With the recent shattering news of the theft of 744,408 BTC (Bitcoins) from the Mt Gox Exchange having hit the news recently, what is the future of the poster child of cryptocurrency and self-touted future of money?
For those of you that are unfamiliar with what has transpired at Mt Gox, I will go through the details. Mt Gox is one of the exchanges that allow investors to convert national currency such as the US$ into BTC. Where the problem has occurred is that someone has corrupted the IT system of the exchange and has been slowly steeling the Bitcoins by taking small amount with each transaction. The main problem that is facing Mt Gox is that this has been happening for seven years and was only now found out. This has led to Mt Gox facing bankruptcy and the investors that used their services are likely to lose all of their money. With total liabilities equalling US$55 million, plus 744,408 BTC that was stolen and has to be repayed customers it does not look good. When you combine this with the fact that they only have US$32 million and 2,000 BTC to repay these debts, Mt Gox has no choice but to declare bankruptcy
How Where The Bitcoins Stolen?
A talented thief has been able to find a whole in the systems of the exchange and has been sifining off the currency slow little by little, similar to what we have seen in early days of electronic banking for national currencies. One of the systems that has been put into place by the creators of Bitcoin is the recording and verification of the transfer of BTC. It appears that not only has the Mt Gox’s systems failed but the Bitcoin processing system has failed to recognise the fact that the coins that where stolen where not legitimately acquired.
What Is The Future For Mt Gox?’
The CEO of Mt Gox has announced his resignation and will soon be replaced. The company’s board of directors are determined to ensure the survival of the exchange and are actively working to resolve the issue and relaunch the business under the name of Gox, like a Pheonix out of the ashes of what could possibly be the down fall of the this fledgling currency. As part of the relaunching of the business the exchange will be on hold for one month after which it will allow restricted trading. It hopes that it can trade its way out of the debt that it has accumulated.
What Is The Future Of Bitcoin?
With Bitcoin taking a hit after the news dropping to around US$400 per BTC from around US$580 it took an initial hit. With prices returning to around US$580 does this mean that Bitcoin still has a future? I am not so sure, as there are still a lot of people that have money invested into equipment to mine more BTC and they are still requiring to sell the currency generated to make a profit. I am not as optimistic, as I believe that this incident is just the start of some real pain to come for those heavily invested into Bitcoins. Only time will tell but I believe that we may see some more announcements coming in the not too distant future. Stay Tuned!
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