People reading this thread might be interested to know that Mtgox has just now registered as a money transmitter with U.S. government agency FinCen (thanks Nagle for noticing that).
Since one possibility is that the difficulty with USD withdrawals is due to Mtgox not being properly registered in the U.S., it seems to me that this increases the chances that Gox will successfully fix the problem with the wires (and possibly someday even add back Dwolla).
Topic: So what happens if Gox misses their deadline in one week? - page 3. (Read 4729 times)
> I'm puzzled by the big spread between Mt. Gox and the other exchanges. For the last week, Mt. Gox has been running about 5 USD above the other exchanges, even though you can't get USD out of Mt. Gox.
Imo it's because traders can't complete an arbitrage trade to bring the prices back into line.
The abstract idea is that, in order to bring the price of BTC relative to USD down, there must be at least the potential for a flow of trades that exchange BTC for USD, and continue on from there to do other things elsewhere in the economy. This flow is blocked at gox, however, because with USD withdrawals on hiatus, there is nowhere for that USD to go. In the other direction there is no block, because you can withdraw BTC. So, because of the uncompensated USD->BTC flow potential, there is an uncompensated upward pressure on price of BTC at gox.
More concretely, let's say that you are a trader with an account on both Mtgox and on Campbx. On each exchange, let's say your account value is half US dollars and half bitcoin.
Normally if you see the BTC/USD price on gox much higher than campbx, you would exchange BTC for dollars on gox and simultaneously exchange dollars for BTC on campbx. This trade has the effect of bringing the price of BTC/USD down on gox and up on Campbx, thereby reducing the price spread between them.
But after you do this, your account on gox is all in dollars, and your account in campbx is all in BTC. To complete the circle (that is, to return you to your starting point, plus profit), you need to transfer most of your newly acquired dollars from gox to campbx, and transfer most of your newly acquired bitcoin from campbx to gox. After you do that, if the prices are still out of line, you can repeat the arbitrage trade.
If USD withdrawals are on hiatus from gox, you can't complete the circle, and so you can only do this trade once. Assuming there is a fixed population of arbitrageurs on gox each with a fixed amount of money, eventually all of the arbitrageurs will run out of ammo and there won't be anyone still trying to bring the prices back into line in this fashion.
In addition, with USD withdrawals but not BTC withdrawals on hiatus, people who want to withdraw USD from gox immediately are forced to convert it to BTC, withdraw that to another exchange, convert that back to dollars, and withdraw from there. This exerts additional upwards pressure on the BTC/USD price on gox, and additional downwards pressure on the BTC/USD price on other exchanges.
If i were Mtgox, i would consider prioritizing the completion of the LARGEST outgoing wire transfers, in an attempt to bring the prices back into line (and to retain the business of large traders).
If gox gets their act together and starts processing wire transfers promptly, it will be interesting to see if this situation briefly reverses, due to a brief, massive flow of dollars out of gox.
Imo it's because traders can't complete an arbitrage trade to bring the prices back into line.
The abstract idea is that, in order to bring the price of BTC relative to USD down, there must be at least the potential for a flow of trades that exchange BTC for USD, and continue on from there to do other things elsewhere in the economy. This flow is blocked at gox, however, because with USD withdrawals on hiatus, there is nowhere for that USD to go. In the other direction there is no block, because you can withdraw BTC. So, because of the uncompensated USD->BTC flow potential, there is an uncompensated upward pressure on price of BTC at gox.
More concretely, let's say that you are a trader with an account on both Mtgox and on Campbx. On each exchange, let's say your account value is half US dollars and half bitcoin.
Normally if you see the BTC/USD price on gox much higher than campbx, you would exchange BTC for dollars on gox and simultaneously exchange dollars for BTC on campbx. This trade has the effect of bringing the price of BTC/USD down on gox and up on Campbx, thereby reducing the price spread between them.
But after you do this, your account on gox is all in dollars, and your account in campbx is all in BTC. To complete the circle (that is, to return you to your starting point, plus profit), you need to transfer most of your newly acquired dollars from gox to campbx, and transfer most of your newly acquired bitcoin from campbx to gox. After you do that, if the prices are still out of line, you can repeat the arbitrage trade.
If USD withdrawals are on hiatus from gox, you can't complete the circle, and so you can only do this trade once. Assuming there is a fixed population of arbitrageurs on gox each with a fixed amount of money, eventually all of the arbitrageurs will run out of ammo and there won't be anyone still trying to bring the prices back into line in this fashion.
