Bitcoin Price Crashes

Beardydog writes "Bitcoin trading site MtGox.com has suspended operations for the rest of the day after illicit access to at least one account resulted in a steep drop in the price of Bitcoins on the site. Commenters to the support page for the event are reporting that a list of usernames and associated email addresses and password hashes have been posted online. MtGox are currently planning to roll back all of the day's trading, email notices to all affected users, and require replacement passwords for affected accounts."

Comments

Bitcoin to revolutionise economy

[David Gerard]

Bitcoin is a decentralised computer currency designed by self-righteous Ayn Rand-reading nerds who despise looters and parasites like, er, you. It is used to purchase Internet services, illegal drugs and pictures of naked women holding video cards.

Bitcoin works by an emergent synergy of cryptography, peer-to-peer, anonymity, anarchism, libertarianism, wasting stupendous quantities of electricity, the marketing department at NVidia, the enduring exchange value of tulip bulbs and doing all of this instead of Folding@Home.

Bitcoin successfully harnesses a hitherto-unexploited Internet resource: the vast reserves of unexamined privilege amongst computer programmers. Coins are "mined" by stealing them from people who are able to comprehend this level of computer science but still keep their Bitcoin wallet in plain text on a Windows machine.

The Bitcoin system is robustly designed to continue past the collapse of the US dollar and the world economy, as the Internet, fast computers and reliable electricity are all expected to be readily available when barbarian hordes are wandering the burnt-out post-apocalyptic remnants of civilisation.

It is completely incorrect to describe Bitcoin as a "pyramid scheme." Technically, it's a "pump-and-dump."

Many common products are still inexplicably not purchasable with Bitcoins. "It's as if they don't understand the revolutionary wonder of Bitcoin," says Debian developer Hiram Nerdboy, 17. "I can't get chicks with Bitcoins either. Even with my slickest Pick-Up Artist techniques! It's as if my knowledge of economics and game theory didn't apply to real life. But that's impossible, of course. They're probably just theists. Hold on, I just gotta post to Slashdot about this."

Bitcoin was invented by Internet libertarians, in the spirit of freely-chosen individual interpersonal interactions that will bring about the utter collapse of the oppressive taint of the dead hand of government, in order to make money at your expense.

Re:Bitcoin to revolutionise economy

[Colin Smith]

The pieces of paper are backed by a country of 300 million people who will do work in exchange for them.

You realise that most dollars are not paper? They make up only about 6% of money. The rest is debt based.

There is only about ~900 billion paper and coin dollars.
There is about ~14 trillion dollars worth of credit supplied by banks.
There is about ~55 trillion dollars in total debt, again, supplied by banks.

What backs the dollar is the faith that the 14 trillion dollars will some day pay the 55 trillion dollars off.

Re:Bitcoin to revolutionise economy

[Fnord666]

Documental: (n) - A form of elemental that has all of the necessary paperwork.

Re:Bitcoin to revolutionise economy

[Binestar]

Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor.

Re:Bitcoin to revolutionise economy

[canajin56]

OK, lets say there is only a single gold coin in town. That's the only currency in existence. OK so far? So, I have that one coin, and I pay somebody that coin for a new window. The glassier takes that coin, and he goes to the pub and he buys a beer for that one coin. Now the bar pays the bartender with that one coin. Now he takes that coin and he buys a sandwich with that coin. Oops, so far our town as a GDP of 4 coins, but there's only one in existence. DO YOU UNDERSTAND YET THAT AN ECONOMY IS NOT A ZERO SUM GAME? I know, you should use the broken window fallacy next! Point out that if you hadn't broken my window in that above example that the GDP of my fictional town would have been 0 instead of 4! ;)

Re:Bitcoin to revolutionise economy

[Ihmhi]

2. Documental: (adj.) - The severely compromised state of mind attained after signing your name for the 422nd time on a mortgage application.

Re:Is it even possible to roll back a bitcoin trad

[Shadyman]

These are trades are done on a firm's website, with US$ and BTC balances stored on it. It's totally out of the hands of the bitcoin system except for deposits to (and withdrawls from) accounts on the site.

