DDoS attack triggers Bitcoin slump

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DDoS attack triggers Bitcoin slump

Mt.Gox attacked.

The recent meteoric rise in the value of Bitcoin has been hit following a DDoS attack on Mt.Gox, the world's largest exchange dealing with the digital currency.

As the value of Bitcoin surged to $142 per coin, Mt.Gox said it had been under a sustained distributed denial-of-service (DDoS) attack for a few days. The Japan-based exchange suggested the attacks had two motivations – financial gain or to destabilise the virtual currency.

“Attackers wait until the price of Bitcoins reaches a certain value, sell, destabilise the exchange, wait for everybody to panic-sell their Bitcoins, wait for the price to drop to a certain amount, then stop the attack and start buying as much as they can. Repeat this two or three times like we saw over the past few days and they profit,” the statement said.

“It is not a secret Mt.Gox is the largest Bitcoin exchange with more than 80 per cent of all USD trades and more than 70 per cent of all currencies. Mt.Gox is an easy target for anyone that wants to hurt Bitcoin in general,” Mt.Gox added.

The attacks have resulted in what Mt.Gox called the “worst trading lag ever,” which saw the value of Bitcoin drop from a high of $142 back to $117. Other issues caused by the DDoS include numerous 502 errors and users not being able to log into their accounts

While the company continued to fight off the attacks with help from the likes of Prolexic, Mt.Gox has admitted there is not a lot it can do. “There are a few things that we can implement to help fight the attacks,” the company added, “such as disconnecting the trade engine backend from the internet. By separating the data centre from the Mt.Gox website, we will continue to be able to trade.

In another blow to Bitcoin, a website called Instawallet, which lets users store their Bitcoins, was forced to close after its database was hacked. A statement posted on its site said the service was “suspended indefinitely until we are able to develop an alternative architecture.”

The site will shortly open a claims process, enabling users to retrieve their Bitcoin balance.

This article originally appeared at scmagazineuk.com

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