This month’s Bitcoin controversy, following a meltdown at the influential Japan-based Bitcoin exchange Mt. Gox, underscores a key problem for the virtual currency’s decentralized model. When nobody is in charge, nobody knows who to believe when something goes wrong.
For weeks after Mt. Gox stopped letting clients withdraw from their accounts, Bitcoin users continued speculating and trading on the embattled exchange. Monday night, Mt. Gox went completely off the grid, and the fate of the Bitcoin stored there is unclear. Six Bitcoin companies scrambled to release a unified statement citing a “tragic violation of the trust of users of Mt. Gox.”