Bitcoin Revolution: Investors Seek Alternative Currency Despite Cyber Attacks

A denial-of-service attack, in which a website is flooded with massive requests for data, obstructed Bitstamp's ability to check account balances, the exchange said in a statement. Customers can withdraw cash but not Bitcoins, as the company works to fix services, Nejc Kodric, Bitstamp's chief executive officer, wrote in an e-mail.

The value of Bitcoin, which can be used to buy everything from Tesla Motors Inc. cars to Gummi bears, was down 1.2 percent at $661.17 at 1:15 p.m. in New York today, according to the CoinDesk Bitcoin Price Index, which averages exchange prices. Mt.Gox, another major online exchange, restored cash withdrawals on Feb. 10 after suspending services last week because of a technical flaw in how service providers reconcile Bitcoin transactions.

"This is a nuisance attack," said Andreas Antonopoulos, chief security officer for Blockchain.info, a provider of online wallets for a digital currencies. "Funds have not been lost, and have not been affected. What it's done is slow down their accounting system from reconciling transactions."

"Even the designer of the system and other developers were unaware of how the system could be changed," Garzik said in an interview. "All of the wallets will need some level of updates.

Precious metals dealers may avoid accepting bitcoin in payment for gold, thanks to regulatory uncertainty, according to industry insiders

That's despite a warm welcome from some gold retailers who will happily trade one of the world's oldest and most recognizable currencies for a volatile upstart on the global financial stage.

Not wanting the legal hassle of operating a crypto-currency exchange, They presided over Mt. Gox as it went on to dominate Bitcoin trading for more than a year by volume. However, over the past six months, the platform has seen a fall from grace as users have had trouble withdrawing their funds. New troubles emerged in the last couple days again, as Mt. Gox said it was halting withdrawals. The company said it was having problems finalizing transactions because of a perceived flaw in the Bitcoin protocol around "transaction malleability." Other exchanges also halted withdrawals as the Bitcoin Foundation said it was working on a solution to the problem.

Bitcoin wallets across the globe came under assault today, resulting in another mini-flash price crash one day after a statement from the MtGox exchange caused prices to fall 20%.

"Bitcoin is still secure, the network is still working," he said in an IM, adding that his financial interest in Bitcoin is both literally and figuratively negligible. Don't panic, everything still works." collapse crash bubble ponzi scheme

Russian authorities have issued warnings against using Bitcoin, saying the virtual currency could be used for money laundering or financing terrorism and that treating it as a parallel currency is illegal.

"Systems for anonymous payments and cyber currencies that have gained considerable circulation -- including the most well-known, Bitcoin -- are money substitutes and cannot be used by individuals or legal entities," the Russian Prosecutor General's Office said on February6.

Reddit, Virgin Galactic, and Overstock.com now accept Bitcoin.

So do dating site OKCupid and travel site CheapAir.com. Game giant Zynga is now in the testing phase.

Two big Las Vegas hotels accept Bitcoin.

Now that Bitcoin exchange Mt.Gox has terminally discredited itself following the latest, and likely last, withdrawal [4]halt announced late last week which sent the value of Bitcoin tumbling by 25%, Bitcoin traders are left with just two exchange options on which to transact: BTC-e and Bitstamp. And for those using the former to buy and sell the virtual digital currency, things went from bad to worse a few short hours ago, when Bitcoin had its very own "Waddell and Reed" moment, when the price of Bitcoin cratered by over 80% in the span of seconds, after a modest block of just under 6000 Bitcoins sent the price plunging from over $600 to $102.