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Bitcoin exchange hit by cyber attack shuts down temporarily

One of the world’s largest Bitcoin exchanges has come under attack with its owners forced to halt withdrawals from the site.

Related: Anger as Apple quietly removes Bitcoin app Blockchain from App Store

Bitstamp, based in Slovenia, stated that the attackers took advantage of a bug in the virtual currency’s underlying software that enabled them to carry out the attack and it followed Tokyo’s MtGox shutting its exchange on Friday.

Another exchange, Bulgarian BTC-e, also stated that some transactions could be delayed with the two European-based sites blaming a denial of service [DoS] attack as the cause.

“Users of the reference implementation who are bitten by this bug may see their bitcoins “tied up” in unconfirmed transactions; we need to update the software to fix that bug, so when they upgrade those coins are returned to the wallet and are available to spend again. Only users who make multiple transactions in a short period of time will be affected,” stated Gavin Andresen of the Bitcoin Foundation, in relation to the problems.

The foundation is also creating workarounds and fixes for the problem whilst reiterating that the DoS attack isn’t stealing coins and is merely preventing transactions from taking place.

The specific cause of the problem is something called transaction malleability, which is when someone changes the cryptographic code that is used to create an ID for the exchange of funds before it’s recorded in the block chain, according to the BBC.

Bitcoin’s value has gone up and down like a yo-yo even since it shot to fame in the aftermath of the FBI seizing Bitcoins worth almost £50 million from the founder of The Silk Road, Ross Ulbricht.

Related: A closer look at the latest record Bitcoin collapse

As can be expected with any detrimental news, Bitcoin has already plummeted in value compared to last week with 1 BTC currently trading at around $665 [£402] – a significant decrease from the $830 [£500] level it was at last week. Although many observers think it will come out of the other side a lot stronger.