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MtGox Files For Bankruptcy Protection
Sockatume writes "The beleaguered MtGox bitcoin exchange has officially filed for bankruptcy protection in Tokyo. According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors. They state that they have over $60m in liabilities against just $30m in assets, and confirm the loss of over $500m worth of Bitcoins, split between customers' balances (750,000 BTC) and company assets (100,000 BTC). Owner Mark Karpeles said, 'There was some weakness in the system, and the bitcoins have disappeared. I apologize for causing trouble.'"
And so the libertarian unregulated money dream dies.
Owner Mark Karpeles said, 'I'm a bad widdle boy', then jumped in his solid gold flying Lamborghini and flew to to his 50 acre estate in Barbados.
This debacle should only help legitimize bitcoin, as corruption surrounding the currency is now a public matter.
Epic fail is epic.
It will be better to purchase from an owner who is a good farmer and a good builder.
According to the Wall Street Journal, Bitcoin held an impromptu press conference that addressed recent rumors.
Bitcoin held an impromptu press conference? Did the Dollar and the Peso attend as well?
Oh, you mean Mt. Gox held an impromptu press conference. Yeah, well, whoever trusted an online card trading portal as if it were a bank deserves whatever they got, IMO.
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
The Gox Crater: Crowd Detectives Reveal Billion-Dollar Heist As Inside Job
Thousands of volunteering and self-organizing detectives have been meticulously laying a puzzle that reveals the Gox billion-dollar heist as an inside job. As smoke clears on the implosion of the Empty Gox bitcoin exchange, thousands of people in the community committed to revealing the truth behind the stonewalling exchange. What was claimed first to be a technical problem, then an outside theft, has been conclusively determined that the MtGox management knew too much, too long ago, to have this be an ordinary case of theft.
davecb@spamcop.net
The weakness was apparently down to the site treating a txid (transaction ID) field as a unique identifier. Turns out not only was it not actually a unique transaction identifier, it could also be spoofed easily without altering the (real) destination for the transaction. Made it trivial to make fake deposits and real withdrawals.
MTGox's fault for not understanding a spec whilst using it to move vast sums around but it probably highlights the importance of good naming practices when creating a spec.
Since these are Digital "coins" don't they have some unique property that can be identfied and tracked?
You can use bitcoin to buy things from both overstock.com and tigerdirect.com. Both of which are pretty big US retailers. Not saying that I would want to, but you could furnish a whole house just buying stuff from Overstock.
Your stewardship of Mt Gox resulted in a fairly significant black eye for the very currency you've plundered and/or allowed to be plundered.
I find your lack of remorse disturbing.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
Failed exchanges are supposed to die. This is how a free market is supposed to work. I have been warning against using MtGox since April 2013 and you can all go check my Bitcointalk posts to see that this is true. If you request a withdraw from an exchange and it suddenly takes two weeks instead of a few days before you get your money then it is time to get out. If the delay increases to four weeks then six then months then it's clearly time to not only get out but also warn others about this exchange. A whole lot of extremely stupid people ignored all the red flags and alarmbells and they lost money when this exchange went bankrupt. This is very good. A small percentage of the people who lost money at MtGox will learn from this and be more careful and picky as to where they place their money in the future. If you do not have control of the private keys of a Bitcoin then you don't have the Bitcoin, you have an IOU with someone who may or may not hold Bitcoin for you. The demise of MtGox will sadly make many of the idiots who lost money there cry for more government, more regulation and more fascism. Fascism is not a good solution, more personal responsibility is the solution. As I said, there were dozens of red flags yet people kept using this clowncar exchange. "but but but I can arbitrage because the price is 25% higher there" said a lot of people who ended up loosing their money. Well duh, why do you think that 25% premium was there in the first place, stupid? In short: Fools and their money are usually separated. If you can't bother to do five minutes of basic research of the place where you plan to place thousands or millions of dollars then you get what you deserve. This is, in my opinion, a good thing.
9/11: Never forget it was a false-flag operation
Not at all at this point. Hard to believe this went on for so long. If they had fixed it earlier, even a 5 or 10% loss would be a problem but, it would be something they could recover from. Down by half?
