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Peter R’s Theory on the Collapse of Mt. Gox

bitcointalk.org

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Re: Peter R’s Theory on the Collapse of Mt. Gox

#71

Post by beagle3 »

smsm42 wrote: post #64
glesica wrote: post #24

Earlier quoted context omitted.

Which is why government insuring bank deposits isn't such a crazy idea. If the government collapses and can't stand behind the policies, then you have some really big problems on your hands and it is likely that private insurers wouldn't have fared much better. If the government doesn't collapse, everyone gets made (more or less) whole again. Basically, when the government is your insurer, there is no "Who insures th…

>>> it is likely that private insurers wouldn't have fared much better. Why is it likely? There are many private companies controlling amounts of money comparable with amounts of money controlled by some governments. I'm not talking US government of course but there are many smaller ones. Such companies are usually multinational corporations carrying much less local political risks and less prone to engaging in stupi…

> Why is it likely? There are many private companies controlling amounts of money comparable with amounts of money controlled by some governments.

You assume complete rule of law is maintained in the absence of government, which is a non-trivial assumption. To exercise control of said money, especially in times of turmoil, you need an underwriter, usually in the form of police and/or army, which usually require the government to be functional.

> But if your government has to resort to robbery, are you sure it's a good insurance?

It's a game of semantics. Some people consider any taxation "robbery at gunpoint". Most people would consider that only about "unjust taxation". However, the number of definitions of "unjust taxation" is close to the number of voters.

Re: Peter R’s Theory on the Collapse of Mt. Gox

#72

Post by Spooky23 »

This shouldn't be surprising. The same sort of things would happen back in the good old days when we were on the gold standard.

Usually the catalyst in those days was some sort of financial stress at moment of weakness for the bank. In the 19th century, Typically this was in the fall before the receipts from the harvest came in. Small banks would have minimal reserves, and failures could easily cascade.

I'm surprised with all of the rhetoric about fiat money that nobody figured this out sooner.

Re: Peter R’s Theory on the Collapse of Mt. Gox

#73

Post by laichzeit0 »

It's interesting to note that the transaction malleability issue was a known problem to MtGox at the very latest by November 2013. [1]

I know this first hand because I was on #mtgox at the time speaking to support staff trying to get some of my own coin out, which I eventually did get. I personally think that at this point they themselves were "wtf is going on?" about the issue and couldn't really explain what went wrong.

Between that time and now they surely must have understood the problem well enough to either use it as a "feature" or try and fix it, which they didn't.

https://bitcointalk.org/index.php?topic=324918.0

Re: Peter R’s Theory on the Collapse of Mt. Gox

#74

Post by laichzeit0 »

GigabyteCoin wrote: post #39
dangrossman wrote: post #15

Of all the speculative explanations so far, this one would make the best plot for a movie script.

He's certainly a great writer. The thing that was lacking were the sources.

If you've been in the bitcoin world since at least before the first MtGox "crash" at $40 then it would be obvious which events he's talking about.

Granted it's being being turned into a narrative but the history is spot on. I wouldn't have bothered putting in sources if I were him either, it's time consuming and those who know the history of the events wouldn't need it.

Re: Peter R’s Theory on the Collapse of Mt. Gox

#75

Post by MertsA »

ahlatimer wrote: post #66
tempestn wrote: post #61

Earlier quoted context omitted.

There's likely still a whole criminal investigation to come. Plenty of people to interview, records to review, pieces to put together. I think it's pretty likely that more information will come out.

I was watching Freakonomics the other day (well, part of it, anyway), and they were talking about how the Japanese police will only really investigate crimes when they have a clear chance of getting a conviction. Take that as you will, but it seems to be that even if there's an investigation, that doesn't mean that anything will necessarily come out of it.

