Monday, April 1, 2013

Barons of Bitcoin: the Tokyo-based powerhouse that controls the world's virtual money

Mt. Gox handles 76 percent of global Bitcoin trading, which is why it’s taking the lead on regulatory compliance

The virtual currency Bitcoin isn’t backed by any assets or central authority. It’s only three years old and its exact origin is a mystery. And yet, for some reason, tens of thousands of people have determined that a single Bitcoin — essentially a unique sequence of letters and numbers — hit $105 US dollars earlier today, the most in its short history. At a time when the euro seems increasingly unstable, financial publications like Businessweek are asking if Bitcoin may the world’s last economic safe haven.

In the early days of Bitcoin, the price was decided by a small community of users who traded the currency on forums. Today users use real-world currencies ranging from the US dollar to the Polish zloty to buy Bitcoin on real-time exchanges. These exchanges determine Bitcon’s price based on what people are willing to pay. The largest of these exchanges, by far, is Mt. Gox.


"If you want to buy Bitcoins, you need to find someone you can trust."

Mt. Gox is based in a highrise office building in Tokyo’s hip Shibuya district. Right now, it’s processing about 76 percent of all Bitcoin currency trades around the world, which translates to around $6 million worth of Bitcoin trades per day. That means roughly $60,000 in revenue for the tiny company, minus salaries for its 18 employees, as well as the costs of site maintenance and fees paid to financial regulators.

Mt. Gox serves as a reliable middleman that facilitates trades between users, just like a foreign exchange. "Bitcoin is a large economy, [and even though] people want to buy Bitcoins, it’s hard to directly find someone who has got whatever you want," explained CEO Mark Karpeles. "If you want to buy Bitcoins, you need to find someone you can trust."

And as the promise of a utopian one-world internet currency endures, Mt. Gox is becoming a liaison between the neo-cypherpunk Bitcoin community and governments around the world. - Read more here:

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