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Bitcoin Exchanges Under ‘Massive and Concerted Attack’

coindesk.com

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Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#141

Post by steveklabnik »

jafaku wrote: post #107
thisiswrong wrote: post #60

Earlier quoted context omitted.

Wow this makes a lot of sense. I personally believe that this is yet again another one of BTC's large dips that will eventually recover onto it's upwards path. But then if people panic and see how hard it is to get back into fiat from BTC won't they just go into relatively stable altcoins instead? For example DOGE is skyrocketing as we speak and it's USD price was totally unaffected by BTC's recent plummet. http://co…

If by "stable" you mean "they are so small that no one will even bother attacking them"... http://imgur.com/0kcORBm

5th largest cryptocurrency with more transations/day than every other one put together isn't exactly small...

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#142

Post by lmm »

VMG wrote: post #133
akkartik wrote: post #56

Earlier quoted context omitted.

Is that really true? Could a botnet not conceivably make transactions out of your wallet? Doesn't the distributed ledger have tentacles reaching under your mattress?

A valid digital signature gives a recipient reason to believe that the message was created by a known sender, such that the sender cannot deny having sent the message (authentication and non-repudiation) and that the message was not altered in transit (integrity). http://en.wikipedia.org/wiki/Digital_signature The purpose of the blockchain is to establish an ordered sequence of transactions.

Sure, but no-one calculates digital signatures in their head. Your bitcoins are worthless without computer systems, and those computer systems are the subject of attack by thieves.

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#143

Post by dnautics »

lukifer wrote: post #70
bduerst wrote: post #58

Earlier quoted context omitted.

Not only that, but the bitcoins themselves need solid liquidity before becoming a feasible currency. That's impossible with the impending cap. Right now, bitcoins are treated like digital gold. People hoard them and treat them like investment assets. And for the same reason the world's major currencies unlinked from gold, bitcoins also exhibits recessionary behavior. (bad news for a currency)

I'm unconvinced that deflation is a problem. The buyer's incentive to hoard is mathematically equal to the seller's incentive to acquire; as with all pricing, buyer and seller would eventually meet in the middle. The greatest significant bit for spending is stability/volatility. If BTC accumulated value at a steady 3% per year, many would still spend it (especially if vendors offered a 5% pay-with-BTC discount). The…

Deflation is, in effect, valuing labor and productivity done in the past, relative to the future; inflation is, valuing labor and productivity done in the future relative to the past.

Deflation is fundamentally less dangerous than inflation, because there is less counterparty risk. Technology is supposed to be the "rising tide that lifts all boats", perhaps not surprisingly, technological goods decrease in price in spite of inflation. But by inflating we rob society of the value created by technology and distribute it to bankers and government contractors. It's really sad, and a large reason why the rich get richer and the poor get poorer.

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#144

Post by yetfeo »

bitexploder wrote: post #11
zacinbusiness wrote: post #7

I've not bought in to Bitcoin yet. It just seems like a massive, world-wide scam to me. I'm not saying that it is a scam, I'm just saying that Bitcoin is something that I don't really understand, and so I don't entirely trust it. That said, this event is extremely encouraging. Not only is the security and the viability of the currency being tested. But more importantly, the communication and cooperation between the m…

It is a non issue, honestly. This issue was known about as early as 2011. You can only modify non-essential pieces of the transaction, but it does change the overall transaction hash. These poorly coded exchanges were looking for an exact hash match to pop up on the block chain, instead of looking for the deposit/address. The actual security of the system is not really impacted at all, and the core Bitcoin clients co…

It is not poorly coded exchanges that are causing the issue. It's actually an issue with the reference bitcoin client and those that use the same behaviour: http://www.reddit.com/r/Bitcoin/comments/1xm49o/due_to_activ...

Spending unconfirmed outputs in the presence of malleable transactions is unsafe. The reference client allows spending unconfirmed change outputs as they used to be considered safe. But if the original transactions is modified then the chain of unconfirmed transactions becomes double spent and the reference client gets confused about balances.

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#145

Post by yetfeo »

zAy0LfpBZLC8mAC wrote: post #91
o_nate wrote: post #53

Earlier quoted context omitted.