Re:Enough already

[hipp5]

Enough with this Bitcoin spam already. Bitcoin is stupid, unneccessary and irrelevant, we don't care for your fucking scam.

To be fair, it's nice to hear news that predictions about bitcoins being crappy are indeed true. This story is somewhat of an anti-spam.

BitCoins are simply a hobby, not a currency

[sirwired]

Usefulness as a currency is inversely proportional to potential as an investment. BitCoin fans, when you boast that your "currency holdings" have shot up in value by several hundred percent in a year, this is NOT A GOOD THING for BitCoins as a currency. You, Joe Merchant, would have to be a complete blithering idiot to set yourself up to accept BitCoins as a form of payment if deflation of several orders of magnitude is REQUIRED in order for your "currency" to be anything but a niche toy. In addition, credit, the lifeblood of any economy is completely impossible under such conditions; it would be the height of insanity to take out a loan if you had the potential of owing the equivalent of several hundred percent interest after a year. (As in, if you took out a loan for a thousand BitCoins a year ago, you'd be praying for an event like this to happen right now...)

An ideal currency remains relatively stable in value in relation to something you actually want to buy. An illiquid currency that gyrates wildly in value is useless, as it makes proper pricing of goods, services, and credit impossible.

In the end, BitCoins are no more a "currency" than Beanie Babies were. And at least Beanie Babies are cute. (And tulips were/are pretty flowers.) BitCoins are an interesting experiment in cryptography, nothing more.

Re:BitCoins are simply a hobby, not a currency

[RobinEggs]

These are very good points.

It wasn't until bitcoin that I understood the point of constant inflation: it makes credit feasible. You can only borrow safely if you can be almost certain money won't increase in relative value in the future, and to make a borrower feel truly safe currency value should have a near certainty of decreasing somewhat. With significant deflation a possibility you can't even take out a car loan without simultaneously risking indentured servitude; it would be insane to take home or business loans, and I don't mean figuratively insane, either.

Inflation also encourages lending and investing. It's like the Red Queen hypothesis: with inflation eating the valuation of your cash you have to put it to work somehow in hopes of earning more than the rate of inflation.

It seems no one makes loans or investment in bitcoins, and the scam artists - excuse me, properly rewarded early adopters - who minted thousands or millions of coins back when they cost 1/1000th as much processing time to generate still seem to be hoarding and not using them.

It's technically true that they're not a ponzi scheme, but they're still basically a confidence game that at the current trajectories don't seem like any benefit to people who weren't already in the market by mid-2010. Anyone who adopted after that could use them as money laundering and anonymous payments (like Silk Road), but couldn't efficiently generate or purchase them without wasting more fiat currency than the coins are worth in service fees or electricity.

The e-mail from Mt.Gox.

[Gendou]

I have an Mt.Gox account but have never actually used it for anything. I received the following e-mail earlier today.

Dear Mt.Gox user,

Our database has been compromised, including your email. We are working on a
quick resolution and to begin with, your password has been disabled as a
security measure (and you will need to reset it to login again on Mt.Gox).

If you were using the same password on Mt.Gox and other places (email, etc),
you should change this password as soon as possible.

For more details, please see this:

https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback

The informations there will be updated as our investigation progresses.

Please accept our apologies for the troubles caused, and be certain we will do
everything we can to keep the funds entrusted with us as secure as possible.

The leaked data includes the following:

- Account number
- Account login
- Email address
- Encrypted password

While the password is encrypted, it is possible to bruteforce most passwords
with time, and it is likely bad people are working on this right now.

Any unauthorized access done to any account you own (email, mtgox, etc) should
be reported to the appropriate authorities in your country.

Thanks,
The Mt.Gox team

Gmail also flagged suspicious failed login attempts on my e-mail account, so I had to go through a password reset process on it. Although I used a unique password at Mt.Gox, the attacker apparently is running automated login attempts using the stolen e-mail addresses and Mt.Gox passwords, so anyone using non-unique passwords is likely in trouble.

