Bitcoin, the world's most popular virtual currency, yesterday took a huge nosedive â€" from its all-time-high of $265 to as low as $105 â€" but the reason is not a DDOS as some have speculated.
Instead, the leading Bitcoing exchange, Mt.Gox, claims that Bitcoin was "a victim of its own success," with the lag from too much interest in the currency causing many investors to sell, which lead to a market panic.
"The rather astonishing amount of new account opened in the last few days added to the existing one plus the number of trade made a huge impact on the overall system that started to lag. As expected in such situation people started to panic, started to sell Bitcoin in mass (Panic Sale) resulting in an increase of trade that ultimately froze the trade engine," wrote Mt.Gox on its Facebook page.
Mt.Gox added some numbers to fortify its claims. According to the exchange, the number of trades executed tripled in the last 24 hours, and the number of new accounts opened went from 60,000 in March alone to 75,000 new accounts created in the "first few days of April," with "roughly 20,000" new accounts created each day.
Mt.Gox promises to do its best to remedy the lag issues; in fact, the exchange will have to be closed for two hours "in the next 12 to 24 hours" to add "several" new servers to the system.
Problems such as these are to be expected since the Bitcoin market is still in its infancy. Still, since nothing scares off investors like a panic sale, Mt.Gox (and other Bitcoin exchanges) will have to do more to ensure stability of their system and avoid huge disturbances like this one.
Image courtesy of Mt.Gox
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