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Mt. Gox Gone? Apparent Theft Shakes Bitcoin World
mendax was one of many readers to write with news about the apparent shutdown of Bitcoin exchange Mt. Gox, in the wake of massive theft. "The New York Times is reporting that Mt. Gox, the most prominent Bitcoin exchange, 'appeared to be on the verge of collapse late Monday, raising questions about the future of a volatile marketplace.' 'On Monday night, a number of leading Bitcoin companies jointly announced that Mt. Gox, the largest exchange for most of Bitcoin's existence, was planning to file for bankruptcy after months of technological problems and what appeared to have been a major theft. A document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins in a theft that had gone unnoticed for years. That would be about 6 percent of the 12.4 million Bitcoins in circulation.' Maybe the U.S. Dollar isn't so bad after all." Forbes goes further, and says flatly that Mt. Gox has shut down; Wired calls it an implosion. Reader electron gunner links to the alleged leaked document which outlines the exchange's crisis strategy. Watch this story for updates, since there are bound to be new developments.
Waiting for the libertarians here to demonstrate why this shows how Bitcoin is such a wonderful idea.
https://blockchain.info/address/1Drt3c8pSdrkyjuBiwVcSSixZwQtMZ3Tew?offset=0&filter=0
Oh, that's right. Unregulated currency free from government interference. Enjoy!
Mt.Gox is like a bank, it's not because one big bank fail (Lehman Brothers for instance) that the whole currency is bad. Mt Gox was poorly managed, bad software code, bad PR, often DDOS. They couldn't stand the #1 place they hold for too long. I'm very sorry for everyone who lost money with Mt. Gox but don't get me wrong. Bitcoin ecosystem still exist and many other exchanges services will emerge as of that. Users and investors will have to be very careful about where they hold their money. In my case, I trust my on own encrypted devices.
I've never personally been part of a Ponzi scheme collapsing before. But as the proud owner of a fraction of a Bitcoin, I guess this may be my big chance.
SJW's don't eliminate discrimination. They just expropriate it for themselves.
Many people seem to forget, bitcoin is not inherently an investment vehicle. It is a currency. Using it as an investment is risky.
This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
What I'm saying is there is a slew of non-tech money out there about to prop up the price.
Even gold is worthless in a famine, but if enough people covet something it will hold value.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
A programmer who would implement an ssh server in PHP may be part of the problem?
BTW, the article linked from that reddit comments thread really is beautiful. In the absence of the later disasters, I might have speculated that this was parody.
My blog: http://www.seebs.net/log/ --- My iPhone/iPad app: http://www.seebs.net/seebsfrac/
From mtgox.com:
<html> <head> <title>MtGox.com</title> </head> <body> <!-- put announce for mtgox acq here --> </body> </html>
Trusted Computing FAQ | Free Dawit Isaak!
...and you put it in the title of your comment, so nobody will notice it. :(
No kidding!!! What do you say at this point?
If it's risky as an investment, how useful is it as a currency? I would expect a currency to be one of the least risky forms of property to be useful.
What a fool believes, he sees, no wise man has the power to reason away.
Sounds to me like someone was running a long term con here. Act like a legitimate business for a few years, get people to trust them. Maybe think of them as a bank and a safe place to actually cash, not bitcoins. Then once that trust is built up and you have a nice supply of money sitting in some off shore bank. Vanish like a thief in the night.
Supporting World Peace Through Nuclear Pacification
Kind of sad that a new currency - whose main idea was that it should be easy for private people to transfer money over the internet, free of charge - actually need these big "exchange-places" who not only takes out a charge (=makes money on your transaction) but actually becomes more and more as a regular bank. What's the point then? If the current usage continues we will have big online bitcoin-banks, who then will employ traders and whatnot, and start speculating on/with the currency, and, yes, we'll be in the same place we are now. Call it USD or BTC, same thing. It would be nice if the currency actually was so easy to use, and understand, so that people would feel comfortable to actually run the necessary software themselves, and take own - private - responsible for their.. yes.. wallets.
He obviously thinks a "currency" whose actual value against other currencies regularly swings 100% or more in a day is useful. Frankly I want to hear about the guy who sank money into Bitcoin ATMs and how he's doing at the moment...
Seven puppies were harmed during the making of this post.
