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What's there to say? This is yet another piece of evidence that Mt. Gox was grossly incompetent. Unfortunately, it's very difficult to prove whether or not th

What's there to say? This is yet another piece of evidence that Mt. Gox was grossly incompetent. Unfortunately, it's very difficult to prove whether or not there was any criminal fraud involved. If there was, and it could be proven, then at least justice could be served. If there wasn't any fraud, and that could be proven, then at least it could be shown that Karpeles was just a bad businessman, not a fraudster, and his name could be cleared. This limbo leaves so many questions unanswered that it's hard to know if we're ever going to find out what truly happened. Mt. Gox recently claimed they found 200,000 BTC that they'd lost track of. If their claim can be taken at face value, then I think it's plausible they may have panicked back when their losses first became clear to them in February, leading them to blame it on malleability even though they didn't really have a clue where their money went or why. They probably felt they had to tell people something, and saying "we lost track of >750,000 BTC for unknown reasons" may have been less desirable than blaming their problems on something tangible, like transaction malleability. Unfortunately for them, it turns out that they were wrong about that. So here we are. All that's been demonstrated is that consumers currently have very little protection in this space, and that patio11 and others were right to warn people to be very careful with bitcoin.

rtpg 13y ago
I'm not necessarily pro-bitcoin, but there's a difference between bitcoin:the protocol and bitcoin: services offered around this. I think this is more another case of pretty incompetent people going into this (probably linked to the fact that a lot of proponents of bitcoin are in it for the ponzi-scheme like qualities of the current environment). Maybe we'll get some people who've taken an accounting class and a concurrency class(necessary but not sufficient conditions) to implement these exchanges one day. The public ledger in particular could be used to establish a good amount of trust with an exchange (publicly-auditable). The only problem being that many bitcoin proponents buy into the myth that bitcoin allows you to remain anonymous, and that the exchanges should be built in the same way as money laundering services. We'll probably see a lot of this so long as the current environment is based around bitcoin being some sort of investment vehicle like gold. Maybe if enough people actually start wanting to use it as a currency, the quality of these services will go up, and we can trust them a bit more. Maybe actually having exchanges bail each other out (see Japanese banks in the 80s/90s) and supplying safety nets would increase trust.
- sillysaurus3 13y ago
  The problem, which I can't figure out a way to solve, is that any exchange can die at any time due to massive theft or failure. When this happens, customers will lose all of their funds. People have mentioned m-of-n transactions as one possible solution, which means that the customer and the exchange both have to approve of any transaction involving the customer's funds. But this may preclude realtime trading, which is usually one of the main purposes of an exchange. It's a tough problem, and there may be a solution. I'm continuing to think about it.
  - M4v3R 13y ago
    Yes, m-of-n addresses are the solution, we use it on Bitalo [0]. It's true that it is less suitable for day traders, and while they make the most of network volume, they are not the only purpose that exchanges exist. Some people just want to buy Bitcoin occasionally, i.e. once a week, month or less frequently. They also want a secure place to store them. I believe that for those people, our service is the perfect answer :). [0] https://bitalo.com/why_bitalo https://bitalo.com/why_bitalo
    - sillysaurus3 13y ago
      Someone brought up that Bitalo isn't really an exchange, but an OTC marketplace, and that fraud is possible. A fraudster in the US can reverse the bank payment in a Bitalo transaction up to 6 months after the BTC has been released from escrow: https://news.ycombinator.com/item?id=7432635 https://news.ycombinator.com/item?id=7432635 You should probably specify that Bitalo is perfect for non-US customers.
      - M4v3R 13y ago
        That's true, in the US only SWIFT transfers should be used to prevent fraud.
    - MichaelGG 13y ago
      Can you explain how this works? I read the page, but I don't quite get it. If Bitalo has one key and I have one key, what's the benefit? - If Bitalo loses their key, I lose my money. - If I lose my key, I lose my money (so I still need backups). - Still need my own keystore device, so it's not more convenient. - If I have a single device and it gets hacked, the attacker can emulate me to Bitalo. - If I have multiple devices, why can't I use m-of-n without Bitalo? I'm not trying to be negative, I just feel I'm overlooking something simple.
nikcub 13y ago
> warn people to be very careful with bitcoin. s/bitcoin/mtgox I withdrew everything I had in Feb '13, the writing had been on the wall for a while even at that point.
- sillysaurus3 13y ago
  There have been like 13 exchanges that have died and taken customers' funds with them, not just Mt. Gox.
Nursie 13y ago
Hmmm. If they have actually lost three quarters of a million bitcoins, in an unrecoverable way (and nobody stole them), that's a HUGE proportion of all the bitcoins there will ever be that have just disappeared into the ether.

