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Bitcoin Crumbles To 3-Month Lows On Mt.Gox As CEO Defends Exchange
The ongoing exodus from Mt.Gox - a major Bitcoin exchange - amid withdrawal halts, has seen a massive $150 spread open up between it and other exchanges. Having tumbled by over 50% in the last 2 weeks, Mt. Gox pricing is back at levels first seen 3 months ago. This chaos (and the ongoing 'finger-pointing' over who is to blame) had led Mt.Gox CEO Mark Karpeles to come out swinging in the following interview...
Mt.Gox price for Bitcoin has collapsed...
Leaving the exchanges with very different prices...
Via Forbes,
FORBES: Was Mt Gox’s coding to blame, and are other exchanges having the same problem?
Mark Karpeles: First, you need to understand that the Bitcoin implementation we use in MtGox was created back in 2011. The bitcoin client is not meant to handle the kind of load MtGox has and was having more and more troubles, lagging and crashing. We created our own implementation to solve those issues and to offer a better flexibility to our customers.
Over time Bitcoin changed and started implementing changes that would require people using previous versions of the software to upgrade. While we followed most of those update[s] we were more and more busy and couldn’t keep up with all the changes.
With bitcoin 0.8.0 (released 19 feb 2013) a breaking change has been included that would prevent transactions to be accepted if their signature did not include the right number of zeroes in front of the signature values (in an effort to reduce risks of transaction malleability). We did not notice this change but a few of the transactions we were sending would become invalid because of this.
Due to this fact we started being more transparent on the transactions we sent, and provide a publicly available list of pending transactions. Nobody was however able to tell us what went wrong at that time. Since only a few transactions were affected anyway we didn’t give it much attention (recently we were able to look more into this and fix this issue).
This meant however that some of our invalid transactions were listed publicly, making it rather easy for someone with bad intention to alter these, hence the reason why many people claim there was an issue in our code. Now, transaction malleability does not affect only us, and while it might be more difficult to affect exchanges using regular bitcoin[s], it remains rather trivial.
Is there anything the Bitcoin Foundation can do to help solve this problem?
The Bitcoin Foundation has hired Bitcoin Developers for the purpose of promoting Bitcoin use. I guess the most puzzling part is why this issue hasn’t be[en] solved since 2011.
What constructive steps are both the Bitcoin Foundation and Mt Gox taking together to resolve the issues, and to have everything working at its best for the future?
We have proposed a solution that would allow people sending bitcoins to track sent coins no matter what happens in terms of malleability (a solution that can be applied quickly and without breaking anything), and the Bitcoin developers are preparing ways to prevent modified transactions from being relayed by the network (which will take a lot of time and may break some bitcoin custom clients).
There is obviously no perfect solution in this world, however this is how things are as of today.
Note that our announce[ment], while unfortunately upsetting a lot of people, allowed other exchanges to be much more cautious when faced with failing transactions, and most likely helped a lot of people understanding and dealing with the problem.
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i guess i stick to gold until i develop my own implementation...WTFCoin
https://bitly.com/1aDH4Q7
1001001010100 when there's 01001001010000111 in the 0100101010111101100 !!
What shocks me is that none of the Bitcoin devotees are making the connection between Mad Max Bernie Madoff Keiser launching his new new new ponzi, MaxCoin and the implosion of Bitcoin. All the early ponzi buyers of Bitcoin fled out of that ponzi into the MaxPonzi while Mad Max Bernie Madoff Keiser is planning yet another ponzi coin to follow. Man oh man, PT Barnum has NOTHING on these new charlatans.
When it's out there you can count on fonestar to tell people to put everything into MaxCoin as well.
ASM is up 80% so far in 2014. I think I'll stick with it, since it is (unlike bitcoin) producing something.
Shitcoin, meet your master.......GOLD
The next time we have a day where gold goes down and bitcoin goes back up, are you going to be back here saying the opposite?
Somehow I doubt it.
like PMs, Bitcoins are malleable
This is a problem for multiple reasons:
Several sources of malleability are known:
https://gist.github.com/sipa/8907691
I fail to see any significant similarity between my shiny coins and ANY digital coin. It is like trying to compare a Clydesdale to a seahorse.
Hotel California
Roach Motel
This bitcoin hickup is acting alot like the equities market. When everyone tries to sell and the circuit breakers trip and the market is halted. Or like when the options market breaks because the bids and ask is messed up. It is almost like regular flash crashes. And the price is determined by many differently located exchanges.
This is the appeal of bitcoin.... it fixed everything wrong with the regular markets.
