Just like it's not the fault of the dollar if someone mugs you at gunpoint. Except robbing someone typically requires you to take physical risks and (threaten to) use violence. I'll be very curious to see any effective way of tracking down bitcoin thieves.
If you have to be a security expert to own more than a few dollars worth of bitcoins, the project has effectively failed already.
If you don't have the required knowledge just pay a little bit to a "Bitcoin bank" that handles the task for you. In the real world you also don't carry your money with you all the time, but store it on a bank.
- Centralized money is bad! We need to create a perfectly decentralized, distributed economy!
- Oh no! It turns out that the average Joe will get burned really badly by this new decentralized system!
- But wait! What if we created these things called "banks" and provide people peace of mind and security by taking on some of this risk?!
- ...?
- Um... not profit.
- Anonymity/trackability. Gone if you are with a bank. Sure, possible to sidestep by going through the song-and-dance that is withdraw-send-deposit. We can do this IRL also, but there's a reason people do not.
- Taxability. Welp, if your BTCs are in a bank, the IRS can easily get you.
- Abusive/coercisve government action (e.g., freezing). Well, yeah, if you're with a bank that can happen too.
- Lack of fees. If banks become standard (and if BTC takes off, yes, they will become standard) then kiss goodbye to this benefit - the same way cash right now has no transaction fee, but bank transactions do.
In fact, the only major sell of Bitcoin that remains:
- Inability for government to arbitrarily expand the supply of money.
Still a win, but suddenly Bitcoins have lost a lot of charm, especially for the everyman for whom the above 4 points are much more salient than that last one.
In the real world, the banks are subject to regulation.
Why?
It's true that key management and security are not as good as they could be in the official client, but that doesn't mean the project has failed, merely that the client needs to be improved.
Note that no one of the developers expected it to get this big this fast. Six months ago, no one would even bother stealing bitcoins as they were not more than a toy curiousity. Now very serious amounts of money are represented.
I don't think this is the end of bitcoins but surely enough is quite a ouch moment.
Lesson I've learned today: given that bitcoin wants to be a better currency, they have the chance to provide a better service. A good bitcoin marketplace should enforce two way authentications, maybe with yubikey or even just GPG keys.
It doesn't seem very free market to rollback the market and cancel all the free market trades that happened.
Basically, governments trying to stabilize their currency are in danger of losses whenever they meet someone with even deeper pockets. In contrast, the Japanese government could out-trade Soros in the crash in 1987 and Soros had to pocket substantial losses.
http://en.wikipedia.org/wiki/Black_Wednesday http://en.wikipedia.org/wiki/Monetary_policy_of_Sweden#1992
Yes, for some time MtGox was The Exchange. It seems that it just ended.
It makes you wonder if Mt. Gox actually had the hard currency to back up everyone's account balance.
"It makes you wonder if The New York Stock Exchange actually had the hard currency to back up everyone's account balance."
That doesn't make any sense either.
Mt. Gox seems to act like both an exchange and a brokerage. Presumably people have an "account" in which they can deposit and withdraw various currencies.
"It makes you wonder if The New York Stock Exchange actually had the hard currency to back up everyone's account balance." That doesn't make any sense either.
I guess you don't have an account with any brokers participating in the NYSE or other exchanges. You can't open an account without writing them a check. Once you've given them money, you can trade NYSE stocks which may gain or lose value. But the dollars you deposit into your account you should be able to get them out again with low risk.
Each currency or security should represent a zero-sum balance sheet for the exchange as a whole. Unless Mt. Gox spent the hard cash for themselves and hoped the market for bitcoins stayed healthy.
Who do they think they are, a Wall Street investment bank?
I agree it doesn't make any sense (but for a different reason).
Are these two things actually alike?
AFAICT, yes.
Will the NYSE buy shares from me?
Yes, the NYSE is a building full of member broker dealers who will, in fact, buy shares from you when the proper conditions are met. (I.e., you need to be worth their time).
Someone sold a huge amount of Bitcoins. The market acted accordingly. Expect a bounce back to the old exchange rate as soon as Mt. Gox is available again.
Of course it might be possible that the computer of the person who sold the Bitcoin was cracked. But that's not the fault of Bitcoin - if someone is not capable of taking care of the security of his local computer, it's better not to use a distributed currency where your money is basically stored inside a single file.