Leading bitcoin exchange MtGox's sudden online disappearance caused panic in the online bitcoin community as $666 million remains unaccounted for
Tuesdaynight saw MtGox, one of the world's largest bitcoin exchanges, suddenly go offline yielding much suspicion. The firm disallowed withdrawals from their exchange over two weeks ago, claiming that a bug in the bitcoin software placed their customers at risk. The online currency's other Japanese regulators claimed they were powerless in stopping the free-fall in the currency's value following MtGox's disappearance.
The firm fell under scrutiny shortly after disallowing withdrawals as MtGox CEO Mark Karpeles withdrew from the Bitcoin Group, an organization made by leading bitcoin exchanges aiming to create viable security for the online currency.
As of Tuesday, the MtGox website, www.mtgox.com, only opened a plain white page offering no explanation for the closure of the site.
The site's sudden disappearance only widens the debate of the crypto-unit's security.
The spokesman for Japan's financial services agency simply said "We are not in position to take action" in regards to the disappearance of the massive bitcoin exchange's disappearance.
Bitcoin's value was quoted at $522 shortly before MtGox's disappearance, and as of Tuesday the online currency dropped to $135 per unit according to the CoinDesk bitcoin price index, an agency that follows the price and interactions of the currency in major exchanges.
In January a bitcoin was worth more than $900 at MtGox, one of the world's oldest exchanges of the unit. Unpredictable influxes in the fully independent currency's value have become common occurrences as there are no administrative bodies tied to any banking or governmental organizations.
Units are generated by a complex computer algorithm designed by one or more anonymous people in 2009 with a global cap on the eventual number of bitcoins set at 21 million units. Proponents of the independent currency claim that due to its unbound nature, the currency offers an efficient and anonymous way of transferring and storing monetary value, though the currency has come under fire from economists emphasizing its instability and vulnerability to theft. The currency is also looked upon negatively because the online black-market website Silk Road allows its use when purchasing drugs or weaponry, leading Bitcoin to attract shady individuals.
Though MtGox is yet to respond to any requests for comments after going offline, last week they claimed that withdrawal services would resume after they "relocate" their headquarters within Tokyo to a "more secure" location.
No specific information was as to what security problems MtGox was facing.
MtGox had earlier assured customers that their assets were safe, claiming that they had made progress on patching the software issues that allegedly prevented withdrawals from clients' online wallets.
Bitcoin supporters say the digital currency itself is safe and the problems lie with MtGox, which they claim cannot process a high volume of transactions.
Small protests were held outside the MtGox headquarters in Tokyo but reports claim that the firm is yet to confirm that client assets are in fact safe.
MtGox was in possession of 740,000 bitcoins which were valued at $900 each for (a total of $666 million) at the time they froze withdrawals.
If MtGox does not reume active operation, its metdown will result in the biggest blow the stiving online unit has faced to date, putting its future at risk.
Mt.Gox's collapse would endanger bitcoin
Headof the New Media department at Istanbul's Kadir Has University Ismail Hakkı Polat had this to say on bitcoin: "Bitcoin is a currency that has no time or locational constrictions. Since it is in the global market already, there is no situation in which it will directly affect the Turkish markets. "
"Bitcoin trading in Turkey began around six to seven months ago, when BTCTURK.com opened. The website operates out of Turkish Cyprus and trades bitcoins for the Turkish Lira."
"Mt.Gox is the world's largest bitcoin exchange market. It is not a stock market like operation. Bitcoin trading is simply a method of fiber-currency trading. Bitcoin values are determined by supply and demand and do not depend on external factors. Since Mt.Gox is the largest global trader of bitcoins, the site's collapse or complete disappearance would only further cause doubts about the feasibility of the online currency."