I believe that My Gox customers, if memory serves, were ‘stranded’ (no possibility of a bank run, err exchange run) because little did they know, the bitcoins they bought through the soon to crumble BTC Exchange were somehow locked to My. Gox.
Does this also apply to Poloniex or MasterXchange? In other words, are there two different flavours of SafeCoins locked to their respective exchanges, not withdrawable with other exchanges?
The mechanics of this are important.
When people sent mtgox Bitcoin, they no longer owned them at the blockchain level - instead they had a promissory note.
This is much like banking and why they can get away with fractional reserves.
A distributed exchange is one where there is no middle man. With no middle man, there is no need for promissory notes.
Unfortunately for Bitcoin, you can’t trade quickly without a middle man. Transactions take far too long - 1h to be sure.
Safecoin will be different. There is no blockchain or X confirmations to worry about. The operation is near instant and atomic. Therefore, you could have a distributed, real time, trading platform without needing third party trust at all. Even the transaction fees would be insignificant by design.
Instant settlement of digital assets from anywhere in the world is a big deal. It makes credit clearing redundant in many applications. As our entire monetary system relies on credit due to speed and transaction costs, this could be a game changer.
Bitcoin let settlement happen within a relatively short period, anywhere in the world and was rightly an impressive feat. Safecoin will take this to a whole new level!
SafeCoin could take this to a whole new level when MaidSAFE is live. For now, we need to go through Bitcoin and safecoin friendly exchanges, so it seems to me my question remains.
SafeCoin doesn’t exist yet, MaidSafeCoin is not SafeCoin.
As for your question, MaidSafeCoins are not locked to an exchange, you can withdraw them and let them be sent to a BTC address of your own. Mt.Gox customers lost their coins because they let their BTC stay on the exchange rather than withdrawing them immediately after purchase. It’s ironic, since one of the main features of Bitcoin is the lack of requirement of a trusted third party. And what do people do? Trust a third party to keep their coins safe…
Yes @Seneca there were many users that left their bitcoins or fiat on their Mt Gox exchange accounts, which of course is very bad practice!
However, I remember a big realization, after karpeles filed for bankruptcy protection, was that many users were unable to send their bitcoins to another exchange to cash out. It turned out that bitcoins are locked to whatever exchange you bought your BTC from (including Bitstamp). Ironically bitcoins are not exchangeable with other exchanges.
This is what prompted my question, is a MaidSAFE coin bought from Poloniex locked to that exchange and same Q for MasterXchange?
I guess this is something I’ll have to test out. sorry everyone, my question wasn’t clear. Here’s the inended path:
Fiat cash > bitstamp > bitcoin (omniwallet) > poloniex > trade for MaidSAFEcoin > send MaidSAFE to Omniwallet > send MaidSAFE to MasterXchange (crucial test point, is it receivable?) > trade MaidSAFE for bitcoin > send bitcoin back to an omniwallet > send bitcoin to bitstamp (could be same account) > withdraw cash to bank.
No, you’re misinterpreting it. They couldn’t take out their Bitcoins out of Mt.Gox, that’s why they couldn’t send them to other exchanges. Once a Bitcoin (or any other cryptocoin for that matter) is in your wallet, you can send it to any address. The blockchain is completely independent.
Yes. So if you worry about that don’t keep there all of your coins. Withdraw the part you don’t need to a wallet you have access to without anyone’s permission.
Personally I’m not doing that because it’s not convenient, I’m just sharing best practices :-).
That’s not true. See What if? You could lock a Bitcoin in a Safecoin? - #7 by 19eddyjohn75.
Not true.
How do you think everyone else gets their MaidSafe to MasterXchange (and out)?
Edit: you can’t buy/sell a Bitcoin on distributed exchange faster than it takes to get 6 (or say 3) confirmations on the Bitcoin blockchain, that’s why it’s irrelevant if you have a MaidSafe distributed exchange (on which you can buy/sell SAFE for BTC) that works “faster”.
Yes, you could essentially keep all your Safecoin Asks outside of an exchange. All you would need is a feed of current Bids.
When there was a Bid that suited, you could immediately place an order to sell your Safecoin to meet it.
Ofc, the other side of the trade may not be so fortunate - if they have fiat or slow confirming crypto currencies, they would need to trust the exchange still.
However, I suspect there will be Safecoin based assets which will be traded with the same speed/ease as Safecoin itself (like mastercoin over Bitcoin works, etc).
If the distributed exchange escrows bids, for example like Cunterparty’s does, your trade (from your example I suppose you’re selling a certain amount SAFE) cannot settle any faster than the trade of the BTC seller who is buying SAFE.
In other words you cannot know if you actually received BTC in return for your SAFE until you receive several (e.g. 6) confirmations from the Bitcoin network.
In fact it seems to me that BTC seller would get SAFE faster than you’d get BTC and be more fortunate, unless the distributed exchange delays his side of transaction.
Yes, there are also mechanisms that will supposedly be able to work seamlessly across different platforms, but I don’t know of any that has been time- and volume-tested yet.
Very true. I was referring to a centralized exchange in this case though. As the counter party already has their Bitcoin on the exchange, the Safecoin seller wiikf only need to trust the exchange to complete the transaction.
Thanks for the clarification, I gathered this from a forum or article comment way back when Mt. Gox was going under, so probably misremembered…