Say you're watching the blockchain and you see a pending TX with say a Transaction ID (TxID) of ABC123. Well, you can grab a copy of it and re-broadcast the same transaction but slap a new TxID on it, say ABC124, and if yours gets accepted first it becomes the official transaction. The same money got sent and received as intended, it just had a different TxID. So, the sender spent their funds, and the receiver received their funds. A-OK, right?
Not quite. See, the issue occurs with how Mt. Gox keeps track of their outgoing transactions. Because they use the TxID to uniquely identify a transaction they could be fooled into thinking the transaction never happened when actually it did. Thus they re-send some Bitcoin to the users account, and the user gets paid twice.
Is the the ability for a malicious actor to change the TxID of a pending transaction a bug with Bitcoin? Yes. Does it break Bitcoin? No. Regardless what the TxID is, the transaction still happens as intended (payer loses their money, receiver gains their money); there is no double-spend or anything like that. It's called "Transaction Malleability" and is so well-known it even has it's own entry on the Bitcoin wiki.
In fact it's been a known glitch since 2011, and the workaround is simple: don't rely on the TxID to absolutely identify a transaction; instead use something like:
(Input Addresses + Receiving Address + Amount = unique transaction). This is what everyone else does. But because Mt. Gox is incompetent and implemented their transaction tracking mechanism in the exact way everyone says not to, this is the result: customers could abuse the withdrawal system to perform multiple unrecorded withdrawals. A side-lesson we can learn from this is that "Security by Obscurity" (hoping people don't discover a known-flaw) is no security at all.something like:
(Input Addresses + Receiving Address + Amount = unique transaction).That doesn't sound very unique, my monthly car payment would dup that. In fact unique numbers are hard to generate, and triple-hard to generate in ways that are hard to fake and easy to validate. Traceability is a replacement for strong uniqueness, not a way to accomplish it, but one of the merits of Bitcoin is supposed to be lack of traceability aka anonymity. Then make it maleable on top of that and you are in real trouble.
ALL of Bitcoin sounds to me like security by obscurity, also security by brute force. Neither is sound.
Add Date/Time (UTC) or the transaction with precision to the micro second (or more) and you will be unique to your transaction
Honest Question Seeks Honest Answer:
blockchain charts on bitcoin days destroyed show that almost 98% of the Btc that changed hands in the last 2 days were Btc that had been held by their owners for at least 1 yr.
http://blockchain.info/charts/bitcoin-days-destroyed-min-year
http://blockchain.info/charts/bitcoin-days-destroyed
Many (most?) of these might easily be Btc that have been held since nearly Day 1. 136MM Btc days destroyed is the equivalent of 93,150 Btc that were all mined on Day 1 in 2009 being dumped at once.
6 weeks ago we saw the exact same thing.
What's up with that? Early adopters cashing out? Compare those 2 volumes to the average of ~ 10MM/day recently.
Bank run. The exchanges are having to pull coins out of cold storage to cover the withdrawls, hence aged coins showing up on the blockchain.
Or, if you are to believe some other posters here on ZH, JPM amassed as position and is dumping in an effort to discredit crypto-currencies. I'm conspiratorial inclined, but I think that is a bit too much of a stretch.
It's certainly something in JPM's playbook, but I'm pretty sure they're smart enough to know BTC can't be manipulated the same way.
I do think the exchanges are being manipulated -- certainly the slamdown a couple months ago stunk of it -- but the current situation is just Gox-based FUD and the DoS attacks, I doubt JPM is behind this, though they are happy to trash talk BTC because of it.
Old BTC...any numismatic value there?
shoot, i might be interested in an old bitcoin.
or a bitcoin which can be traced back to Stacy Herbert.
Closest thing to it is mined and never used bitcoin, particularly if it's mined through a proxy. Completely untracable until spent.
Certain classes of BTC users would find that of value.
nearly the same volumes of total btc days and total btc days that were at least 1 yr old were exchanged 6 wks ago. Are you saying that it was for the same reason as what we see the last 48 hrs?
I don't remember reading about any events 6 wks ago that would trigger such a huge spike in volume? The speculation at coinddesk back then was that it was an exchange shuffling from one wallet to another(s).
Is it still the case (was it ever) that if I hold 100 Btc in a single wallet and spend one, then they are all considered destroyed and now I have 99 Btc that are all new babes?
I know that 3 yrs ago some bounty hunters wrote code for determining the "filter by age" and/or by specific block for counting destroyed days. I don't see one out there today though except for the one at blockchain.info (and its mirrors at other sites).
Still trying to get a handle on this.
