What goes up must come down: Bitcoin (BTC) has been on a losing streak lately, shedding more than 50% of its value over the past month.
Some consider Bitcoin’s ability to store value as good as gold. But the digital currency’s latest blunders have many wondering whether it will even survive.
Bitcoin’s troubles have a lot to do with the meltdown of Tokyo-based MtGox – what used to be the largest trading platform for the cryptocurrency.
In early February MtGox suspended bitcoin withdrawals, though soon after announced that it was working on resolving the issue.
But on Tuesday the site went offline and now shows a blank page.
According to the Associated Press, the site went bust after “racking up catastrophic losses.”
In a release titled the ‘Crisis Strategy Draft’ which appears to come from the troubled site, though this is unverified, MtGox wrote that “at this point 744,408 BTC are missing to due malleability-related theft which went unnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet.”
In other words, the bitcoins MtGox was storing offline – cold storage – are gone.
“The reality is that MtGox can go banrupt at any moment,” the draft reads.
MtGox will apparently re-brand itself as GOX.
In a statement issued by the “Bitcoin community,” CEOs and founders of various Bitcoin businesses said the MtGox had violated the trust of its users and that the company’s failure “does not reflect the resilience or value of bitcoin and the digital currency industry.”
“As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today,” the statement reads.
One Bitcoin investor with holdings in MtGox told Marketwatch he’s lost about 200 bitcoins – worth more than $27,000 as of yesterday.
“My feeling is [that] they’re never coming back,” he said.
According to the Winklevoss Index, the price of one Bitcoin on Tuesday was $513.59.
A popular Bitcoin forum on Reddit was bustling on Tuesday. User evoorhees emphasized that “lesson is not that Bitcoin is broken.”
“We are building a new financial order, and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world. This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow’s finance, and we put ourselves at risk in doing so.”