This is strange. There's still nothing about this on their web site.
It's very suspicious when a Bitcoin exchange claims problems on the deposit side and stops processing withdrawals. Nobody trusts a Bitcoin exchange in trouble, with good reason given the history. On the other hand, it's 6:30 AM in London, where Bitstamp is, and their staff is probably not in yet. Bitstamp is still processing trades; they haven't shut down their trading engine.
Most merchants who accept Bitcoin do so through Coinbase, which sells on Bitstamp. Coinbase only holds a working float of Bitcoins. When Coinbase can't unload incoming Bitcoins, they start refusing transactions. So most Bitcoin e-commerce will stop within hours if this isn't fixed rapidly.
On top of that, Bitcoin, after being stable around $315-$320 or so for weeks, suddenly dropped to a low of $255 in the last 48 hours. Right now, it's around $270. Something is going on.
On top of that, Bitcoin, after being stable around $315-$320 or so for weeks, suddenly dropped to a low of $255 in the last 48 hours. Right now, it's around $270. Something is going on.
Stable for weeks is probably over stating it, looking at the chart it looks like almost exactly two weeks it was in that range, so technically it was weeks, but I wouldn't be quick to draw a direct connection between that recent price decline and this unfolding event, as the dominant pattern for the past 6 months or so has been a week or two of relative stability followed by a rapid decline.
[speculation]
If this is a gox-esque scenario, there could be a connection with the recent price decline in that the price decline is what is causing them trouble and not a technical issue.
> It's very suspicious when a Bitcoin exchange claims problems on the deposit side and stops processing withdrawals.
I believe the problem is the following: if you deposit to a certain, old deposit address, that Bistamp has lost the private key to, the Bitstamp deposit system might credit your account with the bitcoins anyway, even though they are not there, because the private key is lost.
If you then withdraw bitcoins subsequently, you are literally withdrawing someone else's bitcoins, because the bitcoins you deposited never arrived, although the Bitstamp software architecture believes they are there, because the deposit address reflects a deposit -- Bitstamp just doesn't have the private key, so the balance of that address is irrelevant.
It is indeed strange...and strangely familiar. Every Bitcoin company that has had massive holes in its books has first claimed that technical difficulties were the reason they had to suspend withdrawals. Then over the following weeks comes the annoucement that the money has been stolen, lost, or law enforcement moves in and says it has been embezzled.
I would be extremely uncomfortable at the moment if I had money in Bitstamp. If withdrawal capability does come back online, try to get your money out ASAP.
When logged in on the balance page it says: "DO NOT DEPOSIT TO PREVIOUSLY PROVIDED BITCOIN DEPOSIT ADDRESSES. Deposits sent to previous address will not be honored. New deposit addresses are forthcoming.".
More generally, though. "Bitcoin core discourages address reuse." I work for the company of the future and I get paid in bitcoins. I'm supposed to log into the payroll system and enter a new address every two weeks?
Thats a pretty fundamental confusion, but it's forgivable due to bad naming.
An address isn't a destination in Bitcoin, it functions more like the serial number of a bill (though the system is able to handle duplication). It would be better thought of as an invoice number.
You don't expect to reuse a different invoice number of separate payments.
If the analogy is accurate, then the pre-addressed envelope that comes with your bill already has the unique address on it, so you don't have to do anything special. What's the problem?
Ah, good point. I said electric bill, but was mentally focusing on the few checks I still hand address, for which I don't necessarily receive monthly bills (rent, etc.).
For that scenario, you'd presumably have some system worked out where you can quickly say, "hey, what's the address for this payment?" And being on the internet instead of going through the mail, you don't have to wait a week for the answer.
Well, at least they're doing that. But there's still no explanation on their site, blog, Twitter, or Facebook, and it's after 8 AM on Monday in London.
Expect this to start hitting the financial press in London in the next hour or two.
I think you overestimate Bitcoin's media profile. FT Alphaville is just mentioning yesterday's crash. Apart from that, only the Bitcoin press and fragments of the tech press (Wired, TechCrunch) have mentioned Bitstamp.
edit: whoops, added to the FT Alphaville article! http://ftalphaville.ft.com/2015/01/05/2079012/who-needs-cave... Come in via Google News for full text. They're using it as one example in a piece on how Bitcoin's infrastructures and the community's ability to assess expertise are not very good.
Two days later, it's in the Economist, Wall Street Journal, USA Today, etc.
Mt. Gox underestimated Bitcoin's media profile. When they went down, they acted as if the event would mostly be ignored and they could quietly get away with it. Instead, they got coverage in just about major business newspaper worldwide: WSJ, NYT, Forbes, South China Morning Post, China Daily, even al-Jazeera and Russia Today.
