The year of doom has begun. Bitcoin which enjoyed a rollercoaster ride in 2013 is heading for some serious trouble.  First China banned Bitcoin trading on its shores, after that USA Fed Commission tabled a report of the harmful effects of Bitcoin and yesterday Russia too followed suit.  But seems like the Bitcoin woes are not over yet.

Future of BITCOIN is doomed?  software bug threatens Bitcoin trading after Russia banned it yesterday

Today Bitcoin faced one of the big challenges since its inception, Mt. Gox, the premier and largest Bitcoin exchange in the world claimed that it had uncovered a bug.  Mt.Gox claims that the bug affects all possibly all Bitcoin transactions and needs to be addressed outside the scope of its own service.  Which means that the issue cant be addressed by Mt.Gox and it wants Bitcoin Foundation, the organisation managing the crypto currency to address the same.

The problem is that Bitcoin Foundation argues that the bug was caused due to the Mt. Gox’s own “highly customized wallet software, their customer support procedures, and their unpreparedness for transaction malleability, a technical detail that allows changes to the way transactions are identified.”   Whatever the issue, Bitcoin and its overall value is sure to suffer.  Since Friday, Mt. Gox suspended all Bitcoin withdrawals from its service, citing a glitch in the way the currency handles transactions paid out to digital wallets held by third parties. Today Mt. Gox issued a statement in which it said that it believes the Bitcoin Foundation should play a role in fixing the issue, as it would affect all exchanges and payments made to third-party wallets.

Mt.Gox above statement left the Bitcoin Foundation fuming.  It squarely put the blame on Mt.Gox and the way it handles transaction requests.

“Therefore, any company dealing with Bitcoin transactions and have coded their own wallet software should responsibly prepare for this possibility and include in their software a way to validate transaction IDs,” Bitcoin Foundation writes. “Otherwise, it can result in Bitcoin loss and headache for everyone involved.”

Mt.Gox countered the Bitcoin Foundation argument by saying that the bug it has discovered is pretty new and can effectively allow potential hackes and cyber criminals to steal Bitcoin from the valid owners wallet.

The street is divided as to who is at fault but Bitcoin Foundation supporters who have long argued that this specific issue : transaction malleability has been known about for years and requires that companies like Mt. Gox develop their own safeguard against it. 

The issue has taken its toll on the value of Bitcoin with its value down to $578.00 from the highs of $1100.00 we saw in the month of December and start January.  Yesterday it tumbled with a surprise dip to $102 but later recovered.  The dip was said to have occurred when some user sold a huge block of 6,000 Bitcoins at $102 rather than the current market price.