It turns out that "non-issue" might have been a slight exaggeration. I can understand where the Bitcoin developers are coming from. I mean no one likes to admit there's a bug in their code. Just read through Microsoft support archives. How many times will you find that some bizarre, head-scratching, counter-intuitive behavior of some API or other is "by design"? Does that mean they won't eventually (quietly) patch it…

The bitcoin developers "admitted" long ago that that behaviour is not quite optimal, and they are actually working on fixing it, albeit not quietly, because that would risk breaking bitcoin, as would doing so fast. It's a non-issue in so far as it does not prevent bitcoin from working as it should if you do implement things as the original client does it, it's only an issue because it's something you might easily get…

> It's a non-issue in so far as it does not prevent bitcoin from working as it should if you do implement things as the original client does it

This is not correct. The original client gets one edge case wrong and it is this that is causing the issue with most of the exchanges that use it: http://www.reddit.com/r/Bitcoin/comments/1xm49o/due_to_activ...

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#146

Post by vidarh »

hangonhn wrote: post #106
pjc50 wrote: post #62

Earlier quoted context omitted.

Also worth noting: you can't buy bitcoins on margin. So no margin calls to suddenly detonate the market.

Hang on. Isn't that just a matter of someone setting up a market and contracts for it? What you mean is that no one has setup bitcoins margins market yet right? Or am I misunderstanding something fundamental about BTC that prevents margins?

You can trade contracts for difference (CFDs) on Bitcoin with 1:10 leverage, including shorting them, at places like Plus500

Great way of taking the risk created with the volatility of Bitcoin and multiplying up the risk massively so you can lose money even faster...

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#147

Post by yetfeo »

The reason why exchanges and other software are having trouble with malleable transactions is not due to bad software using transaction ids. It's an edge case with the reference bitcoin client. See: http://www.reddit.com/r/Bitcoin/comments/1xm49o/due_to_activ...

Basically the reference client allows an edge case where it allows spending an unconfirmed output if that output was generated by the wallet itself as change. This can form a chain of unconfirmed transactions. When the malleable bot modifies the original one they all become invalid. The reference client does not handle this case well, it gets balances wrong, and clogs the wallet up.

It's unfortunate that Mt Gox got a lot of heat for calling out the issue from the foundation and core developers saying that malleability was known and wasn't a bit issue. in fact it is an issue due to this edge case in the reference client.

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#148

Post by vidarh »

pjc50 wrote: post #134
hangonhn wrote: post #106

Earlier quoted context omitted.

Hang on. Isn't that just a matter of someone setting up a market and contracts for it? What you mean is that no one has setup bitcoins margins market yet right? Or am I misunderstanding something fundamental about BTC that prevents margins?

Transaction irreversability makes it a lot riskier, combined with the lack of support from the legal system. If you lend bitcoins to someone, and they run off with them, how do you recover your loss? Conversely, unlike stocks, you don't need a broker, so there's nobody who would take on that dealer role. Nobody has setup a "buy bitcoin on margin" service yet, and the first person to do so will lose a fortune to nonpa…

You can protect against the risk by only providing the service between wallets held and controlled by you on your own exchange.

There also are brokers providing indirect Bitcoin shorting with 1:10 leverage in the form of CFD's (contracts for difference). Of course they could opt to always or sometimes not actually trade the coins - to their clients it makes no difference, as no actual coins can be moved in/out of the accounts.

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#149

Post by vidarh »

steveklabnik wrote: post #141
jafaku wrote: post #107

Earlier quoted context omitted.

If by "stable" you mean "they are so small that no one will even bother attacking them"... http://imgur.com/0kcORBm

5th largest cryptocurrency with more transations/day than every other one put together isn't exactly small...

More like 4th, given that Ripples can't be mined, is controlled by a single entity, most of the existing coins are not freely circulating, and the transaction volume is consistently so tiny that it looks very much like the price is intentionally manipulated to make the coin look desirable.

Re: Bitcoin Exchanges Under ‘Massive and Concerted Attack’

#150

Post by maaku »

ayanb wrote: post #10
nwh wrote: post #4

It's interesting to watch actually, submit a transaction to the network at the moment and there's a rogue node that will mess with the padding of the signatures and rebroadcast it faster than the original. It confuses the reference client into duplicate display, which is what Gox is relying on for the failed/success display. That they're winning races over the normal related transactions isn't that unnatural as the t…

Also worth noting is the fact that the Bitcoin Price Index has been massively resilient to all the bad "news" thats been pouring in this month. It has been consistently hovering around the 670-700 mark.

You know that it was up above 800 before this started on last Friday, right?
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