Bitcoin Price Crashes 642
Beardydog writes "Bitcoin trading site MtGox.com has suspended operations for the rest of the day after illicit access to at least one account resulted in a steep drop in the price of Bitcoins on the site. Commenters to the support page for the event are reporting that a list of usernames and associated email addresses and password hashes have been posted online. MtGox are currently planning to roll back all of the day's trading, email notices to all affected users, and require replacement passwords for affected accounts."
Bitcoin to revolutionise economy (Score:5, Funny)
Bitcoin [newstechnica.com] is a decentralised computer currency designed by self-righteous Ayn Rand-reading nerds who despise looters and parasites like, er, you. It is used to purchase Internet services, illegal drugs and pictures of naked women holding video cards.
Bitcoin works by an emergent synergy of cryptography, peer-to-peer, anonymity, anarchism, libertarianism, wasting stupendous quantities of electricity, the marketing department at NVidia, the enduring exchange value of tulip bulbs and doing all of this instead of Folding@Home.
Bitcoin successfully harnesses a hitherto-unexploited Internet resource: the vast reserves of unexamined privilege amongst computer programmers. Coins are "mined" by stealing them from people who are able to comprehend this level of computer science but still keep their Bitcoin wallet in plain text on a Windows machine.
The Bitcoin system is robustly designed to continue past the collapse of the US dollar and the world economy, as the Internet, fast computers and reliable electricity are all expected to be readily available when barbarian hordes are wandering the burnt-out post-apocalyptic remnants of civilisation.
It is completely incorrect to describe Bitcoin as a "pyramid scheme." Technically, it's a "pump-and-dump."
Many common products are still inexplicably not purchasable with Bitcoins. "It's as if they don't understand the revolutionary wonder of Bitcoin," says Debian developer Hiram Nerdboy, 17. "I can't get chicks with Bitcoins either. Even with my slickest Pick-Up Artist techniques! It's as if my knowledge of economics and game theory didn't apply to real life. But that's impossible, of course. They're probably just theists. Hold on, I just gotta post to Slashdot about this."
Bitcoin was invented by Internet libertarians, in the spirit of freely-chosen individual interpersonal interactions that will bring about the utter collapse of the oppressive taint of the dead hand of government, in order to make money at your expense.
Re:Bitcoin to revolutionise economy (Score:4, Insightful)
The Bitcoin system is robustly designed to continue past the collapse of the US dollar and the world economy, as the Internet, fast computers and reliable electricity are all expected to be readily available when barbarian hordes are wandering the burnt-out post-apocalyptic remnants of civilisation.
I think that you have missed the Fallout series of historic documentals.
Re:Bitcoin to revolutionise economy (Score:5, Funny)
Re:Bitcoin to revolutionise economy (Score:5, Funny)
2. Documental: (adj.) - The severely compromised state of mind attained after signing your name for the 422nd time on a mortgage application.
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I absolutely agree. These worthless, abstract encrypted computer bits are WORTHLESS.
Anybody who knows anything understands that REAL value is in small, green pieces of paper with pictures of dead people on them.
Re:Bitcoin to revolutionise economy (Score:5, Insightful)
The pieces of paper are backed by a country of 300 million people who will do work in exchange for them.
(One good thing about Bitcoin threads on Slashdot: plenty of opportunity to beat Econ 101 into the heads of libertoonians who think they've got the perfect zinger for every situation.)
Re:Bitcoin to revolutionise economy (Score:5, Insightful)
The pieces of paper are backed by a country of 300 million people who will do work in exchange for them.
You realise that most dollars are not paper? They make up only about 6% of money. The rest is debt based.
There is only about ~900 billion paper and coin dollars.
There is about ~14 trillion dollars worth of credit supplied by banks.
There is about ~55 trillion dollars in total debt, again, supplied by banks.
What backs the dollar is the faith that the 14 trillion dollars will some day pay the 55 trillion dollars off.
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Money used to pay for debt isn't destroyed in the process.
Really?
Show me.
Now I absolutely would take your point as it applies to the ~5% physical cash, because it's physical and a credit entry is created when it is deposited in the bank meaning that credit entry is destroyed when the debt is paid... But the 95% of money which is made up of credit itself is purely a book keeping entry not physical cash and that absolutely does vanish when debts are paid.
Where did you think all the crashes and busts came from?
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Since a % of these credits must be backed by real assets, there is an effective limit to the money in circulation (even if that
Re:Bitcoin to revolutionise economy (Score:4, Interesting)
You as a bank lend me $100. I deposit it in my account with you. You now have $100 in deposits and can lend me $1000. I deposit it back into my account and you now have $1000 in deposits and can lend me $10,000. Repeat ad nauseum. In actuality, between us we only have $10 and not $10,000.
Now I suppose we could reverse the situation If I just paid all my loans back. But that's not possible because you don't want the principal back. You want principal + interest.
Where does the money come to pay the interest? It doesn't, because it doesn't exist.
In fact, the same ponzy scheme is played out at the currency level.
