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The Tangled Tale of Mt. Gox's Missing Millions

timothy posted about 8 months ago | from the when-things-go-wrong dept.

Bitcoin 191

jfruh writes "What went wrong to produce the spectacular implosion of bitcoin repository Mt. Gox? Well, according to some preliminary investigation from the IDG News Service, pretty much everything. There was a lack of management oversight and 'culture,' the code running the site was a mess, and the CEO seemed more concerned about his plans for a 'Bitcoin cafe' than he was about his Japanese bank closing the company's account."

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"Sight"? On slashdot? (4, Interesting)

mikael_j (106439) | about 8 months ago | (#46434195)

Really?

Re:"Sight"? On slashdot? (4, Funny)

Jeslijar (1412729) | about 8 months ago | (#46434219)

Slashdot has turned into a great web sight

Re:"Sight"? On slashdot? (4, Funny)

WallaceAndGromit (910755) | about 8 months ago | (#46434247)

You have great incite.

Re:"Sight"? On slashdot? (1)

hb253 (764272) | about 8 months ago | (#46434877)

I wonder who has taken the reigns?

Re:"Sight"? On slashdot? (0)

Anonymous Coward | about 8 months ago | (#46435029)

I guess you meant rains instead of reigns, didn't you?

Re:"Sight"? On slashdot? (1)

hb253 (764272) | about 8 months ago | (#46435797)

Whoosh?

Re:"Sight"? On slashdot? (0)

Anonymous Coward | about 8 months ago | (#46434225)

Yes, really. Are you not paying attention?

Re:"Sight"? On slashdot? (4, Funny)

Anonymous Coward | about 8 months ago | (#46434231)

Eye have a spelling chequer,
It came with my Pea Sea.
It plane lee marks four my revue
Miss Steaks I can knot sea.

Eye strike the quays and type a whirred
And weight four it two say
Weather eye am write oar wrong
It tells me straight a weigh.

Eye ran this poem threw it,
Your shore real glad two no.
Its vary polished in its weigh.
My chequer tolled me sew.

A chequer is a bless thing,
It freeze yew lodes of thyme.
It helps me right all stiles of righting,
And aides me when eye rime.

Each frays come posed up on my screen
Eye trussed too bee a joule.
The chequer pours o'er every word
Two cheque sum spelling rule.

Re:"Sight"? On slashdot? (1)

ericloewe (2129490) | about 8 months ago | (#46435115)

Wow. It's a real pity this was posted as AC... I can see this becoming a meme...

Re:"Sight"? On slashdot? (0)

Anonymous Coward | about 8 months ago | (#46434237)

A bad omen. I see YouTube-level discourse in the near future.

Re:"Sight"? On slashdot? (0)

Anonymous Coward | about 8 months ago | (#46434601)

Yep...definitely time to go to http://soylentnews.org/

Re:"Sight"? On slashdot? (2, Insightful)

edibobb (113989) | about 8 months ago | (#46434335)

I tried to mod up, but it won't work (even though I have 15 mod points). Slashdot seems as competent as MtGox.

Re:"Sight"? On slashdot? (0, Insightful)

Anonymous Coward | about 8 months ago | (#46434367)

Sorry - Slashdot gave out all the mod points to ACs like me. They are now mod point bankrupt,

Re:"Sight"? On slashdot? (2)

Mister Transistor (259842) | about 8 months ago | (#46434523)

I think it was an inside job. Some employee of Dice absconded with all the mod points!

Re:"Sight"? On slashdot? (1)

Mitreya (579078) | about 8 months ago | (#46435299)

I think it was an inside job. Some employee of Dice absconded with all the mod points!

So where did you buy yours? :)

And how much is "+1 Interesting" worth in Bitcoins now, anyway?

Re:"Sight"? On slashdot? (2)

ArcadeMan (2766669) | about 8 months ago | (#46434519)

That kind off spelling is bad four your eyesite.

Re:"Sight"? On slashdot? (4, Informative)

Opyros (1153335) | about 8 months ago | (#46434999)

Also, it isn't "Mt. Gox". It's "Magic, the Gathering online exchange".

Outta sight, man (1)

Anonymous Coward | about 8 months ago | (#46434199)

Stop relying on your spelchekker, people. It's like everyone sees your lips moving while you read.

The Sight? (4, Funny)

Anonymous Coward | about 8 months ago | (#46434217)

Oh, my soar eyes.

There doing they're best! (3, Funny)

Anonymous Coward | about 8 months ago | (#46434289)

The editors have a ruff job. Them have two get those articles up in time for us too sea abd meat there quota. Working four Dice must bee really hard considering that there job cold be sent oversees at anytime!

Re:There doing they're best! (0)

Anonymous Coward | about 8 months ago | (#46435569)

The edit ores halve a ruff job. Them halve two get does art icicles up in thyme for us too sea and meat there quota. Whore king four Dice must bee rely hard con sidelining that they're job cold be send oversees at anytime!

Re:The Sight? (0)

Anonymous Coward | about 8 months ago | (#46434489)

That spelling error really greats on my nerves.

Shouldn't it be understood... (5, Insightful)

TWX (665546) | about 8 months ago | (#46434221)

...that all scrip currencies are going to find themselves subject to attack from all sides? Wasn't it obvious that governments are going to have a problem with it due to a lack of ability to regulate/tax, banking systems are going to have a problem with it due to their not having a role in something that could be lucrative, and criminals are going to be interested in exploiting the lack of government oversight in order to either profit through its use or through outright theft?

