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Hey, Sam here, CTO of BitMEX - we're a crypto derivatives exchange that's been open since 2014. When we founded BitMEX, we went through a long period of discuss
by STRML 10y ago
Hey, Sam here, CTO of BitMEX - we're a crypto derivatives exchange that's been open since 2014. When we founded BitMEX, we went through a long period of discussion among the partners on this topic. We were just coming off the low of watching the MTGox heist and it it was obvious that wallets were becoming the #1 point of failure on any exchange.
Ikeboy(sibling comment)'s explanation is as good as you'll get, in my opinion. And you can even skip steps 2 and 3, as we have done for two years on BitMEX.
It's our opinion that customer funds are simply too important to expose to this kind of risk, so we process withdrawals only once a day from airgapped multisig wallets. It's a bear, and it's slow - we developed a few internal tools to make the review process easier and separate signal from noise - but aside from some manual work we've never had a problem.
The #1 surprise, to me, was that customers don't mind the inconvenience. Sure, a few wonder why they can't simply get their funds immediately. But it's explained to them, they seem to appreciate the sensibility of managing this risk seriously. Compared to alternatives like ACH, at least it only takes one day and runs on weekends.
I can't imagine a nightmare worse than losing millions of dollars of other people's money. I hope for Bitfinex's sake that they are able to recover a portion and continue operating. We've spoken personally with much of the team and enjoy the relationship. They - and their customers - don't deserve this loss.
- martinald 10y agoI know in the US you are used to ACH which is dreadful, but in the UK everyone is used to faster payments which allows you to send £100k to anywhere in the UK, often fee free, within 2 hours. Usually it's actually within a few seconds. Waiting a day for a transfer now seems hilariously outdated now to me. I understand there are other benefits to bitcoin but something seems inherently wrong if transfers have to be intentionally delayed so long to make the system more secure.
- 300bps 10y agoI know in the US you are used to ACH which is dreadful, but in the UK everyone is used to faster payments which allows you to send £100k to anywhere in the UK, often fee free, within 2 hours. My understanding is that the inconvenience of ACH is by design - they are security delays. If you need to send money from one account to another instantly, you use a wire. If you have the amount of money in your account that is typical of people that need to send wires, they are often freely included with your higher-end checking account. Wires send the money instantly.
- seanp2k2 10y agoThey send instantly after you sign the document and fax it back, after the bank manager approves the large amount, etc. It still takes a few hours to do the paperwork in my experience.
- adanto6840 10y agoA good bank will allow you to do wires directly from their internet banking suite (commonly requiring 2-factor auth before using their wire-related tools). I commonly see wires hit within ~30 seconds of hitting the "confirm" button, and almost always within <=5 minutes, and that's between separate US banks.
- pjc50 10y ago'Faster payments' for me has a sort of 2FA: first payment to a given recipient causes the bank to call me (automated, not human), and I have to enter the code read out over the phone in order to process the transfer.
- mtkd 10y agoJust putting some kind of velocity protection on the BitGo side could have had the same effect - if transactions from a client are running a few deviations above normal then start to quarantine until confirmation from client they are valid
- softawre 10y agoThey did that, but it was "bypassed" somehow.