In addition, with USD withdrawals but not BTC withdrawals on hiatus, people who want to withdraw USD from gox immediately are forced to convert it to BTC, withdraw that to another exchange, convert that back to dollars, and withdraw from there. This exerts additional upwards pressure on the BTC/USD price on gox, and additional downwards pressure on the BTC/USD price on other exchanges.
If i were Mtgox, i would consider prioritizing the completion of the LARGEST outgoing wire transfers, in an attempt to bring the prices back into line (and to retain the business of large traders).
If gox gets their act together and starts processing wire transfers promptly, it will be interesting to see if this situation briefly reverses, due to a brief, massive flow of dollars out of gox.
I'm puzzled by the big spread between Mt. Gox and the other exchanges. For the last week, Mt. Gox has been running about 5 USD above the other exchanges, even though you can't get USD out of Mt. Gox. That seems backwards.
Mt. Gox has now used up 9 of their 14 days of their 2-week delay, and we're in the middle of a weekend. If they were actually going to fix the problem, they probably would have announced their new banking relationship by now. Didn't happen. That's a strong indication it won't happen.
The 2 weeks run out on July 3. So we can expect that they'll blame the holiday when they don't resume USD transfers. Then they'll let a few transfers through so that they get some favorable comments, and the fanboys will say everything is now all right. It's worked for Mt. Gox before.
They don't have to totally stop outbound transfers to keep the thing going. They just have to slow them down to the level of inbound transfers. Bernie Madoff made that work for 20 years.
Mt. Gox has now used up 9 of their 14 days of their 2-week delay, and we're in the middle of a weekend. If they were actually going to fix the problem, they probably would have announced their new banking relationship by now. Didn't happen. That's a strong indication it won't happen.
The 2 weeks run out on July 3. So we can expect that they'll blame the holiday when they don't resume USD transfers. Then they'll let a few transfers through so that they get some favorable comments, and the fanboys will say everything is now all right. It's worked for Mt. Gox before.
They don't have to totally stop outbound transfers to keep the thing going. They just have to slow them down to the level of inbound transfers. Bernie Madoff made that work for 20 years.
http://www.reddit.com/r/Bitcoin/comments/1hb3vp/new_corporation_filing_in_deleware_usa_mt_gox_inc/
This implies they are complying with the rules of the US.
This implies they are complying with the rules of the US.
Similar to what happened on bit floor as it became illiquid.
Well. I think people can still buy bitcoin and move it elsewhere.
This implies having problems with authority rather than solvency issue. I would be worry if they stop bitcoin movement.
This implies having problems with authority rather than solvency issue. I would be worry if they stop bitcoin movement.
What happens if Gox misses their deadline? For me, nothing. Left their ass months ago.
Mt.Gox almost certainly IS naked short bitcoin. If you scrape the surface of any deposit taking BTC organization you'll find someone who is naked short.
I do not fully understand the 2nd statement. Any reason to lead to this believe?
Don't forget the exchange itself has something to gain for upward price movement.
There is this biased that anyone with big enough capital can manipulate the price upward, one could argue this is part of the demand side.
But anyone with enough capital can not drive down the price, there is no mechanism to short bitcoin (unless mtgox change their policy to allow naked short using money as collateral).
But anyone with enough capital can not drive down the price, there is no mechanism to short bitcoin (unless mtgox change their policy to allow naked short using money as collateral).
Personally if I had anything at Gox I would have moved it out already, just to improve the quality of my sleep at night.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
That's not true at all and thats what scares me. I posted before on other forums about my experience with localbitcoins. For every 10 offers of people selling me BTC, I *might* get one offer of someone that wants to buy. The demand for buying BTC is just not there - I live in a large area, plenty of people. So I have to believe that these other exchange sites experience the same. Take for example Coinbase - I have no idea what their numbers are and maybe their ratio is not as bad as my 10:1 but I'm willing to bet they also have MANY more sellers than buyers. So these exchanges must also use Gox at some point. If Gox goes down, or cannot do USD any more, I would expect at least a couple of exchanges to follow suit and close down. If the avenues of getting USD back are closing down then something just has to cave in.
You don't understand how a free market works do ya?
For every seller, there must be a buyer. Price makes this happen.
