Bitcoin may have had a bad week, but it will never lack for defenders.
On Monday, Mt. Gox, one of the largest trading sites of the digital currency, went offline after it was revealed that it was possibly the target of a $350 to $380 million theft, about six percent of all bitcoin in circulation. Mt. Gox is based in Tokyo, and authorities in both Japan and the U.S. are looking into the security breach, which went unnoticed by Mt. Gox for years. The trading site's CEO, Mark Karpeles, tells Reuters his company is "at a turning point."
As is Bitcoin itself. Sen. Joe Manchin has already called on federal regulators to ban bitcoin. He wrote Wednesday, "Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans."
So early adopters and bitcoin executives are on the defensive, eager to prove that digital currency is still the next big thing — and that it does not need more regulation. One Reddit poster, who identifies himself as Coinapult founder Eric Vorhees, wrote Wednesday,
I have dedicated my life to building and supporting the Bitcoin project. I don't give a damn about the money I lost at Gox. That's not important. What is important is that Bitcoin is resilient and enduring, and will continue to grow and change the world for the better. It is a story of human progress through technology. It is a story of the good seeping into the cracks of a corrupted financial system. It is a story of passionate people struggling against all odds to remedy the calamities brought down upon society from the most potently misguided people and institutions on Earth.
Vorhees wrote in Business Insider Tuesday that users must stand strong against the media. "We are building a new financial order, and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world," he explains. Vorhees himself is paying quite the price — he lost 550 bitcoins, or $314,000 in the Mt. Gox theft. Still, in broad, dramatic terms, he urges other users to fight the good fight with him, life savings be damned.
Other users are happy to. They don't see the Mt. Gox theft as a sign that digital currency is broken or dangerous. This tweet has been up-voted (the Reddit equivalent of a "like") 761 times on the r/bitcoin forum:
People who don't use bitcoin just don't get it, bitcoin fans reason. The most popular meme on r/bitcoin right now is at right. The implication: bitcoin detractors are dumb.
Executives insist that soon everyone will be using bitcoin. Antony Lewis, a business developer who left Credit Suisse for itBit, tells Reuters, "Finance has got boring in the past five years. It's not fun, it's very backward looking and all the innovation is in virtual currencies." Of course, it's also not fun to lose hundreds of thousands of dollars in completely unprotected investments. But GoCoin founder and CEO Steve Bouregard concurs: "Every venture capital firm will have to have their bitcoin plays in 2014. Otherwise they'll be missing the single greatest asset class that's emerging at the moment."
There's no denying that the industry is growing. Hakim Mamoni, the CTO at bitcoin incubator Seedcoin, tells Reuters that many new exchanges will appear in the coming months. "That's why the Mt. Gox event is not troubling me," he explains. "I know we'll have a vibrant ecosystem in a few months."
Until then, Vorhees reminds users to "shake it off, brothers, for this won't be the last calamity endured before the win." We'll note: Usually salespeople try and avoid the word "calamity."
This article is from the archive of our partner The Wire.
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