Bitcoin? More like Bustcoin

Bitcoins have been the talk of the internet for a while now. This virtual currency first became known (and gained notoriety) when they were employed to purchase items on the now-defunct contraband selling website Silk Road. Silk Road was a portal that facilitated the sale of illegal drugs and dealt in Bitcoins, which is why the virtual currency has been considered with an eye of suspicion.

Moreover, there is no central regulating body for this currency, so who determines the value of one Bitcoin? Who decided in 2011 that it would be equivalent to 30 cents and who decides now that it is worth $564?

If you thought the Bitcoin is a well-orchestrated and highly complex scam, you might be right. Early this week, on Monday, 24 February, Japan-based MtGox, the largest Bitcoin exchange shut shop. There were no warnings, no prior intimations; the exchange just up and vanished. MtGox had been facing some problems leading up to the radical closure; its website had been hacked and fake transactions flooded the exchange. 744,000 Bitcoins worth about $350m were stolen in the process. MtGox’s closure, however, was unexpected.

Now MtGox has filed for bankruptcy protection, according to recent reports. MtGox’s website too has been taken down only to be replaced by a message from the CEO:

February 26th 2014

Dear MtGox Customers,

As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues.

Furthermore I would like to kindly ask that people refrain from asking questions to our staff: they have been instructed not to give any response or information. Please visit this page for further announcements and updates.

Sincerely,

Mark Karpeles

The bottomline is: if you were interested in investing in Bitcoins, DON’T. At least, not yet. With the largest Bitcoin exchange gone, the very existence of this currency hangs in the balance.