Bitcoin days destroyed doesn't necessarily mean they are old coins.
If you see a lot of bitcoin days destroyed it CAN be a few old coins OR just a lot bitcoin moving for whatever the reason.
I'm calling bullshit on this. Transaction malleability in the Bitcoin protocol has been known since 2011 yet the only exchange that's reporting serious problems is Mt. Gox. It's worth noting that this is NOT a vulnerability in Bitcoin, but an implementation error in the Mt. Gox backend. It shouldn't have been relying on the txid in the first place. Mt. Gox just needs to go die already.
I have a sneaking suspicion that, while the technical issue is on their end, instead they're blaming the underlying Bitcoin technology in the hopes of spreading FUD so the price will crash so they can buy cheaper bitcoins to payoff/cover their bad debts. Why? Because Mt. Gox is a fractional reserve scam.
AGREE +10000
Some people in the BTC community refuse to believe this, but it sure looks like a fractional reserve bank run to me. It also dovetails nicely with the public comments made by Karpeles.
BTFD
Yeah, I don't understand why people are making this out to be a huge deal. It's not.
Transaction IDs that are not confirmed in a block cannot be relied upon. That's it. Full stop.
People are talking about "workarounds", but it's not even a workaround; it's just the correct way to do things. Mt Gox and the other exchanges do not need to patch in a "workaround", they need to get their shit together and do things the proper way. Trying to pass the buck onto the Bitcoin protocol because they are incompetent is just sleazy and reeks of desperation.
Why do retailers check recipts against their own records? Because of FRAUD! That is exactly what happened here. The asshats at Gox just assumed that the transactions we good even though there was no confirmation. Ridiculous. I'm surprised it took this long for the exploit to make such a splash.
This whole thing could have been avoided by employing a few high school dropouts to check redemptions vs confirmations vs trades to ensure validity.
What a joke.
timbaaaAAAAARRrrrrrr
bitcoin = toast
Dogecoin = jam
To the moon!
Again... No one can explain why bitcoin is better than the other crypto craps... NOTHING ever justified the insane price based on this alone. If you like buying into these future ponzis then go ahead but even these cryptos have counterparty risk. PMs are your only saviors in this fraudulent mess...
cryptos only have counter party risk if you ADD a counter party to what you doing ... Eg storing your coins under some else's control... an exchange for example.
Keep your coins in your own wallet(s) ,... and you only have your own secuirty to manage... and cold storage (offline or paper or brain wallets) is fairly easy to do. Tutorials for that are easy to find on YouTube. The Bitcoin 101 series covers this and other security topics.
Dogecoin solves much problems.
Dogecoin has future. Philosophy. Community. So currency. Bitcoin was pioneer. Like horse and buggy. Now, move aside. Dogecoin is so happening. Watch so wow dogecoin hype video winner:
http://www.youtube.com/watch?v=000al7ru3ms
Watch daily. Make so happy. Dig up gold, buy dogecoin. Give freely.
To the moon!
that's the video that won the contest?
so turd. very shit. wow, not. (sorry)
btw, why would peeps give freely is doge if all about to the moon?
that seems paradoxical to human or shiba nature.
cmon, you know this is only another huge buy op for those that are hip.
hip deep in doo doo
I make 50k a day arbing bitcoin, ask me how.
Bitcoin IS the Hack
How does a decentralized currency have a ceo?
For BitCon it is the Con Executive Officer
It doesn't. People with Gox have tried to position themselves as spokepersons for all of bitcoin, to a degree that others associated with different exchanges have abandoned trade organizations over Gox-related bullshit. Gox and Karpeles are not well regarded in the bitcoin community.
"Gox and Karpeles are not well regarded in the bitcoin community."
Yet until recently that exchange accounted for 80% of all Btc activity in USD.
20/20 hindsight? ;) The blogs in the past do bear out what you say to an extent, but people voted with their transactions like they do with their feet, and they stayed put for a lonnnnnnng lonnnnnnng time.
Sounds like it needs to be.... <dirty word alert> ....regulated.
Like the Tea Party, because no one "owned" it and could state otherwise, plenty of co-opted media jackwads claimed to be and were presented (more like foisted) to be leaders of the TP...and they managed to completely discredit the movement.
"Recent" is a relative word with bitcoin. Between how Gox has handled past hacks and issues with funding transfers, they were effectively done about a year ago -- typical bitcoin holders abandoned them.
