Bitcoin is a nascent digital currency that people both love and fear. It can be easily transferred around the world but subverts established banks and monetary institutions. (We explained it here recently.)
Proponents say Bitcoin can empower poor people in developing countries who don't have access to banks and capital. Detractors say it makes drug deals and money laundering easier because no government can control it. Recently, the currency had been gaining steam as retailers -- including Overstock.com -- began to accept it in lieu of U.S. dollars.
- The Five Weirdest Things I Learned at the North American Bitcoin Conference
Yesterday, however, the currency suffered a big blow because Mt. Gox, one of the major exchanges on which it was traded, was reportedly hacked, lost 744,408 of its users' bitcoins (worth nearly $367 million), and folded. Mt. Gox bought and sold bitcoin and held it for people in their accounts, or "digital wallets."
The event showed that bitcoin wealth can evaporate in an instant. Speculation grew that potential bitcoin users would be scared away. Some said the currency was doomed. More »