A coworker previously had sang the praises of Bitcoin, but it sounded like he was approaching it from a stock market speculation angle, as in the more it grows the more he was interested. This wasn't long before it started making the news big-time, and like all bubbles, once everyone is involved it usually means that it's time to get out. And also like other bubbles, it has started experiencing the bursting that kills value.

Bitcoin is interesting, but for something so libertarian requires way too much third-party interaction in order to practically use it, and those third-party gatekeepers are the perfect targets.

Re:Shouldn't it be understood... (4, Insightful)

gmuslera (3436) | about 8 months ago | (#46434305)

And if you don't want to rely in third-party gatekeepers, how most people will use it? In your phone? in your (for the majority, windows) pc? You can't use gatekeepers because a lot got hacked or just run with the coins, and you can't have them yourself because the most used platforms are ripe for external exploit, either making the user do something or just making popular good looking trojans.

And if that insecurity is not enough, having over that government sponsored weakened encryption algorythms and mandated backdoors don't help a lot.

We are still not ready for a distributed digital money in those terms.

Re:Shouldn't it be understood... (2)

TWX (665546) | about 8 months ago | (#46434401)

It also doesn't help that Bitcoin, in of itself, has no intrinsic value, and it can be argued that as far as real-world value goes it's actually a detriment as it takes fairly significant resources to run the computers to competitively generate bitcoins and it's possible and even quite likely that people will lose their private keys and thus will lose access to bitcoins.

Money relying on specie that is also itself a valuable material for manufacturing will at least maintain the value of exchange for that manufacturing. Gold is a good example of that given its use in the electronics industry and the jewelery industry, among others. Same could be said for platinum or palladium, and this is the strongest argument in favor of a specie-backed currency.

Money whose value is market-based and is sponsored by government is inexpensive to produce, which is its strong suit. Printing bills is inexpensive- printing the $100 costs the government just about the same as printing the $1. Generating money electronically in the form of credit at the prime rate is also inexpensive, and while computers are involved they're not working as hard in parallel competition to generate the money.

Re:Shouldn't it be understood... (1)

ColdWetDog (752185) | about 8 months ago | (#46435001)

If you have specie based money (the gold standard) then you are limited in the amount of money (ie resources) you can have in circulation which limits the size of the economy which means that economies cannot grow exponentially which means that bankers can't get really, really rich which means that the entire artifice of the current world falls to pieces.

Why do you hate America?

Re:Shouldn't it be understood... (1)

TWX (665546) | about 8 months ago | (#46435295)

I don't actually want a specie-based economy, as either the value of the specie has to fluctuate with the value of the currency, or else as you state, the amount of money in circulation is limited.

I prefer the other option I discussed for this very reason.

Re:Shouldn't it be understood... (2)

VortexCortex (1117377) | about 8 months ago | (#46435049)

It also doesn't help that Bitcoin, in of itself, has no intrinsic value, and it can be argued that as far as real-world value goes it's actually a detriment as it takes fairly significant resources to run the computers to competitively generate bitcoins and it's possible and even quite likely that people will lose their private keys and thus will lose access to bitcoins.

So, it costs nothing to create a new wallet. Considering your regular online banking scenario which is vulnerable to all the same exploits, It's quite secure enough and far more economical to transfer some money into Bitcoin and send it to someone else who converts it back into the currency of their choice rather than pay a wire transfer fee. That is the value of Bitcoin to me.

I'll also point out that the Bitcoin generation is incentive to sign the transactions, and the generation of Bitcoin will stop. When it does it will still be valuable as a transport medium for digital tokens representing currency, and the transaction fees will reflect this.

Re:Shouldn't it be understood... (1)

TWX (665546) | about 8 months ago | (#46435315)

It costs nothing to create a new wallet? What kind of argument is that? It's the contents that matter, not the wallet itself. If one loses access to all of one's accumulated wealth then one is done for.

At least the banks, the FDIC, and the NCUA guarantee the money of depositors in the event of a banking system problem. If they didn't then no one would keep their money in banks

Re:Shouldn't it be understood... (1)

codebonobo (2762819) | about 8 months ago | (#46434497)

And if you don't want to rely in third-party gatekeepers, how most people will use it? In your phone? in your (for the majority, windows) pc?

Once you begin to use wallets on smartphones and your personal computer you begin to realize how much easier it is and more secure(If you follow a few basic rules) than anything else. It is easier, more flexible, and a lot more inexpensive than online banking. The problem with Bitcoin right now is that it is still in its early developmental stages where even though I find it extremely easy to secure, my grandmother doesn't without relying on a third party. Software and wallets are becoming more user friendly for the less technical people everyday and pretty soon hardware wallets will shrink down to the size of a key chain attachment and be found everywhere.

Re:Shouldn't it be understood... (2)

ttucker (2884057) | about 8 months ago | (#46435011)

This is kind of bullshit, because even with encryption, you are still only a keystroke logger away from having all of your bitcoins stolen. Think, any time that you get a trojan, or become a botnet client, your money could be stolen... forever. Unlike credit cards and bank accounts, bitcoin transactions are not reversible.

Re:Shouldn't it be understood... (2)

codebonobo (2762819) | about 8 months ago | (#46435291)

Wallets only ask for passcodes when you spend or create new transactions so even if you have an infected computer it is very difficult to capture the passcode. The trojan would have to find and actively monitor the target for some time and thus is why such thefts are extremely rare at the moment.

Cold storage makes bitcoin safe from all trojans and viruses. This is what I refer to when following a few basic rules that are easy for geeks but too complicated for my grandmother. This is why there is a role for multisig hot wallets to remove risk and hardware wallets in the future to eliminate these risks and still be usable by the technically illiterate.

