Now that you've had a basic introduction into what bitcoins are, I can talk about the news that's breaking in the bitcoin world.

 

To recap a previous point, the primary places to buy and sell bitcoins are known as bitcoin exchanges. One of most prominent exchanges was known as Mt. Gox, a name which was a reference to its beginnings as a place to trade cards for the game Magic the Gathering (Magic The Gathering Online eXchange). At the time of this writing, Mt. Gox is is not open for business, and their website has a notice that all transactions are closed, and to watch the page for future announcements and updates. So what's going on?

 

Well, that's the million dollar (1700 bitcoin) question. There is an unverified document that has appeared on the internet that purports to be a “crisis strategy draft” for the company. If the document is true, then it appears there has been an ongoing theft of bitcoins from the exchange totaling over 744,000 bitcoins, which are worth over three hundred million dollars. Besides the fact that this is a huge amount of money, it needs to be pointed out that this is a substantial portion of the total number of bitcoins in circulation, 6% worth. If someone stole 6% of the ready supply of United States dollars, they would have 223709 million dollars. We're talking Lex Luthor levels of nefarious accomplishment here, and that's terrible. To make matters worse (believe it or not), it is possible that this has been going on for a number of years without being noticed.

 

This is when it's important to reiterate that bitcoins are not a traditional currency, and bitcoin exchanges and wallets are not traditional banks. There is no FDIC to provide insurance to depositors or holders of bitcoins. Mt. Gox could have bought insurance to protect it's users, but it's reported that they did not, and the bitcoins are believed to be unrecoverable. If you had money invested in bitcoins held there, there's not a whole lot you can do.

 

Here at EZ Trade Live, we've been looking into bitcoins, either investing in them or perhaps accepting them as payment. Needless to say, we're going to be watching this situation very closely. Personally, I don't think that this is the end of bitcoins, or the larger concept of cryptocurrency, but this definitely is a call for caution.