News of the Mt. Gox bankruptcy filing on Friday capped off a tumultuous week — and month — for bitcoin. Once the leading exchange for trading of the virtual currency, Mt. Gox is officially closed for business — and it’s reportedly taken a huge chunk of bitcoins down with it.
So what happened? The Tokyo-based Mt. Gox has been generating negative headlines since early February, when it stopped allowing withdrawals, citing technical problems that, at least at first, seemed they might be temporary. But this explanation didn’t sit well with bitcoin investors or Mt. Gox customers. The currency’s price, always extremely volatile, plunged and some customers even began to protest outside the company’s Japan offices, wielding signs that asked, “Where’s our money?”
It seems they are now unlikely to see that money again, as Mt. Gox says hacking of its flawed computer system could be the almost half-a-billion-dollar-draining culprit.
So is this the end for bitcoin, which sprang into virtual existence in 2009 and has seen price swings from a few cents at its inception to more than $1,000 late last year? (For more on the history of bitcoin, see this primer by Yahoo Finance tech reporter Aaron Pressman.)
Not so fast. Many staunch believers still exist, and some see the Mt. Gox implosion as just an early glitch in what remains a promising alternative — even revolutionary — currency. More than 3,000 retailers in the U.S. alone accept bitcoin payments, and bitcoin ATMs have also come to America.
Earlier this week, Yahoo Finance editor Phil Pearlman wrote that the Mt. Gox failure could actually be bullish for bitcoin. But in order to truly thrive, as Friday’s Daily Ticker post acknowledged, bitcoin may just have to “grow up” and accept that, in order to protect customers, it will also have to accept some form of regulation.
Many questions remain about what really occurred here; earlier this month U.S. federal prosecutors subpoenaed Mt. Gox and other bitcoin-based businesses to gather information on a wave of cyber attacks that also hit other bitcoin exchanges. The big difference: The other exchanges resumed operations.
Graphics/research by Siemond Chan