Re:Shouldn't it be understood... (1)

ttucker (2884057) | about 8 months ago | (#46435517)

With a known wallet application, a torjan need only sit and wait for someone to use it. For many users, good botnet trojans go un-noticed for months or years. Cold storage is much safer, and a hardware wallet would be great. Computer wallets are a false sense of security.

Re:Shouldn't it be understood... (3, Interesting)

zippthorne (748122) | about 8 months ago | (#46434317)

Wasn't it obvious that governments are going to have a problem with it due to a lack of ability to regulate/tax,

No, just the opposite in fact, because of the block chain. It's clearly more trackable than regular money. Governments might oppose it, but not for this reason.

banking systems are going to have a problem with it due to their not having a role in something that could be lucrative

Yes, this is obvious. The problem with bitcoin for banks is that inflation is mathematically defined - they can't just print more on a whim, they have to actually do something to generate more.

I imagine it is possible that a bank-designed crypto currency could have properties that are favorable to the banks in this way, but I think those might have a hard time gaining adoption. We've already got a currency that robs its holder of 2% of its value every year by design, why would we need another?

criminals are going to be interested in exploiting the lack of government oversight in order to either profit through its use or through outright theft?

Did you not already mention bankers? Non-banker criminals who are wise will stay well away from anything that has a list of all transactions ever associated to it by design. I think that we probably want criminals to choose crypto currency because they will be easier to prosecute!

Wise criminals probably just go into banking.

Re:Shouldn't it be understood... (0)

Anonymous Coward | about 8 months ago | (#46434345)

^ very good post . +1 from me . Wall street bankers probably steal more than any "thing" else on this planet.

Re:Shouldn't it be understood... (1)

codebonobo (2762819) | about 8 months ago | (#46434639)

We've already got a currency that robs its holder of 2% of its value every year by design, why would we need another?

USD actually robs users of 7-13% a year; 2-4% inflation is a ruse. The CPI was "adjusted" to not include tracking inflation from items such as fuel and food, which IMHO are essential to us all. USD and the Euro are far better than many other currencies which further emphasizes the need for Bitcoin because it isn't just about solving first world problems but lending assistance to countries with hyper-inflation or the unbanked.

Re:Shouldn't it be understood... (2)

ttucker (2884057) | about 8 months ago | (#46435043)

Non-banker criminals who are wise will stay well away from anything that has a list of all transactions ever associated to it by design.

This is misguided at best. Bitcoin transactions are not reversible, so unlike credit card/bank account fraud, the criminal can directly profit. In most cases, the theif is not in a jurisdiction that particularly cares, and their only impediment is finding a money mule with credentials to receive the money and re-transmit it in a non-reversible way (Western Union). I guess at least bitcoin protects the people who fall for Nigerian money mule schemes...

Re:Shouldn't it be understood... (1)

TWX (665546) | about 8 months ago | (#46435327)

The block chain does not have names associated with it. Governments may well know that transactions have occurred, but they do not necessarily know who made the transactions, nor is there a method by which to automagically pay any required taxes during the transaction itself.

It aint fishy .. it's sea food (2)

invictusvoyd (3546069) | about 8 months ago | (#46434325)

Presiding over it all was CEO Mark Karpeles, who uses the online moniker MagicalTux. The attendant image of Karpeles as a stage magician may now inflame Mt. Gox customers who suspect their losses are due to sleight of hand, not sloppiness or outside thieves.

I make exchange sight
I get beetcoin
I get more beetcoin
I get some more beetcoin
some more ....
and .. POOF .. it's all gone ..
Thank you come again

Re:Shouldn't it be understood... (1)

codebonobo (2762819) | about 8 months ago | (#46434393)

Bitcoin is interesting, but for something so libertarian requires way too much third-party interaction in order to practically use it, and those third-party gatekeepers are the perfect targets.

Bitcoin was designed to remove the need to use gatekeepers or third parties. There is absolutely no need to use any exchange once you enter the ecosystem. Once you have some bitcoins and accept bitcoins for payment there is no need to store your assets in hot wallets or exchanges especially since you can purchase almost anything directly with bitcoin right now.

Re:Shouldn't it be understood... (0)

Anonymous Coward | about 8 months ago | (#46434713)

...especially since you can purchase almost anything directly with bitcoin right now.

HAHAHAHAHAHA!!!! Oh wait...you're serious, aren't you?

Re:Shouldn't it be understood... (1)

codebonobo (2762819) | about 8 months ago | (#46435479)

HAHAHAHAHAHA!!!! Oh wait...you're serious, aren't you?

The fact that there exists individuals who live exclusively using Bitcoin as a currency is testament to the amount of items you can buy with it directly or you could always buy gift cards with gyft or egifter(I.E. amazon) for free to be able to fill in the gaps of possible items you can buy.

Fuel, cars, land, and other big ticket items are now sold directly with Bitcoin.

Re:Shouldn't it be understood... (1)

ttucker (2884057) | about 8 months ago | (#46435069)

Arbitrage between existing currency and bitcoin is essential to its continued success.

Re:Shouldn't it be understood... (1)

codebonobo (2762819) | about 8 months ago | (#46435247)

Good point. There is a role for trustless decentralized exchanges and muti-sig exchanges here.

Re:Shouldn't it be understood... (1)

ttucker (2884057) | about 8 months ago | (#46435575)

Is it really possible to have an exchange that is not based on trust? I have hesitated to buy any bitcoin, because Mt Gox did not seem trustworthy; but would gladly buy them from a bank.

