Bitcoin exchange faces DDoS, even as the digital currency surges

Mt. Gox said it had suffered a strong distributed denial-of-service attack

Bitcoin exchange Mt. Gox faced a distributed denial-of-service attack late Thursday, at a time the digital currency is seeing an upward swing.

The Japanese company, which is rated as the largest exchange for bitcoins, was hit by a DDoS attack that was "stronger than the average," the exchange's support team said. Such attacks aim to overwhelm systems by sending an overload of requests to websites.

Bitcoins use a distributed, peer-to-peer cryptographic system to verify transactions. A number of websites including blogging platform WordPress and social news site Reddit have started accepting payments by bitcoins. Expense reports management software firm Expensify said this week that it added bitcoin as a reimbursement option for expense reports. "We see Bitcoin as more than just a gimmick," it said in a blog post.

Payments startup Dwolla also reported a DDoS on its systems on Wednesday from which it was still recovering. The system is also used to trade in bitcoins, and Mt. Gox said in a support message on Friday that it was unable to process deposits and withdrawals through Dwolla.

The attack on Mt. Gox comes at a time when the virtual currency has seen a surge in value and popularity, leading to speculation that it has emerged as a strong hedge against the economic crisis in Cyprus.

Bitcoins are trading at about US$88 each, up from about $47 in the middle of March, according to data from Mt. Gox.

The rate appeared to dip during the period when the exchange was said to have faced a DDoS attack, but there was no indication whether the cyberattack had caused it. Others speculated that the slide of bitcoin was linked to widespread bank re-openings in Cyprus on Thursday.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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