Last year was not kind to bitcoin. And 2015 already looks as if it could be just as tough for the digital currency: Bitcoin exchange Bitstamp went offline this week as it investigated a multimillion- dollar security breach, and bitcoin prices fell from about $US320 to $US270 in the first week of the year.
The news about BitStamp is particularly alarming. The company, based in Slovenia and Britain, is the third-largest bitcoin exchange by volume.
A statement on Bitstamp's website says the company has "reason to believe" that one of its "operational wallets" - a place connected to the internet where some bitcoins being processed were stored - was compromised Jan. 4. The message also said that Bitstamp maintained "more than enough" offline reserves to cover the funds in the operational wallet. A later update said the lapse resulted in the loss of 19,000 BTC, worth more than $5 million at current exchange rates.
Read also:
• Bitcoin economy widens as parents pay digital allowance
• Diana Clement: Bitcoin - Virtual gold or junk?
• Bitcoin problems news to bankers
The incident harks back to the collapse of Tokyo-based Mt. Gox, the once-popular exchange that imploded spectacularly last spring. The company announced in February that it was filing for bankruptcy, saying it had lost the equivalent of nearly a half-billion bitcoins. Just last week, Japanese authorities told a local newspaper that only a tiny fraction of the missing bitcoins could be attributed to hacks from outside the company, according to CoinDesk, a news site for digital currencies.