If it was a sellers market, with 90% people wanting to sell bitcoins and only 10% wanting to buy, then the price per bitcoin would continue to drop until there was no longer more selling interest than buying interest.
I've only done about $700,000 USD transactions of BTC this year, so yeah, I don't understand a thing . . .
you are putting way too much trust in a virtual company. Not all transactions are what they seem, buyers can "appear" out of thin air, you know?
And the Winkelvoss twins bought $10 M USD and didn't sell any.
Anecdotes are not data.
Maybe your customers are all drug dealers.
I'm clearly more concerned about BUYERS of BTC, as in the lack-of. Again, my ratio is 10:1, granted bigger companies may have a smaller ratio, but I would be HIGHLY surprised if there was a company out there (like Coinbase) that could claim a larger buy-side than sell-side demand. There is clearly a larger demand (both in customers and amount) to SELL BTC than buyers of BTC (both in customers and amount - my largest request to buy BTC was 3.5)
If there wasn't equilibrium in the market price would be moving. If you don't understand that you ought to find a new line of work.
There are lots of reasons you get more sellers than buyers. An obvious example is tax avoidance. If you are buying for cash, and your sellers are avoiding tax your personal buy/sell equilibrium is being skewed by the typical income tax rate.
Personally if I had anything at Gox I would have moved it out already, just to improve the quality of my sleep at night.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
That's not true at all and thats what scares me. I posted before on other forums about my experience with localbitcoins. For every 10 offers of people selling me BTC, I *might* get one offer of someone that wants to buy. The demand for buying BTC is just not there - I live in a large area, plenty of people. So I have to believe that these other exchange sites experience the same. Take for example Coinbase - I have no idea what their numbers are and maybe their ratio is not as bad as my 10:1 but I'm willing to bet they also have MANY more sellers than buyers. So these exchanges must also use Gox at some point. If Gox goes down, or cannot do USD any more, I would expect at least a couple of exchanges to follow suit and close down. If the avenues of getting USD back are closing down then something just has to cave in.
You don't understand how a free market works do ya?
For every seller, there must be a buyer. Price makes this happen.
If it was a sellers market, with 90% people wanting to sell bitcoins and only 10% wanting to buy, then the price per bitcoin would continue to drop until there was no longer more selling interest than buying interest.
I've only done about $700,000 USD transactions of BTC this year, so yeah, I don't understand a thing . . .
you are putting way too much trust in a virtual company. Not all transactions are what they seem, buyers can "appear" out of thin air, you know?
And the Winkelvoss twins bought $10 M USD and didn't sell any.
Anecdotes are not data.
Maybe your customers are all drug dealers.
I'm clearly more concerned about BUYERS of BTC, as in the lack-of. Again, my ratio is 10:1, granted bigger companies may have a smaller ratio, but I would be HIGHLY surprised if there was a company out there (like Coinbase) that could claim a larger buy-side than sell-side demand. There is clearly a larger demand (both in customers and amount) to SELL BTC than buyers of BTC (both in customers and amount - my largest request to buy BTC was 3.5)
Personally if I had anything at Gox I would have moved it out already, just to improve the quality of my sleep at night.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
That's not true at all and thats what scares me. I posted before on other forums about my experience with localbitcoins. For every 10 offers of people selling me BTC, I *might* get one offer of someone that wants to buy. The demand for buying BTC is just not there - I live in a large area, plenty of people. So I have to believe that these other exchange sites experience the same. Take for example Coinbase - I have no idea what their numbers are and maybe their ratio is not as bad as my 10:1 but I'm willing to bet they also have MANY more sellers than buyers. So these exchanges must also use Gox at some point. If Gox goes down, or cannot do USD any more, I would expect at least a couple of exchanges to follow suit and close down. If the avenues of getting USD back are closing down then something just has to cave in.
You don't understand how a free market works do ya?
For every seller, there must be a buyer. Price makes this happen.
If it was a sellers market, with 90% people wanting to sell bitcoins and only 10% wanting to buy, then the price per bitcoin would continue to drop until there was no longer more selling interest than buying interest.
I've only done about $700,000 USD transactions of BTC this year, so yeah, I don't understand a thing . . .
you are putting way too much trust in a virtual company. Not all transactions are what they seem, buyers can "appear" out of thin air, you know?
And the Winkelvoss twins bought $10 M USD and didn't sell any.
