Virtual currency fighting off a DDoS attack

Bitcoin, a virtual currency used in some online casinos and other e-commerce industries, recently saw demand soar due to the Cyprus banking crisis , but the positive news appears to have attracted the unwanted attention of entities at present unknown that have launched a major Distributed Denial of Services attack on the website.

The publication Computer World reported Friday that Bitcoin is currently fighting an intense distributed denial-of-service attack it believes is motivated by a desire to manipulate the price of its virtual currency, which has seen volatile price swings in the past few days.

One of the main Bitcoin online exchanges, the Tokyo-based Mt. Gox, said in a Facebook communique that the attacks have caused its worst trading lags ever and presented error pages to traders.

By its own calculation, 80 percent of the Bitcoin trades in U.S. dollars are executed on Mt. Gox’s trading platform and 70 percent of all trades in other currencies.

The price surge, which saw Bitcoin achieve highs of US$142 per coin on Wednesday, has caused malicious opportunists to try and game the system, according to Mt. Gox marketer Gonzague Gay-Bouchery.

Attackers have waited until Bitcoin’s price hits a high, sold their Bitcoins and then started a DDoS attack that destabilises the exchange, Computer World surmised.

They hope Bitcoin holders will panic and sell, causing the price to drop and create a new rock-bottom buying opportunity for the attackers.

Mt Gox reported that the DDoS assault started during Thursday night, intensifying in the early hours of the morning. The company is being aided in its struggle against the cyber-attack by Florida-based specialist Prolexic.

Gay-Bouchery said he wasn’t sure when the attacks would subside.

He urged Bitcoin traders not to panic or invest more money than they’re willing to lose. Traders should also use Mt. Gox’s options for two-factor authentication in order to prevent their accounts from being hacked, he recommended.

Mt. Gox is in the midst of a major technical overhaul of its exchange, Gay-Bouchery revealed, saying that the company hoped to have testing complete and the new systems fully operational by the end of 2013.

He said the trading platform will be separated from the front-end website, which will make it immune from the problems it has faced in the last few days.

Mt. Gox has seen a surge in people applying to trade on its platform. In 2012, between 9,000 to 11,000 people signed up per month, Gay-Bouchery said.

In January, those numbers doubled, and in February, the numbers tripled. The exchange saw more than 60,000 people sign up in March, which has caused delays in verifying accounts.

The exchange is also working with external companies to streamline the verification process and has beefed up its internal account verification team to more than 20 people.

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