Protocol flaw, exchange shutdown, and $2.7M heist prompt speculations about Bitcoin's end

By VCPOST Staff Reporter

Feb 14, 2014 10:54 PM EST

In the last few days, the Bitcoin has been hit by a withdrawal suspension by the top three exchanges, a $2.7 million heist, and an exposure of a Bitcoin protocol flaw. These recent problems have prompted speculations about the Bitcoin's impending end, according to VentureBeat.

Silk Road 2.0. the successor of the previously shut down black market drug trading site Silk Road, reported that over 4,000 Bitcoins worth $2.7 million have been stolen from the website. A flaw in the Bitcoin protocol allowed an attacker to repeatedly request a transfer of the digital currency without revealing the transaction ID. The said flaw has been exposed to the public in 2011, the report detailed.

Mt. Gox, BitStamp, and BTC-e, among the three largest Bitcoin exchanges, temporarily paused their trading in the last recent days. On Tuesday, Slovenia's BitStamp, the biggest Bitcoin exchange, also halted withdrawal after announcing that it was experiencing a denial-service-attack. Bulgaria's BTC-e temporarily stopped its trading this week. Tokyo's Mt Gox issued a statement saying somebody has been exploiting a bug in the Bitcoin software to alter transactions and hide a transaction from the site to a Bitcoin wallet, the report explained.

According to Mt. Gox chief Mark Karpeles, a mismatch occured between the Bitcoin Foundation updates and the exchange's Bitcoin wallet. However, the Bitcoin Foundation denied that assertion, the report stated.

Bitcoin Foundation board member Micky Malka told Reuters this week that Bitcoin is still in the experimental stage of its protocol. He added that people should not invest an amount that they could not afford to lose, VentureBeat reported.

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