Mt. Gox tries to pin its own incompetence on Bitcoin bug

bigbitcoin12 Feb 2014 / Extreme Tech – On Friday, Mt. Gox announced that it was suspending BTC withdrawals due to a problem with its payment processing system that necessitated a system shutdown while it worked to fix the problem. Today, the company has released new information claiming that its problems have nothing to do with Mt. Gox itself, but are linked to a fundamental flaw within the Bitcoin protocol.

The company blog claims that “a bug in the Bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur.” It then goes on to claim that this design flaw (known as transaction malleability) has been known for years but largely ignored by Bitcoin developers. Mt. Gox claims to have developed a solution to this problem and will “allow Bitcoin withdrawals again once it has been approved and standardized.” (Read: What is Bitcoin, anyway?)

The entire post reads like the exchange is doing the BTC-using world a favor by demanding that the Bitcoin core developers solve this problem by adopting a better transaction hash for tracking purchases and transmissions.

The narrative falls apart

The only problem with this narrative is that it seems to be utterly untrue.

Multiple blog posts have sprung up since Mt. Gox put its explanation online, pointing out that transaction malleability has been a known flaw since 2011. The problem with Mt. Gox’s transaction tracking abilities is that its own custom wallet software relies on transaction IDs to track whether or not a payment was received properly. The official Bitcoin daemon (bitcoind) doesn’t do this….. Read more

Follow Twitter

Exchange Rate