The Future of Bitcoin
The virtual currency is more resilient than its critics suggest.
When the world's largest Bitcoin exchange, Tokyo-based Mt. Gox, went offline, critics of the cryptocurrency called for greater regulation. But Mercatus Center researcher Andrea Castillo (pictured) says the worries are premature. In March, she told reason three things the Mt. Gox collapse reveals about the future of Bitcoin.
- The Bitcoin ecosystem is growing up. Originally a digital bazaar for trading playing cards for the game Magic: The Gathering, Mt. Gox epitomized the first wave of scrappy Bitcoin businesses. But what worked in 2009 for hobbyists trading Bitcoins worth pennies simply does not cut it for our modern $7 billion Bitcoin economy.
- Haters gonna hate. An embarrassing number of smug "skeptics" shared the news of Mt. Gox's collapse as if it were a death knell for Bitcoin. Regulators, too, smelled blood in the water. Never mind that the price quickly recovered and that the Bitcoin community had expected this for years. For some people, bad news about Bitcoin is always good news.
- Bitcoin is anti-fragile. Bad actors like Mt. Gox that cannot compete must exit the Bitcoin market-period. Rather than regulating uncertainty out of existence, Bitcoin embraces these kinds of stressors and disorders to the long-term benefit of its users. Bitcoin not only resists shocks like the Mt. Gox collapse, it's made stronger by them.