Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

mtgox.com

Post reply on HN
Print view View original

161–170 of 176 posts

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

#161

Post by rmc »

eli wrote: post #137
rmc wrote: post #119

Earlier quoted context omitted.

No, MtGox said that the thief was able to make a larger withdrawal (approximately 2000 BTC) before our security measures stopped further action.

I wonder if they don't really mean, "2000 of the coins created by the thief and then sold to buyers were withdrawn before we could shut things down"

"withdrawing the coins" in this case means moving them out of the BitCoin wallet owned by MtGox and moving them back into the BitCoin P2P block chain (as far as I know). There is no way to magically print more BitCoins like this (preventing this is one of the core design goals of BitCoin). This BitCoins had to come from somewhere. MtGox have admitted this and will have to buy/trade/get/acquire replacement BitCoins: "the 2000 BTC withdrawn did have real wallet backing and they will be replaced at Mt. Gox’s expense"

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

#162

Post by gojomo »

uxp wrote: post #155
gojomo wrote: post #58

Earlier quoted context omitted.

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…

No, we haven't worked together. My "cursory knowledge" comment was more directed at the people running MTGox, not you. Sorry if I phrased it in such a way to imply so. I agree, there could be an implementation where applying multiple salts might have a benefit, but SHA-512 is not that implementation. I was not slavishly repeating 'standard methods', but pointing out that they are or were widely wrong in whatever they…

We agree on Mt. Gox's hand-waving, and also that intent in threads can get confused. I appreciate the apology.

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

#163

Post by white_devil »

hobolobo wrote: post #154
white_devil wrote: post #117

Earlier quoted context omitted.

> Yes. I am sure. I have far, far, far less than 0.000001% of the total money in the bank. If they could not produce this much money when I wanted it, there would be other serious problems. Last year, a branch office of a large bank in Finland was barely able to produce 10 000 euros in cash when I wanted to withdraw it. The clerk just didn't realize he shouldn't mention it. Don't be so sure.

Is that a case of the bank not having the money or just that branch not having the cash on hand?

Each branch is supposed to function as a bank, right?

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

#164

Post by wnight »

ubernostrum wrote: post #112
stayjin wrote: post #80

Earlier quoted context omitted.

No he isn't. If ( just for the sake of the argument ) RMB replaces USD as the international currency base, US has absolutely nothing to back dollar value and prevent it from dropping.

Pretty much every useful currency these days is "backed" by absolutely not one single atom of metal. Which, it turns out, works just fine -- the belief that gold has value is roughly as magical as the belief that saying some words can turn wine into blood (and a prime sign of religious dogma in both cases).

The problem is that in ditching gold they went straight to faith-based currency. Even if gold was ugly and useless it'd still be a better base for currency than nothing because of its scarcity. It's too easy to create more money. We don't even print it anymore.

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

#165

Post by clistctrl »

latch wrote: post #31
Xk wrote: post #23

If I had any bitcoins hosted on mtgox and, for some reason, had not already taken them out, I would do so right now . When you give them your bitcoins, you are trusting them to keep your money safe. I trust my money with my large bank for two reasons: (1) they have a large safe and have practice keeping people out, but more importantly, (2) if someone were to break in and take some of the bank's money, I would know t…

don't disagree with most of what you said, but...you sure about this part? I would know that I could still withdraw my money because they have enough cash on hand for me to do so. http://en.wikipedia.org/wiki/Fractional-reserve_banking Or if you want a more practical example, keep watching Greece (or look at what happened to Argentina 10 years ago).

The US government guarantees my bank account up to (i think 200k) There is no Internet Government that guarantees my bit coins.

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

#166

Post by hobolobo »

white_devil wrote: post #163
hobolobo wrote: post #154

Earlier quoted context omitted.

Is that a case of the bank not having the money or just that branch not having the cash on hand?

Each branch is supposed to function as a bank , right?

They're not autonomous though - individual branches don't hold the value of all their customers' accounts as cash. You're subject to a daily limit (though you can take more if you give them notice).

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

#167

Post by maaku »

batterseapower wrote: post #110
daeken wrote: post #22

Earlier quoted context omitted.

By using floating point values for a user's balances (per-currency) in the DB, they effectively did make themselves a fractional reserve bank, even if the spread was likely small. Most every transaction would've added a tiny bit of an error value -- given enough time, this would've added up pretty considerably.

Due to how round-off is specified, cumulative errors in floating point calculations should average to 0 for typical workloads.

No. If you were to repeat an experiment a million times, the standard deviation should (quickly) limit to zero. That does not mean that the value compued is correct, however. Due to how round-off is specified, the estimated error will increase with every floating point operation.

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

#168

Post by maaku »

pnathan wrote: post #143
idlewords wrote: post #66

Earlier quoted context omitted.

When talking about DIY crypto, the question should be turned around - what's the benefit of this over just using bcrypt?

Well, one example might be if you were implementing your crypto in a language that doesn't have bcrypt bindings. So you would either have to port bcrypt or use existing crypto code to approximate bcrypt-level security.

False choice. Why roll your own when either porting bindings to bcrypt or porting the bcrypt implementation to your language is easier and safer?

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

#169

Post by burgerbrain »

white_devil wrote: post #163
hobolobo wrote: post #154

Earlier quoted context omitted.

Is that a case of the bank not having the money or just that branch not having the cash on hand?

Each branch is supposed to function as a bank , right?

Why in the world should a single branch be expected to hold that kind of cash for withdrawn without notice? There is a* huge* difference between "having the money" and "having the money in cash form on location".

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

#170

Post by wnight »

RockyMcNuts wrote: post #135
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…

That's the whole point of an unregulated currency, right? Banks can do whatever they want, they're not subject to reserve requirements, or for that matter any kind of oversight. I'm not sure how regulated fractional reserve banking is a terrible thing, but a completely unregulated bank is a better thing.

If not for loaded terms like 'Bank' and 'Exchange' people would think about this rationally and demand that all services buy comprehensive insurance to cover situations like this. Unfortunately they've been lulled to sleep by things like blanket FDIC coverage that, while it pays out after a crash, pays out in weakened money.

Bitcoins provide a chance for trust to be based on economics (escrow, insurance, audits, etc) not by government fiat. But you can't fall asleep at the wheel and just expect everything to work.

Post reply on HN