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Bitcoin “Total Crypto Breakdown” Highlights Risks to Non-tangible Assets
Bitcoin “Total Crypto Breakdown” Highlights Risks to Non-tangible Assets
- Bitcoin wallet app Blockchain suffers major security blunder
- Poor tech sees multiple accounts being created using same address
- Security lapses in electronic and digital currencies not uncommon
- Bitcoin and cryptocurrencies in infancy but are useful tools
- Physical gold offers most secure form of wealth preservation

Blockchain.com, which claims to be the maker of the most popular Bitcoin wallet, suffered at the weekend what the Guardian describes as a "total crypto breakdown", highlighting once again the vulnerability of electronic and digital currencies to human and technological errors and hacking.
Multiple accounts were created using the same bitcoin address which meant that many users apparently had access to the same pool of funds which led to losses for a few.
The newspaper reports that a "series of bad development choices" in the software "all failed in the worst way possible". It was operating in the typical "belt and braces" mode where if one line of defence failed another should still be operational.
"Bitcoin wallets are typically created by randomly generating a public address and a related private key. As a result, it is important for address and key to be truly random, or else it may be possible to guess the private key by looking at the public address."
In the case of Blockchain.com, the random code was generated from two different sources which were then combined. The first was the random number generator on the device on which the app was being installed.
However, some Android phones failed to deliver the code to the blockchain app which meant its random code was generated entirely from the second source. The second source was an online service called random.org.
"But on 4 January, Random.org strengthened the security of its website, requiring all visits to be made over an encrypted connection. The blockchain app, however, continued to access the site through an unencrypted connection. So rather than getting a random number, as expected, it got an error code telling it that the site had moved."
Blockchain then unwittingly used the same error code in creating the address for multiple users, the devices of whom had failed to produce the first line of random code.
"The magnitude of the error sparked shocked reactions from information security professionals."
Security lapses in software for managing digital and electronic currencies are by no means uncommon. The constant march forward of technology often means that less attention can be paid to older systems which have not yet become obsolete.
Early last year banking giant JP Morgan was hacked. It had its system hacked and details of 76 million customers were stolen (Cyber Attacks Growing In Frequency – Entire Western Financial System Is Vulnerable). JP Morgan use the "belt and braces" approach of two-factor authentication but in one older overlooked system they were still using a less sophisticated single password system.
In February, we covered the story where Russian cybersecurity firm Kaspersky lab uncovered an international hacking group who had managed to tamper with customers accounts in order to steal possibly up to $1 billion from over 100 banks globally (International Hacking Group Steals $300 Million – Global Digital Banking System Not Secure).
There have been numerous incidences in recent months where strategically vital monetary, financial and infrastructural computer systems have been seen to be very vulnerable to human error and malintent.
We can see the benefits of Bitcoin and cryptocurrencies in the coming years. We are particularly excited about the potential of the Blockchain itself ( Blockchain Promises To Be As Disruptive A Technology As The Internet)
Cryptocurrencies are a useful tool which could provide a vital degree of short-term liquidity and means of exchange in the event of capital controls and or a banking or currency collapse.
However, given their non-tangible nature and other risks posed to them, we do not view them as a store of value or a safe haven asset akin to physical gold bullion in your possession or stored in the safest vaults in the world in the safest jurisdictions in the world.
Must-read Guides:
Essential Guide To Storing Gold In Singapore
Essential Guide To Gold Storage In Switzerland
MARKET UPDATE
Yesterday's AM LBMA Gold Price was USD 1,186.60, EUR 1,067.23 and GBP 777.60 per ounce.Today’s AM LBMA Gold Price was USD 1,182.45, EUR 1,041.76 and GBP 766.55 per ounce.
Gold fell $8.10 or 0.68 percent yesterday to $1,185.30 an ounce. Silver slipped $0.25 or 1.49 percent to $16.55 an ounce.
Gold in Singapore for immediate delivery fell 0.2 percent to $1,182.80 an ounce near the end of the day, while gold in Switzerland edged marginally higher.
Gold stumbled to its lowest in three weeks today despite very mixed U.S. economic data - there is a perception amongst some market participants that the U.S. economy is recovering and a U.S. rate hike will be occur … timing undetermined.
Physical gold demand remains robust in China and India and this is supporting gold near the $1,200 level.
The chart below shows the cumulative gold buying in “Chindia” since 2008. As can be seen gold demand has been and continues to be voracious. Monthly global gold production is shown in the bottom section highlighting the rampant gold demand of Chindia.
