CryptoURANUS Economics: Defined in CryptoCurrency


Thursday, May 6, 2021 Defined in CryptoCurrency Defined in CryptoCurrency:

Mt. Gox was a cryptocurrency exchange in Tokyo that operated from 2010 to 2014. Jed McCaleb made the website for Mt. Gox exchange. Initially, it was a way for fans of the card game "Magic: The Gathering" to be able to trade cards online. Mt. Gox is an acronym for "Magic: The Gathering Online Exchange." In 2011, the site was bought by Mark Karpeles.

History:Mt. Gox launched in July 2010, and by 2013, it was handling about 70 percent of worldwide bitcoin (BTC) transactions. In February 2014, the platform suspended trading, shut down its website and exchange service, and filed for bankruptcy protection from its creditors. By April 2014, liquidation proceedings began. A week after the exchange suspended all trading and shut down, a document leaked that revealed that 744,408 BTC was taken from customers by hackers. Another 100,000 of the company’s BTC was missing. About 200,000 BTC was later found in an old-format bitcoin wallet.

The CEO of the company, Mark Karpel├ęs, resigned and stepped down from the board of the Bitcoin Foundation. All posts made on the company's Twitter account were deleted. After the company filed for bankruptcy and liquidation, claiming a debt of $63.6 million, Attorney Nobuaki Kobayashi was made the exchange’s bankruptcy trustee entrusted with the administration and disposal of its assets.

The Inside Story of Mt. Gox, Bitcoin's $460 Million Disaster:

From a distance, the world's largest bitcoin exchange looked like a towering example of renegade entrepreneurism. But on the inside, according to some who were there, Mt. Gox was a messy combination of poor management, neglect, and raw inexperience.

Its collapse into bankruptcy last week -- and the disappearance of $460 million, apparently stolen by hackers, and another $27.4 million missing from its bank accounts -- came as little surprise to people who had knowledge of the Tokyo-based company's inner workings. The company, these insiders say, was largely a reflection of its CEO and majority stakeholder, Mark Karpeles, a man who was more of a computer coder than a chief executive and yet was sometimes distracted even from his technical duties when they were most needed. "Mark liked the idea of being CEO, but the day-to-day reality bored him," says one Mt. Gox insider, who spoke on condition of anonymity.

Last week, after a leaked corporate document said that hackers had raided the Mt. Gox exchange, Karpeles confirmed that a huge portion of the money controlled by the company was gone. "We had weaknesses in our system, and our bitcoins vanished. We've caused trouble and inconvenience to many people, and I feel deeply sorry for what has happened," Karpeles said, speaking at a Tokyo press conference called to announce the company's bankruptcy. This would be the second time the exchange was hacked. In June 2011, attackers lifted the equivalent of $8.75 million.

Bitcoin promises to give a bank account to anyone with a mobile phone, no ID required. It's clearly an amazing and potentially world-changing technology -- the first viable, decentralized, reliable form of digital cash. It could democratize international finance. But it's also a technology that was pushed forward by a community of people who were unprepared or unwilling to deal with even the basics of everyday business. A new wave of entrepreneurs may bring the digital currency a new level of respectability, but over its first several years, bitcoin has been driven largely by computer geeks with little experience in the financial world. The most prominent example is Mark Karpeles.

The Mt. Gox offices is in Tokyo.

The King of Bitcoin:

The 28-year-old Karpeles was born in France, but after spending some time in Israel, he settled down in Japan. There he got married, posted cat videos and became a father. In 2011, he acquired the Mt. Gox exchange in from an American entrepreneur named Jed McCaleb.

McCaleb had registered the web domain in 2007 with the idea of turning it into a trading site for the wildly popular Magic: The Gathering game cards. He never followed through on that idea, but in late 2010, McCaleb decided to repurpose the domain as a bitcoin exchange. The idea was simple: he'd provide a single place to connect bitcoin buyers and sellers. But soon, McCaleb was getting wires for tens of thousands of dollars and, realizing he was in over his head, he sold the site to Karpeles, an avid programmer, foodie, and bitcoin enthusiast who called himself Magicaltux in online forums.

Karpeles soon set about rewriting the site's back-end software, eventually turning it into the world's most popular bitcoin exchange. A June 2011 hack took the site offline for several days, and according to bitcoin enthusiasts Jesse Powell and Roger Ver, who helped the company respond to the hack, Karpeles was strangely nonchalant about the crisis. But he and Mt. Gox eventually made good on their obligations, earning a reputation as honest players in the bitcoin community. Other bitcoin companies had been hacked and lost customer funds. Most of the time, they simply folded. But Karpeles and Mt. Gox did not.

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