I mean, a 1% discrepancy in the books...shit, something is wrong, but you almost expect something like that now and again; hell my grandfather had an exta 10k in his account, and when he reported it to the bank they thanked him cuz they had been looking for where it was but couldn't find it....and 10k isn't even 1% of a small banks bankroll.
I would have considered it a temporary shut down emergency at somewhere under 10%.
If 1 in 10 of your assetts is vanished into thin air, isn't it past time to put everything on hold and investigate?
"I opened my eyes, and everything went dark again"
One really has to wonder how this happens.
I understand how it can happen, from a technical perspective, but only with effort. Negligence is hard to blame, because negligence of an admin, with the way things are logged now days generally means there is enough of a log between all copies of the servers involved for a site as popular as MtGox to piece together most of what happened and fix it. With reverse proxies/load balancers, application logs, database replication log files and all the like, and all the other bits that go with a cluster setup, you leave enough data laying around unless you actively work on deleting it when its no longer needed.
If someone is typically smart enough to go looking for data that needs to be cleaned up for security purposes, they've usually already made sure proper backup and audit procedures are in place to protect the data that needs to be stored, and they tend to make sure the important data gets stored. There is a pattern to of progression that seems to naturally protect from ignorance in large cluster.
Actually loosing half a billion dollars of someones virtual stash?
Bullshit.
It could happen, but it didn't. Hell, BitCoin has a built in transaction log that the 'network' has to agree on FFS. You know where some of this money went.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
Indeed they do. And some 400000 coins Karpeles publicly moved two years ago to prove ownership, still sit where he put them.
So it seems someone forgot their wallet password. Probably they didn't notice until people rushed to get out and they tried to dip into cold storage.
You give me your real money and I give you this number. Annnnnd it's gone. http://www.youtube.com/watch?v...
Making a mistake is one thing. Not realising that something is wrong when over $500000000 slowly disappears from your accounts is the criminal thing. I mean, in practice this must mean that they constantly noticed their hot wallet is empty (when it should not be) and filled it from the cold wallet without investigating anything. Over and over and over again.
Amazing.
Yes, they do, you utterly missed the point. You are not anonymous in ANY way using BitCoin, exactly the opposite in fact. The only theory you can follow is that you can create so many fake identities that its impossible to figure out who you are, but again, this is false.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
And so the point of maintaining the blockchain with a record of where each coin goes is....
Slashdot: where don knuth is an idiot because he cant grasp the awesome power of php
Here's the thread on bicointalk where Mt Gox announced their first attempts at providing some operational/financial data to the bitcoin marketplace.
Surprise! They never followed through with their commitment. :-(
It'll be interesting to see if the courts will restructure debts when the debts aren't delineated in "real money."
Building your cryptocurrency to be outside the regime of banking regulations may mean you can't seek the shelter of those same regulations when you get into trouble.
is this the same as the other self organizing investigation that tracked the silk road bitcoins to bitstamp?
The problem with slashdot is that most of its users were bullied and stuffed into lockers as kids!
Knowing all the problems that Mt.Gox created BEFORE they stop the withdrawal (ddos, bank delays, bad PR, bad code). My best guess is that most people that had coins there were speculators (because the price was higher because of the delayed bank transfer). Real Bitcoin users don't keep their bitcoins in an exchange but on their device. I still feel sorry for everyone that lost something, but life goes on and other exchanges will add more transparency about their reserve and better software code.
The problem is MtGox used a setup with known exploits that are completely avoidable and make no mistake MtGox is at fault here for bad security practices. You can't just fuck around when you're dealing with half a billion dollars... They're either the most incompetent sobs ever or they took everyone for a ride and stole their money and cried exploit. So what happened? Well I'm leaning on the latter myself, but that's just me.
I'm sure the picture will become clear as shit plays out over the next few months.
When they lost $500M in Bit Coins, most of which belonged to their customers? Are they not treating customer deposits as a liability? Shouldn't that interest be represented in the bankruptcy proceeding?