rtpg 13y ago

I'm not necessarily pro-bitcoin, but there's a difference between bitcoin:the protocol and bitcoin: services offered around this. I think this is more another case of pretty incompetent people going into this (probably linked to the fact that a lot of proponents of bitcoin are in it for the ponzi-scheme like qualities of the current environment). Maybe we'll get some people who've taken an accounting class and a concurrency class(necessary but not sufficient conditions) to implement these exchanges one day. The public ledger in particular could be used to establish a good amount of trust with an exchange (publicly-auditable). The only problem being that many bitcoin proponents buy into the myth that bitcoin allows you to remain anonymous, and that the exchanges should be built in the same way as money laundering services. We'll probably see a lot of this so long as the current environment is based around bitcoin being some sort of investment vehicle like gold. Maybe if enough people actually start wanting to use it as a currency, the quality of these services will go up, and we can trust them a bit more. Maybe actually having exchanges bail each other out (see Japanese banks in the 80s/90s) and supplying safety nets would increase trust.

sillysaurus3 13y ago
The problem, which I can't figure out a way to solve, is that any exchange can die at any time due to massive theft or failure. When this happens, customers will lose all of their funds. People have mentioned m-of-n transactions as one possible solution, which means that the customer and the exchange both have to approve of any transaction involving the customer's funds. But this may preclude realtime trading, which is usually one of the main purposes of an exchange. It's a tough problem, and there may be a solution. I'm continuing to think about it.
- M4v3R 13y ago
  Yes, m-of-n addresses are the solution, we use it on Bitalo [0]. It's true that it is less suitable for day traders, and while they make the most of network volume, they are not the only purpose that exchanges exist. Some people just want to buy Bitcoin occasionally, i.e. once a week, month or less frequently. They also want a secure place to store them. I believe that for those people, our service is the perfect answer :). [0] https://bitalo.com/why_bitalo https://bitalo.com/why_bitalo
  - sillysaurus3 13y ago
    Someone brought up that Bitalo isn't really an exchange, but an OTC marketplace, and that fraud is possible. A fraudster in the US can reverse the bank payment in a Bitalo transaction up to 6 months after the BTC has been released from escrow: https://news.ycombinator.com/item?id=7432635 https://news.ycombinator.com/item?id=7432635 You should probably specify that Bitalo is perfect for non-US customers.
    - M4v3R 13y ago
      That's true, in the US only SWIFT transfers should be used to prevent fraud.
  - MichaelGG 13y ago
    Can you explain how this works? I read the page, but I don't quite get it. If Bitalo has one key and I have one key, what's the benefit? - If Bitalo loses their key, I lose my money. - If I lose my key, I lose my money (so I still need backups). - Still need my own keystore device, so it's not more convenient. - If I have a single device and it gets hacked, the attacker can emulate me to Bitalo. - If I have multiple devices, why can't I use m-of-n without Bitalo? I'm not trying to be negative, I just feel I'm overlooking something simple.

nikcub 13y ago

> warn people to be very careful with bitcoin. s/bitcoin/mtgox I withdrew everything I had in Feb '13, the writing had been on the wall for a while even at that point.

sillysaurus3 13y ago
There have been like 13 exchanges that have died and taken customers' funds with them, not just Mt. Gox.

Nursie 13y ago

Hmmm. If they have actually lost three quarters of a million bitcoins, in an unrecoverable way (and nobody stole them), that's a HUGE proportion of all the bitcoins there will ever be that have just disappeared into the ether.