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June 21, 2011 / twobitcents

Users Claim MtGox Disregarded Security

A post on the Bitcoin forums details many comments and logs regarding discussions with members of the high-profile trading exchange MtGox that recently has crashed and burned. One log alleges that days before the major events the company was warned about their security flaws – one of which was reported as fixed.

The other, however, well I think we all know that didn’t get fixed.

June 20, 2011 / twobitcents

MtGox Outage Hits Day Two

Just an update that Japanese exchange website MtGox, the largest Bitcoin exchange website, is still down after their security issues started yesterday and crashed their exchange market. While not able to meet their original 2 AM deadline they have responded with this:

We have almost completed the account recovery page and are waiting for result to unit tests and intrusion tests (and more than anything, don’t want to put something online and go to sleep just after, best way to get screwed), so the page will be put online tomorrow morning.

It will allow every user to claim ownership of their account based on proof such as deposits, withdraws, password (if complex enough), email or notarized documentation.

Once it is deemed enough users had the chance to get their account back, the exchange will be open again (opening time will be announced at least 24 hours in advance). It will still be possible to file claims for user accounts after this.

June 19, 2011 / twobitcents

MtGox Hacked: Is It a Bitcoin Problem?

Today (June 19th PST) many witnessed a huge sell-off in Bitcoin on MtGox. That video seems to summarize the reaction and opinion that many had. Another YouTube video claims a large sell-off occurred at $0.01 – so virtually any buy order was being allowed.

Currently the MtGox website redirects to a support article, which claims a single account was comprimised with a large amount of Bitcoin. Posts on the forums are challenging the single account theory, since password lists have been released and others say they logged in before MtGox shut it down and saw something irregular.

Now that we’re all up to speed: Did this have anything to do with Bitcoin as a currency? Many are quick to blame BTC as a digital currency, free market, and who knows what else. Let’s get some things straight here:

  • This happened entirely within MtGox. Graphs you’re seeing in videos and trading numbers reflect this one exchange. From what I understand not many actual BTC trades occurred.
  • Security is always a problem. It’s basically an arms race. Bank accounts, entire banks, companies, credit cards, and cash in a vault gets stolen all the time. As long as there is a market to freely compete it will select the best combination of price and quality.
  • “Bailout?” Are you high? There is no central control in the BTC market. MtGox can play guardian angel – by rolling back transactions – and enjoy the risks of doing so. If people don’t wish to associate with how MtGox handles this situation they may move to TradeHill or Britcoin.

In reality we’re looking at a very young market here with little corporate adoption because of the uncharted legal waters it sails. While at the heart it is very decentralized and could support thousands and millions of exchanges – it currently does not. What the community should take from this is that more exchanges are needed to foster more competition, which will improve quality in all dimensions.

Edit: Looks like I’m not alone. Greetings to go1dfish from reddit!

Additional coverage:

June 14, 2011 / twobitcents

Forums: $500,000 USD Stolen?

User allinvain shared a story of having lost about 25,000 BTC, which is currently valued at about $500,000 USD.

Anyone interested in following the money look no further than:

June 14, 2011 / twobitcents

Cryptome: Is Bitcoin a Triple Entry System?

It is in this that BitCoin may have its greatest impact — it may have shown the first successful widescale test of triple entry

June 12, 2011 / twobitcents

The Strengths and Weaknesses of Bitcoin

I’m truly interested in why people like or dislike the concept Bitcoin or a digital currency like it. To help easily explore the subject I’ve crafted two polls that have some rather simple answers but you can also provide your own answers. (Answers are arranged in randomly every time)