Yeah, I would really like to know how this happened, because as far as I thought I knew, all BitCoin transactions are "logged" in a public "blockchain" or something, so you can actually track all transactions to their anonymous sources.
Ht Charles Stross
Look where all this talking got us, baby.
From the AP Story
The reactions of the various Japanese government officials are interesting. Essentially, there was no "theft" because Bitcoin is not a "real" currency. Which is an interesting attack. Anyone can steal your bitcoins and you have no recourse to the law because it isn't actually theft.
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White, young, male and privileged.
I'll just leave this here:
http://thinkprogress.org/econo...
You are welcome on my lawn.
According to Janet Yellen
After all, it's not a legitimate currency, is it? So no reason for the Feds to get involved! Which is also what her Japanese counterpart is saying.
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No, that's exactly what OP is describing. The fact that a single transaction can have different binary formats owing to variations in zero-padding on the txid is called "transaction malleability".
Yes, the smell of testosterone.
http://suitpossum.blogspot.com...
You are welcome on my lawn.
The reason for all the AC comments is that many moderators don't follow the rules for moderation. Many with moderator points see an opinion or fact they don't like and mod it down as flaimbait, troll, etc. even when it is a valid point or true fact, causing the commenters to lose karma. Mods using their points to effectively shout down and/or silence unpopular opinions or facts is the reason for the rise in AC commenting and is a sign of the groupthink censorship going on withing the readership of Slashdot.
Yeah, yeah, millions in bitcoins, but what about the Magic the Gathering Online Exchange? I keep all my wealth in Moxes. How will I exchange them now?
So basically someone ginned up what they thought was a banking system only to discover they were grossly incompetent to run it and hadn't implemented anything resembling security?
Or did someone just manage to scam everyone out of bitcoins?
From the sounds of it someone just threw something together which was woefully insecure and allowed for a rather large scale theft.
Real banks have been at this for decades, and even they have problems. Trusting someone who just built one over the last year strikes me as a bad idea.
Lost at C:>. Found at C.
It is impossible for a Bitcoin to be copied or duplicated, but not stolen. Yes, the blockchain keeps track of ownership of each fraction of a coin as it travels from address to address. So the transactions are public but the addresses are fairly close to anonymous unless someone like the NSA or your ISP recorded internet traffic to attach it to an IP address. (You can see which addresses hacked or stolen funds went to but it is harder to figure out who is tied to those addresses.) If someone gains access to your private key, the blockchain has no way of knowing they are not the rightful owner. This is why most people with large amounts in their wallets keep it on an offline machine only or print it out on a paper wallet so there is absolutely no way of someone hacking in and stealing their private key.
Now in the case of Mt. Gox, it is not clear if they were actually hacked or if they lost so much because of this "transaction malleability issue", which is basically like receipt fraud in which people would make withdrawals and claim they were not paid, so Gox would pay them again. This is more like Gox getting "conned", not "stolen". Either way, it is looking like it was an inside job. There is just no way they could slowly lose this much money of this long of time period and not notice it.
Real Bitcoin users don't keep their bitcoins in an exchange but on their device.
No True Scotsman lost money on Bitcoin.
> a great opportunity to get in during a market correction and load up on deeply discounted BTC.
Sounds just like those stock pump-and-dump spam emails I get.
I guess I'll never be able to withdraw that Shivan Dragon now...
Chuuch. Preach. Tabernacle.
The bitcoin protocol itself works by having every transaction public, this is all stored in the blockchain. I send you a coin, and publicly announce this with a message signed with my private key. If I try to spend the same coin twice, then this is where the transaction confirmation chain kicks in (and why you need to wait for X number of confirmations). When you announce sending a coin to somebody else, I see the message, and additionally sign your transaction message with my private key and add it to the blockchain. The next person to see the transaction, will again sign on top of all the previous confirmations.