This is not really a bitcoin story

[Cyberllama]

So much as it is a MTGox story.

About a week ago the first rumors of MtGox being compromised by a SQL injection exploit began to circulate.
Here's one of the original claims from someone calling themselves Buttsec from June 14th. Others which I'm too lazy to dig up were more specific and named MtGox explictly:
http://pastebin.com/4NPemHfz

On that very same day, MTGox implemented a $1000 dollar withdrawal limit. Suspicious, right? For the past 3 days, there have been offers to sell MTGox's database of usernames and password hashes. Here's an example:

http://pastebin.com/ui0nusuZ

Today, there is this:
http://pastebin.com/hN7PxRhc
http://pastebin.com/w06pa2mB (there are many of these, the first link gives you the urls if you want to see them all)

This confirms MTGox was indeed hacked. One of the hackers offering to sell this database that came out today had even specifically mentioned that the hole he had used was CLOSED by MTGox a couple of days ago. Today, FINALLY, MTGox admits they were hacked and has sent out emails to all their users. Here is a copy:
http://pastebin.com/9Cx94wzs

In light of all of the evidence (more of which I'm sure you can find on your own), I find it very hard to believe that MtGox was not aware they had been hacked, and yet they've been denying it and operating normally (aside from the newly added withdrawal limit, which they even boast about in the linked press release). In fact, I found one reddit page of many where MtGox users were complaining there accounts had been compromised (There have been many over the past week) and the employee flat out denies that they have ANY reason to suspect they've been compromised:

Here's one such complaint among many: http://www.reddit.com/r/Bitcoin/comments/i17jd/i_just_got_ripped_off_on_mtgox/
And here's one with an employee denial: http://www.reddit.com/r/Bitcoin/comments/i2dkn/mt_gox_has_some_serious_issues/
Here's all that (purported) employees posts: http://www.reddit.com/user/MtGox_Adam

Long story short: For the last week (5 days at least), I've been wondering if MtGox had been truly hacked or if someone was just trying to depress the price of bitcoins by spreading rumors. Today I don't have to wonder anymore. What I do have to wonder about is why has MtGox kept silent for the past week when ALL indications were that they KNEW. They fixed the hole, added the withdrawal limit, and yet kept on denying they had an issue when dozens of users complained of account compromises. Rather than admit the issue and try to have it fixed, they apparently tried to keep it a secret. How can we trust any company that handles security issues in this manner?

Bigoted much?

[SuperKendall]

Remember, most people are stupid

This is untrue, if you actually examine the world people, on average are VERY CLEVER. If "people" were stupid our species would have been wiped out long ago.

Now what people are, is selectively informed. They may not have chosen to be informed about topics you consider important, but it does not mean they are stupid...

I'm sure your average redneck ain't keeping his ammo dry, and your average gun nut (simply for lack of a better term) can't guarantee their storage spot is impervious to floods or broken water pipes

How "sure" are you? Because I'm damn sure you are wrong. Almost anyone I've ever seen keeps ammo in something like an ammo box, which is quite dry and mostly impervious to occasional water. The "redneck" that talks so funny probably knows quite a lot more than you about the care of ammo, and humorously would probably call you an idiot for not knowing the details on this better...

Grow up and realize that people who are different from you are not automatically stupid.

Re:Enough already

[_Sprocket_]

Bah. Bitcoins represent a number of interesting concepts. Currency alone is a rather fascinating thing that touches on psychology, economy, history, and one of the earliest forms of information technology. Toss in some cryptography, peer-to-peer / decentralisation, etc. and there's no end to the facets of this subject.

That doesn't mean you have to buy in to Bitcoins. Keep in mind that these Bitcoin stories are more than simple "yay Bitcoin - buy buy buy" that you would expect from advertisements / spam. There are negative sides being covered by these stories. But if you have no interest in anything remotely related to Bitcoins, then by all means... don't click on the damn article that says it is, in fact, about Bitcoins.