Nothing new here if you have been following the story. It is a glossy, quick summary of all the conjecture that has been posited thus far in many other places, not delving into really any detail or saying anything new.
I am sure this story is going to get much weirder before it sees any semblance of sunlight or truth. And it might take many years for that to happen.
Agreed, this was pretty far from the "inside story" of Mt. Gox and was more just about Karpeles incompetence and personality faults.
"seated, inexplicably, on top of a blue pilates ball" really irked me, because its not inexplicable. The guy probably has back or circulation problems, give him a break instead of giving him crap for every last detail of his life. There's more than enough to critique about the fact that he ran the largest bitcoin exchange into the ground.
If you are trying to project that you are the CEO of a stable financial institution, having a lot of people say, "What the hell is he sitting on?" is not the best PR strategy.
Actually, that's a great example of how to use those well for PR. When's that photo from, something like 2005? Before?
Early on, Google did a great job of creating a young, hip, fun image. They wanted people to like them. Miracles and wonders, all from these slightly goofy Californian eggheads!
But that's not the kind of image you want to create for a financial trading platform on which you want people to deposit lots of money and feel safe. You could go brilliant and edgy or respectable and serious. But goofy? Nope. I can't imagine he had a PR person there for the interview. Just another sign that he wasn't qualified to run a billion-dollar business.
I wouldn't go that far. If people are comparing Bitcoin to ye old Dollar, then the lack of regulation that can lead to a disaster like this is something people need to be aware of.
I don't disagree that in a post-regulation world, people are going to have to be more cautious with their monies from a security and risk perspective. That's a good thing.
But a lack of regulation still doesn't make this Bitcoin's disaster. You're doing a great injustice to those of us that did lose money to assign blame to any party other than Mt. Gox.
> I don't disagree that in a post-regulation world, people are going to have to be more cautious with their monies from a security and risk perspective. That's a good thing.
Those who forget history are doomed to repeat it. Do some reading on what financial life is like for most people in a pre-regulation world. Presumably the post-regulation one wouldn't be terribly different.
No one is forgetting history. I think those of us pointing out that Bitcoin enables perhaps less regulation is because it provides new technologies for self-regulating and self-organizing. n of m wallets, self-executing contracts, autonomous organizations, etc. are all paradigms that we've never seen before and solve some of the efficiency/regulatory problems of the past.
One could imagine a world where the government doesn't regulate, it only provides guidelines that all people can use as a framework or template for the self-contracting they do with potential risk.
So what do people have to do to "be more cautious"? If both the biggest and smallest Bitcoin exchanges are getting ransacked, then what does cautious even mean?
It's a disaster that affects all of Bitcoin really. The most recent compromise left a bunch of Russians with the passports, home addresses and full names of basically every large player in the Bitcoin community. Anonymity broken and locations disclosed means a lot of people could be in very real physical danger.
A lot of bitcointalk users make mention of their wealth in general conversation, believing that their pseudonym protects them physically. It's not unreasonable to think that somebody who has lost a large amount of funds might act irrationally and decide that stealing from or threatening a prominent Bitcoin community member is a solution.
I'm speculating of course, but I would be very scared if my more of my information than my email address had been in that leak.
I realize that in pure fact it's wholly Mt. Gox's disaster, but it feels a lot broader in terms of perception.
As a theoretical parallel, imagine if a small island nation decided to reimagine themselves as a hub for international banking. They loosened regulations, provided incentives for banks to open up there, and generally tried to disrupt the world of money movement.
A bunch of banks open up there, of varying levels of quality. One takes the lead, becomes the most visible brand among the worldwide public, and then gets robbed of all of their depositor's money. Not only does it get robbed, it turns out that their security was stupidly lax.
Yes, that lead bank is the one that actually screwed up, but in what world isn't that going to reflect poorly on the entire island banking system? Or at least, how is it not going to inject an element of fear into the entire model?
Just like Panama canal scandal was only its investor’s issue, it still changed significantly how Stock Exchanges are regulated. BitCoin appears unregulated and hard to make sense of: MtGox was an entry point for many newcomers , one whose obscurity proved damning. Those newcomers, attracted by business magazine covers (and drugs on Silk road) were the first wave that changed BitCoin from a crypto-geek game into a valuable currency. No body is challenging the fact that people have lost money, citing dollar figures -- a unit BitCoin was meant to avoid initially.
