Okay, I need to talk about this because I've been half-laughing, half-groaning about it since yesterday morning. Mt. Gox, the Tokyo bitcoin exchange that imploded a few weeks back and told the entire internet that 850,000 bitcoins had basically vanished, announced yesterday (March 20th) that they went digging through some old wallets and, whoops, found 200,000 of them sitting right there.
Two hundred thousand bitcoins. At yesterday's price of somewhere around $580 a coin, that's something like $116 million that was apparently just... misplaced. Like a set of car keys. Except instead of car keys it's enough money to buy a small regional airline, or possibly a medium one.
The official explanation, from what I've read, is that this was an "old-format" wallet dating back to before June 2011 that they'd assumed was empty and never bothered checking again. Three years. Nobody checked it for three years, during which time the company was simultaneously telling customers, in writing, that their money was gone for good.
I don't know Mark Karpeles personally and I'm not going to pretend I understand exactly how rickety a bitcoin exchange's back end must have looked in 2011. Early bitcoin software was genuinely a mess back then, and Mt. Gox literally started life as a site for trading Magic: The Gathering cards before it somehow became the biggest exchange on earth, which tells you most of what you need to know about how much long-term planning went into its security. But "we found $116 million we'd forgotten about" is not exactly the statement that restores confidence three weeks after you file for bankruptcy protection and tell something like 750,000 customers they're out of luck.
The bitcoin crowd online seems split about evenly between "see, this proves the blockchain is more resilient than people give it credit for, the coins were always traceable if anyone bothered to look" and "this proves nothing except that Mt. Gox doesn't actually know what is or isn't in its own wallets." I lean hard toward the second camp, for what it's worth. If you can misplace 200,000 of something and then stumble across it a month later, that's not evidence your accounting is fine. It's evidence your accounting was never happening in the first place.
Unrelated tangent, but this whole saga made me paranoid about my own backups again, in a smaller and much less dramatic way. I spent Wednesday night going through old external drives I hadn't touched since maybe 2012, mostly just making sure nothing important was sitting on something I'd since half-forgotten about in a drawer. No forgotten treasure over here, sadly. Just a folder labeled "drafts_FINAL_v3" with nine half-written blog posts in it that never went anywhere, and a truly embarrassing number of duplicate vacation photos. If I owe anyone $116 million, it is not sitting on that drive.
The bigger question nobody seems to be asking loudly enough is: if they found 200k coins by accident, what else might be sitting in some other old wallet nobody's double checked? And if the honest answer is "nothing," why should anyone take that answer more seriously than the first one they gave? I don't think this is a scandal exactly, not in the way the original collapse back in February was. It's more just deeply embarrassing, in a way that makes me wonder how much of the crypto exchange world in 2014 is held together by good intentions and spreadsheets that nobody ever double-checked.
I still think bitcoin as an idea is interesting, for whatever that's worth from someone who has bought exactly zero of it. I do not think Mt. Gox specifically should be trusted to run a lemonade stand at this point, let alone an exchange holding other people's money. If you've still got coins parked with them somewhere, yesterday's news probably shouldn't make you feel much better about ever seeing them again.