Mt. Gox re-opening up at 11EDT tonight; huge run on the bank expected, total collapse of bitcoin economy emminent
EDIT: Relaunch delayed 24 hours because someone took their last highlighter pens.
After Mr. Gox claimed do-overs, and had no idea how to re-secure their site or even verify who’s money is who, they are planning on re-opening tonight and everyone is waiting for the pandemonium to begin.
Bitcoins are the product of a possibly fictional Japanese man named Satoshi Nakamoto. They are “mined” through having computers with powerful graphics cards solve gradually more complex mathematical equations, and only 21 million Bitcoins will exist (creating an inherently deflationary currency, a major no-no). Bitcoin gained notoriety due to the press talking about how people were using a service named “Silk Road” to buy drugs online with Bitcoin, and Bitcoin’s “value” skyrocketed to over $30 to 1 BTC.
The big Bitcoin “currency exchange,” MtGOX (“Magic: the Gathering Online Exchange,” or, as they like to call it, “Mount Gox”) made a killing off of taking a .65% fee off of every conversion, and had a policy of only allowing people to withdraw $1000 USD a day or $10,000 a month from their MtGOX account, supposedly to conform with money laundering laws but actually to prevent a run on the bank. The first run on the bank happened in relatively slow motion due to MtGOX holding everyone’s money hostage (if you can only withdraw $1,000 a day you have an interest in keeping the bubble going artificially long) and helped prevent a full-fledged initial run on the bank. Nevertheless, prices plummeted as low as $10 USD-1 BTC before recovering to about $15.
Then, MtGOX was hacked and someone took 100,000 BTC and sold them to another account of his for $.01 a Bitcoin (to conform with their “withdraw no more than $1000 a day” rule) and this crashed the market. MtGOX shut down and has had an incredibly tough time trying to rebuild itself. It instituted a “rollback” of the deal and reclaimed the “stolen” Bitcoins, but it is still sitting on at least 1.3 million dollars of other people’s money, and they’re no longer even completely sure what belongs to who. They’re opening the market up again at 11 PM EDT tonight, and we will witness a full-scale cyber-run on the bank, It’s a Wonderful Life-style.
Various other exchanges have been set up to replace MtGOX, but none is that big yet.
Via Something Awful