For every $ the FED creates and disperses into the money supply, they charge interest on. Which means, they want that $+interest back. But if they only gave out a $ but they want $+interest back, where does the money come from to pay the interest? It doesn't exist. It can never be paid back.
The only solution is to create more money. And that's why we're in the shite we're in today and why the $ is worth only 4 cents of what it used to be worth.
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No, this is not how it works. Fractional reserve banking is greatly misunderstood.
You deposit $10 in a bank. The bank keeps 1$ in reserve and lends out 9$. The borrower spends this $9 and it is deposited back in the banking system. The bank keeps 90c in reserve and lends out $8.10. It keeps going round in circles like this until there is $100 on deposit, $10 kept in reserve and $90 lent out.
That assumes a 10% reserve ratio. In practice the reserve ratio is more like 6%, but it depends on the type of deposit
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You deposit $10 in a bank. The bank keeps 1$ in reserve and lends out 9$.
This is the classical description of a Fractional Reserve Banking System. However, this is not the system the US Banking/Federal Reserve Banking System uses. This is how it works (Assuming 10% reserve ratio for easy numbers but the Fed sets the ratio and it can be 0%), why it is abused and why your savings will always be worth less tomorrow than it is today (if its stored in dollars).
1. You deposit $100 into bank. The bank now has $100 in assets.
2. The bank borrows $1000 from the Fed to loan out, using you
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That part is wrong. The money to pay the interest could quite well be "summoned" by you lending some money to the banker and getting paid by some real good you sell him (or the equivalent of you giving some money to the banker and he giving you that money back). The fact that the banker expects some interest means only that he wants some real thing back for lending you the money.
That works quite well if the lending is co
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Why on earth does it matter if most dollars aren't physical objects? And since when is the dollars based on the faith that existing assets will eventually pay off the debt? First of all, it's not as though no new wealth is being created. Secondly, why does the debt ever need to be paid off? Just because you belly-feel that debt is bad?
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Actually, what backs the dollar in the US is that the only legal tender for payment of taxes is USD, and if you don't pay your taxes you eventually wind up in jail.
Re:Bitcoin to revolutionise economy (Score:5, Insightful)
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Re:Bitcoin to revolutionise economy (Score:4, Interesting)
OK, lets say there is only a single gold coin in town. That's the only currency in existence. OK so far? So, I have that one coin, and I pay somebody that coin for a new window. The glassier takes that coin, and he goes to the pub and he buys a beer for that one coin. Now the bar pays the bartender with that one coin. Now he takes that coin and he buys a sandwich with that coin. Oops, so far our town as a GDP of 4 coins, but there's only one in existence. DO YOU UNDERSTAND YET THAT AN ECONOMY IS NOT A ZERO SUM GAME? I know, you should use the broken window fallacy next! Point out that if you hadn't broken my window in that above example that the GDP of my fictional town would have been 0 instead of 4! ;)
To take this further, assume my company sells your company a piece of paper for $1M. You then sell me a piece of paper for $1M. All that has happened is that two pieces of paper changed hands, but economically we've produced $2M of GDP (= total value of goods and services produced, not total amount). No gold coin needed at all. If there's a 1000 of us buying and selling each others' pieces of paper we will have produced $ billions. No currency involved. It's also why an economy can grow without increasing production - there's simply an increase in demand for what it produces. More specifically, an economy that's more effective at meeting needs instead blanketing producing every conceivable product and service can have the same or bigger GDP while producing significantly less.
What people really need to undersand (Score:3)
Is that all an economy is at the fundamental level is trade. I do something, you do something, we trade, that is the economy. Currency just acts like a lubricant, making the trade flow more freely, that is all. It doesn't matter what the currency is, so long as it does its job.
The whole reason we have currency is to deal with the complexities that arise if you try and do anything more than direct barter. In a barter system you very quickly run in to two problems that hamstring an economy:
1) Person A may wan
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You only have "x" amount of supplies, be it gold, potatoes, petroleum, or Tampax.
And here I thought every day more gold was mined, more potatoes were planted, more petroleum was extracted and more Tampax were created.
Take the stock market.
You can't take that example and extrapolate for the whole economy. The stock market works in a very particular way.
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There is only 1 unit of credit, and it is destroyed when the debt is paid.
If you look further up the thread, you'll see that there is 55 (or 52 depending on who you ask) trillion dollars worth of debt in the USA and only 14 trillion dollars of credit. The debt cannot be paid. As you pay it off, the credit is destroyed. It would cause massive deflation to even attempt to pay.
This is one of the reasons the criticism of gold or bitcoins as deflationary is laughable. Our existing monetary system would be mind b
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You are only looking at cash. The 55 trillion debt is secured against property too. If you don't have the cash to pay your debt then the person you owe it too has a right to the property you secured it against. Not just physical property either, intellectual property.
