3rd largest Bitcoin exchange lost its wallet.dat • Hacker News Board

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

#41

Post by jackolas » Sun, Jul 31, 2011, 6:03 PM UTC

scotty79 wrote: post #17

WarDekar wrote: post #5

Earlier quoted context omitted.

That was my reaction as well. Not just the fact that it's ambiguous whether they're trying to sell for 17k EUR or 17k BTC, but the fact that they're even trying to sell it at all, and then the buyer is presumably on the hook for the BTC that were lost as well! I currently had ~13 BTC in my Bitomat account- when I login they correctly show my balance, so I'm slightly confused as apparently their database wasn't lost,…

> EUR 17,000 BTC EUR here is just some strange artifact of google translate > Serwis www.bitomat.pl zostaje wystawiony na sprzedaż za kwotę 17000 BTC. translates to: > Www.bitomat.pl service is on sale for EUR 17,000 BTC.

Maybe they don't say EUR much in polish and they used a "for money" kind of phrase and gtranslate was being "helpful."

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

#42

Post by wcoenen » Sun, Jul 31, 2011, 6:05 PM UTC

aw3c2 wrote: post #37

kiba wrote: post #32

Earlier quoted context omitted.

Yes, but dollars and euro and yens almost always require a middleman, unless you're doing cash exchange.

Ah, I did not realise that this was about a "transformation" between bitcoin and normal money. But in that case wouldn't it make sense to keep the money on the exchange just as long as needed?

The bitcoin exchanges typically require 6 confirmations of a transaction in the block chain before crediting your account with bitcoins. This takes about 1 hour.

If you are speculating on bitcoins and you hear about some news that might cause the price to drop, then you don't want to wait 1 hour before you can sell them.

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

#43

Post by sgornick » Sun, Jul 31, 2011, 6:07 PM UTC

> At this point I wish to inform and assure you that your cash deposited into your bank account service and not converted into BTC and unpaid cash from the sale of BTC remain safe and intact

The funds are likely held in aggregate in a single bank account under a single name. Without having the data showing which accounts hold which amounts, I wonder how those funds could be returned to the rightful owners.

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

#44

Post by barnaby » Sun, Jul 31, 2011, 6:09 PM UTC

Cushman wrote: post #19

WarDekar wrote: post #5

Earlier quoted context omitted.

That was my reaction as well. Not just the fact that it's ambiguous whether they're trying to sell for 17k EUR or 17k BTC, but the fact that they're even trying to sell it at all, and then the buyer is presumably on the hook for the BTC that were lost as well! I currently had ~13 BTC in my Bitomat account- when I login they correctly show my balance, so I'm slightly confused as apparently their database wasn't lost,…

I don't understand how this is news to people. Bitcoin was designed to be a secure, distributed, anonymous country. What do you expect to happen when you stop relying on Bitcoin to store your money and start relying on some random Polish webapp?

Like many 'random Polish web apps' this one was among the top in its class. Poland has world-class software talent, please don't downplay it.

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

#45

Post by sp332 » Sun, Jul 31, 2011, 6:25 PM UTC

wcoenen wrote: post #42

aw3c2 wrote: post #37

Earlier quoted context omitted.

Ah, I did not realise that this was about a "transformation" between bitcoin and normal money. But in that case wouldn't it make sense to keep the money on the exchange just as long as needed?

The bitcoin exchanges typically require 6 confirmations of a transaction in the block chain before crediting your account with bitcoins. This takes about 1 hour. If you are speculating on bitcoins and you hear about some news that might cause the price to drop, then you don't want to wait 1 hour before you can sell them.

Can you offer more money for the verification, to get it done faster? I think the default is 0.01 BTC, so if you offer 0.05 BTC will you get priority?

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

#46

Post by djcapelis » Sun, Jul 31, 2011, 6:30 PM UTC

scotty79 wrote: post #14

WarDekar wrote: post #7

Earlier quoted context omitted.

They've been around for a few months and were one of the higher volume exchanges. They were doing ~800 BTC in trades/day for the month prior to this, so ~$11k/day with their commission of .006*2 (I think it was .006, and on both sides) they were pulling in ~$130/day.

Everything (transactions, withdrawals, deposits) was free of charge. Only way of profiting legally from the exchange was interest on the capital deposited by users on exchange owners bank account.

Or "losing" the wallet.dat after a few months.

You're operating in an unregulated market. Your legal protections for when someone outright steals your money are much weaker. You might be able to sue them... if you could get to Poland. Not only is your market unregulated, you don't share a jurisdiction with the "bank" unless you live in Poland.

So it's not the only way of profiting legally as much as it's the only way of profiting ethically.

I don't think this particular case was malicious, but I think people are vastly underestimating their risk exposure to a malicious exchange. Thankfully, the bad guys seem as incompetent as the people running bitomat.

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

#47

Post by Cushman » Sun, Jul 31, 2011, 6:32 PM UTC

barnaby wrote: post #44

Cushman wrote: post #19

Earlier quoted context omitted.

I don't understand how this is news to people. Bitcoin was designed to be a secure, distributed, anonymous country. What do you expect to happen when you stop relying on Bitcoin to store your money and start relying on some random Polish webapp?

Like many 'random Polish web apps' this one was among the top in its class. Poland has world-class software talent, please don't downplay it.

Didn't mean to disparage Polish software development; just was assuming the average user of the site wasn't Polish, leaving them even less legal security— which I see, glancing at the site now, was wrong. So apologies to any offended.

With that said, I think you could pick a better site to be the shining beacon of Poland's world class talent than the site that just lost a bunch of people's money because the only place they were keeping it was on a single EC2 instance store. If this is the top, I'm not sure I wanna see the rest of the class.

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

#48

Post by sandGorgon » Sun, Jul 31, 2011, 6:32 PM UTC

mh- wrote: post #24

tshtf wrote: post #9

Earlier quoted context omitted.

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.

This.

I have to repeatedly tell people that EBS-backed is not persistent. Amazon did everyone a big disservice by calling something -backed when it was actually transient.

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

#49

Post by _delirium » Sun, Jul 31, 2011, 6:39 PM UTC

If this kind of thing keeps happening, isn't Bitcoin inherently deflationary? With gold, for example, only a small proportion is ever permanently "lost"; even shipwrecks can be recovered in the future. And of course more gold is always being dug up. But if bitcoins from a fixed set are slowly being lost in various ways, irreparably shrinking the money supply, it seems like it'd have trouble being a viable long-term currency.

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

#50

Post by sliverstorm » Sun, Jul 31, 2011, 6:43 PM UTC

jackolas wrote: post #41

scotty79 wrote: post #17

Earlier quoted context omitted.

> EUR 17,000 BTC EUR here is just some strange artifact of google translate > Serwis www.bitomat.pl zostaje wystawiony na sprzedaż za kwotę 17000 BTC. translates to: > Www.bitomat.pl service is on sale for EUR 17,000 BTC.

Maybe they don't say EUR much in polish and they used a "for money" kind of phrase and gtranslate was being "helpful."

Yea- why would BTC translate to BTC, but "kwote" translates to EUR?