Bitcoin Crashes Due To Hackers Or New Entrants

Posted Apr 11, 2013

The price of the open source P2P currency, known as Bitcoin, plummeted yesterday.  It was just a couple days ago that we wrote about how Bitcoin shot up to around $237.  As of the time that I am writing this article, Bitcoin’s last price was at $120, according to Bitcoin exchange service Mt. Gox.  The Bitcoin market was lagging so there was a panic, which resulted in a large sell-off.

The slowdown was believed to be caused by a “distributed denial of service” (DDoS) attack.  A DDoS is when a group of hackers use a large group of computers to hit a website with a large number of connections at once so that nobody else can connect to it.  This happened to Mt. Gox last week.

Analysts believe that DDoS hackers are attempting to drive the price of Bitcoin down so that they can buy it at cheaper prices and make a solid profit.  It takes only about a day for the hackers to capitalize from panicking Bitcoin investors and wait until the markets stabilize again.

About 13 hours ago, Mt. Gox released an update on their Facebook page that says a rapid number of new users have flocked to their trading platform over the last few days.

Seven hours after that announcement Bitcoin made an announcement that they were hit with another DDoS attack:

Clearly Bitcoin trades are volatile and it may take a while to stabilize.