Mt. Gox was the first automated marketplace dedicated to the exchange of bitcoins. Founded in 2010, it has long supported most of the trading volume between traditional currencies and Bitcoin. The company is known to have gone bankrupt in February 2014 due to a series of hacking and other incidents, and to have taken away its customers‘ funds in the process. Let’s go back to the beginnings of this platform, which holds a mythical place in Bitcoin’s history.
The creation of Mt. Gox by Jed MCCaleb
In the spring of 2010, the means of acquiring Bitcoin Bank app are few and far between. There are essentially two services to perform an exchange. The first is the service offered by the NewLibertyStandard user who sells bitcoin based on its production cost by performing all transactions manually. The second is the bitcoinmarket.com platform, launched in March, which connects people for peer-to-peer trading.
There is therefore no advanced trading platform that allows automatic order management and offers sufficient liquidity to obtain a reliable price. It is in this context that the Mt. Gox platform will appear, thanks to the genius of Jed McCaleb.
Jed McCaleb is an American entrepreneur and programmer approaching 35 years of age. He is already known for co-founding MetaMachine Inc. in 2000, the company that ran the eDonkey2000 peer-to-peer file sharing software in the 2000s. When he discovered Bitcoin through Slashdot on July 11, 2010, he was no stranger to the concept of distributed networking and was immediately enthusiastic about Satoshi Nakamoto’s invention.
He quickly tries to get his hands on Bitcoin, but finds it hard to buy it for dollars. A video game enthusiast, in 2007 he developed a platform to buy and sell cards from the Magic: The Gathering Online game, which is derived from the Magic: The Gathering trading card game. The platform, called Mt. Gox as an acronym for Magic The Gathering Online eXchange and hosted at mtgox.com, had been running for about 3 months.
Three years later, Jed McCaleb decided to use his experience and domain name to create a marketplace. He started working hard on his project and, a week later, the platform was up and running. Under the pseudonym mtgox, he writes an announcement on the forum saying :
„Hi everyone, I’ve just set up a new bitcoin trading platform. Please let me know what you think about it.“
Following this announcement, Michael Marquardt (theymos) asked him „why [he] would use Mt. Gox and not BitCoin Market,“ to which Jed replied:
„[Mt.Gox] is always online, automated, the site is faster and has dedicated hosting and I think the interface is nicer.“
Initially, the platform accepts payments via PayPal. However, following too many chargeback requests, PayPal blocked Jed McCaleb’s account in October 2010, forcing it to suspend the platform’s activities for one month. This prompted him to add Liberty Reserve as a means of payment to reopen Mt. Gox. Thereafter, he will also accept transfers via Paxum, and bank transfers in dollars (ACH) and euros upon request.
The sale to Mark Karpelès and success
In November 2010, the price reached 30 cents and remained at that level for the rest of the year. As the platform meets more and more users, Jed McCaleb becomes concerned about regulatory repercussions. At that time, legislation around digital currencies like Bitcoin was more than unclear and he had to hire a lawyer in New York. In addition, he manages Mt. Gox on his own time and does not have the time to fully manage Mt. Gox.
So Jed McCaleb wants to give the platform to someone else in order to devote himself to his projects. In January 2011, the idea came to him to entrust it to an individual who is active in the community and with whom he interacts on IRC: Mark Karpelès.
Mark Karpelès (who goes by the name of MagicalTux on the Internet) is a talented French developer living in Tokyo, working freelance through his company, Tibanne Co. Ltd. A young geek of 25 years old, he emigrated to Japan out of an attraction for the local culture. He discovered Bitcoin at the end of 2010 thanks to a French friend who told him about it. He is immediately interested in digital currency, so much so that he starts accepting Bitcoin payments for his hosting service as soon as November 8th.