The cloudy state of bitcoin exchanges in Europe
In an earlier post titled How to exchange Euros for Bitcoins and vice-versa, I have described how easy it was to acquire or sell bitcoins with Euros in the Fall of 2012. Nine months later, and with the bitcoin exchange rate being more than tenfold what it was then, the marketplace weather appears much more cloudy.
Bitcoin Central, a service by Paymium, has stopped all operations because their hosting provider OVH suffered from a fatal flaw in their password reset procedure that lead to the compromission of the Bitcoin Central servers. Fortunately, they had been cautious enough not to keep a lot of bitcoins in their online wallet, and only suffered the loss of a few hundredth bitcoins that they will cover with their own funds. They will restart their operations on a more secure infrastructure in the future, but in the meantime the service has been stopped. Instawire, an instant deposit service also by Paymium, had been stopped a few weeks earlier already.
Bitcoin-24 is no longer available either because the Polish and German authorities has locked their bank accounts in Poland and in Germany. They are currently pursuing legal ways to unlock those accounts which contain user funds.
Bitmarket.eu was suffering from a lack of manpower and decided to shut down the site and to stop trading. They aim at being replaced by Bitalo, an unknown service whose gates are still closed.
#bitcoin-otc and LocalBitcoins seem to be the only survivors from the list of exchange platforms I surveyed nine months ago, although LocalBitcoins introduced trade fees since then. Those two systems have one thing in common: they put two persons in touch, instead of acting as a middleman in an automated currency trading system.
It looks like the events are forcing bitcoin to be what it was designed for: a peer-to-peer way of circulating wealth.