Leading bitcoin exchange Mt Gox has collapsed. An apparently authentic internal Mt Gox memo says 744,000 bitcoins (6% of all bitcoins in circulation, worth $350 million) held by them for customers have been stolen. Bitcoin as we know it may be dead. However, deep pocket investors and banks may create new exchanges. Things are hugely in flux.
For several weeks MtGox customers have been affected by bitcoin withdrawal issues that compounded on themselves. Publicly, MtGox declared that “transaction malleability” caused the system to be subject to theft, and that something needed to be done by the core devs to fix it. Gox’s own workaround solution was criticized, and eventually a fix was provided by Blockchain.info. The truth, it turns out, is that the damage had already been done.
At this point 744,408 BTC are missing due to malleability-related theft which went unnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet.
Golly, what a convenient leak that is. Where did the bitcoins go? And the question that must be asked, were people at Mt Gox complicit in the theft? This certainly sounds like organized crime.
Marc Andreessen, a billionaire, has long supported bitcoin. Now may be the time for big money to move into it, buy out or make irrelevant the independent exchanges, and create new exchanges run by big banks. I’m guessing those who use bitcoin now would be highly suspicious of this.
The uncertainty surrounding Mt. Gox comes just as a New York firm, SecondMarket, was announcing plans to create a new exchange with some major banks as possible partners.
Just recently, Silicon Valley venture capitalist Marc Andreessen wrote about his belief that Bitcoin was one of the Internet’s most significant developments.