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

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

#51

Post by spartango » Sun, Jul 31, 2011, 6:43 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 is not actually true. If you Stop an EBS-root EC2 instance, the EBS Volume can be safely detached and moved along to other instances, or you can restart the instance and your data will be ok. Additionally, There's no excuse for not snapshotting your EBS volumes of any sort, and these snapshots persist beyond the lifetime of the volume. I find it just a little sad that relatively few (less than all) EBS customers don't snapshot their volumes.

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

#52

Post by sliverstorm » Sun, Jul 31, 2011, 6:46 PM UTC

sgornick wrote: post #43

> 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.

It sounds like they lost the bitcoins, not the database.

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

#53

Post by sliverstorm » Sun, Jul 31, 2011, 6:50 PM UTC

On the bright side, if the wallet has truly been lost and not stolen, everybody else's BTC got just a bit more valuable.

In other news, funneling thousands of trades through one wallet.dat... how on earth do you successfully back that up when it has new data every minute? If exchanges are going to become a "thing", I'd think you'd want something like multiple redundant networked databases storing the BTC.

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

#54

Post by icebraining » Sun, Jul 31, 2011, 6:59 PM UTC

jonknee wrote: post #31

bcl wrote: post #27

Earlier quoted context omitted.

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…

What's to prevent a firm from lying about who they are and what they are doing? Without regulations (and accompanying penalties for breaking the rules), it's the wild West. It sounds good on a libertarian check list, but in practice the people who can least afford it get absolutely destroyed.

In theory, you'd have trusted independent third-parties that would verify and vouch for your company if you asked them to. Rating Agencies are an example of those.

We know how well they work in real life, though.

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

#55

Post by wmf » Sun, Jul 31, 2011, 7:00 PM UTC

_delirium wrote: post #49

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 c…

The 21M BTC limit already made it deflationary, so lost BTC just increases the rate slightly. The early adopters tend not to complain.

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

#56

Post by icebraining » Sun, Jul 31, 2011, 7:07 PM UTC

djcapelis wrote: post #46

scotty79 wrote: post #14

Earlier quoted context omitted.

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…

If it's a scam, lying about losing the file is useless, since all the BTC transactions are publicly logged. You can just input their address(es) on the Bitcoin Block Explorer and see if any of them are being used.

Of course, that doesn't mean you'll have any legal recourse against them.

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

#57

Post by doublec » Sun, Jul 31, 2011, 7:13 PM UTC

sliverstorm wrote: post #53

On the bright side, if the wallet has truly been lost and not stolen, everybody else's BTC got just a bit more valuable. In other news, funneling thousands of trades through one wallet.dat... how on earth do you successfully back that up when it has new data every minute? If exchanges are going to become a "thing", I'd think you'd want something like multiple redundant networked databases storing the BTC.

The individual trades in exchanges don't hit the wallet. Only deposits and withdrawal's do. The trades themselves are handled by the exchanges database.

You can pre-generate addresses in a wallet and then do a backup. This backup is valid and can be used to recover funds as long as that pre-generated pool doesn't run out.

There's also a 'backupwallet' RPC command that the bitcoin daemon provides to safely copy/backup the wallet. So lots of options available.

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

#58

Post by doublec » Sun, Jul 31, 2011, 7:17 PM UTC

icebraining wrote: post #56

djcapelis wrote: post #46

Earlier quoted context omitted.

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…

If it's a scam, lying about losing the file is useless, since all the BTC transactions are publicly logged. You can just input their address(es) on the Bitcoin Block Explorer and see if any of them are being used. Of course, that doesn't mean you'll have any legal recourse against them.

The addresses being used don't necessarily indicate the exchange owner was lying. An enterprising AWS engineer might have been able to recover the wallet somehow. At a value of $200,000+ USD it'd be worth looking for.

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

#59

Post by rsynnott » Sun, Jul 31, 2011, 7:19 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.

These particular developers, though, were probably not world-class. Data this important simply should not be lost due to trouble with an EC2 instance; any data on an EC2 instance, even on EBS (though somewhat less so for EBS) should be considered liable to vanish at any moment.

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

#60

Post by rsynnott » Sun, Jul 31, 2011, 7:23 PM UTC

sliverstorm wrote: post #50

jackolas wrote: post #41

Earlier quoted context omitted.

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?

Google Translate is heuristics-based, and can occasionally produce strange results. For instance, when translating Irish-language text, it will sometimes translate Baile Ath Cliath (Irish for Dublin, the capital of Ireland) to London, the capital of the UK.

This is likely because its corpus for Irish is made up largely of Irish government documents (all Irish govt documents are translated into Irish, but Irish isn't used by many people and there's not all that much else written in it), and these documents are rather similar to British civil service documents.