The good news is that all the stuff in the US is enough to cover your debts. The bad news is that other countries effectively own yours and you have to slowly buy it back by paying off debts. There is a further complication in that when someone
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Except that's not actually true. That would be like saying that, I have two trucks because I lent it to a friend for his move. There aren't really two trucks, and if we both tried to use it at the same time, there'd be trouble.
Likewise, there aren't really that many dollars in existence, if there were we'd see massive inflation, those are obligations, some of which will end up in a state of default and most of which will be paid off. However, they won't be paid off simultaneously, doing so would result in a
-1, buzzkill (Score:3)
What exactly do you want it to be based on? The number of Jesus' hairs in the shroud?
Drowning in debt is a wonderful horror story, but anybody who tries to collect on it will be facing a horde of nuke-equipped "non-hostile" drones.
Its not like it is a cancer that increasing destroys everything in its path, its just a paltry concern to be taken care of when we can afford it. Clinton nearly destroyed the US by actually reducing it; and thus transferring power back to the people. Thankfully the clear thi
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Think hard about what causes inflation. During the Civil War, there was a lot of destruction and killing going on, so what happened then is not necessarily predictive of what happens now when the govt prints debt-free money.
Inflation is caused largely by perception, by psychology. The Weimar Republic's inflation ended in a day. Bolivia's inflation during the 1980s ended in a similarly short period. Same with Brazil's hyperinflation...because inflation is mostly a psychological phenomenon.
Some inflation is t
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Bitcoin isn't perfect -- hell, it's probably going to fail. But something like it could very well be 'the thing' that the 6 billion other people would be willing to work for. It's mostly a
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or something of a true value.
You lost me there. There is no 'true value' - shells, dust particles, crypto hash results...all of this only has value insofar as it is accepted on the market as such, and insofar as it provides a medium of exchange
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Re:Bitcoin to revolutionise economy (Score:4, Funny)
Pop Quiz: What was the Zimbabwean dollar backed by?
Re:Bitcoin to revolutionise economy (Score:5, Insightful)
Pop Quiz: What was the Zimbabwean dollar backed by?
Ooh! Ooh! I know!
It was backed by the full faith and credit of the Zimbabwean government!
(which, unfortunately, didn't have a very good grasp of economics)
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It follows that when an economy becomes so degraded (or in the case of Zimbabwe when the government so degrades the economy) that there is no longer anything to tax, the currency the government issues will become worthless.
Or enough people start using the black market and a black market currency to do almost all of their trading instead. In most countries, it is more expensive to use the black market and risk the punishments for tax evasion than to simply pay the tax, but there is a level where it become more economically smart to use the black market and risk getting caught than to pay the onerous taxes.
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Re:Bitcoin to revolutionise economy (Score:5, Funny)
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Is also a poor investment, since it can spoil if stored improperly, and become dangerous to use. Granted, proper storage will protect the gunpowder, but still, stocking up for an unknown period of time in the future can cause problems. Ten years is about the limit of recommended time I could find.
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Is also a poor investment, since it can spoil if stored improperly, and become dangerous to use. Granted, proper storage will protect the gunpowder, but still, stocking up for an unknown period of time in the future can cause problems. Ten years is about the limit of recommended time I could find.
Modern ammo never "spoils". People have safely fired extremely old ammo and there has been a market for milsurp ammo far older than ten years for a long time. Keep it dry and it'll be fine.
Bigoted much? (Score:5, Insightful)
Remember, most people are stupid
This is untrue, if you actually examine the world people, on average are VERY CLEVER. If "people" were stupid our species would have been wiped out long ago.
Now what people are, is selectively informed. They may not have chosen to be informed about topics you consider important, but it does not mean they are stupid...
I'm sure your average redneck ain't keeping his ammo dry, and your average gun nut (simply for lack of a better term) can't guarantee their storage spot is impervious to floods or broken water pipes
How "sure" are you? Because I'm damn sure you are wrong. Almost anyone I've ever seen keeps ammo in something like an ammo box, which is quite dry and mostly impervious to occasional water. The "redneck" that talks so funny probably knows quite a lot more than you about the care of ammo, and humorously would probably call you an idiot for not knowing the details on this better...
Grow up and realize that people who are different from you are not automatically stupid.
You prove my point (Score:3, Insightful)
No, on average, people are around average intelligence.
Did I ever say anything about intelligence? No, I said Clever. As in, people can figure out the things that are most important to them pretty well.
It's just that may people have different priorities than your own. But by all means feel superior to them even though in different circumstances they would be laughing at you too.
I myself will maintain the awareness that all people are generally clever and avoid the impedance mismatch of thinking they are
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Gold is pretty, but in a combat situation, those gold bars are not going to be keeping the zombie hordes or marauders at bay.
It's awfully handy in case the Cybermen invade.
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Enough already (Score:4, Insightful)
Enough with this Bitcoin spam already.
Bitcoin is stupid, unneccessary and irrelevant, we don't care for your fucking scam.
Re:Enough already (Score:5, Insightful)
Enough with this Bitcoin spam already. Bitcoin is stupid, unneccessary and irrelevant, we don't care for your fucking scam.
