Oh really ?
A leading British Bitcoin dev who claims to have lost more than £200,000 in the collapse of MtGox says he has written to Japanese police asking them to take action. Under the name Rebroad, Richard Broadley is one of the world's top cryptocurrency software developers, placed as the 12th most active contributor to the Bitcoin …
Bitcoin is a total free for all.
The whole point of the wallet is that you keep YOUR bitcoin on your own terms. Easy to lose if you suck at data backup, but not controlled by any entitiy. A key to a sequence in the blockchain.
A Bitcoin developer should know never to trust another entity, as they should know full well that there is no legal meaning to the Bitcoin itself.
Don't invest in this volatile investment unless you can afford to lose said investment. Certainly don't cry about it afterwards when you lose you your pretend bits of verified data in an arbitrary sequence copied to many computers, backed by... nothing.
But these problems are the actual draw to the currency. If it was somehow regulated or backed, it would end up being just another fiat currency. The wild west approach works. People need to understand what they're getting in to, and you'd think a developer of Bitcoin would know that.
As for the fiat currency he had held with Magic: The Gathering Online Exchange, then that's a different story. However, I doubt Magic: The Gathering Online Exchange has many real assets left, and I would imagine their customers are not the first in line to pick for scraps after bankruptcy.
Endlessly repeating the observation that MtGox used to be a game card exchange does not make you look any more clever than would blaming Nokia's current woes on the fact that it was a welly boot manufacturer.
On the specific point about keeping bitcoins in your own wallet, this is utterly immaterial. During the period running up to its disappearance you could not withdraw bitcoins from the exchange, no matter how much you might have wanted to.
And the losses reported in the article have absolutely nothing to do with the volatility of bitcoins. The allegation is that they were STOLEN. And if that is not, in fact, true, then there has been a FRAUD.
Endlessly repeating the observation that MtGox used to be a game card exchange.....
is something that just never gets old. Nothing brings this whole story into sharp clarity faster than the realisation that these people had vast sums invested in "Magic The Gathering Online Exchange".
You're spot on. Bitcoin certainly isn't the first thing to be bitten in the ass by some poorly thought out mission migration. What something was, remains forever, even if occasionally temporarily forgotten.
eBay got the shit kicked out of them for ages because the first thing they ever sold was broken. The only reason they bought PayPal was to demonstrate they were serious. Amazon gets kicked all the time & called a book store. NCR once actually made cash registers (there's a good book called The Incorruptable Cashier about those registers). The Electric Boat Company. Apple made absolute shit for decades. Internet Explorer was once the darling of the business world. McDonalds used to have a giant eggplant and an escaped convict for mascots.The North Face once made quality outdoor apparel.
The once was plays both ways. If the transition works and the company/brand is successful then it adds a lot to their history. A 'look how far we've come' kind of thing. If it doesn't go well it becomes a standard in business textbooks for ages. A 'should have seen that coming' thing.
What I really don't understand, is why they kept Mt.Gox as the name. It meant nothing to the new world of Bitcoin. If you're wanting to be a popular waypoint for people moving millions in valuable goods it's kind of weak to keep the old name to save registrar fees.
Totally agree, Piro.
Other commentators on MtGox threads have commented that when you either mined the coins or you bought them. If you mined them then they have no intrinsic value until you sell them. If you bought them then you lost the real world money as soon as you exchanged it for bit coins. Assuming this man was not trading on the darknet, then he was doing this for investment purposes. If he wasn't trading then he should have maintained his own wallet, not entrusted all his money to an exchange. It looks like he has lost the lot.
I had the same issue in 2001 when I invested real money in Telecoms shares. I lost the lot when the twin towers came down. My shares were worthless or pretty close to it. No time to cry, just have to get on with it. May be I should have written to the Afghan authorities and asked them to reimburse me; or perhaps the Saudis. It wouldn't have been worth the stamp.
I was always suspicious of the Bitcoin stuff. It sounds like: Hey, I have all this money, let me exchange it for a virtual currency, and for that I get a string of 0 & 1's. That's the proof that I own virtual coins. Now, let me give that string to someone else for safe keeping. That someone is in a different country, under a different legal system, and I really can't tell if I should trust them (hint here: I think we have proof that you can't trust them).