U.S. weekly jobless claims are at 12:30 GMT and tomorrow's nonfarm payrolls figure will be watched.
Gold is moving into the quiet summer months. Demand from Asia remains robust with premiums in China at $1.50-$2 over the global benchmark and SGE withdrawals robust.
Greek Prime Minister Alexis Tsipras said a deal with creditors was "within sight" after he stepped out of talks with senior EU officials in Brussels. Tsipras said that they would make the IMF payment on Friday.
This has taken some of the safe haven appeal out of gold bullion and moved money into other assets as market participants see a Grexit as less of a threat. Although stock markets today are sharply lower suggesting jitters on bond markets are spreading to equities.
In late European trading gold is down 0.27 percent at $1,182.40 an ounce. Silver is off 0.17 percent at $16.47 an ounce, while platinum is up 0.17 percent at $1,105.55 an ounce.
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What you're talking about here is human error. It has nothing to do with the algorithm or cryptology. Yes, physical gold would be more secure if you have actually "secured" the gold and it is stored in a physically secure place out of the reaches of western governments. But the real question with the even western central banks having difficulty to recover their gold from other western central banks who promised to store it for them, what does this clown mean by "most secure"?!? Trying to say that physical gold is more secure on principal is just PURE BS!!!
That's why I get mine delivered to my house. Good luck finding it on 3500 acres of land. And I wonder, even if I left 5 or 10 pounds of metal laying around the house, if a criminal would even be smart enough to take it anyway.
Teh we hasn't read one single article on ZH or anywhere else that has provided verifiable evidence of Bitcoin ever being hacked. Not one.
Instead of teh junk, you got any sources? Nothing? Not one?
Just people yelling loudly to avoid ownership of their problems coming up while operating under false assumptions of financial safety when history is the grand master of how safe PM's are. (they ain't) So no sweat, just keep mining BTC. The bunch of them are in for an ugly surprise once it does go south. They are going to find out how 'safe' shipping tonnes of gold around is versus the nearly instant, tracable and built of encryption electronic method of BTC. Lot easier to hijack gold from men with nearly no effort and minimal planning than to pick apart a spaghetti code mess of encrypted anonymous math.
If it's not at the bottom of the lake you don't own it.
Bitcoin is for rubes, what don't they get about unlimited competition (supply) combined with little to no barriers to entry?
Not to mention governments are pushing people to digital money, so will love the opportunity to 'adopt' your coins or force you into theirs. There is always a trail, especially for something you don't hold.
What "unlimited competition" you dope? Nothing competes with Bitcoin! Nothing!
Price of bitcoin didn't fluctuate on the news. Last Price $226. Would you leave your gold on the net or in Jamie Dimon's vault. No. So what's the difference. You are supposed to keep bitcoin offline until you use it.
Fuck the ragged hole that burdened this planet with your unholy presence you ignorant chumps!!
Buy Bitcoin!!!
https://btc-e.com
problem with bitcoin is very simple
to be safe you need to run your own checker into bitcoin transactions ledger
the ledger is too big to be practical to hold on every user computer (let alone on every mobile device)
the proposed solution to this issue was to have intermediate servers that would ensure to keep your wallet safe with them.
now ask yourself - will you better keep your money with the bank you have legal contract with ?
or
with some web site/server you have no legal contract at all ?
This.
It hammered the hell out of a core duo system until it soaked my 80gb drive. Not a beastly system I know.
Way more involved than the PM's the fell in to a lake near my house.
This.
It hammered the hell out of a core duo system until it soaked my 80gb drive. Not a beastly system I know.
Way more involved than the PM's the fell in to a lake near my house.
That's what you get when The government sells the cryptography system . From day one of the history of criptography , Never , Ever a system was permitted to be sold without the backdoor provided to the government . With the SHA-1 and 2 The government outdid themselves , they sell a system of which they have the backdoor . Another way of making money and when the oppurtunity comes rip off the cutomers ........
http://www.smithsonianmag.com/smart-news/how-the-nsa-stopped-trying-to-p...
SHA_256 is Open Source.It does not have any back doors , the code is open source and anybody can see how it works both bitcoin and SHA_256. The problem was with a web-site which did not upgrade it's security system. Nothing to do with government , you can take off the tin foil hat now.
I'm not willing to believe this Bitcoin failure was an accident. It was almost certainly caused by a mailicious party that perverted random.org.
