Bitcoin is a virtual currency that has exploded in popularity over the past year. Invented in 2008 and made widely available in 2009, this software allows people to make payments directly between peers, without interference from or reliance upon any central monitoring group. Perhaps the biggest attraction of Bitcoin is its complete lack of regulation by any federal government. Transactions take place in so-called Bitcoin Exchanges, which allow buyers and sellers to communicate directly.
There is, however, a downside to Bitcoin: whenever an exchange fails, those who owned Bitcoin stored in online accounts are often unable to retrieve their money. When the Mt. Gox website, an online exchange for Bitcoin, was shut down, investors around the globe struggled to come to terms with the implications. The Mt. Gox crisis created a huge setback to for cryptocurrency in general and raised a number of existential questions and concerns about the future of Bitcoin.
The most obvious concern was that the decentralization and lack of regulation could lead to Bitcoin users being unable to recover their money after an online exchange shuts down. In the future, creditors who lend money to Bitcoin users may have to hire commercial attorneys or creditors’ rights attorneys to retrieve moneys owed to them.