Virtual currency may be the future. But just as the the original IBM PC was no where near the best PC, and DOS was not a secure operating system, the first incarnation of a virtual currency was never going to be the best virtual currency.
Sorry, when the twin towers came down, did someone steal the money you'd invested in telecom shares from the stock exchange, causing the stock exchange to go into administration? Or could you simply not sell those shares at that time, and realise any real-world funds?
Because unless it's the former, your "same issue" is quite a different issue, that didn't involve the exchange being hacked, and forced into administration.
Did the market for telecom shares recover at some point?
Hey, I have all this money, let me exchange it for a virtual currency, and for that I get a string of 0 & 1's. That's the proof that I own virtual coins. Now, let me give that string to someone else for safe keeping.
As opposed to what we all do with 'real' currency.
Hey, I have all this money, let me give it to my bank in exchange for some ones and zeros (or maybe some ink marks in a book). That's the proof that I own money.
Of course Bitcoin is a far bigger risk and I wouldn't touch it with a bargepole but all of us trust other people to look after our wealth. Most of us labour under the illusion that banks are 'holding our money for us' when in fact they are taking it from us in exchange for a promise that they'll give us some back if we ask.
"I was always suspicious of the Bitcoin stuff. It sounds like: Hey, I have all this money, let me exchange it for a virtual currency, and for that I get a string of 0 & 1's. That's the proof that I own virtual coins. Now, let me give that string to someone else for safe keeping."
It's the last bit that's the problem, but that isn't part of Bitcoin, rather a problem with using online wallets (including keeping large amounts on an exchange).
"Virtual currency may be the future. But just as the the original IBM PC was no where near the best PC, and DOS was not a secure operating system, the first incarnation of a virtual currency was never going to be the best virtual currency."
Possibly, but don't underestimate the network effect. And to go with your analogy, whilst today's computers are far removed from an original IBM DOS PC, we can still trace a heritage where hardware technology in today's x86 machines that still dominate computing evolved from that IBM PC, and where competing platforms died out (68K, PPC, even Macs switched to being a brandname based on the x86 hardware that everything else uses); and the OS running on 90% of those machines evolved from a family of operating systems descended from DOS.
Also there is the issue, as I say above, the problem here is not with the currency itself, but what happens when you give that currency to someone else to "look after" it. Other competing virtual currencies still have that same problem, AFAIK. I'm not sure how this could be solved by the implementation of the currency itself? Note, Bitcoin already offers the ability to store the currency yourself, and trade for other currency yourself, it's just that online exchanges are much more convient for doing trading. I did once use an exchange where you can trade direct with people, but it's less convenient to use.
It would be interesting to know how much he's lost as a proportion of what he had - if it's most of it, he is indeed foolish, and surprising for a Bitcoin developer. On the other hand, maybe he is filthy rich (not implausible, for someone in to Bitcoin from an early stage). Why go to the police if it's only a small amount? Well, I'd still report theft of my wallet to the police, even if the cash on there was a tiny fraction of my wealth, most of which is stored in banks.
Your arguments about "pretend bits" "backed by... nothing" make no sense; modern currency is not backed (by definition of being "fiat"), and I don't think being virtual stops this being theft (or some kind of crime at least - if a hacker causes damage to information which results in a loss, good luck claiming it's just "pretend bits").
Plenty of Bitcoin supporters and users would like regulation and certainly more security, I'm not sure how many want "wild west". Different people have different views. Bitcoin doesn't need to be "backed", as Bitcoin *is* the thing being bought (gold isn't backed by anything else).
"Richard Broadley is ... 12th most active contributor to the Bitcoin protocol ... He is one of a number of people who contacted The Reg to ask what to do if they had lost their Bitcoins"
..and there's the problem with bitcoin. If one of the guys writing the code doesn't understand it, what chance does anyone else have?
I agree the techo babble does not make bitcoin a currency. But it is worse bitcoin does not have any strong sponsor backing up it's value.
As illustration of the risks of Bitcoin as opposed to the more established FIAT consider the following hypothetical situation.
Take for example a small country previous part of a union with another larger country declares independence and starts to print exact copies (forgeries) of one of the popular FIAT currencies. How would the state whose currency is being ‘forged’ react?
