On 03/01/2014 02:27 PM, Jed Rothwell wrote:
This is the largest bank robbery in history. Countless people must have lost fortunes, perhaps their life savings. These people expect they can "move past" this event? That's crazy. Bank regulators and police investigators in Japan, the U.S. and all other countries are going to be all over these people from now on. There will be legislative investigations and new laws regulating them.
I think what a lot of people are missing, is that the people who have been using MtGox, are people who had accounts set up there from over a year ago. [They are the 'old-timers' of Bitcoin, because in the Bitcoin world, a month is an eternity]. Here are a couple of points that have probably been missed, and they apply to most of the people who've used MtGox, because no one can speak for everyone.
1) MtGox has been delaying withdrawals now for over 6 months. So, for the past 6 months, just about everyone knew that they were having liquidity problems, and rumors were wide that MtGox would probably go under. Yet, for the past 6 months, anyone could take money out of MtGox who wanted to. They just had to wait a few weeks.
2) Most of the people who continued to trade on MtGox were doing so with the knowledge that MtGox was having liquidity problems and might go under. The incentive to continue trading with MtGox, was the profit that could be made through the arbitrage opportunity that this presented.
3) The 744,000 coins that MtGox lost, were, (far more than likely), made back in 2010 and 2011 when MtGox sold Bitcoins for pennies each. They didn't lose $500 million in active accounts, but rather, coins which were backing up accounts of those who have been trading at MtGox with the risks understood, or of those accounts which were set up in days gone by, but abandoned long ago when Bitcoin was thought to be worthless.
Personally, I don't think very many people lost a lot of money at MtGox, who didn't intentionally take those risks in recent months. The older accounts had long been forgotten.
MtGox has also made several mistakes in the past two years which have turned a lot of their strongest supporters against them. They say things which demonstrate incompetence, or which do not make sense. A few things here:
1) They rewrote code designed to send transactions to the block chain, to accommodate their own needs, without adequate understanding and testing. This resulted in a loss in October 2011 of several thousand bitcoins when they incorrectly created a transaction, in error, which sent the bitcoins into oblivion.
2) They had $10 million in USD seized by the US government earlier this year, when they were operating as an exchange in the US without registering with Fincen and securing the required money transmitter licenses.
3) The transaction malleability anomaly which they are blaming for having lost the 744,000 is almost unbelievable. They are claiming that transactions which they submitted to the block chain were modified by a third party in such a way that DID NOTHING to prevent the transactions from being placed on the block chain, but rather only modified the transaction ID, such that their own software would then automatically try to resend the bitcoins when it could not identify the transaction on the block chain, by its ID. Again, for about two years, people have known that the transaction ID does not represent the absolute identity of the transaction. They should have indexed and used any of the inputs from their transactions as identifiers, as does everyone else.
4) They claimed that most of these 744,000 coins were in cold storage. Well, if they were in cold storage, then someone would have had to physically remove them from cold storage to create transactions with them, to then subsequently transfer them. If this was even possible, then those coins were never in cold storage, or they don't know what the term means.
I don't think very many Bitcoin aficionados, (if any), are taking a loss with this.
Craig