You are right in saying it’s not a BitCoin disaster: it will trigger massive changes in the currency, just like Silk Road’s closing has triggered a legitimation of the tool.
As for rhetoric: all publicity, even bad, is legitimation this is a worthy interest to look into; business magazines like blood, but their prefer victory in adversity. I promisse that you’ll have enough “How we step out of MtGox rumble and built a competitor to Visa” soon enough. Remember ‘Web 2.0’? that actually was the shortest version of that story, told by O’Reilly. You’ll have a similar catchy name for what BitCoin will become soon enough; my money is on an international payment system with lower fees. The tax-avoidance angle was as lame as only ultra-liberalitarian can be; the drug angle seemed to have missed both the decriminalisation trend, and the whole ‘Every transaction is recorded forever, publicly’ part of the protocol; the funky price chart is a sin of youth. It could become a (long-term) reserve for value, that has been the secondary angle through-out, but I don’t see it: I believe that should remained reserved for ventures, talent and fine wine.
I don't have much confidence that the dozens of other starry eyed bitcoin startups out there are any better prepared than Mt. Gox was at operating a high stakes financial exchange.
This phase in bitcoin history would be less painful if there wasn't so much hype driving the price up. There's going to be a lot of bugs, hacks, and developers learning how exchanges actually work in the real world, so it'd be better for bitcoin if that maturity phase happened under calmer circumstances where less money was at stake.
The biggest red flag for me was Mt.Gox not declaring itself as money transmitter and being fined by the U.S Government as a result.
Knowing it would have a great deal of American users and that it would have to abide to rules, Mt.Gox overlooked this. Everything that followed only validated my decision to stay away.
US law is pretty clear on the fact that Mt. Gox is a money transmitter (you don't have to actually transmit money to be one, just things equivalent to money). Whether they are subject to US jurisdiction or not might be debatable (though not really as far as the feds are concerned if they have US customers).
> Whether they are subject to US jurisdiction or not might be debatable
If you're worried about what the courts have to say about the subject, it isn't debatable in the slightest. They're the ones who get to decide what the rules are, period.
If you don't care what a jurisdiction's courts have to say about the rules governing financial services, you really have absolutely no business offering financial services in that jurisdiction.
Do you know if CCP Games is registered as a money transmitter? Eve ISK has value and is as equivalent to money as bitcoins so they should fall under that umbrella right?
> US law is pretty clear on the fact that Mt. Gox is a money transmitter
US law is pretty clear on the fact that Mt. Gox is a money transmitter because Gox did, in fact, transmit money (that is, it had USD denominated accounts for users and distributed funds to other people from those accounts to other people at the direction of the account holder.)
> (you don't have to actually transmit money to be one, just things equivalent to money).
That might be true, but its irrelevant, as Gox (and any other exchange that exchanges a commodity for money, whether or not the commodity itself is also money) actually transmitted money, not merely "things equivalent to money".
This is anything but the inside story. The only "insider" information is the one guy who interviewed at Gox and claimed they don't use any VCS (but he made this claim a while ago).
It's pretty clear from this story that the "CEO" had no business running a half billion dollar business, much less a lemonade stand. It seems he mostly lucked into the business and luck doesn't work as a business plan, especially in a financial business.
Unfortunately this guy doesn't posses the motivation and focus to even run a lemonade stand because he'd rather be hacking on cash registers instead. CEO was not his calling, and neither was CTO.
A phone is a sufficient but not a necessary condition for using Bitcoin. It makes sense to mention phones instead of computers since in developing countries there are significant numbers of people with a phone but not a computer.
A fair amount of BTC and USD together with 12% on the company allied to the fact Jed was kind of expecting the difficulties ahead and wanted out. But I mean OUT, really OUT...