If I try to double spend a coin, then there will be two different sets of transaction history. The bitcoin client is configured to accept the transaction confirmation chain with the most number of signatures as valid, the other one is ignored. Additionally, clients in the network will only additionally sign the chain they believe is valid. Once you get more than a few signatures, its almost computationally impossible to fake a confirmation chain faster than the network, assuming you don't have 51%+ CPU dominance (which is the worry about cex.io going rogue).
The MtGox issue is that they wrote their own custom bitcoin software to deal with the running of a high transaction volume exchange. They where not waiting for transaction confirmations from the network to check their own internal transactions. Their software was buggy and suffered from an exploit using Transaction Malleability. See https://freedom-to-tinker.com/...
The best real world bank analogy, is if you where to go to a cashpoint ATM outside a bank, withdraw money from the system, then enter a special code into the ATM which makes it display an error message. You then go into the bank and show them the error message, and ask them to refund the ATM withdrawal from your account claiming the ATM never gave you any cash (but in truth you did get the cash). This process didn't create new cash out of thin air, in practice you just got the bank to give you free money.
Eventually the bank becomes bankrupt, and you discover that what you actually own is not cash but rather an IOU from the bank for cash, which the bank can't pay.
https://explosm.net/comics/347...
wtf. 500 mil is not just 'causing trouble' and something you can simply dismiss with an apology. Time for a public hanging.
---- Booth was a patriot ----
It tells me they were not following accounting principals and balancing the books at the end of the month. (Which I suspected long ago when I closed my account with them)
Any company that I question the accounting practices on is one that I run from screaming. Stocks, jobs, bitcoins, does not matter.
The thought that the public should have -any- exposure to this debt (via FDIC or similar ) is ridiculous. Bitcoin is by its very nature outside the establishment. When it fails/falls should it just disappear as invisibly? If the public has to bail it out, substantial measures would need to be put in place to provide transparency, which would be completely at odds to the secrecy/privacy crucial to Bitcoin. This sounds alot like the trend in the US markets to favor private benefit and public exposure to financial risk.... This has to stop.
Time for a new Political party in the US (or two!) One is off the rails Other cant pony up a leader.
Of course it's by design, if you pass a $100 bill to someone and he run, you lost it and can't have it back. It's the same thing with Bitcoin. Bitcoin is design to put the power in the hand of the people rather than in the bank like the traditional system. If you trust a company to hold your bitcoin you have the risk of losing them. You nailed it, you disagree with the design, but only time will tell if Bitcoin is good or not.
Actually, no money today "just works". Yes, the old coins did. They were minted out of precious metals and because of that they had some value. You could essentially cut off parts of it and sell those parts if you felt like it. That actually did happen.
Roman coins are actually a rather bad example because they, at least for some of them, already had the same effect money has today. The value is less the intrinsic value of the coin itself (made of bronze they were not that valuable), but because of the trust people had into the issuing entity (the Roman senate, or later the emperor). In early medieval times, people returned to the system of intrinsic value because there was no entity that you could (or rather would) really rely on that could say that copper in your bag is worth more than the metal is worth. That only came into existence again when countries were strong enough to give money its symbolic value again. And that's where we are today.
The coin (or bill, for that matter) itself isn't that valuable, but its symbolic value is what gives it its value. It represents something. When I hand you a dollar bill, it's worth one dollar. Why? Certainly not because the paper with the funny print on it is worth a buck. The material value of a dollar is negligible. And it gets even more absurd with a 100 dollar bill.
The value of modern currency is in the trust the person receiving it has in it. If you allow me to buy something worth 100 bucks with a 100 dollar bill, you trust that bill to be worth those 100 dollars (ok, you might want to check whether it's genuine because you do not trust me, but if it's genuine and the Fed printed it, you trust that bill), you rely on getting something worth 100 dollars again with that bill.
Why do you do that? Because you trust the entity issuing the bill that they can back it up with something. In case of the US, probably you trust it because you rely on the US' economy to produce enough to prop up the bill's value.
That our current currency has zero intrinsic value can easily be seen when states start to fail. Take most of the European countries after the war. The money bills were essentially worthless. They printed insane denominations on them (up to a billion, and with a hint of luck you could probably get a loaf of bread with it), but they still lost value pretty much by the second simply because nobody trusted the money anymore.
