As One Bitcoin Exchange Dies, Throw the Baby out With the Bath Water

Banking, finance, and taxes

Published: February 25, 2014 10:30 am

Last Updated: February 25, 2014 11:04 am

So, how silly do the people who bought Bitcoin at $1,000 or higher feel now? That is the question that needs to be asked — as well as how eager these people will be to chase bitcoins elsewhere. Bitcoin has proven to be vulnerable to a hack that has allowed bitcoins to mysteriously be taken from their owners. While the Bitcoin loyalists may hate Bank of America, Chase and other banking giants, who can they call now to see about getting their “money” back?

The MtGox website used to be the top Bitcoin exchange, and now the website is simply gone. MtGox.com is now a white screen with nothing there. Reports were out that hundreds of thousands of bitcoins had been stolen over time and that MtGox was filing for bankruptcy.

The Bitcoin Foundation said upon MtGox’s resignation:

Effective immediately, Mt. Gox has submitted their resignation from the board of directors. We are grateful for their early and valuable contributions as a founding member in launching the Bitcoin Foundation. MtGox Co. Ltd. (Japan) held one of the three elected industry member seats. Further details, including election procedures, will be forthcoming.

Bitstamp is picking up where MtGox left off. The exchange issued a statement trying to calm the fears. The group said Bitcoin was still working, with a bright future, and said that losses were limited to MtGox. Bitstamp said that its customers are safe and that its business is solvent, and also that Bitstamp is not subject to the transaction malleability vulnerability that MtGox was subject to.

What is amazing is that bitcoins are still worth $505 or so, even after almost a $31 fall. Bitcoin looks like it is on the way to changing its name to $#itcoin. How many people who just got burned by MtGox will really go throw new money into the other Bitcoin exchanges and start over?

It is too bad that a virtual currency has yet to evolve after this much time has passed. There is obviously a demand for a global virtual currency, so maybe the powers that be can make a universal currency. The argument that it can be used for crime or terrorism is just not really worth stating — cash and gold can be used for that too, and these are hard to track as well.

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