Prominent bitcoin supporters said the apparent collapse of the Tokyo-based Mt Gox exchange was an isolated case of mismanagement that would weed out "bad actors".
But the setback raised serious questions about bitcoin's tenuous status and even more tenuous future. At least one supporter said the blow could be fatal to bitcoin's quest for acceptance by the public after it was just beginning to gain legitimacy beyond the technology enthusiasts and adventurous investors who created it.
A coalition of virtual currency companies said Mt Gox went under after secretly racking up catastrophic losses. The exchange had imposed a ban on withdrawals earlier this month.
By yesterday its website returned only a blank page. The collapse followed the resignation on Sunday of chief executive Mark Karpeles from the board of the Bitcoin Foundation, a group seeking wider use of the exotic currency.
Mt Gox's origins are rooted in fantasy instead of finance. The service originally specialised in trading colourful cards featuring mythical wizards and derives its name from a game. The initials stand for Magic: The Gathering Online Exchange.
San Francisco-based wallet service Coinbase and Chinese exchange BTC China sought to shore up confidence in the currency by saying the Mt Gox's situation was isolated and the result of abusing users' trust.
"As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today," the statement said.
Since its creation in 2009, bitcoin has become popular among tech enthusiasts, libertarians and risk-seeking investors because it allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties. Criminals like bitcoin for the same reasons.
For various technical reasons, it is hard to know just how many people worldwide own bitcoins, but the currency attracted outsize media attention and the fascination of millions as an increasing number of large retailers such as Overstock.com began to accept it.
Speculative investors have jumped into the bitcoin fray, too, sending the currency's value fluctuating wildly in recent months. In December, the value of a single bitcoin hit an all-time high of 1,200 dollars (£722). In the aftermath of the Mt Gox collapse, one bitcoin stands at around 470 dollars (£283).
Central banks across the world have been hesitant to recognise bitcoin as a form of money and yesterday's vanishing act is not helping.
Japanese government officials at the Finance Ministry and the Fiscal Services Agency said today that a virtual currency like bitcoin was not under their jurisdiction. Tokyo police declined to comment.
Mt Gox "reminds us of the downside of decentralized, unregulated currencies", said Campbell Harvey, a professor at the Duke University Fuqua School of Business who specialises in financial markets and global risk management.
"There is no Federal Reserve or IMF to come to the rescue. There is no deposit insurance."
But, Prof Campbell said, Mt Gox's disappearance "doesn't mean the end of the road" for bitcoin and other virtual currencies.
The collapse "might represent the end of the 'wild west' where anyone can set up shop and deal in crypto-currencies," he said. But "increasingly sophisticated investors" are funding serious ventures that will "raise both quality and confidence".
Peter Leeds, a publisher of newsletter focused on risky investments, doubts bitcoin will recover from the Mt Gox collapse and expects the currency to plunge below 300 dollars (£180).
"It's more likely that someone getting involved in bitcoin at this point of the game is going to lose," he said. "There are all sorts of problems inherent with bitcoin that are just now coming to light."
Documents purportedly leaked from Mt Gox lay out the scale of the problem. An 11-page "crisis strategy draft" published on the blog of entrepreneur and bitcoin enthusiast Ryan Selkis said that 740,000 bitcoins were missing from Mt Gox. That represents roughly 6% of the estimated 12 million bitcoins that have been created so far, translating into hundreds of millions of dollars' worth of losses, although figures are fuzzy given the currency's extreme volatility.
"At the risk of appearing hyperbolic, this could be the end of bitcoin, at least for most of the public," the draft said.
In a post to his blog, Mr Selkis said the document was handed to him by a "reliable source" and that several people close to the company had confirmed the figures. The Japanese government has not announced any formal investigation.
The scandal may cost customers dearly.
At the Tokyo office building housing Mt Gox, bitcoin trader Kolin Burges said he had picketed outside since February 14 after traveling from London in an effort to get back 320,000 dollars (£193,000) he has tied up in bitcoins with the exchange.
"I may have lost all of my money," said Mr Burgess, next to placards asking if Mt. Gox is bankrupt. "It hasn't shaken my trust in bitcoin, but it has shaken my trust in bitcoin exchanges."
Mr Karpeles did not immediately return messages seeking comment. A security officer at the office building said no one from Mt Gox was inside. Tibbane, an internet company of which Mr Karpeles is CEO, still has its name listed on the building's directory.
"I have no idea" where they are, said Mr Burges. "I'm both annoyed and worried."
Bitcoin's boosters say the currency's design makes it impossible to counterfeit and difficult to manipulate. But it has struggled to shake off its associations with criminality, particularly its role in powering the now-defunct online drug marketplace Silk Road.
Only last month, another member of the Bitcoin Foundation, vice chairman Charlie Shrem, was arrested at New York's Kennedy Airport on charges of money laundering.