Tulips are the next big thing (2, Funny)

mrmeval (662166) | about 8 months ago | (#46434413)

Buy all you can. :)

The only thing that cannot be fudged is that we cannot make. Gold keeps it's spending power over long stretches of time.

Re:Tulips are the next big thing (2)

Mashdar (876825) | about 8 months ago | (#46434631)

Right. The value of gold is based on supply and intrensic industrial value. 95%+ of the value of gold is purely speculative. Just because it is shiny and limited does not make it safe. Anything used as a currency is going to have an artificial value far in excess of its tangible value. Hope you didn't buy in 1980, or you are still missing half of your money. http://commons.wikimedia.org/w... [wikimedia.org]

Re:Shouldn't it be understood... (1)

Anonymous Coward | about 8 months ago | (#46434747)

"third-party gatekeepers are the perfect targets"

Mtgox is not a target here, mtgox is the attacker. By now its pretty damn certain that mislaying half a billion $ worth bitcoins did not happen by accident. Make no mistake, nobody stole from mtgox, mtgox itself pulled off the biggest heist in bitcoin history. Mtgox-es sad story about how they got hacked holds no water, its nonsense.

U like it better... (0)

Anonymous Coward | about 8 months ago | (#46434277)

On "INVISO-POWER"...

Code running the "sight?" (-1)

Anonymous Coward | about 8 months ago | (#46434293)

Fuck you, timothy, you illiterate piece of shit.

I don't want to be a spelling nazi but... (2, Informative)

140Mandak262Jamuna (970587) | about 8 months ago | (#46434307)

the code running the sight was a mess,

is particularly irritating.

Learning from history (2)

sphealey (2855) | about 8 months ago | (#46434321)

I believe it was the Medici family which first documented the need for bank regulation in the 1500s, although it is possible that other civilizations with extensive merchant activity may have realized that earlier but not left records. Bank and banking system failures in the 1600s, 1700s, 1800s, and early 1900s led all nations with large merchant, industrial, and financial economies to pass and implement banking regulation, oversight, and auditing requirements.

Bitcoin? "Freedom!"

sPh

Re:Learning from history (1)

codebonobo (2762819) | about 8 months ago | (#46434503)

Bitcoin is regulated. It is regulated by the users and the protocol rather than a central authority than can be corrupted or one in which sociopaths naturally gravitate to.

Re:Learning from history (0)

Anonymous Coward | about 8 months ago | (#46434629)

which first documented the need for bank regulation in the 1500s

Not quite the first. [wikipedia.org]

--
[taiwanjohn: posting as A/C to preserve mods]

Get your popcorn ready! (0)

Anonymous Coward | about 8 months ago | (#46434329)

Bitcoin can't and won't survive without regulation, and all (most) countries have said they won't, so... Many a fool and his money shall soon part. ; ) it'll be interesting to watch. 500 million dollars go missing, and the funny thing is governments don't really seem to care that anti-government investors lost their ass. LOL

Re:Get your popcorn ready! (4, Insightful)

arth1 (260657) | about 8 months ago | (#46434441)

Bitcoin can't and won't survive without regulation, and all (most) countries have said they won't, so... Many a fool and his money shall soon part. ; ) it'll be interesting to watch. 500 million dollars go missing, and the funny thing is governments don't really seem to care that anti-government investors lost their ass. LOL

What's important to realize is that the dollars won't go missing. They're still around - they have just changed hands. And that seems to be the real purpose of Bitcoin - have real money change hand, and mostly to the early adopters and those who get out in time.

In itself, bitcoins have no value. The only value comes from what other values people exchange bitcoins for. It's a parasite economy that depends on non-bitcoin money for backing.

And it's irrelevant. Can we forget it soon, like we've forgotten other ponzi/pyramid/tulip schemes? It's not worth mentioning - let fools and crooks shift real money around between themselves. The losers will deserve it, and while the winners don't, they're not worth losing sleep over.

Re:Get your popcorn ready! (1)

codebonobo (2762819) | about 8 months ago | (#46434675)

In itself, bitcoins have no value. The only value comes from what other values people exchange bitcoins for. It's a parasite economy that depends on non-bitcoin money for backing.

By this logic, paypal, western union, moneygram, ect.. are all worth nothing and the stockholders are being fleeced.

Re:Get your popcorn ready! (2)

SlaveToTheGrind (546262) | about 8 months ago | (#46434875)

In itself, bitcoins have no value. The only value comes from what other values people exchange bitcoins for. It's a parasite economy that depends on non-bitcoin money for backing.

What distinction do you think you're striking between BitCoin and "real money"? You can just as easily use your same construct to (correctly) say, "in itself, the U.S. dollar has no value. The only value comes from what other values people exchange U.S. dollars for." This is the very definition and role of currency.

And it's irrelevant. Can we forget it soon, like we've forgotten other ponzi/pyramid/tulip schemes? It's not worth mentioning - let fools and crooks shift real money around between themselves. The losers will deserve it, and while the winners don't, they're not worth losing sleep over.

I don't understand how you qualitatively distinguish the BitCoin bubble from, for example, a stock bubble, or even the price of a stock being moderately driven up higher than its fundamentals will bear. The same thing happens -- when the music stops, the last to buy gets left holding the bag, right? Do you consider yourself to "deserve it" when your 401(k) goes down because your fund manager didn't get out in time?

