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Those 500K Bitcoins that caused the flash crash weren't real

mtgox.com

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Re: Those 500K Bitcoins that caused the flash crash weren't real

#51

Post by drivebyacct2 »

rlpb wrote: post #6

"The new Mt. Gox site features SHA-512 multi-iteration, triple salted hashing" Why not use a standard key derivation function such as PBKDF2 or bcrypt to provide some confidence in the system rather than inventing their own? AFAIK bcrypt is strong because of Blowfish's expensive key setup. How does this compare to SHA-512?

Yeah, when this very first happened, I was in the IRC room at onlyonetv interviewed Mark (via proxy). I kept shouting in IRC to ask them to use bcrypt and was told they were doing 1000xSHA-512. I later tweeted at MagicalTux to recommend bcrypt and was asked if multiple iterations of SHA-512 is good enough. He said that he was told bcrypt was not secure enough.

How do these businesses succeed with business people that have no business wit about them, have NO ability to communicate effectively in these critical situations and have awful taste in technical advice?

Google "bcrypt sha-512 hash passwords" and tell me if it's a hard call to make. You should have heard these guys within the first 36-hours answering questions. Even the business guy over at TradeHill, "Well, you know after mtgox, we need to do a lot to beef up our security". Even if that's a true statement, what a ridiculously terrible way to phrase it.

I think speech and debate classes should be required for everyone to graduate highschool, let alone college. People aren't good at thinking on their feet and speaking in critical situations where wording makes a difference.

When you're in the business of being an online bank for an uninsured (nearly) untraceable currency, mis-speaking like this costs you your most important asset: TRUST. That's not even touching the tip of the iceberg of lies and misinformation that has come out of mtgox.

Anyone that leaves a penny in any mtgox account is an idiot.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#52

Post by [deleted] »

latch wrote: post #49
tedunangst wrote: post #39

Earlier quoted context omitted.

mtgox accounts are not FDIC insured.

I understand that. I am curious how effective insurance deposite works in the face of a country-wide breakdown. I know Greece has a deposit fund, I'm curious to see how effective it'll be (does it actually cover 100% of the deposited money (up to the maxium per account)?)

[deleted]

Re: Those 500K Bitcoins that caused the flash crash weren't real

#53

Post by georgemcbay »

drivebyacct2 wrote: post #50
latch wrote: post #49

Earlier quoted context omitted.

I understand that. I am curious how effective insurance deposite works in the face of a country-wide breakdown. I know Greece has a deposit fund, I'm curious to see how effective it'll be (does it actually cover 100% of the deposited money (up to the maxium per account)?)

It doesn't. The FDIC doesn't have a fraction of the money needed to insure a fraction of the money that is supposedly FDIC-insured. More over, the United States likely lacks the gold to back our current currency, let alone the currency needed to prop up those who lose money in the situation of the decreasing number of banks failing.

US currency hasn't even pretended to be backed by gold since the early 1970s.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#54

Post by puredemo »

drivebyacct2 wrote: post #51
rlpb wrote: post #6

"The new Mt. Gox site features SHA-512 multi-iteration, triple salted hashing" Why not use a standard key derivation function such as PBKDF2 or bcrypt to provide some confidence in the system rather than inventing their own? AFAIK bcrypt is strong because of Blowfish's expensive key setup. How does this compare to SHA-512?

Yeah, when this very first happened, I was in the IRC room at onlyonetv interviewed Mark (via proxy). I kept shouting in IRC to ask them to use bcrypt and was told they were doing 1000xSHA-512. I later tweeted at MagicalTux to recommend bcrypt and was asked if multiple iterations of SHA-512 is good enough. He said that he was told bcrypt was not secure enough. How do these businesses succeed with business people that…

>How do these businesses succeed with business people that have no business wit about them, have NO ability to communicate effectively in these critical situations and have awful taste in technical advice?

They take off because they are excellent, useful and timely ideas. Unfortunately, people who have strong, timely ideas, like this one, frequently aren't able to find good technical co-founders, probably because of the "ideas are worthless" meme so many hackers love to recite nowadays.