Even if Bitcoin balances can be made bullet proof, the Achilles heal is that it is not a legal tender, and that there are no market fundamentals to contribute to its exchange rate. My 660 Trillion Zimbabwe dollars, sitting here on the desk, are solidly in my possession. So what? P=0 means they have zero use value other than as a conservation piece. Interestingly, when I show them to people and they handle them (Produced by the British Bank Note Company that makes currency for a lot of countries) they frequently falsely conclude that the are phony. They have a hard time reconciling "real" with "worthless"
Whether or not Gox slid into fractional reserve banking is interesting, since if they did (I doubt it) they were basically betting against their depositors. To do that they would have had to taken Bitcoin balances as they came in, sold them for hard currency, wanted for Bitcoin to fall, buy it back, and pocket the difference, at the same time being able to honor withdrawals so there was not a bank run. The way this ended suggests that either something else happened, or they "bet the farm" and shifted virtually all of the Bitcoin deposits at a hard currency Bitcoin price below what it is worth now. The got caught "short" bigtime like in a margin call for stock bought on the margin.
Sounds like Karpeles is a guy with a short attention span who looks for low-hanging fruit and ignores the big issues because he may not be able to solve them. I have this issue with projects too, but of course I never ran a 9-figure Bitcoin exchange.
Its not the role of the CEO to solve those issues, its his role to make sure he has people who DO know how to solve it working on it, and to make sure they have the resources they need to do it.
He seems better suited for a role as CTO, though even that may be a stretch...
> Mt. Gox, he says, didn’t use any type of version control software — a standard tool in any professional software development environment. This meant that any coder could accidentally overwrite a colleague’s code if they happened to be working on the same file. According to this developer, the world’s largest bitcoin exchange had only recently introduced a test environment, meaning that, previously, untested software changes were pushed out to the exchanges customers — not the kind of thing you’d see on a professionally run financial services website. And, he says, there was only one person who could approve changes to the site’s source code: Mark Karpeles. That meant that some bug fixes — even security fixes — could languish for weeks, waiting for Karpeles to get to the code. “The source code was a complete mess,” says one insider.
So you're saying at some point you will make the decision to trust them based on... what? Will you go to their premises and inspect everything they do?
Will you analyze all their processes? And for how long? At which point will you decide it's "satisfactory"? Will you account the cost of the analysis in your process?
If the source code is in a language you don't understand, what will you do?
48 comments
[ 10.5 ms ] story [ 206 ms ] threadI am sure this story is going to get much weirder before it sees any semblance of sunlight or truth. And it might take many years for that to happen.
"seated, inexplicably, on top of a blue pilates ball" really irked me, because its not inexplicable. The guy probably has back or circulation problems, give him a break instead of giving him crap for every last detail of his life. There's more than enough to critique about the fact that he ran the largest bitcoin exchange into the ground.
http://www.youtube.com/watch?v=LLjlOw3TVc8#t=1m10s
If you are trying to project that you are the CEO of a stable financial institution, having a lot of people say, "What the hell is he sitting on?" is not the best PR strategy.
http://www.corechair.ca/wp-content/uploads/2013/03/google-ex...
Early on, Google did a great job of creating a young, hip, fun image. They wanted people to like them. Miracles and wonders, all from these slightly goofy Californian eggheads!
But that's not the kind of image you want to create for a financial trading platform on which you want people to deposit lots of money and feel safe. You could go brilliant and edgy or respectable and serious. But goofy? Nope. I can't imagine he had a PR person there for the interview. Just another sign that he wasn't qualified to run a billion-dollar business.
But a lack of regulation still doesn't make this Bitcoin's disaster. You're doing a great injustice to those of us that did lose money to assign blame to any party other than Mt. Gox.
Those who forget history are doomed to repeat it. Do some reading on what financial life is like for most people in a pre-regulation world. Presumably the post-regulation one wouldn't be terribly different.
One could imagine a world where the government doesn't regulate, it only provides guidelines that all people can use as a framework or template for the self-contracting they do with potential risk.
http://flexcoin.com
So what do people have to do to "be more cautious"? If both the biggest and smallest Bitcoin exchanges are getting ransacked, then what does cautious even mean?
A lot of bitcointalk users make mention of their wealth in general conversation, believing that their pseudonym protects them physically. It's not unreasonable to think that somebody who has lost a large amount of funds might act irrationally and decide that stealing from or threatening a prominent Bitcoin community member is a solution.
