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Only invest what you can afford to lose, Bitcoin executive says of digital currency

By CNN Wires
updated 4:04 AM EST, Wed March 5, 2014
STORY HIGHLIGHTS
  • Bitcoin's executive director Jon Matonis tells CNN people should only invest what they can lose
  • His comments come after the meltdown of Mt Gox, one of the biggest Bitcoin exchanges
  • Matonis says Bitcoin is still considered experimental, even though it's very successful
  • Since its inception in 2009, Bitcoin has fluctuated wildly in value

(CNN) -- Bitcoin is still in beta, and users should only invest what they can afford to lose, Bitcoin Foundation executive director Jon Matonis says.

"It's still experimental, even though it's five years old and very successful, it still is considered experimental," Matonis told CNN's Jim Boulden at the world's biggest mobile tech trade show in Barcelona.

"I don't think that people should treat it as non-experimental. You should only invest in trade what you can afford to lose," he said.

Matonis' comments to CNN at Mobile World Congress come just days after Mt. Gox, one of the world's largest Bitcoin exchanges, was taken offline, putting millions of dollars of investors' money at risk and shaking confidence in the digital currency.

On Friday, Mt. Gox filed for bankruptcy protection at a Tokyo court on Friday with debts of 6.5 billion yen ($64 million), Japanese media reported.

Matonis, speaking before Mt. Gox's bankruptcy filing, told CNN the melt-down represented the opposite of "too big to fail capitalism" because it was not bailed out. "If this had been a traditional financial institution, the losses would probably be papered over with tax payer money. We didn't see that in this case," he said.

Mt. Gox has been mired in problems since February 7, when it halted withdrawals from its accounts.

The company's computer programmers hadn't accounted for a quirk in the way Bitcoin works, allowing cyber attackers to dupe Mt.Gox with a scheme resembling receipt fraud.

When Mt. Gox discovered it was under attack, it stopped any investors from pulling their money out of their trading platform. Mt. Gox CEO Mark Karpeles resigned from the Bitcoin Foundation's board of directors on Sunday.

Matonis remained bullish about Bitcoin's future, telling CNN the currency was "massively resilient." Further, he said, "the exchanges that are still in existence and operating will tend to be stronger because of this."

Matonis said the currency would move out of beta in the next few years. "I would say in about three to five years we'll start seeing user-friendly apps which really will complete the transition to mainstream. It should be as easy to download and use Bitcoin apps as it is to download something like Skype," he said.

The currency has fluctuated wildly in value since its inception in 2009, shooting to $1,000 in December as investors began leaping into the currency. It is now around $545.

Some traditional businesses, including online retailer Overstock.com, some Subway sandwich shops and Richard Branson's Virgin Galactic, have begun accepting Bitcoin.

But the anonymous nature of the currency also has linked it with less reputable outlets. Bitcoin and other digital "cryptocurrencies" have been the de facto payment system on underground websites that deal in drugs, weapons and other illegal merchandise.

Read more: Bitcoin ATMs coming to a corner near you

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