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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mijev's picture

Damn, the first comment on a ZH article about bitcoins and it's original and thoughtful. Just want to say thanks. 

I guess everything's gonna get worse as I read on, with the usual repetitive neanderthal drivel and "Aren't I funny? I just came up with shitcoin" ad infinitum.

 

EDIT: no it was "Bite Me" Coin. Damn, the 77th time around and it just gets funnier and funnier.

mijev's picture

For all the people who don't trust bitcoins because, what wll happen when the power grid goes down? Is there a battery powered tester I can use to verify the gold someone is bartering with me isn't tungsten? Just curious. How do I tell gold and silver from lead and tungsten without power? Serious question. I know in the movies, the guy always bit into the coin.

johnberesfordtiptonjr's picture

Bitcoin = Beanie Babies for Libertarians

 

Such goofballs must enjoy losing money... ZH proves it every day.

Leraconteur's picture

It's the NSA making sure no competition to the FOMC arises.

This isn't even conspiracy - it's policy and we have seen documents that prove so much similar that making this small leap is a non-issue.

It was only a matter of time before the state-sponsored bots took this down.

notadouche's picture

I'd like to see the thoughts of the masses when the fiat dollar was invented.  Then when Nixon did away with the gold standard.  I wonder if those folks took sides or did a few thoughtful folks spread their "bets" into competing forms in order to avoid an all or nothing scenario.  The comments here suggest a pervasive "all or nothing" crowd.  Good luck with that either way.  Just not my particular style.

UGrev's picture

Can I laugh now? Is it time to laugh? yes.. I will laugh now... HAHHAHAHAHA!

loonyleft's picture

holy schadenfreude batman. 

And we lament how TPTB get and stay where they are. 

roadhazard's picture

Even I knew digital currency was a looser. Common sense people.

PN7's picture

Unlike Fonestar, I bought my first bitcoin @ $985.  It was a case of FOMO. (fear of missing out).  I then researched bitcoin.  I bought again as the price fell all the way down to $513 as bitcoin crashed in early December.

I was prepared for this most recent mini-crash and I bought 5 half-bitcoins in the $530-$630 range.  I am now at about the break-even point and I am quite satisfied.

I also own physical gold, silver, cash, signed-first-editions etc.  I realize bitcoin has problems, but every investment comes with problems.  That's why investors diversify.

I fail to understand the hatred spewed at bitcoin.  If someone doesn't like it they shouldn't buy it.  If someone likes it they should buy it.  As always, some will be proven right and some will be proven wrong.  If I happen to be proven wrong it's no big deal.  I've been wrong before and I'm still alive and kicking.  Meanwhile, I'm having tons of fun.