user13856: I'm sorry if this is a stupid question, I'm not a bitcoin user and may lack important information. My understanding was that each bitcoin user has a wallet on his harddrive or wherever, where he stores his bitcoins with the transaction history proving that they are his.  So the system is pretty decentralized. Then why is it such a problem that Mt. Gox disappears? Don't the people losing money have it in their own wallets, if so why?
Edit to add: In case the question was unclear, I was asking for why people lost money with Mt. Gox - not about the wider ramifications like potentially lost trust in *coin etc.

user13929: The short answer to the question is that it is NOT a problem.  That is unless you are a Mt Gox customer that had deposits held by them on your behalf - then you probably do consider it a problem.
Mt. Gox in essence is like a bank holding bitcoins on people's behalf.  Apparently many of those bitcoins have gone missing and Mt Gox is now insolvent and unable to honor all its liabilities.  It is very much like a failing bank in the 1920's.  
Assuming that Mt Gox really is done for is a set back for bitcoin and may slow its a adoption but just like the failure of banks in the 1920's did not destroy the dollar neither will this destroy bitcoin.

user10577: It also shakes confidence in BTC both for the BTC community and the public in general. When I say BTC I am encompassing all other *coin. It is analogous to the failure of a large bank--except without any insurance.   

user5464: People had bitcoins loaded on Mt.Gox internal trading accounts (trading wallets). This goes both for fiat currency and bitcoins.
Bitcoin withdrawals were shut-down for a few weeks now, which created concepts like "goxbucks" or "goxcoins" as you could not get any Bitcoins out.
Now, the Mt.Gox is closed completely, so you cannot get either fiat currency or Bitcoins out at all. People speculate that they will never get their funds back, as MtGox would have lost these assets they manage for their customers.

user13873: To actually try and answer your question, Mt Gox acted as a trusted middleman in btc trading, and thus had to have control over their users money. 
Let's say dude A has a few btc he wants to sell, and dude B has a few dollars he wants to buy btc for. B doesn't want to pay until A sends him the btc, and A doesn't want to send his btc to B until B pays. Unless they trust each other, they can not do business.
By putting money and btc in the hands of a supposedly trustworthy middleman (Mt Gox), A and B can do business. As soon as they agree on the price, the middleman, who has access to both the btc wallet of dude A and the dollar wallet of B, can make sure that both transfers are made, so that each person gets what they agreed on.
So essentially, users had dollar accounts and a btc accounts at Mt Gox, and it is from these that things seem to have gone missing.

As has been pointed out below, it may be that accounts still show the right balance, but Mt Gox doesn't have that money anymore.

13856: <p>I'm sorry if this is a stupid question, I'm not a bitcoin user and may lack important information. My understanding was that each bitcoin user has a wallet on his harddrive or wherever, where he stores his bitcoins with the transaction history proving that they are his.  So the system is pretty decentralized. Then why is it such a problem that Mt. Gox disappears? Don't the people losing money have it in their own wallets, if so why?</p>

<p><strong>Edit to add:</strong> In case the question was unclear, I was asking for why people lost money with Mt. Gox - not about the wider ramifications like potentially lost trust in *coin etc.</p>
 13929: <p>The short answer to the question is that it is NOT a problem.  That is unless you are a Mt Gox customer that had deposits held by them on your behalf - then you probably do consider it a problem.</p>

<p>Mt. Gox in essence is like a bank holding bitcoins on people's behalf.  Apparently many of those bitcoins have gone missing and Mt Gox is now insolvent and unable to honor all its liabilities.  It is very much like a failing bank in the 1920's.  </p>

<p>Assuming that Mt Gox really is done for is a set back for bitcoin and may slow its a adoption but just like the failure of banks in the 1920's did not destroy the dollar neither will this destroy bitcoin.</p>
 10577: <p>It also shakes confidence in BTC both for the BTC community and the public in general. When I say BTC I am encompassing all other *coin. It is analogous to the failure of a large bank--except without any insurance.   </p>
 5464: <p>People had bitcoins loaded on Mt.Gox internal trading accounts (trading wallets). This goes both for fiat currency and bitcoins.</p>

<p>Bitcoin withdrawals were shut-down for a few weeks now, which created concepts like "goxbucks" or "goxcoins" as you could not get any Bitcoins out.</p>

<p>Now, the Mt.Gox is closed completely, so you cannot get either fiat currency or Bitcoins out at all. People speculate that they will never get their funds back, as MtGox would have lost these assets they manage for their customers.</p>
 13873: <p>To actually try and answer your question, Mt Gox acted as a trusted middleman in btc trading, and thus had to have control over their users money. </p>

<p>Let's say dude A has a few btc he wants to sell, and dude B has a few dollars he wants to buy btc for. B doesn't want to pay until A sends him the btc, and A doesn't want to send his btc to B until B pays. Unless they trust each other, they can not do business.</p>

<p>By putting money and btc in the hands of a supposedly trustworthy middleman (Mt Gox), A and B can do business. As soon as they agree on the price, the middleman, who has access to both the btc wallet of dude A and the dollar wallet of B, can make sure that both transfers are made, so that each person gets what they agreed on.</p>

<p>So essentially, users had dollar accounts and a btc accounts at Mt Gox, and it is from these that things seem to have gone missing.</p>

<hr>

<p>As has been pointed out below, it may be that accounts still show the right balance, but Mt Gox doesn't have that money anymore.</p>
