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One of the big stories in the Bitcoin world these days is the crisis at Mt. Gox, the former undisputed king of Bitcoin trading.

In recent weeks, the site has been having trouble with withdrawals, and actually all Bitcoin withdrawals have been halted.

Users of Mt. Gox can withdraw real currency, but to do that they'd have to sell their Bitcoins on Mt. Gox to someone willing to have theirs frozen on the site until the technical issues are fixed.

This has caused a huge plunge in price on the exchange, to the mid $200s. Meanwhile, Bitcoins that are traded elsewhere remain in the mid-$600s. If you are brave, you can buy a Bitcoin on Mt. Gox on the hope that things become unfrozen and make a huge profit. The massive gap obviously reflects a panic and a lack of faith in the site's ability to reconnect with the broader market.

Essentially, Mt. Gox has become Cyprus. Remember, in early 2013, when the Cypriot financial system collapsed, the Eurozone imposed massive haircuts on Cypriot bank accounts (confiscating cash) and instituted capital controls, preventing people from withdrawing their cash and moving it to non-Cypriot banks. For awhile, there was talk about a normal Euro and a Cypriot Euro. And a Cypriot Euro was worth less, because you couldn't move it out of Cyprus easily, or if you did want to move money out, you probably had to pay huge fees to do so through illicit mean.

So that's the deal today with the two prices of Bitcoin. There's the normal Bitcoin price and the price of a Bitcoin that's frozen on a site with severe technical problems. If Mt. Gox gets everything fixed, prices should find parity. But the large gap in price reflects a lack of confidence that things will be sorted out soon.





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