In the case of the 2013 bubbles, there defintely was a new, sudden, huge demand in China: http://www.csmonitor.com/World/Asia-Pacific/2013/1206/Why-the-Chinese-can-t-get-enough-of-Bitcoin-despite-bank-ban 

You may want to check this comment by Ian Green to the Willy Reports:
http://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/comment-page-1/#comment-13
Some tantalizing finds on the blockchain...

Sorry, I don't beieve in that.  Since November at least, perhaps since April 2013, and until now, the evolution of the BTC price is well explained by natural demand in China, and the subsequent events there.  I am pretty sure that the 2013 bubbles would have developed the same way even without Markus/Willy, except that the price may have risen faster and higher without them.  (Arbitrage naturaly slows down rallies and crashes that originate in only some of the exchanges.)

And I don't see how one can tell whether the price is/was inflated, since there is no objective criterion to establish the "correct" price.

EDIT: Evolution of the BTC price

Right, sorry for that.  I meant to write that the  USD/BTC price has fallen since Februrary while the total BTC traffic has remained pretty much constant (~600'000 BTC/day).

Thanks, interesting information there.

[/quote]
the creation of zero balances implies transactions and spending
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That is not clear...  Addresses with zero balance could be created for many other reasons, such as sprinkling and collecting dirty coins to confuse detectives, stress-testing of wallet software, gambling, pay-out by miner pools, ...   

If you are giving bitcoins to Coinbase, individually or in lump amounts, those payments should show in the blockchain as Output Volume, right? 

If you are paying Coinbase in dollars, in what sense is that "bitcoin adoption"?

I asked the Sunlot (non-)PR person, on the Savegox.com thread, for a link to that court ruling.  No answer yet.  Perhaps "preliminary approval" means that they handed over the proposal at the court's front desk, and got a numbered ticket for it.

I do not get what you are getting at.  It is obvious that there was foul play at MtGOX, and China does not seem directly responsible for it (although, if it was indeed arbitrage as I believe, there may have been other people involved at the other end.)

The "arbitrage hypothesis" does not change the basic fact claimed by the Willy Report: someone inside MtGOX bought bitcoins from clients, but instead of paying them with real dollars (as the clients thought) paid them with fictitious "goxDollars", mere IOUs without any backing assets.  That, I suppose, is a crime in itself.  Presumably the buyer thought that he could get real dollars in time to make good on those IOUs, without the clients ever knowing.   Of course the goxDollars were as good as real dollars in raising the price at MtGOX.

The only contribution of the "arbitrage hypothesis" is the claim that those bitcoins were sold in China, and that the price at MtGOX merly tracked the 2013 bubbles, instead of creating them.

But that is unfortunately necessary, and seems to be the standard way.  Large companies that go bankrupt may have thousands of creditors, some with hundreds of unpaid bills or undelivered products.

One advantage of the input-output criterion above is that the creditors would need to furnish proof only of their deposits (for which they must have got printed records), not for all their trades in the site; and then subtract the total withdrawals from that to get the claim amount.   Since one cannot prove a non-withdrawal, it should be the liquidator's task to check that the client did not withdraw more than what he stated.

I may be wrong, but it does not seem necessary to wait for the criminal case before distributing the remains to the creditros.  Any assets eventually seized from the criminals would be distribued at a later time, to the same creditors, in the same proportions.   Even if the criminal investigation finds that some clients were involved in the crime, their share could be seized back and distributed to the other creditors.  

In any case, from what I read, the owners and managers should not get anything, until all other claims are paid -- even if they are innocent.

EDIT: line break, "In any case"

We already discussed this on another thread.  Doing that would be trying to defraud the court, like a furniture store claiming a debt that was actually paid.  If you were to claim 0 withdrawals (in writing, as part of a judicial procedure) and your bot account eventually got tied to you by the auditors, you would be in real trouble.

It would be useful to have concrete examples of that, yes.

But I wonder whether poker site failures ever resulted in bankruptcy proceedings.  Such sites must have had very few assets left to pay for bankruptcy, and civil suits would not yield much.  Unless the owers could be charged with fraud, in which case their personal assets would be seized.

In an eventual bankruptcy of a poker site, the criterion must depend on how the court sees the deposits.  I am totally guessing now, but if the money you deposited is viewed as advance payment for the service of allowing you to play, then your claim would be proportional to the service that you paid for but did not get: namely, the total amount you deposited, minus the amount you withdrew, minus the total stake of the games that you got to play in the site.   So, if you deposited 50$, made 10 bets of 3$ each, and withdrew 15$, all before the site closed, then your claim would be 50 - (10 x 3) - 15 = 5$, irrespective of how the bets went.  This hypothetical criterion would probably result in very few positive claims.

