131–140 of 305 posts
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Zero. Bitcoins are worthless.
Just like everything, until we decide to give it value. Gold is completely and absolutely worthless to us humans, we don't need it to function and it serves no biological function in our organisms whatsoever. But because we like it and there is a scarcity of it, we will trade goods for it. Just like with bitcoins.
When you make a deposit you are extending credit. In the case of Mt. Gox, or any other Bitcoin exchange, that credit is secured by nothing and insured by noöne. Advice, going forward, for managing counterparty risk: (1) Split a $100 transaction into 10 $10* transactions executed incrementally (send $10 of BTC to Mt. Gox, exchange it, transfer it out, and only then send the next $10 of BTC over). This keeps exposure a…
How would you transfer out $10 from an exchange? My bank charges more than that in fees for any transfer at all... Also, it always took weeks to get anything out, so you'd be waiting for months to transfer $100.
When you make a deposit you are extending credit. In the case of Mt. Gox, or any other Bitcoin exchange, that credit is secured by nothing and insured by noöne. Advice, going forward, for managing counterparty risk: (1) Split a $100 transaction into 10 $10* transactions executed incrementally (send $10 of BTC to Mt. Gox, exchange it, transfer it out, and only then send the next $10 of BTC over). This keeps exposure a…
How would you transfer out $10 from an exchange? My bank charges more than that in fees for any transfer at all... Also, it always took weeks to get anything out, so you'd be waiting for months to transfer $100.
If, on the other hand you're the guy trying to cash out $500k worth of BTC, a $25k loss is probably acceptable risk so you might exchange your $500k over 20 independent transactions of $25k each. In reality, you're not going to be able to sell $500k of BTC in a day anyway, so it's difficult to see this process as onerous -- it's just part of the game.
When you make a deposit you are extending credit. In the case of Mt. Gox, or any other Bitcoin exchange, that credit is secured by nothing and insured by noöne. Advice, going forward, for managing counterparty risk: (1) Split a $100 transaction into 10 $10* transactions executed incrementally (send $10 of BTC to Mt. Gox, exchange it, transfer it out, and only then send the next $10 of BTC over). This keeps exposure a…
The only problem with doing multiple transactions is the amount of time required to both withdraw and send. If I waited, the price could fall (or rise...)
What's needed is a non-governmental/industry-driven method of showing solvency and competence. Blockchain-transfers and signed messages to show bitcoins solvency maybe? I'm not sure how to show solvency in a national currency. I'm also not sure how to show full compliance with the protocol without an auditing organization.
Also, users need to pay attention. As soon as mtgox started making bad transactions people should have started questioning them more. When they didn't properly fix those transactions, people should have started moving away.
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>> hindsight I'm only making this comment because you used the term "hindsight". Let me first start off by saying I feel very, very sorry for all the people who lost funds in MtGox. It'll take awhile before you get over the pain of losing a life-changing amount of money. But let's be very clear about this; hindsight wasn't needed here. The warning signs that MtGox was a house of cards became visible a long time ago.…
I will say that the article you linked is almost garbage. It glances over the "clues" very quickly which I will assume due to lack of knowledge. The complaint that passwords were displayed in plain text is not anywhere near recent. Even in 2011 when I started using MtGox, passwords were hashed. Granted, early on the passwords were only hashed with 1 pass of SHA256, but later on passwords were stored to much better st…
But perhaps I'm taking for granted my tech-knowledge(or bias opinion). Let me say some things that jumped out at me immediately as mistakes that should have never happened to begin with when making an application dealing with people's money.
---The password in URL thing.
The issue with that password in browser's history is that it becomes an easy target for malware. Just like there's malware that knows the default location of wallet.dat, malware that scrubs your web history will find it. Making it worse is the fact that there are already a lot of malware that hijack browsers and monitor where it's going. At least wallet.dat can have a passphrase. Then you have those tools that are designed to help end-users by keeping their web history synced with other computers and/or devices. In short, web history is constantly exposed to 3rd parties so no personal info should end up there since you don't know how secure the 3rd parties are handling your data. At least, not passwords, SSN, etc. Another thing is servers tend to keep urls in access.log which tend not to get the same level of security consideration as the rest of the webapp. They should have sent it in POST body which isn't stored in access.log(at least not by default).
