The issue here is the velocity of bitcoin. Is there any site that calculates this?
Why/ how is velocity of bitcoin an issue?
Topic: Residual effect from MtGox (Read 1168 times)
Why/ how is velocity of bitcoin an issue?
The issue here is the velocity of bitcoin. Is there any site that calculates this?
this would actually increase volatility. With less liquidity in the market, bid/ask spreads will widen and we will see sharper price moves.
That's correct, volatility would increase with less liquidity.
But it's not clear if the 850k coins are 'missing'. We don't know yet who controls them, and they haven't been destroyed (keys lost forever).
Some coins could still be in posession of MtGox (by some counts 332k), some could be controlled (and currently sold) by hackers.
I tend to agree that what will arise from this is a less volatile period for a particular period. It's just that we don't know what period that will be for.
I personally think that this will cause relative stability for a short term (i.e. the period we are in right now after the whole Gox fiasco, things have been relatively silent with prices ranging from $610-$640), but I think in the medium term (within 3-6 months), we will experience the effects of these lost funds in the form of another bubble. And coincidentally, this next bubble will likely coincide with the next iteration of miners on the market. It'll be interesting to see what will happen in the medium term.
I personally think that this will cause relative stability for a short term (i.e. the period we are in right now after the whole Gox fiasco, things have been relatively silent with prices ranging from $610-$640), but I think in the medium term (within 3-6 months), we will experience the effects of these lost funds in the form of another bubble. And coincidentally, this next bubble will likely coincide with the next iteration of miners on the market. It'll be interesting to see what will happen in the medium term.
also, if the response is that most coins are put away into cold storage, this hoarding can cause another hyperdeflation event (price bubble).
this would actually increase volatility. With less liquidity in the market, bid/ask spreads will widen and we will see sharper price moves.
MtGox was, incontestably first biggest trading platform and for a big period, the one with the most volume. It became, for the outsiders at least, homonymous with Bitcoin. Lots of people had their life savings in there and I saw accounts of desperate people that lost everything.
Accounting the huge loss this case is a scandal that has to get direct scrutiny from LEAs, financial, academic and media institudions. This has to go sooner or later in economics textbooks as the biggest (scam, heist, incompetence, you name it) case in internet's history. Also legal action needs to be taken and all facts investigated professionally.
Thus being said, we need to analyze what impact it had on the bitcoin ecosystem. I can name a few:
But what about long term, residual effects? I only can think of one:
With 0.9 mil coins less than we thought, confidence into centralized wallets / exchanges and lesson learned, whoever wants to buy, buys or bought already and stores into cold storage. There is no way were going to see that kind of speculation from the past and this will translate into less volatility.
Accounting the huge loss this case is a scandal that has to get direct scrutiny from LEAs, financial, academic and media institudions. This has to go sooner or later in economics textbooks as the biggest (scam, heist, incompetence, you name it) case in internet's history. Also legal action needs to be taken and all facts investigated professionally.
Thus being said, we need to analyze what impact it had on the bitcoin ecosystem. I can name a few:
- a big PR hit, mostly for people that never invested and now have lower confidence in Bitcoin
- more scrutiny from big financial institutions (banks especially) who have direct ties to exchanges
- less coins available to trade, as 900k are missing from their owners
- believers in bitcoin, mostly those that didn't have all eggs in one basket are going through the acceptance phase and might be ready to buy some again
But what about long term, residual effects? I only can think of one:
With 0.9 mil coins less than we thought, confidence into centralized wallets / exchanges and lesson learned, whoever wants to buy, buys or bought already and stores into cold storage. There is no way were going to see that kind of speculation from the past and this will translate into less volatility.
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