In April last year I posted on the origins of Mt Gox - the bitcoin exchange.
To celebrate the collapse of Mt Gox I have decided to reprint the post:
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MtGox.com is the main exchange for bitcoin. I am not inherently opposed to bitcoin as a small and interesting speculation (though I would not do it for my clients). I think bitcoin probably goes to zero - but only probably...
If you want to understand bitcoin the best explanation I have found is on the self-evident blog...
However it is the history of MtGox - that amuses me...
MtGox started as an exchange for trading cards in a fantasy role playing game. It stands for Magic The Gathering Online Exchange.
But between trading playing cards and trading encrypted tokens certified with a file-shared registry it distributed an online game called "The Far Wilds". Archive.org preserves some of the website:
The Far Wilds is a unique turn based strategy game. Configure an army and fight on a random battlefield.
Battles are dynamic. You must adapt your strategy to different battlefields conditions and opponents....
The Celestial Imperium moves out toward the northern wastes to respond to the rising tide of the Hordes of Chaos. Disciplined and Powerful Psions wield their minds against twisted Mutants. Priests and Paladins of Xosa battle with Demons and armies of Orcs across the wilderness of the Borderlands.
John
How about that?
ReplyDeleteTransaction Malleability has been known about for a while; it appears that the MtGox people weren't paying enough attention. It doesn't seem like the end of BTC (it is explained pretty simply here: http://blog.oleganza.com/post/76213549017/mtgox-and-malleable-transactions)
Their response has been pretty weird though. That's definitely going to damage confidence...
I think that the take-home message here is just how hard it is to create completely robust software. The sums involved meant that there were going to be plenty of smart people looking for ways to exploit weaknesses, and once the smarties found a crack, it looks like the MtGox people weren't responding fast enough.
ReplyDeleteJohn,
ReplyDeleteI'm probably late to the party, but I wanted to say I hope you stayed short GNI through the recent nosedive. Good call on that one. :)
Cheers,
Tom
"Magic The Gathering Online Exchange"
ReplyDeleteWhen I read the FT this morning, the first thing I thought about was your post. Thanks for republishing.
Bitcoin is built as a box of Monopoly with Monopoly banknotes inside and rules to grab the notes (mining). Fair enough if this is a way to play. Fair enough if some players are ready to buy the notes with USD in order to play more, however, this is not a currency and a secondary market to resell the Monopoly Notes is the flaw : economically, this makes no sense.
And in my view, the guy(s) who created the scheme knew it, reason for which he disappeared, now MtGox, who's next?
I must admit surprise at the level of amateurism. The industry knew about serious MtGox problems for over a year, and their reaction was to "distance themselves"? From the most popular exchange of BTC? They talk about "moving forward" with "a second wave of more responsible entrepreneurs" like this was some botched software update or a flawed website. I don't think they understand the seriousness of trying to build a currency.
ReplyDeleteWho wouldn't want a humongous return on an investment? Bitcoin went from $20 to over $1000.
ReplyDeleteAm I sour about missing out? Yes, but I am smart enough to know that it's too late to jump on a ride this crazy bubble run!
When the subject of digital currency is raised I think of one word --> TULIP
Believers in MtGox certainly look dumb right now .
People who use bearer bonds that are designed to be easy to be moved from hand to hand without oversight shouldnt be surprised when other people make a good living from stealing them.
ReplyDeletehttp://www.coinsight.org/mtgox.html is documenting rather a lot of bitcoins being currently washed and anonymised through the system - hat tip to tharlam of reddit for the link.
Oh, and while Im here, dont get too snooty about companies that fundamentally came out of gaming.
ReplyDeleteYou know Jane's Defense Weekly ?
Started as a supplement for a naval wargame.
THE JANE NAVAL WAR GAME
A SEA KRIEGSPIEL SIMULATING ALL THE MOVEMENTS AND EVOLUTIONS OF EVERY INDIVIDUAL TYPE OF MODERN WARSHIP, AND THE PROPORTIONATE EFFECT OF EVERY SORT OF GUN AND PROJECTILE PART I. TACTICAL PART II. STRATEGICAL
INVENTED BY
FRED T. JANE
AUTHOR OF "ALL THE WORLD'S FIGHTING SHIPS, ETC., ETC.
http://www.wargaming.co/books/fredjane/homepage.htm
It’s definitely not yet the end of bitcoin just because a major exchange website collapsed. It’s not only the bitcoin exchange website in the Internet, there are more trusted websites. Bitcoin is a strong digital currency, and I’m quite sure that it’s going to stay for good.
ReplyDelete