Problems at the Mt. Gox exchange have dominated Bitcoin news this past week, creating concern and confusion within the Bitcoin community and leaving everyone else wondering what in the world is going on.
Here's what's happened.
A few days later the exchange blamed a glitch in the Bitcoin software itself that allowed dishonest users to make multiple withdrawals. That angered many in the Bitcoin community, who charge that the glitch had been known for a long time and that Mt. Gox should have had a system in place to deal with the issue.
The story then took another twist, and the Bitcoin news got much worse…
Other Bitcoin exchanges, such as BitStamp and BTC-e, were also vulnerable to the glitch, which became apparent after a widespread attack on the digital currency in the days following the Mt. Gox announcement.
Slovenia-based BitStamp, now the largest Bitcoin exchange, and Bulgaria-based BTC-e, both halted withdrawals late Tuesday.
The disruptions caused Bitcoin prices to tumble from about $700 to about $600 on most Bitcoin exchanges.
But on Mt. Gox, where Bitcoin had been trading for more than $900 in the days before the halt in withdrawals, prices kept dropping. They hit a low of $220 on Sunday, a steep drop from their all-time high in early December of $1,242.
Some order returned to the world's Bitcoin exchanges when BitStamp and BTC-e both resumed allowing withdrawals of bitcoin on Friday. Bitcoin prices on those exchanges have stabilized in the low $600s.
But Mt. Gox remains in a state of crisis. The exchange said on Monday (yesterday) that it was working on a solution with bitcoin wallet site Blockchain.info, and that customer withdrawals of bitcoin would resume "soon."
But given the issues Mt. Gox has had moving fiat currencies to and from customer accounts, as well as its waning popularity, many believe the exchange's problems run much deeper.
And the entire sequence of events has given skeptics more reason to question whether the digital currency can endure.
And yet there are numerous signs that Bitcoin will survive this episode just as it has several previous crises…
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.