To be fair, it's nice to hear news that predictions about bitcoins being crappy are indeed true. This story is somewhat of an anti-spam.
Re:Enough already (Score:5, Insightful)
Bah. Bitcoins represent a number of interesting concepts. Currency alone is a rather fascinating thing that touches on psychology, economy, history, and one of the earliest forms of information technology. Toss in some cryptography, peer-to-peer / decentralisation, etc. and there's no end to the facets of this subject.
That doesn't mean you have to buy in to Bitcoins. Keep in mind that these Bitcoin stories are more than simple "yay Bitcoin - buy buy buy" that you would expect from advertisements / spam. There are negative sides being covered by these stories. But if you have no interest in anything remotely related to Bitcoins, then by all means... don't click on the damn article that says it is, in fact, about Bitcoins.
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Currency is basically a form of barter that avoids having to move physical goods around of a value equal to that of the currency. The earliest currencies - often things like the iron rings used by Celts in the early Iron Age - converted to a fixed amount of some physical goods. This evolved over time into the gold standard (instead of having different coinage equate to different physical goods, all currency equated to a single physical good - gold, in this case). After a while, currency was switched to a fl
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"Enough with this Bitcoin spam already. Bitcoin is stupid, unneccessary and irrelevant, we don't care for your fucking scam."
Seriously. Slashdot editors: give me an option to block your idiotic Bitcoin spam, or at least post less of it. I'm so tired of every third story being a shill for this ridiculous scam that I'm going to find another technology news source if one of those two things doesn't happen.
You are either participating in an attempt to swindle a bunch of people out of their money, or you are so
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"Enough with this Bitcoin spam already. Bitcoin is stupid, unneccessary and irrelevant, we don't care for your fucking scam."
Seriously. Slashdot editors: give me an option to block your idiotic Bitcoin spam, or at least post less of it. I'm so tired of every third story being a shill for this ridiculous scam that I'm going to find another technology news source if one of those two things doesn't happen.
You are either participating in an attempt to swindle a bunch of people out of their money, or you are so deluded by this moronic idea that you're going to be among the swindled yourselves.
Either way, it doesn't speak well for the general quality of material on the site if multiple editors here can be persuaded to post "stories" about it approximately every five minutes.
I'm not sure if you are aware of this, but typically "shills" don't generally post stories to slashdot that demonstrate weaknesses or blunders related to themselves. Do you think the Playstation Network outage stories were by Sony shills too?
And you want an option to block these stories? Have you considered trying to exercise enough willpower not to click on the freaking link?
Some people here might find it to be an interesting experiment (though possibly naive), even if they aren't buying into it.
Just bec
Re:Enough already (Score:4, Insightful)
You cared so much, you wouldn't risk your precious slashdot karma. Therefore, bitcoins are worth less than slashdot karma.
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Time to setup KarmEx and make a fortune!
Re:Enough already (Score:4, Insightful)
Is it even possible to roll back a bitcoin trade? (Score:2)
I thought each trade was part of the bitcoin history, so how can you possibly "roll back" trades? I could see sending bitcoin back to where it came from, but both parties would have to agree to everything.
Re:Is it even possible to roll back a bitcoin trad (Score:5, Informative)
Re:Is it even possible to roll back a bitcoin trad (Score:4, Informative)
Re:Is it even possible to roll back a bitcoin trad (Score:5, Funny)
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We asked the monkey for his response to events of the day. "Shocked!" he said.
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I was wondering that myself, but I think it must justnbe MtGox transactions rather than all BitCoin transactions.
I was a bit worried there. I got the email about Mt Gox being compromised, and soon afterwards my Gmail account stopped working. I'm guessing maybe Google just reset the passwords of everyone who got the Mt Gox email.. because my password isn't the same between the sites.. and Google asked me to change my password when I logged in via a browser.
Virtual Currency at its greatest (Score:2)
I think that maybe its time to hit the drawing board again.
Great idea but I think they need like 1 time key generators or some other level of security layered on transactions.
Link for master list of compromised accounts (Score:3, Informative)
buh? (Score:2)
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Presumably because the attackers were selling coins from other people's accounts, not buying them. The exchange site can contact their $$$ bank to cancel cash payments, and refund incoming bitcoins transactions from hacked accounts.
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RTFA?
What they're saying is that somebody amassed a lot of coins on a single account but wasn't able to transfer them out. Just $1000 worth. The coins are there, and the transactions can be rolled back. Mostly.
I hope that is the case - if they can't fix this then it's a huge blow to a very interesting experiment.
Re:buh? (Score:4, Informative)
Rolling the transactions back is a huger blow to that interesting experiment, and basically undermines the attempt to get bitcoins accepted as a form of currency.
Trades on the exchange do not impact the Bitcoin blockchain (transaction history) directly, in the exact same way as money is not directly transferred to/from your bank when you trade. Any market event is buffered into the virtual accounts that traders hold with Mt.gox, while the actual bitcoins are in Mt.gox's wallet and the actual dollars are in Mt.gox's bank account. You need to specifically request a transfer to get either money or bitcoins out of the system.
