Bitcoin Update: "Your Money May Be 'Tied Up' In Unconfirmed Transactions"

Tyler Durden's picture

As the torch of responsibility is rapidly handed off from exchange to exchange to the Bitcoin source code, Gavin Andersen (one of Bitcoin's protocol core developers) explains just what is going on - and what it means for the 'wealth' stored in the virtual currency - "Users of the reference implementation who are bitten by this bug may see their bitcoins “tied up” in unconfirmed transactions" - so that's what 'bit' stands for in bitcoin...


Update On Transaction Malleability

You may have noticed that some exchanges have temporarily suspended withdrawals and wondering what’s going on or more importantly, what’s being done about it. You can be rest assured that we have identified the issue and are collectively and collaboratively working on a solution.


Somebody (or several somebodies) is taking advantage of the transaction malleability issue and relaying mutated versions of transactions. This is exposing bugs in both the reference implementation and some exchange’s software.


We (core dev team, developers at the exchanges, and even big mining pools) are creating workarounds and fixes right now. This is a denial-of-service attack; whoever is doing this is not stealing coins, but is succeeding in preventing some transactions from confirming. It’s important to note that DoS attacks do not affect people’s bitcoin wallets or funds.


Users of the reference implementation who are bitten by this bug may see their bitcoins “tied up” in unconfirmed transactions; we need to update the software to fix that bug, so when they upgrade those coins are returned to the wallet and are available to spend again. Only users who make multiple transactions in a short period of time will be affected.


As a result, exchanges are temporarily suspending withdrawals to protect customer funds and prevent funds from being misdirected.


Thanks for your patience.

As a reminder, Andersen previously explained:

Transaction malleability has been known about since 2011. In simplest of terms, it is a small window where transaction ID’s can be “renamed” before being confirmed in the blockchain. This is something that cannot be corrected overnight. Therefore, any company dealing with Bitcoin transactions and have coded their own wallet software should responsibly prepare for this possibility and include in their software a way to validate transaction ID’s. Otherwise, it can result in Bitcoin loss and headache for everyone involved.


As Mike Krieger recently noted,

Bitcoin is no longer in Phase 1 of its evolutionary cycle. I believe Phase 2 for Bitcoin began in earnest back in November 2013, when the Senate Committee on Homeland Security and Governmental Affairs held its first hearings on the topic. Those hearings made it clear that, at least for the moment, no significant roadblocks would be put in place to prevent people from transacting with one another using the crypto-currency. Phase 2 also saw the largest Bitcoin investment to-date, a $25 million infusion led by Silicon Valley VC firm Andreessen Horowitz, as well as acceptance by major U.S. retailers, with Overstock being the most significant. Bitcoin is becoming serious, and serious means serious accountability.

As a free market currency, the market will decide the products required to keep the Bitcoin protocol open and functioning to its highest potential.

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disabledvet's picture

it should be worth at least a buck.

Grosvenor Pkwy's picture

"it should be worth at least a buck."

Several weeks ago right here I estimated the value of 1 Bitcoin to be about US$1.00

However, I may have to reduce my estimate to 80 cents U.S., given the most recent problems in implementation.

fonestar's picture

fonestar shall not desert you.

Bindar Dundat's picture

And for that we are glad.


I am with you bud.

NoDebt's picture

More like Jim Jones.  


fortune114's picture

Last year, me to wife: "Have you ever heard of BitCoin?"

Wife: "Is it that Internet money?"

Me: "Yes."

Wife: "Don't you dare buy any of that f***** s***!"

fonestar's picture

What is your wife's number?  I am sure fonestar can get her to come around.

Bangin7GramRocks's picture

All scammers and hucksters know to never pitch the bitch! Women have more common sense. Maybe Fonestar should have consulted his mom when she was doing his laundry. Could've saved him his life savings.