1. new currency emerges, becomes significant
2. reigning system of currency/government considers it a threat.
3. coordinated attacks on the stock exchange
4. bankruptcy, uncertainty, disappearance
5. 'Maybe X currency isnt so bad after all!"
the fact stands that shifting major trade away from the dollar is dangerous, but the bitcoin midel would be catastrophic. its a world where international financial sanctions cant work, and in which America would need to do more than just show up to security council meetings in the UN for a rubber-stamp vote against $evil_dictator. Iraq and Iran serve as real-world examples of this in action. both countries have in the past attempted to shift oil trade away from the dollar. Nothing says monetary supremacy like de-stabilizing the competitions government.
http://www.hks.harvard.edu/fs/...
http://www.projectcensored.org...
Good people go to bed earlier.
Pity it's nearly useless as a currency. The wild swings in value on a minute-by-minute basis make it impossible to use as a currency for anything other than black market goods.
Oolite: Elite-like game. For Mac, Linux and Windows
That's a face palm. He mentioned he wrote his own half-ass DNS server so that he could use MySQL as storage too. Apparently he didn't take five minutes on Google to discover PowerDNS. Pdns is used by major sites like Wikipedia, has a MySQL backend, and takes security seriously. I found and reported a security flaw in Pdns once and their response was textbook perfect.
For small-scale transactions in time and value - e.g. turning $7 into BTC to immediately buy a CD - a relatively unstable currency is fine.
Stability of currency is absolutely needed for a vendor. If you had to change your pricing every 10 minutes how would you ever advertise anything? Would restaurants have dynamic menus with pricing that changes throughout the meal?
Maybe this will be an object lesson for the libertarians (a very expensive lesson, for some of them). In the real financial world, we used to have "bank panics" all the time. People could lose their life savings if a bank was run poorly or crookedly. Worse, if there was a recession, people were more likely to need their money immediately, so they'd go to the bank to withdraw it – but of course a large portion of deposits had been loaned out and weren't immediately. And since people knew this could happen, they'd rush to withdraw their deposits at the first sign of trouble, since they didn't want to be the one left out in the game of musical chairs. These "bank panics", then, could happen even to well-run banks, and they made recessions far worse than they might otherwise have been. During the 19th century, the U.S. economy was repeatedly devastated by bank panics.
Finally, after the Great Depression and the mother of all bank runs, the government stepped in, because the "free market" obviously wasn't working well in this area and really never had. The answer was to create the Federal Deposit Insurance Corporation (FDIC), funded by insurance premiums charged to banks. This ensured that even if a bank did go broke, the FDIC would reimburse depositors up to a certain amount (originally $2,500, but now a quarter of a million dollars). Stockholders might be wiped out, but depositors would be made whole. As intended, this reform restored confidence in the U.S. banking system. There have been quite a few failed banks that went broke, but people with checking or savings accounts at those banks still get their money back.
But didn't that lead to "too big to fail"? Not really. The whole point of the FDIC is that you can let a bank go broke, let the stockholders be wiped out, sell the bank assets at auction, and the federal insurance will make sure the regular depositors – who didn't sign up for extra risk – will get their money back anyway. So why didn't that happen in 2008? It's extremely complicated, but it basically has to do with the repeal of Glass-Steagall. This was legislation passed in 1933 that basically said because banks are federally insured, risky investment activities have to be cordoned off into separate businesses from ordinary consumer banking. In other words, you weren't supposed to be able to run a bank, gamble on risky high-yield investments with the deposits, and then go running to the federal government for a bailout when things went south. They didn't want bankers privatizing profits and socializing costs. But that law was repealed by Phil Gramm in the 1990s. As a result, everything got intermingled – we had massive insured deposits being used to gamble on derivatives that no one understood, and everything was linked to everything else in such a way that one false move would bring the whole house of cards tumbling down. The fear was that if there was not a general bailout for the investment banks (not covered by FDIC) then the whole economy would collapse. Whether that argument was sensible or just self-serving, it's what happened. Since then there have been several attempts, only partially successful, to rein in the exuberant activities of Wall Street to try to stop this from happening again.
Now back to Bitcoin. People in Mt. Gox thought they were keeping their money in a bank. Well, they were – a pre-1933 bank, with no insurance and no guarantees. There was a de facto bank run on Gox a couple months ago, and now it's gone bust and everyone has lost everything. And the libertarians didn't see this coming because they thought FDR was the devil and that all banking regulations are unnecessary.
