The Bitcoin mystery that is Mt. Gox
The audio above features Marketplace Tech host Ben Johnson in conversation with Kai Ryssdal. For some context on the Mt. Gox conundrum, read on:
So far this has not been a good year for Bitcoin. In fact, today appears to be a terrible day for Bitcoin's most prominent exchange, Mt. Gox.
The website was recently hacked and criticized for not plugging a long-open security hole. And news of another apparent theft from the site this week has many expecting Mt. Gox to file for bankruptcy.
So how did such a major player in the Bitcoin market take such a tumble? To understand, it helps to start at the beginning.
Mt. Gox began life as an online platform to trade Magic cards. Yes, those magic cards. In fact, the name of the site is an acronym that stands for "Magic: The Gathering Online Exchange." It was started by an unemployed hacker named Jed McCaleb. In 2010, McCaleb switched the site's function to handle Bitcoin-to-U.S. dollar trades. Over the next year, Mt. Gox became hugely popular, leading to the sale of the site to Tokyo-based hacker Mark Karpeles in 2011. Under Karpeles' leadership, Mt. Gox became a trusted entity in the world of Bitcoin.
Then came 2013. Users began to report problems accessing their funds, including delays of weeks and months. Several times last year, Mt. Gox suspended services completely. According to an article in Wired Magazine, Karpeles’ lack of business experience began to show as goodwill towards the site began to diminish in the Bitcoin community.
Cut to today's shut down.
With a theft totaling over $400 million and a huge Bitcoin price drop, Mt. Gox is once again in trouble. Yesterday, the website was totally blank. Today:
Values for the crypto-currency plummeted as competing Bitcoin exchanges quickly distanced themselves from the former Bitcoin super power.
It's worth mentioning that the very companies associated with the anti-Mt. Gox sentiment – Coinbase, Kraken, Bitstamp, BTC China, Blockchain, and Circle – are the very exchanges that Bitcoin enthusiasts might turn to, now that the once powerful Mt. Gox seems on its way to extinction.
So the Bitcoin saga continues. And for Mt. Gox, it seems like the magic may be gone.
So now the future of Bitcoin is uncertain. What do you think? We want to hear from Bitcoin investors, businesses and enthusiasts. Why do you use Bitcoin? Do you still have faith in crypto-currencies?