The bitcoin faithful would like you to believe that the virtual currency's recent price swings result solely from the crisis at Mt. Gox, a leading bitcoin exchange firm headquartered in Tokyo.
Don't believe it: The Mt. Gox affair is a symptom, not a cause, of deep-seated problems in the bitcoin system. It's a sign that bitcoins aren't ready to serve as anything but pieces in a very risky, speculative game.
Or as Boston University finance expert Mark T. Williams told state regulators in New York last month, "Bitcoin is an experiment that needs to remain in the laboratory until it can meet the basic standards required to become a beneficial transaction currency."
To recap, Mt. Gox, which at one time was the world's largest bitcoin exchange, announced last week that it was suspending all bitcoin withdrawals for "technical" reasons. That meant if you had an account, or "wallet," at Mt. Gox, your money in bitcoins was frozen--you couldn't transfer them to a bitcoin account elsewhere. In an update Monday, the firm said it would resume withdrawals once the technical issue has been "properly addressed." But it didn't offer a time frame.
The Mt. Gox freeze sent bitcoin prices on a dizzying plunge of 13% to 30%, depending on which service you follow for price quotes. On Bitstamp, bitcoins were quoted at $790 just before the Mt. Gox announcement and $619 just after, a fall of more than 20%. As I type these words, the quote is $674. Back in December, bitcoins were quoted as high as $1,200, a price bitcoin fanciers used as evidence that their pet currency was here to stay.
http://www.latimes.com/business/hilt...#ixzz2t2G4he9P
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