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Surrogate Database Key, Not Bitcoin Protocol Flaw, To Blame For Mt Gox Problems
An anonymous reader writes "Bitcoin values dropped sharply over the weekend after the largest trading exchange, MtGox, revealed that an investigation into unusual trading activity turned up a flaw in the underlying Bitcoin software that allowed an attacker to double withdrawal a transaction"
Not so fast according to database experts: the real problem is that Mt Gox (and other exchanges) are using a surrogate transaction id rather than a natural key in their databases: "The flaw isn't so much in Bitcoin as it is in exchange-systems. Many exchanges use the tx-id to uniquely identify transactions, but as it turns out, an attacker can change the tx-id without changing the actual transaction, rebroadcast the changed transaction (effectively creating a double-spend) and if his altered transaction gets accepted into a block instead of the legit transaction, the attacker receives his coins and can complain with the exchange that he didn't. The exchange will then check their db, fetch the tx-id from it, look it up in the blockchain and not find it. So they could conclude that the transaction indeed failed and credit the account with the coins. ... A simple workaround is to not use the tx-id to identify transactions on the exchange side, but the (amount, address, timestamp) instead."
So a site with strong experience in trading Magic cards wasn't quite ready to handle the combined rigors of cryptography and finance?
The world is just full of surprises....
Many pro bitcoin will hate me for saying that, but the transaction ID should not be change and once published it's value should be considered safe to check if a transaction is part of the blockchain or not. All the crap related to 3rd party modifying Sign script is pretty idiot compare the power for having a single ID to track a transaction. That said, this give no excuse for Mt Gox to not release the funds, the problem is not new, not even to them, and probably hide a much bigger financial problem.
Bitcoin with other people's money and not mine!
Funny how the currency is only as good as the institutions supporting it. (In this case the exchanges)
Lets not kid around. Bitcoin was created with the intention of getting around existing laws and regulations regarding currency. The philosophy behind this idea suggests that these things are unnecessary and represent others stealing your money.
Not saying the banks and money regulations are completely without flaws, but they do have some damn good reasons for being there.
A bitcoin transaction comprises 3 parts:
Transaction data - Source, destination, amount and timestamp
An ECDSA signature signed with the private key of the source
A transaction ID.
The transaction ID is generated as the cryptographic hash of the transaction data and signature.
The problem comes with how ECDSA signatures are formatted. A signature is essentially a large integer of undefined length. Industry standards are that the signature should be written with no zero padding - i.e. the first byte should be non-zero. In practice, many software implementations would define a fixed length field and zero-pad signature.
The signature would still be valid even if zero padded. However, the transaction ID which is a hash of the transaction data and signature would change.
Early versions of the bitcoin daemon would accept padded signatures, but this bug was fixed a couple of years ago, and transactions submitted to the network with excessive signature padding would be rejected as invalid.
Mt Gox used in-house bitcoin client software which for a long time continued to pad their transaction signatures, even after the bitcoin developers issued an alert to users, resulting in failed or delayed (if the first node to receive the transaction broadcast was running on old daemon which would accept the transaction, the transaction would be validated and accepted; therefore a semi-invalid transaction may succeed after a number of retries) withdrawal transactions.
Finally, the thing that really screwed things up was that 3rd parties (possibly early adopters with large amounts of bitcoin at Mt Gox) recognised the bug, and provided a workaround for Gox's broken software. Their software acted as transaction relay nodes, and when it received a broken transaction from Gox would rewrite the signature in the correct form, and compute a new transaction ID, before re-broadcasting the transaction.
The result was that Gox's withdrawral problems disappeared for a number of months - until Gox's client went out of sync with the bitcoin network, as it was trying to spend coins that had previously been spent by transactions that it thought had failed.
Captcha: bugged
Then please don't read how the dollar works. You won't be able to sleep at night.
And? It highlights the real issue with the proposed "value" of this currency. It's not stable, it's not backed by any meaningful entity, and its value is an illusion created by Libertarians and gov't conspiracy nuts who love to circle-jerk each other that somehow currency can just appear out of thin air...like magic. You can argue a fiat currency system, but it means a lot more when a massive nation (or group of nations) back that currency and will use military force to ensure it stays around.
I can't believe whoever wrote the original code didn't catch this. It seems pretty database 101 class to me. Even the non-programmers had to take that class at my college and it always taught that you don't base a primary key in a table (or use as a unique ID in code) a value which isn't necessarily unique or can change. It's almost the same thing as not using as the primary data table key a compound key of last name, first name, and middle initial. First of all, it can change. Secondly, it can be repeated. That's basics, people. This isn't too far from that.