Feb 26, 2014

How will the closure of Mt. Gox impact BitCoin?

Mt. Gox, which was the largest trading platform in the world for BitCoins, has apparently closed down. Its website is a blank page, and the CEO has resigned from the board of the BitCoin Foundation. I’ve seen numbers thrown around claiming that $367 million worth of BitCoins may have been lost. Could this threaten BitCoin’s survival as a digital currency?

Bitcoin seems to be a bit of a mess right now, I wouldn't put any money into it.

Investing in Bitcoin has a dangerous flip side

"● It’s a high-risk commodity because of the volatility in its price.

● It’s not backed by any central banks worldwide and has no tangible value.

● It’s an experimental concept.

●It’s unregulated and does not provide protection for consumers.

● Consumer disclosure rules and regulations are limited or nonexistent."

While it may have some short term impact...the exchange rate for BitCoin did drop somewhat after new of the Mt. Gox breach...I doubt it will have lasting impact. There has been increasing criticism of Mt. Gox over the past year or so, as the site experienced repeated trouble, some minor and some significant. There is some thought in the BitCoin community that the disappearance of Mt. Gox is a good thing, since it was one of the weakest links in the system anyway. It also makes it clear how exchanges should NOT operate, and should actually result in a more secure BitCoin environment for the future. 


There are always failures in any system. Banks have collapsed in the past, and that clearly did not result in the demise of the dollar. Of course, deposits at banks are generally insured against loss, which was not the case at Mt. Gox, but I have to believe that most of the people using Mt. Gox were aware that they were not making a zero risk investment with BitCoin.

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