The Mt.Gox Verification Queue: 14,180 Users!

I just received a report from a friend that the Mt.Gox verification queue, as of eight minutes ago, is now 14,180 users long.

Fourteen thousand, one hundred and eighty users! That's a lot of money about to flow into Bitcoin.

Six days ago the queue was reported to be over 8300, with approximately 1000 accounts being verified daily; that works out to 12,000 new accounts in the last week.

Update:

Why is there a requirement to verify an account? From Mt.Gox:

"If you plan to invest more than 50,000 USD or equivalent on the long term in bitcoins, we need to know about you. In this case please use our verification system to get your account verified first. 

Please also be advised that all deposits are subject to an ID check by our AML team and this process would take up to 1 business day.  First-timer depositors are requested to upload their copy of the official ID to facilitate this process (you will not have to be fully verified at this point if your deposit is lower than 50,000 USD)."

So, how many of these 14,180 users are planning to invest over $50,000? How much money is that in total? The implications are staggering.

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The $8 Million Chart We Should All Be Watching

Fun fact: did you know that it was only just over a month and a half ago that a new all-time high record was set for the value of bids on MtGox's order book? That record was $3 million USD.

Well, it's over $8 million now.

Chart courtesy of BitcoinX.com

As can be deduced from these three graphs, there is a strong correlation between the sum value of bids in the order book and the exchange rate. If we combine this with reports that there are still thousands of people waiting just to get their MtGox accounts verified, it's become apparent that the case for the current exchange rate being a bubble is getting ever so harder to make.

Perhaps instead of a continuing consolidation period, or even a temporary fall, we are actually poised for an even bigger rise? I believe that would be the correct assessment, given these facts.

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A Second Look at OKPAY, Bitcoin's Largest Payment Processor

In November of 2011, I announced the arrival of OKPAY onto the Bitcoin scene, which at the time was seen as a huge step toward the consumer popularisation of Bitcoin. OKPAY was, and still is, the first well-established payment processor to integrate Bitcoin into their services. Since the original announcement, OKPAY has continued to increase in popularity, becoming one of the top 10,000 sites on the Internet, and hence a member of our prestigious Bitcoin Ladder. OKPAY is also one of the top 1700 sites in Russia.

Its competitors from within the Bitcoin community, BitPay, WalletBit, and MtGox have obviously kept the pressure on OKPAY to remain competitive, and OKPAY has done just that by recently dropping their BTC to USD conversion fee to 2.50% from the 3.00% that it was back in March of 2012. BitPay is currently charging 2.69%, while WalletBit charges 2.75%. Mt.Gox is of course competitive with the straight BTC to USD conversions, but they also charge 2.50% on top of their trading fees for any other currency. OKPAY's 2.50% rate also holds for anyone wishing to withdraw their BTC proceeds via the OKPAY MasterCard debit card.

Uniquely, OKPAY has also aligned itself with two of the major Bitcoin exchanges, Mt.Gox and BTC-E, allowing users to withdraw funds from the exchanges to their OKPAY accounts, and ensuring OKPAY gets the best possible Bitcoin exchange rate.

OKPAY's service has drawn in hundreds of thousands of users, thus giving them an advantage through economies of scale, something BitPay, WalletBit, and MtGox may find difficult with which to compete, though they're obviously doing a great job of staying competitive, themselves.

The beauty of these payment processors is the fact that they allow a merchant to accept Bitcoins with zero risk, with fees very much competitive with, if not lower than, those of PayPal, Visa, and MasterCard. Add in the absolute zero chance of chargebacks, and you wonder why there are any merchants out there that are not willing to accept Bitcoin in addition to the usual currencies.

As always, it's exciting to see the Bitcoin payment processor space continue to grow with the Bitcoin economy, inevitably forcing traditional payment processors (*cough* PayPal *cough*) to either get with the times or potentially lose significant business.

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Bitcoin Poised for Rally

I don't normally like to make predictions, but... (click images to enlarge):

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10 Exciting Things About Bitcoin - Right Now

1) The success of Bitmit - Bitcoin's eBay. Over 550 listings and growing rapidly.

