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BTC Stolen from Poloniex

bitcointalk.org

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Re: BTC Stolen from Poloniex

#91

Post by jnbiche »

bunderbunder wrote: post #82
jnbiche wrote: post #56

I know everyone is gleefully using the failure of three poorly-coded Bitcoin exchanges to crow about the many wonders of regulations. However, has anyone stopped to ask why so many exchanges are poorly-coded? No, it's not because everyone in Bitcoin adores PHP. I've met some of the most capable coders among cryptocurrency enthusiasts. Go check out Conformal's btcd, or any of Jeff Garzik or Warren Togami's projects, o…

My suspicion is that simply removing barriers to entry for more cautious folks would not effectively resolve this sort of problem. Methodical people who take their time in engineering ironclad software systems backed by rock-solid accounting practices don't get first mover advantage, and they might not have bottom lines capable of supporting the kind of fee structures that would allow them to compete effectively with…

Perhaps, in the case of the most cautious developers. But right now, I'd be happy with just competent developers.

And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions.

Re: BTC Stolen from Poloniex

#92

Post by danielweber »

o_nate wrote: post #84
tptacek wrote: post #57

Look: every startup gets owned up somehow in its first year or so. If you think your company hasn't, I have an adage about the sucker at the poker table for you. I'm not sure how many people on HN really understand this, because every thread I read about Bitcoin companies having security problems features highly-voted comments expressing shock at how bad their security must have been. No: this problem is universal. T…

Perhaps any online Bitcoin service is going to have to expect a certain loss rate due to hacking and budget accordingly. Just as credit card issuers expect to charge off some percentage due to fraud. The trick is to keep that loss rate manageable. It's clear that many of the same features that Bitcoin users like about it also make it attractive to criminals.

Most credit card purchases, like almost everything in the financial system, are reversible. Things that aren't reversible are the exception, and those are the places where, pun intended, the buck stops. If someone gets my credit card, they can't get $50,000 out of it and disappear. It's very very hard to buy cash equivalents via credit card, and this is not an accident.

Nothing in Bitcoin is reversible. Everyone working with them has to be hyper-vigilant, always, constantly, whatever you do don't blink, blink and you're dead.

I think if I were working with Bitcoins I'd get an ulcer.

Re: BTC Stolen from Poloniex

#93

Post by jnbiche »

bunderbunder wrote: post #53
rayiner wrote: post #42

Earlier quoted context omitted.

I think it's just the rush to be first on the scene and capture the perceived network advantages that arise from being first. These are MVP's.

I think we're seeing now that they're actually just MPs.

I don't know...I hesitate to bestow the "product" label on sites that take away value, instead of adding it.

In fact, I think they're just M's.

Re: BTC Stolen from Poloniex

#94

Post by georgemcbay »

smacktoward wrote: post #29
patio11 wrote: post #15

I made a comment on an earlier thread about the security properties of hot/cold wallet and the security properties of separating the matching and settlement systems. ( https://news.ycombinator.com/item?id=7340505 ) This incident is an example of the Bitcoin community's best practices "working." They lost 12.3% rather than 100%. That's actually a considerable accomplishment in Bitcoin, but not a success condition for…

This is the most fascinating part of the Bitcoin story: watching a group of people who are philosophically opposed to most elements of the modern economy discover, one by one, why all those elements exist.

Totally agree, but would also add this general concept applies to many non-bitcoin startups (especially those that deal in "real world" services as opposed to pure software) as well, eg. Airbnb, Uber, etc.

The natural path of these "disruptive" startups is to start small and lean, ignoring a lot of the complexity of whatever market they are disrupting, and then a slow and steady snowballing as they begin to re-accumulate a lot of the baggage of the industry they came in to disrupt. In the end if you're lucky you wind up with something that is still better than the old thing, but not nearly as much better as the original hype around the new thing would suggest.

Re: BTC Stolen from Poloniex

#95

Post by danielweber »

jnbiche wrote: post #91
bunderbunder wrote: post #82

Earlier quoted context omitted.

My suspicion is that simply removing barriers to entry for more cautious folks would not effectively resolve this sort of problem. Methodical people who take their time in engineering ironclad software systems backed by rock-solid accounting practices don't get first mover advantage, and they might not have bottom lines capable of supporting the kind of fee structures that would allow them to compete effectively with…

Perhaps, in the case of the most cautious developers. But right now, I'd be happy with just competent developers. And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions.

it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions

Where's 'rayiner? He'll love this.

