Bitcoin drops another 20% as exchange highlights bug

Bitcoin suffered further price volatility on Monday as Japan-based exchange Mt. Gox blamed its ongoing technical issues on a critical flaw in the currency. CNBC reports Mt. Gox said the issue affects all bitcoin exchanges.

Bitcoin fell to around $680 on Friday morning after trading for $850 most of the week, CNBC reports. On Monday, after the statement from Mt. Gox, the digital currency fell to $538.

Mt. Gox said that a bug in the bitcoin software made it possible for people to use the bitcoin network to alter transactions, giving the false impression that bitcoins had not been sent to  a bitcoin wallet, when in fact they had.

"Since the transaction appears as if it has not proceeded correctly, the bitcoins may be resent," Mt. Gox told CNBC in a statement.

Garrick Hileman, an economic historian at the London School of Economics, told CNBC that this error with bitcoin's protocol isn't a new problem and believes that Mt. Gox may be using it as a delaying tactic because of an internal technology complication, a regulatory issue or even a solvency problem.

Mt. Gox is the third-biggest bitcoin exchange in the world, representing about 14 percent of total bitcoin trade in the last week, according to Bitcoinity.org.

Read more from CNBC.