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TheStreet Open House

You Could Become the Next Person to Lose Bitcoins

NEW YORK (TheStreet) -- Bitcoin investors are on a wild ride, one that I think is perfectly illustrated by the following illustration of a generic bubble from trader Brian Shanon's book, Technical Analysis Using Multiple Timeframes:

Used with permission from Brian Shannon

Right now, I think bitcoin investors are at the "complacency" stage. The virtual currency may weather upcoming challenges, but I expect things to get worse before they get better.

Instances of bitcoins disappearing because of technical glitches or theft have become so rampant that now a second bitcoin exchange has halted bitcoin withdrawals, and you could become the next victim. It appears bitcoin investors can't catch a break lately.

Bitstamp joined Mt.Gox in halting bitcoin withdrawals, making it the second significant bitcoin exchange to do so as a result of technical issues. These events have helped pressure the virtual currency's value to about half of its December highs. Bitcoins could recently be had for about $540.

According to Mt.Gox:

"A bug in the bitcoin software makes it possible for someone to use the Bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur. Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent."

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