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Technical problems cause Bitcoin to plummet from record high, Mt. Gox suspends deposits

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bitcoin 1020 (casascius)
bitcoin 1020 (casascius)

Technical problems caused preeminent Bitcoin exchange Mt. Gox to suspend deposits today, and led to a major sell-off of the cryptographic currency. The news was reported by Ars Technica, and follows an unprecedented run that’s seen Bitcoin rise from a low of $2 in June of 2011 to a high of over $48. While the price at one point fell below $37, losing nearly a quarter of its value, it quickly recovered to within a few dollars of its high.

Each new block of the digital currency relies on the blocks before it for authentication

The sell-off was precipitated by a glitch that prevented a newly-mined Bitcoin block from checking out with an older version (0.7) of the software. Since each new block of the digital currency relies on the blocks before it for authentication, this created a fork in the chain — miners running the newest software (version 0.8) continued on as though nothing had happened, while those running the older version were forced to pick up where the troublesome block had left them. Bitcoin developer Pieter Wuille is suggesting that miners revert to the older version of the software until the problem can be ironed out, and is calling for merchants to stop processing purchases using the newer software. The Tokyo-based Mt. Gox says believes its suspension will be lifted by the end of the day.