Anecdotes are not data.
Maybe your customers are all drug dealers.
Or maybe you have an agenda to talk the price down. I see you trying that on threads all over the site.
Personally if I had anything at Gox I would have moved it out already, just to improve the quality of my sleep at night.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
That's not true at all and thats what scares me. I posted before on other forums about my experience with localbitcoins. For every 10 offers of people selling me BTC, I *might* get one offer of someone that wants to buy. The demand for buying BTC is just not there - I live in a large area, plenty of people. So I have to believe that these other exchange sites experience the same. Take for example Coinbase - I have no idea what their numbers are and maybe their ratio is not as bad as my 10:1 but I'm willing to bet they also have MANY more sellers than buyers. So these exchanges must also use Gox at some point. If Gox goes down, or cannot do USD any more, I would expect at least a couple of exchanges to follow suit and close down. If the avenues of getting USD back are closing down then something just has to cave in.
You don't understand how a free market works do ya?
For every seller, there must be a buyer. Price makes this happen.
If it was a sellers market, with 90% people wanting to sell bitcoins and only 10% wanting to buy, then the price per bitcoin would continue to drop until there was no longer more selling interest than buying interest.
I've only done about $700,000 USD transactions of BTC this year, so yeah, I don't understand a thing . . .
you are putting way too much trust in a virtual company. Not all transactions are what they seem, buyers can "appear" out of thin air, you know?
You don't understand how a free market works do ya?
For every seller, there must be a buyer..
For every seller, there must be a buyer..
Or buyers, or a fraction of a buyer
True, i thought about adding that but wanted to be as concise as possible.
You don't understand how a free market works do ya?
For every seller, there must be a buyer..
For every seller, there must be a buyer..
Or buyers, or a fraction of a buyer
Personally if I had anything at Gox I would have moved it out already, just to improve the quality of my sleep at night.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
That's not true at all and thats what scares me. I posted before on other forums about my experience with localbitcoins. For every 10 offers of people selling me BTC, I *might* get one offer of someone that wants to buy. The demand for buying BTC is just not there - I live in a large area, plenty of people. So I have to believe that these other exchange sites experience the same. Take for example Coinbase - I have no idea what their numbers are and maybe their ratio is not as bad as my 10:1 but I'm willing to bet they also have MANY more sellers than buyers. So these exchanges must also use Gox at some point. If Gox goes down, or cannot do USD any more, I would expect at least a couple of exchanges to follow suit and close down. If the avenues of getting USD back are closing down then something just has to cave in.
You don't understand how a free market works do ya?
For every seller, there must be a buyer. Price makes this happen.
If it was a sellers market, with 90% people wanting to sell bitcoins and only 10% wanting to buy, then the price per bitcoin would continue to drop until there was no longer more selling interest than buying interest.
Personally if I had anything at Gox I would have moved it out already, just to improve the quality of my sleep at night.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
If they do not open USD withdrawals as announced, we will probably see the same trend continuing, people will buy BTC with their USD, and move it out, resulting in higher prices at Gox compared to other exchanges.
If that's all that happens, there will be no dramatic impact on prices - dramatic would be Gox closes down, goes out of business.
That's not true at all and thats what scares me. I posted before on other forums about my experience with localbitcoins. For every 10 offers of people selling me BTC, I *might* get one offer of someone that wants to buy. The demand for buying BTC is just not there - I live in a large area, plenty of people. So I have to believe that these other exchange sites experience the same. Take for example Coinbase - I have no idea what their numbers are and maybe their ratio is not as bad as my 10:1 but I'm willing to bet they also have MANY more sellers than buyers. So these exchanges must also use Gox at some point. If Gox goes down, or cannot do USD any more, I would expect at least a couple of exchanges to follow suit and close down. If the avenues of getting USD back are closing down then something just has to cave in.
I'm trying to form hypotheses on what happens if Gox misses their deadline. Note my use of the word "deadline". In my mind, Gox painted themselves into a corner by saying "we will be back in 2 weeks" - you need to be 100% sure before you're holding people's money and you make a statement like that.
You never (never!) use the term "in 2 weeks" (unless you work for BFL of course)
https://www.youtube.com/watch?v=qLcjUmBncZ8
In the second statement, they say USDs withdraws are not suspended, but that they are being processed slowly.
Have there been any confirmations of USD withdrawals in the last week?
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