The Collapse Of Bitcoin

From:  The Economic Collapse

 By Michael Snyder

 

Bitcoin is a virtual currency that has no intrinsic value.  The only thing giving bitcoin value is the faith that people have in it, and now that faith has been shattered.  This week, the most prominent bitcoin exchange in the entire world, Mt. Gox, totally collapsed.  At one time, Mt. Gox boasted more than a million accounts and it accounted for approximately 25 percent of all global bitcoin trading.  But now the website has been taken down, there are rumors of catastrophic losses, and many investors are concerned that they will lose all of their money.  In fact, according to one report, investors could be facing total losses of up to 367 million dollars.  The collapse of Mt. Gox is also affecting other bitcoin exchanges.  As I write this, the market value of bitcoin had fallen to about $470, but just three months ago it was trading close to $1,200.  Needless to say, a lot of bitcoin investors are going to be licking their wounds tonight.
I have never written much about bitcoin because I never believed in it.  Personally, I have always preferred to stick to silver and gold.  But I can't blame people for wanting to create a monetary system that worked outside of the central bank-controlled paradigm that we have today.
I just didn't have any faith in bitcoin.  I considered it something of a Ponzi scheme.  That is why I never recommended it to anyone.  Those that got in early and got out at the peak of the market made a killing.  Good for them.  But most investors are going to end up taking a bath - especially those that got in at the very end.
When you have an imaginary currency that has no intrinsic worth that is being managed and traded by organizations that have very little regulation or accountability, bad things can happen.  And we saw a perfect example of this on Tuesday...

A major bitcoin exchange has gone bust after secretly racking up catastrophic losses, other virtual currency companies said Tuesday — a potentially fatal blow for the exotic new form of money.
The website of Tokyo-based Mt. Gox was returning a blank page Tuesday. The disappearance of the site follows the resignation Sunday of Mt. Gox CEO Mark Karpeles from the board of the Bitcoin Foundation, a group seeking legitimacy for the currency, and a withdrawal ban imposed at the exchange earlier this month.

MORE