Bitcoin Backers Propose Goxcoin to Cover MtGox Losers

Digital currency enthusiasts have proposed the creation of a bitcoin derivative named Goxcoin, which represents failed exchange MtGox's obligation to its troubled customers.

After the collpase of MtGox, Bitcoin losers may not get their holdings back as courts in Japan are not likely to recognise bitcoin as a currency. Therefore some are proposing a new bankruptcy system, called Goxcoin, a digital currency dedicated to manage bitcoins lost at MtGox.

Humint and the Mastercoin Foundation are among those who have proposed the new system.

"We envision Goxcoin as a User Created Asset, issued using the Mastercoin Protocol and given to MtGox customers to denote their MtGox BTC account balance at the time the exchange went offline. Goxcoin would be issued on a one-to-one basis to trusted and verified accounts," Humint said on its website.

"These digital tokens, representing MtGox's bitcoin obligation to the customer, would be transferable and limited in supply. There would be only one issuance of Goxcoins."

The tokens enable pro-rata distribution of any bitcoin that may be recovered through forensic investigation, law enforcement, and/or the liquidation of MtGox as a corporate entity, according to the proposal.

Owners of Goxcoin may trade them with each other or buy them up if they assume the recovery effort is going well.

"We believe the creation of these tradable tokens is the best way for Mt.Gox to address its current bitcoin liabilities, and that the fiat recovery obligation should be separated from the bitcoin recovery obligation," Humint added.

The issuance of Goxcoins would require the participation from MtGox and its CEO Mark Karpeles.

"Goxcoins represent the claim on a single bitcoin worth of recovery. So if you believe the coins will be recovered, it makes sense to hold them," said Adam Levine, one of the backers of the concept and editor-in-chief of bitcoin audio show, Let's Talk Bitcoin Network.

Adam Levine Talks about The MtGox Debacle and Goxcoin