On Monday, Mt. Gox announced that the suspension of payments would continue because of a software problem. This will not inspire confidence by Bitcoin newbies. The dollar price of a bitcoin at Mt. Gox fell below $600 on February 11. Long term though, such difficulties and responses are inevitable. Protocols in other contexts have these problems, including theft of information on millions of credit cards.
Mt. Gox has suspended payments, at least until Monday, February 10. A suspension of payments means that it is not possible to withdraw funds from Mt. Gox. This is not a problem at a small outfit. Mt. Gox was the by far largest exchange for bitcoins at least until the last few months. Mt. Gox seems to have had difficulties redeeming accounts for some time. The problems started about the same time that the Financial Crimes Enforcement Network in the United States started treating Bitcoin firms as money transmitters and reportedly seized accounts in the United States related to Mt. Gox.
It is odd to read a spokesman for the Bitcoin Foundation — Jinyoung Lee Englund — say that the United States has a “smart regulation approach” at the same time this problem occurs.
But then again, maybe creating substantial difficulties for firms dealing in bitcoins is smarter than trying to ban them? The Russian government has announced that bitoins are banned in Russia.
Trying to ban bitcoins is not particularly bright. It shows a lack of knowledge, imagination or both. Bitcoins can be transferred around the world trivially by parties who completely trust each other. Anyone who has bitcoins in Russia can transfer funds abroad if they have someone they trust outside the country. It is equally easy to make the reverse transaction, bringing bitcoins into the country. Maybe bitcoins would be brought into Russia to sell? An institution such as Mt. Gox is not necessary.