Monday, October 25, 2021

Bitcoin Black Friday

Mt. Gox announced Friday that they were disabling BTC withdrawals. Markets reacted instantly, sinking approximately $200 USD/BTC. Combined with the June 20th announcement halting USD withdrawals Mt. Gox is essentially cut off from any remaining American customers. I am also entirely skeptical of Mt. Gox’s liquidity situation, given their involvement in the Dwolla seizure.

While there are problems with transaction mallebility these aren’t news to anyone.

Transaction mallebility conceptually allows malicious users to change transaction id’s while a transaction is present on the network but not yet included in the blockchain. There’s a really simple work around here. The transaction should be tracked by transaction id, but verified by the to and from addresses once it is included in the blockchain.

It appears that bitstamp has suffered a similar fate. Their response however contains some subtle differences that are worth noting.

Bitstamp doesn’t blame bitcoin, instead they blame an ongoing ddos attack that has caused some minor problems across the whole network. They also imply that they are fixing the problems on their end rather than waiting on the bitcoin team.

So is this Black Friday for bitcoin? Hardly. It’s certainly similar in terms of liquidity and access to funds but the underlying causes are vastly different.