Bitcoin's value was hammered following a pause in withdrawals by one major exchange.
After trading at around $850 this past week, the virtual currency fell both Thursday night and Friday morning and is now hovering at around $732, according to the CoinDesk Bitcoin Price Index. So what triggered the freefall?
MtGox, a major Bitcoin exchange, had announced that it was temporarily stopping all Bitcoin withdrawal requests in light of a technical issue in the withdrawal process. The process needed to be frozen for MtGox to fix the problem, according to a statement on its Web site:
In our efforts to resolve the issue being encountered by various bitcoin withdrawals, it was determined that the increase in the flow of withdrawal requests has hindered our efforts on a technical level. To understand the issue thoroughly, the system needs to be in a static state.
In order for our team to resolve the withdrawal issue it is necessary for a temporarily pause on all withdrawal requests to obtain a clear technical view of the current processes.
We apologize for the sudden short notice. All bitcoin withdrawal requests will be on pause, and the withdrawals in the system will be returned to your MtGox wallet and can be reinitiated once the issue is resolved. The trading platform will perform as usual for the needs of our customers.
Our team will resolve this problem as soon as possible and will provide an update on Monday, February 10, 2014 (JST).
So what exactly is Bitcoin, you ask, and how does it work? For an explanation of the virtual currency, check out this "Bitcoin for Dummies" edition of CNET's 404 show.
Clarification at 8:12 a.m. PT: According to MtGox site, the freeze remains in effect