Topic: I just dont understand what is going on . . . and a question on Chase seizure (Read 2547 times)

Nice reasoning. I did noticed that government even give you some tax deduction if you booked a large amount of after tax income by mistake, they don't even need any prove that you actually have those money

Just a theory to try to explain the apparent imbalance between buyers and sellers.

If you are a buyer, exchanges are a fuss-free option to convert your fiat into BTC. If you are a seller of BTC, I can imagine that you may prefer cash from localbitcoins or other local buyers, over attention-grabbing wire transfers into your account. If you are a silk road seller, I can imagine you would like to avoid large bank balances that you cannot explain, and I can also imagine you would be willing to pay for the privilege (through accepting a lower price for your BTC). These sellers would also tend to do larger than "casual" amounts, regularly. All these concerns do not apply to BTC buyers. The authorities are also generally unconcerned about how you spend your taxed income, they tend to be a lot more concerned with incoming, untaxed proceeds of sales.

The main reason that people need exchange is a trust problem. No one wants to send money first, so a trustworthy entity must be used

If this problem can be solved, then essentially you need only a broadcasting platform to matching each buyer and seller's order, and the real transaction will happen in bank wire and bitcoin network seperately, totally unrelated

Nashx, localbitcoin provide some kind of escrow service, but I think this kind of service is still centralized, need some more advanced solution

One solution I can think of is an insurance that everyone can buy to cover the transaction risk, but that do not prevent people from creating more and more scam, so some kind of credit rating system will be needed, but then the degree of anonymity will reduce

TBH, MtGox's problems stem from mis-management. If they had followed through with their CoinLab deal they would have had clear sailing. It's only a matter of time until they destroy themselves.

If you're selling that much you probably have your customer's IDs on file including copies of their drivers license and utility bill, and are reporting each of these transactions to FinCEN? Anti-Money Laundering laws don't give you a 180 day reprieve.

It doesn't really matter where they're based.  MtGox is proof of that - they're getting flack by US regulators and they're based in Japan.  If you're working with US dollars, you have to follow the US laws.

This is if the companies are based in the US, is that right? Could future businesses setup up HQ outside of the states and work with companies inside with a mobile format? Like for example, if Gyft were to be based in Europe somewhere and only sent cards to the US.

I just noticed that there is a trend of mobile payment ongoing, if you have to first purchase payment credit to be spent by your mobile phone later, then bitcoin is no difference than any other mobile payment solution, even better, since the merchant will have extremely low fee

Thats good, thats encouraging. The problem is that ventures like this tend to disappear quickly because they find that they can't deal with all the paperwork and regulations. If memory serves, selling gift cards is also a form of MSB and they will also have to register with the right paperwork.

The Gyft application allows people to easily buy gift cards to Amazon and Lowes. Sure, it's in increments, but the process is pretty smooth. It doesn't look like they are using the higher exchange rates at MtGox, most likely the lower ones at Bitstamp/BtcE because that's where they can cash out.

We have discussed this before, even all the merchant accept bitcoin, it does not automatically make it easy to use, only a special group of people will be interested in it, but the demand is there. It's not the money average joe used to buy milk, but very special utility can be derived from it

There is one occasion that bitcoin shines: You are a super agent that lost your memory in a foreign operation and only have a paper wallet engraved in your nails

I suppose that CIA and KGB will be more interested in supporting bitcoin than anyone else

I dont agree with this. Yes, its possible that the high April prices made more sellers enter the market, that's possible. But the lack of buyers is still indicative of a lack of utility of BTC. At the end of the day, unless you can use it somewhere, people will not demand it (ie become buyers). The other problem is that everything that has been done for mass acceptance has already happened - ie you can't be one the front page of the New York Times twice and expect the same "pop". So the only thing left is to have someone like Amazon accept BTC. At that point there will be good things, but until then, the lack of utility is hurting BTC.

