Dive Brief:

• As of Monday, Mt.Gox, the largest global bitcoin exchange, is offline after $350 million was plundered in a hack that lasted at least two years.

• Bitcoin advocates defended the currency, blaming the incident on the ineptitude of Mt. Gox. Some experts see it pushing back the mainstreaming of bitcoin by five to 10 years.

• Mt. Gox had been troubled for a while, but the bad news for bitcoin users is that hackers were apparently able to access bitcoin not only through internet wallets, but also through “cold storage” bitcoin stored offline.

Dive Insight:

There is no question that this is a major setback, and it’s hard to know how advocates will be able to set things right. The issues are not only the practical implications of the Mt. Gox collapse — in particular, how to protect bitcoin from hacks and thefts — but also how to repair the psychological damage. Bitcoin was already struggling to gain legitimacy, and it looks like the Mt. Gox collapse will go far in wiping out much of what it had.