After Silk Road 2.0 a couple of weeks ago, and now this, I’m surprised there’s any confidence in it. I should think even the insiders would be shaken at this point.
There’s precedent for using the “Mt” backronym like that.
In the 1980’s and 1990’s there was a company, Mt. Xinu, that marketed the Berkeley Unix system. The name was simply Unix[sup]TM[/sup] spelled backwards. Their slogan was “We Know UNIX Forward and Backward”. But they explicitly used the mountain metaphor and name and image. Their logo was a drawing of a mountain – IIRC it was Mt. Fuji or something drawn to somewhat resemble Mt. Fuji, with additional smaller peaks added on each side.
I’ve read stuff like that as well. Organizations with sufficient resources (ie, goverment law enforcement agencies) are perfectly capable of tracking down Bitcoin users. Or at least, identifying the computer/smartphone/tablet that is making the transactions.
So far, the most common response I’ve seen could reasonably be paraphrased as “Anyone who was paying attention saw this coming, and why weren’t you keeping your Bitcoin in a wallet under your control, you idiots?”
What advantage is there to using a bitcoin exchange or bank? I thought that was one of the other “advantages” - every coin owner his own bank or some such.
Bank robbers and bank & Wall St. execs steal money all the time. That doesn’t devalue money or cause everyone to lose confidence. Bitcoins can be stolen too. How does that undermine confidence?
I stand corrected; apparently the flaw was in Mt. Gox security and not the underlying Bitcoin software. That would indeed seem to have a more limited impact, but it’s still going to hurt.
Conventional banks and brokerages are insured against theft. Before deposit insurance, public confidence in the banking system did crash every now and then, with disastrous results. With Bitcoin, it’s hard for customers to know which exchanges are more at risk for security problems than others, so a large-scale theft hurts all exchanges.
There’s also the difference in that while most modern finance is digital, the underlying money is not. However vaporous dollars might have become, they’re not virtual. Interrupting the records of a bank doesn’t make the money disappear.
You’d think that the bitcoin people would set up to track the thieves ?
OR… perhaps its more of an inside job ?
It was always the worry with open source… that the code is polluted - that anonymous authors can’t be tracked. That no one can say if the people in the know are doing insider trading ?
And MtGox is in Nippon-koku … like the author of bitcoin …
Bitcoins can be tracked. This theft means that about 6% of all current bitcoins (and 3% of all potential bitcoins) is stolen. Stolen money can be reclaimed if you can identify it. I’m sure that some amount of the money I receive in day to day transactions is stolen, but there’s no real chance that it will ever be reclaimed. How would you feel about accepting cash if there was a 6% chance that in five years, the police would show up and reclaim it as stolen property? It remains to be seen if this will happen, but it certainly could happen, and the concept may chill the adoption of Bitcoin.
Mostly that it’s easier. You have to run software that constantly downloads transaction records and takes up space and all that in order to keep your own wallet. People can run their own web and email servers, too, but most just use some free or low cost service provided by another company.
They may well. The fact that this may happen in the future should make people wary of accepting bitcoin now.
In this case, the flaw was not in the open source code, it was in Mt. Gox’s closed-source proprietary client.
No one is sure who the author of bitcoin is, but the leading theory is that it’s Nick Szabo, an American citizen.
Even with federal deposit insurance, if 6% of all U.S. dollars were stolen, from one bank, you better believe there’d be a massive reaction. Sure, not many people would conclude that the dollar as a concept was stupid and flawed, but the analogy only goes so far.
Insiders, or true believers?
The true believers either think it’s being misreported, blame agents provocateurs, or find some suitable post facto explanation – that’s what true believers do.
The insiders, well … I suspect it’s working just fine for them.
You use an exchange as an easy way to deposit money and buy bitcoins with that money (or the opposite, deposit bitcoins and trade them for another currency). The exchange facilitates matching buyers to sellers, similar to what NYSE and AMEX do, plus it allows you to keep any of the currencies they handle in your account. You can trade bitcoins directly with anyone else who has a wallet, but the exchange makes it easier to find someone willing to pay or charge the price that’s most ideal for you.
If you left your dollars or your bitcoins in the account, you’re hosed. If, instead, you transferred them to your wallet, you’re still OK, just not as OK as you thought you were a week ago.
Bitcoins remind me of the currency issued by various banks in the early 19th century, which crashed all the time also. In ten years people are going to be wondering what the hell bitcoin investors were thinking.
I’ll stay invested something foolproof and secure: Beanie babies.
I’m shorting your Beanie Babies and going long into Buggy Whips. Because once we cross peak oil, it’s back to horses!
Excellent point, although I would say that that points up the small size of the Bitcoin economy as a further source of instability. Or rather, part of the reason the dollar economy is more stable is that it is big enough such that there aren’t realistically likely to be 6% of them held in one spot.
True, but isn’t the larger problem that if the money in a real bank disappears, there is an authority or government that will either make you whole, or will at least seek to punish those who stole it? It seems that in this case, the Japanese government doesn’t care. With no chance of punishment, the chances one of these companies slips up or has some vulnerability that allows hackers to steal money is basically 100%. Time, anonymity, and no repercussions greatly incentivizes hackers to keep hitting these companies until the succeed.
I do have a couple o question though:
Is there a count of the active money supply of bitcoins? Like, if I lose my hard drive with 400 bitcoins on it, are those coins existentially gone forever, and does everyone else know they will never be spent?
To answer the 1st question; yes, there is a finite amount of bitcoins available, and if you kept those 400 bitcoins on a HD and lost it, they are gone. As to the 2nd question, I’m not sure.
As I understand it, (which may not be right,) without the encryption codes of those bitcoins, they can never be spent, but nobody you didn’t tell knows that those bitcoins were on that hard drive.
If the hard drive with the only copy is completely trashed, then the coins are sitting in a sort of box that nobody will ever be able to open again. But if somebody finds the hard drive and can use it, or if you took a backup of the hard drive, either could be used to spend the coins.
On the other hand, there was one (1) act of malfeasance in the bitcoin economy last week. Care to estimate how many there were in the global currency economy?
Yes, but one of the founding pillars of virtual currency (as I understand it) is that Gummint Iz Bad and should not be in control of the medium of exchange. Currencies created and maintained by Free Citz of the Cyberzone are inherently superior.
Until someone has to enforce the rules and fix malfeasance, then the Free Citz either need to form a government or go crying to a real one. Which means a currency founded on irony would be nigh indestructible.