Topic: Bears Bunker - Official thread - page 4. (Read 12110 times)

They're supposed to, but all they're really doing is exchanging ExchangeBTC for ExchangeUSD and then processing withdrawals, but only for those who request it. A significant amount of money is stored on exchanges because banks suck and it takes a long while to actually move fiat around. To that significant group of people, it makes sense to keep some money on exchanges long-term for short-term trading.

An exchange can have $10M in ExchangeUSD IOUs, but actually only have $5M in USD to pay out. This fractional reserve system (or in this example, probably insolvency) works so long as there isn't any kind of "bank run" on the exchange.

MtGox and BTC-e (maybe BTC-e still does - Idunno) used to have "code money." That is, you could withdraw fiat and BTC in the form of GoxUSD or GoxBTC - debt notes, represented by a hash, similar to Bitcoin. You could trade these notes around, and they offered excellent advantages, but also the very serious drawback that Gox may not honor the IOUs. These IOUs, it should be noted, are effectively the same as the balance you see in your account on an exchange -- they're not necessarily representing actual money. When Gox started issuing these IOUs as a withdrawal method, there was a very slight premium over face value due to the convenience they offered. However, when Gox's future started looking uncertain, GoxUSD and GoxBTC started trading at a discount under face value. This was because the debt notes (the same as account balances in exchange accounts) may not have been fully backed by Gox's reserves. Gox eventually discontinued issuing these debt notes due to regulations.

Thanks Nagle, at last I am satisfied.

Why would the exchanges not have the required funds to pay out? If you sell your bitcoins on an exchange, there must be a buyer with fiat on the exchange ready to buy it.

I would if I didn't have some fiat tied up on some exchanges.

No funny. Laugh! 

Of course it does! Gambling's part of the entertainment business.

That'd be scary.

It's taken much longer than I expected for the irrational exuberance to subside.

What still hasn't happened is substantial use of Bitcoins for buying real-world goods. This last runup is because Bitcoin can be used to get around exchange restrictions in China. There's still little non-speculative use. (Satoshi Dice does not count as "non-speculative")

Right now, Bitcoin Charts shows all exchanges headed down.

We have an interesting event coming up - on the next downturn, many new speculators will cash out and will demand money from exchanges. Some of the exchanges aren't going to make it.

Nagle. I demand of you to show up in this 2 years old thread and provide an update on the eventual endgame: https://bitcointalksearch.org/topic/nagle-55024

Alternatively, update your website downside.com.

That's an important point. At some point, there will be profit-taking. The Bitcoin "exchanges" will suddenly be required to pay out sums in excess of a billion dollars.  Mt. Gox has trouble paying out much of anything, and some of the other exchanges are flaky.

Think about this. We have unregulated "exchanges" run by anonymous parties holding huge sums, which they may have to pay out.  Historically, over half of Bitcoin exchanges have failed, usually taking the money. How many will actually pay up when it's time to wire transfer a few hundred million dollars?

I would be more concerned if it was Eastern WA, the peninsula is very much in the orbit of Seattle, plus Neil Stephenson lives out there.

Peninsula Daily News

Unfortunately, though that article is helpful, you could gauge this sentiment just by reading the forums and looking at member join dates. The more "get rich" and paranoid reassurance threads ("will it crash?" "is this the top?" "will we go higher?" "predict the top") the more likely we are in a territory of people just buying to make money and not investing in an idea for the sake of the idea and helping it advance.

which paper?

Good morning. I'm not normally a bear, but recent events are beginning to bring my ursine side out of hibernation.

I am with my family in rural Washington for the weekend. In the local small-town newspaper, I saw an editorial article about bitcoins. It talked about the price movements of BTC and altcoins for 60% of the article, gave a brief discussion of what it is for another 20%, and spent the last 20% with a brief quote from an economist who mentioned the usual criticisms of any private currency.

Do you see? A small-town newspaper runs an article about Bitcoin, and it's mostly about how the price is going up and up. To me, this is the doorstep of "Aunt Flo buys into this hot new thing without understanding it at all", which - in the traditional path of the bubble - is the beginning of the end, as the last possible pool of buyers are exhausted.

Your thoughts?

I dont believe we will make 2000 this year, not enough fiat for that and infrastructure of exchanges is already struggling as we speak. 1500 (Gox only) is the ceiling I think.

My experience tells me I shouldn't look at the bid/asks. They can change anytime.

What are the current bear opinions? The bull opinions are very well known.
Bid sum on Gox is starting decreasing a little bit. 2000$ then crash?

Anyone alive? Just checking? NMC and LTC have also seen huge speculative runs. Any insights?

What indication would lead you to believe miners are cashing any of their mined assets? If I was mining I'd be holding off as long as I could right now.

Also Can someone explain this recent behavior on bitcoinity... during selloffs there are massive swings in the price, almost as if someone is recognizing the selloff and actively buying into it to create some support level?

Also, the coordinating moves across networks (once between Gox & BTCChina, and recently between Gox & Bitstamp)... is this just a result of bots? Any insights?