Re: Get your popcorn ready! (0)

Anonymous Coward | about 8 months ago | (#46434881)

It's a parasite economy that depends on non-bitcoin money for backing.

Well, it depends on people to accept it as payment, just like any other fiat currency. The notion that bitcoins should be tied to real world money, that exchanges are required, etc is probably were the current trouble with bitcoin resides.

Re: Get your popcorn ready! (1)

arth1 (260657) | about 8 months ago | (#46435701)

Look at the very title of this submission. The "Missing Millions" are a reference to money, not Bitcoin.
That pretty much sums up Bitcoin and how it doesn't stand on its own.

Irony at all? (0)

Notabadguy (961343) | about 8 months ago | (#46434331)

Does anyone else find it ironic that THIS messed up sight is posting an article about another messed up sight?

Timothy, you're not literate. Don't be hypocritical. Yeah, Mt. Gox was screwed up. So is Slashdot. And /. beta. And you.

Re:Irony at all? (0)

Anonymous Coward | about 8 months ago | (#46434383)

Does anyone else find it ironic that THIS messed up sight is posting an article about another messed up sight?

I hope you're trying to be ironic.

Timothy, you're not literate. Don't be hypocritical. Yeah, Mt. Gox was screwed up. So is Slashdot. And /. beta. And you.

Slashdot is fine. And when the Betoddlers did their little boycott the other week there was a marked improvement in discussion quality, which actually makes me want Slashdot to accelerate the Beta schedule. That, and the fact that a feature complete Beta looks likely to be a HUGE improvement over D2.

Please, go to Soylent News and leave us adults alone.

- squiggleslash (posted AC because this is off-topic)

Bit coin is highly misunderstood by many (5, Interesting)

140Mandak262Jamuna (970587) | about 8 months ago | (#46434349)

Most people think bitcoin is an anonymous digital cash, totally untraceable. But the basic fact is, bitcoin is the very opposite of anonymity. All the transactions of all the people are public and is verified by multiple entities. Bit coin blocks are like pages of a bank ledgers and multiple copies of are floating around the world, copied and replicated.

The only anonymity the users have is the notion, these bitcoin wallets exist only in the bitcoin universe and it can not be linked to real life entities. This is a big assumption to make. Whenever bitcoin universe intersects real universe there is potential for the anonymity to be broken. A vendor delivering goods maintaining records like "bitcoin wallet xxx placed order for yyy delivered to address zzz" will link the wallets to real identities and clues.

I thought "These blocks go well into the past, so people who have conducted illicit transactions in the past also have their wallets linked to the transactions. These can not be erased or modified. Multiple copies of the blocks exist. So the law enforcement can catch them years from now". More informed slashdotters explained that those "expired" blocks have been purged from most miners. Only their final checksums were carried forward. So past transactions to buy drugs or something can not be decrypted.

But NSA and other agencies have been sucking up internet traffic like a giant vacuum. They know more about the value of the blocks being validated (Mining is a misleading term. Mining is repeatedly validating the block till the checksum meets a criterion). Those blocks exist in the vault.

So yes, every time a drug dealer or a hired assassin gets nabbed and his/her bitcoin wallet gets decoded, all the wallets that dealt with him will be recovered. The web will grow. There is potential for a very large number of people to be caught by the law years after their "illegal" activity happened. If it is a time bound offense they might be lucky. But there is no statuette of limitation for murder and other higher felonies. Bitcoin blocks might turn out to be a huge law enforcement tool after all.

But most likely to catch illegal downloads than drug dealing, given the tenacity and connections of MPAA and RIAA.

Re:Bit coin is highly misunderstood by many (2)

goodmanj (234846) | about 8 months ago | (#46434463)

Agree. The ratio of people talking about Bitcoin to people who know *anything* about how it works is astounding.

More informed slashdotters explained that those "expired" blocks have been purged from most miners.

When I first read the details of the Bitcoin system, this is the point at which I got a gigantic sinking feeling in my chest.
The documentation said, "Look, we keep a distributed record of all bitcoin transactions!", and I said,
"Well that does make it vulnerable to law enforcement, but that means it can't be stolen which is awesome." And then it said,
"And then after a while we throw those records out."
"...so all I've got to do is conceal my theft until the records get purged?"
"Pretty much!"
"..."

Re:Bit coin is highly misunderstood by many (2)

Connie_Lingus (317691) | about 8 months ago | (#46434549)

oh...and the idea that someone might have been throwing the daily blockchain into a git repos probably never occurred to anyone, not even developers or exchange makers or government agencies whose job it is to track everyfuckingthing we do on the net.

like you said...
"..."

Re:Bit coin is highly misunderstood by many (2)

codebonobo (2762819) | about 8 months ago | (#46434721)

"And then after a while we throw those records out." "...so all I've got to do is conceal my theft until the records get purged?" "Pretty much!" "..."

This is factually incorrect. Transaction pruning or using Simplified Payment Verification clients like electrum only is an option for those not wanting to run a full node and download the whole blockchain. Many run full nodes and there will alway be distributed full records of all transactions.

Re:Bit coin is highly misunderstood by many (0)

Anonymous Coward | about 8 months ago | (#46434815)

umm... no, no transaction ever gets thrown out, you can verify the entire blockchain starting from genesis block, no problems.

Re:Bit coin is highly misunderstood by many (2)

mysidia (191772) | about 8 months ago | (#46435369)

"And then after a while we throw those records out."

No... the full Blockchain contains every transaction ever made.

Not every Bitcoin client needs to download the full blockchain, which is what he must have been talking about.

