It’s been a bad week for Mt.Gox. Once the largest and best-known Bitcoin exchange, the Tokyo-based trading center has been besieged by complaints and criticism following the exposure of a weakness in their code that fails to properly compensate for the “transaction malleability” bug, first revealed in 2011. Shortly after that revelation, Mt.Gox suspended currency withdrawals for their account holders, effectively locking out tens of thousands of account holders from their funds.
As a result, while the rest of the Bitcoin market has been surprisingly resilient to this week’s other Bitcoin news — DDoS attacks, hints of coming regulation in New York and Canada, lukewarm statement from India’s central bank and a negative investment report from J.P. Morgan — trading value on Mt.Gox has plummeted. Most major markets have been hovering around $650, but at MtGox prices have fallen well below $500.
It’s no secret that Mt.Gox has been increasingly considered Bitcoin’s problem child in recent years. Originally founded as a site for trading Magic: The Gathering cards (Mt.Gox stands for “Magic The Gathering Online eXchange”), the site’s success is largely attributable to being one of the first Bitcoin exchanges, rather than being one of the best. Poor code implementation, legal troubles and rapidly decreasing market share have shaken confidence in the site and its future. With a $150 value disparity between the value of a Bitcoin on Mt.Gox and that same coin’s value anywhere else, there’s reason to think many traders will be moving their wallets and trading accounts to other, more reliable exchanges in coming weeks.