So essentially, the value of contemporary currency is in the trust people put into it. The trust that they will get something in exchange for it. As long as that trust applies universally, a currency will continue to work. When that trust is lost, the currency becomes pretty much worthless.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I suppose someone might be silly enough to try such a thing, except that nothing has been done to undermine trust in Bitcoin directly, just some of the supporting infrastructure. And infrastructure that pretty much everyone should have been suspicious of at that. I'd say this event highlights two of the biggest weaknesses in the Bitcoin economy:
1) The exchanges are mostly run by geeks with no fucking clue how to maintain security in the face of the size of target they represent. All those annoying banking regulations and "best practice" rules? They're there for a reason, mostly because some asshole(s) historically managed to exploit weaknesses in the cash-based banking system. Even if you aren't legally required to obey them you should probably consider doing so.
2) An awful lot of the exchanges, etc. are intentionally based in jurisdictions where they face limited if any legal regulation or liability (red flag anyone?), so the owners have no real incentive to harden their security, or for that matter to not just take the money and run. There are solutions to this however, as evidenced by the mostly smooth functioning of the black market. I'm not one to advocate murder, but perhaps a variation on that crowd-funded assassination site would be effective - one where targets receive daily beatings until they right the wrongs they are responsible for. Or maybe weekly - the sort of beating you can survive receiving daily might not be cost-effective to commission.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
A great of example of why no one takes you feminists seriously...
Umm... the same can be said about any currency. Every currency is only worth whatever the receiving end is willing to part with in exchange for it.
The thing that makes our current currencies "valuable" is simply trust. I trust the issuing entity (the country, the fed, the ... whoever prints your money) that they know what they're doing, that they ensure the currency is stable and that I can still expect that I will get something in exchange for it tomorrow. If that trust is gone, the currency becomes a piece of paper with funny swirls on it.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
$0.5B in BtC's are missing (not all deposits), but they only have liabilities of $60M?
Cute. Are they somehow magically not on the hook for all that missing dough?
If they were a bank, deposits are supposed to be counted as part of your liabilities.
So, an even higher proportion of bitcoin owners are dishonest jerks than I had previously thought, having cleaned out a bunch of honest-but-naive Mt. Gox clients.
This makes me want to do anything in bitcoin even less than before -- why should I muck around with such counterparties?
Thousands of volunteering and self-organizing detectives have been meticulously laying a puzzle that reveals the Gox billion-dollar heist as an inside job.
Oh great, the armchair Internet detectives are back. Remember the crack job those guys did tracking down the Boston Bombers?
I don't care if it's 90,000 hectares. That lake was not my doing.
The other theory is they misplaced the encryption keys for their cold wallet, making all those coins vanish forever.
Peter predicted that you would "deliberately forget" creation 2000 years ago...
If all you are doing with them is exchanging in and out of other currencies currencies for a profit. That would be a loophole for regualtion. Many bitcoin owners are using them this way.
If a currency was only being traded for goods and services, then it would not be a security. Some bitcoiner owners only do that.
Sure, assuming this is honest mistake due to gross accountant incompetence (As a "bank" they did employ actual accountants familiar with the symptoms of cooked books, right? Right?!?) they could no doubt track all the stolen bitcoins to the money laundering service they were routed to. Doesn't help with fixing things in the slightest though. A single major heist, detected quickly enough, might unite enough of the bitcoin network operators to reverse the transaction(s). Thousands of minor heists scattered across months though? Those coins are so well mixed into the economy there's no way to get them back.
Logs are wonderful for tracking down the cause of problems so that you can fix them. Adequately monitored they can even alert you to ongoing problems, if you're logging the right stuff at least. But they don't help in the slightest when it comes to undoing damage that has already been done and left your control. For a simple website analogy - monitoring the logs may let you know when your site has been hacked. Reading them will help you close the vulnerability and repair any defacement. None of that though will un-infect the computers of the people who visited your site while it was distributing malware.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
End of month? Any financial institution I know of - major or minor - does balance the book either in real time or at least daily. Every shop does balance cash receipts vs. cash in register daily. THis is not "making a full audit", it is minor "run what we have in the cash register vs. what the receipts say we have" and should be done pretty much every time for example you access cold storage, or daily for real money accounts.