So the event is in no way relevant for Bitcoin. It's just a bad case of unsanitized inputs.
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Growing pangs (Score:3, Interesting)
I've been watching the Bitcoin system/experiment since the beginning of last autumn, and I can't help but feel it's receiving too much attention and increasing in value too quickly for its own good.
I really like the idea of the system and I want to see this system or one like it succeed, but with the extremely quick rise in value since last year and all the attention it's been getting, coupled with the games those with lots of bitcoins could play with the market and the somewhat unknown nature of who controls these fortunes (now in both bitcoin and USD), I felt a devastating crash is unavoidable at $.70 US / bitcoin, much less $17 / bitcoin.
At this sort of insane value, the system is an extremely interesting experiment, but I think it's a huge roadblock for serious adoption.
Re:Growing pangs (Score:4, Insightful)
Anyone with an iota of common sense could see that.
I wasn't trying to extol myself as a genius--I was making an observation for those who haven't had much of a look at the history of the market.
What we need is a digital cash system that is run by banks -- yes, I know, we all like to hate on banks, but the truth is that banking is an important part of the economy and the majority of digital cash protocols call for a bank to issue the digital currency.
I think bank-issued digital currency would be worse than government-issued currency, because the government has at least some semblance of advancing the good of its people, whereas a single bank issuing a currency could do whatever it pleases to the market, having only profit motive.
A system like bitcoin where a very large number of users of the currency all have a stake it in with no single user selling all their bitcoins would cause more than a .1% fluctuation in value would be a system that would be very good at holding value for its users (assuming there are no design exploits and no organization with enough computing power to start playing games with the block chain).
The problem with the current bitcoin system is that I imagine there are hundreds of people who could crash the value of the currency because it's likely too concentrated with a few individuals and the market is not deep enough for them to sell their stakes to those who are willing to invest in it more. At the value of $17 US / bitcoin, there are $112,141,350 US in the bitcoin market. There are probably dozens of bitcoin "millionaires" (in USD) who would end up with probably only somewhere in the thousands of dollars if they sold, with the result being putting the bitcoin value back at something like $.10 - $.20 / bitcoin. The system is extremely intriguing, but the current ownership distribution and market seems like a disaster, either waiting to happen or already starting.
Maybe if the system were started again, with the current level of interest, the results would be different. I'd get involved in that. The market with the current ownership distribution? No way.
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For all intensive purposes the dollar is already a digital currency. There always needs to be some way for non digital transactions (cash), but the majority of all transactions are digital. With the dollar, there is nothing backing it, and since the supply grows exponentially, along with goods and services, prices stay flat.
Bitcoin is designed to grow at a less than linear rate with a maximum number of bitcoins ever created. Using this as currency would never work as the deflation rate would continue to gro
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For all intensive purposes the dollar is already a digital currency.
Not grammar trolling, but FYI, it's "all intents and purposes".
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No, it's actually designed to deflate, i.e., gain value over time, since the total number of coins will level off.
Dollars/Euro/etc, those are actually designed to lose value over time, due to inflation.
Where is the government? (Score:2)
Is it just me? (Score:3, Insightful)
Is it just me, or does these comments, and everything surrounding this, AND THE FACT THAT THIS OCCURRED ON FATHER'S DAY, sound suspicious to anyone? I hate to sound like a conspiracy theories, but this sounds an aweful lot like a psy-op to me.
After all, Bitcoin" was not hacked, nor did "Bitcoin" crash (http://bitcoincharts.com/markets/ - they are STILL WORTH MORE than the U.S. dollar). It was a SINGLE WEB SITE that was hacked. If the pirate bay was hacked, would you say that "bittorrent" was hacked? Only if you're an idiot and don't understand how bittorrent works.
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This is correct. Bitcoin is designed to be very fractional, much more than typical currencies. Rather than paying 1.50, you might pay .052 BTC. The 1/1 ratio does not really make a difference. With how relatively low the actual number of bitcoins is, the fractions are going to make up the majority of the transactions.
It's worse than that. Very flaky players (Score:5, Informative)
"Mt. Gox", the main Bitcoin exchange, was originally "Magic the Gathering Online Exchange". Nobody really knows who runs "Mt. Gox"; it appears to be one person in Tokyo who's only reachable via email and IRC. (He must be having a terrible night; this all happened around 3AM in Japan.) It's not like there's some real financial institution, or even a funded start-up, behind this. Most, if not all, of the Bitcoin "exchanges" and "exchangers" are somewhat flaky entities. Bitcoin's ecosystem is financially very weak.
Understand that Mt. Gox is not just an exchange. It's a depository institution, like a bank. Customers have balances, in Bitcoins and other currencies, with Mt. Gox. But Mt. Gox is not regulated or audited as a bank or a brokerage, even though it holds other people's money. Accounts are uninsured.
