Since the introduction of Bitcoin back in in 2009, the cryptocurrency has certainly had its fair share of highs and lows. After the downfall of the leading Bitcoin exchange, Mt Gox, in February 2014, we investigate how it affected Bitcoin, and how it will fare for the future of the cryptocurrency.
Hi there and welcome to another episode of MyCurrencyTransferTV. So we’ve got another Bitcoin episode lined up for you today, to bring you the latest update on the currency, how it’s faring with the recent downfall of Mt Gox and what the future holds for Bitcoin.
So what happened to Mt Gox?
Mt. Gox was a Tokyo-based company which took deposits in dollars, yen, and a few other currencies and also most commonly Bitcoin. The company allowed people to trade Bitcoin for dollars etc and vice versa. Mt Gox made their profit by charging traders a commission, and so earned a percentage of transaction volume. The transaction volume was exceptionally high, making Mt. Gox the leading Bitcoin exchange for over a year. However, this all changed some weeks ago. On 7th February 2014, Mt Gox began to halt Bitcoin withdrawals. This went on for around 2 weeks and of course people freaked out, because Mt. Gox now allowed neither real money nor internet money to leave their company. In that period, MtGox continued to accept trades and earn commission on them. Users couldn’t cash out their Bitcoins, but they could still sell them on the site and attempt to withdraw their money.
What did this mean for Bitcoin?
As a result, the price of Bitcoins on the site plummeted over the fortnight, potentially lessening Gox’s liabilities while earning the failing company commission fees. The obvious way Bitcoin has been affected can be seen in market prices. Right now Bitcoin is down 18% from about 6 weeks ago when the trouble started, quite simply as a result of the downfall of Mt Gox. The challenges Bitcoin faced in the last month represent what happens when you have such a valuable currency in such a vulnerable and chaotic environment. Bitcoins remain an unregulated currency with high risks. Of course, other Bitcoin exhanges are all just as likely to fall to hacks and bugs due to the insufficient level of security used for trading a cryptocurrency.
How does this fare for the future of Bitcoin?
Bitcoin continues to face hurdles as it attempts to become the big currency of the digital age. And it is highly likely that the damage to public perception to this class of technology could put it back 5~10 years, and cause governments to react quite harshly in response. However, on the positive side, most of the Bitcoin community seems prepared to try and separate perception of Mt Gox from that of the currency and concept itself. To add to this, Bitcoin is empowered by the immense hype it continues to receive and actually “What is Bitcoin” was one of the most popular search terms in 2013.
Personally, Bitcoin as a currency, may or may not be revolutionary, but the technology behind it, the block chain, is likely to leave an impact. Ultimately the success of Bitcoin as a currency and commodity will come down to how many merchants use it and customers demand to pay with it. It needs to be regulated for it to be accepted, so as long as the users & merchant numbers grow, governments will have to pay attention.
So we hope that this video has given you a breakdown as to the impact the fall of Mt Gox has had on Bitcoin. We’d love to know what you think and how you believe Bitcoin will fair later on this year. Why not send me a direct email at [email protected] or tweet us at @mycurrencytrans
Thank you for watching and goodbye
Written by Sofia Kluge on Google+