----The password hashing thing
Security 101; you don't just hash passwords once with no salt. Existence of rainbow-tables make that insecure and even a novice should have known that before starting. Also, according to this article[1] it was a "saltless MD5"[2?] hash.
----SQL vuln
I don't claim to be a DB expert but I do know using stored-procedures, instead of concatenating a bunch of strings together partially from user-input to form an SQL statement, makes SQL injection nearly impossible. I also believe there are some nice SQL sanitation libraries out there. But I can't judge this too hard because I don't know exactly where the SQL injection happened. Sometimes hackers do something really clever and put the malicious SQL in a place that's not normally user-input; like a cookie value for an authtoken.
----Trades roll back
I did not see that solution as a valid way to do things. I still don't fully understand how that didn't screw over all kinds of people. Can etrade.com decide to roll back 1 day of activity?
I dunno; all these things put together just gave me the feeling that one day these guys would be in trouble. The right thing to do after first, or at least 2nd, hack was a full audit of their whole system by someone who knows about these things. They just didn't show any signs of learning from their mistakes. e.g., like the postmortems that other companies sometimes post up detailing the problem and steps to recover. MtGox seemed to just be reactionary and only enough to solve the immediate problem. I'd advise anyone going forward that if you see similar behavior in anything you deal with, not just bitcoin-related, you run away. Also, a red-flag for me is any system where it's easy to put money into but hard to get out without a very sensible reason.
1. http://www.dailytech.com/The+Death+of+Bitcoins+Mt+Gox/articl...
2. This article claims there was a salt... http://www.dailytech.com/Inside+the+MegaHack+of+Bitcoin+the+...
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I believe your understanding if the situation is flawed, if you are a US citizen. The $3000 per year applies to capital losses. You did not suffer a capital loss. You suffered a loss due to bank insolvency. If you realized your gains in 2013, you actually owe taxes on $500,000 for your 2013 taxes, which is roughly $250k. I believe your losses due to bank insolvency will apply to your income for 2014. But you may be o…
Yep, talk to a CPA. One key issue is you may not have a capital loss, but rather a casualty, which by my read of the flowchart becomes a miscellaneous itemized deduction. Those are limited to 2% of MAGI and I don't believe they carry over. Also, there is a hard cap at $20k for lost deposits. See publication 547. It may be to your advantage to file it under a loss to personal property (form 4648) - the math isn't stra…
If it is not a technical problem, and is rather a Ponzi Scheme, the tax implications may be much different since there are IRS rules that handle Ponzi Schemes. Additionally, those that gained profits in the exchange may be required to pay back those profits to victims through clawback lawsuits+.
This IRS link below is a brief overview of how victims of Ponzi Schemes are treated. The most important piece of information is that there is a real chance of a clawback for the people who withdrew and currently think they made money.
http://www.irs.gov/uac/Help-for-Victims-of-Ponzi-Investment-...
I don't have time to read these documents this morning, but I do know that the people who received returns from Madoff are now the focus of lawsuits.
Here is a Forbes article on the subject, there are plenty more you can read out there as well: http://www.forbes.com/sites/jordanmaglich/2012/10/23/ponzi-s...
Here is one example of a hospital having to pay a Clawback. http://www.jewishpress.com/news/breaking-news/hadassah-docto...
+My guess is that the clawback lawsuits would yield very little real money since much of the value of Bitcoined gained was due to price appreciation which may keep lawsuits against those who gained fairly minimal since there isn't much money for lawyers to sue for in complex litigation.
That can't include the value of the bitcoins lost can it? So presumably the assets doesn't include the value of any bitcoins that they still have which all makes this statement rather meaningless.
To all the HN members who lost a lot of money in this closing, remember the community is here for you. Don't do anything too rash and if you need someone to talk to, myself and most other people would be happy to lend an ear.
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Majority of it was from mining, but I had already realized my profits.
to be fair, with the funds in $ you probably have a better chance of getting some of that back than if it was BTC.
It's the biggest load of hypocrisy that people who enthusiastically wanted to play in the libertarian paradise of an unregulated currency think they should be able to turn around and request the help of the regular, regulated, tax-supported economy to make them partial or whole.
First, we'll crap a bunch of processing resources into thin air, ponzi up value in the system, scream self-righteous screeds to the nay-sayers... then, when it goes to shit, call in the cops you were giving the finger to a second ago.
You took your chances. You relished in the freedom of the risk. You eat your pudding.