In just one day, major bitcoin exchange website Mt. Gox has flatlined. So … what happens now?
Credit: CoinDesk.com
Starting in the earliest hours of Tuesday, the Internet was in a fervor after Mt. Gox, once the world’s largest Bitcoin exchange, abruptly disappeared and wiped itself clean. Not only did the website disappear— leaving a blank page with no further information— but Tokyo-based Mt. Gox also completely deleted its Twitter account and cannot be reached for comment.
So what does this actually mean? Here’s what we know:
Mt. Gox first suffered a massive security breach that crashed the market price in 2011 (the then-hugely popular exchange issued an apology and covered the loss). It may be only recently, following years of smaller crises and security threats, that the actual extent of that cyber attack is playing out— although when and exactly how the breach occurred remains unestablished.
Yesterday, a branded “insider” report— titled Crisis Strategy Draft— was leaked, alleging that the current total loss may be 744,408 BTC or roughly $350 million. That’s about 6 percent of the existing virtual currency vanished.
Six major exchanges in the Bitcoin market collected to prepare a written statement distancing themselves from the embattled Mt. Gox on Monday, saying: “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.”
The statement appeared as a response to Mt. Gox formally severing ties with the Bitcoin Foundation and deleting its Twitter feed Monday.
On Sunday, CEO Mark Karpeles resigned as head of the exchange company.
Internet scouts quickly spotted a new clue lurking in the lines of code on MtGox.com: This further bolsters suspicion that a major upheaval is in the works.
One emerging theory is that Mt. Gox is aiming to rebrand as Gox.com, which is supported by the purchase of the domain name on Feb. 24 as well as the previously mentioned Crisis Strategy Draft.
If you owned Bitcoins that were held with Mt. Gox, it’s very possible that the company’s insolvency will mean that you won’t ever see your investment, as the exchange is not protected under FDIC laws that insure banks.
But even if your Bitcoins are stashed under your virtual mattress, their worth is still quickly diminishing as the virtual currency market continues to quake under scrutiny of security measures.
Online marketplace SecondMarket released a statement saying that it plans to become the first U.S.-based Bitcoin exchange site, managed from NYC. The New York Times reports that the current plan, improving upon inadequacies demonstrated by Mt. Gox, is to create a platform more like the New York Stock Exchange, where only large institutions can join and trade.
The Bitcoin ideology itself, some are saying, may be set back as far as 10 years if Mt. Gox conflates hard-won trustworthiness in the system and otherwise causes the industry to crash. But in truth, the crisis is far-reaching, and its widest implications are not yet known.
As of 6:30 a.m. EST, CoinDesk.com values Bitcoins at $492.50. This follows hours of bobbing valuation, ranging from a high of $545.32 to a low of about $418 right when the Mt. Gox shutdown scandal broke.