FEDbuster's picture

"Ma where are my Bitcoins?" screams Fonestar from his basement lair....

chemystical's picture

One of many trying to launch the same concept.  I watched their developers' sales pitch in the youtube selfie.  Don't they have some unsavory TPTB type partners/backers? 

cool concepts that will without a doubt come to fruition and change networking forever, and that have inifinite uses beyond cryptocurrencies, but really pokes too deeply into skynet-ish nightmares. 

Most tools can be used for either good or evil purposes.  The more powerful the tool the more frightening the possibilities.  If only we have benevolent leaders.  That's not gonna happen.  Gawd I've gone luddite in my comfort level. 

Scientist: '"Hey, I invented a way for us to travel to other galaxies in seconds!"

Sociopath: "Awesome, now we can kill them and steal their stuff.  Or maybe just enslave them with joo spacebux."

fonestar's picture

Just let fonestar handle the smart thinking stuff.  All you have to do is buy more Bitcoin.

palmereldritch's picture

Hey Jon...I thought you were starting a hedge fund ?

chemystical's picture

my comment was a reply to the "Ethereum" comment.  My reply was spot on.  Fuck your down arrow douchebag, and go back to your mom's basement

aVileRat's picture


The whole gimmick depends on the assumption that any user can fact check his block chain vs. the master chain. If someone is able to fork the chain, or even usurp the master chain via a sequence of phony trades it will be near impossible to detect the skimming until the broker starts to see mismatching in the house P&L sheet.  

Sadly, just like Tulips the counterparties can not stand to fill orders for hard cash delivery and the whole system is now suffering a perma-loss of faith because nobody is willing to be a central bank who can offer hard currency collateral to the bitcoin dealers.

zaphod's picture

Completely and technically incorrect, but thanks for trying.

Only major services need to run full nodes with the full transaction history.

The vast majority of users can (and already have) switched to SPV clients, which only require a couple megabytes today and which grows by less than a megabyte per year. This is why you can have a cell phone wallet which syncs immediately and uses less bandwidth than web surfing.

Light clients only need the parts of the block chain that are relavent to them. And because the bitcoin blockchain uses merkle trees you can retrieve only the sub-segments that are relavent to your wallet, while being able to fully verify both their integrity in the main chain and the validity of the main chain. 

Read up on bitcoin headers and merkle tree structure to understand how bitcoin was designed from the start to enable full verification with out the entire chain being required.

nmewn's picture

Not to be an "old fogie" on this but that seems awful complicated just to verify if something is money/currency or not, so you can use it, ya know, as a currency.

Trust is 99% of any "currency" and the first action of any con is to institute a sense of trust on the intended victim. Overly complicated anything is where you find conmen...from presidents to bankers to magicians to roofers banging on your door saying your ceiling is going to cave in if you don't do something!


Saro's picture

"I don't understand it, therefore it must be made by conmen." is not an argument that anyone who does understand the system will accept.

If you don't feel comfortable with Bitcoin, I fully agree with you that you should not invest in it.  That doesn't imply that people who disagree with you are deluded or stupid.

Citxmech's picture

I think that the point is that the more folks learn about BC, the more of a gigantic PITA it seems like - at least for folks who don't want to make "Bitcoining" a full-time hobby. 

Saro's picture

I agree that it's not as simple as it could be yet, but that's how tech is.  It gets easier over time.

chemystical's picture

I enjoy your posts, but this is not tech.  This is not de novo science.  This is application of tech that's been around for a long long time.  The application has next to nil excuses for and no credible way to say, "Bear with us; we're still feeling our way around in the dark" much less, "Yeah, we knew about this 3 years ago, but didn't thikn it was important enoug to devote resources to."

Another poster called it an experiment, and that's very close to accurate.  I am a scientist in more than one physical science.  We do sometimes launch new ideas while they're frankly in the experimental stage and before they've undergone sufficient testing, and that's partly the beancounters driving that and partly the fear that someone else will get there first (IP notwithstanding).  In other industries, running before you learn to walk has lead to dead or disabled humans and fat lawyers suing those who lacked due diligence but had sufficient insurance combined with soul-less and cost:benefit driven leadership. 