The new meme on Reddit seems to be that you need to keep your coins in "cold storage" – if you keep them on an exchange and something bad happens, you have only yourself to blame. Imagine the financial papers saying that you can't trust the banks, so y
You don't need a bitcoin IF you have bitcoin, but the exchange service like Mt.Gox is doing exactly that, changing your cash to bitcoin and bitcoin to cash. Once you have Bitcoin you should remove them from the exchange service and store them on your own device to avoid any potential lost.
I'm setting up a new exchange. It used be a Pez dispenser trading site but I'm sure it can be adapted to securely manage millions of dollars worth of financial transactions.
I have a goat
nobody likes a braggart.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
More like putting money on your safe. A safe that can instantly teleport it anywhere you want.
Bitcoin isn't a currency and never will be - it's just a gambling scheme like playing roulette is.
Would you similarly suggest that diamonds are worthless if your neighborhood jeweler got robbed?
Funny thing, those diamonds. You go and buy a $10,000 diamond from a jeweler and together with the diamond you get an official certificate stating that the diamond was worth $10,000 on a particular date. The same day you take the diamond to another jeweler, and they agree that, yes, it's worth $10,000, and then offer you $6000 if you want to sell it.
Diamonds are nice status symbols allowing you to say 'look, I can afford to pay $10,000 for a sparkling rock' but they are worthless as investments as even when there is a consensus about their value, no one who is professional in the diamond trade will pay you anything close to that. If you want to get your money back, you need to find some sucker who doesn't know this and sell it to them.
Ding! We have a winner. Anyone who uses an exchange as a bank didn't grok the point of a distributed P2P transaction log in the first place. I would have thought it would be a key point for all those libertarians as well - personal responsibility n'all.
Keep your own wallets, keep your keys backed up, and keep them offline unless you need them. ALL these Bitcoin theft stories have one thing in common - the wallets were accessible from a public server. You would have thought that all the Bitcoin banks would have crashed right after the first story as people transferred their balances into personal wallets, but apparently people really do value their convenience much more than their hard-earned Bitcoin.
At a minimum, have a "current account" wallet that you maybe carry around on your personal devices like a phone, and a "deposit account" which you keep the wallet for OFFLINE. You can still transfer TO it any time you like - you only need the keys to transfer FROM it. Store multiple redundant copies of the keys somewhere secure - you might even want to go as far as storing a paper wallet in a real safe deposit box, but a USB memory thumb in your desk drawer and a backup thumb somewhere else is probably secure enough - you do remember your passphrases, right? And they're not the same for each copy of the wallet, right?
Recharge your current account from currency exchanges, or from your deposit account. Transfer any balances that are too large for comfort to your deposit account. Now the only thing that can destroy the value of your coins is... oh, everyone else who's still dumb enough to value convenience over personal responsibility. Que sera.
I've been told not to count those.
Good luck paying for a $6,000 - $10,000 diamond in Monopoly money, though :)
Something something cloud something network something something wizards.
No kidding!!! What do you say at this point?
Anarchist societies fail for the same reason communist societies fail: Humans are greedy assholes who'd gladly kill you for a buck if they think they can get away with it.
It's also the reason why the capitalist system works out.
Still, I think it's sad that we base our financial and economical system on the bad traits of humanity. Actually, I'm sad that it works.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
It's not always the case though, it depends what the "thing" is. I've encountered plenty of situations where there's an existing library or selection of libraries for a problem but that frankly the options available have all been terrible such that I knew without question I could create my own better.
For something like a DNS or SSH server you're absolutely right though! Some problems are common enough to have been solved near perfectly a thousand times over, others however are still not common or advanced/solid enough that there is always a better option than writing your own.
But it was going UP UP UP! The reason why people held on to it was the deflationary nature of the currency guaranteed that in the long run the value of your account would appreciate, at least until the whole thing imploded and became totally worthless.
Frankly, I'm shocked it has gone on as long as it has. I thought it was going to be a flash in the pan scam, with the original guys selling their horde of early mined coins and then leaving the suckers to hold the bag, but it seems like the suckers were much better at finding other suckers than I expected.
I read the internet for the articles.
