Mt. Gox: Bitcoin's 1st Exchange- Who Created it?

Here is a quick informational post about Mt. Gox, Bitcoin's 1st exchange. This comes from the book, Digital Gold, by Nathaniel Popper. This chapter takes place in July of 2012. I hope you enjoy.

Jed McCaleb, a native of Arkansas, had been raised by his single mother. He was a math and science prodigy, and this allowed him to make it into Berkeley College. However, Jed dropped out of Berkley and moved to New York. There he and a partner set up what became one of the main successors to Napster.

Once day, Jed came across the Slashdot post about Bitcoin, and he was immediately intrigued. He loved the idea of it taking power away from authorities and giving it back to individuals. But when Jed tried to buy some actual Bitcoins, he ran into the limitations of the few existing sites that sold Bitcoin. He could not buy Bitcoin at night.

Jed said that he wanted to build a site himself where he could buy Bitcoins at any hour. With some experience in amateur foreign-currency trading, Jed knew the basics of what an exchange required. He had never actually set up a website before, so this was something of a fun experiment. He and his wife had discussed what to name his new site. He mentioned an old domain name that he owned and was not using- mtgox.com. Jed had bought the site in 2007 as an online exchange to buy and sell cards used in the role-playing game Magic: The Gathering- hence the acronym for Magic: The Gathering Online Exchange.

7 days later after the Slashdot post, Jed casually advertised his new site on the Bitcoin forum: "Hi Everyone, I just put up a new Bitcoin exchange. Please let me know what you think." Jed offered to take money from customers into his PayPal account and thereby risk violating the PayPal prohibition on buying and selling currencies. This made buying Bitcoin much more convenient, but it betrayed some of Bitcoin's basic principles. Satoshi had designed Bitcoin to eliminate the need for trusted central authorities. It was supposed to be a new money that people could hold on their own, without a bank, secured with a private key that only the user knew. Mt. Gox customers would be moving back to the old model in which a single institution-Jed's company- held everyone's money. Although, unlike banks, Mt. Gox had no deposit insurance and no regulators overseeing the safety and soundness of Jed's operation.

During his first day in business, July 18, twenty Bitcoins were traded at 5 cents USD each on Mt. Gox. But within the 1st week he had his first $100 USD day of trading, and by the end of the month Mt Gox had overtaken all other existing exchanges in terms of trading volume to become the largest Bitcoin business around. Mt. Gox was a success...or was it? Tune in next time to learn more...thanks for stopping by.