Mt. Gox has been in a lot of heat these past few months. The company, which is considered as the numero uno Bitcoin exchange in the world, had to temporarily stop dollar withdrawals of its clients to make sure that its operations were compliant with U.S. anti-money laundering rules.
In April, Mt. Gox attracted the watchful eyes of U.S. Federal Officials when a client of the firm was seized by authorities. The client was allegedly operating as an unlicensed (and therefore illegal) money-service business. Things are looking up now though, as Mt. Gox has finally resumed dollar withdrawals. In a notice to customers dated July 4, 2013, Mt. Gox indicated,
“Mt. Gox is happy to announce that global account withdrawals have now fully resumed as of today, after several days of testing our new system for processing transactions. We want to keep you informed about our progress in this arena, and especially assure our customers that their funds are accessible.
While we announced that there would be a temporary hiatus on withdrawals, during our testing over the past two weeks we managed to process over $1,000,000 USD to customers. As this required a great deal of manpower and was not a perfect solution, we are quite happy with the progress made despite the conditions.”
Apparently, Mt. Gox was able to create some solid partnerships with several financial institutions in Japan and other parts of the globe to ensure that it has the necessary resources to handle money transfers in a more stable and competent way. Even though Mt. Gox still has two weeks’ worth of backlog payments to fulfill, it assures its clients that the operations will be back to normal soon.
Bitcoins: What’s the Deal?
As the world’s leading virtual currency, the Bitcoin has been on a pretty wild rollercoaster ride when it became more popular recently. At the start of this year, it was trading at around $13 in value before skyrocketing to $220 in April. Last Friday, it plummeted to a low of $66 then recovered to $72 as of this writing.
If you’re wondering why people buy up Bitcoins, then let me remind you that its strength lies in its limited supply. Unlike regular currencies that central banks can print whenever they decide to, Bitcoins are garnered using algorithms.
As discussed in my Bitcoins 101 article, the Bitcoin algorithm basically reflects the diminishing value of gold or other limited precious metals. For now, there are roughly 11.4 million Bitcoins in existence. The ceiling is 21 million Bitcoins, at which no more Bitcoins will be issued.
The bane of the currency, however, is in its volatility and lack of transparency. Remember that Bitcoins are not regulated by the U.S. government, which means that it is difficult to track if they are used in illegal activities such as money laundering or drug sales. In fact, Silk Road, which is basically the E-bay of the drug market, is known to rely heavily on Bitcoins for its transactions.
It’s tough to predict the future of Bitcoins, but what we do know for now is that its use and popularity is still on the rise. At the end of the day though, this virtual currency carries extremely high risk, which means that caution must be exercised when using them.