Bitcoin believers unfazed by losses in Mt. Gox collapse

A photo illustration of coins from a Bitcoin collection. -- FILE PHOTO: REUTERS 
A photo illustration of coins from a Bitcoin collection. -- FILE PHOTO: REUTERS 

TOKYO (REUTERS) - Like other bitcoin evangelists, Mr Ken Shishido is ready to write off the money he lost in the bankruptcy of Tokyo-based virtual currency exchange Mt. Gox as the price of revolutionising global finance.

"In the early days of the automobile, there were traffic accidents because you didn't have traffic lights or pedestrian crossings," he said hours after Mt. Gox said on Friday it had lost up to half a billion dollars of investor funds. "But we didn't ban automobiles."

Mr Shishido, who lives in Tokyo, was one of about 1,000 investors in Japan who became creditors in Mt. Gox's bankruptcy when the company capped a tumultuous period of weeks by filing for bankruptcy on Friday.

He lost about a tenth of his investment in bitcoin in Mt. Cox and expected none of that money to come back.

Early enthusiasts for the five-year-old crypto-currency were drawn to its revolutionary ideals of transparency and a lack of central or official control. There was also a heady mix of geek chic - the currency is "mined" through a process involving complex computer math - and laissez-faire Austrian economics.

Mt. Gox's loss is eye-popping but so too is the number of creditors - 127,000 - in what had been the world's biggest exchange. That means the average trader lost the equivalent of US$3,500 (S$4,422) in the bankruptcy at current bitcoin prices, assuming no money is recovered in the court-supervised restructuring in Tokyo set to play out over the following months.

Bitcoin's value spiked in April 2013 as the crisis-racked Cyprus government clamped down on withdrawals and seized deposits, rattling faith in "fiat" currencies.

The crypto-currency soon crashed back. Late last year, as the number of exchanges and the virtual money's name recognition grew, it took off again.

Bitcoin gained wider acceptance - and took off again in price - late last year. It attracted high-profile proponents, like the investor twins Cameron and Tyler Winklevoss of Facebook fame, and speculators.

Investors interviewed after the exchange collapsed faulted the Tokyo exchange and Mt. Gox's French CEO Mark Karpeles, but they remained committed to the bitcoin idea.

Mr Roger Ver, a big investor in Mt. Gox, said he did not know if he would ever get any of his lost bitcoin back.

"But the important thing to realise is that Mt. Gox is just one company using bitcoin. The bitcoin technology itself is still absolutely amazing," he said.

"Even if one email service provider is having a problem that doesn't mean people are going to stop using email. It's the same with bitcoin."

Mr Ver spoke of "all of the positive ways in which bitcoin is going to change the world ... if anything, it is kind of for the better of bitcoin that the irresponsible players are going out of business."

Mr Shishido said he does not expect to get his virtual money back, but that the rest of his bitcoin investments had soared 10-fold in value.

Mr Keiichi Hida, a bitcoin investor and member of the Japan Digital Money Association, lost 100,000 yen (S$1,227) worth of bitcoins, which he got involved with as a form of "study". But he was unfazed.

"We should make it a national project to have bitcoin used nationwide at the time of the 2020 Tokyo Olympics," he said. "I think then everyone would come to Tokyo in an instant."

Mt. Gox CEO Karpeles, even after bowing to apologise for the exchange's bankruptcy, later said the currency will endure.

"The bitcoin industry is continuing and the most important thing now is to limit the impact of (Mt Gox's collapse) on that," he said.

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