The Bitcoin network doesn't "forget" the details of transactions --- the record is indeed permanent.

Re:Bit coin is highly misunderstood by many (2)

kencurry (471519) | about 8 months ago | (#46434599)

Doesn't this story of MtGox completely invalidate the idea of Bitcoin? It was made to appear safe due to an algorithm, but obviously it can disappear without a trace and then what? There was never any sovereign authority behind that currency. Thus no international muscle to go track down the bad guys or figure out what happened. If anything, the international banking community will simply say "told you so..."

Re:Bit coin is highly misunderstood by many (2)

codebonobo (2762819) | about 8 months ago | (#46434757)

Doesn't this story of MtGox completely invalidate the idea of Bitcoin? It was made to appear safe due to an algorithm, but obviously it can disappear without a trace and then what? There was never any sovereign authority behind that currency. Thus no international muscle to go track down the bad guys or figure out what happened. If anything, the international banking community will simply say "told you so..."

Exactly the opposite. Mtgox's failure stresses the need for the original purpose of Bitcoin; removing the need for counter-party trust. Storing your assets in any third party or hot wallet goes against the intention of the Bitcoin protocol and is foolhardy. Bitcoin is just as susceptible to being stolen by con artists, governments, and corporations as greenbacks are. Some users learned the hard way that Bitcoin is as safe or dangerous as you choose to make it.

Re:Bit coin is highly misunderstood by many (0)

Anonymous Coward | about 8 months ago | (#46434831)

No not really, bitcoin is like cash, if you give cash to a crook, you are unlikely to ever see that money again. Same deal with mtgox, people trusted money to mtgox and bad news, people are not getting it back. And its a good bet that mtgox owners/employees themselves made off with it.

Nothing wrong with bitcoin itself here. Lots of people simply got scammed by mtgox.

Re:Bit coin is highly misunderstood by many (1)

Anonymous Coward | about 8 months ago | (#46434785)

Wallet and address are not the same thing, an wallet should contain lots and lots of addresses, with no way from outside to see that any of these addresses are connected in any way.

No bitcoin is not totally anonymous, but its not that easy to pin transactions to people as you make it out to be. With proper countermeasures (that you would certainly take if you were doing something illegal) it would be pretty much impossible to match money to person.

If you pay for drugs and taxes from the same address you are simply being a moron and its your own fault for getting caught.

Re:Bit coin is highly misunderstood by many (0)

Anonymous Coward | about 8 months ago | (#46435323)

The problem with that idea is that you somehow have to get the money to your addresses.
It doesn't matter if you have 1000 of them. The transfer of dollars to bitcoins can and will be tracked.
And if you use bitcoins to buy anything non-anonymous that address can be connected to you in that way.
Of course you could set up an elaborate automated transaction script that continually creates new addresses and moves the bitcoins around through them.

Re:Bit coin is highly misunderstood by many (1)

140Mandak262Jamuna (970587) | about 8 months ago | (#46435363)

With proper countermeasures (that you would certainly take if you were doing something illegal) it would be pretty much impossible to match money to person.

Qualifiers like "with proper countermeasures", "when it is done right", "if used in sufficient quantity" etc make the entire sentence meaningless. Anytime some one does get caught, you would just say "nah, he did not take proper countermeasures", "he didn't do it right", "he did not use it enough" etc.

So let us change it to reasonable countermeasures. And throw in a law enforcement agency with great power and resources, and throw in entities like MPAA, RIAA and the copyright shakedown artists, what countermeasures would be reasonable and sufficient?

My guess is, they won't use decoded dead blocks to track down assassins, it is hard work, but nothing more than glory as the paydirt. But torrent downloaders be on guard, they are gonna get you.

Re:Bit coin is highly misunderstood by many (2)

AmiMoJo (196126) | about 8 months ago | (#46435261)

The anonymous aspect is that when you mine Bitcoins you can do so anonymously. It isn't very practical any more as you need to be part of a pool to stand much chance of actually earning many, but in theory you can create them in an untraceable way (with the usual caveats about using Tor properly etc.)

You can also spend them anonymously if it is only on stuff that doesn't require anyone to know your identity or interact with you, so basically donation. Might indirectly benefit you, such as a fund to have someone you don't like assassinated. For the most part though it is hard to actually use Bitcoins anonymously. You also have the problem of Bitcoin addresses being linked, so when mining you need to keep creating new addresses with each new coin you mint, and ideally spend them in exact multiples of one since spending 0.5 BTC twice from the same address links the two transactions.

I have no more sympathy for anyone (4, Insightful)

oscrivellodds (1124383) | about 8 months ago | (#46434379)

who has lost real money by "investing" in Bitcoins than I have for anyone who lost real money by "investing" in beany babies. Like my momma always told me, "stupid is as stupid does".

Re:I have no more sympathy for anyone (1)

TheRealMindChild (743925) | about 8 months ago | (#46435019)

To be fair, beanie babies didn't have a limited production. When they flooded the market to where McDonalds was giving them out with happy meals, that was their demise. If they would have kept or even lowered production instead, they still might have value.

Re:I have no more sympathy for anyone (1)

oscrivellodds (1124383) | about 8 months ago | (#46435637)

to be fair? You have misunderstood the fundamental concept of value. Limited production of something does not automatically confer value.

For an extreme example that illustrates the point, I produce a very limited amount of poop each day, and after I die, there will never be any more of my brand produced, yet no one wants to pay me for it. As rare as it is, no one seems to think it has value, and other than as fertilizer for maybe one or two plants, they are correct.