The only ones to stayed with them were the day traders -- which account for a lot of the volume, but not so much of the holdings. Remember, by and large bitcoin is held in private wallets and recorded in the blockchain, as opposed to being in the black hole of MtGox's accounting systems -- so if you look at it from the perspective of size of holdings and not volume, Gox is small potatoes. No one is really crying over bitcoin daytraders getting fucked.
Dogecoin is the cure.
So crypto.
On/Off topic.
Once is an accident, twice is coincidence, three times is enemy action:
Silk Road 2.0 was just hacked hours ago, and all bitcoin was stolen.
Remember a couple days ago evidence came out that TOR was compromised as well.
...and key players at Silk Road's successor Utopia were arrested yesterday. Damn that "anonymity".
http://www.telegraph.co.uk/technology/internet/10635359/Drugs-guns-and-assassination-Silk-Road-successor-Utopia-shut-down-by-police.html
I guess the future isn't what it used to be.
I commented about this yesterday. All the evidence points at TOR being compromised at this point.
The silk road "hack" is looking more and more like a cover for insider theft, but it'll be a while before we know.
Bit-con
If a bitcoin is just a string of numbers/letters, why can't you just park your string of numbers somewhere else besides Mt Gox. Do they have to somehow release the string of characters?
When you send Bitcoins to your Mt Gox account (or any exchange), you are sending them from an address where you hold the private key to an address where you don't (only Mt Gox does), just like if you sent them to me or anyone else. Mt Gox then credits your account in their database with a certain amount of coins and shows that number to you when you log on, but at no time do you have the ability to just withdraw them directly. Only Mt Gox knows the private key, so only Mt Gox can send them back to an address you control at your request.
sounds sweet, I like sending my money to inept bumbling idiots that can claim they made a mistake when it all vanishes into thin air.
Saro, than you for the explantation. That makes sense now.
bitcoin is a string of imbeciles, that have all registered with the exhange.
delete - double tap
Silk Road Admin swipes your bitcoin. Blames "bugs" in Bitcoin. http://www.forbes.com/sites/andygreenberg/2014/02/13/silk-road-2-0-hacke...
“I am sweating as I write this… I must utter words all too familiar to this scarred community: We have been hacked,” Defcon wrote. “Our initial investigations indicate that a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as “transaction malleability” to repeatedly withdraw coins from our system until it was completely empty.”
Yeah, I think he's a lying sack of crap. There's no way this minor annoyance of transaction ID malleability causes someone to lose 4000 bitcoins "automatically".
He just stole them and wants some cover.
"Yeah, I think he's a lying sack of crap. There's no way this minor annoyance of transaction ID malleability causes someone to lose 4000 bitcoins "automatically. He just stole them and wants some cover."
Possibly, probably, but due to the nature of the beast you won't know. Maybe the NSA could help ;)
"How's that design working for ya now?"
So, what's needed is trusted exchanges? Revert to p2p and you might as well stick a fork in cc (or at least in 95% of it's putative benefits)
The coins just keep tumblin'
Silk Road 2.0 Has Been Hacked And At Least4,474.26 BTC Stolen; Operator Says Centralized Escrow Service Can't Ever Work » Cryptocurrency and Bitcoin News, BTC Trading Analysis and Chat
What he meant to say was "I took this opportunity to steal all your deposits and blame it on a minor annoyance affecting the bitcoin ecosystem."
Stage 4. The search for the guilty.
For myself, I'm waiting for Stage 6.
Never let a crisis go to waste.
Looking at the chart I find a pricing range of 100-200 compelling..
"Looking at the chart I find a pricing range of 100-200 compelling.."
Looking at the chart, I see the price range US$0.50 to US$0.75 a possibility. But what do I know anyway?
On the plus side it wont go below 0 - unless you count in opportunity and sunken costs...
"unless you count in opportunity and sunken costs..."
This is an important point. The days of mining for Bitcoins and most alt coins on spare home computer equipment are mostly gone, and miners have usually invested considerable sums of money in high-powered computer equipment of various types, plus physical design equipment such as racks, cabling, and cooling systems. Then, to mine coins, they have to use electricity, which becomes waste heat, perhaps usable in cold climates in the winter, but otherwise necessary to exhaust costing further resources. So they have incurred real costs normally payable in so-called "fiat" dollars, Euros, etc.
Either they are small-scale operators, in which case they need to recoup their costs relatively quickly, or else they are using investment capital which has its own requirements for payback. They need to get payback from their coin operations to fund all of this effort, and generate fiat-currency funds to pay the debts. They are depending on an increase in Bitcoin value, or at least, no significant decrease, to pay off all these costs.
you want to pay 50 cents for something worth ZERO? thats a lot of %%% over value.
