Over 700,000 Bitcoin missing in Mt. Gox security flaw

Mt. Gox, the Japan-based Bitcoin exchange, has had a remarkably bad month. All withdrawals from the service were halted on February 7, 2014; the CEO, Mark Karpeles, resigned from the board of the Bitcoin Foundation on February 23, 2014; and there was an indefinite closure of all transactions "for the time being" as of two days later. There has been a slow unraveling of the digital currency's valuation since February 1, 2014, though it has been on the mend at the time of writing. This problem is one that those closely monitoring the market or the news likely saw coming months ago, with discussions about unreasonable delays in transaction processing dating back to April 2013.

The root of the problem at hand, according to a leaked document, is that "transaction malleability" (i.e., the modification of a transaction such that the associated hash is invalidated) is responsible for the loss of 744,408 BTC (Bitcoin, compare USD for U.S. dollars), which occurred unnoticed over the course of several years. This leaked document provides a roadmap for dealing with the crisis of having lost approximately 6 percent of all minted Bitcoins, and how best to inoculate the Bitcoin digital currency from the damage of the insolvency of Mt. Gox—assuming that such an undertaking is possible. Among the recommended actions include a renaming of the service from Mt. Gox, which originally stood for Magic: The Gathering Online Exchange to simply Gox, with a logotype reminiscent of cloud storage service Box.