Can't Withdraw BTC from MtGox? Trade it for "Real Bitcoins"

Recognizing that "people are pretty sick of the Mt. Gox Mt. Gox Mt. Gox is the name of a Japan-based cryptocurrency exchange that was infamously hacked for 850,000 BTC worth roughly $450 million at the time in February of 2014. During July 2010 Mt. Gox formally launched Mt. Gox launched its exchange and price quoting service. It was subsequently sold to French developer Mark Karpelès in early 2011.Prior to its hacking, Mt. Gox suffered from other security vulnerabilities as early as June 2011. On 19 June, 2011, a security breach of the exchange caused the no Mt. Gox is the name of a Japan-based cryptocurrency exchange that was infamously hacked for 850,000 BTC worth roughly $450 million at the time in February of 2014. During July 2010 Mt. Gox formally launched Mt. Gox launched its exchange and price quoting service. It was subsequently sold to French developer Mark Karpelès in early 2011.Prior to its hacking, Mt. Gox suffered from other security vulnerabilities as early as June 2011. On 19 June, 2011, a security breach of the exchange caused the no Read this Term BTC withdrawal freeze, and are starting to take matters into their own hands", an individual by the name of Josh Jones has done just that.

Inspired by a thread on bitcointalk where users were offering to trade their stuck bitcoins on MtGox, he launched BitcoinBuilder.com which offers trading between MtGox bitcoins, or "GOXBTC", versus standard BTC.

Trading takes place between market participants offering bid/ask orders for the pair. The "Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term" takes a 2% fee from each trade.

Withdrawals are processed once daily, manually. That's where the concept can really add value; until now, the only other outlet has been to convert your GOXBTC to fiat, whose withdrawal has always been far from quick even prior to the BTC withdrawal issues. Indeed, a good part of GOXBTC's discounted value stems from fiat's new-found "appeal" of quicker cash-out than GOXBTC, aside from the fact of GOXBTC's inherent value is getting called into question. It will be interesting to watch how this alternative outlet may release downward pressure on GOXBTC/USD, although this may have to wait as indications of GOXBTC withdrawals , sending its value soaring.

24-hour volume is currently listed as 7808 GOXBTC, which is pretty impressive for an exchange barely 2 weeks old. This is 400x that of Vault of Satoshi. At more than 300 GOXBTC an hour, this exceeds BTC volumes on MtGox itself during from its more stable days.

Indeed, Jones claims that demand has exploded to the point he has had trouble keeping up with various housekeeping and site maintenance. He seems to be highly transparent thus far in settling concerns from users.

One GOXBTC is currently trading at 0.56 BTC. This translates to $342 assuming a BTC/USD rate of $611 as currently traded on BTC-e. GOXBTC/USD is currently trading at $305, making for a 12% premium over current rates on MtGox.

Arbitrage is likely avoided for the same reason it it was avoided during Gox's "good old days": traders are willing to pay more to get "real bitcoins" which can be cashed out fairly quickly rather than fiat which cannot. During those days, GOXBTC also traded at about a 12-20% premium relative to BTC on other exchanges.

The trading has caught traction with Bitcoinity.org, who has set up a live chart tracking GOXBTC/BTC:

The new concept can be likened to the sale of bad or high-risk debt in bond markets where it is traded to a discount relative to its face value.

Deposits of GOXBTC are sent to a dedicated GOXBTC address, which remains internal to MtGox. Once traded into "real BTC", withdrawals can be made to any BTC address. Users are urged to exercise caution not to accidentally deposit real BTC into the MtGox address.

If MtGox were to continue digging itself out of its mess and GOXBTC/USD to gradually converge toward BTC/USD, it will become interesting to follow the how prices, volume and even the existence of this exchange plays out.