Bitcoin discussion and news

[xenon]

An enterty that can quickly redress fraudulent trades made as a result of accessing compromised accounts might be another way of putting that.

 

[grit]

So what we have here is a "currency" whose value can actually be controlled by a single entity? An entity that can just decide to abandon trades they don't like and so take values back to whatever date they want?

That's... brilliant.

Eh no... you are really showing your lack of understanding of the architecture of the system.

What single entity are you referring to, for example?

 

[grit]

Here is a csv dump of the database that was leaked http://bit.ly/kE3Q4D

 

[camouflage]

lapsed or idle accounts according the the mountain.

 

[kabbes]

Eh no... you are really showing your lack of understanding of the architecture of the system.

What single entity are you referring to, for example?

Well somebody rolled all those trades back and decided they were invalid.

 

[kabbes]

I think the point is that it's just another reminder that this is a stock, not a currency. They're fundamentally different. Using bitcoins to pay with is no different to using any stock you like as your payment method, with all the advantages and disadvantages that a bartering system brings.

 

[grit]

Well somebody rolled all those trades back and decided they were invalid.

Yes, one exchange of many, there is no monopoly here. As noted previously, roll backs are not unheard of in the traditional markets either.

Its not a stock because its not being issued by a company. Is it being traded like one, thats debatable.

 

[Crispy]

What, precisely, is being rolled back here? And how? Because it could just be transactions within the exchange's internal system, right? Need more detail.

 

[DotCommunist]

Fraudulent activity makes Bitcoins worthless. Oops.

http://www.theregister.co.uk/2011/06/19/bitcoin_values_collapse_again/

It's like realising the bloke who is banker in monopoly is on the take and also being robbed behind his back. Do not pass go, do not buy bitcoins

 

[grit]

What, precisely, is being rolled back here? And how? Because it could just be transactions within the exchange's internal system, right? Need more detail.

A system was compromised which allowed fraudulent trades to happen. In one hour someone dumped a huge amount of coins on to the market at one cent each. In response to this, the exchange is rolling back all transactions that occurred AFTER the pump and dump to stabilise the market.

 

[Crispy]

I still don't understand. I thought bitcoin transactions were final?

 

[grit]

I still don't understand. I thought bitcoin transactions were final?

This is internal in the context of a exchanger not the network as a whole

 

[Crispy]

Ok, so let's say I bought $20 worth of bit coins. Will the exchange magically take my BTC away and put $20 back in my bank account?
Was the exchange actually acting as a bank and holding people's money/BTC?

 

[free spirit]

this is all just a big house of cards waiting to come crashing down isn't it?

 

[grit]

Ok, so let's say I bought $20 worth of bit coins. Will the exchange magically take my BTC away and put $20 back in my bank account?
Was the exchange actually acting as a bank and holding people's money/BTC?

Yes the exchange is also operating as a bank in this respect.

 

[Bernie Gunther]

Pretty funny ... might give some geeks an elementary education in economics.

 

[DotCommunist]

this is all just a big house of cards waiting to come crashing down isn't it?

you'll ride it out if yo got the utilities and the stations

 

[grit]

Pretty funny ... might give some geeks an elementary education in economics.

Network web application security doesn't have much to do with economics.

 

[camouflage]

Ok, so let's say I bought $20 worth of bit coins. Will the exchange magically take my BTC away and put $20 back in my bank account?
Was the exchange actually acting as a bank and holding people's money/BTC?

There's a daily limit to the amount of money you can withdraw from your account at an exchange like MtGox, $1000 iirc, probably a limit that applies in terms of bitcoin value too. MtGox can change peoples MtGox account balances, but of course once the money is out of the exchange they have no control whatsoever.

Gox say the hacker only managed to withdraw a grand due to this policy.

 

[Bernie Gunther]

Network web application security doesn't have much to do with economics.

You might be surprised ...

http://www.cl.cam.ac.uk/~rja14/econsec.html

 

[magneze]

There's a daily limit to the amount of money you can withdraw from your account at an exchange like MtGox, $1000 iirc, probably a limit that applies in terms of bitcoin value too. MtGox can change peoples MtGox account balances, but of course once the money is out of the exchange they have no control whatsoever.

Gox say the hacker only managed to withdraw a grand due to this policy.

So, someone withdrew $1000 and this caused the value to crash to zero?

 

[joustmaster]

So, someone withdrew $1000 and this caused the value to crash to zero?

No, some one sold a stolen 8.7 million usd at a silly rate.

But they didn't get the bitcoin or the dollars out of the mtgox system. So they can return it.

They only managed to get a grand out of the internal mtgox system.

This isn't bitcoin. It's mtgox. Mtgox isn't the only exchange.
People are still currently using and trading britcoin on other exchange sites.

 

[magneze]

No, some one sold a stolen 8.7 million usd at a silly rate.

But they didn't get the bitcoin or the dollars out of the mtgox system. So they can return it.

