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Twice burned: How Mt Gox's bitcoin customers could lose again

24 Comments
By Alexandra Harney and Steve Stecklow

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24 Comments
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I want to know who will compensate the taxpayers for this? Just imagine how much time and public money has been spent by police, prosecutors and judges in this case. The taxpayers will never recoup this public money even if they are successful in recovering every bitcoin for these people.

These 'investors' are happy to trade on a market full of criminals and dubious characters where their money is untraceable and there is no instutional oversight or control, yet they expect us to pick up the pieces when things inevitably go wrong.

4 ( +4 / -0 )

bitcoin such a scam. enjoy convincing people its legit, it is not

3 ( +3 / -0 )

I lost BTC with gox going down, not 311 but it is what it is. If you bought at the time it went down you still have nearly 10x your investment. Use bitflyer backed by several Japanese top banks.

Just don't keep your BTC on the exchange, watch the price when you want to buy transfer the money, when you want to sell transfer it out. Unless you are doing bot or high freq trading it is the safest and you don't lose much in the transfers if you play medium term.

2 ( +2 / -0 )

What a mess, I can see similar happening to banks as well, THIS, is the kind of chaos that digital is REALLY bringing to our world!

I think old more analog systems for things are looking much safer, reliable than digital.

Expect more problems in various area's of our lives as we head down the disastrous road that is digital, just sayin!!

2 ( +2 / -0 )

Case of a lifetime. Very interesting. I am a lawyer and I don't understand what the helle is going on!

2 ( +2 / -0 )

Proof this behaves like a coupon or a highly volatile stock, and not a currency

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How does BC handle the inflation?

How can you get your millions out?

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These 'investors' are happy to trade on a market full of criminals and dubious characters 

You seem to have misunderstood. They were not trading on Wall Street.

They were trading bitcoin.

1 ( +1 / -0 )

Use bitflyer backed by several Japanese top banks.

I get the impression that they are pretty solid, but their spreads are ridiculously expensive.

0 ( +1 / -1 )

"digital coins are bought, sold and stored" easy. Don't strore your coins in an exchange. Lots of options. Buy a hardware wallet.

Mt. Gox should have been eye opening enough lesson to store your own coins but so many people still keep their money in the exchanges. Mt. Gox was a an expensive disaster that made cyrptocurreny better because it brought some government oversight and regulation to Japan. Japan is now number one trade volume in the WORLD. Big big banks and insurance companies in Japan are rallying behind cyrptocurreny. So they obviously feel it's all come a long way and has potential to much much further.

0 ( +0 / -0 )

What a mess, I can see similar happening to banks as well, THIS, is the kind of chaos that digital is REALLY bringing to our world!

The problem is not digital but non regulation, As the article says "cryptocurrency exchanges – where digital coins are bought, sold and stored – are largely unregulated and have become magnets for fraud and deception", that's the problem, these cryptocurrency exchanges need to be strictly regulated. Now who determines the number of bitcoins in circulation and what-if these were to increase say hundred times..

0 ( +1 / -1 )

Wait til a huge solar flare burns out all your banks' memory of your money, and hopefully debt! I always try to keep a recent paper copy.

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The number of bitcoins is fixed, now who determines that, Math ?? guess i will leave this here..

And who regulates that finite number, the mining and the other nodes ??

0 ( +0 / -0 )

mrtinjp: you can google it yourself dude, its facts.

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who regulates that finite number, the mining and the other nodes ??

No one. It’s a self-regulating system. It lets you, me and anyone with an internet connection to take control of our own money, rather than letting some institution do so.

If you lose your cryptocurrency data, can you get it back? Like if you lose a 10,000 note...

It depends on what you mean by ‘lose’. If you lose the private key that unlocks your wallet, then no, it can never be recovered. Some people have lost keys for wallets that are now worth millions of dollars. That could be considered lost, but actually anyone can see exactly what wallet owns those coins. So they aren’t exactly lost either. It’s just that no one is able to use them.

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Say you received 100 BT credits the moment you joined. You barter and trade and use the coins and a means of exchange. That would be a currency that wouldn't have any connection to the banks.

But once you have to pay another currency to give BT value, it isn't a currency anymore. I didn' t have to pay into my local currency, it's merely the credit system used to define my labour and the cost of goods. No one needs to use another currency to make a currency.

