Bitcoin trading halted after massive crash

One of the largest exchanges for the digital currency blames panic selling, tamping down speculation about a hacker attack.

By Kim Peterson Apr 11, 2013 12:41PM
Credit: luismmolina/E+/Getty Images
Caption: BitcoinsBitcoin, the digital currency that has become the talk of the financial world, saw trading halted Thursday after a spectacular crash Wednesday.

The trading freeze comes after Bitcoin's price plunged from an intraday peak price Wednesday of $266 to $105. Thursday afternoon, the price dropped to $55 (you can see the live price here). Just two months ago, Bitcoins were valued at $20, The Guardian reports.

Observers had been predicting that the Bitcoin bubble would burst, particularly as word of the alternative currency spread in the mainstream media. (Click here for our explainer.)

There are about 11 million Bitcoins in circulation, The Guardian notes. One of the largest trading exchanges, Mt.Gox, announced Thursday that it would halt trading until 2 a.m. GMT Friday to allow the market to cool down.

Speculation abounded that major Bitcoin trading sites had been hit by hackers in a distributed denial of service (DDoS) attack. But Mt.Gox said that was not the case, blaming instead a widespread hiccup caused by too much activity. Bitcoin users panicked after a flood of new accounts caused the overall system to lag, Mt.Gox said in a statement. People started selling Bitcoins, and the increased activity ultimately froze the site's trading engine.

Mt.Gox said that about 20,000 new accounts are being created on the site each day, up from just 60,000 new accounts opened in March.

Bitcoin users took to Reddit to grouse about the drama. "Speculators have turned this into a freak show," one user said. "I want (Bitcoins) to stabilize and get boring again so we can reliably engage in commerce."

Two key observations surfaced on Twitter and other sites about Bitcoin Thursday. First, why the need to halt? If Bitcoin is truly a reliable, strong alternative currency, then just let it go and let the chips (or is it coins?) fall where they may. Second, there needs to be a good way to short Bitcoins to keep speculation down more organically.

More on moneyNOW




Tags: SPY
16Comments
Apr 11, 2013 2:29PM
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It doesn't matter if anything is "limited" or not. The fact is: there is no "there" there. There is no intrinsic value to anyone, as there might be if the formulas were patented and valuable in chemistry, materials, etc. But no one is claiming that, just that there is value because they are "limited".

And before you compare this to actual gold coins--as the pictures of Bitcoins try to imply--it's true that gold has few industrial uses beyond jewelry. But anyone who has held a real gold or silver coin in his hand knows that there is something intrinsically appealing about the experience beyond any other use. And by intrinsically, I mean it's part of being human. See if Bitcoins will ever elicit this response. And what exactly have you got? Nothing when the electricity goes off.

Apr 11, 2013 3:32PM
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The fact that bit coins are limited do not make them valuable is true. The point I was making was that the price of bit coins cannot fall solely due to someone making as much of them as they want. Paper money holds no intrinsic value other than the governments who promise to honor them. Looking at the historical price of bit coins they have remained relatively stable until the crisis in Cyprus. After that large financial institutions and currency speculators bought up a lot of bit coins then fooled the general public into believing that the bubble they created would not burst then sold them at a huge profit while regular investors took the loss. This was simply a market correction. Again Bit coins true value is having the ability to be able to pay for goods and services over the internet without being traced or going though a bank. There is a secret internet where bit coins can be used to buy military grade guns, drugs, and even people. For these people bit coins is the preferred method of payment. While you may have moral obligations against these things it does not mean that they are not valuable to some people. 
Apr 11, 2013 1:10PM
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Gee, what a big surprise (not).  As I said before, Bernie Madoff is kicking himself that he didn't think of this first.

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p.t. barnum said once "there is a sucker born every second"

seems like he was right.

wonder what all those math equations are trying to solve.

a) Iranian nuclear bomb equations
b) Amount of energy and direction to move an asteroid  to hit Tehran
c) The precise time and place for a butterfly to move it's wings to stop global warming
d) The ultimate answer to the oldest riddle in the world - why were we created
e) The expansion of the value of pi until it repeats.
 f) When the stock market is going to collapse
 e) How many angels can dance on the top of a pin
 g) How fast is the national debt growing
 h) How many times will Madonna get married
Apr 11, 2013 6:19PM
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If it's money, it's being manipulated.
Apr 11, 2013 3:16PM
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Forget Bitcoins.  I have my retirement account invested in Beanie Babies.
Apr 11, 2013 2:44PM
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Back in the 1920s the big rip-off was selling swampland in Florida, sight unseen, to people who were sure that Florida real estate could only go up. You could certainly say that Florida real estate was "limited", no one could make more of it. But of course it was way overpriced and people lost money. But at least there was something there, and in fact if they had held onto the land for 40 years they would have actually made money.

 

With Bitcoins there is nothing there, not valuable patented formulas, not overpriced land, nothing. It is the ultimate in selling something for more than it's worth, because there is no worth at all. Maybe the founders meant to teach people something about paper money, I don't know. Let's be charitable and say that's what it's all about.

Apr 11, 2013 2:35PM
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A Bitcoin and $5.00 will buy you a cup of coffee.

 

Sovereigns produce currency. The Franklin Mint produces "bitcoins." Barter trade doesn't use either of them.

Apr 11, 2013 5:34PM
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one reason way crash is not seller dumping but bit coin miners logging more hours produce them.  I dislike fact once 21 million production of coin will stop. the demand of money never ends so currency will undergo deflation.  right money supply it bas on program that creates cost to produce time and time frame to do it.  I was expecting a crush because there was no hyper inflation in the dollar.  in fact gas prices fell a bit.  there have been to bull runs on the bit coin. this one and in 2011. 
Apr 11, 2013 1:59PM
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Bitcoins, while having high volatility recently are stable currency, There will only ever be 16 million bitcoins in circulation EVER. Unlike the US dollar which the US mint can print infinite of which will devalue the dollar there will never be more than 16 million bitcoins. The massive rise and not so massive fall of the bitcoin prices have more to do with wild speculation by currency traders then the value of the currency itself. Bitcoins are still far more valuable then the US dollar and will continue to be so for the forseeable future. Its greatest asset is its ability to keep the user secret and is generated from peer reviewed algorithmic formulas. 
Before calling it a scam try to do a little research, you make yourself sound stupid
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