Bitcoin freeze causes value to plummet

Kyle Geary — The Hale Center For Journalism

Bitcoin, the largest digital currency on the market right now, according to cryptocurrency market capitalizations, is in the midst of some trouble. The currency, which was valued at over $1,000 per coin late last year, has dropped down to $628, according to the value tracking site preev.com. The cause of this latest drop is due to major bitcoin exchanges freezing bitcoin withdrawals for customers.

Mt. Gox, Bitstamp and BTC-e are some of the largest exchanges that froze withdrawals. According to The Verge, the first of the freezes occurred Feb. 8 from Mt. Gox. It also report that Mt. Gox claimed the reason behind the freeze was a vulnerability across the entire currency system, which they call “transaction malleability.” This would allow a user to change the details of a transaction to make it appear to have failed when it was successful. This could potentially allow the user to withdraw extra bitcoins due to the exchange believing the original transaction failed. 

Bitcoin has handled troubles before. Last year, China banned financial institutions from dealing in the digital currency, causing the price to drop nearly 40 percent. Despite these recurring hurdles, the Bitcoin community still continues to invest, and some businesses continue to adopt it.

In Kansas City, companies like Overland Park Jeep, Dodge, Ram, Chrysler, The Modern Maids, Tivol and Kennyhertz Perry law firm have already started accepting bitcoin payments.

According to the Norwegian Bitcoin exchange Justcoin, a proposal to fix the vulnerabilities has been submitted and accepted by the Bitcoin core developers. Some bitcoin withdrawals have already resumed, while others are expected to start in the near future.