3 ms·

Does this same danger also apply to bitcoin exchanges? Are they heavily guarded? Just wondering...

by copenja 12y ago

jonknee 12y ago
Ask Mt. Gox... Typically an exchange will keep most of its BTC in actual bank vaults. Similar to how you'd store a large amount of gold.
- dobbsbob 12y ago
  They claim they do but there's never been any 3rd party auditing or verification of this that I know of. In the gold business every reliable business has auditing and insurance while so far Bitcoin businesses are run like a regular startup with open offices. Who's cleaning the offices after hours with access to the workstations or servers, who are the hired developers and are they smuggling wallet stealing software inside to transfer to themselves while on a flight to Brazil, who is writing their custom wallet and is it robust, how do we know they didn't copy every address to themselves. Lot's of security questions I've never seen addressed by any of the big exchanges. There was a payment processor startup that posted their office to bitcointalk.org which was floor to ceiling open glass windows with laptops facing the outside. How many binoculars are trained on those laptops across the street to get logins. Some friends of mine trade large amounts of Bitcoin on a regular basis and there's never been much of a delay withdrawing. I doubt they are going to a bank to physically take out printed keys everyday for every transaction over $10,000 or phoning 5 people to combine keys. I bet the backups are kept in a safe deposit box, the cold wallet is likely an offline system anybody can walk up to with some kind of feeble authentication judging by past Bitcoin exchange incompetence. Many of the smaller exchanges are using Blockchain.info wallets as their hot wallet too but won't admit it.
  - krapp 12y ago
    >There's never been any 3rd party auditing or verification of this that I know of. I think that's intended to be a feature and not a bug. With Bitcoin 'third party verification' means other people no longer use a service after you've generously sacrificed your money to demonstrate their incompetence or malice.
dobbsbob 12y ago
Not at all, you can freely walk into most exchange offices. Theoretically an armed robbery of exchanges and payment processors would be the perfect crime. Commit private address to memory or tattoo it on yourself in code, after the robbery forcing them to transfer to your public address and waiting out confirmations turn yourself in to the police and do the 5 yrs. Walk out with millions worth of bitcoins on your arm. (Penalty here is 5yrs, unsure anywhere else). Blockchain.info would prob nickname that address "Hans Grueber"
- peteretep 12y ago
  They'd keep you in indefinitely for contempt of court for not handing over what you'd stolen.
  - dobbsbob 12y ago
    Claim the exchange operator hired you to rob their own business and they have the private key :P
  - jfoutz 12y ago
    IANAL, but in the US, the 5th amendment still protects combination locks, and as far as I can tell, passwords. Prosecutors can be as intimidating as they wish, the government is free to use their magical NSA powers to recover the bitcoin. They can't compel someone to incriminate themselves. giving the wallet address to the prosecutor is effectively admitting to a crime, perhaps just conspiracy, but nonetheless that's self incrimination. Go for memorization over tattooing.
    - aidenn0 12y ago
      They can compel you to enter the passphrase to decrypt your computer so long as there is sufficient evidence that you are capable of doing so. What they can't do is say "only the person who committed this crime knows the password" and then force you to enter the password (since doing so would be self incrimination). It's when it's already known that you could enter the password that you can be compelled to.
    - 12y ago

Does this same danger also apply to bitcoin exchanges? Are they heavily guarded? Just wondering...

by copenja 12y ago

Does this same danger also apply to bitcoin exchanges? Are they heavily guarded? Just wondering...

Ask Mt. Gox... Typically an exchange will keep most of its BTC in actual bank vaults. Similar to how you'd store a large amount of gold.

dobbsbob 12y ago
They claim they do but there's never been any 3rd party auditing or verification of this that I know of. In the gold business every reliable business has auditing and insurance while so far Bitcoin businesses are run like a regular startup with open offices. Who's cleaning the offices after hours with access to the workstations or servers, who are the hired developers and are they smuggling wallet stealing software inside to transfer to themselves while on a flight to Brazil, who is writing their custom wallet and is it robust, how do we know they didn't copy every address to themselves. Lot's of security questions I've never seen addressed by any of the big exchanges. There was a payment processor startup that posted their office to bitcointalk.org which was floor to ceiling open glass windows with laptops facing the outside. How many binoculars are trained on those laptops across the street to get logins. Some friends of mine trade large amounts of Bitcoin on a regular basis and there's never been much of a delay withdrawing. I doubt they are going to a bank to physically take out printed keys everyday for every transaction over $10,000 or phoning 5 people to combine keys. I bet the backups are kept in a safe deposit box, the cold wallet is likely an offline system anybody can walk up to with some kind of feeble authentication judging by past Bitcoin exchange incompetence. Many of the smaller exchanges are using Blockchain.info wallets as their hot wallet too but won't admit it.
- krapp 12y ago
  >There's never been any 3rd party auditing or verification of this that I know of. I think that's intended to be a feature and not a bug. With Bitcoin 'third party verification' means other people no longer use a service after you've generously sacrificed your money to demonstrate their incompetence or malice.

dobbsbob 12y ago

Not at all, you can freely walk into most exchange offices. Theoretically an armed robbery of exchanges and payment processors would be the perfect crime. Commit private address to memory or tattoo it on yourself in code, after the robbery forcing them to transfer to your public address and waiting out confirmations turn yourself in to the police and do the 5 yrs. Walk out with millions worth of bitcoins on your arm. (Penalty here is 5yrs, unsure anywhere else). Blockchain.info would prob nickname that address "Hans Grueber"

peteretep 12y ago
They'd keep you in indefinitely for contempt of court for not handing over what you'd stolen.
- dobbsbob 12y ago
  Claim the exchange operator hired you to rob their own business and they have the private key :P
- jfoutz 12y ago
  IANAL, but in the US, the 5th amendment still protects combination locks, and as far as I can tell, passwords. Prosecutors can be as intimidating as they wish, the government is free to use their magical NSA powers to recover the bitcoin. They can't compel someone to incriminate themselves. giving the wallet address to the prosecutor is effectively admitting to a crime, perhaps just conspiracy, but nonetheless that's self incrimination. Go for memorization over tattooing.
  - aidenn0 12y ago
    They can compel you to enter the passphrase to decrypt your computer so long as there is sufficient evidence that you are capable of doing so. What they can't do is say "only the person who committed this crime knows the password" and then force you to enter the password (since doing so would be self incrimination). It's when it's already known that you could enter the password that you can be compelled to.
  - 12y ago