As someone who accepts BTC for transactions, and also pays suppliers in BTC, it's simple: advertise in BTC.
Payment services (like bitpay for example) offer you the choice to "accept BTC" and get paid in your currency of choice. If you want to hold USD (or another currency), you pay your bills in USD, and you have things you want to do with USD, then you advertise your prices in USD.
Consider this: most of the world doesn't post prices for goods and services. They expect people will haggle based on what they are willing to pay for something in person. This helps to prevent a "race to the bottom" on goods, allowing small businesses to pop up and offer competitive service at higher prices. (among things!) This ends up meaning people with more money are generally willing to part with more of it (they feel something is worth more to them) and people who need things end up being able to haggle a great deal (leaving them with more capital to do other productive things with)
426 horses if you want a v8.. more if you want it to be bitchin'
Bitcoin payment processors such as Coinbase and Bitpay protect the vendor from this already.
Peter predicted that you would "deliberately forget" creation 2000 years ago...
That's possible for a bank because they're expected to take the money deposited with them, invest it, and make more money from it. If the investments are worth less than the amount the bank's supposed to hold (e.g. subprime mortgages), or the rate of withdrawal becomes larger than the bank can support because their investments aren't liquid (e.g. oil pipelines and housing blocks) then they become insolvent. That's all well-understood.
Neither supposed to be possible for a Bitcoin exchange. They have no investments. They ostensibly hold just as many Bitcoins as are currently deposited with them, plus the amount they've accumulated from fees. Their holdings are 100% liquid. You literally have to misplace money for this to happen.
No kidding!!! What do you say at this point?
Yep. I'm so disappointed with my 10x return in less than a year. Yeah, it's not the 20x it used to be, but c'est la vie.
Peter predicted that you would "deliberately forget" creation 2000 years ago...
When bitcoins dropped below $200 and even knowing no-one could transfer anything out of Mt Gox, I transferred in some money to my Mt. Gox account (about $1500).
I knew it was a massive risk but the potential gain was correspondingly high too.
The money should have hit my Mt.Gox account about 8 days ago but never did. Of course I went through the formality of filing a support ticket but pretty much had already figured the money was gone.
Since I saw MtGox website is now just a message that clearly translates to "Goodbye and thanks for all the fish" I will waste nothing on guessing if I will ever see the money again, as losing it is OK too. I went in with my eyes open, knowing this was a massive risk and therefore only spending some play money that I could afford to miss.
Perhaps the most surprising thing to others may be that this won't change my positive view of Bitcoin itself one little bit, nor will I stop making other high-risk investments with amounts of money that I can easily afford to lose.
You all probably think I'm nuts, especially for even sending that money to Mt.Gox in the first place, but Grestsky said it best: you miss 100% of the shots you don't take.
That is precisely the scam of BitCoin.
It has pretended to be an "alternative currency" when in fact, it just was an investment scheme based on theoretical nothingness.
Otherwise educated folks bit on it as a "get rich quick" scheme hook, line, and BitCoin - because a bunch of techno-babble and theory that sounded like smart folks knew what they were talking about lured them in, coupled with the "The Man" view of the government held by (mostly) young and inexperienced people who think the sky is going to fall at any moment.
What the parent of these replies is still buying into is that the "eco-system" will somehow survive and balance this out, when the only thing BitCoin had going for it was the confidence (or wishful thinking) of the folks who bought into it had. That has now been shattered. The "eco-system" has been exposed - and it's not what was sold by all the fancy talk about open-transactions and how secure it was - in theory.
When they say "...will have to be very careful about where they hold their money" he is precisely correct - but he still misses that his money is in someone elses pocket who is higher up on the pyramid - it doesn't matter how "secure" you think encryption makes your BitCoins as the bottom is falling out of it as we type. I can lock up $1000 in cash in a fireproof, buried safe - and while the value of what that $1000 can buy me over time will depreciate, it's not going to suddenly turn into a stack of 1000 pennies.
"Maybe the U.S. Dollar isn't so bad after all."
Because the regulated financial institutions that deal in U.S. dollars are so much more trustworthy. Perhaps I should keep my money with these guys. Or this company. Or them perhaps? This guy looks trustworthy, doesn't he?
Here is what government-backed currency banks, lenders, investment firms, and the like have been up to recently. And here is what they're up to now.
Liberty in your lifetime