20 September 2014

Bitcoin bug causes massive sell-off

10 February 2014  |  7859 views  |  7 bitcoins

A bug in the bitcoin software that makes it possible to alter transaction details over the network has caused panic-selling among holders of the crypto-currency, sending prices crashing below the $600 mark on Monday morning.

Japan-based bitcoin exchange MT Gox last week suspended bitcoin transactions while it investigated technical problems that had emerged during an increase in withdrawal requests.

In an update today, the exchange says a bug in the bitcoin software makes it possible for someone to use the network to alter transaction details to make it seem like a sending of coins to a 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 it is working with the Bitcoin core development team and others to mitigate this issue.

"The problem we have identified is not limited to MT Gox, and affects all transactions where Bitcoins are being sent to a third party."

MT Gox has advised other exchanges and wallet services - and any service sending coins directly to third parties - to be "extremely careful" with anyone claiming their transaction did not go through.

News of a flaw in the bitcoin protocol which is being actively exploited has crashed the value of the crypto-currency, sending the price down to $539 per coin in early morning trading, way off last-year's year high of $1203.

MT Gox has not put a timescale on a fix, reminding users that "bitcoin is a very new technology and still very much in its early stages".

Comments: (7)

Chris Dunne - VocaLink Limited - London | 10 February, 2014, 13:54

The press release from MT Gox identifies a possible fix - providing a separate transaction hash.  That may fix this particular issue but the underlying problem remains that successful payment systems are built on trust, and this is somewhat absent in Bitcoin.

Trust in bitcoin is lacking in three respects: confidence that the mining system will not be exploited by 'selfish miner' cartels; confidence that the counterparties are indeed who you think they are, and now confidence that a transaction will not be altered in flight.

Bitcoin is a fantastic innovation but it is still a long way from being a stable transaction ecosystem

 

Barry Mac - LSE - London | 10 February, 2014, 21:21

Please correct the title. 

MTGOX bug(s) not bitcoin bug !! They are a terrible shower of unprofessionals and now they are trying to spin the story. This technical detail about bitcoin has been in the public domain since 2011 and only applies to unconfirmed transactions. 

https://en.bitcoin.it/wiki/Transaction_Malleability

http://bitcoin.stackexchange.com/questions/21959/is-this-transaction-malleability-really-an-issue

 

Alexander Peschkoff - TEDIPAY - London | 10 February, 2014, 21:29

MT Gox has been one of the major BTC exchanges since the early days. If they are (that) bad, what can be said of the others (and I don't mean those that simply vanished without a trace...)

A Finextra member | 11 February, 2014, 10:12

@Barry Mac agree this is a silly hyped sell off that has created a great buying opportunity.  What the article omits to say is that after the crash to $600, the price recovered again on the many other exchanges to $700.

Back up the truck and see you at http://insidebitcoins.de tomorrow.

A Finextra member | 12 February, 2014, 04:31

What if ....

http://bitcoinmagazine.com/9900/global-bankers-cryptocurrency/

This were true? How would bitcoin maintain utility?

 

 

A Finextra member | 12 February, 2014, 07:33

I guess in a truly free global market economy the market will select its preferred medium or media of exchange.  There are currently 80+ crypto currencies, so for much of this discussion Bitcoin could be taken as a place holder for the entire sector rather than specifically the Bitcoin protocol, block chain, etc.  One key change going on here is the idea of free market selection rather than legal tender being mandated by central banks or governments.  It was one of the Rothschilds in 1800s who said "Give me control of a nation's money and I care not who makes it's laws".  Then the US got the FED.  That's the regime the world needs to move away from to not be run by the bankers with politics as a puppet side show distraction.  There's an intense war going on behind the scenes now - mandated fiat vs freedom.  Throw in gold and silver (moving East) and the next few years will be really interesting ...

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