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3rd largest Bitcoin exchange lost its wallet.dat

bitomat.pl

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Re: 3rd largest Bitcoin exchange lost its wallet.dat

#21

Post by nordsieck »

mef wrote: post #2

Looks like the admin stored the wallet.dat and backups on an ec2 instance, and then shut it down while doing a RAM upgrade without realizing he would lose everything on the disk. Translation of post: DECLARATION I hereby inform all users of the service www.bitomat.pl of system failure that occurred on 26 July 2011 and its consequences. At the outset I would like to apologize for such a long delay in publication of th…

Am I the only one reminded of the Eve Investment Bank?

http://news.softpedia.com/news/Eve-Online-Economy-Suffers-70...

Does anyone know if they disclosed the address at which they stored their bit coins?

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#22

Post by aw3c2 »

kiba wrote: post #13
dedward wrote: post #11

Everyone keeping their bitcoins in exchanges/(think banks, or broker accounts) instead of their own wallets is completely subverting the point of the idea of bitcoin. BTC has some great unique properties as a p2p cryptocurrency - which goes out the window when everything sits in a few exchanges rather than a bunch of wallets.

Find a way to easily trade bitcoin without centralizing wallets and you got the thousand bitcoin idea. Next step is to turn the thousand bitcoin idea into an actual reality and get rich.

I thought one can directly send bitcoin to another address without the need for a middleman?

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#23

Post by jonknee »

kiba wrote: post #18
jonknee wrote: post #16

Sometimes you don't appreciate regulation until it's gone.

An exchange failed on its incompetency and now they are trying to liquidate and giving back their customers' money. The market works even if the consequence is quite sour and painful. This will means that exchanges will tend toward competency rather than incompetency. Regulations is something that you will have to design first or else you get regulatory capture or "TOO BIG TO FAIL" or some kind of unjust monopoly. Ad…

Except with a lost wallet.dat there will be a lot of BTC that cannot be given back. Customers are likely going to take a haircut because an incompetent exchange lost their money. In the real world the people running the exchange would be going to jail.

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#24

Post by mh- »

tshtf wrote: post #9
mef wrote: post #2

Looks like the admin stored the wallet.dat and backups on an ec2 instance, and then shut it down while doing a RAM upgrade without realizing he would lose everything on the disk. Translation of post: DECLARATION I hereby inform all users of the service www.bitomat.pl of system failure that occurred on 26 July 2011 and its consequences. At the outset I would like to apologize for such a long delay in publication of th…

1. How do you "increase the amount of RAM" on an EC2 instance other than spinning up a new larger instance? 2. Why didn't they use EBS and take frequent snapshots to S3? It sounds like they were running an instance store EC2, then fired up a larger instance and stopped the first one? This has to be a textbook case of how not to use EC2.

You can't. Instance types are fixed. He was likely using an EBS-root configured AMI, where the mount point for EBS is /. These are EBS-backed, but since the EBS block is automatically created when you spool up the instance; it is also automatically deleted when you terminate the instance, unless you specify otherwise.

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#25

Post by jpr »

mef wrote: post #2

Looks like the admin stored the wallet.dat and backups on an ec2 instance, and then shut it down while doing a RAM upgrade without realizing he would lose everything on the disk. Translation of post: DECLARATION I hereby inform all users of the service www.bitomat.pl of system failure that occurred on 26 July 2011 and its consequences. At the outset I would like to apologize for such a long delay in publication of th…

There's a reason real banks use mainframes, not cloud services...

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#26

Post by bcl »

kiba wrote: post #10

I guess the bitcoin economy is ruthless on its entrepreneurs and users. Failure to backup, improper trust in individuals, improper understanding of the technology, poor security practice, and bad decisions will wipe out early adopters' wealth continuously and relentlessly. I doubt we will see much of the early adopters retaining their bitcoin wealth from these early days. Those who did are either incredibly lucky, or…

I think that's a bit over the top. It really isn't that hard to keep your coins in your own wallet and back it up.

What this demonstrates to me is that people are too trusting. You really shouldn't trust any of these services until they become more transparent in who is backing them, what their infrastructure looks like, their disaster plans, etc.

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#27

Post by bcl »

jonknee wrote: post #16

Sometimes you don't appreciate regulation until it's gone.

I disagree. Regulation has given people a false sense of security, leading to them trusting these unknown and untested entities.

Instead of regulation what they need is more transparency. Tell your customers who you are, how you are building your service, what you will do in the case of a disaster.

In this particular case you have someone who is playing with the technology without having even a basic understanding of how to build the required infrastructure.

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#28

Post by tghw »

jpr wrote: post #25
mef wrote: post #2

Looks like the admin stored the wallet.dat and backups on an ec2 instance, and then shut it down while doing a RAM upgrade without realizing he would lose everything on the disk. Translation of post: DECLARATION I hereby inform all users of the service www.bitomat.pl of system failure that occurred on 26 July 2011 and its consequences. At the outset I would like to apologize for such a long delay in publication of th…

There's a reason real banks use mainframes, not cloud services...

This is not why they use mainframes instead of the cloud. This is why they employ competent sysadmins.

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#29

Post by tghw »

bcl wrote: post #27
jonknee wrote: post #16

Sometimes you don't appreciate regulation until it's gone.

I disagree. Regulation has given people a false sense of security, leading to them trusting these unknown and untested entities. Instead of regulation what they need is more transparency. Tell your customers who you are, how you are building your service, what you will do in the case of a disaster. In this particular case you have someone who is playing with the technology without having even a basic understanding of…

How do you ensure transparency without regulation?

Re: 3rd largest Bitcoin exchange lost its wallet.dat

#30

Post by kiba »

jonknee wrote: post #23
kiba wrote: post #18

Earlier quoted context omitted.

An exchange failed on its incompetency and now they are trying to liquidate and giving back their customers' money. The market works even if the consequence is quite sour and painful. This will means that exchanges will tend toward competency rather than incompetency. Regulations is something that you will have to design first or else you get regulatory capture or "TOO BIG TO FAIL" or some kind of unjust monopoly. Ad…

Except with a lost wallet.dat there will be a lot of BTC that cannot be given back. Customers are likely going to take a haircut because an incompetent exchange lost their money. In the real world the people running the exchange would be going to jail.

I don't understand the point you are trying to make.

Incompetent exchange goes out of business. Said exchange try to compensate their customers. Customers learn better to scrutinize other exchanges for their backup policies and how they run their business.

Of course, this is the free market. Failure to be competent, either as an investor, user, or exchange, result in monetary loss.

To others, this is horrible. To me, this is the way I like it.

I wish for the accurate consequence of my decisions, not a jacked up distorted picture of reality. This prevent crisis from becoming a minor blip in the bitcoin economy into something that fundamental destroy the bitcoin economy.

Adding regulators who have a hold on the whole Bitcoin economy with no alternative for said regulators, with no incentives to for regulators to regulate the market right is a recipe for disaster. You want regulation and regulators? Show me the incentives for them to make things right. Show me why they will not fall prey to regulatory capture. Give me precise details of how this is all suppose to work and what the rules are.

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