Mt. Gox protester: Bitcoin will emerge ‘stronger’

Kolin Burges has been protesting outside the Tokyo headquarters of the major bitcoin exchange for two weeks, after finding he could not access hundreds of thousands of dollars worth of bitcoins he had held in an account.

Mr Burges, a Glaswegian who previously worked on computer software before become a full-time bitcoin trader, says around two-thirds of $260,000 worth of bitcoins he owns are trapped in Mt. Gox – bitcoins that he may not seen again.

Mt. Gox abruptly closed all transactions at the exchange on Tuesday, saying it was doing so to “protect the site and our users.”

Reports suggest that Mt Gox had suffered a debilitating theft, possibly of bitcoins totalling six per cent of the entire market, though there has been no comment on this from Mt Gox. Earlier this month, the Tokyo-based company said it had detected “unusual activity.”

Trapped in Mt. Gox

Mr Burges, speaking to Channel 4 News from Tokyo, said he journeyed to Japan on 12 February after finding he was unable to access his funds.

“My funds were stuck in a Mt. Gox account and there was no adequate explanation as to why they were stuck or when I would be able to acces them,” he said. “I decided to go and ask them in person.”

However, since arriving in Tokyo he has only spoken to one person at Mt. Gox. Mr Burges said: “I have had contact with one person. He visited me and said he was doing so unofficially. He asked me to stop protesting.”

There has been speculation on forums across the internet that the Mt. Gox debacle could spell the end of bitcoin – a digital currency that operates without regulation and beyond the control of governments.

Critics say the currency is open to abuse at the hands of criminals – something that would be supported by the suspected theft. It is also considered by some to be too unstable – the value of bitcoins surged from around $120 a bitcoin in October last year to more than $1,000. Since then the value has halved.

Bitcoins supporters say this should be expected of a new currency, and should be seen as part of the path to the crypto-currency gaining legitimacy.

‘Emerging stronger’

However, and despite his probable loss, Mr Burges does not think Mt. Gox will be a nail in the coffin of bitcoin.

“I think bitcoin won’t be hugely affected,” he said. “Once Mt. Gox is out of the way, bitcoin will be stronger. The exchanges will be expected to have better transparency and better security, and possibly there will be more regulation. It will emerge stronger.

“The price of bitcoin is edging slightly back up at the moment. I don’t see Mt. Gox having a long term impact on the price.”

Mr Burges began investing after seeing the value of bitcoins increase “eight or nine times” in March and April last year. Since then, he says the amount he has invested has risen five-fold in value. Despite the bitcoins trapped in Mt. Gox, Mr Burges says he is still “up” on his investment.

More regulation

The early adopters of the currency are often described as “libertarians” who are attracted to the currency because of its distance from state control. There is some resistance to regulation of the bitcoin market for this reason.

However, Mr Burges said he would like to see some regulation. “I think there should be a certain degree of regulation,” he said. “I think exchanges need to be accountable for their security precautions and have to be able to prove they have the money to repay customers. I want them to ensure that deposits are safe.”

But he said he thinks it would be “going too far” to submit bitcoins exchanges to the same degree of regulation as banks and other financial institutions.

‘Finding a solution’

Nevertheless, Mr Burges is “pretty angry” at Mt. Gox for the way the company has handled its security, and for the way it has treated its customers. His problem will be holding the unregulated business accountable.

Mt Gox Chief Executive Mark Karpales said on Wednesday that he remains in Japan, and is working to solve “our recent issues”.

“As there is a lot of speculation regarding MtGox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues,” he said in a posting on the Mt. Gox website.

On Tuesday, he said: “We are currently at a turning point for the business. I can’t tell much more for now as this also involves other parties.”

Japanese authorities are investigating what has happened at the bitcoin exchange, though the country’s Financial Services Agency and finance ministry have said they do not have jurisdiction.