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Speculation on the Mt. Gox Price Differential

August 21, 2013 at 5:57 by BitcoinNews

The price at Mt. Gox continues to be elevated relative to other exchanges as Mt. Gox may be assumed to be the main seller of bitcoin on the exchange. It’s not clear whether Mt. Gox is raising prices because they necessarily require the capital, or whether they are simply taking advantage of a sellers’ strike to create a price squeeze.

Why would customers pay a $20 more for essentially the same product that is available elsewhere for less? It may be an irony to these issues at Mt. Gox that the very customers who were the cause for concern at the Department of Homeland Security (DHS) may also be the customers providing the extra funding to the exchange, via higher than market prices. Some customers who won’t pay an extra fee would simply line up for withdrawals regardless of how long it takes, and complain accordingly to the regulator for unfair delays in payment– this is something I have done myself. In addition, perhaps there is a new requirement to provide additional identifying information on the account to receive a U.S. dollar withdrawal, as required by any real implementation of “Know Your Customer” (KYC) procedures.

However, customers who are loathe to provide this information, for example, because they are laundering money, because they truly believe in the principle of anonymity, or for some other reason might be willing to pay 20% extra, or much more to transfer their account value out of Mt. Gox, via Bitcoin, assuming again that it is the new KYC procedures which could be skirted in this fashion.

The only way to know for sure would be to ask Mt. Gox customers they would pay $120 for bitcoin when exactly the same thing is available at another exchange for around $100. The speculation so far has been limited to diminishing confidence in the exchange’s ability to provide U.S. dollar withdrawals, but there might be more to it.

zY3W8raSource of image: Reddit Funny

 

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