Mt. Gox Chief Leaves Bitcoin Foundation; Can Investors Be Far Behind?
For a lot of people, bitcoin can be a trip to the midway of a county fair where all sorts of opportunities and prizes await the next sucker, um, investor. Or the virtual currency can be a funhouse where mirrors distort reality and what appears large is really small and vice versa.
Lack of regulation combined with rapid growth and a strong criminal element has created an unfamiliar landscape for most bitcoin investors. Before the FDIC insurance program in 1933, creditors, including savings depositors, were expected to do their own due diligence and determine if any given bank was safe for deposits. An unfounded rumor could easily fuel panic and a run on the bank.
Observing the Mt.Gox bitcoin exchange is the most recent incarnation of those old days.
Mt. Gox was one of the largest bitcoin exchanges until the site became a cyber-theft victim, forcing the company to halt all bitcoin withdrawals. For a few days earlier this month, cash withdrawals potentially offered an enormous payday for bitcoin buyers on its exchange.
A bitcoin on Mt. Gox is trading for about $125 per coin, while the CoinDesk index of several other bitcoin exchanges currently prices a bitcoin near $570.
If those odds sound attractive to you, by all means take a chance. I wouldn't touch it.
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