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  • Sep 17, 2014
  • Updated: 8:39pm


Bitcoin, released to the world in 2009 by a person or people called Satoshi Nakamoto, is not backed by a central bank or a government and is seen as an alternative payment system. In February 2013, Bitcoin went into the mainstream as a monetary crisis threatened to bankrupt Cyprus, seen as a safer bet. Early adopters of Bitcoin have been richly rewarded as the price has soared – in one case, a young Norwegian bought a house from an $850,000 windfall on a US$22 investment.

BusinessBanking & Finance

Mt Gox exchange shutdown sparks Chinese bitcoin gold rush

PUBLISHED : Wednesday, 26 February, 2014, 11:32pm
UPDATED : Thursday, 27 February, 2014, 1:50am

Chinese investors rushed to buy bitcoin, seeing it as potentially undervalued, after the value of the virtual currency fell following the shutdown of the Mt Gox bitcoin exchange this week.

Since Tuesday, more than 30,000 bitcoins have changed hands in China. That's four times the usual trade volume, and compares with just 300 exchanged in the United States.

Bobby Lee, chief executive of one of mainland China's biggest exchanges, BTC China, said: "Much more bitcoin is flowing around the system in China."

Hao Hong, managing director and chief China strategist at Bank of Communications, said: "I think people are trying to trade the market, but with one of the largest exchanges closed, it will be a little difficult to cash in even if there's a technical rebound."

It marks a strong return to the market for Chinese investors after the People's Bank of China moved to cool interest in bitcoin, the value of which peaked at US$1,120 last year.

Watch:Buyer protests in front of a Japanese bitcoin trading company

Japanese authorities announced a probe into the shutdown of Mt Gox. On Tuesday a leaked company document said its customers' 625,000 bitcoins and its own 120,000 holding, together worth US$350 million at current prices, had been stolen.

Art adviser Jehan Chu is increasingly pessimistic about recovering the HK$100,000 he has invested but said he is still bullish about bitcoin: "With bitcoin we're not even at the tip of the iceberg - we're merely a snowflake about to land on a glacier."

Last night a statement on Mt Gox's website said: "A decision was taken to close all transactions for the time being in order to protect the site and our users."

Watch:What's Bitcoin and how does it work?

The Tokyo-based trading platform went offline, preventing customers contacting it.

However, in an online chat yesterday obtained by Fox Business, chief executive Mark Karpeles said of the leaked report, which suggested Mt Gox rebrand itself, relocate to Singapore and replace him: "… It's a bunch of proposals to deal with the issue at hand, not things that are actually planned and/or done."

Karpeles said the report was "more or less" legitimate.

Bitcoin was trading at an average of US$563.51 last night.


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Why Bitcoin is hoox: bitcoin founding member(s) take 1.6M bitcoin for almost free
What the mining machines are doing is performing a "hash" calculation with a block of transaction data (including the coinbase transaction) plus a chosen number as the input. For a given block, the result of that calculation depends on the chosen number, and the chosen number cannot be found from the result without a "brute force" trial-and-error effort, rather like trying to guess the combination number of a safe by trying repeatedly. Bitcoin uses SHA-256, a "Secure Hash Algorithm" designed by our friends at the NSA, which produces a 256-bit result. In decimal, that is a range from zero up to about a 1 followed by 77 zeroes. There are only about 10^80 atoms in the universe, to give you some idea of how big that number is.
The difficulty did not begin to increase until block 32256 on 30-Dec-2009, so it is fair to assume that until the middle of December 2009, there was only one miner mining, probably the founder. Up to that point, 1,612,800 Bitcoins had been mined. The latest adjustment to difficulty was on 26-Oct-2013, when the difficulty was set at 390,928,787.64. That, plus the fact that each block only earns coins at half the original rate, means that it now takes about 782 million times more hashes to produce a Bitcoin than it originally did.
(Credit: David Webb)
Yet another Midas-touch dot com story ! This money will soon be not even worth the paper it is NOT printed on.


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