Beany babies, like bitcoins, had no value. They were a silly bean-bag toy the likes of which can be purchased for next to nothing at any toy store, but somehow got promoted sufficiently into fooling a few people into thinking they had value. The suckers have beany babies (bitcoins) and all the associated service providers who took advantage of them operated with real money. It's called "shearing the sheep".

Re:I have no more sympathy for anyone (1)

mysidia (191772) | about 8 months ago | (#46435409)

It's fine. You have no duty to sympathize for people who took a big risk and lost, on the other hand, if you withhold sympathy, then you have no right to envy those who took a big risk and succeeded.

Personally... I think Bitcoin represents many huge opportunities. Not in buying coins, though.

It represents an opportunity for businesses to accept coins as payment for goods or services (that they promptly convert back to fiat dollars).

Since there are so few good Bitcoin-related businesses, and there is an ecosystem, with many people running around with Bitcoins, there are plenty of potential opportunities for business to profit, regardless of what direction the currency's value takes for the near term.

Re:I have no more sympathy for anyone (1)

oscrivellodds (1124383) | about 8 months ago | (#46435661)

Characterizing an "investment" in bitcoins as a big risk is being very generous. Bitcoin was designed from the start to be a vehicle to steal from those gullible enough to convert real money into it.

I have a better investment idea- send me your money and I absolutely guarantee that you'll get 1/2 of it back. That's a better deal than you'll get with bitcoin! Does bitcoin offer a guaranteed return? Of course not.

Nothing goes right when potheads run the bank. (1)

Anonymous Coward | about 8 months ago | (#46434403)

Mt. Gox was run by a drug-addled manchild. How is this outcome surprising at all?

The drug culture is fundamentally incompatible with responsible adult life, and especially banking. Just look at what our coke-addled bankers did in the US! Nothing new here..

Turns out bankers aren't worthless. (1)

goodmanj (234846) | about 8 months ago | (#46434425)

Turns out those evil corporate bankers with their evil statist money turn out to have some useful skills. Like, they know how to prevent the theft of a good chunk of all the money in their world. Apparently it involves boring stuff like spreadsheets and regulations and corporate hierarchy rather than algorithms, so that's kind of a drag, but so it goes.

Re:Turns out bankers aren't worthless. (1)

codebonobo (2762819) | about 8 months ago | (#46434587)

Interesting bit of revisionism if you are implying that spreadsheets and regulations are more efficient at preventing theft. Con-artists and Sociopaths naturally will manipulate and steal from traditional investors and the Bitcoin community alike. The difference with Bitcoin is that it takes a majority of the community to steal wealth from the economy(and thus irrationally devaluing their own savings) vs less than 1% that routinely manipulate and steal with fiat.

Re:Turns out bankers aren't worthless. (0)

Anonymous Coward | about 8 months ago | (#46435047)

So, you're saying that the majority of the community drove Mt Gox into bankruptcy?

Re:Turns out bankers aren't worthless. (1)

codebonobo (2762819) | about 8 months ago | (#46435433)

So, you're saying that the majority of the community drove Mt Gox into bankruptcy?

Why would you suggest a 10 person company equals a majority of the community? No, I was referring to the inherent theft which is a feature of fiat currencies were your savings are devalued by 5-13% per year in "stable" countries and 20-60% per year in countries with hyperinflation.

It takes 51% of the users to change Bitcoin monetary policy with a hard fork and even after the fact there could exist 2 separate currencies where the other users aren't effected by the theft through inflation, bail outs, and quantitative easing policies. With fiat currencies a few people can make this decision on behalf of everyone even against their wishes.

"Missing millions" (0)

Anonymous Coward | about 8 months ago | (#46434511)

Trick question. There are no missing "millions", because BTC is a completely artificial construct with no actual value.

The only "millions" that came out of BTC is all the extra revenue hardware manufacturers came up with with everyone decided to buy half a dozen video cards to cram into their PC for mining.

Re:"Missing millions" (1)

ArcadeMan (2766669) | about 8 months ago | (#46434533)

In short, buy AMD and nVidia stock. Especially nVidia, with their new Maxwell GPUs.

Re:"Missing millions" (1)

Baldorcete (1184665) | about 8 months ago | (#46435033)

Video cards are ineficient now for Bitcoin. Mining has moved to ASICs.

good news imo (1)

Connie_Lingus (317691) | about 8 months ago | (#46434517)

"Tokyo police are now scratching their heads. "The National Police Agency seems to lack the ability to analyze the bitcoin trading history of Mt. Gox," a government official told a source probing the investigation."

that's not a bug, it a feature.

Re:good news imo (1)

Kaenneth (82978) | about 8 months ago | (#46434969)

I swear the Japanese police 'scratch their heads' so often, they should be checked for lice.

what a coincidence! (2)

slashmydots (2189826) | about 8 months ago | (#46434565)

Hey, what a coincidence! My company is doing poorly because it's run by incompetent idiots too! Small world, huh?

I never really understood bitcoin (0)

FuzzNugget (2840687) | about 8 months ago | (#46434753)

Now, I'm reasonably technologically proficient, but I couldn't ever wrap my head around it. So, there's this virtual currency that can be "mined"? What exactly is being mined? Cryptographic calculations? What gives it its value? Simply that it's a new calculation? It all seems like trying to making something out if nothing, which inevitably ends up being nothing.

The value of real money is in being a by-currency for minerals and materials with actual, practical utility. Where is the practical utility for bitcoin?

Re:I never really understood bitcoin (1)

codebonobo (2762819) | about 8 months ago | (#46434849)

The value of real money is in being a by-currency for minerals and materials with actual, practical utility. Where is the practical utility for bitcoin?

