Anarcho-Socialists and Orwellian doomsday revelators alike: tune your tinfoil hats to the proper frequency, because Bitcoin is dead, and there’s nothing you can do about it.
The nascent, decentralized crypto-currency suffered a massive setback in its evolution, as Mt. Gox, a Bitcoin exchange organization, announced that it had effectively lost $500 million of its customers’ money and would be filing for immediate bankruptcy.
$500 million. Gone.
Bitcoin gained widespread notoriety over the last few months, most notably for the FBI shutdown of the virtual open-air drug market Silk Road, and subsequent arrest of its founder Dread Pirate Roberts. Bitcoin values plummeted upon the announcement of the website’s seizure, and provided a revealing look as to the unpredictable nature of an anonymous and unregulated online currency – and the news of Mt. Gox’s failure is only a further indicator that the world does not have the Internet infrastructure and safeguards in place to deal in digital cash.
As with any new venture, an integral component to its success is gaining the trust of the public and providing a tangible level of confidence and consistency. The thought of handing over your hard-earned income to a bank must have seemed ludicrous after the economic collapse that led to the Great Depression – but then FDR established the FDIC, insuring an individual’s assets in lieu of financial disaster.
Bitcoin flew too close to the sun in its infancy, and whatever shreds of legitimacy it retains will not put it over the hump in terms of gaining a foothold as a viable alternative to centralized money. In a society where hackers and online miscreants live for the thought of screwing up John Q. Public’s day, the idea that one’s life-savings is floating ill-protected in cyberspace is not one that will lend to mass global support.
While the Mt. Gox implosion may have been the death knell for Bitcoin itself, it does not necessarily spell doom for the crypto-currency archetype altogether. It’s entirely possible that we experienced the first wave – the rise and fall – of online currency, and with technology constantly pushing itself to the limits of invention, another incarnation may be waiting in the wings to fill the vacuum.