The rush to build a more reliable exchange for the virtual currency bitcoin is under way after another price crash on Wednesday disgruntled customers who directed their anger against the alternative currency's major exchange.
Bitcoin proved once again that it's not for the faint hearted as it lost 60 percent of its value on Wednesday with the biggest exchange Mt.Gox citing increased demand leading to a slowdown with its systems.
This follows a 20 percent crash last Thursday which Mt.Gox blamed on a type of hacking attack called a distributed denial-of-service attack (DDoS) - which slows down the website - delaying orders and panicking sellers. Another DDoS was again reported by the exchange on Thursday morning, coinciding with another price drop.
"People started to panic, started to sell bitcoin in mass, resulting in an increase of trade that ultimately froze the trade engine," Mt.Gox said in a press release after Wednesday's fall caused bitcoin to close at $105 from an all-time high of $266.
Mt.Gox is the biggest exchange for bitcoins and the company claims it currently handles over 80 percent of all bitcoin-USD trades.
"The number of new [accounts] opened went from 60,000 for March alone to 75,000 new [accounts] created for the first few days of April! We now have roughly 20,000 new accounts created each day," the company said, adding that account creation had tripled in the last 24 hours.
Despite Mt.Gox working around the clock to fix problems and adding new servers, people took to Facebook to vent their frustrations.
Daily turnover for the exchange is close to $30 million, according to Bitcoinwatch.com. Jon Matonis, a senior member of the Bitcoin Foundation and an e-money researcher told CNBC.com that the prize for an exchange that can prove its stability is "potentially massive".
Recent crashes prove bitcoin's over-reliance on a sole exchange, he said, adding that the market is still maturing and exchanges are springing up around the globe taking market share away from Mt.Gox.
Bitcoin is a virtual currency allowing users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining.
Bitcoin prices have surged around 400 percent over the past month due to growing uncertainty over fiat currencies, growing media interest and the turmoil in Cyprus. Opinion has been sharply split over the currency, however, with analysts differing on whether it's an advancement in the monetary system or just a ponzi scheme that should be avoided.
On top of dealing with DDoS attacks, a surge in customer demand and implementing anti-money laundering (AML) checks, these new bitcoin exchanges have the added worry that new regulations for separate jurisdictions will hit trading further.
American broadcaster Max Keiser, a former Wall Sreet stock broker and inventor of the technology behind web-based game Hollywood Stock Exchange told CNBC.com that he was providing consulting for a new exchange to be set up in London.
"The 'market making' design for [Mt.Gox] is weak; as is the case across all the bitcoin exchanges. This is where we'll see some new initiatives - many are already in the pipeline," he said.
"I'm consulting on a project now in London with some excellent people who are part of what I would call the core bitcoin community of developers and financiers and it looks to be very exciting."
The first American bitcoin exchange Tradehill relaunched and rebranded itself back in March in the hope that it can provide a "more professional, cleaner, faster and more effective operation." The exchange even includes engineering talent from Google.
Matonis cited Tradehill and BitStamp as two exchanges that were alternatives to Mt.Gox. Over 50 exchanges are currently in existence and Matonis said he expects new leaders among exchanges will rise up separately in the U.S., Europe and Asia, with the currency never truly being centralized.
Germany's Bitcoin.de is another exchange vying to take market share. It's currently in negotiations with banks and it's looking to develop its marketplace model as well as adding more staff to its books and more servers to its current set-up.
"I think our colleagues at Mt.Gox do a great job! Nobody is immune from attack," Oliver Flaskamper, manager at Bitcoin.de told CNBC.com.
"The growth in the last three months was so strong that even we were surprised at Bitcoin.de of the influx of new registrations," he said, adding that the rush of users on Wednesday evening was "too much."