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Bitstamp Accounts Frozen

news.ycombinator.com

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Re: Bitstamp Accounts Frozen

#101

Post by eterm »

tlrobinson wrote: post #96
sp332 wrote: post #94

Earlier quoted context omitted.

Each user needs their own deposit address, for bookkeeping. If the cold storage is really offline, you'd have to manually create a new address for each new user.

"Hierarchical deterministic wallets" (BIP0032) support parallel generation of public and private keys on different systems. The bookkeeping system can generate an unlimited number of addresses from the public "seed" that corresponds to the private keys that will eventually be generated using the private key seed stored in the cold wallet. However, I didn't consider that the hot wallet needs to be replenished as peopl…

Anything which can automatically send to somewhere else is a hot wallet. No number of staging wallets inbetween makes it "cold".

Re: Bitstamp Accounts Frozen

#102

Post by unreal37 »

megaultra wrote: post #69
qnr wrote: post #3

More info: https://coinfire.cf/2015/01/05/bitstamp-confirms-deposit-add... "We are working to determine what has gone wrong. The majority of our coins are swept and placed in cold storage often so this shouldn’t be a major issue right now but we are still working to determine the breadth of the issue. This seems to be a server issue and not a compromise but our teams are still investigating."

I don't like the wording here: The majority of our coins are swept and placed in cold storage often so this shouldn't be a major issue right now . It leaves too much wiggle room. It's like saying: At least some coins have not been placed in cold storage so this could be an issue . Does not look good.

Unless their hot wallet was always empty (and how could it be, since it's by definition used for operations), there is no way they can say all of their coins are safe and none are missing. It's all they can say unless they know 100% for sure what was taken and what is safe.

Re: Bitstamp Accounts Frozen

#103

Post by tlrobinson »

eterm wrote: post #101
tlrobinson wrote: post #96

Earlier quoted context omitted.

"Hierarchical deterministic wallets" (BIP0032) support parallel generation of public and private keys on different systems. The bookkeeping system can generate an unlimited number of addresses from the public "seed" that corresponds to the private keys that will eventually be generated using the private key seed stored in the cold wallet. However, I didn't consider that the hot wallet needs to be replenished as peopl…

Anything which can automatically send to somewhere else is a hot wallet. No number of staging wallets inbetween makes it "cold".

Hence why I called it a "warm" wallet. It would online but isolated from other systems.

Re: Bitstamp Accounts Frozen

#104

Post by eli »

im3w1l wrote: post #75
grondilu wrote: post #52

Earlier quoted context omitted.

Just checked my email again, and indeed I have received it now.

Got it now too (about 2.5 hours after grondilus post). I wonder why it is happening so slowly... Are they mailing us manually?

If you suddenly start sending a much larger volume of mail, it can get flagged as spam.

Re: Bitstamp Accounts Frozen

#105

Post by corford »

corford wrote: post #72
megaultra wrote: post #69

Earlier quoted context omitted.

I don't like the wording here: The majority of our coins are swept and placed in cold storage often so this shouldn't be a major issue right now . It leaves too much wiggle room. It's like saying: At least some coins have not been placed in cold storage so this could be an issue . Does not look good.

To be fair, they have to leave some wiggle room while they investigate the extent of the hack. With a bit of luck just the hot wallet got compromised, they trace how, fix it and honour any deposits made to the that wallet before the breach was detected. So far this is exactly what they say they are going to do. Time will tell but there's no reason to believe they wont act correctly at this stage.

On the other hand, this makes for uncomfortable reading (was posted to r/bitcoin earlier today): http://pastebin.com/ufNLW7xZ

Re: Bitstamp Accounts Frozen

#106

Post by dserodio »

zo1 wrote: post #56
PhantomGremlin wrote: post #49

Earlier quoted context omitted.

I think a tweet from a few years ago sums up the situation (at least in terms of "conventional wisdom"): You know what’s cooler than a million dollars? Virtual currency backed by nothing and nobody. @ReformedBroker The only reason BitCoin exists is because of all the problems with existing currencies and payment mechanisms. It solves a lot of those problems, but creates new problems of its own.

>" The only reason BitCoin exists is because of all the problems with existing currencies and payment mechanisms. It solves a lot of those problems, " What problems would that be?

