Surprised no one has figured out Bitcoins yet
 

Banks take in deposits in dollars, say $100 they only have to pay out $100 USD when the customer wants his money back. Banks are required to keep 10% of the deposits. The rest they lend out in loans. If they need more than 10% on any given day, the Federal Reserve gives them a short-term loan. So banks never run out of money. It has happened a few times, but with FDIC insurance the depositors get all their money back.

MTGOX claims to trade 80% of all bit coin trades. The problem is when they sell Bitcoins they need to keep 100% of the sales as reserves. They do charge fees, but the fees alone probably don't cover their overhead and salaries. So even it Bitcoins remained at a stable price they probably couldn't refund customers at 100%.

Since Bitcoins fluctuate in price, that's what going to jam MTGOX up. They started out selling Bitcoins at just a few pennies. Lately Bitcoins have been over $100. It's difficult to sell a product for a few dollars and buy it back for hundreds. That's impossible. Only way they can stay afloat is to constantly bring in new customers paying ever increasing prices.
Normally that business model is called a Ponzi scheme.
The only other thing that could save the day is Bitcoin buyers actually buy goods and services from other customers but it looks like that's a small percentage of Bitcoins.

Somewhat correct. Banks take in deposits and lend out to even the depositor. When you write a check you are taking out a loan. When you use your card you are taking out a loan, in their eyes. All deposits are kept in reserves and banks lend out 10x++++ that amount. Some are leverage out xxx times reserves. Only cash withdrawals are deducted from reserves.

Bitcoin in a way is what banks should be doing which is why it is attractive to some. IE. 100% reserves. Banks could live off of fees only they don't want to and as long as the public allows them to manipulate them they will continue to build and buy the biggest building in town and gamble away on risky investments on their deposits. And when the time comes to pay the bill on their risky investments they'll just stick it to you even more.

Bitcoin isn't the answer but the ideology behind it is. Unfortunately bitcoin could set the ideology back many years.

i'm surprised you think no one hasn't figured that out yet.

it's the fundamental problem i have with buying and selling right now, i drain my mtgox account after transactions due to the risk of leaving ANYTHING in my account there for any length of time and consequently, it's hard to make transactions quickly when the market changes.

Been saying this for many days.

Problem is that 99% of adult webmasters have ZERO Knowledge about economy. And self esteem + EGO of most adult webmasters is easily inflated when they sell a bitcoin to some sucker for 200 dollars, then they think they found the gold mine and that they are geniuses who will become rich, when in fact, they are a group of losers and idiots buying on the new hype and bubble.

Just my two cents.

there are also other exchanges i've read about that facilitate the exchange and then the exchange is done elsewhere between the 2 parties, which is how it all needs to be anyway.



mtgox is a problem for bitcoin, not a solution or even part of the original solution.

its very easy to backup air with air

true



true

mtgox's 30 day volume
2.5 million btc / $274 million

take a modest 0.3% fee as they have flexible fee structure based on account's volume from 0.6% to 0.25%. on average i'd say they're getting closer to 0.5%. there is your answer how much mtgox makes roughly.

no one even knows who created them
http://libertycrier.com/finance/bloo...st-safe-haven/
"Bitcoin was created in 2009 by a pseudonymous hacker who calls him or herself Satoshi Nakamoto (and who might be several people). It’s a form of virtual cash used to buy goods and services online. "
Thats scary to me.

:thumbsup:thumbsup

It a classic bubble like Dot-com bubble, and many others bubbles in history. Its a classic "pump and dump" bubble.

<DirtyF>

SHUT UP BITCOIN HATER! YOU'RE AN IMBECILE! SO STUPID JUST ANGRY CAUSE YOU MISSED OUT! HAHAHAHA HAHAHAHA!!! $260 TO $52 IN A DAY AND YOU STILL CAN'T STOP US!! HAHAHAHAHAHA!

</DirtyF>

He / they either used their skills for the greater good, or they are going to fuck everyone right in the ass like hackers often do. Flip a coin. At this point, no one really knows.

lol, going to mainstream news and looking for reliable info on bitcoins is just like going to google to look for silkroad. you won't find it there.

this is the part you are thoroughly mixed-up about. mtgox doesn't buy and sell btc, they are simply a medium where sellers sell and buyers buy.

they don't sell an item for a few dollars and buy it back for hundreds.

so in order to sell bitcoins, you need to have someone interested in buying at the current price, whatever it may be?

