Bitcoin Prices Quickly Rebound After 23 Percent Drop

Bitcoin prices rebounded early this week after a sharp decline from some limited technical problems. Bitcoins, promising digital currency, fell about 23 percent Monday night after trading was stopped temporarily and developers worked out a solution to the problems.

As of late Tuesday afternoon, Bitcoins were trading for $45.55 via the MT Gox Exchange. The drop comes after Bitcoin prices jumped in value in recent weeks. Bitcoins were trading as high as $48 on Monday.

Ars Technica reported that a “Bitcoin miner running the latest version of Bitcoin-mining software (version 0.8) created a large block that was apparently incompatible with earlier versions of Bitcoin. When this happened, Bitcoin transactions stopped and prices fell,” according to a report from VentureBeat.

“The incident shook the confidence of the markets,” Ars Technica added in its report. “This time, the glitch occurred in the core Bitcoin software.”

The problem relates to the Bitcoin network, which features a register called the “blockchain.” A new block is made every 10 minutes which has a list of all recent Bitcoin transactions. Bitcoin is not connected to a central bank or government agency, like dollars or pounds, TechZone360 reported last week. But its proponents see that as advantage. 

The incident led to some critical as well as supportive comments from readers on Ars Technica. For instance, autodefenestrator wrote that “perhaps a central bank is in fact necessary for Bitcoin. It will be interesting to see how unexpected software bugs like this affect the stability of the Bitcoin system as it grows ever bigger. The protocol is theoretically sound, but it's all in the implementation.”

In addition, VideoGameTechArs Tribunus Militum said in response, “Ouch. That's bad, but at least it only affected newly mined bitcoins. Ironically, it could inspire confidence if it's handled well. Prices recovering so quickly is a good sign.” And AbreshArs Scholae Palatinae added, “And people on various networks still wonder why I don't trust Bitcoin. This espouses it very well.