Saro's picture

Just because the underlying tech has been around for a long time does not imply that everything works perfectly in a 0.x beta release.  Prior to Bitcoin, our collective experience with a global, distributed cryptocurrency was nil.

The better cryptocurrency that eventually unseats Bitcoin will have no excuses, however.

Bunga Bunga's picture

25 years back e-mails had to be managed from a command line, attaching files to an e-mail was even challenging for an undergraduate in computer science, but now even grandmas can handle that with ease.

nmewn's picture

I never said people who invest in it are used the word invest, not me. My entire premise (if you want to call it that) from day one is, some very smart people can indeed be fooled...its happened to both of us...just keep investing "advice" separate from a new "money" paradigm.

Look at it this way (taking off from your avatar, with all respect, I sympathize with it) you need me and others like me to challenge you, to make sure what you're doing/thinking is right for all who read it.

This is Fight Club my brutha ;-)

Saro's picture

Money and investing are not entirely separate things, in my mind.  

And I'm down for people challenging me anytime (I'll talk your ear off if you let me!), but I've noticed that the people here aren't usually arguing in good faith or interested in facts; they just like throwing popcorn at whatever graph happens to be declining today (unless it's gold\silver).  The slew of no-reply downvotes I get anytime I make a technical observation about the nature of Bitcoin seem to back me up.

nmewn's picture

"Money and investing are not entirely separate things, in my mind."

I guess thats where the disconnect is then.

Money, in all its variations, should have a known value against any commodity to be purchased, services or wheat. Investing is risk of that money already in hand (in all its variations) on an unknown outcome.

Saro's picture

I bought a quantity of silver mid $30's.  Did I purchase "money" or was that an "investment"?

All value is subjective, exists only in the minds of people, and is constantly changing based on expected utility.  You buy what you think will do best in the long run.  Sometimes you're right, and sometimes you're wrong, but the notion that there is a set thing you can trade for called "money" that exists outside this value fluctuation strikes me as wrong.  Gold does not have a "known value" against wheat, except what you can get for it right this very instant.  Tomorrow it might not trade for as much wheat as today, or maybe it will trade for more.  Bitcoin is no different.

Vint Slugs's picture


Your silver purchase was neither buying money nor investing.  You speculated just as you would have done had you bought copper, natgas or live cattle.

Re gold's "known value": over any multi-decade period of time deflate any commodity's price by gold's price and you will find a "known value" that has meaning that is not relative to "right this very instant".

sessinpo's picture

Saro    Gold does not have a "known value" against wheat, except what you can get for it right this very instant.


Tell me. What value or utility does gold or silver have compared to bitcoin, even if both go to zero?

Gold is used many applications such as electronics or jewlry. Silver also has the same applications in addition to other uses.

Does bitcoin?

TheHound73's picture

As long as bitcoin has any value whatsoever you can use it to send value to anyone anywhere nearly instantaneously. It is a distributed ledger of ownership which can be used to run a stock exchange without a central clearing house as well as a return to a gold standard.  The ledger and transaction network are valuable.  

I don't buy gold thinking, "oh well, if this stuff goes to zero at least I can make some electronics out of it."

fonestar's picture

Well I think anyone who doesn't hold a significant portion of their wealth in Bitcoin is stupid though.

tenpanhandle's picture

There is something quite trollish about you.

jomama's picture

there are scores of commenters that I've gained insight from in the comments section of ZH, Falestar is not one of them.

fonestar's picture

fonestar is one of the sharpest Satoshis in the tool shed.  When Zerohedge readers were polled in November 2013, 47% cited fonestar as a major inspiration in buying their first Bitcoin.

chemystical's picture

if you had a shred of decency you'd fall on your sword.  if you haven't one, there are many who'd lend you one.

