The following news item was posted on Forex News:
Bitcoin prices at troubled exchange MtGox spiked over 150% to reach a high of $290 today. The basis for the rally was a rumor posted on Reddit that the company has started processing bitcoin withdrawals again. User that goes by the nickname ‘’bcn00b’’ posted his analysis of some blockchain transactions that may indicate that the exchange is in the process of testing bitcoin withdrawals. While most agreed with the assessment that there is movement of bitcoins out of MtGox, some speculated that the reason for this may be ‘’insider selling’’ before the announcement of more bad news. The general consensus, as indicated by the market, is that this is good news for the firm and may lead to the eventual restart of btc withdrawals.
After the rally to $290, prices on MtGox fell to a low of $180. One bitcoin is currently trading at $195.3 on the exchange. The news propelled btc prices higher on all exchanges. On BTC-E, prices rallied from $545 to $574. One bitcoin is currently quoted at $594 on BitStamp. Prices also spiked higher on BitcoinBuilder. This is an exchange that was specifically setup to connect buyers and sellers of MtGox BTC. A GOXBTC refers to a bitcoin that is stuck inside MtGox. The cost to purchase one GOXBTC went up from 0.350 to a high of 0.640 BTC in the few hours after the news. Buying one GOXBTC will currently set you back 0.537 BTC on BitcoinBuilder. The chart below shows how price moved in the last 12 hours. You can find the most recent chart for the BTC/GOXBTC pair here.
I would like to begin with pointing out that the Reddit post was just a rumor, and nothing else. There is no proof in the post, despite referring to several links/images that are supposed to be 'proof'. If MtGox reinstated withdrawals, only the following would qualify as sufficient proof:
A video in which an MtGox customer successfully withdraws bitcoins, with time & date stated. From beginning to end.
An official announcement by MtGox.
None of the above happened. Despite this, people got excited and invested new money in bitcoins and other cryptocurrencies. Not only did they do that, they also made new deposits into their MtGox account. This means that MtGox received more money, money those people might never get back.
The manipulative rumor which was posted earlier today, has probably resulted in more people losing more money. I don't like conspiracy theories, but we can not exclude the measures MtGox is willing to take to squeeze more money out of its current customers, and people who are influenced by greed and false rumors.
This is one of the main reasons for bitcoin's volatility. Bitcoin's volatility is a major issue which will not only scare away your average Joe, but also investors. And if both 'normal' citizens and rich investors are scared away, than there is little hope for the currency's development and adaption in the long run.
A lot of people are in it to make a quick buck, which is understandable. Our society is based on capitalism, but we are also used to some kind of control. I understand that the main idea behind bitcoin & other cryptocurrencies is decentralization and more financial independence. But most of you forget what centralization really means. It's not only about the dollar. Centralization is about a lot more. It is about security. Without a centralized state, or banks, there would be little control. Little control results in chaos. I could start referring to the Wild West and alike, but the point is; I don't have to do that. I could refer to MtGox and that would prove my point. It was not centralized and it was not backed by anything. The people who have their assets in this troubled exchange, don't have any guarantee at all. Nobody will protect them, and there is nobody to sue in case the exchange goes bankrupt (if it hasn't already). Why you ask? Because it was not backed by anything, and the commodity traded is not recognized/regulated. Governments and banks have even warned you for using the currency, but you didn't listen and went on with it. That's a risk you take, and the moment you took that risk, you accepted all the possible consequences. Unfortunately, those 'possible consequences' are about to become a reality.
A certain degree of centralization is needed. Only then, bitcoin will be developed further and adapted by investors and government institutions. Nobody likes to take risks, but at the moment, bitcoin is nothing more than an online gambling game.