Pseudonymous, not anonymous. Not that that matters much when the first destination of the stolen coins is no doubt a money-laundering service somewhere.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
Blockchain is one of the core algorithms of bitcoin to eliminate multiple spending of the same bitcoin id. Otherwise some clever person could simultaneously spend a billion copies of the same bitcoin id file and succeed.
Kind of like torrent works. Some services will split bticointransactionsin many small transactions and scatter them among intermediate computers. This makes noticing them and tacking them more difficult.
That deserves some +5 informative mods. I've heard about Roman devaluation of coinage to a small extent, but this really put that into perspective with the dark ages' reliance on metals.
What changed under Obama? Nothing Good
They might be able to file for the business sake. But, technically, they are still on the hook for the lost value of the bitcoins. Bankruptcy doesn't free you of negligent or fraudulent action. Wouldn't want to be them.
Considering Mt. Gox's original business -- as a Magic: The Gathering Online eXchange -- I'm much more worried about how this will affect card prices. I don't own any bitcoins, but I have boxes of cards in my spare room that I've been counting on as retirement income.
Genocide Man -- Life is funny. Death is funnier. Mass murder can be hilarious.
The community may have been better off keeping mt gox afloat, in order to stabilize the market and thereby averting additional losses in bitcoin market value.
With the collapse of essentially the largest exchange for bitcoin, if indeed bitcoin value plumets even more, what would people rather lose; a few dollars each to inject into mt gox to clear up its debt (getting you long-term stablity), or would you rather let mt gox fail and risk another huge loss in bitcoin value costing people far far more as a whole?
Its probably too late to save mt gox but I did notice their debt of $30 million is practically chump change compared to millions or billions in loss from another market value plunge.
Bottles of soda aren't a government-regulated currency either, but if I gave 100,000 bottles of soda to a company with the understanding that they would store them and return them on demand, and they managed to lose them, I would still have a legal claim against that company for the value of the goods they were supposed to be holding for me. This is squarely in common-law contract territory; no special regulations are required.
Yes, precedent was surely set when EVE Bank failed. Oh, wait.
And yes, Bitcoin is the equivalent of a bunch of ISK. It's a virtual good. It isn't legal tender. Hell, in a few countries now, it's rather illegal to use as currency, even.
Special regulations are required. You aren't going to win a lawsuit when your mothership gets hotdropped. You aren't going to win a lawsuit when Bob the Barbarian stabs you in the face and loots your corpse. And in many countries, you aren't going to win a lawsuit when someone steals your imaginary Internet money.
the dark ages' reliance on metals
Read up on tally sticks. At least in Britain, silver didn't make a comeback until the 1600's. If you have 209 minutes to be rapidly educated, check out The Money Masters. It also contains 15 minutes of conjecture, so keep your critical thinking cap on but enjoy the high signal:noise ratio.
My God, it's Full of Source!
OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
Eh, even your old coins made with precious metals lack any true intrisic value. They only worked because people were confident that they could could trade them again as no one really had any use for a bunch of gold or silver.
Barter economy is the only way to go.
That was anonymous, who didn't check their work. The armchair detectives published their claims with their evidence for others to critique. That often works better, especially when one is as mad as hell (:-))
davecb@spamcop.net
It tells me they were not following accounting principals and balancing the books at the end of the month.
How do you balance the books? You have a bitcoin which is "stolen" and spent. Surely it's only when you come to try to spend it yourself that you discover that someone else has spent it first and your bitcoin is no longer valid.
God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.
And as long as an exchange exists, you can exchange your bitcoins for money, and thus use them for whatever you want.
Also, Bitpay is nothing but an external branch of a bitcoin exchange.
This is a company that implemented their SSL encryption by hand in PHP. "Best Practices" are a word that never crossed their mind.
