This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

No Surprise That Bitcoin Users Got 'Goxed'

NEW YORK (TheStreet) -- Bitcoin exchange Mt. Gox's abrupt shuttering of its Web site on Tuesday wasn't an uncharacteristic move to many users who have traded and held the digital currency for years.

Mt. Gox's repeated past errors led to an erosion of trust among individuals who consider themselves part of the "Bitcoin community," and it also encouraged the emergence of more secure exchanges that likely saved the cryptocurrency from a complete collapse.

"Bitcoiners repeatedly warned people not to use Mt. Gox, pointing to the fact that the suspension on their withdrawals was a bad indicator and it made Mt. Gox nearly useless as an exchange if you required a payout in USD," Ryan Shea, co-founder of Halfmoon Labs, wrote in an email.

Mt. Gox, which started in 2009 as a trading card exchange, relaunched in 2010 as an early Bitcoin exchange. Images of 2010 message threads, which were forwarded to TheStreet by a source who asked not to be named, show the early platform was meant for early adopters of the currency to trade online. But even the early stages of its creation foreshadowed chronic problems that faced the exchange.

The three windows suggest Mt. Gox, early in its days as a Bitcoin exchange faced novice programmer hurdles. In the image linked above, the third window shows that Mt. Gox in URLs had programmed the link to actually show individuals' account passwords. The source who spoke on the condition of anonymity called this "a ridiculously concerning mistake that only a novice programmer would make."

Coinapult founder Erik Voorhees took to Reddit (the Bitcoin subreddit) to defend the currency, saying the end of Mt. Gox didn't represent a collapse of the whole space.

"We are building a new financial order, and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world," Voorhees wrote. "This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow's finance, and we put ourselves at risk in doing so."

For now, Mt. Gox's decision to pull itself offline, possibly erasing Bitcoin assets of most of its users, dealt a heavy blow to Bitcoin's legitimacy. But with the existence of other exchanges, it may be premature to tout the end of the cryptocurrency for now.

"Glitches, leaks, bad software, legal troubles. [Mt. Gox] got so bad that the Bitcoin ecosystem repeatedly warned mainstream users to stay away from them and even started using 'gox' as a verb to mean fuck over (i.e. 'You got goxed!')," the source said.

TheStreet was unable to contact Mt. Gox for comment on this story.

The company, however, has issued an online statment to its customers. "In light of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly," it said.



-- Written by Joe Deaux in New York.

>Contact by Email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs