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> MtGox was essentially insolvent for most of its existence. This is the biggest worry. How could they have not known about their books? This shows the fundame

> MtGox was essentially insolvent for most of its existence. This is the biggest worry. How could they have not known about their books? This shows the fundamental flaw in cryptocurrencies. There will always be highly motivated and very technical people (Russia and China looking at you) willing to spend hours, days, months attacking or searching for exploits and vulnerabilities to extract coins. This differs from traditional banks which requires a physical bank robbery. Ultimately the incentives for illegal activities, theft, and fraud is just to high without oversight and a central trusted authority.

spraak 9y ago
> This shows the fundamental flaw in cryptocurrencies. Hardly... but if it did, it doesn't mean they're still not worth using and developing. And traditional banks don't require a physical robbery to be hacked.
- deleted 9y ago
  [deleted]
- saalweachter 9y ago
  Traditional banks have insurance. An uninsured Bitcoin exchange, once the first few coins have been stolen, becomes a secret game of musical chairs to see who gets left without the coins they deposited.
  - mrb 9y ago
    Well, some cryptocurrency exchanges have insurance too. For example Coinbase/GDAX is insured by Lloyd's of London, and their USD accounts even have FDIC insurance: https://support.gdax.com/customer/en/portal/articles/2689803-how-deposits-are-insured-on-gdax https://support.gdax.com/customer/en/portal/articles/2689803...
  - quickthrower2 9y ago
    And that insurance is the state.
    - rspeer 9y ago
      Are you expecting gasps of horror in response to your simplistic statement? Oh, no, not the state! Not everybody here is an anarcho-capitalist.
      - quickthrower2 9y ago
        No not expecting gasps of horror at all! Just saying the bank can be bailed out and consumers expecting this can feel a bit safer with their deposits
        rspeer 9y ago
        Oh, I apologize for misinterpreting you. So many of these threads end up with people who think they can replace government with Bitcoin, and I read it in that tone. Incidentally, I believe that there is also a considerable amount of private insurance involved in banking.
        quickthrower2 9y ago
        Thanks to be fair my comment was short and mysterious and in the context of the HN community it's probably been taken the less charitable way. In the UK there is deposit insurance provided by the government as the last stop and that's an amount per financial institution.
- StillBored 9y ago
  Well, they can also reverse transactions, and physically extracting more than a few thousand from an account can be a painful process at most banks, particularly if the money was recently transferred. They just tell you, "sorry we don't have that much cash on hand, it will take us X days to get it, please return on Y."
  - nickonline 9y ago
    In a world with fast payments, that money can be washed and moved and out a dozen atms quite quickly
    - lukeschlather 9y ago
      That's why payments typically take a few days to clear. Bitcoin is designed for instantaneous payments with no rollback, which is an anti-feature.
      - gizmo686 9y ago
        Bitcoin explicitly does not have instantaneous payments. The standard view is to wait for 6 blocks before considering a transaction as "confirmed" Confirming a transaction at 0 blocks leaves you open to a very low cost double spend attack.
  - mrb 9y ago
    A central bank hack lead to $58 million being transferred and withdrawn in cash in just a few days. Permanently lost/irrecoverable... https://en.m.wikipedia.org/wiki/Bangladesh_Bank_robbery https://en.m.wikipedia.org/wiki/Bangladesh_Bank_robbery
  - pavel_lishin 9y ago
    How do you physically extract more than a few thousand from a cryptocurrency exchange?
- wbl 9y ago
  Has a US customer ever lost money from a bank getting hacked?
knocte 9y ago
> This shows the fundamental flaw in cryptocurrencies. You're missing a word: "...flaw in cryptocurrency-centralization entities". Actually cryptocurrencies are achieving the opposite: they're decentralizing security. Exchanges are just a bridge to that world.
- canoebuilder 9y ago
  Put a non-trivial amount of btc in a wallet with a moderately secure password. Oh you'd rather not? It will be swept up almost instantly by any of a myriad of wallet cracking programs running 24/7 for just that purpose. I think nodesocket's point was that to expect the run of the mill computer user, who barely understands what a browser is, to have the security chops to withstand constant attacks from people who not only know what a browser is, but have also devoted substantial time to understanding as many exploits to the crypto-currency systems as they can and who have monetary incentive to continue refining that understanding in pursuit of most likely consequence free(apart from their soul) illicit monetary gains, to look at the dynamics at play here, it is not a stretch to assume that expecting widespread adoption in any form is likely to be a losing proposition. What does "decentralizing security" mean? Everyone with any currency to protect will have to implement the digital equivalent of 36 inch fortified walls? Why would they want to do that when most people are satisfied with outsourcing this to service providers who specialize in such things? For some scenarios there is a case to be made for "user defined security" or some-such, possibly even a few legitimate ones that aren't socially hostile. But it's hard to make any convincing case(without using any "semantic sugar," "empty calorie" buzzword-laden phrases like "decentralizing security") against nodesocket's point that the lay of the land of crypto-currency seems hopelessly tilted towards those who would like to exploit it in these ways.
  - benchaney 9y ago
    > Put a non-trivial amount of btc in a wallet with a moderately secure password. Oh you'd rather not? It will be swept up almost instantly by any of a myriad of wallet cracking programs running 24/7 for just that purpose. Most people refuse to invest in Bitcoin because of the possibility of a crash, so this is a completely pointless challenge.
empath75 9y ago
It's not a flaw in cryptocurrency, it's cryptofanatics discovering that we have banking regulations for a reason.
lojack 9y ago
> This differs from traditional banks which requires a physical bank robbery. A traditional bank is still susceptible from similar attacks. Difference being, at banks they're just balance sheets in a database, so forensics and backups can be used to restore balances. Traditional banks also have decades of experience protecting their data.
kaffeemitsahne 9y ago
>This differs from traditional banks which requires a physical bank robbery. Not really. Recent example: http://www.telegraph.co.uk/news/uknews/crime/11414191/Hackers-steal-650-million-in-worlds-biggest-bank-raid.html http://www.telegraph.co.uk/news/uknews/crime/11414191/Hacker...

