Technical Issues Dogging Bitcoin Exchange Prompt Transfer Halt

CYBERSPACE—In the aftermath of the cessation of Bitcoin transfers by Mt. Gox on Friday, the value of the global digital currency has seen a substantial drop. According to the BBC today, "Bitcoins fell from $700 (£427) to $540." In an updated statement by Mt. Gox, the Japan-based exchange stated, "The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party. We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending Bitcoin withdrawals until this technical issue has been resolved." Offering a more specific and non-technical explanation about what prompted the transfer halt, the company continued, "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. MtGox is working with the Bitcoin core development team and others to mitigate this issue." But the BBC reported that not everyone believes the problem is as widespread as Mt. Gox describes. Gavin Andresen, chief scientist at the Bitcoin Foundation—which oversees and develops the Bitcoin software—told the network, "The issues that MtGox has been experiencing are due to an unfortunate interaction between MtGox's highly customized wallet software, their customer support procedures, and an obscure (but long-known) quirk in the way transactions are identified and not due to a flaw in the Bitcoin protocol." This is just the latest hit to the digital currency that has seen its popularity soar in recent months among consumers, investors and industries, including the adult entertainment industry. The recent arrest of Silk Road Bitcoin traders as well as the decision by Russia to prohibit its use in the country have created a few bumps in the road for a currency whose flexibility and relative anonymity makes it attractive to many people for the same reasons it remains problematic for law enforcement and regulators. That said, this recent snafu may be just another bump that the currency deals with and survives with the same tenacity that has seen it through the last few years' challenges. The BBC also spoke with Garrick Hileman from the London School of Economics, who opined of this recent set-back, "It's a reason to be concerned, but it's a little early to say that there's something fundamentally flawed with Bitcoin software. Previous problems have been corrected. "It reflects the immaturity of the software," he added. "Bitcoin is still a technology in the process of being developed." That sentiment reflected the reminder by Mt. Gox that, "Bitcoin is a very new technology and still very much in its early stages. What MtGox 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." That would appear to be the understatement of the week.