It’s been an interesting week in Bitcoin. Three exchanges, including Mt. Gox—formerly the largest—all ‘temporarily’ halted withdrawal of Bitcoin after discovering duplicate transactions in their internal record keeping due to the long-known ‘transaction malleability‘ issue. However, while the other two exchanges have reopened, Mt. Gox has not, leading to an effective run on the bank. Without being able to move bitcoins out of Mt. Gox, users are fearful they will never recover the bitcoin, and have been selling at bargain prices to folks willing to take that risk. The price on Mt. Gox has therefore plummeted to the $200 range.
Meanwhile, even other bitcoin services such as Coinbase—which shrugged off the transaction malleability issue, stating “there weren’t any users affected by this issue”—admited to being hit by a DDoS attack. Coinbase recovered quickly however, and claims to still be carrying on business as usual, leading to an interesting situation where pricing on Coinbase (a broker and wallet service), as well as other major exchanges besides Mt. Gox, continues a relatively long period of stability since the last run-up, at over $600.
Having exchange rates vary between $200 and $600 per bitcoin is just the latest interesting result of having the world’s first decentralized currency. Personally, I continue to be long bitcoin—this is still very early days in the grand scheme of things—but having major exchanges shut down like this is certainly disturbing.