BitCoin speculation

Posted in Fiat money fear and loathers at 4:55 pm by George Smith

The BitCoin community has turned on Mt. Gox, it’s old favorite exchange, at least for the moment.

Today the rate hit a low of $109 with the average being $159.

At the Financial Times, the feeling is the jig is up:

Protester Kolin Burges, who started dabbling in virtual currencies last summer, says that he should have known Mt Gox was “a bit dodgy”, and accepts that he should not have stashed all his Bitcoins – the proceeds of a well-timed sale of Litecoins – in the exchange’s vaults as late as January 28. (To see Kolin, check “They had a Bitcoin sad” where the programmer indicated he had “hundreds” of them locked up at Mt. Gox.)

In the vacuum between Mt Gox’s public statements, he notes, rumours and conspiracy theories are rife.

“Exchanges need to prove that they have X amount of coins, and X amount of cash,” says Mr Burges, an Android games developer hoping to “semi-retire” if he gets his coins back.

Prices on Mt Gox have been removed from a benchmark Bitcoin index run by Coindesk. BitcoinEast, a start-up incubator, says it will take Mt Gox off its site, howtobuybitcoins.info.

An online petition to remove Mt Gox managing director Mark Karpelès from the board of the Bitcoin Foundation, a non-profit that serves as the industry’s governing body, has attracted more than 750 signatures.

A Los Angeles seller of BitCoin who I have linked to is currently advertising at $112, pegging his asking price to Mt. Gox. One might come to the conclusion he is trying to unload.

All other sellers are keeping their prices high, at anywhere from the high 500s to mid-600, in effect, seemingly market betting that Mt. Gox will fail and be removed from the BitCoin economy.

This has led to what has typified BitCoin, speculation, and behavior that is just like that of Wall Street with some rushing to buy the rights to Bitcoins at Mt Gox at the depressed price, betting that eventually the system will restore itself and they will have turned a nice profit.

Of course, if it does not, they lose everything.

“BitCoin exchange faces ‘Whirlpool of Death,'” reads the International Business Times.

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