The practical utility of Bitcoin:

1) Provides a deflationary currency in a sea of inflationary options. Useful if you live in a country with mild inflation like the US, extremely useful in countries with hyperinflation like Argentina.

2) Allows you to use escrow for free and remove all counter party risk with mutisig authentications- bitrated.com is one example.

3) A much cheaper and secure payment protocol where you can reduce merchant processing fees 2-7% lower than credit cards and not even worry about the volatility because you instantly transfer into fiat of your choice. - bitpay.com

4) No chargeback risk is great for merchants.

5) No risk of frozen accounts for consumers or businesses.

6) Provide an option in third world banks for the unbanked or underbanked

7) Ability to instantly send money around the world instantly and not have to wait days for wires or ACH payments.

8) Cost to send money is half a cent to nothing for almost any amount you can think of.

9) International currency that gives you the option of not worrying about merchants banning you. An option of free speech where you can donate to non-profits like wikileaks.

10) Smart contract systems, Time locks, DAC's , Oracles, ect....

The list is much larger than this but the important take away is that Bitcoin isn't just a currency but a new technology which is extremely useful because it has over a billion dollars worth of infrastructure behind it and efficiently solves the Byzantines' generals dilemma. It is likely that Bitcoin will be used by most in the future whether they are even aware of it or not because of what it can accomplish just like how most use HTTP and TCP/IP protocols daily and have no idea what they are.

Re:I never really understood bitcoin (0)

Anonymous Coward | about 8 months ago | (#46434867)

Maybe U're close to understanding it .

There's no practical utility
The algorithm is inefficient and impractical at best
The market it was supposedly used on is bust
dangerously close to a ponzy scheme

But, gave us glimpse and insight on how parallel economies could spawn in the future

With oversight like this... (1)

tomhath (637240) | about 8 months ago | (#46434907)

around July 2013, Bitcoin entrepreneur Roger Ver visited Mt. Gox's Tokyo headquarters. He published a video saying he believed the company's withdrawal problems were caused by the "traditional banking system, not because of a lack of liquidity at Mt. Gox."...

In an email interview last week, Ver recalled his meeting with Mt. Gox: "I watched him [Karpeles] log into his online bank account in real time and saw the balances with my own eyes. They had a huge amount of U.S. dollar liquidity at that time."

Yea, that's how a CPA would conduct an audit. No chance of anything sketchy going on with that kind of oversight.

Spaghetti code? (2)

mveloso (325617) | about 8 months ago | (#46435109)

"Spaghetti code" is what developers say when they're confronted by code that exceeds their capacity to understand complexity.

Re:Spaghetti code? (1)

maple_shaft (1046302) | about 8 months ago | (#46435341)

I love this quote.

Depends on the developer (0)

Anonymous Coward | about 8 months ago | (#46435789)

That is quite a good description of spaghetti code. However, there comes a point where complexity exceeds the ability to test and validate.

Having seen the Mt Gox source code, I can verify that spaghetti is quite a good description:
Everything from web rendering, to trade matching, to wallet management, support, database management in a single class
Multi-thousand line procedures which perform complex disparate operations requiring dynamic SQL generation, string processing, input validation, business logic, wallet management, etc. and which might contain over 100 branches and a dozen function exit points
Switch statements that approach 500 lines in length
Large chunks of code commented out as a method of version control

The "sight"? (1)

MXB2001 (3023413) | about 8 months ago | (#46435173)

Idiots.

Total lack of controls (4, Interesting)

Animats (122034) | about 8 months ago | (#46435729)

The main problem with Mt. Gox was not that the code was a mess. It was a lack of basic financial controls. Mt. Gox lacked a chief financial officer, a controller, inside auditors, outside auditors, a board of directors, an audit committee, and a compliance officer. Yet they were doing a billion dollars of transactions a year. It's not even clear that they have a general ledger listing all transactions. Lack of financial controls is usually considered an indicator of fraud. I've been making this point on bitcointalk for the last year. None of the "Bitcoin exchanges" have proper financial controls. None have an outside auditor and published audits. Yet they're handling far too much money to operate that way.

As for "The National Police Agency seems to lack the ability to analyze the bitcoin trading history of Mt. Gox", that seems to be correct. One would think that the Japanese National Police Agency would have a cyber-crime division, but they don't. In 2013, they were trying to beef up their capabilities in the computer area. [japandailypress.com] This is embarassing for a developed country. Today, any sizable financial mess involves computers, and Tokyo is a major financial center. Untangling any business collapse requires computer forensics and forensic accountants.

The Tokyo police have a backup option - putting Mark Karpeles through one of their standard 23-day interrogation sessions. That's probably going to happen at some point.

Mt. Gox didn't have that high a transaction rate. They only did two or three money transactions a minute on average. They had a lot of traffic from people querying their site for market info, but that's all read-only traffic, and they had nginx and Amazon AWS to help with that.

Their use of PHP wasn't the real problem. From the leaked code, a big part of the problem seems to have been that the front-end system that talked to web users also handled the money. Banks have a separation between the front-end web system and the money system, with standard-format transaction items flowing between them. All those transaction items are logged, often by a third system that just does logging. This allows auditing. It's separation of function that's important, not the language. As far as anyone can tell, Mt. Gox had nobody on staff who understood this.

This all screams "inside job". If you're running a business that handles a lot of money and you lack financial controls, you're scared that someone will rip you off. Unless you're the one doing the ripping off.

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