How long was the password? If it’s short enough, it might be possible to crack it with brute force. It’s worth putting a little effort in if it’s worth $11K.
First I would make copies of the disk image in case the hard-drive it’s on goes bad.
Not necessarily. FTR: I own zero Bitcoins and am overall skeptical about them.
There absolutely has been a big percentage correction in the last few days; -25% ain’t chicken feed. But …
Is it straight to near-zero from here? Probably not. As I write it’s at about USD16K = BTC1. That means people who bought in more than 2 *weeks *ago are still money ahead.
How often does the S&P or other broad index give up 2 week’s gain? Answer: often. How often do ordinary currencies like JPY, GBP, EUR, CNY lose 2 week’s gain against the USD? Very often.
I can easily imagine a pretty good-sized bounce driven by the buy-on-the-dips mentality. Whether that turns into a dead cat bounce is 100% TBD.
I’d also not be surprised to find there has been and continues to be some serious bulk purchasing going on by big legit financial operators (mostly non-US) or by big secret accounts full of corruption or crime money.
As with the legit US stock market, all the Mom & Pop investors, even those with $1M portfolios, add up to a very small slice of the total market cap. Those people add up to a lot of TwitFace posts, but what really moves prices is whatever the éminence grise’ of the world are doing with the big bucks.
Unlike the NYSE I don’t think (IANA expert) there’s any way to identify large holders of BTC. There’s certainly no way to trace 100,00K different wallets all to one particular corrupt Chinese pol, African dictator, or Russian gangster.
Do all bitcoin exchanges limit withdrawal amounts? If so that is one point in bitcoin’s favor.
Do you mean withdrawal of money, or transfer of bitcoin? They might have $ withdrawal limits, but I doubt they have any limits on transfers of bitcoin under normal circumstances beyond what the network itself limits.
Not sure what you mean by that being a point in bitcoin’s favor.
Ripple?
I’m not talking about transfers or exchanges of currency. If a withdrawal of fiat currency is limited (per amount, per day) then it lessens the chance of a bank run crashing the system doesn’t it.
In a classic bank run, rumor spreads, people panic and withdraw all their money from the bank of ill-repute, and the rumor becomes a self-fulfilling prophesy in that the bank either has to close its doors to customers for a period or it just runs out of money and declares bankruptcy.
You misunderstand a key point.
A bank operates by taking deposits and lending the money back out between 10x & 20x. So if everyone wants their money back at once, it simply can’t be done. It’s not all still sitting in a vault.
A Bitcoin *exchange / wallet *is like a money changer and a safety deposit box. If you give them your 27 bitcoins, they hold those 27 bitcoins for you. Every single one of them is sitting in the vault. If you want them back that’s easy. There is no run even if everyone wants theirs back today. Because every single Bitcoin everyone has deposited is still sitting there in the vault.
There’s essentially three things you can do with a Bitcoin (or any other cash device including greenbacks):
You can transfer your Bitcoin from exchange to exchange. That does nothing except alter *who *is holding your money. If everybody decided that exchange XYZ was no longer trustworthy they might all decide to move their Bitcoin elsewhere. f so, XYZ goes out of business for lack of customers and the revenue they provide. But nobody is necessarily going to lose their Bitcoin in the process. Unlike in a bank where (absent depositor’s insurance) only the first few percent of everyone gets anything out of a failing bank.
Or you can convert your Bitcoin to goods by buying something with them. Practically speaking this is a pretty limited use due to lack of counterparties unless you’re in the wholesale heroin trade. No run possible here.
Or you can convert your Bitcoin to dollars or yen or Euros or … . That still won’t create a run on your exchange. It *will *bid down the price of Bitcoin expressed in dollars or yen or Euros. Which may in turn motivate others to sell. Then you might get a price crash, just as happened to the US stock market in 1929 and 2008. But that’s not a run; it’s a price crash.
Ultimately your ability to convert your Bitcoin into dollars depends on somebody else being willing to give you dollars for them. The exchange/wallet is under no obligation to give you *their *dollars for a Bitcoin. They’re simply acting like an escrow company helping you line up a buyer and recording the transaction after you seal the deal.
Couldn’t there be a run on selling bitcoins due to the limited speed at which the network processes the transfers? Don’t people already pay to jump the queue because otherwise their bitcoin transfer could take around a day? If everyone is trying to sell at the same time, but the transfer is extremely slow due to the network being clogged, I’d say it’s very much (but not exactly) like a run.
Assuming of course that the exchange is actually going to give them back to you, instead of just disappearing over night and keeping everything for themselves.
I’m just quoting you
“Ultimately your ability to convert your Bitcoin into dollars depends on somebody else being willing to give you dollars for them. The exchange/wallet is under no obligation to give you their dollars for a Bitcoin.”
Without your password they can’t use them; they’re in effect lost forever. Yes, you lose. But no, they don’t gain.
That sentence doesn’t mean what I think you think it means.
I’m saying the exchange is an exchange. It isn’t a market-maker. It has no obligation to take the other side of a transaction you propose. As such, unlike a deposit or withdrawal at a bank, you’re never transacting *with *them. You only transact *through *them to somebody else.