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I think exchange is the most important place to decide a currency's value. Even for a large economy like Japan, their central bank still intervene with large amount of buy/sell to scare the speculators out and keep the exchange rate, unless some fundamentals changed, the exchange price will be relatively stable

A currency's value is mostly decided by a consensus (What can you actually DO with a currency? Exchange for other things), and that consensus typically comes from exchange. Since MTGOX is a very early supporter of bitcoin, I think they have the motivation to support the exchange price and promote public image of bitcoin, similar to FED printing dollars to artificially support the housing price (If amount of houses are more than amount of inhabitant, essentially the extra houses worth nothing: You can't even rent them)

Support the exchange price for bitcoin is relatively easy, since the supply is limited, in worst case you end up buying all the coins, and when demand rises again, even a little bit, there will be shortage of coin supply, the price will skyrocket. So the downside risk is small and upside potential is enormous, just throw in a couple of billion dollars  and the exchange price will be supported. (Currently Bitcoin market capital is really small compared to real world economy, I've seen a single telecom equipment order from a japanese operator larger than 30 billion dollars)

If bitcoin's price rised another 100/1000 times, maybe it becomes difficult to support the bitcoin price, but by that time there will be other larger players, I heard many traders from wall street investment banks are already trading at MTGOX. If each of them are willing to put 1 billion dollars at stake, the downside risk is limited

Your ratio of 10:1 could be a indicator of recent sentiment after price shock in April, how is that ratio before April?

Very interesting. In my region you can buy btc 10% below mtgox via localbitcoins if you are able to buy larger amounts above 100 btc, which is very nice indeed. What are the spreads in your region?

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Great post! Thank you so much for sharing your insights and experiences OP.

500:1??? Seems Mtgox are buying all the coins by themselves, is there a japanese bank behind them? Say, this bank would like to support the bitcoin price as much as possible in a ten-years period with some of their spare USD reserve and acquire at least 20% of total coin supply 

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That makes sense.  Oh, I'm not complaining about Coinbase as a company.  I used them to buy my first bitcoins and the process went very smoothly, the coins arrived when they said they would.  I just like to minimize my fees when buying, that's my reason for being inclined to buy elsewhere.  I'm looking at CampBX now, but I haven't decided for sure if I'll switch yet.

It depends.  If you are selling because you want to sell bitcoins and buy dollars you should be fine.  If you make it your business to buy and sell for people and take a fee you are a broker and must register.

I've had nothing but good experiences with Coinbase, but obviously you need to make your own assessment of the risks of any business you hold money with.

So people selling bitcoins on localbitcoins need to be registered as MSBs too?  I thought it was only exchanges themselves, but maybe volume is a factor.  I was thinking of selling on localbitcoins eventually, so I guess I'll have to look into these laws eventually.

I signed up for Coinbase myself and was reluctant to use them initially because the fees are relatively high compared to the exchanges, but it's so easy to use that I'm willing to put up with a 1% fee.  I was hoping to use bitstamp with their lower fees, but since I don't live in Europe the fees would actually be higher than Coinbase's fees overall since I'd have to pay wire transfer fees or SnapSwap's fees if I went the Ripple route.

My personal theory on why the price is lower on non-MtGox exchanges is because the volume is so much less.  More volume tends to push up prices, so MtGox prices get pushed up and the other exchanges prices tend to stay lower.

This is hilarious. Thank you all. Best laugh of the day!

I didn't make assumptions, I added conditions to my statement.... see how it starts with IF.  I just wanted you to be aware since you were asking if your account could potentially be closed.  In conclusion, you are an ass.

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If you are selling bitcoins for cash / buying bitcoins for cash as your business then yes, you have to register.
I don't do that which is why I don't have to worry. That's operating as an exchange, transmitter, etc.

That will be the case regardless of where you bank.

If you are a US citizen and you are not operating under a registered money services provider, you are breaking the law and will have your account closed if someone ever decides to look into your transactions.

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I also forgot to mention that another reason why I'm confused/concerned about current conditions is because I am once again finding arbitrages across markets. I was able to find arbitrage across markets like Coinbase & CampBX and Coinbase & Tradehill. With the ridiculous fees that Coinbase charge, arbitrages shouldn't even be possible. But they are and that's a little worrisome - efficient markets shouldn't have this large number of arbitrage possible.

Hi,

I bank with Chase. I asked them specifically and the answer I received was that they could not comment on why the alleged accounts were closed or frozen but that my account was not in danger of being closed if all I was doing was transfering money to and from a legal exchange, regardless of what type of commodoties that exchange dealt with.

My suspicion is that the reddit thread is a load of balderdash, that they either were doing something illegal (such as acting as an exchange without the proper paperwork), laundering money, or something else that triggered the accounts to be closed and/or frozen.

reddit is a neat place but it frequently is full of half-truths so take reports there with a lot of salt. Sometimes truth is stretched, sometimes outright lies are told.

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