2) The boom happening over at Silk Road. While I don't condone the illegal applications of Bitcoin, the site's success if further proof that Bitcoin is a technology that fills a gap.

3) The appeal and rapid growth of Ogrr.com, which is bringing in hundreds of new users each month and expanding exponentially.

4) Mt.Gox is about to launch "e-commerce solutions" this week.

5) Recent discussions regarding making Bitcoin truly anonymous.

6) The upcoming completion and launch of Bitcoin.com by the good folks at Tradehill (currently down).

7) The popularity of coinworker.com.

8) The announcement of the upcoming Bitcoin Conference in London.

9) Through no fault of their own, tens of thousands of Bitcoins were stolen from various high profile Bitcoin businesses. Why is this good news? Not a single user was impacted as the owners chose to absorb the losses. It was also the first time that a major hack or closure didn't impact Bitcoin's market value.

10) And the most exciting news of all: you can now tip cows for Bitcoins.

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Overheard at CES 2012: "Bit-Pay/Bitcoin is the most innovative thing we have seen at this show."

Bitcoin's business leaders took to the Venetian in Las Vegas last week for CES 2012, with multiple booths advocating Bitcoin, including representatives from Bit-Pay, Casascius, Mt.Gox and a Bitcoin ATM.

Bit-Pay and Casascius gave us the play-by-play over at the Bitcointalk forums, with some exciting revelations over the course of the week:

Bit-Pay:

The show is really busy and we are seeing alot of traffic in our booth. I've given demos already to people from Citibank, Diebold, and First Data.

We have talked to a lot of really big decision makers at some major companies. These deals will take time to follow up on and complete, but look for an explosion of Bitcoin in 2012, in ways you can't imagine; some of these ideas we had not even thought of!

We spoke to pretty much every major bank, VC firm, and retailer that you could think of. Most of them specifically sought us out. Many of them were very interested in us, and some of them specifically said "this is the most innovative thing we have seen at this show." That is quite impressive considering all the gadgets that the media is all hyped up about.

Square was getting alot of attention at the show as well. When people came to our booth after they talked to Square, they were really impressed with what Bitcoins could do. We have, hands down, the most business friendly payment system in the world. We got that point across to some very influential people this week.

Casascius:

What keeps me excited are the people who came up to the booth and said things like "Hey! I've heard of Bitcoin. I don't yet know what it is, but I heard (whatever), and want to ask questions, because we do (this) and (that), and I was wondering if Bitcoin could help us do a better job of (this)". These are people who are already well-situated in a career where their buyoff on Bitcoin can be a major part of a big company's decision to take a real look at it. Those are the ones who will make a serious difference when they get home.

A shot of the Bit-Pay booth and its friendly hosts at CES 2012.

Part of the display at the Bit-Pay booth.

Alison Skipper, Bit-Pay's spokesperson, demonstrates a Bit-Pay deposit card.

And to top off a fantastic week for Bitcoin publicity, the "Bitcoin for Dummies" episode of "The Good Wife" airs on CBS tonight!

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BitInstant Now Facilitating Withdrawals from Mt.Gox and Tradehill to PayPal

In what can only be described as a major breakthrough for Bitcoin traders and merchants, BitInstant is now facilitating withdrawals to PayPal from the two major exchanges, Mt.Gox and Tradehill.

The one-two punch of the announcement of Roger Ver's investment in BitInstant and this announcement could only mean further great things are to come from BitInstant CEO, Charlie Shrem.

How long before BitInstant allows for transfers from PayPal to Mt.Gox and Tradehill? Is it just a matter of time? One can only imagine the explosion in Bitcoin usage that would occur as a result. Stay tuned; our fingers are crossed.

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Bitcoin: The Best Investment in 2012

Let's look at some of the factors at play here:

1) The hacking is over with. Between Mt.Gox, Tradehill, Intersango, Cavirtex, and the other reputable exchanges, we've seen a reliable streak. Amateur night is done.

2) There are reliable ways to store your Bitcoins. With the exchanges mentioned above, e-wallets like Stongcoin, and secure wallets like Electrum and the Satoshi client, securing your investment is no longer a crapshoot. It's incredible to think how far we've come.

