A mock bitcoin is shown in this photo illustration in Sandy, Utah, in this September 17, 2013 file photo.   U.S. Federal prosecutors in New York charged Charlie Shrem and Robert Faiella, both operators of bitcoin exchange businesses, with money laundering for helping drug merchants exchange $1 million in cash for bitcoins, the digital currency, U.S. Prosecutors said January 27, 2014.  REUTERS/Jim Urquhart/Files (UNITED STATES - Tags: BUSINESS SOCIETY)

Bad Day for Bitcoin: Price Crashes After Mt. Gox Halts Withdrawals

A few days ago, we noticed that thousands of people were having trouble converting Bitcoins to cash. Things just got a lot worse

Anyone hoping to covert their Bitcoin to cash this weekend is out of luck.

Mt. Gox, the third-largest Bitcoin exchange, has announced it is temporarily shutting down. Not surprisingly, the news has sent the price of Bitcoin tumbling. In less than eight hours, the price fell $75, to $709. 

We first noticed some issues Tuesday at the Japanese-based exchange. For over a week, people had been trying to withdraw Bitcoin, but were receiving error messages. More than 3,000 people complained online. This morning, Mt. Gox posted a brief statement on its site, explaining it is looking into the problem. “To understand the issue thoroughly,” the company explained, “the system needs to be in a static state.”

Bad Day Bitcoin_01

The withdrawal issues are not the end of Bitcoin, of course. Trading will likely resume on Monday, and the price will jump back up. But for Bitcoin to ever gain real legitimacy—both from the public and the government—these types of exchange issues simply cannot happen. There are more 150,000 Bitcoin accounts, so shutdowns like this aren’t trivial. Imagine, for a moment, walking into a bank and being told by the teller that the bank can’t handle your request for $100 because their computers weren’t working. That’s essentially what Mt. Gox is saying.

Even the usually ebullient Bitcoin hivemind is taking a moment to pause and recognize the ramifications of systems errors like these. ”This a reminder that while Bitcoin may be an interesting technological achievement, as a tradable asset it is still basically a toy,” writes one commenter on Hacker News. “Crappy exchange technology combined with low liquidity is a perfect recipe for this kind of volatility.”

 

Respond Now
  • So if it is yours -it should be safe guarded in my name only?  

Activists of the Right Sector movement and their supporters gather outside the parliament building to demand the immediate resignation of Internal Affairs Minister Arsen Avakov, in Kiev March 27, 2014. A prominent Ukrainian far-right activist, part of a hard-line nationalist movement that played a leading role in the overthrow of President Viktor Yanukovich, was shot dead by police overnight, authorities said on March 25. The Interior Ministry said Oleksander Muzychko, also known as Sashko Bily, was killed by officers of the 'Sokol' special unit as he tried to escape from a cafe in the western Ukrainian region of Rivne. REUTERS/Vasily Fedosenko (UKRAINE - Tags: POLITICS CIVIL UNREST TPX IMAGES OF THE DAY) - RTR3IWHV
UKRAINE

Organizing a Right-Wing Ukrainian Militia? There’s an App for That

Rachael Levy
Russian President Vladimir Putin and his wife Lyudmila sit in front of the Taj Mahal while touring city of Agra October 4, 2000. Building on the first day of a visit aimed at rekindling Soviet-era amity, Putin told India's parliament that ties with New Delhi would remain a key element of Moscow's foreign policy. - RTXK1TW
RUSSIA

Meet the Putins

Vocativ Staff
Shoppers walk past an advertising billboard for shoes in the central business district (CBD) of Beijing November 3, 2008. A measure of Chinese manufacturing activity showed factory output shrank sharply in October in the face of waning orders, while officials pledged further steps to boost domestic demand to keep the economy from slowing too much. Capital controls and the relative conservatism of China's banks have largely insulated the world's fourth-largest economy from direct hits from the global financial crisis, but its reliance on exports to the United States and Europe makes it vulnerable to a drop-off in Western demand.    REUTERS/David Gray    (CHINA) - RTXA6ZX
INDUSTRY

New Strike Breaks Out at China Factory That Michael Jordan Made Famous

Versha Sharma
Snoop Fancy
CELEBRITY

Living a Snoop Dogg-Curated Life

Emily Levy
LOVE HOTEL POSTER 6
SOCIETY

Brazil’s By-The-Hour Love Hotels

Ramon Iriarte
Lionel Gonzalez (16) dreams of crossing the border and reunite with his family in Denver, Colorado. In the background dowtown El Paso
MEXICO

Teens Caught in Cartels’ Trafficking Crossfire

Jan-Albert Hootsen
Ana Paula Maciel Playboy 05
BRAZIL

Greenpeace’s Brazilian Playboy Jailbird

Mac Margolis
NASA Selfies 01
SCIENCE

NASA Spaces Out Its Social Media Orbit

Emily Levy
Join the Fray
Grounded! Teen Girl Exiled by Virginia Parents to Siberia