Overnight the trade price of Bitcoin dropped nearly 70 per cent, from $US265 to less than $US100 per bitcoin.
The currency has since recovered to be around $US160.
Initial reports indicate a coordinated distributed denial-of-service attack – a DDoS is an attempt to make a machine or network resource unavailable to its intended users – against multiple large Bitcoin exchanges was responsible. It is believed the DDoS attacks have been orchestrated in an attempt to destabilise the fledgling currency by encouraging panic selling, allowing the attackers to buy in at much lower prices.
During the past few weeks the price of a Bitcoin has blossomed from less than $US20 to about $US150 last Wednesday and then onto its peak yesterday, before crashing spectacularly.
Bitcoin is an open-source 'cryptocurrency' that provides means of anonymously transferring value over the internet without the need for a central banking system or government. Transactions are timestamped and a chain of records is retained that can't be changed. All transactions are open and public and sellers sign a hash of both the previous transaction and the public address of the new owner.
Nick Santamaria is a digital consultant and IT professional.