Writing bitcoin software is like writing crypto. You need to get it exactly right.

But instead of starting with a spec written down that the crypto community tears to pieces, instead the developers eat their own dogfood. No, change that: they build critical infrastructure out of their own dogfood. All before it's ever been vetted by the really smart people.

I'd say competent people don't write Bitcoin marketplaces that handle real money for the same reason competent people don't write their own home-grown crypto and then make it a single-point-of-failure for their entire business.

Re: BTC Stolen from Poloniex

#96

Post by bunderbunder »

jnbiche wrote: post #91
bunderbunder wrote: post #82

Earlier quoted context omitted.

My suspicion is that simply removing barriers to entry for more cautious folks would not effectively resolve this sort of problem. Methodical people who take their time in engineering ironclad software systems backed by rock-solid accounting practices don't get first mover advantage, and they might not have bottom lines capable of supporting the kind of fee structures that would allow them to compete effectively with…

Perhaps, in the case of the most cautious developers. But right now, I'd be happy with just competent developers. And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions.

Is it really just government sanctions? Or do regulatory cost and exposure to liability have something to do with it, too?

I think that in the USA at least, government sanctions are far from guaranteed - the courts have confirmed that BTC is a currency. What that means is that there is no longer a question of if you can legally start a Bitcoin exchange in the USA - it's a question of what hoops you have to jump through to do it. (And liability. . . I'm curious if the Flexcoin situation means we'll soon be finding whether a clickthrough EULA that says, "Not responsible for lost or stolen bank accounts" is enforceable.)

Now, perhaps the hurdles are prohibitively high. I'm more than willing to believe that's true. But if so, then you're being rather melodramatic to frame this in terms of "government sanctions". That makes it sound like people aren't doing it because they don't want to knowingly engage in illegal activity. It'd be more realistic to just say that competent people are staying out because the regulatory environment results in an excessive cost of doing business for anyone who wants to make sure they're operating on the up-and-up.

Re: BTC Stolen from Poloniex

#97

Post by jamesaguilar »

bunderbunder wrote: post #53
rayiner wrote: post #42

Earlier quoted context omitted.

I think it's just the rush to be first on the scene and capture the perceived network advantages that arise from being first. These are MVP's.

I think we're seeing now that they're actually just MPs.

If the V stands for "good enough to get people to pay you," then you have to admit that this product had it.

Re: BTC Stolen from Poloniex

#98

Post by lcasela »

minimax wrote: post #71

The comments on the bitcointalk thread are interesting. Here you have a bunch of people who have just lost 12% of their funds and most of them are totally ok with that . If you are looking for evidence that bitcoin supporters are driven more by ideological reasons than economical ones, here is a pretty good example.

>bitcoin supporters are driven more by ideological reasons than economical ones

and for good reasons.

Re: BTC Stolen from Poloniex

#99

Post by eropple »

spiralpolitik wrote: post #69
drakaal wrote: post #25

If BTC is going to survive there needs to be insurance against loss. An FDIC for Crypto. The exchanges take a cut on every transaction, so Poloniex should have self insured for the first 3% (or what ever their transaction fee is). After all they made that money on the transaction. They should carry insurance for the rest. The 12.3% deducted from everyone's account is "wrong" in my view because Poloniex absorbed none…

A better solution would be for the Bitcoin Foundation (or some other entity) to certify exchanges and online wallets as being compliant with a well defined code of practice and audit them regularly. Consumers could look for the mark as indicating that the exchange is a well run outfit rather than a bunch of cowboys.

That doesn't solve the problem, though: how do you trust that they're able to do a good audit?

(I don't have to trust that my bank can, because my accounts are insured by something that rhymes with "duvvermint".)

Re: BTC Stolen from Poloniex

#100

Post by wmf »

drakaal wrote: post #25

If BTC is going to survive there needs to be insurance against loss. An FDIC for Crypto. The exchanges take a cut on every transaction, so Poloniex should have self insured for the first 3% (or what ever their transaction fee is). After all they made that money on the transaction. They should carry insurance for the rest. The 12.3% deducted from everyone's account is "wrong" in my view because Poloniex absorbed none…

How much would such insurance cost? More than the money deposited?
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