This matters when something goes wrong and somebody gets stuck with losses. Mt. Gox claims they're going to "roll back" transactions to before the theft. But some of the money is already gone, transferred out before Mt. Gox shut down. Mt. Gox is going to have to eat some of those losses if they do a rollback. Do they have the cash? Nobody knows. They're not audited by anybody.
As for the security breach, not only is the entire file of usernames, email addresses, and encrypted passwords now widely available, so are the unencrypted passwords cracked so far. (One wonders why whomever stole the password file published it, but it may have to do with their needing help from others to crack the passwords.) As a result, TradeHill, another Bitcoin exchange based in Chile, has shut down, to avoid attacks using passwords obtained from Mt. Gox. Right now, there's no way to turn Bitcoins into dollars. (Euros, yes; right now the going rate is EUR11.51/BTC. But that market is very thin.)
Whether or not BItcoins are a good idea, the market ecosystem behind them is far too flaky.
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Right now, there's no way to turn Bitcoins into dollars.
This isn't true. There are non-mtgox exchanges [bitcoinwatch.com], they just aren't very liquid/prominent.
is far too flaky.
Oh its' definitely flaky. But too flaky for what? 130M marketcap? Perhaps. But for all we know this is all a beta-test for 'microsoft money' -- the open source terms on bitcoin permit microsoft to basically take the code, embrace & extend and own the whole network. Every mistake that's made, every fix that's produced, every problem every solution brings us closer to a world without banks as we know them today
Re:It's worse than that. Very flaky players (Score:4, Insightful)
Do they have the cash? Nobody knows. They're not audited by anybody.
And there's your problem - no transparency. Same problem as exists on Wall St.
One wonders why whomever stole the password file published it, but it may have to do with their needing help from others to crack the passwords.
Perhaps, but de-anonymizing BitCoin is sufficient for the purposes of BitCoin's biggest critics (and those who stand to lose the most from it succeeding).
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The money transferred out of the exchange is gone and MtGox IS going to eat the losses, and do a proper rollback.
The question is 1) do they have the cash to do that, and 2) do they have their own cash to do that, as opposed to taking it from the accounts of their customers (see Madoff, Bernie). This is why depository institutions need outside audits.
There's a lot we don't know about Mt. Gox. Do they trade Bitcoins themselves? The value of Bitcoins is way down from the peak; does Mt. Gox have a problem with losses? After a screwup like this, it's necessary to ask those questions.
As for "personal integrity", the op
There's no Bitcoin market right now. (Score:5, Informative)
other USD exchanges are still running fine.
From Bitcoin.org's market table [bitcoincharts.com]:
Look at those tiny volumes. Total volume for all the little guys is under 0.1% of Mt. Gox, which was trading over 200,000 bitcoins per day. With Mt. Gox and TradeHill off-line, the market is dead. None of those little guys have any significant buyers available.
Bitcoin market live again, but thin. (Score:3)
With TradeHill [tradehill.com] back up and running for a few hours, there's now a functioning Bitcoin market. For a few hours, there was a huge spread between bid and ask prices, and thus few trades. Now the spread has tightened up, and price seems to have settled down around $11.90/BTC. The market remains thin; selling a few hundred bitcoins would crash the market.
It's a dinky market by any standard. The total volume at TradeHill, under $20,000 today, is comparable to a big gas station or a supermarket.
So it _is_ a real currency! (Score:2)
It can crash in value. That means it is a real currency and can be attacked by traders at will. Not quite the validation the inventors intended, I gather.
BitCoins are simply a hobby, not a currency (Score:5, Insightful)
Usefulness as a currency is inversely proportional to potential as an investment. BitCoin fans, when you boast that your "currency holdings" have shot up in value by several hundred percent in a year, this is NOT A GOOD THING for BitCoins as a currency. You, Joe Merchant, would have to be a complete blithering idiot to set yourself up to accept BitCoins as a form of payment if deflation of several orders of magnitude is REQUIRED in order for your "currency" to be anything but a niche toy. In addition, credit, the lifeblood of any economy is completely impossible under such conditions; it would be the height of insanity to take out a loan if you had the potential of owing the equivalent of several hundred percent interest after a year. (As in, if you took out a loan for a thousand BitCoins a year ago, you'd be praying for an event like this to happen right now...)
An ideal currency remains relatively stable in value in relation to something you actually want to buy. An illiquid currency that gyrates wildly in value is useless, as it makes proper pricing of goods, services, and credit impossible.
In the end, BitCoins are no more a "currency" than Beanie Babies were. And at least Beanie Babies are cute. (And tulips were/are pretty flowers.) BitCoins are an interesting experiment in cryptography, nothing more.
Re:BitCoins are simply a hobby, not a currency (Score:5, Insightful)
It wasn't until bitcoin that I understood the point of constant inflation: it makes credit feasible. You can only borrow safely if you can be almost certain money won't increase in relative value in the future, and to make a borrower feel truly safe currency value should have a near certainty of decreasing somewhat. With significant deflation a possibility you can't even take out a car loan without simultaneously risking indentured servitude; it would be insane to take home or business loans, and I don't mean figuratively insane, either.
