{"id":445227,"date":"2011-06-21T23:11:04","date_gmt":"2011-06-21T23:11:04","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/06\/21\/bitcoin-will-recover-from-crash\/"},"modified":"2011-06-21T23:11:04","modified_gmt":"2011-06-21T23:11:04","slug":"bitcoin-will-recover-from-crash","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/06\/21\/bitcoin-will-recover-from-crash\/","title":{"rendered":"Bitcoin ‘will recover’ from crash"},"content":{"rendered":"

21 June 2011<\/span> Last updated at<\/span> 19:11 ET<\/span><\/span><\/p>\n

The virtual currency Bitcoin will “bounce back” after a hack attack caused its value to collapse, according to one of its senior developers.<\/p>\n

Gavin Andresen said he hoped the crisis would lead to better security on sites where Bitcoins are bought and sold.<\/p>\n

Prices on the main exchange, Mt.Gox, fell from $17.50 (\u00a310.80) to almost zero when a large number of stolen Bitcoins were dumped on the market.<\/p>\n

Trading was suspended and eventually rolled back to pre-crash rates.<\/p>\n

Mt.Gox revealed details of the security breach on June 20 with an announcement on its website.<\/p>\n

“It appears that someone who performs audits on our system and had read-only access to our database had their computer compromised. This allowed for someone to pull our database,” the statement read.<\/p>\n

Around the same time, an unidentified person accessed one of the compromised accounts and sold all of its Bitcoins.<\/p>\n

They then attempted to buy the coins again and withdraw them in US dollars.<\/p>\n

The fraudster was partially foiled when they hit Mt.Gox’s $1000 daily limit.<\/p>\n

The decision to reset the Bitcoin rate to a point just before the malicious trades were placed was criticised by some users who had taken the opportunity to buy low.<\/p>\n

“Why should everyone who profited from the crash suffer your inability to secure the site?” wrote a user called Elments.<\/p>\n

Questionable future<\/span><\/p>\n

Although the problem was caused by security failings at Mt.Gox, it has raised wider questions about the viability of Bitcoin as a virtual currency.<\/p>\n

Continue reading the main story<\/a><\/p>\n

\u201cStart Quote<\/span><\/h2>\n
\n

Like any start-up, it could change the world but it could also be risk.\u201d<\/p>\n<\/blockquote>\n

End Quote<\/span> Gavin Andresen<\/span> Bitcoin developer<\/span><\/div>\n

“I am sceptical about its longer term prospects,” said David Birch, director of Consult Hyperion, a consultancy specialising in electronic transactions.<\/p>\n

“There were two things here – the specific bubble (caused by the dumping of stolen coins) and the exchange mechanism.”<\/p>\n

Bitcoin transactions are made by swapping anonymous, heavily encrypted codes which only a specific user can unlock.<\/p>\n

Details of who owns each Bitcoin are distributed across a peer-to-peer network, with no central repository.<\/p>\n

If an encrypted coin file is deleted, the money is lost.<\/p>\n

The system has proved popular with online criminals, keen to keep their financial transactions secret, although it has a wider, legitimate, user base.<\/p>\n

Mr Birch said the fact that so many Bitcoins were traded on a single exchange made it vulnerable to market shocks.<\/p>\n

He also questioned the fundamental workings of the currency, saying that its emphasis on anonymity and decentralised nature meant there was little recourse for users when things go wrong.<\/p>\n

Bitcoin developer Gavin Andresen conceded that current safeguards around the currency may be inadequate.<\/p>\n

“I have been the person saying that Bitcoin is an experiment, so you can have confidence in it as much as you can have confidence in any start-up.<\/p>\n

“Like any start-up, it could change the world but it could also be risk,” he said.<\/p>\n<\/div>\n<\/p>\n

See original article:
\nBitcoin ‘will recover’ from crash<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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