You honesty think that Russia, the European Union want an autonomy currency floating about?
Hysterical thread...lol.
SA(msung)TOSHI(ba) NAKA(michi)MOTO(rola)
I've been in I.T. a long time and Karpeles's discussion around the bitcoin malleability issue sounds like classic nerd double-talk. Translation: "We were all pretty comfortable making lots of money and, frankly, our tech staff barely knows whats going on. But we sure did give it a go, didn't we"
i relish the losses of you bitiots. the money is in a better place, not in the pocket of a shmuck
seriously, explain to me how a supposedly fungable bitcoin can be wildly different prices?
is bitcoin really the turd we all know it is?
help me out here.
ps, even the lowest penny stock scam has a single bid ask price. This btc market is gay.
"seriously, explain to me how a supposedly fungable bitcoin can be wildly different prices?"
As far as I understand, the prices are manipulated and controlled by a very small number of large holders, and the mining pools. The mining pools have a tremendous control over the entire system, and can move the price on a particular exchange. This is more easily observed for an alt coin, where for example, less than 10 participants may hold 25% of the entire stock of the coin.
I've come to the conclusion that the quoted prices basically represent what a particular mining pool is willing to sell coins for at that time, and otherwise the prices don't mean anything. Also, a few large holders can sell coins back and forth to each other to give the appearance of some specific price. The Bitcoin markets are not regulated in any way, so they use any trick in the book of penny stock manipulation.
I don't fully understand it, but it is clear to me that to figure out what is going on, you have to understand the behavior and motivations of the miners and mining pools. It would be like a stock where some unknown group of individuals could issue additional stock and sell it without any centralized control, or information such as a prospectus, at whatever price they believe they can obtain. Perhaps like the stock market 150 years ago, where constant scams were the norm.
Studying a few of the more scam-ridden alt coins can give some insight into the whole process, such as pre-mining, instamining, founders holding most of the existing coins, miners looking for a quick buck, fake prices, etc.
"Perhaps like the stock market 150 years ago, where constant scams were the norm."
How far we've come!
You are not telling me anything I didn't know 3 years ago.
It's a scam and a rigged market.
Period.
The risk of doing business on each given exchange is priced in.
Much like how different brokerages charge different trade fees etc.
Mt.Gox was considered the premium exchange in terms of price, people paid more to do business there.
Sadly their site was coded for trading pokemon cards and was not up to snuff.
I warned back months ago(november I think) to all that the primary problem with bitcoin was never the coin itself, it was the exchanges, they are all ad-hoc crap exchanges ! I took a lot of flack for pointing that out....
It was clear from the begining that very few exchanges had the technology and security in place to act as a proper financial marketplace for very long....
Coinbase is probably one of few exchanges that are actually somewhat professional grade.
That being said, I think Bitcoin has grown to the point that when this hurdle is over-come it will continue to chug along and grow as a social payment system with very low fees.
It's human nature that ruins everything, we are greedy and turn every little invention into either a casino or a weapon.... humanity is at flaw, not bitcoin.
Bitcoin has a future, but how great of a future is uncertain.
And lets put it this way, the only reason it hit 1000/Btc was because of the media hype, news casters bought bitcoins at 100$ then went on air and for a whole week there was nothing but "bitcoin this and bitcoin that" the media created a micro mania around the coins, just like they did with silver, look at silver it ran up to 40~50 bucks and now its 18~20........
The best place to be is CASH..... all the mania is just trying to separate you from your cash before a period of massive deflation and bank runs hit.
Pimpers of Bitcoin are attempting to prop up a corpse. I had hoped it would prove viable. Nope.
Enjoy your "Weekend at Blankfein's"
Bitcoin will prevail in the end. It's with a mixture of humor and fascination when I watch the haters of Bitcoin on here. You'd rather put your faith in paper rectangles with pictures of dead guys on it? Based solely on the fact that each bitcoin is unique makes it ultimately more valuable than any one of the 85 BILLION DOLLARS they are printing each month (or is it only 75 billion this month?).
I bet you are the same people who were screaming in 1990, "Why would I want email? I can send a letter through the Post Office and hold it in my hand! Email is only "virtual""
Burn losers! Burn!
I doubt very few on ZH put their faith in "paper rectangles." The "Gold, bitchez!" post that seems to be the first on any thread should have been an indicator. Idiot.
If anyone doesn't understand BITCOINS here is a good beginner article I read - http://eprofits.com/article/diy-bitcoin-mining-from-home
I understand it well enough to know that bitcoin longs are anii
thanks. will read it.