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Bitcoin Security IT

Bitcoin Price Crashes 642

Posted by samzenpus
from the black-bit-sunday dept.
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."
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Bitcoin Price Crashes

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  • Growing pangs (Score:3, Interesting)

    by traindirector (1001483) on Sunday June 19, 2011 @06:55PM (#36493782)

    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.

  • Disconnect (Score:4, Interesting)

    by SuperKendall (25149) on Sunday June 19, 2011 @07:54PM (#36494168)

    I'm supposed to hate electronic voting, but support a wholly electronic currency?

  • Just sayin'! (Score:4, Interesting)

    by John Pfeiffer (454131) on Sunday June 19, 2011 @07:55PM (#36494180) Homepage

    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.

  • by Anonymous Coward on Sunday June 19, 2011 @09:34PM (#36494864)

    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

  • by Colin Smith (2679) on Sunday June 19, 2011 @10:20PM (#36495220)

    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 bendingly deflationary without constant injections of monetary inflation (bailouts, interest rate cuts, Fed POMOs etc.).

    Put another way; crash is the default mode of operation.

  • by woolpert (1442969) on Sunday June 19, 2011 @11:00PM (#36495490)

    On that very same day, MTGox implemented a $1000 dollar withdrawal limit. Suspicious, right?

    Not so. The $1000 withdrawal limit has been in place since at least early May 2011 (when I started cashing out my holdings).

  • by emt377 (610337) on Monday June 20, 2011 @12:20AM (#36496148)

    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.

  • by 7-Vodka (195504) on Monday June 20, 2011 @05:41AM (#36497772) Journal
    LOL, even a child can figure this exploit out.

    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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