Inflation also encourages lending and investing. It's like the Red Queen hypothesis: with inflation eating the valuation of your cash you have to put it to work somehow in hopes of earning more than the rate of inflation.
It seems no one makes loans or investment in bitcoins, and the scam artists - excuse me, properly rewarded early adopters - who minted thousands or millions of coins back when they cost 1/1000th as much processing time to generate still seem to be hoarding and not using them.
It's technically true that they're not a ponzi scheme, but they're still basically a confidence game that at the current trajectories don't seem like any benefit to people who weren't already in the market by mid-2010. Anyone who adopted after that could use them as money laundering and anonymous payments (like Silk Road), but couldn't efficiently generate or purchase them without wasting more fiat currency than the coins are worth in service fees or electricity.
Re: (Score:3)
Again, I would not (while in sane mind) loan money in currency that is losing value, it is a losing proposition.
Funny, because banks make money hand over fist by doing exactly that.
Misleading title (Score:2)
Disconnect (Score:4, Interesting)
I'm supposed to hate electronic voting, but support a wholly electronic currency?
Just sayin'! (Score:4, Interesting)
It's worth nothing that this 'price crash' was completely artificial, the result of a malicious act, and only really affects the Mt.Gox exchange site. I suppose it probably also affects any sites that set their exchange rate by Mt.Gox, but many don't do that on a real-time basis anyway. I use Bitcoin Market, another trading site, and their prices are unaffected.
The e-mail from Mt.Gox. (Score:5, Informative)
I have an Mt.Gox account but have never actually used it for anything. I received the following e-mail earlier today.
Gmail also flagged suspicious failed login attempts on my e-mail account, so I had to go through a password reset process on it. Although I used a unique password at Mt.Gox, the attacker apparently is running automated login attempts using the stolen e-mail addresses and Mt.Gox passwords, so anyone using non-unique passwords is likely in trouble.
Re:The e-mail from Mt.Gox. (Score:4, Informative)
Yep. Same story for me too. Glad I enabled two-factor authentication [blogspot.com] on my Google account (and SSH to my home server while I was at it).
Re:The e-mail from Mt.Gox. (Score:4, Interesting)
Gmail also flagged suspicious failed login attempts on my e-mail account...
That's not an accident; Google is watching out for you.
See http://forum.bitcoin.org/index.php?topic=19641.msg245983#msg245983 [bitcoin.org]
Hi guys,
The reason your Google accounts have been required to change the password is that you appeared in a list of public MtGox accounts. We do understand that you may not have been sharing your passwords, unfortunately as they were leaked in hashed form it is hard to know which ones will be found to be sharing passwords and which won't - this will be found out by brute forcers over the next 24-48 hours.
Again, apologies for the inconvenience, we know that choosing new passwords is a pain. Requiring password rotations is not a decision we take lightly. However this is standard procedure for credentials leaks. It is to avoid accounts showing up in the black market for hacked passwords, as Gmail account access can be used to obtain access at other sites (PayPal, Facebook, etc).
thanks,
Mike
Google abuse/anti-hijack team
This is not really a bitcoin story (Score:5, Informative)
So much as it is a MTGox story.
About a week ago the first rumors of MtGox being compromised by a SQL injection exploit began to circulate.
Here's one of the original claims from someone calling themselves Buttsec from June 14th. Others which I'm too lazy to dig up were more specific and named MtGox explictly:
http://pastebin.com/4NPemHfz [pastebin.com]
On that very same day, MTGox implemented a $1000 dollar withdrawal limit. Suspicious, right? For the past 3 days, there have been offers to sell MTGox's database of usernames and password hashes. Here's an example:
http://pastebin.com/ui0nusuZ [pastebin.com]
Today, there is this:
http://pastebin.com/hN7PxRhc [pastebin.com]
http://pastebin.com/w06pa2mB [pastebin.com] (there are many of these, the first link gives you the urls if you want to see them all)
This confirms MTGox was indeed hacked. One of the hackers offering to sell this database that came out today had even specifically mentioned that the hole he had used was CLOSED by MTGox a couple of days ago. Today, FINALLY, MTGox admits they were hacked and has sent out emails to all their users. Here is a copy:
http://pastebin.com/9Cx94wzs [pastebin.com]
In light of all of the evidence (more of which I'm sure you can find on your own), I find it very hard to believe that MtGox was not aware they had been hacked, and yet they've been denying it and operating normally (aside from the newly added withdrawal limit, which they even boast about in the linked press release). In fact, I found one reddit page of many where MtGox users were complaining there accounts had been compromised (There have been many over the past week) and the employee flat out denies that they have ANY reason to suspect they've been compromised:
Here's one such complaint among many: http://www.reddit.com/r/Bitcoin/comments/i17jd/i_just_got_ripped_off_on_mtgox/ [reddit.com]
And here's one with an employee denial: http://www.reddit.com/r/Bitcoin/comments/i2dkn/mt_gox_has_some_serious_issues/ [reddit.com]
Here's all that (purported) employees posts: http://www.reddit.com/user/MtGox_Adam [reddit.com]
Long story short: For the last week (5 days at least), I've been wondering if MtGox had been truly hacked or if someone was just trying to depress the price of bitcoins by spreading rumors. Today I don't have to wonder anymore. What I do have to wonder about is why has MtGox kept silent for the past week when ALL indications were that they KNEW. They fixed the hole, added the withdrawal limit, and yet kept on denying they had an issue when dozens of users complained of account compromises. Rather than admit the issue and try to have it fixed, they apparently tried to keep it a secret. How can we trust any company that handles security issues in this manner?
