Is It That Mt. Gox’s Demise Is Marking The End Of Bitcoin’s First Wave Of Entrepreneurs

What Happened To Mt.Gox?

BitInstant CEO Charlie Shrem said in a phone interview where he described that he had built BitInstant along with an autistic Welsh hacker named Gareth Nelson whom he had never met in real life. Getting distracted and exuding a certain paranoia, Shrem quipped that they can’t trust anyone as sometimes they can’t trust their team. Later on, meeting the Bitcoin exchange Mt. Gox’s team in Tokyo, Mark Karpeles and Gonzague Gay-Bouchery talked through their lawyer where once it was the world’s leading exchange being challenged by BTC China and Europe’s Bitstamp in volumes and were grappling with lawsuits against Coinlab and a US government seizure of $5million. 

Karpeles says that if we say something, we believe and it’s the truth or we’re being honest that could be misinterpreted. With customer emails, we are screaming inside. Where unfortunately Karpeles handed a stack of Mt. As and when the Gox security cards were generated with onetime passwords they were then turned into Bitcoin powered café for retail experimentation. One by one they all fell in place. 

Further on Shrem was arrested at New York’s John F Kennedy airport on the charges of money laundering as it was found that the Mt. Gox website has disappeared as well as the company halted all trading amidst purported losses of almost 750,000 bitcoins where both Karpeles and Shrem who are now out of the Bitcoin foundation that is a nonprofit organization well versed in guiding Bitcoin standards and adoptions worldwide. 

Even though the fact is that while Bitcoin has had a long and volatile history given numerous thefts and scams, Mt. Gox is surely set to represent its biggest crisis in confidence to date. For well over a year, as it is a fact that Mt. Gox being Bitcoin’s largest and the most visible player coming as the biggest exchange in the world.

All the hype come along that there is not only the sheer headline size of losses that is as enormous at $ 400 million but also the cryptocurrency crossed over into mainstream consciousness as the bitcoin’s more obscure says with a choir of true believers rallied whenever a hoax or theft emerged. With a collapse at this scale, it may irreparably damage the bitcoin’s image in the eyes of retail investors or at least set it back a few years.  

Is The Situation In Crypto World Under Control?

The Tokyo entrepreneurial and Bitcoin community had the feeling that the Mt. Gox team was well-intentioned, whereas incompetent to the point of gross negligence as they replied to the requests for comments communicating the company’s leadership in the last few weeks. One Bitcoin entrepreneur says that they believed what they were hearing and thought they were going to blackout where at least reconcile the books regularly. They further mentioned they would have had to screw up on so many levels for something like this to have happened. 

Is it that Mt.Gox comes as the new version of Friendster, the social networking site leader that buckled just before Facebook surged ahead? The bitcoin’s next generation of founders are cleaner, more pedigreed and suited to Wall Street’s and Capitol Hills tastes with no less libertarian or wolf-like. This is eventually unlike bitcoins the first generation of entrepreneurs who are not outsiders. They are what you would call the establishment. The Circle CEO Jeremy Allaire had later on taken a company public along with Coinbase and Bitpay backed by the Valley’s most prominent venture firms including Accel, Andreessen Horowitz, and the Founders Fund. 

According to a high profile Bitcoin Angel, Barry Silbert, who was involved in building SecondMarket into the formidable market place for shares in privately held and pre-IPO companies preparing his Bitcoin exchange for launch. The original creator of Mt.Gox Jed McCaleb too was selling the site to Krarpeles and Gay- Bouchery staring what appeared to be a new exchange. 

Finally, The Bottom-Line

Providing a surprisingly favorable response to Bitcoin, the US-based regulators are bound to ask more of the questions in the near recent timeline as many see companies operating without money transmitter licenses facing more scrutiny which is a good thing. As Micky Malka of Ribbit Capital opines in short term there is an impact on trust and on counterparties where you see the system maturing where the rookies and players were never transparent or had issues with regulators being taken out of the system. Eventually, it is the time for the second wave of founders to step up that some rot has been cut out of Bitcoin’s core. There is more to get the grip of the situation whereby the experts are keenly watching the scene. Keep the fingers crossed and get true insight.