They only managed to get a grand out of the internal mtgox system.

This isn't bitcoin. It's mtgox. Mtgox isn't the only exchange.
People are still currently using and trading britcoin on other exchange sites.

Oh, so the $1K limit only applies to exchange transactions between bitcoins and normal currency?

 

[joustmaster]

Oh, so the $1K limit only applies to exchange transactions between bitcoins and normal currency?

No.

You can only take out the grand a day from the mtgox system. You can trade as much as you want on the site. I believe.

You have a mtgox account. Load it with dollars and trade it with other users for bitcoin, which sit in your mtgox account. Or the other way round.

The reversal of transaction is happening to anyone that made a trade after the stolen coins were dumped on the market, and still have the funds in their account.

If they have switched the coins or cash out of the system (to their bank account or bitcoin wallet) they can't be reversed.

 

[joustmaster]

Any way. They are about to open a page that let's users claim their accounts back, then after a day or so they will open their exchange again. I might be tempted to buy a load if the prices crashes.

 

[camouflage]

Any way. They are about to open a page that let's users claim their accounts back, then after a day or so they will open their exchange again. I might be tempted to buy a load if the prices crashes.

I don't use the exchanges, but I was quite glum not to have been in a position to buy at $0.01

Here's an article that I think sums up the situation well...

An Insecure Economy Built on a Super Secure Currency

An attacker distorted the value of a bitcoin on the biggest marketplace for the currency

Tom Simonite 06/20/2011

As I wrote last week, it is becoming clear that although the crypto-currency Bitcoin is built on (currently) unbreakable mathematics, its economy currently relies on insecure software. The latest news from that economy underlines that its vulnerabilities present dangers not only for the personal fortunes of Bitcoin's early adopters, but also the future of the currency itself.

Yesterday the largest exchange where people trade Bitcoins for "real" currency like dollars came under attack. A bitcoin was changing hands for about $19 on the MtGox exchange going into the weekend, but the price crashed to pennies yesterday afternoon after an account with a large number of bitcoins was used to manipulate the market. The site was taken offline and later posted this explanation:

"omeone 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."

Soon after, that database was made available online, making it clear that MtGox had not secured passwords as well as it might (this discussion thread has more for technical detail). The still-offline exchange has warned its users, will roll back the market to before the attack, and is currently working to upgrade its security. Other Bitcoin exchanges are presumably also bolstering their defenses, since more attacks can be expected.

Those security improvements can't come fast enough. Recent high-profile hacks have shown that conventional banks and other institutions are not without their own security problems. But Bitcoin tools and institutions needs to rapidly professionalize if the currency is to successful ride the wave of interest in a form of money none before.

http://www.technologyreview.com/blog/editors/26910/?ref=rss

Like I said, a titanium door embedded in the soft mushy goo of nearly everything that surrounds it. I don't think it's a threat to the bitcoin economy though. Only gold and silver have anything like the raving commodity-fundamentalists bitcoin has, waging their fixed-eyed techno-jihad.

 

[Mrs Magpie]

From the Grauniad
LulzSec rogue suspected of Bitcoin hack
More than $9m of online currency was stolen in weekend attack on Bitcoin currency exchange that could cost members of Anonymous and LulzSec thousands of dollars each

http://www.guardian.co.uk/technology/2011/jun/22/lulzsec-rogue-suspected-of-bitcoin-hack

 

[camouflage]

Just to correct the Grauniad regarding Wikileaks...

@wikileaks said:

The Atlantic is opportunistically trying to spread fear, uncertainty and doubt about Bitcoin. We have spent our Bitcoins on our work, and not as a result of speculation.

WikiLeaks believes that Bitcoin is a very promising censorship resistant currency and that people should support it in practice and in principle. Bitcoin will eventually need to be augmented with a sub currency that has fixed time spend retractability if it is to be successful as a safe storage (as well as exchange) currency for the average person, but this is a minor criticism compared to Bitcoins many emancipating benefits.

http://www.twitlonger.com/show/b8qli4

My conspiracy-theory is that anti-Bitcoin hackers attacked MtGox in an attempt to undermine confidence in the currency. In the community this merely kicked-off a feeding frenzy of buying and then shrieks of rage when roll-backs of MtGox accounts meant that buys of bitcoins essentially off the back of a lorry got canceled.


In the longer run it's good, not only in terms of tempering the security of the btconomy 3rd party sites and practices etc, but more generally in dispersing trade to the other exchanges.

The charts are mostly green again...

 

[camouflage]

Was interesting how the Polish market bitcoinmat.pl held steadiest though all of this by the way, it's been climbing for the past three days.

None of this exchanges stuff takes into account otc and ebay deals and things like that of course, so it's only partially reflective of what's going on.

 

[spacemonkey]

Loads of people are showing quite a poor understanding of the whole system on this thread. It's still very early days. To write off the whole currency because of a few hacks on one exchange is simply ridiculous.