Not all that long ago, Mt.Gox was the center of the Bitcoin world. It was the first major exchange to handle the virtual currency, and the largest by volume until last year. After a year-long series of blunders and one massive recent catastrophe, however, the users are fleeing the site in droves.
The tech press is ready to declare Mt.Gox dead. Why?
The trouble started with the recent revelation that Mt.Gox’s internal code was not equipped to handle the “transaction malleability” bug, which the industry at large had known about since 2011. It’s not clear exactly to what extent this exploit had been used on Mt.Gox, but by early this week things had gotten bad enough that the Tokyo-based exchange had completely halted all withdrawals. Mt.Gox had long been criticized in the industry for slow withdrawals, and this wasn’t the first time they had cut customers off from their funds. But with other, more reliable exchanges now in the market, Mt.Gox began to look like a very bad place to do business.
According to a Coindesk report filed Feb. 8, 2014, most customers could not even withdraw their funds before the current crisis.
A CoinDesk survey of readers who use Mt. Gox has found that nearly 70% of respondents have not received their funds after making withdrawal requests from the exchange. Some 914 respondents said they were still waiting to receive their funds. The median waiting time was between one and three months, with 22% reporting wait times of between one week and a month.
According to Motherboard’s Alec Liu, however, the problems at Mt.Gox are significant enough that many are declaring the exchange effectively “dead.”
When Mt. Gox struggled—and it would often as Bitcoin grew in popularity, whether through DDoS attacks or spikes in trading volume—the entire ecosystem suffered, often resulting in catastrophic prices crashes. “Their time has finally come and passed,” a prominent insider told me nonchalantly.
For much of the community, word of the historic exchange’s apparent demise wasn’t much of a surprise; the writing had always been on the wall. The exchange has long been plagued by performance issues, and last year added legal worries and regulatory problems to its growing list of potentially fatal flaws.
Before the current halt in payments, Mt.Gox still carried roughly 21 percent of all Bitcoin trade. It’s probably a bit too soon to declare it “dead” in any real sense, but there’s clearly a growing sense that the Mt.Gox will need a massive overhaul to remain competitive and rebuild consumer confidence in the coming months.