Banking Blog

Finance Blogs » Banking » Mt. Gox suspends bitcoin trading

Mt. Gox suspends bitcoin trading

By Allison Ross · Bankrate.com
Monday, February 10, 2014
Posted: 4 pm ET

It's time for taking antacids if you're a bitcoin holder.

It's been a rocky past few days for the price of bitcoins after major trading exchange Mt. Gox announced Friday it was suspending bitcoin withdrawals to address a technical issue.

Today, Mt. Gox issued a statement blaming its technical issue on a bug in the Bitcoin software that affects all exchanges. Mt. Gox is suspending withdrawals from its exchange indefinitely as it works to address the problem.

The statement caused bitcoins to briefly drop to just over $572 in Friday morning trading, according to CoinDesk, which averages prices from different Bitcoin exchanges, although it has since rebounded a bit. Before Mt. Gox's announcement Friday, a bitcoin had been trading around $850.

Here's Mt. Gox's "non-technical explanation" of what it says is happening:

A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent.

Mt. Gox says currency withdrawals can continue as usual, as can transfers between Mt. Gox Bitcoin addresses, but that it has temporarily stopped transactions to external Bitcoin addresses.

"To put things in perspective, it's important to remember that Bitcoin is a very new technology and still very much in its early stages," Mt. Gox's statement reads. "What Mt. Gox and the Bitcoin community have experienced in the past year has been an incredible and exciting challenge, and there is still much to do to further improve."

Gavin Andresen, lead developer on The Bitcoin Project, says in a blog post that, contrary to Mt. Gox's statement, "Bitcoin is not at fault."

Andresen says Bitcoin's "transaction malleability" -- which is where transaction IDs can be renamed before being confirmed in Bitcoin's ledger -- has been known since 2011. Andresen says the Bitcoin team has worked to reduce this malleability but blames the problems on Mt. Gox's procedures.

Regardless, this latest news means the end of a period of relative stability for the price of bitcoins.

Bitcoin has been known to have volatile pricing, often seeing jumps in prices with media publicity and price drops in response to bad news.

In the past few weeks, the price of bitcoins has been relatively less volatile, floating mostly between $800 and $900, according to CoinDesk, which announced today it is no longer including Mt. Gox in its index.

With all this news about Bitcoin lately, what is your personal take on cryptocurrencies? Will you be buying bitcoins in the near future?

Follow me on Twitter: @allisonsross.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment
Add a comment

(Comments may take 5-10 minutes to appear)