This is why BT is a stock, not a currency. Paid for with money from a bank, somewhere down the line. People want to know how their stock is doing, buy or sell it. It isn't about using it as a currency for the most part. That's why it merely subtracts value, if it had been setup to exist in a market then its value could have been judged without effect from banks or Chinese investors. Once China no longer invests, it's done like dinner

You can't buy into it without currency from a bank, then say it doesn't depend on banks. That's nuts

If it had been merely a credit system based on value not something you buy then it would have worked.

It is us that give money value, not money, mkay?

0 ( +0 / -0 )

once you have to pay another currency to give BT value, it isn't a currency anymore. 

You’re correct in that it would be a commodity if it were required to be purchased. However, you are mistaking the common way bitcoin is used, that being the method you described, as being the only way bitcoin is used. I have a wallet into which I’ve received payment, in bitcoin, for services I’ve provided. I’ve used those coins to pay for services on the internet. This currency was never converted to any other currency between the work I did, and the services I paid for. That is the definition of a currency. Early adapters are using bitcoin as a currency. Eventually we all likely will. Even right now, you can get credit cards that work with bitcoin. You prepay a card with a quantity of bitcoin, and as you make payments, the bitcoin amount is deducted at the current rate. Same as when I use my Japanese credit card in another country.

Your definition of the currency as a stock is akin to equating Fx trading to benign a stock. There are similarities between a stock and how some people are using bitcoin, but it’s not accurate to call bitcoin a stock.

You can't buy into it without currency from a bank, then say it doesn't depend on banks. That's nuts

Except that you can buy into it without a bank. I gave my example above of receiving payment for work done in bitcoin. Another way I can buy into it without a bank is to set up a bitcoin miner (server), and dedicate the resources to mine for new coins. If I am lucky enough to get a hit, I get 25 bitcoins (over 7.5 million yen) all without going through a bank. I can then convert that currency to yen, through a bitcoin exchange, or anyone I want for that matter, all without going through a single bank.

It is us that give money value, not money, mkay?

You are entirely correct on this point. People have decided bitcoin has value, and that’s why it has value. And at this point it has reached a critical mass - it may fluctuate in value severely, but it’s not going away.

0 ( +0 / -0 )

"Like if you lose a 10,000 note..."

I checked my wallet and found out I currently own a grand total of two "10,000 notes." That's because 99% of my cash is in bank accounts as reserves. Those reserves are protected by govt-backed deposit insurance, which pays for any amount lost, up to $100,000 per account.

0 ( +0 / -0 )

JeffLee: you are confusing bitcoin's stability vs. a bitcoin exchange. Nothing unsafe about BTC. Idiots like MTGox are the issue. Use authorized money exchange places like bitflyer.

0 ( +0 / -0 )

Use authorized money exchange places like bitflyer.

Or maintain your own wallet. The problem with exchanges is that you are surrendering control over your wallet to them, so if something ever happens to the exchange, you are screwed (like the Mt. Gox customers).

This bitflyer - who has authorized it?

0 ( +0 / -0 )

Strangerland: Yeah of course that is the best but it you are trading you need to trade somewhere. Check out their website and the major players backing it, including 3 of the top 4 banks in Japan and insurance on assets. Nothing is safe but at least these guys have some insurances in place and the main guy running it used to be in stocks and bond trading.

https://bitflyer.jp/

0 ( +0 / -0 )

Now who determines the number of bitcoins in circulation

Math.

and what-if these were to increase say hundred times..

There is a finite number of bitcoin that will ever exist. It's impossible to create more than that, new BTC is made from mining, you can't just make your own. Even if you tried to because of the nature of the blockchain no other node would accept it and it would be rejected. Hacking aside, the biggest risk is exactly the same as a regular stock, someone dumping something like 100,000 bitcoin in one go...

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If you lose your cryptocurrency data, can you get it back? Like if you lose a 10,000 note...

-1 ( +0 / -1 )

I think old more analog systems for things are looking much safer, reliable than digital.

That's what people said when we went from barter to precious metals. Then when we went from precious metals to currency. Then when we went from currency to credit cards.

In reality, bitcoin is much safer and reliable than analog systems. Try stashing a million dollars of cash in your home - where are you going to put it that is secure? With bitcoin, this can be stored on an external bitcoin wallet software, or even a piece of paper (paper wallet).

-2 ( +1 / -3 )

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