Yesterday, Mt. Gox went offline and it seems the site is on its very last legs. Over 750,000 BTC have seemingly vanished and the Bitcoin community is scrambling to make sense of it all. That amount is valued at somewhere between $350 million and $450 million and represents about six percent of the total currency.
While Bitcoin’s price dropped significantly due to the news, it has bounced back significantly, proving the relative resiliency of the digital currency.
Of course, when something like this happens the community understandably looks to its leaders for guidance. While there is no one leader or owner of Bitcoin, and its inventor is, at best, as real as King Arthur, there have been some people who have in one form or another, been tapped to lead the Bitcoin community.
These are their best and most significant reactions on the Mt. Gox shutdown. Most of them are on Twitter, except Andreas Antonopoulos’ comment, that comes from his official blog.
First comes from Roger Ver, an Angel investor in blockchain, BitcoinStore, BitPay, Kraken “and more.” He points out that holding your money in exchanges isn’t always the best way to store bitcoins.
— Roger Ver (@rogerkver) February 25, 2014
Ver is correct, if Bitcoins are moved into a dedicated bitcoin wallet they become far more secure. Exchanges basically have control of your bitcoins when you hold them in an exchange, similar to how a bank controls your money when you put cash in a savings account. If you want to be really secure with your bitcoins, you can put them into what is called “cold storage” and store them in a wallet that is installed on a computer that is disconnected from the internet, or you can even print them onto paper and store them the old fashion way, under your mattress.
Next is Jon Matonis, the Executive Director of the Bitcoin Foundation and the Editor of The Monetary Future. He compares the recent Mt. Gox events to the financial crisis of 2008 and the too big to fail (TBTF) banks.
— Jon Matonis (@jonmatonis) February 25, 2014
It’s an interesting point for sure, but it still doesn’t reflect positively on the community. If you are comparing Bitcoin’s problems to the stock market, then Mt. Gox is its first Charles Ponzi, the exact kind of person one would be trying to avoid when moving to a cryptocurrency. He has a point that the regular market is full of this kind of thing and that a bank would have been bailed out by the taxpayer. However, that is of little assurance to people looking for a more trustworthy place to store their money than the banks.
Ben Davenport is an investor in BitPay and itBit and was the co-founder of Beluga, a messaging app that was acquired by Facebook in 2011. Davenport pokes fun of the canned statement posted on Mt. Gox’s website.
MtGox is “monitoring the situation and will react accordingly.” Pheeeew! That’s a relief!
— Ben Davenport (@bendavenport) February 25, 2014
Yes, we are all very relieved that Mt. Gox has it all under control.
Last, we have Andreas Antonopoulos, a security expert for blockchain and a verifiable Bitcoin evangelist. Some have even called him the “Bitcoin Jesus” although he has expressed a strong distaste for that title.
On his blog he talked about the potential for a Mt. Gox recovery, he isn’t hopeful.
Everything I see makes me believe that Gox will never recover and that the funds are most likely lost.
I am devastated by the impact this will have on customers of Gox and I am angry at the irresponsible behavior of Mt. Gox and especially [Mt. Gox CEO] Mark Karpeles that will damage the lives of many people.
As for Mt. Gox’s earlier claim that most of its funds were in cold storage, Antonopoulos said that:
[I]t appears their “cold storage” was not in fact “cold” – which is either a stunning misrepresentation of their security or an outright lie. “Cold storage” does not “leak”. The idea that the funds were stolen, unnoticed, from cold storage, due to Transaction Malleability, strains the credulity of even the most gullible observers.
Harsh comments, but it is hard to argue with the logic. If bitcoins are stored in cold storage, that is, in a computer not connected to the internet, it would be pretty difficult for a nefarious party to access them.
As for Mt. Gox’s reaction on Twitter? It has deleted every tweet on its account. Talk about taking your ball, or in this case, everyone’s bitcoin, and going home.