I am guessing that after a certain amount of diplomatic ‘cease and desist’ the respective owners of these currencies will react as below:
GBP - SAS slips across the border destroys the printing plant and all stocks of currency
EUR (France) – the Foreign Legion invade the place, destroy the printing plant etc. Plus the DGSE sink any ships registered to the example country
USD – take off and nuke the place from orbit
And so on ….. oh yes and what does the bitcoin hegemony do?
Bitcoin – anonymous attack randomly selected web sites
It's not possible to print Bitcoins though, is it?
The closest situation would be if someone found a bug that make it possible to give themselves extra bitcoins in the block chain. In which case the response from the "bitcoin hegemony" would be to patch the bug. And if it was severe enough roll back the block chain to undo the damage.
And hey, no one gets blown up. That's plus, right?
"But it is worse bitcoin does not have any strong sponsor backing up it's value."
So you're suggesting something like "iBucks", "Amazon Gold", "Google Cash", "Windows Dollars 8.1 Home and Office", or "Oracle Coins", then?
Ew, I just had a chill... going to go hide under the covers for awhile.
Wouldn't it be ironic if the security flaw that lead to this theft were traced back directly to his code...
One thing I learnt early on in my programming career was to tone down the outrage when I found a flaw in a project I was working on. Because sometimes (whispering) the stupid careless prat who caused it is yourself.
The only thing that's changed of late is that now the flaw in someone else' project can sometimes be traced back to my project. That's the ugly side of everything being on a network and SaaS :-/
Proof that even smart people can be unbelievably stupid at times. Why was this genius keeping £200,000 of bitcoins he had no immediate need to be actively trading on an exchange? An exchange that for years had a record for incompetence and lax security? Instead of in multiple encrypted geographically-diverse copies of a cold storage wallet?
Hummm seems that Bitcoin community has a lot of growing up to do... If this "leading" dev is representative of their mindset. I love it when freetards run to the authorities and cry for protection at the merest knee scratch.
You might have noticed that most stable currencies are backed up by a society with a strong legal & enforcement system ... to protect users of the currency against such mishaps. If you create a currency without any mechanisms to protect its integrity and outside of the usual legal frameworks - don't expect the law to come to the rescue.
Oh Wait! Should I also call the Nigerian police because the widow of a Nigerian prince who promised me millions of pounds never called back after I sent her £5000....?
Or maybe I should call sue Microsoft because my pirated version of office is full of malware?
~~~ Thanks for the laughs.
Cars and stamps have real intrinsic value. If you started printing your own Monopoly-style money and using it to barter with your friends you couldn't expect the police to value it as anything other than paper and ink.
Glad to hear that anything that exists purely as a pattern of ones and zeros is fair game then. I 'm just off to download all the software, music, movies and games I feel like without paying the rights owner a penny. Either that, or your logic may have a teensy flaw in it.
"Do you know anything about what happened at MtGox? Get in touch and let us know. "
And that, in a sentence, sums up the whole thing really. I read a long article only yesterday which claimed it was going to tell me but turned out just to be a list of things it *wasn't*.
Easy to be smug in hindsight and you have to feel sorry for the poor sod; but keeping £200K on internet-facing ANYTHING -regulated or not- is just asking for trouble.
I was toying with the idea of dipping a toe in around Xmas and the first thing I looked up was how to get my one (count them...one) potential bitcoin off the net. Glad I didn't now.
Sadly, there seem to be a number of banks that can't write/maintain basic transaction software.
And, lets face it, our banks are too busy playing around with complex derivative products to play with BitCoins, which are a small-fry compared to the games the banks already play.
The Japanese police (Not any worse than the UK police though..) barely do anything when crazy drunk old farts are trying to kick your windows and doors in (true story) so I doubt they'll put much effort into chasing a crime that can't be traced back to anyone unless MK stole the coins or lost them/the passwords... I think the best he can hope for is that they get pissed off with trying to actually work out what happened and will revert to their normal tactic of questioning and bullying until they get a confession from MK that he stole real world money.
I suspect they'll have their crack detectives working in shifts to get to the bottom of these shenanigans. Your money is totally safe dude, it should be getting back to you shortly after they have sorted out the nefarious details... Oh it just goes on. There's a sucker born every minute
People are completely out of mind nowadays.
The whole Bitcoin and cryptocurrencies are a huge fraud created by bankers.
