Mt. Gox, the largest exchange for buying and selling bitcoins, is temporarily shutting down following an uptick in activity on the site sparked by a massive drop in the digital currency’s price.
The Tokyo-based exchange is suspending trading until 10 p.m. Eastern Time as it allows the market to “cool down,” Mt. Gox announced Thursday morning. People may still cancel their pending and open orders, the site said.
Bitcoins were going for over $230 a pop on Tuesday, up from roughly $100 last week, but their price plummeted back into the lower $100-range yesterday following service lags on Mt. Gox, which handles more than 75 percent of all bitcoin trades. At the time of this article’s posting the price was $123.
Though some may have suspected that the lags were the result of a DDoS attack on the site, the slowdown was actually caused by a huge spike in trading volume due to bitcoins’ increasing popularity, said Gonzague Gay-Bouchery, who heads marketing for Mt. Gox.
“Customers decided to trade at the same time resulting in lags, then people started to panic due to the lag,” resulting in a sell off, though it was not due to a distributed denial-of-service attack, he said. The site fought a DDoS attack last week intended to manipulate the price of bitcoins.
Bitcoin, which is based on a concept called “crypto-currency,” has indeed attracted serious attention in recent weeks. On Mt. Gox alone, the site went from 10,000 new customers per month last year to 60,000 new customers this past March, and by yesterday the site already had 75,000 new customers, Gay-Bouchery said.
All told, Bitcoin is estimated to have roughly 1.4 million users.
But pinpointing the reasons behind the digital currency’s recent rise in popularity is tricky. Some speculate that debt troubles in Europe have played a role, while others say the philosophy behind the currency, which is not regulated by any central financial or regulatory body, appeals to a new class of consumers skeptical of big government.
Other Bitcoin services have been subject to hacking attacks in the past as the currency’s value has risen. Instawallet, an online Bitcoin storage service, announced just last week that its database had been fraudulently accessed and that it was accepting claims for stolen bitcoins.
Mt. Gox is “working around the clock to scale up its architecture,” Gay-Bouchery said. The site is currently waiting for some new hardware and servers to arrive that it says will help them to cope with Bitcoin’s rising demand and also better handle future DDoS attacks.
Because bitcoins are not just a fad or a bubble, Gay-Bouchery said. “People still have a lot of faith in it,” he said.
But bitcoins still only constitute a small slice of larger markets worldwide. The site Blockchain, which tracks Bitcoin activity, caps the digital currency’s market at $2.25 billion.