That and the Japanese police also will try to get a conviction even if it means convicting someone with little evidence. Combined with their seeming incompetence at investigating cyber crime this does not bode well for the MtGox investigation. The Japanese police have a 99% conviction rate with prosecutors being fired for threatening to kill suspects if they don't confess. The Japanese system of "Justice" strives for convictions, not justice.

http://www.bbc.com/news/magazine-20810572

Summary: Police arrest 4 separate suspects and get confessions from 2 for having a virus on their computer.

Re: Peter R’s Theory on the Collapse of Mt. Gox

#76

Post by [deleted] »

laichzeit0 wrote: post #74
GigabyteCoin wrote: post #39

Earlier quoted context omitted.

He's certainly a great writer. The thing that was lacking were the sources.

If you've been in the bitcoin world since at least before the first MtGox "crash" at $40 then it would be obvious which events he's talking about. Granted it's being being turned into a narrative but the history is spot on. I wouldn't have bothered putting in sources if I were him either, it's time consuming and those who know the history of the events wouldn't need it.

[deleted]

Re: Peter R’s Theory on the Collapse of Mt. Gox

#77

Post by thenmar »

laichzeit0 wrote: post #74
GigabyteCoin wrote: post #39

Earlier quoted context omitted.

He's certainly a great writer. The thing that was lacking were the sources.

If you've been in the bitcoin world since at least before the first MtGox "crash" at $40 then it would be obvious which events he's talking about. Granted it's being being turned into a narrative but the history is spot on. I wouldn't have bothered putting in sources if I were him either, it's time consuming and those who know the history of the events wouldn't need it.

Tone down the superior attitude. Sources benefit everyone.

Re: Peter R’s Theory on the Collapse of Mt. Gox

#78

Post by whyenot »

pygy_ wrote: post #56
jamesaguilar wrote: post #49

Earlier quoted context omitted.

You can't put money directly into a cold wallet, if I understand correctly. If you can manipulate it directly then it's hot by definition.

Yes, you can, as long as you have an address (Public key). A wallet is just a private key. The transaction history, and thus the ballance of an address is held in the blockchain, in the ether. To spend the coins, you must have at hand: * the current blockchain * the private key * a connection to the network.

Is that true even if you only spend some of coins and not all the coins? I seem to remember there being something very tricky about this if you are using a paper wallet.

Re: Peter R’s Theory on the Collapse of Mt. Gox

#79

Post by oscilloscope »

pktgen wrote: post #45
patio11 wrote: post #28

Earlier quoted context omitted.

Mt. Gox tried to secure insurance of customer deposits. Japanese insurance companies asked them about the specifics of their business and then said, to paraphrase, "Oh HELL no." One of the issues was that they were awaiting guidance from the Financial Services Authority, because insurance companies hate uncontrolled regulatory risk. The other issues were the sort of thing which will get your Errors and Omissions insu…

I'm curious if this is due to Mt. Gox not trying hard enough. Recently a Bitcoin startup was able to obtain insurance from Lloyd's: http://arstechnica.com/business/2014/01/backed-by-lloyds-of-... . If this theory is true, presumably Karpeles would not have done this after the 2011 hack, because that would be insurance fraud (falsely obtaining insurance on the theft of coins that have already been stolen). It's possib…

Insuring Bitcoin in 2011 sounds like a scam already.

Re: Peter R’s Theory on the Collapse of Mt. Gox

#80

Post by TerraHertz »

When bitcoin started it was touted as anonymous, reliable and secure against fraud and theft by central authorities (especially government.)

I had some doubts (and other interests) so didn't bother getting into bitcoins.

Now we find out that bitcoin definitely isn't secure, and fraud by central authorities is just as possible as with any complex system of representing monetary value. I really think it's a universal Law - let there be any kind of central body involved in a system where there are profits to be made by dishonesty, and there WILL be dishonesty.

MtGox turns out to be no different to the FED and any other fiat money authority. No different to the bullion markets, and their empty gold vaults (gold stolen, due to fractional reserve fraud.)

I think I'll stick to keeping gold and silver pieces in an old sock. The only true value store is in-your-hand allodial, and never, ever abstracted to ones and zeros (or paper.)

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