ship to start sinking.

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Techskeptic
I'm ignorant as to how BTC exchanges work. Is there a market maker providing
liquidity or do the exchanges take inventory themselves? Any info for this
would be appreciated. Insofar as uneducated guesses go, I suspect they are
facing a "bank run" liquidity crisis based on them taking inventory and not
having the capital to accommodate withdrawals.

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Larrikin
I never had any problems withdrawing money, but I live in Japan

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gaius
Because it's Magic the Gathering Online eXchange.

~~~
shiftpgdn
Wow what an insightful comment I'm glad you made your way to this thread.

~~~
gaius
Thanks. It's a complete mystery why people think that a website set up to
trade playing cards can act like a bank. And completely unsurprising that it
finds itself embroiled in all these hilarious situations.

~~~
mkr-hn
Just because software is weird and niche doesn't mean it's poorly engineered.

