Computer Business Review

Exchange defends suspension of Bitcoin

by Joe Curtis| 13 February 2014

But Mt. Gox founder admits it couldn’t keep up with updates.

The founder of a Bitcoin exchange service admitted it could not keep up with updates to the digital currency, meaning it had to suspend the virtual cash after flaws put transactions at risk.

However, Mt. Gox founder Mark Karpeles hit back at critics in a Forbes interview this week, claiming the Bitcoin Foundation (a development community dedicated to the currency) should have solved the flaw, saying it has known about it since 2011.

Karpeles said Mt. Gox created its own Bitcoin implementation in 2011 to solve lag issues the Bitcoin client was having in processing the volume of transactions Mt. Gox experienced.

But he admitted the exchange couldn't keep up with the pace of changes wrought by the Bitcoin Foundation.

He told Forbes: "While we followed most of those update[s] we were more and more busy and couldn't keep up with all the changes."
One such change, in Bitcoin 0.8.0, prevents transactions being accepted if a person's digital signature did not include the correct number of zeroes in front of it, rendering some of Mt. Gox's transactions invalid.

This coincided with efforts to make a list of all transactions on the exchange public, added Karpeles.

"This meant however that some of our invalid transactions were listed publicly, making it rather easy for someone with bad intention to alter these," he said.

Having the details of a person's digital signature would mean observers could request bitcoins from their account, while making it appear as if the transaction had not gone through - leaving the person unaware of where their money had disappeared to.
Karpeles said the exchange is working with the Bitcoin Foundation on a solution.

"We have proposed a solution that would allow people sending bitcoins to track sent coins no matter what happens.

"The Bitcoin developers are preparing ways to prevent modified transactions from being relayed by the network (which will take a lot of time and may break some bitcoin custom clients)."

Bitcoin's value plunged to $650 after Mt. Gox suspended the currency indefinitely this week.

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