spraak 9y ago

> This shows the fundamental flaw in cryptocurrencies. Hardly... but if it did, it doesn't mean they're still not worth using and developing. And traditional banks don't require a physical robbery to be hacked.

deleted 9y ago
[deleted]
saalweachter 9y ago
Traditional banks have insurance. An uninsured Bitcoin exchange, once the first few coins have been stolen, becomes a secret game of musical chairs to see who gets left without the coins they deposited.
- mrb 9y ago
  Well, some cryptocurrency exchanges have insurance too. For example Coinbase/GDAX is insured by Lloyd's of London, and their USD accounts even have FDIC insurance: https://support.gdax.com/customer/en/portal/articles/2689803-how-deposits-are-insured-on-gdax https://support.gdax.com/customer/en/portal/articles/2689803...
- quickthrower2 9y ago
  And that insurance is the state.
  - rspeer 9y ago
    Are you expecting gasps of horror in response to your simplistic statement? Oh, no, not the state! Not everybody here is an anarcho-capitalist.
    - quickthrower2 9y ago
      No not expecting gasps of horror at all! Just saying the bank can be bailed out and consumers expecting this can feel a bit safer with their deposits
      - rspeer 9y ago
        Oh, I apologize for misinterpreting you. So many of these threads end up with people who think they can replace government with Bitcoin, and I read it in that tone. Incidentally, I believe that there is also a considerable amount of private insurance involved in banking.
        quickthrower2 9y ago
        Thanks to be fair my comment was short and mysterious and in the context of the HN community it's probably been taken the less charitable way. In the UK there is deposit insurance provided by the government as the last stop and that's an amount per financial institution.
StillBored 9y ago
Well, they can also reverse transactions, and physically extracting more than a few thousand from an account can be a painful process at most banks, particularly if the money was recently transferred. They just tell you, "sorry we don't have that much cash on hand, it will take us X days to get it, please return on Y."
- nickonline 9y ago
  In a world with fast payments, that money can be washed and moved and out a dozen atms quite quickly
  - lukeschlather 9y ago
    That's why payments typically take a few days to clear. Bitcoin is designed for instantaneous payments with no rollback, which is an anti-feature.
    - gizmo686 9y ago
      Bitcoin explicitly does not have instantaneous payments. The standard view is to wait for 6 blocks before considering a transaction as "confirmed" Confirming a transaction at 0 blocks leaves you open to a very low cost double spend attack.
- mrb 9y ago
  A central bank hack lead to $58 million being transferred and withdrawn in cash in just a few days. Permanently lost/irrecoverable... https://en.m.wikipedia.org/wiki/Bangladesh_Bank_robbery https://en.m.wikipedia.org/wiki/Bangladesh_Bank_robbery
- pavel_lishin 9y ago
  How do you physically extract more than a few thousand from a cryptocurrency exchange?
wbl 9y ago
Has a US customer ever lost money from a bank getting hacked?