I still believe my reading of the report: the bubbles were real, caused by the demand in China, and Markus/Willy were merely carrying them over to MtGOX by arbitrage (probably with BTC-China at first).  It does not contradict the facts of the report, and seems supported by the data from BTC-China.  

There is nothing wrong with arbitrage, of course, even when it radically changes the "natural" price at a given exchange.  There may be ethical problems, perhaps, if the arbitrager is also the exchange owner, or has special privileges that are denied to other traders.  Doing arbitrage with fake money, counting on later inputs, would have been very risky, and was ultimately fatal.   Allowing clients to deposit and trade, without telling them that the exchange was insolvent, will be hopefully characterized as crime.

EDIT: not to mention stalling withdrawals and lying to customers all the time.

In some other thread, it was claimed that the liquidator will probably ignore whatever accounting MtGOX did internally, and consider only all your deposits into MtGOX minus all your withdrawals; converting dollar, euro, and BTC deposits/withdrawals to yen at the prevailing market rate at the time of the action.  If the balance is positive (you deposited more yen than you withdrew), then that is your cliam; if it is zero or negative, you have no claim and it would be pointless to apply.

Likewise the BTC in MtGOX wallets, and any other valuable assets, will probably be converted to yen by auction, and added to the bank account balances for the final distribution, proportional to the claims.

At least two people have confirmed that this is the standard procedure under US law (one pointed to Madoff's case as an example) and claimed that Japanese courts follow the same principle; and I haven't seen anyone disputing those claims.  

This is also arguably the "least unjust" criterion, and consistent with the general principle that lost opportunities and hypothetical profits ("if I had not given those BTC to MtGOX in September, I could be selling them today for 10'000$") are not actual losses in the eye of the law.  It has also many practical advantages, such as not depending on a database that may have been doctored: deposits and withdrawals, but not trades, can be confirmed by external sources.

EDIT: I presume however that the court will not consider people who had closed their accounts, or were covered by the clause in the TOS that allows MtGOX to close any account that has been inactive for 6 months. (Someone claimed this clause exists, I haven't checked). 

Curioulsy the number of transactions per day and their total BTC volume have increased very little, or not at all, since September last year.  So, either commercial e-payments  are a small fraction of those numbers, or they are not increasing (and their USD volume is actually decreasing, since the BTC price has fallen considerably in that period).

I just wrote:


Then Huobi did this:


But @magicmexican had already posted this:


I rest my case. 

Well, from December to April, especially from February, the Chinese were exponentially "un-getting it"; and that was swamping any growth outside China.  (They may have started "getting it" again now, we'll see...)

The original poster asked what I would consider proof of success.  Obviously that can only be empirical.

Logic can only change someone's expectations of success.  I could be argued out of my position, but I see big flaws in the supporter's arguments (like "the price will go to the moon because the supply is limited") which they refuse to acknowledge. Why should I change my expectations then?

I am not here to convince anyone, but when someone posts something that I think is wrong of course I may choose to reply.

The collective mind of the market obviously does not believe in that...

I doubt that this thread has more than 1000 readers.  If having one skeptical poster here can prevent the success of bitcoin, then you should all dump your coins and get out of this losing game, as fast as you can.

Independently of its probability of success as defined above, bitcoin may be a fun gambling game, but is a terrible investment, because there is no reliable way to estimate its future value.  Unfortunately some sleazy salesmen are touting bitcoin to unwary people as a good investment, even as a hedge against the 1%/yr inflation of the dollar or the 6-7%/yr inflation of Brazil.  (Even with the recent spurt, Bitcoin's annualized inflation rate since january has been ~100%/yr.)  We see plenty of examples right here.  (Sure, if one had a time machine and could invest in September 2013, the return would be fantastic; but, with that tool, playing the roulette at Las Vegas would be even better.)  Thus if you want to help someone, tell him/her NOT to invest in bitcoin.

I already answered that too, maybe 15,998,822 posts after that other question.  I am satisfied that the technical aspects of the bitcoin protocol are sound. (Except for the fact that it relies on a mathematical conjecture for which there is no evidence whatsoever; but if that conjecture fails, all internet payment schemes will collapse, not just bitcoin.)  It is the economical, political, and practical aspects that I am very skeptical about.

The sleeping and eating patterns of the Chinese are relevant to understanding what will happen to the price, which, you must agree, is an important factor in predicting its success.  They can indicate, for example, whether the volume there is fake or not, which exchanges are leading the market, why those Overstock and Winklevoss noises have no effect on price, etc.  Not as enlightening as dinosaurs, but infinitely more than any TA (even my own Chinese Slumber Method) or those log-scale straight line extrapolations.

If it is clearly stable and long term, even a few tens of thousands of legitimate users can be counted as success, I guess.  But note that there must be enough payment volume to support the miners through fees, once block reward dwindles.