I've stayed away from MtGox due to their issues w/ fiat transfers from last year (which seem to be ongoing), however, technical problems aren't a new thing for them over the years. I've heard not so great things about the technical underpinnings of their custom Bitcoin protocol implementation.
When I got back into bitcoin recently, I tried signing up w/ a bunch of exchanges, but ended up using Coinbase and have been pretty happy with them. I've still been transferring coins into my own cold wallets though. The whole point of Bitcoin is that you don't need to introduce counterparty risk by having someone else hold your money.
Oh dear. According to that, several transactions are using the same input, which basically means that they're trying to use the same Bitcoins to pay multiple people. So Mt Gox may never even have had enough Bitcoins in their hot wallet to make all the payments they claim to have already sent out.
I'd bet that this early adopter had some information or leverage that forced Karpeles's hand. This balance may be from an old Mt. Gox cold storage address, but it's equally possible that Karpeles is using some of his personal holdings to cover the amount owed for one big customer, or perhaps more.
Furthermore, I actually now believe that Mt. Gox is having technical problems with Bitcoin withdrawals. Their poorly-designed custom Bitcoin node is evidently having problems coping with the newly-mined inputs a lot of people were directing straight into their Mt. Gox account.
Before, I was thinking that people should just write off their Gox holdings, or prepare for a lawsuit if the holdings are big enough, but I now believe that there's a decent chance that people will be able to eventually withdraw their balance in Bitcoins (USD transfers still look impossible for most people).
Finally, a personal note to those with coins stuck at Gox:
Please, even if you are able to eventually recover your coins, and even if future trading opportunities on Mt. Gox are incredibly profitable, please, please don't do any further business at Gox. Gox has been harming the Bitcoin ecosystem since back in 2011, when their incompetence, greed, and contempt for customers first reared its ugly head. Since then, the same problems have repeated themselves, time after time. Please don't go back. Remember this pain.
There is some risk with early adoption. Reliability will be lower. That's why NASA built the space shuttles uses decades-old computers in its spacecraft. But that doesn't mean it's not the solution to a problem
I'm still sort of in shock. I allowed myself to believe it was a good idea to store all of my bitcoin in mtgox, due to their One Time Password protection features.
Once I realized something was up, and realized that only small withdraws of <0.05 BTC were being processed, I spent the last 24 hours salvaging as much as I could. I was able to withdraw 3.4 BTC of my 9.2 total. There are still 0.65 in my MtGox account. The remaining 5.15 are stuck in "withdraw limbo" due to the technical problems. MtGox has set up a system to automatically refund all stuck withdraws exactly 7 days after they get stuck. So, hopefully 7 days from now I'll be able to withdraw the rest, if MtGox allows it.
I hope their Monday update will bring good news...
This is kinda unrelated, but I seriously wouldn't feel comfortable leaving any sort of coin I didn't mind loosing on MtGox for any extended period of time. Armory (https://bitcoinarmory.com) is great for offline storage and is pretty straightforward to use.
Before you get too worried, it's likely more a technical problem with their wallet software than them not having the funds to spend. It seems to be that they are losing track of which inputs they have spent and which ones haven't, and everything is getting backed up behind a mound of transactions with unmet dependancies. No doubt they'll sort it out and be back to processing withdrawals again in no time.
So many investors held out much longer that many might have expected, clinging to the belief that pirateat40 was true to his word, and that the Ponzi stench existed only in the minds of cynical observers.
In the end though, the last groups of investors lost almost everything.
Collapsing banks have very little choice. You can physically go to their branch and withdraw money (and historically everyone doing this at once has been one of the more common _causes_ of collapse), and if they stop withdrawals for no reason the regulators will be on them like a shot.
The regulators will also keep track of their reserves, particularly if there seems to be a problem.
None of this applies to MtGox; it's an unregulated company running in a country with very different law to that of the countries most of its customers live in.