--"But on 4 January, Random.org strengthened the security of its website, requiring all visits to be made over an encrypted connection. The blockchain app, however, continued to access the site through an unencrypted connection. So rather than getting a random number, as expected, it got an error code telling it that the site had moved."
Blockchain then unwittingly used the same error code in creating the address for multiple users, the devices of whom had failed to produce the first line of random code.--
yes, it doesn't sound right. it would have to be some flaky software, to expect a random number, then confuse an error code with the expected random number. what are the odds that the error code was the exact format/scope/size or whatever, as the expected random number?
The odds are good if it was intentional, not accidental.
I think you underesitmate how lazy these app devs are.
Object orientated programming = "I'm not familiar with that part of the code."
The odds of the message accidentally being the damaging format are negligible.
The odds of the message intnetionally being the damaging format are likely.
Someone pervented random.org with the express intention of damaging bitcoin.
The question becomes - who had both opportunity and motive?
This was clearly an oversight caused by a lack of communication, this has only temporarily affected one web-site , not bitcoin itself ..
Where's the poster on here that's always going "Bitcoin Bitchezzz"?
I have two words for him "Ha" and "Ha"
My turn,
"Gold Bitchezzz" Stored in my secret drawer, right next to my wanky pic of Elle McPhereson, come and get it if you think you're hard enough.
The gold that is, not the wanky pic.
Bitcoin BTChezzz ... Ha Ha ...
Bitcoin has only been hacked like 6543 times now .. Ha Ha ... still going strong .
No, you're right, you're right. I'm sure it will stand the test of time, 5,000 year history and all that...fill your boots.
Rare sea shells were used for 15,000 years prior to gold. They sure did stand the test of time as well.
I certainly would not choose them above gold, but I would feel more "secure" putting my money into rare sea shells than bitcoins.
which is why you will be permanently on the wrong side of the decimal point when this thing blows.
Silver will be explosive and Bitcoin will outperform silver!
Por Cierto... The internet will last thousands of years.
Nope , it's going to suddenly dissapear next year.
OK, Then how shall you access your precious bitcoins? Seashells over bitcoin.
Sea shells= medium of exchange (unless they were truly rare)...gold= store of value.since...forever
bitcoin will become the world's next phase in global medium of exchange. Gold is great but it totally sucks as a fast global medium of exchange.
Good thing I am not a globalist.
No of course you are not - he says whilst using the Internet ...
Damn, headed to the beach now to clean up.
Oh, sorry, I retract that last line...you can't actually 'Fill your boots' with Bitcoin can you...errr...fill your hard drive.
LOL just remember that your bank account is so much better than this POS /s
especially a bank account in Cyprus.
Paging Mr. Fonestar! Paging Mr. Fonestar!
fonestar is still with you!!
Ha, yeh, that's the guy. Couldn't remember his name.
Nice one Jonas.
you will not forget teh fonestar!
A better description of an online wallet provider is ...... ta da ... a bank.
So a bank was hacked - not Bitcoin. This is exactly the same issue you can have with PM's - if you dont hold it, you dont own itt.
The classic Bitcoin equivelant is to generate several paper wallets (private/public key pairs), and move your funds to those addresses.
You can easily check if the paper wallets are new, (unlike the hack mentioned)... just look them up and verify that they are empty and have never had any transactions before you move any funds to them.
Paper wallets need to be carefully protected ... stored in a safe that you own is a good idea!!! - not in a safety deposit box at a bank though. Make several copies and secure in separate locations to protect against fire or other accidents.
"Wallets need to be carefully protected ... stored in a safe that you own is a good idea!!! - not in a safety deposit box at a bank though. Make several copies and secure in separate locations to protect against fire or other accidents."
Hmmm. . . Sounds about like the same routine advisable for PMs - except that "fire or other accidents" won't destroy my PMs.
Yeah but a metal detector or a thief could find them. You can encrypt and back up your private keys and store them in multiple geographical loacations on paper , USB thumb drive or even stamped into metal rods. You cannot do that with metals.
Encrypt you backup keys? I suppose that you'll need backup keys for those too, right? Pretty soon you're going to need a treasure map just to keep track of all that shit hidden all over the place - and then backups for the map. . .
Fuck-it. I'm sticking with PMs.
Backup's are just copies of your keyfile. You should encrypt your keyfile with a password so if somebody finds it it's useless to them. Quite simple really.
blockchain.com or blockchain.info? Are they the same company? My balls kinda ache
no - different websites.