Bitcoin under threat as MtGox goes offline

The future of the virtual currency Bitcoin has been thrown into doubt after MtGox, one of the world’s most popular Bitcoin exchanges, went offline following a suspected hack in which $375m worth of the currency was allegedly stolen.

MtGox stopped functioning on Tuesday morning, with visitors to its website finding an empty page. It follows the exchange halting cash withdrawals and its chief executive Mark Karpeles stepping down from the board of the Bitcoin foundation, which oversees the virtual currency.

The events of the last few weeks have raised questions about Bitcoin, which has exploded in popularity in the last year amid a growing interest in alternative payment forms.

The currency has attracted the attention of economists and regulators, some of whom have warned that it is unstable and liable to security issues. According to a leaked document obtained by a blogger, around 745,000 Bitcoin, worth $375m, has gone missing from MtGox, which allowed users to buy and sell the currency.

A group of other Bitcoin exchanges attempted to distance themselves from MtGox, issuing a statement claiming the "tragic violation of the trust of users of MtGox was the result of one company’s actions and does not reflect the resilience or value of Bitcoin and the digital currency industry".

However, the Tokyo-based exchange’s problems have weighed on Bitcoin in general. Its price on Coinbase, another platform, fell to $480, having traded above $1,000 three months ago.

Bitcoin was founded in 2009 by a developer known as Satoshi Nakamoto, whose true identity is unknown. It spent years in relative obscurity, used only by a relatively small internet community.

Last year, it rocketed in value, due to a growing interest in alternative currencies, growing acceptance from regulators and a legitimacy stemming from the closure of the online marketplace for illegal goods, the Silk Road, which processed transactions in Bitcoin.

Source:www.telegraph.co.uk