Why is that scenario "more likely" exactly? Do you know something we don't? It's all a bit fishy. If my bank did this I would be livid (and yes, I realize that some banks have asked for a reason to withdraw large amounts of cash. Likewise, I would be livid.)
In July 2011, after the MtGox hack and price "crash", iirc MagicalTux sent a 424,424.42 (an amount suggested in IRC) transaction to prove control of the BTC funds. This time, we know they control the 60k+ BTC stuck in withdrawal because mtgox published the list of transaction hashes (and a lot if it is change going back to MtGox).
But he did also accidentally push a bad tx one time (6k BTC iirc), to an unspendable output.
Forget the title, thanks for posting, it is the first I've heard of this. I moved off Gox in December and transferred my BTC to cold storage (paper wallets). I really recommend looking into doing something like that, it makes it easier to sleep at night. Hope you get the rest of your money out :)
I stopped using Gox long ago because of the fiat withdrawal issues. Their reign as the king of the Bitcoin markets boggles my mind. Like Bitinstant, somehow the fact that they were among the first in this space has engendered undying loyalty in the face of outrageous problems that would be instant business killers for any site other than themselves.
It's a fascinating study in brand loyalty, but is also ultimately hurtful to the Bitcoin community. Customer acceptance of Gox's mediocrity will only ensure that these and even more egregious issues continue to occur.
Yes, all that's happened is a bug that completely halted trading at a financial service managing millions and millions of dollars worth of assets.
At every point in the sad journey of Mt Gox -- from expertly storing passwords in plaintext (EDIT: actually it was unsalted MD5 hashes, but still, jesus christ) to this awful business of freezing the entire exchange -- the bitcoin community has fallen all over itself to forgive and excuse them.
How much is too much? You people should be calling for someone's head on a damn platter.
You left out the inability to keep a trading engine running under modest load after two years of lost opportunity to fix the problem. Turns out most of those "DDos" attacks on Gox were simply their customers wanting to trade at modest to moderately-high Bitcoin volume (aka low volume in traditional exchanges).
Traditional banks take deposits of USD, loan them out using fractional reserve, and fail if depositors all simultaneously run to the bank and close their account. Banks need loans to pay operating costs (I suppose) so any economy (specifically, currency) with loans going on will need deposit insurance, i.e. all banks will eventually end up subsidiaries of a single enormous bank - the Federal Reserve.
MtGox does not do loans. In fact, BTC loans are so risky that no large scale lending happens in BTC. Unless MtGox embezzled funds or shredded BTC (see below), they will ultimately have the ability to honor all payment requests and _still_ have their profits.
It is possible they've had some sort of error which has irretrievably sent BTC to random addresses where it can't feasibly be recovered. If this is true, they should say so.
On their USD side, they are struggling and may have chosen to use some BTC deposits to generate USD funds to accelerate payouts. However, I find this unlikely since their USD payout problem has only gotten worse. I may be wrong; if MtGox is trying to play with their deposits, they should say so.
In other words, check your assumptions. And MtGox of course has always had a problem with communication.
> if MtGox is trying to play with their deposits, they should say so.
That's the problem with unregulated "banks", they don't have to say anything and they can for example pay all the money for themselves as for example "bonuses" or salaries and then go bankrupt. There is no protection for assets at "banks" like mt. gox.
Does anyone know whether Gox keeps 100% of deposits in reserve?
In a somewhat similar situation-- online poker, where poker sites took deposits in a wildly unregulated space-- Full Tilt Poker only kept a small amount of deposits on hand and paid out much of it to insiders.
I'm probably oversimplifying this or missing some crucial step but...
All your users by BTC at i.e. $10 and store them on your (Gox) exchange. Price jumps to +600 and you subsequently get 50k fiat withdrawal requests. Am I a total cluebie to wonder how they can fund such withdrawals? Maybe there isn't sufficient capital reserve or liquidity between BTC and fiat to withstand such demand?