Home / AMERICAN NEWS / Why did the Bitcoins Exchange file for bankruptcy? The virtual currency raises concerns

Why did the Bitcoins Exchange file for bankruptcy? The virtual currency raises concerns

The Mt. Gox bitcoin exchange in Tokyo filed for bankruptcy protection Friday and its chief executive said 850,000 bitcoins, worth several hundred million dollars, are unaccounted for.

The online exchange’s unplugging earlier this week and accusations it had suffered a catastrophic theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.

Bitcoins

Mt Gox a Tokyo based bitcoin exchange files for bankruptcy. Image Courtesy: Wikipedia

The loss is a giant setback to the currency’s image because its boosters have promoted bitcoin’s cryptography as protecting it from counterfeiting and theft.

The online exchange’s unplugging earlier this week and accusations it had suffered a catastrophic theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.

It remains unclear if the missing bitcoins were stolen, voided by technological flaws or both.

Bitcoins are virtual currency used in online purchases to divert from paying bank transaction fees. The digital currency was created by  Satoshi Nakamoto back in 2009. Users can send payments by broadcasting digitally signed messages to the network and never revealing their real names.

Bitcoins are stored in a digital wallet, which exists either in the cloud or on a person cloud account, like: a virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money.

Millions of people around the world use bitcoins and companies like Overstock.com have recently started accepting them for online purchases.

Proponents for bitcoins insist that Mt. Gox is an isolated case, caused by the company’s technological failures, and the potential of virtual currencies remains great.

Why Did the Bitcoins Exchange file for bankruptcy? The virtual currency raises concerns. 

The Associated Press contributed to this story.

 

 

About Seth Barr

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