So I was half-watching my RSS feeds around lunch today and Bitcoin had already blown past $260 on Mt. Gox. By the time I actually sat down to pay attention, it had round-tripped back down under $105. In about an hour. That's not a dip, that's a trapdoor.
For anyone who hasn't been following, Mt. Gox is (was? is, still, barely) the biggest Bitcoin exchange, and it's been buckling under the weight of its own popularity all week. The price has been climbing since basically the start of March, crawled past $100 around April 1st, kept going, and today just went vertical. Then the exchange's matching engine choked on the volume and they took the whole thing offline for a "cooling off period." Nothing says confidence in a financial system like the exchange itself hitting the brakes because too many people showed up at once.
I have a weirdly personal stake in this, which is embarrassing to admit. Back in late 2011, right around when I started this blog actually, I had a spare Radeon 5870 sitting around and mining software was this fun little novelty thing people in forums were messing with. I ran it for maybe three weeks before the fan noise drove me insane and my electricity bill made my roommate ask pointed questions. I want to say I ended up with something like 4 or 5 coins out of it, total. At the time that was worth less than a sandwich. I genuinely forgot the wallet file existed until this week, when it occurred to me that "less than a sandwich" might now be "more than a used car," depending on the hour.
I dug up the old laptop tonight (it still boots, barely, Windows 7 update purgatory and all) and yes, the wallet's there. I have not moved it. I'm not going to pretend I have some grand investment thesis here — I don't trust an asset that can lose 60% of its value between when I make coffee and when I finish drinking it. But I also can't quite bring myself to cash out into an exchange that just proved it falls over under load. Mt. Gox going dark mid-crash is not exactly a reassuring place to route a wire transfer.
What's been more interesting than the price itself is watching this thing get discovered by people who've never heard of it before. My cousin texted me a Forbes headline about it like I was going to have some hot take. I don't, really, beyond: this is what happens when something illiquid and thinly traded gets a wave of new attention all at once. It's not a stock exchange with market makers and circuit breakers designed for this. It's one company's server cluster, and today it showed.
A couple of people in the comments on a forum thread I follow were already calling this "the crash that kills Bitcoin," which, sure, maybe, people have been predicting Bitcoin's death since it was worth pennies. I don't think a bad afternoon on one exchange is the whole story either way. What I do think is that if you're the kind of person who wants in on this because the number went up fast, you should maybe notice that the number also went down fast, on the same day, for reasons that had nothing to do with any of the actual arguments for or against the currency working as money.
Anyway. I'm not selling tonight. I'm also not buying more, and I'm definitely not telling my cousin to buy any, because explaining "well actually the exchange might just stop working when you try" is not the kind of sentence that inspires confidence in a financial product. I'll probably check the price again before bed out of morbid curiosity and then again first thing tomorrow, which is exactly the behavior that got everyone into this mess in the first place. Old habits.
If nothing else, it was a strange thing to spend an evening on: digging a 2011 laptop out of a closet because a currency I mined as a joke to fight boredom is suddenly a headline on a finance site. My roommate, for the record, still thinks I owe him for the electricity.