Re:This is not really a bitcoin story (Score:4, Interesting)
Not so. The $1000 withdrawal limit has been in place since at least early May 2011 (when I started cashing out my holdings).
Re: (Score:3)
I should add to this that MtGox is now saying that it wasn't one of their systems that was compromised, but that of one of their auditors and that's how they were unaware of the intrusion. Given that the withdrawal limit has been around, its hard to say exactly what MtGox should have done. They had to know at least as much as I did, which was that there were rumors, an upsurge in compromised accounts and people offering to sell the database, but perhaps that's all the information they had. In that case,
Re: (Score:2)
"it wasn't even backed by anything physical - not even a piece of paper."
Like the US dollar, the only thing that any currency can have going for it is what it will fetch in the public market. Right now that includes 'real' dollars, and a whole myriad of services from the odd local coffee shop to air con
Re: (Score:2)
Here's the leaked account list: http://bit.ly/kE3Q4D [bit.ly]
The passwords before ID 3000 that were not changed are plain md5 hashes. Almost all are easily cracked. Example:
id: 642
name: shlax
hash: de434a6e3a01de06657454e07349535c
password: pretorian
The ones starting with $ are MD5 crypt passwords. The 1000 MD5 iterations add about 10 bits of apparent entropy, and the salts prevent parallelisation.
Re:Let's attempt some critical thinking. (Score:5, Insightful)
Imagine this headline: Forex.com hacked, concept of USD put into question. Doesn't that sound a bit ridiculous? This was a bad day for mtgox.com and bitcoin speculators, but it does not demonstrate inherent weaknesses in the system of bitcoin.
I agree, this does not "demonstrate inherent weaknesses" in the design or Bitcoin, per se, and I would add that an event such as this one could strangle Bitcoin in its cradle. Consider these points:
i) Unlike the USD, Bitcoin has still to establish legitimacy in the eyes of the serious investor.
ii) Sites such as Mt Gox, provide the primary (perhaps even exclusive) gateway to Bitcoin. FX dealing sites are very much down the list on how most people gain exposure to USD.
iii) The USD can be used by US citizens to settle their taxation debt. The USD can be used internationally to purchase oil. Within the US (and not only there), the USD can be used to purchase practically the entire range of goods and services.
If we apply critical thinking, it will be apparent that the analogy you propose with your headline, while appealing on the surface, cannot do justice to the differences between Bitcoin and the USD.
Re: (Score:3)
I am sorry I think it does... Bitcoin was supposed to be a secure/stable/next generation way of doing transactions with money. But instead we have amateur hour in the Arctic! I mean come on WTF was the bitcoin guy thinking? Did he think nobody would hack? Or try to fake? Or try to steal? You only need to look at Windows to see how versatile hackers are.
No bitcoin is toast!
Re: (Score:2)
The difference being that in Debt of Honor, a virus stopped recording transactions at noon while trading continued until 5:00 p.m., so no one knew who owned what after the afternoon's trading. They didn't roll back so much as agree to ignore all the non-recorded trading.
What MtGox is proposing is to revert a bunch of known transactions, and a lot of bitcoin traders are rightly pointing out that they profited by the volatility and shouldn't lose their profits, especially since whoever scammed the exchange l
Re: (Score:3)
Someone else submitted around the same time with "Bitcoin Price Crashes", and my submission seems to have eaten that poster's title during the Slashdot editing
Re: (Score:3)
This particular situation though is really interesting. The big win features of Bitcoin are really supposed to be the removal of central authorities that can jack up a currency, and anonymity. The downsides are really the same.
And yet, here we have what is effectively a sort of central financial institution locking down a huge bulk of the Bitcoin economy, because they were able to meaningfully identify currency that was stolen
Re: (Score:3)
You are completely misinformed. I will reply to your anonymous troll instead of modding it as such, just to alert readers to it's crapitude.
The amount of money that can be transferred out of mtgox at once is $1000 (or $1000 value in BTC). That is not the limit on trades. It's like having a Charles Schwab account with $10,000 in it - you can buy and sell thousands in stocks, futures, and currencies, but your Schwab debit card has security preventing you from withdrawing more than $400 a day at an ATM.
The 'ac