I'm speculating of course, but I would be very scared if my more of my information than my email address had been in that leak.
As a theoretical parallel, imagine if a small island nation decided to reimagine themselves as a hub for international banking. They loosened regulations, provided incentives for banks to open up there, and generally tried to disrupt the world of money movement.
A bunch of banks open up there, of varying levels of quality. One takes the lead, becomes the most visible brand among the worldwide public, and then gets robbed of all of their depositor's money. Not only does it get robbed, it turns out that their security was stupidly lax.
Yes, that lead bank is the one that actually screwed up, but in what world isn't that going to reflect poorly on the entire island banking system? Or at least, how is it not going to inject an element of fear into the entire model?
You are right in saying it’s not a BitCoin disaster: it will trigger massive changes in the currency, just like Silk Road’s closing has triggered a legitimation of the tool.
As for rhetoric: all publicity, even bad, is legitimation this is a worthy interest to look into; business magazines like blood, but their prefer victory in adversity. I promisse that you’ll have enough “How we step out of MtGox rumble and built a competitor to Visa” soon enough. Remember ‘Web 2.0’? that actually was the shortest version of that story, told by O’Reilly. You’ll have a similar catchy name for what BitCoin will become soon enough; my money is on an international payment system with lower fees. The tax-avoidance angle was as lame as only ultra-liberalitarian can be; the drug angle seemed to have missed both the decriminalisation trend, and the whole ‘Every transaction is recorded forever, publicly’ part of the protocol; the funky price chart is a sin of youth. It could become a (long-term) reserve for value, that has been the secondary angle through-out, but I don’t see it: I believe that should remained reserved for ventures, talent and fine wine.
It is wholly Mt. Gox's disaster, in the sense that they alone caused it and are responsible for the consequences.
It is Bitcoin's disaster in the sense that these events impact the Bitcoin ecosystem, and are (could be) a disaster for Bitcoin adoption as a whole.
This phase in bitcoin history would be less painful if there wasn't so much hype driving the price up. There's going to be a lot of bugs, hacks, and developers learning how exchanges actually work in the real world, so it'd be better for bitcoin if that maturity phase happened under calmer circumstances where less money was at stake.
Knowing it would have a great deal of American users and that it would have to abide to rules, Mt.Gox overlooked this. Everything that followed only validated my decision to stay away.
If you're worried about what the courts have to say about the subject, it isn't debatable in the slightest. They're the ones who get to decide what the rules are, period.
If you don't care what a jurisdiction's courts have to say about the rules governing financial services, you really have absolutely no business offering financial services in that jurisdiction.
US law is pretty clear on the fact that Mt. Gox is a money transmitter because Gox did, in fact, transmit money (that is, it had USD denominated accounts for users and distributed funds to other people from those accounts to other people at the direction of the account holder.)
> (you don't have to actually transmit money to be one, just things equivalent to money).
That might be true, but its irrelevant, as Gox (and any other exchange that exchanges a commodity for money, whether or not the commodity itself is also money) actually transmitted money, not merely "things equivalent to money".
Long answer: http://www.pcworld.com/article/2095060/apple-removes-blockch...
He seems better suited for a role as CTO, though even that may be a stretch...
> Mt. Gox, he says, didn’t use any type of version control software — a standard tool in any professional software development environment. This meant that any coder could accidentally overwrite a colleague’s code if they happened to be working on the same file. According to this developer, the world’s largest bitcoin exchange had only recently introduced a test environment, meaning that, previously, untested software changes were pushed out to the exchanges customers — not the kind of thing you’d see on a professionally run financial services website. And, he says, there was only one person who could approve changes to the site’s source code: Mark Karpeles. That meant that some bug fixes — even security fixes — could languish for weeks, waiting for Karpeles to get to the code. “The source code was a complete mess,” says one insider.
Will you analyze all their processes? And for how long? At which point will you decide it's "satisfactory"? Will you account the cost of the analysis in your process?
If the source code is in a language you don't understand, what will you do?
If you go down the rabbit hole, it's endless.