“MtGox had to die for Bitcoin to thrive. Its former role from early Bitcoin days has been supplanted by better, stronger entities.”
— Marc Andreessen, in a tweet Tuesday about the demise of Tokyo-based bitcoin exchange Mt. Gox, which had halted transactions since the first week of February and whose website is now down. Japanese authorities are now reportedly looking into Mt. Gox’s collapse, and a couple of reports say federal prosecutors in New York have subpoenaed the exchange. Mt. Gox users have lost more than $300 million in bitcoin, some reports say. Mt. Gox CEO Mark Karpeles told Reuters that an official announcement will come “soonish.”
So what’s next for bitcoin, the online currency that has increasingly seen wider adoption?
The stance of Andreessen, whose venture capital firm Andreessen Horowitz has invested in the bitcoin industry, isn’t surprising. Also not surprising is the joint statement from other bitcoin exchanges, including San Francisco-based Coinbase: “In order to re-establish the trust squandered by the failings of Mt. Gox, responsible bitcoin exchanges are working together and are committed to the future of bitcoin and the security of all customer funds.” Others who are still bullish about bitcoin include Union Ventures partner Fred Wilson, who wrote Tuesday that bitcoin’s very nature will help it weather this storm: ”The wonderful thing about a globally distributed financial network is that if one of the nodes goes down, it doesn’t take the system down. Bitcoin’s architecture is similar to the Internet’s architecture. There is no centralized control point. No single point of failure.”
But some point out that since bitcoin is unregulated and the practices of different exchanges vary, another Mt. Gox-type breakdown is possible. Could all this lead to the maturation (and regulation) of the virtual currency?
Illustration from Chicago Tribune/MCT archives