5 ms·

Somebody, one of these days, should design a cryptocurrency whose point is just to NOT get stolen.

by Eliezer 10y ago

DennisP 10y ago
Here's an article by some cryptocurrency researchers, about a proposed anti-theft extension to Bitcoin: http://hackingdistributed.com/2016/02/26/how-to-implement-secure-bitcoin-vaults/ http://hackingdistributed.com/2016/02/26/how-to-implement-se... The same scheme can be implemented as a one-page smart contract on Ethereum: http://www.blunderingcode.com/ether-vaults/ http://www.blunderingcode.com/ether-vaults/ Of course Ethereum had its own giant theft, but that was from a convoluted, poorly-written, and much larger contract. There are ways to avoid the sorts of vulnerabilities that were exploited there: http://www.blunderingcode.com/writing-secure-solidity/ http://www.blunderingcode.com/writing-secure-solidity/ Probably other vulnerabilities will be discovered. But I think simple contracts that secure ether with multiple keys, timelocking, and so on are a pretty good solution for anyone just storing and sending ether. They're also starting to incorporate formal verification of contracts; the online Solidity compiler includes it now, though it doesn't yet support all Solidity features.
patio11 10y ago
I can't believe I'm saying this but: this is not a Bitcoin problem, per se. This is a Bitcoin exchange problem. (Bitcoin has many security problems, in the same way that an overweight smoker has many health problems, but that doesn't mean that smoking caused the gunshot wound.) It's possible to have customer balances of $60 million and not lose them. Thousands of businesses manage this. They suffer $5+ million dollars of damages in less than 0.1% of business-years. (SWAG on a reasonable upper bound-- ask an actuary. This is an insurable risk.) Bitcoin exchanges with this level of deposits sustain $5+ million dollars of damages 20%+ of exchange-years. Running Bitcoin exchange probably requires $10 million a year in engineering and compliance costs, and consequential changes to the business model with an eye towards a) paying for the actual costs of running the business and b) compromising on other things that users/investors care about, like speed of withdraw, degree of engagement with the regulatory state, and growth rate. Instead of making that tradeoff, Bitcoin businesses continue trying to grow at 100%+ YOY on four, five, or six digit risk budgets. And this works... until it doesn't. "How do we not transfer substantially all of our assets to fraudsters?" would be an acceptable job interview question at the Medici bank in the early 15th century. It was a solved problem then.
- legulere 10y ago
  It's as much of a Bitcoin problem as the ethereum DAO hack is a ethereum problem. In a normal banking system you just roll back the transaction, which often is possible. In Bitcoin, what's gone is gone.
  - syngrog66 10y ago
    >In Bitcoin, what's gone is gone. that's true with US cash too. the problem with some of these exchanges is that they essentially have these buildings with $50M+ cash sitting inside them, but they are NOT also running bank vault level security, quality-wise, to protect that stash. some are better than others, but it makes sense that the worst of them will be run by underqualified people. I've had the opportunity to look/study behind the scenes at a few major Bitcoin websites, early on, and... let's just say you never wanted to learn how the sausage in the sausage factory gets made. "This PHP kinda works on my box... Let's ship!"
    - celticninja 10y ago
      Also the attackers have plenty of time to snoop, wait and watch for an opening. If you were breaking into a real bank then hanging around drilling or whatever is very noticeable and limits your options. I assume they are always scanning for unauthorised access but it only takes one chink and they are very attractive prospects for hackers so the motivation is there.
  - deleted 10y ago
    [deleted]
  - xorcist 10y ago
    Bitcoin has problems, but let's not pretend the normal banking system is unhackable, or even possible to roll back. One group did at least four thefts via SWIFT this year using RAT tools in banks, the largest of which netted $80M. Nothing rolled back, no one caught.
    - gozur88 10y ago
isho 10y ago
Bitcoin's security model is fundamentally different from more traditional money transfer system. Security is distributed pushing responsibility to the edges. Individual users must secure their own keys but only those funds are at risk if those keys are compromised. By forcing Bitcoin into a central clearing house model like most of these exchanges are doing you arguably have the worst security properties of both models.