I read the internet for the articles.
That was not the error they were dealing with and there is no way for you to spend someone elses bitcoin.
The issue as I understand it, is that someone was forging a transaction ID on an existing deposit or withdraw. Thus tricking the system into transferring the coin a second time. So they had a pool of coins that everything went into and came out of. If I deposit 25btc into the account there system credits my account 25btc. If I withdraw 25btc then it debts my account. All of this keyed to the bitcoin transaction ID. If I forge that transaction ID taking the same 25btc deposit packet and send it again with the forged transaction ID. There system would credit my account a second time, even though the coins were never deposited into the pool. I could then withdraw 50btc, which would come out of the pool of coins because there system thinks I have more btc than what is really there. The only way they would have caught it is if they did a month end and reconciled the numbers in there web system to the number in there btc pool wallet. Which they should have been doing EVERY MONTH!
In simple terms balancing the books is.
You take the account total at start of month.
You take and apply the debts and credits to the total.
You validate that the total you have come up with is the same as the account total
You sign off on the total for the month and close out the month locking it from change.
What I fail to understand is how MtGox managed to lose all this money with "transaction malleabiliity." My question is simple and stupid, but I haven't been able to discover the answer from articles discussing this fiasco.
Depositors initiate a transfer of bitcoin, then complain that it didn't go through, then MtGox transfers additional bitcoin.
Why didn't they simply send the original bitcoin again?
So that's what they keep under their kilts - Bitcoins!
"National Security is the chief cause of national insecurity." - Celine's First Law
If you're a bank or finance company, borrowing and lending on your own account, then yes, customer funds are liabilities. But stockbrokers, lawyers, accountants, et al. keep their customers' funds in a segregated trust account, and Mt.Gox and all the other exchanges should be following this model.
So is there a video of the press conference anywhere? I've only seen clips, such as Mark Karpeles bowing and apologizing (in Japanese), and answering a few misc questions.
the stream of consciousness is like bitcoin's block-chain. When several alternative phrasings / formulations are being considered by consciousness, there is a system-wide (brain-wide) "lottery" or computational competition to determine which "block", which phrasing, will actually make it onto the stream. The more processing power (attention) that a section of the brain applies to the problem, the more likely its phrasing will become used. Imagination can be seen as rotation around sections of the brain -- using a wide variety of mental / psychic structures in your everyday thinking, and not "overfunding" one area of the brain and relying on it for all of your realizations. Bitcoin's genius is that it provides a model for how the mind works. There has to be a competition or "lottery", because there ~is chance and randomness in the decision of which alternatives to your inner stream will be chosen. Right at the front of the stream, the frontal edge, the foaming froth, there is an intense interplay as different areas of the brain seek to get their "statements" into play. This is obviously happening very fast. Many people never notice the frontal edge, and only focus on the completed stream (block-chain)... They in a sense don't know there is an alternative to what they're thinking.
David C. Baird theunspokenyes.com
You're slightly off: The forged transaction would succeed, and the 'real' transaction would 'fail' because bitcoins couldn't be double-spent. The result of this being the sender's ledger doesn't show the transaction as having successfully completed. From there a social engineering attack convinces the sender to submit a new transaction to the reciever who would now have recieved their payment twice.
This was how it's been explained to me by two different people with knowledge of the system. As such it wasn't a 'double bill' in a technical sense, but rather a 'cooking the books' attack to convince the sending end to double-pay a bill.
Well, 95% of bitcoin owners are in fact men.
You are welcome on my lawn.
So does this entitle him to a massive government assistance package, so that he can then leave as CEO with a multi million $ payout to go to an even better paying job??
That is how this works, right??
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Which Helpless Linux zealot/MS basher do you want to mod down today?
Sorry, but my knowledge of the history of the far east in the times between about 0 and about 1700 is spotty at best. But I'm quite willing to hear what you have to say about it, I'm quite interested.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The Earth is not a closed system, either materially or energetically. We can also leave it and utilize the resources outside the Earth. Communications satellites already do this. They tap a tiny fraction of the Sun's energy that misses the Earth.
