The Mt. Gox Bitcoin Exchange Is Gone – Now What?

Now that the Mt. Gox Bitcoin exchange has gone dark, rumors are that the digital currency's future looks dark – but that's not the case.

While all activity on Mt. Gox has ceased as of Monday evening, Bitcoin prices on other Bitcoin exchanges only experienced a brief dip.

On Bitstamp, for example, Bitcoin prices fell from about $580 to $400 as news of the Mt. Gox shutdown spread. But within a few hours, Bitcoin prices were back over $500, even going as high as $540.

That's well below the highs of over $1,000 seen in December, but far from the total collapse of the digital currency that one might have expected from Mt. Gox going dark.

After all, Japan-based Mt. Gox was the first, and for most of its existence, the largest Bitcoin exchange.

Now, after a three-week suspension of Bitcoin withdrawals that had many customers up in arms, the company has suspended all activity, including trading.

For several hours, the main website was blank. Eventually that was replaced with this message:

Dear Mt. Gox Customers,

In the event of recent news reports and the potential repercussions on Mt. Gox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

Best regards,

Mt. Gox Team

Many believe Mt. Gox to be insolvent, and all customer money lost – both in bitcoin and fiat currency. The Mt. Gox chief executive officer, Mark Karpeles, told Reuters in an e-mail that there would be an "official announcement soon," but offered no details on whether the site would ever return.

Most in the Bitcoin community assumed that Mt. Gox was in serious trouble from the moment it suspended bitcoin withdrawals Feb. 7. Many customers engaged in panic selling on the Bitcoin exchange in an effort to convert them to dollars they could try to extract via the international banking system. Bitcoin prices on Mt. Gox dropped as low as $91.50 at one point.

Whether Mt. Gox returns or not – and that appears very unlikely – the black eye that this episode has delivered to the digital currency won't knock it out.

Let's take a closer look at how Mt. Gox got into such a dire condition and what this episode tells us about the future of Bitcoin.