3) Publicity, publicity, publicity. In two days we've heard from Max Keiser, Fox, and Fred Wilson, and all in a positive light. Right there we've had three of the largest bouts of publicity for Bitcoin since its inception. What's coming in the next year? The sky's the limit, really.

4) Development. Mt.Gox is about to unleash a new round of products and services, one of them probably being their point-of-sale device, as was promised back in July. Tradehill is working bitcoin.com. Others promise easy ways to buy Bitcoins with credit cards; Crypto X Change is making it much easier, on a global level. FeedZeBirds is innovative. What's next? 2012 will be an amazing year for Bitcoin development.

5) Existing business is recognizing Bitcoin. Switch Poker was the first already-existing poker site to start accepting Bitcoin. Other online casinos have their eyes on Bitcoin and don't want to lose ground to the competition. Okpay started accepting Bitcoin deposits just recently. They'll soon be releasing Bitcoin merchant services and permitting Bitcoin withdrawals. Okpay is fairly large, with half-a-million accounts, but it's just a matter of time before even larger dominoes start to fall. These payment processors are seeing Bitcoin as another opportunity to make money, and like the casinos, they won't want to fall behind.

6) Global financial trouble. The Euro is done, kaput, over with, but it's not the only one. The Occupy movement is waking people up to the deceptive practices of banks. Financially-aware people will want to re-gain control of their money and diversify out of fiat currencies into alternatives like gold, silver, and Bitcoin. I already know a lot of people who invest in Bitcoin to hedge against holdings in their national currencies; more people will be doing it.

When you have a bubble like we've had, and then a crash, but then a definitive rise from the ashes, it's going to generate some serious publicity. Once investors realize that Bitcoin acutally ISN'T going away, they're going to pile on, and it will make the June 2011 bubble look like a speed-bump.

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$40,000 Thrown Up on the Bid @ 2.80

You don't see THAT happen very often! If all of the money currently sitting at $2.80 suddenly bought Bitcoins at market value, every Bitcoin for sale on Mt.Gox (at least what they're showing for sale - the data stops at $4.55) would be bought.

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Someone in Russia Just Bought 8000 BTC

That one trade, alone, counted for nearly half of the 30 day volume on the Mt.Gox Ruble market.

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The Power of MtGox

While none of the Bitcoin exchanges could ever be considered "liquid" by the usual financial measures, MtGox is the most liquid of them all, with a 30 day volume nearly 20x larger than its closest competitor, TradeHill.

MtGox will, on occasion, consolidate its accounts into one Bitcoin address, which they did today. The size of its wallet, to say the least, is shocking. That's right; 2.3 million Bitcoins, or nearly a third of all Bitcoins ever mined.

Now, what can we surmise from this? Well, first of all, MtGox is a bigger player than any of us could have ever fathomed. Not only is it the largest Bitcoin Exchange, but it also the largest Bitcoin bank, absolutely crushing the number two bank, whomever that would be (maybe TradeHill?).

Second, if we look at the monthly volume at MtGox, it was only 1.2 million Bitcoins. That means that in the last month, a number of BTC traded hands that was only equal to half of the Bitcoins held by MtGox. Imagine if 10% of the Bitcoins held at MtGox moved in the same direction in one day! Theoretically, in an all-out sell-off, we could see a legitimate return to Bitcoins valued sub $1. To be fair, I don't see that ever happening, save for an announcement of a functioning Quantum Computer that can decrypt Bitcoin private keys, but we'll have much bigger problems than Bitcoin to worry about should that ever happen (you can kiss your online bank account goodbye as well).

Interestingly, the Bitcoins held at MtGox are likely held by investors. This tells us that the market is even more illiquid than previously suspected. An analogy could be drawn between these Bitcoin holders and a company's institutional investors, holding for the long run. If an important announcement were to be made, such as a major online retailer deciding to accept Bitcoin, we should expect Bitcoin's value to rocket to new highs within just a few days, or even hours. There simply wouldn't be that many Bitcoins available to be purchased.

Which direction will the Bitcoin roller-coaster go next? It's hard to say for sure, but you'd better hang on!

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