Bitstamp seems to be dead. They said they'd be down for "24-48 hours". Two days later they're still down. They haven't issued any new statements. There's a good chance they're in "take the money and run" mode.
Wonder what Bitpay are going to do, since their "aggregate price" turns out to have long closely tracked ... Bitstamp. How in the bag are they? Did they in fact cash out daily?
"I wouldn't be surprised to see prices break the 1y low at this point."
Already happened. Yesterday.
Bitstamp now has a huge PR problem. Even if they "fix" the problem and resume withdrawals, no one will believe they're solvent without an outside audit. They had a sort-of audit once before (Bitcoins only, not fiat), but now customers will want a full audit.
This is obviously bad - and certainly suspicious... but the lack of withdrawals given the situation is just sensible.
Withdrawals will require movement from cold storage - am I right? Well - if you've got a security problem with your hot wallet, then this would be a ridiculously stupid thing to enable.
Most merchants who accept Bitcoin do so through Coinbase, which sells on Bitstamp. Coinbase only holds a working float of Bitcoins. When Coinbase can't unload incoming Bitcoins, they start refusing transactions. So most Bitcoin e-commerce will stop within hours if this isn't fixed rapidly.
Most? Source? Bitpay seems to be bigger than Coinbase
And wouldn't Coinbase just sell somewhere else, instead of shutting down their entire business?
Your claim that most Bitcoin e-commerce will stop within hours seems implausible
"From payment processors serving billion-dollar merchants to bitcoin ATMs and advanced trading platforms, Bitstamp's stoppage caused quoted prices in bitcoin to become inaccurate, some products to be suspended and select services to be retailored in light of the interruption."
It turns out that BitPay got their pricing from Bitstamp. Robocoin also used mostly Bitstamp, and had to switch exchanges.
This is tiresome. This event is obviously disastrous for Bitstamp and bad for Bitcoin, I was just politely calling you out for making a hasty and alarmist prediction that was full of poorly-founded conjecture and misinformation.
If you had just said something like "I think this is probably going to cause a lot of problems for the Bitcoin eco-system..." that would have been a reasonable guess. The article you linked to actually shows that, but it does not show the effect that you predicted. It does not show "most Bitcoin e-commerce" stopping.
Not exclusively. Coinbase also sells (and buys) bitcoins directly to consumers. In fact, Coinbase is probably the biggest seller of bitcoins in the US (or second biggest after Circle.com - none of these companies publish volume numbers due to competitive reasons).
"Something is going on."
What is going on is very simple: customers of Bitstamp see that bitcoin withdrawals are halted. So the only way to get money out of the exchange is to sell coins and withdraw fiat. This selling activity is what is causing the price to crash. This always happens whenever an exchange halts bitcoin withdrawals (eg. see MtGox's demise in early 2014).
Edit: @TylerE: some customers usually learn about news before others: friends of employees, or even simply the first affected customers (before a public statement is made... remember: rumors spread fast). Again, the same scenario happened with MtGox: the exchange rate started crashing on MtGox a few days before the public news of their insolvency came out. I have been trading BTC for 4 years. I have seen how most of these scenarios play out in the Bitcoin world.
Bitcoin exchanges actually can't stop people from sending them new Bitcoin deposits because the Bitcoin protocol doesn't provide any way to block new transactions to their existing deposit addresses. About the best they can do is to send out an e-mail like this one.
Even worse, some people used to (don't know if many still do) set up a payout address on whatever mining pool they're using directly to an address on an exchange. Ouch.
Andreessen said on Twitter earlier today that he thinks the BTC price drop is due to inefficient miners selling BTC to fund OPEX and keep operations going. This activity is seen in the hash rate.
I think (NO EVIDENCE!) that people using BTC over Christmas and in the sales is likely to be a factor in driving the price down. Retailers immediately exchange the coins for $$ to avoid the risk of holding them, so this is a substantial liquidity call on the currency.
It's very suspicious when a Bitcoin exchange claims problems on the deposit side and stops processing withdrawals. Nobody trusts a Bitcoin exchange in trouble, with good reason given the history. On the other hand, it's 6:30 AM in London, where Bitstamp is, and their staff is probably not in yet. Bitstamp is still processing trades; they haven't shut down their trading engine.
Most merchants who accept Bitcoin do so through Coinbase, which sells on Bitstamp. Coinbase only holds a working float of Bitcoins. When Coinbase can't unload incoming Bitcoins, they start refusing transactions. So most Bitcoin e-commerce will stop within hours if this isn't fixed rapidly.
On top of that, Bitcoin, after being stable around $315-$320 or so for weeks, suddenly dropped to a low of $255 in the last 48 hours. Right now, it's around $270. Something is going on.