knocte 9y ago

> This shows the fundamental flaw in cryptocurrencies. You're missing a word: "...flaw in cryptocurrency-centralization entities". Actually cryptocurrencies are achieving the opposite: they're decentralizing security. Exchanges are just a bridge to that world.

canoebuilder 9y ago
Put a non-trivial amount of btc in a wallet with a moderately secure password. Oh you'd rather not? It will be swept up almost instantly by any of a myriad of wallet cracking programs running 24/7 for just that purpose. I think nodesocket's point was that to expect the run of the mill computer user, who barely understands what a browser is, to have the security chops to withstand constant attacks from people who not only know what a browser is, but have also devoted substantial time to understanding as many exploits to the crypto-currency systems as they can and who have monetary incentive to continue refining that understanding in pursuit of most likely consequence free(apart from their soul) illicit monetary gains, to look at the dynamics at play here, it is not a stretch to assume that expecting widespread adoption in any form is likely to be a losing proposition. What does "decentralizing security" mean? Everyone with any currency to protect will have to implement the digital equivalent of 36 inch fortified walls? Why would they want to do that when most people are satisfied with outsourcing this to service providers who specialize in such things? For some scenarios there is a case to be made for "user defined security" or some-such, possibly even a few legitimate ones that aren't socially hostile. But it's hard to make any convincing case(without using any "semantic sugar," "empty calorie" buzzword-laden phrases like "decentralizing security") against nodesocket's point that the lay of the land of crypto-currency seems hopelessly tilted towards those who would like to exploit it in these ways.
- benchaney 9y ago
  > Put a non-trivial amount of btc in a wallet with a moderately secure password. Oh you'd rather not? It will be swept up almost instantly by any of a myriad of wallet cracking programs running 24/7 for just that purpose. Most people refuse to invest in Bitcoin because of the possibility of a crash, so this is a completely pointless challenge.

empath75 9y ago

It's not a flaw in cryptocurrency, it's cryptofanatics discovering that we have banking regulations for a reason.

lojack 9y ago

> This differs from traditional banks which requires a physical bank robbery. A traditional bank is still susceptible from similar attacks. Difference being, at banks they're just balance sheets in a database, so forensics and backups can be used to restore balances. Traditional banks also have decades of experience protecting their data.

kaffeemitsahne 9y ago

>This differs from traditional banks which requires a physical bank robbery. Not really. Recent example: http://www.telegraph.co.uk/news/uknews/crime/11414191/Hackers-steal-650-million-in-worlds-biggest-bank-raid.html http://www.telegraph.co.uk/news/uknews/crime/11414191/Hacker...