Mt. Gox is one of the first bitcoin exchanges, and historically the most popular one. It was launched in 2010, and was handling 80% of the world Bitcoin transactions. Unfortunately, on Feb 24th 2014, the same day our group did the presentation about digital payments, Mt. Gox suspended trading and filed for a form of bankruptcy in both Japan and US. The company claimed that 850,000 Bitcoins had been lost or stolen from its exchange, including 750,000 belonging to customers. That amount is worth $477 million!
So how can half a billion dollars vanish into air in a flash? According to Mark Karpeles, founder of the Mt. Gox, saying the Bitcoins was lost "due to weaknesses in the system". The coins is missing because of a long-known security flaw called transaction malleability that can enable fraudulent withdrawals in some cases. Bitcoins transaction is really hard to trace. There is no identifying information attached to a bit coin address showing who is transferring the coins. Mt. Gox is facing some serious problems now and the long-term impact of its downfall on the Bitcoin industry remains to be seen.
The big question, what is the future for Bitcoins? Do you think Bitcoins will still have a future? What do you think about Mt. Gox or of Bitcoins?
Sources:
http://money.cnn.com/2014/02/25/technology/security/mtgox-bitcoin/
When you presented on Bitcoins in class I thought it was a cool idea, however, I would not trust this system for my money. I have a hard time trusting the internet, and this confirms my fears. I believe that after reading this information Bitcoins will no longer be used or seen as a way of money in the future.I think that Mt. Gox is in trouble and I am interested to see what will happen. For example, will there be any legal consequences?
ReplyDeleteBitcoin isn't accepted as a unit of currency. Therefore with legal consequences, there is a huge debate. It's almost a "at your own risk" deal. You can read more about the case with the links provided above or read more on bitcoin and the legalities on Forbes with the following link: http://www.forbes.com/sites/cameronkeng/2014/01/06/bitcoin-is-not-anonymous-and-is-always-taxable-part-2/
DeleteBitcoin will eventually become a main currency due to developing technology. But one barrier they will have to overcome is making the public comfortable and secure in using Bitcoins. Todays society is still very cautious when it comes to online transactions and they will have to persuade us that their new developments are more secure than they have been in the past.
ReplyDeleteIt's very true. I am not a Bitcoin advocate. I definitely agree with you that with the technology now, it's hard to really say that digital currency is a risky deal. Money is money and we work hard to earn it. To invest hoping for a huge return at such risks is hard to decide.
DeleteBitcoins are incredibly un-secure. If you don't have them backed up, such as on a external hard drive or flash, then any hacker over the Internet can steal them from you. Sometimes when trading them they are lost, like this example, and can't be recovered. I believe the current exchange rate is 1 Bitcoin for 588 USD. That's quite an expensive loss. I don't believe they will be used as a main currency anytime soon. At least not until they are protected by a Government Agency.
ReplyDeleteThat's exactly it. Bitcoins are not even recognized as unit of currency. It doesn't meet the requirements. But being that it isn't a unit of currency, there are tax benefits to using Bitcoins. So as much bad, there are also good things about it. It's really up to you if you could trust Bitcoins or not.
DeleteI don't think digital currency will ever become a mass form of currency. The article here states the inherent flaws in using a program to mine currency. No programmer in history has created a perfect program that can withstand the test of time and change in hardware, and digital currency will be no different. The fact that this currency must be kept on physical storage makes it extremely vulnerable to not only external threats (Viruses, Trojans, BSOD).
ReplyDeleteNo one is perfect, every system is flawed. Truly. Bitcoin has a lot of controversial debates and issues circulating it but there are the creators and people who believe in the system. It works for them. That's the risk you have to take. But as business majors, we all take risks. I wonder if people could see that side of it and start to create more digital payments like Bitcoin. I think we will start to see more of Bitcoins as much as there are lots of debate against it.
DeleteThe internet is un secure in general. Hackers alway find a way to hacks into almost any data base on the web. Epsilon, Sony, Target, Yahoo are some of the big companies that have been hacked into. So of course I don't think Bitcom is secure and safe to use at all.
ReplyDeleteThis is one of my favorite topics , I have never heard about bitcoins before you guys presented about it. after hearing plenty of stories about bitcoins getting lost or stolen i think we can all say that the internet is not a safe place to keep our money..
ReplyDeleteI am glad that we were able to introduce Bitcoins to you ! There are tons of digital payments that are out there and not everyone knows about it. You should read up on it. It's very good to know about because it's a new age and life is really changing. Digital payments are on the rise!
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