So the ideas take off anyway, but the sites basically don't have the technical architecture that they should and have to be rewritten later.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#55

Post by mcbarry »

A reminder that MTGOX originally stood for "Magic The Gathering Online eXchange". When a site designed for trading cards online turns into the world's biggest Bitcoin exchange you better believe there's not going to be an appropriate level of security underneath it.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#56

Post by rick888 »

kristianp wrote: post #33
wiredfool wrote: post #17

What this means is that very easily, or even accidentally, MTGox could be running a fractional reserve bank in bitcoin. Balances are just numbers in the database, so there's no cryptographic requirement that they sum up to the actual amount in the dollar and bitcoin escrow accounts/wallets. They can inflate the bitcoin in circulation, and all it takes is enough real bitcoin and cash to cover the withdrawals for no on…

You're saying MTGox is a bank, they're not, they are an exchange.

It seems they like to use this term, so bitcoin can claim it's still decentralized.

Since it's obvious we do need banks for bitcoin (or a safe way to store our currency) and it's not very anonymous, what's the point of using it again?

I would rather just use credit cards or cash.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#57

Post by drivebyacct2 »

georgemcbay wrote: post #53
drivebyacct2 wrote: post #50

Earlier quoted context omitted.

It doesn't. The FDIC doesn't have a fraction of the money needed to insure a fraction of the money that is supposedly FDIC-insured. More over, the United States likely lacks the gold to back our current currency, let alone the currency needed to prop up those who lose money in the situation of the decreasing number of banks failing.

US currency hasn't even pretended to be backed by gold since the early 1970s.

I was more referring to the fact that we fail to produce proof of the limited amount of gold that we claim to have and every attempt to audit it is rebuked magically.

In terms of the question, how would it be handled from an FDIC perspective if it came to a worst case scenario... it'd be a shit-show.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#58

Post by gojomo »

uxp wrote: post #43
gojomo wrote: post #28

Earlier quoted context omitted.

Not necessarily. Let's say the salt is a combination of a per-user salt in the database, a per-user salt from a file on disk, and a per-system salt that's entered at the console at startup and held in memory. A DB compromise doesn't reveal the other 2 salts. A full filesystem image doesn't reveal the third salt. Even an interactive root compromise would need to know to take an image of the running system's memory to…

Why reinvent the wheel using engineering techniques you only have cursory knowledge of from reading an encyclopedia? There is a standard method of securing online accounts, using known methods that are currently known to be perfectly safe in every application from financial institutions to the latest social networking site. Triple-salting passwords is not that method. http://codahale.com/how-to-safely-store-a-passwor…

I wasn't advocating this method or defending Mt. Gox. (Their touting of SHA-512 and use of the unclear term 'triple salted' raises red flags.)

I was providing an example of what could be meant by 'triple salting' that didn't necessarily involve 'three servers'. We could contrive scenarios where bcrypt with this multisource-salt would be a win over bcrypt with a single same-database salt. Intellectually exploring the problem and solution space requires more than just slavishly repeating the already widely-known 'standard methods'.

Have we worked together at a level that would help you assess my level of knowledge, and the sources thereof? I don't recognize your name/handle.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#59

Post by bcl »

rlpb wrote: post #6

"The new Mt. Gox site features SHA-512 multi-iteration, triple salted hashing" Why not use a standard key derivation function such as PBKDF2 or bcrypt to provide some confidence in the system rather than inventing their own? AFAIK bcrypt is strong because of Blowfish's expensive key setup. How does this compare to SHA-512?

1st rule of cryptography - don't try it at home. You'll get it wrong. There are any number of standard ways to protect passwords, there's no need for them to be reaching for the bottle of Snake Oil.

Re: Those 500K Bitcoins that caused the flash crash weren't real

#60

Post by jellicle »

kristianp wrote: post #33
wiredfool wrote: post #17

What this means is that very easily, or even accidentally, MTGox could be running a fractional reserve bank in bitcoin. Balances are just numbers in the database, so there's no cryptographic requirement that they sum up to the actual amount in the dollar and bitcoin escrow accounts/wallets. They can inflate the bitcoin in circulation, and all it takes is enough real bitcoin and cash to cover the withdrawals for no on…

You're saying MTGox is a bank, they're not, they are an exchange.

As soon as an exchange holds your money for more than ten seconds, it's a bank.
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