Mt. Gox Shutdown Puts Bitcoin Investors on Edge

1681 26th February, 2014 Poker Business & Finance
Mt. Gox Shutdown Puts Bitcoin Investors on Edge

The closing earlier this week of Mt. Gox, formerly the largest Bitcoin exchange worldwide, has left some investors in the digital currency quite anxious.

Mt. Gox, headquartered in Japan, closed rather suddenly Monday, apparently the result of DDOS attacks and phantom transactions that have also been felt at other websites. Those who visited the Mt. Gox site were met with a posting which stated that "a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.”

The value of Bitcoin sharply declined, falling to some $470, with a number of investors seemingly hitting the panic button. It didn't help that a significant number of media reports hinted that in light of the problems facing Mt. Gox, Bitcoin's demise was likely just around the corner.

Mt. Gox customers were clamoring for more information from the exchange. With no information forthcoming, a number of other Bitcoin sites teamed up to release a joint statement to ease the fear that was beginning to take hold in the Bitcoin community. The statement read as follows:

"This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today."

Bitcoin's value managed to gain some strength following that reassurance and is now trading at roughly $583, according to CoinDesk. The digital currency has fluctuated wildly in the last three months, first reaching an all-time high in mid-November of $400. Two weeks later, it was trading at more than $1,200.

Though the issues at Mt. Gox are troubling, the gloom and doom currently surrounding Mt. Gox and Bitcoin may turn out to have a silver lining. As the joint statement offered, the industry can learn from mistakes made and become stronger as a result.

The latest statement from Mt. Gox, dated today, comes from CEO Mark Karpeles. Although not very informative or reassuring to Mt. Gox customers, Karpeles said:

"As there is a lot of speculation regarding Mt. Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues."

Karpeles may not be part of the solution if the authors of a "Crisis Strategy Draft" have their way. It has not been made clear exactly who is behind a 4-part plan outlined to save Mt. Gox. But one of the recommendations is that Karpeles step down while new advisors take over in an effort to restructure and re-brand the exchange after one month of remaining offline.

Bitcoin has been gaining a wider global welcoming as of late, including the online gambling industry. But as stated in the draft that aims to resolve the current problems, the Mt. Gox issue may cause "damage in public perception" to Bitcoin that "could put it back 5-10 years" with regard to mainstream acceptance.

 

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About The Author

Charles Rettmuller

Charles Rettmuller

Charles has been an avid poker player for a number of years, both live and online. He holds a degree in journalism and previously worked as a reporter for a Chicago-based newspaper...

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