Grosvenor Pkwy's picture

"47% cited fonestar as a major inspiration in buying their first Bitcoin"

And when 1 Bitcoin falls to 50 cents, they will still remember that inspiration from you.

Skateboarder's picture

So the other six billion, nine hundred and ninety nine million, nine hundred thousand of us?

anonnn's picture

Bitcoin ain't real money?

Oh yeah? Well. it's sorta money.

Someone who accumulartes $Millions thru lying-cheating-stealing-rehypothedacting-corruption-bribery--deceit-conning-regulatory capture-using the law to bypass the law---and whatever else a Harvard MBA learns, ...

Then to escape capital controls and prison  and get his $Millions out of the country, BIRCOIN can do it.

Just buy BITCOIN , transfer it out of the country to, say, Argentina, and sell at 20-to-40% discount to street re-sellers. It's done every day in one variation or another since, well, before anyone "looked  a gift-horse in the mouth".

E.g., from 1970s thru 1980s [at least], Taiwanese paid 20% to Taiwan banks to wire their hot funds to USA and into USDollars, avoiding capital controls and other forms of bizarre justice. They were glad to reclaim 80% of it. No question asked. Done deal. Everybody happy.

BTW readers of ZH, just how do you suppose business is done in the real world?


aVileRat's picture

Somebody (or several somebodies) is taking advantage of the transaction malleability issue and relaying mutated versions of transactions. This is exposing bugs in both the reference implementation and some exchange’s software.

Read what that says. Now read what I said. Now look what you said:

Nobody gives a fuck about light clients in the same way nobody gave a shit about single gold coin stackers when speculators were Corzine'd. If a major brokerage goes down and that money is frozen the cash is not going to be made whole without a central clearing/banker backstopping the gimmick. With those speculators wiped out, confidence will be gone. Go look at how many people pledged to roll their trading accounts over to a relaunched Man Global. Or how much gold was held in speculation at bullion banks pre & post.

Clear ?

Without a massive systemic boost to the crypto currency liquidity mechanism, the bitcoin is dead money. BRICS banning it out of currency flight fear have only hastened the deflation.

Tough to swallow, but someone needs to explain this, at least once.

Done speaking on 'coin again.


DoChenRollingBearing's picture

zaphod is correct.  Client programs (on your PC for example) like Multibit only use the small fraction of the blockchain pertaining to THEIR OWN BTC.  I use Multibit for that reason, it is easy to use and does not require downloading the blockchain.

3,000,000 copies of the blockchain are already out there IIUC.  I do not have to have my own copy.

Mitzibitzi's picture

"The whole gimmick depends on the assumption that any user can fact check his block chain vs. the master chain. If someone is able to fork the chain, or even usurp the master chain via a sequence of phony trades it will be near impossible to detect the skimming until the broker starts to see mismatching in the house P&L sheet."

I'm only a jacklag programmer, dude. And even I can think of ways to work around that one. A registered parity block being the most obvious one.

Face the facts, guys, we are probably going to see multiple cypto-currencies going forward. Bitcoin probably isn't going to be one of them, I'll concede, but every step forward will make things harder and harder for the haters to fuck with. You don't have to get it perfect, you only have to make it more effort than just beating the actual owner with a golf club until he forks 'em over - see any difference between that and the fiat shit we currently have to use? Other than there's no central bank involved, of course. Though by that point they probably will be.


LMLP's picture

Cue Googlecoin or Applecoin....probably centrally cleared in 3,2,1.....



nmewn's picture

"The block chain is growing exponentially."

Wait a minute, so they're pulling a BitBernanke on the whole deal?

Imagine that, digitizing a "currency", can lead the unsrupulous to devalue it and then it not being the store of wealth, as advertised.

This is shocking! ;-)

TheHound73's picture

 "The block chain is growing exponentially." 

The blockchain is a ledger of bitcoin transactions, so if the data size grows exponentially it means the number of  Bitcoin transactions is growing exponentially.