The Bitcoin Crash • Hacker News Board

Re: The Bitcoin Crash

#31

Post by smbwrs » Wed, Jun 22, 2011, 1:54 PM UTC

gwern wrote: post #29

Tichy wrote: post #12

"The system has proved popular with online criminals" Citation needed. Are there any stats on where BitCoin are being spent? Everybody says BitCoin could be useful for criminals, but how big is the adoption so far? How much business did Silk Road generate?

There was a comment on the Silk Road forums (in the context of replying to someone wondering whether buying from a seller with 0 reviews was very risky or not) to the effect that the Gawker article had caused SR to jump from a few hundred accounts to over 9000. A decent number, granted, but likely most of them have not engaged in any transactions and never will. On the other hand, another poster mentioned that there…

"...from a few hundred accounts to over 9000."

I see what you did there.

Re: The Bitcoin Crash

#32

Post by themal » Wed, Jun 22, 2011, 2:08 PM UTC

sunchild wrote: post #26

rrrazdan wrote: post #19

This is one of the most balanced coverage of the Bitcoin issue I have seen. "The system has proved popular with online criminals, keen to keep their financial transactions secret, although it has a wider, legitimate, user base." Nicely researched. Kudos to the BBC team. Shows why BBC is still the trusted source for many of us.

I had the opposite reaction. I thought it was poorly-researched, esp. in that it parroted MtGox's explanation for the compromise. I don't think the BBC should be so quick to accept that story, given this information: http://news.ycombinator.com/item?id=2676263

At the very least, the BBC has avoided the BitCoin hype.

Lots of other websites mention it every other day, yet this crash was probably the first major event for the technology.

Re: The Bitcoin Crash

#33

Post by timrosenblatt » Wed, Jun 22, 2011, 2:19 PM UTC

Tichy wrote: post #12

"The system has proved popular with online criminals" Citation needed. Are there any stats on where BitCoin are being spent? Everybody says BitCoin could be useful for criminals, but how big is the adoption so far? How much business did Silk Road generate?

I imagine people thinking that Tony Soprano is sitting in his house, furiously mining BitCoins, while whacking snitches.

Re: The Bitcoin Crash

#34

Post by jmilloy » Wed, Jun 22, 2011, 2:23 PM UTC

rrrazdan wrote: post #28

sunchild wrote: post #26

Earlier quoted context omitted.

I had the opposite reaction. I thought it was poorly-researched, esp. in that it parroted MtGox's explanation for the compromise. I don't think the BBC should be so quick to accept that story, given this information: http://news.ycombinator.com/item?id=2676263

They are quoting an official statement from Mt Gox. Its not like they are accepting this line. But if there is somebody they can quote, its Mt. Gox, not somebody who claims something on a forum. In any case, not mentioning 'toasty' is not really relevant.

I see one quote, followed by non-quoted statements that read as facts.

Re: The Bitcoin Crash

#35

Post by praxeologist » Wed, Jun 22, 2011, 2:28 PM UTC

Tichy wrote: post #12

"The system has proved popular with online criminals" Citation needed. Are there any stats on where BitCoin are being spent? Everybody says BitCoin could be useful for criminals, but how big is the adoption so far? How much business did Silk Road generate?

I have no clue if this one article I happened to pull up is accurate or conspiracy wackiness but it says that banks connected to the CIA pull in $10-15 billion in drug money each year. http://omasiali.wordpress.com/2011/06/08/cia%E2%80%99s-50-ye...

How much do federal/local cops actually steal in drug money each year? Silk Road is a worldwide thing too so it would really have to be compared to the millions that corrupt forces in Mexico and all over the world make each year using the anonymous money system.

I think people need to reevaluate who the criminals really are.

Re: The Bitcoin Crash

#36

Post by alttab » Wed, Jun 22, 2011, 2:28 PM UTC

IsaacL wrote: post #25

thanasop wrote: post #20

Earlier quoted context omitted.