It's all illegal. No taxes are paid on this money. There is no control. It's just dirty black market.
It's what bankers wanted to steal money quicker from people and move legal money from banks too.. so still stealing from people worldwide anyway.
Bankers must be jailed. And all the politicians that work with them and help them stealing money from people.
>>"The whole Bitcoin and cryptocurrencies are a huge fraud created by bankers"
Please tell me you're kidding? This requires the same degree of determination to scapegoat that believers in The Protocols of the Elders of Zion require. For one, "bankers" by which I assume you mean influential and rich people in the banking industry and not some conspiracy of branch managers, are not in some global conspiracy to hype and steal Bitcoins. How do I know this? Because even small players in that area are dealing in millions of pounds. Which rapidly becomes tens of millions as you go higher and then to sums that would make your eyes bleed trying to count all the digits. What's the sum value of all Bitcoins? It barely registers on the scale of "bankers".
As to it being some means for bankers to steal money quicker (you mean "more quickly, btw"), that's both ridiculous because of the aforementioned amounts, and because banks don't need to commit fraud to siphon money from you and me. It's called interest rates.
Seriously - it's staggering how little you have thought your conspiracy through.
Bitcoins are what they appear to be - a very clever set of algorithms implemented to create a novel currency which may or may not be able to establish itself long-term but is buoyed up by a combination of optimism and opportunistic speculation. We don't know where it will go, but we're pretty sure where it came from isn't a conspiracy of "bankers".
I doubt you'd all be saying what you are if the story was "uk bitcoin dev mines coins for a few quid on mother's leccy bill, sells 450 in December for £300,000". There's all sorts of reasons to not see where something's going and I'm sure there are many that regret things they've done, TheReg commentards among them.
As for bitcoin itself, I think it's more of a commodity than a currency and all you need is someone else to put a value on something they want to buy. There are lots of things you can buy that loose their value.
So... My Space1999 cards from late '70s might be worth something?
A quick search on eBay tells me... yes.
Depending on their condition, and which cards exactly you are talking about, they're worth anything between a few quid and a few hundred.
Now, if only I'd held onto my original 'horror' Top Trumps from the same period. As you can see, scarcity, and subjective value, makes things more valuable. Whodathunkit?
>>"Well, if he had been clever and made serious (real) money from bitcoins he wouldn't be sniveling about loosing them all due to his own stupidity now would he? therefore we wouldn't be gloating."
While the image of someone opening the back of their computer and sending hordes of scampering BitCoins out across the fields crying: "You're free now, little BitCoins, Free!", I believe the word you are looking for is "losing".
When mocking someone, particularly when they've just lost (not loost) a lot of money, try not to display a level of English below GCSE level.
>>"Yes, well you see I'm not LOSER enough to painstakingly run letter by letter through my posts because I'm scared some arsehole pedant will find a typo to pick up on."
Well I don't expect you to use the correct word out of fear, more because you have a passable grasp of English. Anyway, you were self-admittedly gloating over someone losing a very substantial amount of money due to software flaws - you really ought to be able to take it when people here correct your English.
>>"And there I was thinking you were correcting my spelling, maybe it's you that needs the English lesson."
Not really. The word was a correctly spelled word, but was the wrong word for what you meant. So it's fine to say I corrected your English, because I did. Besides which, correct spelling is an element of correct English so even if I had been correcting your spelling rather than your choice of words what I wrote would remain correct, Your attempt to try and turn things around and point out a flaw in my own post is pathetic. For someone who so revels in handing out criticism and mockery, the tiniest correction seems to send you into a tail-spin.
>>"he hasnt lost any money, he lost some data blocks"
BitCoin is money, used for buying and selling things. If you genuinely think that because something is represented as numbers on a computer system (such as your bank account) that it cannot be money, then you have a little catching up to do with how things have gone over the last few decades.
Really, there are plenty of valid (and interesting) questions about BitCoin to do with economic management, security and divisibility. Critics who resort to denial of reality just weaken their own position.
With any investment, one of the key things is to spread your risk, and knowing when to get out. I had a modest holding of bitcoins that I sold when they reached about $1000 each , I only paid dollars for them, I've always kept them in different places.
Why are some clever people, so stupid?
