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The Mt. Gox Debacle: What Happened, What It Means for Bitcoin

The Mt. Gox Debacle: What Happened, What It Means for Bitcoin
Despair Not, Dear Non-Statist, or Even Minimally-Rational Mt. Gox-Debacle Spectator
The recent shutdown of Mt. Gox, once the world’s largest trading platform for bitcoins, has sparked, as expected, a flurry of flashy headlines in the mainstream media warning that the event portends nothing less than an apocalyptic end for the cryptocurrency.

This is, of course, a natural consequence of the institutionalized worldview that axiomatically and uncritically assumes market dynamics as chaotic, socially destructive forces, only to be tamed by a benevolent governmental apparatus in charge of watching over the interests of the wider public.

Take, for instance, the headline from Joe Paglieri at CNN Money:

Mt.Gox site disappears, Bitcoin future in doubt” (emphasis mine).

It’s one of the clearest examples of the phenomenon. The bankruptcy of a key player in an industry is assumed to inexorably imply instant doom for the industry as a whole. A very similar logic to what the whole “too big to fail” meme meant towards justifying the enormous bailouts handed out to the banking industry during the latest global financial crisis.

But upon reading the body of the article, it is clear — at least for anyone with a minimally consistent view of how markets work and their role in the evolution of a sustainable economic systems — that there’s nothing in it that warrants such an alarmist conclusion.

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