Amazing how over and over again the people who complain about bitcoins are the ones who have no clue how it works.

I'm confused as to the question/confusion here... MTGox isn't a bank. It's an exchange. It works the same way any stock exchange site does. Whether bitcoins are $200 or $5 MTGox doesn't lose any money and will still have 100% of the funds for everyone to withdrawal. They make their money on transaction fees.

If you put $1,000 into e-trade and buy stock and the value of the stock goes down 50% because people are only willing to pay $500 for it. E-Trade still has that $500 you lost, It's just now belongs to someone smarter than you.

If MTGox is housing $2,000,000 in deposits and bitcoin crashes to $1/coin they will still have $2,000,000 available for withdrawal. Whether the money is in your account because you bought low and sold high or in someone else's because you bought high and sold low it's always there ready for withdrawal.

that's right. the buyers set the current price.

nevertheless, bitcoins are a risky experimental concept, plan to lose all of your resources you put in to it, time, money, tears, etc... all.

You are one of the few around here who gets it.

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That was my first thought when I read that. lol

OK.

8chars

:winkwink:

Exactly!

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In the many real-world and online discussions I have had with people I have found that they either immediately grasp the concept of cyber currency or they simply never get it.

If they don't get it right there, right then, they never will and no amount of explaining is going to help. The application of traditional notions of hard and paper currencies simply don't work and is disingenuous at best.

Cyber currencies are not dollars, marks, drachmas, tulips or pounds fucking sterling and do not act quite like them.

I was asked what backs Bitcoins.

I replied with a question:

"What backs the US dollar?"

That threw the questioner for a loop I'll tell you. He almost but not quite got it.

:2 cents:

try to pay your rent with it.

Try to pay your rent with stock shares of a company. You can certainly sell those stocks for cash and pay your rent. Just like you can sell your bitcoins for cash and pay your rent.

At this point bitcoins should be treated like a stock. Many will become rich, many will lose their ass.

from mtgox::::::::

Does mtgox run as a fractional exchange? Meaning, do you have 100% of the bitcoins your users have deposited in your system?
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[–]WeAreMtGox[S] 108 points 1 hour ago
NO. Everything is accounted for (BTC and money). Fractional reserve is absolutely against our principles. In fact 90~95% of BTC are held in cold storage.

Your "friend" is a dolt.

1) The USD used to be backed by both gold and silver. At one time it WAS backed by something tangible. Unlike bitcoin which has never been backed by anything and was in fact created by a hacker.

2) The USD is the petrol dollar, which alone makes it worth something until oil is bought and sold via another currency. When governments can buy and sell oil in bitcoin, then it can be a contender.

3) The USD is currently backed by the promise of the Federal Reserve, which is arguably the most powerful group of individuals on planet earth.

4) The USD is backed by the confidence of every human, business, local bank, central bank, and government in the entire world.

There is an enormous difference between the fiat USD and a fiat cyber currency.

It's hard to put faith/confidence in a currency that can be printed off at an unlimited rate to create more "money" for the economy. Also there have been a lot of talks of moving away from the USD as the "petrol dollar" or world currency reserve. It happened to the British sterling and look where that ended up.

Such a simple concept. But still the poor guy doesn't get it.

Whether you believe bitcoin or not doesn't mean there's not money to be made in it. Treat it like any other pump and dump on the OTC stock market and make some profit. Then whether it pans out and actually becomes some kind of currency or just crashes and burns you've already made your profit, nothing to even be mad about. Learn how to invest or don't, it's not difficult, it's just different, :winkwink:

None of that matters. It is what it is.

If... when... maybe... other... talk... all totally irrelevant. As of April 12th 2013, the USD is the world's currency.

And I'm not a fan of the USD by any means, I'm just stating the facts.

i just don't see bitcoins having long term worth unless they are used for something. right now they represent an investment opportunity as many see them as some kind of future currency. however, if they never are used as such (for more than illegal activities) then what do bitcoins represent? what gives them worth?

:1orglaugh:1orglaugh:1orglaugh:1orglaugh:1orglaugh :1orglaugh:1orglaugh

bitcoin is hot right now..