The amount sold was over 500000 BTC - more that all estimated deposits on MtGox. The likely explanation is that these were just virtual BTCs added through SQL injection. The alternatives are that a single person was keeping that much on an exchange rumored to be insecure and used insecure password (easily cracked from leaked md5 hashes), or the person decided to sell half his BTC for $0.01 - an extra $2500 in additio…

That raises an interesting point. The nature of Bitcoin is supposed to prevent things like fractional reserve banking, since the nature of the system means you can't give people BTC you don't have. It's impossible to create bitcoins in any other way except mining. However, if people are making BTC transactions through a centralized exchange such as Mt. Gox, they are in effect moving numbers around in MtGox's database…

How would MtGox effectively "create BTC"? There is a difference between moving coins around in a database and creating new coins. All coins are deposited from users. The only way BTC would be "created" in MtGox is if MtGox was mining on their own. Coins need to be "mined" to be created - so MtGox couldn't even loan coins they didn't have.

Re: The Bitcoin Crash

#37

Post by Tichy » Wed, Jun 22, 2011, 2:29 PM UTC

rrrazdan wrote: post #19

This is one of the most balanced coverage of the Bitcoin issue I have seen. "The system has proved popular with online criminals, keen to keep their financial transactions secret, although it has a wider, legitimate, user base." Nicely researched. Kudos to the BBC team. Shows why BBC is still the trusted source for many of us.

Your comment is a nice example for people wanting to read what they already believe.

Re: The Bitcoin Crash

#38

Post by danssig » Wed, Jun 22, 2011, 2:41 PM UTC

thanasop wrote: post #20

watt wrote: post #14

I really wonder who is the person whose coins were being sold off. I mean, that's the real story here: somebody had many tens of thousands of BTC that were stolen from his MtGox account and were sold off at a very low price. (The story that people were buying BTC at very low prices is a distraction, the real story is that somebody was SELLING at this low price.) The other thing is that MtGox did not suspend trading o…

The amount sold was over 500000 BTC - more that all estimated deposits on MtGox. The likely explanation is that these were just virtual BTCs added through SQL injection. The alternatives are that a single person was keeping that much on an exchange rumored to be insecure and used insecure password (easily cracked from leaked md5 hashes), or the person decided to sell half his BTC for $0.01 - an extra $2500 in additio…

>The amount sold was over 500000 BTC

Source? I hope you're not quoting the guy from the "I'm the one who bought them" forum thread who accidentally add all numbers including dates to determine how many BTC were traded. He was almost instantly debunked.

Re: The Bitcoin Crash

#39

Post by burgerbrain » Wed, Jun 22, 2011, 2:46 PM UTC

alttab wrote: post #36

IsaacL wrote: post #25

Earlier quoted context omitted.

That raises an interesting point. The nature of Bitcoin is supposed to prevent things like fractional reserve banking, since the nature of the system means you can't give people BTC you don't have. It's impossible to create bitcoins in any other way except mining. However, if people are making BTC transactions through a centralized exchange such as Mt. Gox, they are in effect moving numbers around in MtGox's database…

How would MtGox effectively "create BTC"? There is a difference between moving coins around in a database and creating new coins. All coins are deposited from users. The only way BTC would be "created" in MtGox is if MtGox was mining on their own. Coins need to be "mined" to be created - so MtGox couldn't even loan coins they didn't have.

MtGox could effectively "create" BTC by simply selling more than they actually had. This would of course only work as long as people were actually withdrawing less than MtGox had available to them. Until you attempt to withdraw the BTC from the exchange, you wouldn't necessarily actually know that they in fact exist.

Re: The Bitcoin Crash

#40

Post by lifty » Wed, Jun 22, 2011, 2:48 PM UTC

IsaacL wrote: post #25

thanasop wrote: post #20

Earlier quoted context omitted.

The amount sold was over 500000 BTC - more that all estimated deposits on MtGox. The likely explanation is that these were just virtual BTCs added through SQL injection. The alternatives are that a single person was keeping that much on an exchange rumored to be insecure and used insecure password (easily cracked from leaked md5 hashes), or the person decided to sell half his BTC for $0.01 - an extra $2500 in additio…

That raises an interesting point. The nature of Bitcoin is supposed to prevent things like fractional reserve banking, since the nature of the system means you can't give people BTC you don't have. It's impossible to create bitcoins in any other way except mining. However, if people are making BTC transactions through a centralized exchange such as Mt. Gox, they are in effect moving numbers around in MtGox's database…

Indeed, if people would keep the money inside the exchange all the time, they would be able to artificially create more bitcoins in their system without being noticed.

In case all people would try to take all their money out, the exchange would be left with a deficit of money, practically not being able to return it to their users.

In anyway, it would be risky for an exchange to create more money than they actually have. For users, it would be best to keep as little money for as little time possible in exchanges, thats the whole point of bitcoin.