Topic: Bitcoin Bank Run - page 2. (Read 3165 times)

I read it on the internet.  Must be true.

AFAIK all players got paid by now. Fulltilt is back up running.

My brain mustlve edited it out, because 1/3rd of the article is about bank runs and how MtGox is experiencing one (at zero speed, due to no withdrawals). Thanks for pointing that out.

"What may be happening"

That's the part you edited out to help you take it out of context properly.

I don't think it's fractional reserves personally, I think it's fractional theft, and the source for that is watching their constant hacks and scams and Uberfails.

Where did that come from? They don't do loans, and have no reason to do fractional reserve. Is there a source for this claim?

I used to play online poker professionally.  This is eerily similar to what happened with Full Tilt Poker.  Its been more than 2 1/2 years since they shut down and players have still not received their funds back.

LOL! THIS!

omg I get so much joy with these regular hacks/crashes/thefts/whatever the F they are doing over there.

That's not a peer to peer exchange and cryptsy charges a withdrawal fee.

www.Cryptsy.com

Ask them.

what did gox do with customer deposits ?

I was referring to exchanging and trading cryptocoins. As for cash then an exchange or Ebay, etc.

I don't think it will be possible with paper money, it's too monopolised by governments and central banks, I did however get linked this site which is planning to do this with cryptocurrencies and make a massive peer to peer platform.

http://www.altchain.org/

and how do you suppose you get cash at that point?

does your PC spit it out from your DVD drive?

I'm sure there must be a way around using an exchange.

If two people were to make a voluntary exchange, one would enter a sell order and the other a buy order. If the price matches then the software would automatically process the order and send the relevant coin to each addresses.

there is one: it's called Ripple. but it's complex. and you left out one key component: the gateway to process the orders. that still needs to be done by an exchange.

I don't have any money with Mt. Gox but come on, this is what bother me the most. It's like saying we know we don't have enough money to give you all what you really own, but you can get a good part of it if you give us the rest. They are desperate if you ask me, trying to save themselves any way they possibly can.

Don't know if anyone read this on here but i'll put it up just in case.

http://bastiat.mises.org/2014/02/bitcoin-bank-run/

"By David Howden   
Saturday, February 8th, 2014

Ever wonder what a digital bank run looks like? Nearly one million Mt. Gox users are finding out first hand.

The Tokyo-based exchange, popular amongst currency traders, has risen in prominence by offering its customers storage services in a variety of currencies. This effectively makes it act as an online bank. One such “currency” that it allows accounts to be denominated in is bitcoin.

Yesterday the exchange halted withdrawals of the digital currency, citing a technical malfunction. It promises to reopen for business on February 10th. What many news sources are missing is that this is not a particularly new development – the exchange has been rejecting customer withdrawals on-and-off for about two months.

What may be happening is a good old fashioned bank run. Like all banks, Mt. Gox is operating under a system of fractional reserves, loaning out or otherwise making use of bitcoin deposits entrusted to it. There are many more claims to the bitcoins depositors have with it than are actually in the digital “vault” at Mt. Gox. This is not unlike your bank, which has many more claims to each dollar deposited in it than it has dollars in the vault to honor. If too many people make a withdrawal at the same time, your bank has two options.

Option one is that everyone gets some small percentage of their original deposit. Option two is that only the first small percentage of people who get to the bank first get their whole deposit. Neither option looks very appetizing.

Mt. Gox has decided to use a method to stymie its own bank run which is not without precedent – it has halted redemptions. Of course, this policy was used widely by banks in many fractional-reserve regimes before the advent of deposit insurance, notably in Scotland.

In the Scottish fractional-reserve free banking experience, the option clause stated that a bank could halt redemption of a depositor’s funds, but would have to pay interest for this privilege. Besides the obvious rights violation of turning your deposit into a loan (but hey, at least they paid interest on it), the policy was also not able to stop banks from loaning out deposits until there was nearly a continual suspension of withdrawals. (At least, according to the expert on the period, Sydney Checkland.)

Mt. Gox has used this policy with a twist. Instead of promising your money back in the future with an added interest payment, it is “allowing” you to withdraw your bitcoin now by paying an additional fee.

Lest this post be misunderstood, this is not a fundamental problem of bitcoin, but one of fractional-reserve banking. Here we have an example of a purely unregulated currency succumbing to the same problems that have plagued money users for hundreds of years. When banks are allowed to function with fractional reserves, it matters not if the money is state-issued (like dollars) or market-created (like bitcoin), the outcome is the same: bank runs and depositors left with the inevitable losses.

(Originally posted at Mises Canada.)"

One thing that does bother me with all exchanges i'd used so far is the 'withdrawal fees'. I do the work when making a withdrawal by inputting the relevant address and wait. The exchanges do nothing but charges us for withdrawing what is rightfully ours.

One thing i've been thinking about, is there any genius programmers who are capable of coming up with a peer to peer exchange. It would work something like downloading a 'wallet' and in it one inputs their orders and send it to a 'order blockchain'. The 'wallet' would also updates the 'order blockchain' to one's computer and can see what other orders there are. Obviously it would need more research on the possibility of creating one.