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So maybe I'm ignorant here, but did they do the transfer over the Internet, or was it a thumb drive taken out of "cold storage" and handed off to someone else.

by glesica 13y ago

So maybe I'm ignorant here, but did they do the transfer over the Internet, or was it a thumb drive taken out of "cold storage" and handed off to someone else. Do we even know? Don't you think there are vulnerabilities in the system for transferring Bitcoins just like there are vulnerabilities in the system for transferring other valuable things?

gwern 13y ago
> So maybe I'm ignorant here, but did they do the transfer over the Internet, or was it a thumb drive taken out of "cold storage" and handed off to someone else. Every bitcoin is controlled by a private key. The private key can be put in 'cold storage', but if I hand you the USB key with a private key stored in a text file on it, you have no way of being sure that I didn't keep a copy elsewhere and in a few minutes will make a transaction sending it to some other private key (which you don't have). So unless you trusted me an extraordinary amount, you would immediately want to make a transaction transferring from the private key on the USB to a new private key you generated just that moment.
Jtsummers 13y ago
> or was it a thumb drive taken out of "cold storage" and handed off to someone else A transaction like this is invisible to the bitcoin network. This would be equivalent to me handing you a 20 USD bill, no one but us (well, there is surveillance, but you get the point) knows what happened. Unlike handing over 20 USD, if I had you a USB drive with a wallet containing 20 BTC, you need to move that money from that wallet to another, because you can't trust it's my only copy. If I have another copy of the private key somewhere I can take that money back at any point by announcing a transaction before you do. So exchanges like this are done via the bitcoin network by specifying a from address and a to address (simplified, other more detailed explanations are out there detailing the actual cryptographic tools and protocols) and an amount. So you provide me an address, I use my private key to encode a transaction from an address containing my 20 BTC to your address. Everyone knows about this, though they may not know who we are as the addresses are pseudonyms and the connection to our real identities may be virtually non-existent. Now, you control that 20 BTC and its spending, and my 20 BTC are gone from my address, I can't spend them again (legitimately at least). Supposing that address now has less than 20 BTC. If I try to spend 20 BTC again the network will consider it an invalid transaction since I can't spend BTC I don't have.

by glesica 13y ago

gwern 13y ago

> So maybe I'm ignorant here, but did they do the transfer over the Internet, or was it a thumb drive taken out of "cold storage" and handed off to someone else. Every bitcoin is controlled by a private key. The private key can be put in 'cold storage', but if I hand you the USB key with a private key stored in a text file on it, you have no way of being sure that I didn't keep a copy elsewhere and in a few minutes will make a transaction sending it to some other private key (which you don't have). So unless you trusted me an extraordinary amount, you would immediately want to make a transaction transferring from the private key on the USB to a new private key you generated just that moment.

Jtsummers 13y ago

> or was it a thumb drive taken out of "cold storage" and handed off to someone else A transaction like this is invisible to the bitcoin network. This would be equivalent to me handing you a 20 USD bill, no one but us (well, there is surveillance, but you get the point) knows what happened. Unlike handing over 20 USD, if I had you a USB drive with a wallet containing 20 BTC, you need to move that money from that wallet to another, because you can't trust it's my only copy. If I have another copy of the private key somewhere I can take that money back at any point by announcing a transaction before you do. So exchanges like this are done via the bitcoin network by specifying a from address and a to address (simplified, other more detailed explanations are out there detailing the actual cryptographic tools and protocols) and an amount. So you provide me an address, I use my private key to encode a transaction from an address containing my 20 BTC to your address. Everyone knows about this, though they may not know who we are as the addresses are pseudonyms and the connection to our real identities may be virtually non-existent. Now, you control that 20 BTC and its spending, and my 20 BTC are gone from my address, I can't spend them again (legitimately at least). Supposing that address now has less than 20 BTC. If I try to spend 20 BTC again the network will consider it an invalid transaction since I can't spend BTC I don't have.