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Demonstrates dramatically how Taxes put a floor under a sovereign fiat currency value. Without a central bank or government markets turn irrational and panic. The Mt. Gox exchange seems to be the weak point because during each rise and crash, their systems crash. At least they don't go bankrupt since they can't issue credit.
All the rhetoric about the heavy hand of the state and what not aside, I think I'd rather store my money in a devalued Yen or even an unstable Euro than these experiments in social/peer networking.
The suspicion is that the exchanges are brought down by hackers speculating in Bitcoins. Of course, the paranoids think instead that it's a govt cyberattack.
Hackers... DDOS attacks. *cough* please. While attacks are possible and likely, for instance, The MPAA/RIAA ironically ran a very successful hacking campaign against the peer to peer networks years ago to slow file sharing. The same style of attack that they engineered would likely cause headaches for bitcoin.
But my suspicion for which I have no evidence, is that Mt. Gox has counterparties... I don't know who but people like Visa, Mastercard, Citbank, BofA, Chase, Barclays, Westpac and others. Also Mt Gox has to have risk management in place to protect their own liability against fraud as well. So when their volumes spiked they almost certainly ran into limits on their counterparties and internal risk levels. You'll notice following the suspension of trading they reduced withdrawal limits (capital controls!) and suspended trading except for special customers. That doesn't sound like a DOS attack response! The pattern was a classic trading induced ponzi- collapse but on a grand scale, much like you see in regulated forex markets all the time, just bigger.
4 comments:
Demonstrates dramatically how Taxes put a floor under a sovereign fiat currency value. Without a central bank or government markets turn irrational and panic. The Mt. Gox exchange seems to be the weak point because during each rise and crash, their systems crash. At least they don't go bankrupt since they can't issue credit.
All the rhetoric about the heavy hand of the state and what not aside, I think I'd rather store my money in a devalued Yen or even an unstable Euro than these experiments in social/peer networking.
The suspicion is that the exchanges are brought down by hackers speculating in Bitcoins. Of course, the paranoids think instead that it's a govt cyberattack.
More like they can't handle the traffic on a crashing market.
Even markets like NYSE have technical problems in some of these 'special' turmoil days.
Hackers... DDOS attacks. *cough* please. While attacks are possible and likely, for instance, The MPAA/RIAA ironically ran a very successful hacking campaign against the peer to peer networks years ago to slow file sharing. The same style of attack that they engineered would likely cause headaches for bitcoin.
But my suspicion for which I have no evidence, is that Mt. Gox has counterparties... I don't know who but people like Visa, Mastercard, Citbank, BofA, Chase, Barclays, Westpac and others. Also Mt Gox has to have risk management in place to protect their own liability against fraud as well. So when their volumes spiked they almost certainly ran into limits on their counterparties and internal risk levels. You'll notice following the suspension of trading they reduced withdrawal limits (capital controls!) and suspended trading except for special customers. That doesn't sound like a DOS attack response! The pattern was a classic trading induced ponzi- collapse but on a grand scale, much like you see in regulated forex markets all the time, just bigger.
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