Instantly transferring money around the world with near zero fees is a great example.

Re: Bitstamp Accounts Frozen

#107

Post by nullc »

tedunangst wrote: post #71
csomar wrote: post #67

Earlier quoted context omitted.

I think he means you use a new address for each deposit.

How is this supposed to work in the real world? Imagine if you had to mail the payment for your electric bill to a different address every month.

Thats a pretty fundamental confusion, but it's forgivable due to bad naming.

An address isn't a destination in Bitcoin, it functions more like the serial number of a bill (though the system is able to handle duplication). It would be better thought of as an invoice number.

You don't expect to reuse a different invoice number of separate payments.

Re: Bitstamp Accounts Frozen

#108

Post by esoteric1 »

Well, ever since I lost my bitcoins on gox I don't let anything on exchanges. This because if you let your coins on an exchange they are not yours, if the exchange closes you can loose everything. What I've been using recently is the BitShares decentralized exchange. I can save my assets there and everything seems to run smoothly up until now. It seems to be a nice solution, you can still trade and don't need to worry about exchanges going down. Not to mention their market pegged assets have prevented me from loosing some money on this last price drop. If you would like to try it, here is a link http://bitshares.org/ it's still something new but definitely worth checking out, it solves most problems with crypto, which is trusting exchanges and volatility

Re: Bitstamp Accounts Frozen

#109

Post by Animats »

FatalLogic wrote: post #9
Animats wrote: post #4

This is strange. There's still nothing about this on their web site. It's very suspicious when a Bitcoin exchange claims problems on the deposit side and stops processing withdrawals . Nobody trusts a Bitcoin exchange in trouble, with good reason given the history. On the other hand, it's 6:30 AM in London, where Bitstamp is, and their staff is probably not in yet. Bitstamp is still processing trades; they haven't sh…

Most merchants who accept Bitcoin do so through Coinbase, which sells on Bitstamp. Coinbase only holds a working float of Bitcoins. When Coinbase can't unload incoming Bitcoins, they start refusing transactions. So most Bitcoin e-commerce will stop within hours if this isn't fixed rapidly. Most ? Source? Bitpay seems to be bigger than Coinbase And wouldn't Coinbase just sell somewhere else, instead of shutting down t…

http://www.coindesk.com/bitcoin-ecosystem-feels-far-reaching...

"From payment processors serving billion-dollar merchants to bitcoin ATMs and advanced trading platforms, Bitstamp's stoppage caused quoted prices in bitcoin to become inaccurate, some products to be suspended and select services to be retailored in light of the interruption."

It turns out that BitPay got their pricing from Bitstamp. Robocoin also used mostly Bitstamp, and had to switch exchanges.

Re: Bitstamp Accounts Frozen

#110

Post by FatalLogic »

Animats wrote: post #109
FatalLogic wrote: post #9

Earlier quoted context omitted.

Most merchants who accept Bitcoin do so through Coinbase, which sells on Bitstamp. Coinbase only holds a working float of Bitcoins. When Coinbase can't unload incoming Bitcoins, they start refusing transactions. So most Bitcoin e-commerce will stop within hours if this isn't fixed rapidly. Most ? Source? Bitpay seems to be bigger than Coinbase And wouldn't Coinbase just sell somewhere else, instead of shutting down t…

http://www.coindesk.com/bitcoin-ecosystem-feels-far-reaching... "From payment processors serving billion-dollar merchants to bitcoin ATMs and advanced trading platforms, Bitstamp's stoppage caused quoted prices in bitcoin to become inaccurate, some products to be suspended and select services to be retailored in light of the interruption." It turns out that BitPay got their pricing from Bitstamp. Robocoin also used m…

This is tiresome. This event is obviously disastrous for Bitstamp and bad for Bitcoin, I was just politely calling you out for making a hasty and alarmist prediction that was full of poorly-founded conjecture and misinformation.

If you had just said something like "I think this is probably going to cause a lot of problems for the Bitcoin eco-system..." that would have been a reasonable guess. The article you linked to actually shows that, but it does not show the effect that you predicted. It does not show "most Bitcoin e-commerce" stopping.

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