Somebody, one of these days, should design a cryptocurrency whose point is just to NOT get stolen.

by Eliezer 10y ago

Somebody, one of these days, should design a cryptocurrency whose point is just to NOT get stolen.

Here's an article by some cryptocurrency researchers, about a proposed anti-theft extension to Bitcoin: http://hackingdistributed.com/2016/02/26/how-to-implement-secure-bitcoin-vaults/ http://hackingdistributed.com/2016/02/26/how-to-implement-se... The same scheme can be implemented as a one-page smart contract on Ethereum: http://www.blunderingcode.com/ether-vaults/ http://www.blunderingcode.com/ether-vaults/ Of course Ethereum had its own giant theft, but that was from a convoluted, poorly-written, and much larger contract. There are ways to avoid the sorts of vulnerabilities that were exploited there: http://www.blunderingcode.com/writing-secure-solidity/ http://www.blunderingcode.com/writing-secure-solidity/ Probably other vulnerabilities will be discovered. But I think simple contracts that secure ether with multiple keys, timelocking, and so on are a pretty good solution for anyone just storing and sending ether. They're also starting to incorporate formal verification of contracts; the online Solidity compiler includes it now, though it doesn't yet support all Solidity features.

patio11 10y ago

I can't believe I'm saying this but: this is not a Bitcoin problem, per se. This is a Bitcoin exchange problem. (Bitcoin has many security problems, in the same way that an overweight smoker has many health problems, but that doesn't mean that smoking caused the gunshot wound.) It's possible to have customer balances of $60 million and not lose them. Thousands of businesses manage this. They suffer $5+ million dollars of damages in less than 0.1% of business-years. (SWAG on a reasonable upper bound-- ask an actuary. This is an insurable risk.) Bitcoin exchanges with this level of deposits sustain $5+ million dollars of damages 20%+ of exchange-years. Running Bitcoin exchange probably requires $10 million a year in engineering and compliance costs, and consequential changes to the business model with an eye towards a) paying for the actual costs of running the business and b) compromising on other things that users/investors care about, like speed of withdraw, degree of engagement with the regulatory state, and growth rate. Instead of making that tradeoff, Bitcoin businesses continue trying to grow at 100%+ YOY on four, five, or six digit risk budgets. And this works... until it doesn't. "How do we not transfer substantially all of our assets to fraudsters?" would be an acceptable job interview question at the Medici bank in the early 15th century. It was a solved problem then.

legulere 10y ago
It's as much of a Bitcoin problem as the ethereum DAO hack is a ethereum problem. In a normal banking system you just roll back the transaction, which often is possible. In Bitcoin, what's gone is gone.
- syngrog66 10y ago
  >In Bitcoin, what's gone is gone. that's true with US cash too. the problem with some of these exchanges is that they essentially have these buildings with $50M+ cash sitting inside them, but they are NOT also running bank vault level security, quality-wise, to protect that stash. some are better than others, but it makes sense that the worst of them will be run by underqualified people. I've had the opportunity to look/study behind the scenes at a few major Bitcoin websites, early on, and... let's just say you never wanted to learn how the sausage in the sausage factory gets made. "This PHP kinda works on my box... Let's ship!"
  - celticninja 10y ago
    Also the attackers have plenty of time to snoop, wait and watch for an opening. If you were breaking into a real bank then hanging around drilling or whatever is very noticeable and limits your options. I assume they are always scanning for unauthorised access but it only takes one chink and they are very attractive prospects for hackers so the motivation is there.
- deleted 10y ago
  [deleted]
- xorcist 10y ago
  Bitcoin has problems, but let's not pretend the normal banking system is unhackable, or even possible to roll back. One group did at least four thefts via SWIFT this year using RAT tools in banks, the largest of which netted $80M. Nothing rolled back, no one caught.
  - gozur88 10y ago

isho 10y ago

Bitcoin's security model is fundamentally different from more traditional money transfer system. Security is distributed pushing responsibility to the edges. Individual users must secure their own keys but only those funds are at risk if those keys are compromised. By forcing Bitcoin into a central clearing house model like most of these exchanges are doing you arguably have the worst security properties of both models.