Since its inception, Bitcoin has been volatile. Its community has seen many uplifting successes and been marred by many failures including online thefts of the currency worth millions of US dollars. Lately, however, news has been more grim than uplifting: Mt. Gox, Bitcoin’s most dominant exchange, has declared bankruptcy; a Bitcoin bank called Flexcoin has closed its doors and is now being investigated by Canadian police; and tragically, Autumn Radtke, the CEO of First Meta Ltd. (another Bitcoin exchange) was found dead in her apartment in Singapore last week. These unfortunate developments have left many in and outside of the Bitcoin community whether or not its demise is imminent or if, given the perseverance and will of the community to keep the crypto-currency afloat, the demise of Bitcoin is impossible.
Mt. Gox was originally a market for “Magic: The Gathering” trading cards, but later shifted its focus and became one of the first ever exchanges for Bitcoin. Mt. Gox made its switch to Bitcoin in 2010, a time when the crypto-currency was not very well known. As such, it faced little competition and rapidly ascended to the dominant position above other Bitcoin exchanges, but that also meant it was a high value target for hackers. In June 2011, Mt. Gox had $8.75 million worth of Bitcoin stolen in an online attack by hackers that used to stolen passwords to penetrate Mt. Gox. To make matters worse, last week Mt. Gox filed for bankruptcy in Japan because it said it couldn’t account for about $474 million worth of Bitcoin (100,000 of its own and 750,000 of its customers) as well as $27.3 million in cash customer deposits, with a grand total of roughly $501.3 million gone missing. No one is quite sure exactly how Mt. Gox lost 850,000 Bitcoin (yet), but many speculate it has to do with something called transaction malleability, a well-known and long-standing security flaw that can allow for fraudulent withdrawals. However some critics are throwing around accusations of fraud while others are saying Mt. Gox was simply poorly managed.
Following Mt. Gox’s declaration of bankruptcy, an online Bitcoin bank based out of Edmonton, Alberta, Canada called Flexcoon has shut its doors after announcing that it had lost 896 Bitcoin (as much as $600,000) to a hacker theft; a loss which it reportedly does not have the resources to recover from. Flexcoin’s customers that were affected are not given many options to get their funds back, a trend that seems to be consistent with most Bitcoin thefts. Due to the cryptic nature of Bitcoin, any attempts at recovering stolen ones are very rarely successful. The latter has contributed significantly to the coin’s reputable volatility and has continued to bring into question whether Bitcoin could collapse at any moment or whether such demise is impossible.
Perhaps the most tragic of recent news, however, is the death of Autumn Radtke, the CEO of First Meta Ltd., another Bitcoin exchange. She was found in her apartment on the morning of February 26th after police received an emergency call from the building. Police have initially ruled out foul play but are still investigating her “unnatural death”. Neighbors told police they thought she jumped from an apartment, while Steve Beauregard, CEO of Bitcoin processor GoCoin and who lived in the same apartment complex and was friends with Radtke, told Reuters that her apparent suicide was related to a lot of other small factors going on in her life, but nothing to do with business.
In November, Bitcoin saw its highest value with each coin being valued at over $1,000. After the Mt. Gox fiasco, the value dropped to around $660 and as of today, March 6th, the value is around $630. Yet, despite this drop in value and this series of unfortunate events, the Bitcoin community has been rather optimistic, with many already looking forward from this bad news with strong confidence in Bitcoin’s perseverance and integrity. It is true that there is still plenty of room for bad things to happen in the world of Bitcoin, but the fact that it still has not collapsed amid all of this unfortunate news is a testament to its continued success and support from its investors. As such, the demise of Bitcoin seems to be far off from imminent. Rather, it seems like Bitcoin will be around for quite some time, continuing on its roller-coaster ride of ups and downs.
By Taylor Schlacter