Well, it’s been a bad week for bitcoin. First, Mt. Gox, the world’s largest and most prominent bitcoin exchange, indicated that millions of dollars’ worth of the cryptocurrency had been stolen — and then it filed for bankruptcy today.
Its CEO, Mark Karpeles, stepped down from the board of the Bitcoin Foundation, an advocacy group for the currency (another board member, Charlie Shrem, resigned at the end of January after it was alleged he’d participated in a money-laundering scheme for drug deals). Democratic senator Joe Manchin of West Virginia also called for the currency to be banned this week.
You could practically cut bitcoin naysayers’ schadenfreude with a knife. But, as they say, rumors of the coin’s demise are greatly exaggerated.
Experts tell NRO that the rough patches have less to do with the currency itself than with the people working to bring it to prominence. The emerging consensus seems to be that some bitcoin pioneers knew more about tech than business and, as a result, put together organizations that weren’t ready for primetime. What we’re seeing now is a trimming of some of the less competent players, and bitcoin advocates hope that the decline of less credible institutions will make more room for reputable companies to gain clout.
And Manchin’s hopes to ban bitcoin were quickly put to rest by Fed chairman Janet Yellen. In a congressional hearing, she told him that the Fed doesn’t have the authority to regulate the private currency, and that congressional regulation (not to mention an all-out ban) would be very tricky since there isn’t a central issuer for regulators to go after. Manchin doesn’t seem to have gained anything, in other words, besides the ire of a lot of Reddit users.
That’s not to say that the downfall of Mt. Gox isn’t a significant blow to the bitcoin community — the value of the currency itself dropped significantly this week, for one. But its bankruptcy highlights the fact that incompetence in the cryptocurrency industry doesn’t mean that these currencies themselves are doomed — that’s like saying that the closing of one bank (admittedly, a big one) means the U.S. dollar is on the outs.