The Bitcoin correction we wrote about yesterday was not caused by a DDOS attack on one of the largest Bitcoin exchanges, Mt.Gox, but rather by a massive spike in interest in the crypto currency, according to Mt.Gox.
During trading yesterday the value of Bitcoin plummet by 60%, dropping from a high of $265 to around $150 (at the time of writing it has climbed back up slightly, to around $180). As the value of Bitcoin dropped, San Francisco-based exchange called TradeHill claimed the fall was a result of distributed denial of service attacks on Mt. Gox and Bitstamp.
But Mt.Gox has now posted a notice on its Facebook page explaining the dramatic dive as the result of too much interest in Bitcoin. As its infrastructure slowed down under the volume of new users crowding in, it said the resulting lag then caused traders to panic and sell off currency -- triggering the drop.
Earlier this month the Tokyo-based exchange was hit by a DDOS attack -- which it said had caused its "worst trading lag ever". But this time the lag was caused by the Bitcoin goldrush, and existing investors' fearing a Bitcoin bubble.
Mt.Gox said 60,000 new accounts were opened in the first few days of April alone, vs 75,000 for the whole month of March, and added that it is seeing an average of 20,000 new accounts opened per day, while trading volume has apparently tripled in the past day.
As a result of the increased strain on its infrastructure, Mt.Gox said it may have to temporarily close the exchange for two hours in order to add more servers. "We have been busy working on improving things since last week and our team has been working around the clock to improve Mt.Gox to catch up with the demand," it added. "We will continue to release several updates today and in the coming few days to improve our system overall performance."
As well as needing to bolster its infrastructure to cope with the influx of new users, having previously been a DDOS target -- and with the value of Bitcoin still so high and the market so volatile -- Mt.Gox can expect to be a target for hackers for the foreseeable future, which is another reason it needs to beef up its infrastructure.
Mt.Gox's update follows below in full:
Hi everyone, just a quick update on the situation and what happened last night.
First of all we would like to reassure you but no we were not last night victim of a DDoS but instead victim of our own success!
Indeed 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!
To give you an idea of how impressive things were here are some numbers that we would love to share with you guys:
- The number of trades executed triple in the last 24hrs.
- The number of new account opened went from 60k for March alone to 75k new account created for the first few days of April! We now have roughly 20,000 new accounts created each day.
Due to these facts we have been busy working on improving things since last week and our team has been working around the clock to improve Mt.Gox to catch up with the demand. We will continue to release several updates today and in the coming few days to improve our system overall performance.
Also please note that we may have to close the exchange for two hours in the next 12 to 24hrs to add several new servers to our system.
Thank you for your understanding and continuous support!
Update: A notice on Mt.Gox's Facebook page, posted several hours after the prior update, confirms the planned network downtime maintenance has been completed. However it also says the exchange is now under DDOS attack.