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In this week’s guest editorial, BTC Global CEO Mauro Betschart elaborates on life after the demise of MtGox
Mt Gox announced it’s closure two months ago with nothing more than a blank page and a message saying as little as possible. Much of the bitcoin world was stunned. If you followed the media, the event was a big shock to many, and a big blow to Bitcoin’s valuation.
However, the writing had been on the wall for a long time for those who knew where to look. Mt Gox had malfunctioning trading engine which lagged 40 minutes during the peak of the early 2013 bubble, an event which was painfully remembered by many, when Mt Gox still handled over 70% of the Bitcoin market’s trading volume. T
here was also the 75 million USD CoinLab lawsuit. And there was a seizure of their US banking account by the Department of Homeland Security for failing to register as a Money Service Business. After the seizure, Mt Gox stopped offering fiat money withdrawals by claiming bank delays, then delays in their support, and then delays due to technical problems. Rumors of all sorts, from stolen bitcoins to government intervention spread throughout the market. In the end, there were no bitcoin withdrawals.
Incidents of poor management and software were not unique to Mt Gox in 2013, but also in 2012 and 2011. It all pointed to the same thing, that Mt Gox was an institution to be avoided, probably insolvent, and certainly incompetent. The anecdotes supporting this assessment are too great to list.
So how does Mt Gox’s closure affect Bitcoin?
Of course the bankruptcy and liquidation of the biggest and most well known Bitcoin exchange was a blow to both the Bitcoin community and Bitcoin’s public image. The Bitcoin market had “grown up” with Mt Gox, having benefited a lot from having a well-known exchange floor. But this does not mean Bitcoin died with Gox. The Mt Gox debacle is proving to be little more but a bump on the road. It is not at all a blow against the Bitcoin protocol or its peer-to-peer network.
Mt Gox´s default is to Bitcoin what the default of a traditional bank would be to the Dollar. Bitcoin itself is still as healthy as ever, and perhaps even stronger as software development continues.
The market shift
There was a market shift in how people think of Bitcoin service companies. Security awareness is much higher, and customers are taking more time making sure a company is trustworthy. And that is great for the Bitcoin market.
Companies now have to become more transparent and responsible with what they do, especially when holding customer funds. It makes for a more mature market and allows for more professional companies that offer better security for Bitcoin-related services to fill the vacuum.
Mt Gox’s failure has also had the unlikely benefit of forcing the regulatory and legal conversation to start becoming clearer, especially in international law. The challenges involved will probably now be tested to some degree, but all the legal and regulatory questions are far away from being completely resolved.
Companies that are expecting changes to happen, in the technological and legal framework, and have a flexible and strong system to be able to adapt to theese changes, will be the ones to triumph in the long run.
We now know now how strong bitcoin is and we are seeing a glimpse of what the world can do with this new technology.
This editorial was written by Mauro Betschart, CEO and founder of BTC Global