Skip to main content
  1. Tech
  2. Gadgets & Tech
  3. Tech Gear

Is Bitcoin a buying opportunity?

See also

Mt. Gox, the Japanese Bitcoin trading exchange, issued a statement today after it announced last Friday it would suspend trading due to a technical issue.

Here's the lay person version of what happened this afternoon:

In essence, Mt. Gox says it identified a bug in the Bitcoin software that makes it possible for someone to use the network to alter transaction details, making it seem like bitcoins had not been sent to a bitcoin wallet, when in fact they had.

‘Since the transaction appears as if it has not proceeded correctly, the bitcoins may be re-sent. Mt. Gox is working with the Bitcoin core development team and others to mitigate this issue,’ Mt. Gox said.

The technical explanation is a lot more detailed.

It points out that bitcoin transactions are subject to a design flaw that has been largely ignored, although it was known to ‘at least a part’ of the Bitcoin core development community. The defect is known as ‘transaction malleability’ and it allows third parties to alter the hash of a fresh transaction without invalidating the signature. Mt. Gox further explains:

‘Of course only one of the two transactions can be validated. However, if the party who altered the transaction is fast enough, for example with a direct connection to different mining pools, or has even a small amount of mining power, it can easily cause the transaction hash alteration to be committed to the blockchain.’

At least one exchange proved itself immune to the attack: Kraken, which is one of the only Bitcoin exchanges based in the U.S., though its volumes are dwarfed by exchanges like Bitstamp. In an email, site founder Jesse Powell explained that Kraken's wallets were already constructed to avoid precisely the outcome that befell the other exchanges. ‘We read the manual’ he said.

And he says there is still no reason to doubt the currency.

‘This problem has to do with poor design around Bitcoin, not Bitcoin itself. You don't blame gravity when your plane fails to fly--you understand gravity and design around it. There's a tremendous buying opportunity right now. I'm recommending everyone I know to jump in.’

Oleg Andreev, a France-based software developer and commentator, offered a bit more caution. While he agreed Bitcoin will overcome this event, he admitted it's a sign the digital currency remains in its infancy. He explained that if it were developed in all areas of exchanges, personal wallet, education in all areas of use then investment amount and the number of investors of Bitcoin would be a larger amount around the world.

JPMorgan forex analyst John Normand released a note after hours casting doubt on the digital currency's utility. ‘Ironically the lack of external oversight may prove an obstacle to significant market deepening, since many market participants would prefer the accountability of known but fallible entities to one based on a mathematical code.’

The price of Bitcoin as of 5 p.m. Eastern was $637, according to Coindesk.

To read more articles on Bitcoin see the list below in Author's suggestions and view the video atop this article of the Mt. Gox trading stop.


Don't Miss

  • Massive
    Ubisoft Massive exclusive: 'The Division', PS4 & Xbox One, Activision to Ubisoft & more
    Games Exclusive
  • iPhone
    Get your wallet ready: The next iPhone could cost $100 more than your last one
    Tech Buzz
  • Civ
    Need to catch up on 'Sid Meier's Civilization'? Here is everything you need to know
    Games Feature
  • Google Glass
    See how Google Glass is letting sick kids go to the zoo without leaving the hospital
    Tech News
  • Upcoming
    These are 2014's biggest PS4, Xbox One and Wii U games
    Games Feature
  • Google
    Google has filed for a patent to develop contact lenses capable of taking photos

Related Videos:

  • It's not a "smart" watch. HappyHour Timepieces Bottle Opening Watch.
    <iframe width="600" height="337" src="//;autoplay=1"></iframe>
  • Recap: National Facilities Management and Technology 2014 show in Baltimore
    <div class="video-info" data-id="517697768" data-param-name="playList" data-provider="5min" data-url=""></div>
  • Sing like the rockstar you are with Singtrix
    <iframe width="560" height="315" src="//;autoplay=1"></iframe>

User login

Log in
Sign in with your email and password. Or reset your password.
Write for us
Interested in becoming an Examiner and sharing your experience and passion? We're always looking for quality writers. Find out more about and apply today!