The Inside Story of Mt. Gox, Bitcoin's $460 Million Disaster

Wired has done some investigating on what led to Mt. Gox's collapse last month. What it basically boils down to is the exchange was run by amateurs, particularly the young and inexperienced CEO. It sounds like their back end software was an absolute mess, and their accounting was worse. Somehow they either didn't notice or chose to ignore the fact that they were leaking bitcoins by the hundreds of thousands. Some have also speculated that it wasn't that innocent. Maybe they know where those 850,000 bitcoins are. 

Mt. Gox, [an insider] says, didn’t use any type of version control software — a standard tool in any professional software development environment. This meant that any coder could accidentally overwrite a colleague’s code if they happened to be working on the same file. According to this developer, the world’s largest bitcoin exchange had only recently introduced a test environment, meaning that, previously, untested software changes were pushed out to the exchanges customers — not the kind of thing you’d see on a professionally run financial services website. And, he says, there was only one person who could approve changes to the site’s source code: Mark Karpeles. That meant that some bug fixes — even security fixes — could languish for weeks, waiting for Karpeles to get to the code. “The source code was a complete mess,” says one insider.

I think this disaster will end up being a good thing for Bitcoin in the end. It's definitely big enough to serve as a major wake up call to the rest of the Bitcoin community that they need to weed out the amateurs and bad actors before Bitcoin will be able to go mainstream and become more widely adopted. The community seems to be taking it seriously with their recent joint statement, so we will see how things unfold in the coming months.