Today marks the eighth anniversary of the fall of Mt. Gox, the once-popular online exchange that at one point accounted for the majority of all Bitcoin transactions.
Tokyo-based Mt. Gox, whose domain (MtGox.com) was originally[1] registered in 2007 to host a trading site for the wildly popular “Magic: The Gathering” game cards, began operating as a rudimentary bitcoin exchange in late 2010. However, as business began to drive huge traffic, the owner sold the platform to Mark Karpeles.
Karpeles, an avid programmer and Bitcoin enthusiast, beefed up the web platform’s code to handle an increased volume of Bitcoin transactions and buy and sell orders. But ultimately, the exchange’s failure demonstrated that he did not do a sufficient job in the technical or management aspects of the business, as he tried fulfilling the role of Mt. Gox’s chief executive officer with little experience.
On February 24, 2014, Mt. Gox suspended trading and went offline[2]. Eventually, it came to light that Mt. Gox’s infrastructure had been exploited by attackers multiple times over the course of several years, who slowly robbed the exchange of its bitcoin by manipulating parts of transactions data — a characteristic known as transaction malleability[3] — leading Mt. Gox to believe that certain withdrawals had not happened, prompting it to re-send requested funds multiple times.
Earlier that month, Mt. Gox had gone offline for a few hours and its team issued a press release blaming the Bitcoin protocol itself[4] for being faulty in its transaction watching mechanism. When receiving a withdrawal request, the exchange would observe the Bitcoin blockchain for a confirmation of the withdrawal transaction ID — a hash constructed from the transaction’s information. However, a transaction ID is only final once the transaction gets confirmed