In other news, the escrow company won’t buy your house. You need a buyer for that. The escrow company will be glad to officiate at your transaction. But they won’t be a party to it.
I see what you’re saying now.
I’m not sure that a limit on transfers out makes any difference, though.
In a classic bank run, there’s a fractional reserve, so it matters who gets to their money first since there’s not enough to go around. Having transfer limits might slow the spread of panic, since people won’t think “I need to be at the bank right now or there will be nothing left”.
But with Bitcoin, there’s a floating exchange rate, so you get the same effect. Instead of people thinking “I need to transfer my out of the exchange", they'll think, "I need to convert my Bitcoin to before the price drops to zero”. The same panic can happen, and it can spread from exchange to exchange just by the spread of price information. In a run, once you’ve converted to $ to avoid the crash, then you’re “safe” (well, as safe as the exchange you’re on, which is probably not very) from a further price drop. Doesn’t matter if it takes time to get money out of an exchange. What matters is converting your crashing Bitcoin into valuable fiat.
That’s not how exchanges work, though. When your Bitcoin is at an exchange, it’s in the exchange’s wallet, under their password, not yours. They can (and have many times!) disappear into the night with them.
Banks typically lend longer term and borrow shorter term (take deposits). A bank run is a liquidity crisis when all the short term lenders want their money back at that same time. A bank can reduce that inherent liquidity risk before a crisis occurs by borrowing longer term when it’s creditworthiness is strong - e.g. offering fixed term CDs at a slightly higher rate that cannot be cashed in early - i.e. matching the maturity of liabilities more closely to assets. But after there’s a loss of confidence in the value of the banks long-term assets, this won’t work, and restricting withdrawals won’t work either - in fact it serves only to reduce confidence in the bank. The only solution to a bank run is for a more creditworthy guarantor (a strong bank or the government) to step in and guarantee repayment of the liabilities.
But the bigger point is that LSLGuy is right - the bitcoin exchanges are not supposed to be acting as banks, they are supposed to be actings are brokers/custodians. And there’s a very clear distinction between banking/proprietary activities and broker/custodial activities, codified in law and strict regulation for brokers that participate in the regular financial markets. A broker that acts as custodian for your assets must keep them in a segregated account, he cannot touch them in any way unless instructed by the customer, or he goes to jail. The strict regulation is precisely because of the hazard inherent in allowing a broker to “commingle” customer assets with the broker’s own assets.
Suppose I buy 1000 shares of Crapstock for $1 in my Fidelity brokerage account. Fidelity has a strict responsibility to hold those shares for me in my segregated account. Now, whether or not I can subsequent sell those shares in the open market is not Fidelity’s problem. Fidelity’s only responsibility is to deliver those shares to any buyer that I can find. If I can’t find a buyer (i.e. the bid is zero), then my shares are worthless – but that’s a market move, it’s not a failure on the part of Fidelity. My worthless shares are still sitting there in my segregated account at Fidelity, all ready to go if I can ever find somebody who will pay me something for them. Now, to draw the analogy with the bictoin exchanges, it would be a serious WTF moment if I did find a buyer who would pay me $2 for all my shares of Crapstock, but Fidelity said “we’re holding 1000 shares of Crapstock for you (honest), but although you have a buyer for all 1000 those shares, we’re only going to let you sell 10 of them”.
So if a bitcoin exchange just won’t let you sell shares that they are supposedly holding for you, that’s a serious worry, it’s certainly not a source of stability. I don’t know if these exchanges are regulated at all, so who knows if your assets are even really there.
If you want to speculate on the collapse of bitcoin, just sell futures. Both the CME and CBOE futures are cash-settled, meaning it’s strictly a bet on the underlying price with no delivery of actual bitcoins at expiration. If you sell one future at Jan 18 future at $15k and bitcoin is trading at $12k at contract expiration, you’ll be credited $3k. If it goes up to $18k, your account will be debited $3k. The longest dated contract currently trading is for June 2018 on the CME.
OK, not sure I get it fully yet though. Why do the bitcoin exchanges have withdrawal limits then?
Liquidity is horrible so far.
Well, that’s something they need to answer, isn’t it. If the market is to gain some credibility, they wouldn’t have those limits.
It’s not bad, all things considered. As with any new market, it takes time for liquidity to develop. I’m only aware of two trading firms here in Chicago that have much of a cryptocurrency desk at this point that are making markets. The CME contract is 5x the size of the CBOE contract (5 bitcoins vs. 1 bitcoin). With a little patience it’s not too hard to get a fill. It’d be pretty easy to build a pretty decent sized position.
So you don’t know either. I assumed it was to prevent the equivalent of a bank run or price crash.
A “bank run” would mean they are in the business of the deposit taking and re-lending. This is a regulated activity.
In any case as they present themselves as the exchanges, which is not a banking business, the sole rationale is as in analogy to the trading limits other types of the proper exchanges. That is limit price changes.
It can be suspected they also may lack the capacity to process above a certain level of the activity.
There is no answer to the question that does not cast great doubt on the real stability of the process.