Mt. Gox blamed for Bitcoin volatility

You may recall that we reported about the suspension of trading in Bitcoins a few days ago. The Bitcoin Foundation said Monday that a problem identified by Mt. Gox as a bug in Bitcoin software issue is really a long-standing technical issue.

Mt. Gox blamed problems on a problem where by Bitcoin’s software would allow what they referred to as “transaction malleability,” or in other words, the ability for someone to change Bitcoin transaction details after the fact. The Bitcoin Foundation said in response that actually there is no bug. "Transaction malleability" is an underlying issue in Bitcoin’s software, and Mt. Gox should have prepared its exchange for it.

The Bitcoin Foundation said that the problems are due to an interaction between Mt. Gox’s so-called wallet storage software, its customer support procedures and unpreparedness for transaction malleability.

“This is something that cannot be corrected overnight,” the Bitcoin Foundation said. “This is a good reminder that Bitcoin is still young and experimental,” it said.

Last week the currency was trading in the mid-$800 range, but it has since dropped to a value around $570 during late morning Pacific time Monday.