Bitcoin to ‘bounce back’ following hack attack

Virtual currency Bitcoin would "bounce back" after its value collapsed following a hack attack, according to a senior developer of the currency.

Gavin Andresen said he hoped the incident would lead to better security on sites where Bitcoins are bought and sold.

Prices on the main exchange, Mt Gox, were down $17.50 to almost zero when a large number of stolen Bitcoins were dumped on the market. This led to the suspension of trading and eventual roll back to pre-crash rates.

Revealing details of the security breach on 20June with an announcement on its website Mt Gox said, "It appears that someone who performs audits on our system and had read-only access to our database had their computer compromised. This allowed for someone to pull our database," in a statement.

At around the same time, an unidentified person gained access to one of the compromised accounts and sold all of its Bitcoins. Subsequently, they attempted to buy back the coins and withdraw them in US dollars.

The fraudster was stopped in his tracks after  Mt Gox's $1000 daily limit was crossed.