What’s been going on with bitcoin lately? On Sunday, the digital currency lost half of its value on the Tokyo-based Mt.Gox exchange, the oldest, and one of the largest bitcoin trading platforms in the world, after the company was forced to halt transactions following the emergence of a bug. And last week, Silk Road 2.0, the online black market, lost $2.7 million in bitcoins to hackers. Despite these recent hiccups, bitcoin adoption rates are continuing to increase with more and more mainstream retailers choosing to accept the cryptocurrency.
Analysts are blaming the sharp drop in value of bitcoins on the spike in investors cashing out their bitcoins by exchanging them for traditional currencies like the U.S. dollar. Meanwhile, investors are pointing the finger at Mt.Gox as the reason for withdrawing their bitcoins. An apparent bug in Mt.Gox’s software has shaken investor confidence and left many looking to cash out.
Mt.Gox has halted trading while it works to resolve the bug – one that could make users’ wallets susceptible to hacking. And this morning the company issued an apology to its users, and promising to be back up and running as soon as possible. “We apologize for the inconvenience caused by the recent suspension of external bitcoin transfers,” an Mt.Gox press release stated. “Thanks to our friends at Blockchain.info, Mt.Gox now has a workaround that will use a unique identifier created by Blockchain to show whether transactions have been modified or not. This will prevent any fraudulent use of the malleability issue and protect the assets of our customers."
The company hopes to put the finishing touches on its new system and to resume bitcoin withdrawals by the end of the week.
Silk Road 2.0 Hacked
Silk Road 2.0 was hacked last week, losing an estimated $2.7 million, further fueling speculation that the bitcoin bubble has burst. Silk Road 2.0 is the spawn of the original Silk Road, which was shut down last fall by the FBI. The site, an online marketplace for various illicit goods, operates in the untraceable deep web.
The Silk Road 2.0 hackers exploited the same bug that forced the temporary halting of transactions on Mt.Gox. Shrewd hackers were able to trick Silk Road wallets into thinking a transaction had been denied, thus resending it, when in fact the transaction had gone through. The hackers made off with tens of thousands of bitcoins. The unfortunate news comes on the heels of the arrest of Charlie Shrem, a high-profile entrepreneur in the bitcoin space who founded bitcoin exchange services provider BitInstant, on charges of money laundering.
Much finger pointing has occurred in the Silk Road and bitcoin community since the hack, with some users even laying the blame on Silk Road administrators, claiming they concocted the story of the hack to cover up their theft.
Mainstream Retailers Accepting Bitcoin
Despite the turmoil surrounding the digital currency, more and more retailers are opening their doors to bitcoin users. An Orange County Lamborghini dealership completed its first-ever bitcoin-vehicle transaction when it sold a pre-owned Tesla Model S for 91.4 bitcoins. And last month, online retail giant Overstock.com announced it would start accepting bitcoins.
Many other merchants have chosen to accept bitcoins:
- TigerDirect.com processed more than $500,000 in bitcoin payments within three days of its announcement that it would start accepting the cryptocurrency.
- Virgin Galactic, the private spaceflight company, announced it would accept bitcoins last fall.
- The NBA’s Sacramento Kings became the first professional sports team to accept bitcoins for ticket and merchandise payments.
- OkCupid has been allowing its users to submit payments in bitcoins since April 2013.
Online retailers aren’t the only ones adopting a bitcoin strategy. If you want to find out which local brick-and-mortar businesses accept your bitcoins, then check out CoinMap.org. The site will help you locate a variety of neighbourhood stores and businesses that accept the digital currency – be it a Manhattan acupuncturist to soothe your tired muscles, a Chicago printing company for your marketing needs, or a San Diego gas station to top off your tank.