Notes of Note from John F. Ince

Like other Bitcoin evangelists, Ken Shishido is ready to write off the money he lost in the bankruptcy of Tokyo-based virtual currency exchange Mt. Gox as the price of revolutionising global finance.

“In the early days of the automobile, there were traffic accidents because you didn’t have traffic lights or pedestrian crossings,” he said hours after Mt. Gox said on Friday it had lost up to half a billion dollars of investor funds, including some of his own. “But we didn’t ban automobiles.”

Shishido, who lives in Tokyo, was one of about 10,000 investors in Japan who became creditors in Mt. Gox’s bankruptcy when the company capped a tumultuous period of weeks by filing for bankruptcy on Friday.

(Also see: Mt. Gox Bitcoin exchange files for bankruptcy, hit with lawsuit)

He lost about a tenth of his investment in Bitcoin in Mt. Gox, he said, and expected none of that money to come back.

Early enthusiasts for the five-year-old crypto-currency were drawn to its revolutionary ideals of transparency and a lack of central or official control. There was also a heady mix of geek chic – the currency is “mined” through a process involving complex computer math – and laissez-faire Austrian economics.

Mt. Gox’s loss is eye-popping but so too is the number of creditors – 127,000 – in what had been the world’s biggest exchange. That means the average trader lost the equivalent of $3,500 in the bankruptcy at current Bitcoin prices, assuming no money is recovered in the court-supervised restructuring in Tokyo set to play out over the following months.

Value spikes, crashes, takes off again

Bitcoin’s value spiked in April 2013 as the crisis-racked Cyprus government clamped down on withdrawals and seized deposits, rattling faith in “fiat” currencies.

The crypto-currency soon crashed back. Late last year, as the number of exchanges and the virtual money’s name recognition grew, it took off again.

Bitcoin gained wider acceptance – and took off again in price – late last year. It attracted high-profile proponents, like the investor twins Cameron and Tyler Winklevoss of Facebook fame, and speculators.

(Also see: Mt. Gox: A quick rise and even faster fall)

Investors interviewed after the exchange collapsed faulted the Tokyo exchange and Mt. Gox’s French CEO Mark Karpeles, but they remained committed to the Bitcoin idea.

Roger Ver, a big investor in Mt. Gox, said he did not know if he would ever get any of his lost Bitcoin back.

“But the important thing to realize is that Mt. Gox is just one company using Bitcoin. The Bitcoin technology itself is still absolutely amazing,” he said.

“Even if one email service provider is having a problem that doesn’t mean people are going to stop using email. It’s the same with Bitcoin.”

via Bitcoin true believers unfazed by losses in Mt. Gox collapse | NDTV Gadgets.

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