In July 2010, a programmer named Jed McCaleb launched a Bitcoin exchange called Mt. Gox. The name was borrowed from an earlier project of his: “Magic: The Gathering Online Exchange,” a trading card game marketplace. The domain was repurposed for Bitcoin, but the name stuck. Within a year, Mt. Gox would become the dominant Bitcoin exchange in the world, handling over 70% of all Bitcoin trades globally.
McCaleb built the exchange in a few weekends. It was a hobby project, not a professional financial service. In March 2011, he sold Mt. Gox to a French developer living in Japan named Mark Karpelès. Under Karpelès’ management, the exchange grew explosively. By 2013, Mt. Gox was handling billions of dollars in Bitcoin trades. Customers from around the world trusted it with their savings.
The rise of Mt. Gox coincided with Bitcoin’s first big price rally. When Bitcoin crossed $1 in February 2011, it was big news. When it crossed $30 in June 2011, people began taking it seriously as an asset. And when it briefly hit $266 in April 2013, before crashing to $50, Mt. Gox became a household name in the tech world. It was, for most people, the face of Bitcoin.
But beneath the surface, Mt. Gox was a disaster waiting to happen. The code was sloppy. Security was minimal. Karpelès, though well-intentioned, was an inexperienced manager running what had become one of the world’s most important financial institutions. Hackers probed the exchange relentlessly. Bitcoins were being stolen from Mt. Gox’s wallets, often without anyone noticing.
In February 2014, Mt. Gox would collapse spectacularly, losing 850,000 bitcoins — worth roughly $450 million at the time and billions today. Users would never recover most of their funds. The collapse would devastate Bitcoin’s price and reputation for years. But in its brief heyday, Mt. Gox proved something important: that millions of people, all over the world, wanted to own Bitcoin. The demand was real. The infrastructure just wasn’t ready yet.
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