The slow decline of Bitcoin’s biggest exchange, in one chart

September 4, 2013

Mt. Gox is the world's largest Bitcoin exchange, at least as measured by transaction volume. Millions of dollars worth of bitcoins change hands every day on the site.

Yet recently, something peculiar has been happening. Ordinarily, the price of a commodity is roughly the same everywhere it's traded. But lately that rule hasn't applied to Bitcoin. The price of Bitcoin on Mt. Gox is $145. Yet on other Bitcoin exchanges, like Bitstamp, Bitcoin only sells for about $130. And the spread between the two has been growing:


(Donald Marron)

That chart is from Donald Marron, who identifies the reason for the growing discrepancy. If you sell Bitcoins on Bitstamp, you can withdraw the dollars at any time. In contrast, the Japan-based Mt. Gox, which has been under pressure from American regulators, has been slow to redeem customers' dollar-based deposits. The exchange declared a two-week "hiatus" on withdrawals in June. In July, the exchange admitted it had a "back-log of withdrawals that we need to process." Last month, the exchange said that "the issues with deposits and withdrawals from Mt. Gox are being relieved, but still not at the rate we want."

Bitcoin discussion forums are full of people complaining about long delays in processing withdrawal requests. So the 10 percent difference between the Mt. Gox price and the price everywhere else reflects market skepticism that traders will be able to get their money back any time soon.

We've asked Mt. Gox for comment and will update this post if they respond.

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Timothy B. Lee · September 4, 2013