Tech Talk: Bitcoin Breaks into the Offline World

Bitcoin's value has recovered by more than 30% in the last 24 hours, proving the cyrptocurrency can survive and even thrive despite the expected shutdown of troubled Tokyo exchange Mt Gox.

Just a day after a document apparently leaked from Mt Gox claimed the exchange had lost more than $350 million (£210m) worth of bitcoins, the currency's value grew by almost 35% to $601.03, according to data from CoinMarketCap. CoinDesk has bitcoin at $594, while the newly formed Winkdex values it slightly lower, at $585.

Bitcoin's surprise recovery was felt across the cryptocurrency landscape, with the top 62 currencies all reporting positive growth in their market caps over the last 24 hours. At the time of publication, litecoin was up 23.4% to $14.76, while dogecoin grew by 19% to $0.0011.

Cryptocurrency values

Most virtual currencies saw heavy losses earlier in the week when the Mt Gox news broke, following weeks of poor communication from the exchange about whether account holders at the company would ever be able to withdraw bitcoins held there.

Having deleted every message from its Twitter account, Mt Gox has now shut down its website, replacing it with a single page stating: "In light of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users.

"We will be closely monitoring the situation and will react accordingly."

Bitcoin is still some way behind its $1,200 high earlier this year, but yet again the currency is proving its ability to recover after major setbacks.

Leaked Mt Gox letter is legitimate, says CEO

Mt Gox CEO Mark Karpeles has admitted that the leaked document revealing the exchange's loss of 744,408 bitcoins is "more or less" legitimate" in an interview with Fox Business.

Published on 24 February by bitcoin blogger Ryan Galt, the document, called 'Crisis Strategy Draft', said Mt Gox's bitcoin funds have "been wiped out due to a leak...the reality is that Mt Gox can go bankrupt at any moment, and certainly deserves to as a company."

Karpeles said the document was not produced by Mt Gox, but added: "As the name suggests it's a draft, and it's a bunch of proposals to deal with the issue at hand, not things that are actually planned and/or done."

The Frenchman said he would not be stepping down as Mt Gox CEO, and that he and his team "haven't given up" on trying to save the company. He said all bitcoins he owns are stored on the Mt Gox exchange, and while many customers will have lost hope of seeing their coins again, Karapeles said: "technically speaking it's not 'lost' just yet, just temporarily unavailable."

BlockChain security officer 'devastated' by My Gox failings

The leaked Mt Gox document claims the exchange's 'cold storage' of bitcoin - in other words, those stored on computer hard drives not connected to the internet, and therefore safe from cyber theft - were hacked.

Respected bitcoin community member and chief security officer of virtual wallet service, Andreas Antonopoulos, said Mt Gox's excuse of a leak from coins held in cold storage was "either a stunning misrepresentation of their security or an outright lie...[which] strains the credulity of even the most gullible observers."

Antonopoulos added: "I am devastated by the impact this will have on customers of Gox and I am angry at the irresponsible behavior of Mt. Gox and especially Mark Karpeles that will damage the lives of many people."

However, he remains confident and is "committed to bitcoin's future and I am confident that the bitcoin industry and community will add Gox, alongside [shady online drug marketplace] Silk Road, as a lesson and move towards the future, stronger."

Bitcoin an 'innovative solution' says former US Treasury secretary

Lawrence Summers, former US Treasury secretary under President Bill Clinton, believes bitcoin is a "very, very important development. Giving a speech on 24 February - the same day the leaked Mt Gox document was published - Summers said bitcoin is "an innovative approach" to reducing financial friction and transaction costs.

Likening cryptocurrency development to the early days of the internet, Summers said: "Very serious economists thought that the internet was going to be no more important than a fax machine, so I'm not willing to dismiss bitcoin."