- Yesterday, Mt. Gox, the world's largest trading platform for bitcoins—the virtual currency that started circulating online in 2009—suddenly went blank. Bitcoin prices crashed.
- Bitcoin enthusiasts insisted that this was merely a minor hiccup on the currency's path to world domination. For those of us who are not immersed in this confusing online culture, the collapse of the Tokyo-based Mt. Gox raised a lot of questions.
- Such as, what is a Bitcoin, and how can a virtual currency go bankrupt?
- Why were people investing in a currency that is "like Tinkerbell: if people stop clapping, it's going to die"?
- Although you might not be directly affected by this blow to the Bitcoin economy, many others are watching the trembling of Mt. Gox with alarm. Criminals, for example. Last fall, when the federal government shut down a huge online drug emporium that took Bitcoin as a form of currency, it suddenly became apparent that Bitcoin was a great way for people to sell illegal goods with impunity.
- Libertarians will also have some egg on their face if Bitcoin falters. The currency is, in many ways, a libertarian dream—a secret underground marketplace with no banks, no fees, and no government interference. Late last year, Ron Paul declared that Bitcoin could go down in history as the "destroyer of the dollar."
- Bitcoin has slowly, over the past year, been infiltrating the mainstream. Overstock.com, Virgin Galactic, CheapAir.com, and a Subway franchise in Allentown, PA all take Bitcoin. (But you can't use Bitcoin in Russia, so don't try!)
- But while the Mt. Gox crash is certainly scary for Bitcoin fans, this isn't the first time the cryptocurrency's viability has been questioned. Bitcoin prices have crashed three times since late 2013. And who doesn't remember the Great Bitcoin Bubble of 2011?
- One could also make the argument that Bitcoin was doomed the minute the Winklevoss twins got involved.
- Luckily, though, even if Bitcoin crashes and burns, there are a gaggle of rival online currencies ready to take its place. My money's on the Linden Dollar.
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