Bitcoin "addresses" are unique. They are derived from several rounds of hashing functions on the private key of of a public-key encryption pair. Addresses hold some bitcoin balance amount, which is recorded to 8 decimal places. Bitcoin transactions move some amount of balance from one or more input addresses to one or more output addresses. The private key is required to digitally sign a transaction, so whoever knows that key, can spend the coins they control. Bitcoin "wallets" are files that contain as many keys as needed. Since they are 256 bit keys, one file can hold as many as you need.
Transactions are broadcast across a peer-to-peer network. They are collected by "miners" into "blocks" who attempt to find a low-valued hash for the block by varying the random number, where the data being hashed is [hash of previous block + hash of current block's transactions + random number]. How low the hash value needs to be is adjusted so the whole network finds one every ten minutes on average. Whoever finds the hash value first broadcasts the new block to the network, and everyone running the software updates their copy of the "Block Chain", the set of all blocks containing all past transactions.
Thus everyone has a complete history of all transactions, and every bitcoin amount can be tracked across all the transactions it has been involved with. Each block has a special "coin generation" transaction, which creates 25 new coins, and sends them to the miner's own address. Those 25 coins are worth $14,000 at today's rates, which drives the whole mining operation. Miners compete to find the next block, and claim the 25 new coins.
Since blocks are hard to create, and each block contains the previous block's hash value as data, they form a chained history which is effectively impossible to edit. Any change to any data invalidates the hash recorded in the next block, and every one after it. That is the innovation contained in bitcoin: digital data you can't edit. It is highly useful for recording financial transactions, but it can also be used for any other kind of data you don't want to change.
So not only does everyone have a copy of all past transactions, nobody can change them, because that would take all the computation power consumed since the point you want to change, and all the computation power is busy writing new blocks to earn the rewards of new coins.
While I am no expert in Japanese law, I can tell you that in many jurisdictions there is a law on the books called "criminal negligence". I.e., doing something harmful when you should have known better.
I think "losing the key to the box containing $500m of customer money" would qualify for that.
I think that's a reasonable compromise: governments leave currencies like Bitcoin alone (no taxation or regulation), and in return don't enforce anything. I guarantee you: Bitcoin will win over the Yen or Dollar that way.
You can agree to buy or sell a commodity in whatever tradable currency the buyer and seller can agree on. They can then buy or sell that currency pretty easily on the world currency exchanges to end up using their own choice of currency.
When you look at forward or long term contracts, the choice of currency used in the price begins to make a difference. Price variations are the sum of variation in the supply/demand of the commodity plus variation in the currency used to price the contract. Most buyers and sellers try to minimise the currency component of the total variation.
The preferred currency of the biggest buyer has a significant effect on this choice. USD.
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If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people.
Also notice that when energy is spent, it stays spent most of the time. At 3% annual growth, which is the amount politicians like to think is a minimum to guarantee such things as employment rates, it will take about 1000 years to utilize the entire energy output of the Sun.
Total power used by mankind today: 10^13 W
Total solar power striking the Earth: 10^17 W
Total solar power output: 10^26 W
3% compounded over 1000 years: 10^13
Who knows where humankind will be in 1000 years but my guess is that we are unlikely to achieve a Dyson sphere.
Best.
I just checked Tiger Direct, no way to pay with BTC that I can see. Link?
I think bitcoin will succeed like email!
No you trust that things will continue as they are ^x. Since they have for a long time.
You're at a computer! And if you're on Slashdot probably more than 8 hours a day!
http://www.tigerdirect.com/bit...
That's what the sporran is for.
No kidding!!! What do you say at this point?
You are right if you are talking about the bitcoin wallet. The Transaction ID was used by there web software to credit the DB entry for the persons account. That is where the breakdown was. Not in the wallet software but in the web interface. The transaction ID would come in and the web site would update the database for the persons account. The bitcoin wallet would invalidate the transaction but the website would not.
Seeing as I have worked in the Banking industry, yes they balance the books every month and close out the month. They do not balance everyone's individual account.