That will be one developer who hadn't thought to read up on zero trust then. Was this trading money, or was he confusing the exchange with a bank? Even my semi-legitimate share broker is fairly obviously not a bank and the nominee holdings I have with them are a fairly obvious risk exposure.
He who holds the private key holds the ability to destroy (or have stolen) the coin. A developer would, one might reasonably assume, know this. Ergo, you are not taking to a developer.
He clearly didn't have much of a clue because it was obvious that MtGox was faltering from about July 2013 onwards.
The point of bitcoin is to have a currency out of the control of the banks and central banks. This doesn't preclude people from complaining if fraud has happened - and in my opinion MtGox has been up to some dodgy tricks with other peoples money.
The great thing about Bitcoin is its basically a distributed public ledger - which means that anyone can see any transaction. The problem is that the transaction malleability 'bug' excuse by MtGox does not appear to tally with the truth - if it did you would see multiple transactions for the same amount retransmitted over and over to the same wallet - and this isn't the case.
There are proven transactions in 2011 from Gox where 400k BTC was transferred out - and these lead to several wallets with (for example) 50,000 BTC just sat there doing nothing. But it's not possible to determine who these wallets belong to.
So IMHO this leaves two possibilities: 1) Fraud - ie. someone from MtGox took the coins and is going to use them later OR 2) Stupidity - MtGox lost the key(s) to the coins.
If (1) is true then MtGox should be held criminally liable. If (2) is true then 7% of coins have disappeared and therefore the BTC is more valuable.
On the fraud side - there are suggestions that MtGox crashed the price of BTC on their own exchange so they could buy BTC cheaply, transfer it to another exchange and then sell it to try and recover some of the money... (allegedly of course).
I know how some enterprising individual can walk into the office of a VC and leave with a wagon load of cash.
There's an offering for everyone! Exchanges, customers, software developers, everybody. Anybody at any point in the Bitcoin life cycle could benefit. For a small fee of course.
Nobody would deal with uninsured exchanges. Merchants would buy in with easy to embed Bitcoin code snippets and the payment and cash conversion would be insured (for a small fee, of course).
Software developers could sell insured wallets (after a security audit (and a small fee of course).
You could even bundle policies and resell them, just like traditional insurance companies do. There's also no better way to validate an industry than an insurance market developing around it.
I fucking hate insurance and insurance companies. As such, I'm not interested in any parts of this. But one of you bright fellows should run with it.
Yes, it's uninsurable - because there is no way to differentiate between 'I got my bitcoins stolen by someone guessing my password' and 'I transferred my bitcoins to a new wallet and lied to you'. You could insure the exchanges against failure or theft, but then the risk is such that you'd have to charge a pretty monster fee to cover it, since virtually every exchange out there is fly-by-night, coded by a self-taught nerd, running from a PO box office, and sometimes virtually indistinguishable from a ponzi scheme.
Look at Lloyd's. English Ships of the Line were some of the most atrociously built examples of naval architecture in history. But Lloyd's still insured them.
Pricing would be just like pricing insurance for any non-commodity or artwork or show dog. You can break a Bitcoin down into small bits, so if a guy like in this has a good pile of them he wouldn't care one bit to pay to insure them. He'd pay a lot more now..,
You also get into the 'individual mandate of responsibility' of law (not stupid health care law). That is at the core of Western law and states that the individual must take all reasonable and prudent measures to protect their property before public resources are used to protect private property'.
Basically, if your pile of gold gets stolen but you were keeping it a nylon tent in the woods then tough shit. That was just dumb. In today's world the police have to file a report if you want to 'officially' record the loss, but that's it. If they are working on another case and happen across your gold they'll return it. But they aren't going to go looking for it, and they don't have to.
But if your pile of gold was kept in a secure place and reasonable and prudent measures in line with the value of what was stolen are used law enforcement is duty bound to actively work toward recovering your gold and punishing those who stole it. (Interestingly, that individual mandate of responsibility is why national law enforcement resources are used to track down people 'pirating' music. They've taken all reasonable and prudent measures to protect their property.
Where I'm going with that, is that insurance is one of the fundamental measures that determines if you're actually trying to protect your property. No police force on Earth is going to track down the Bitcoins this guy lost. If he'd would've had them insured the police would look a little harder.
Yes, bnecause Lloyds took the value of a ship (e.g. £1000), multiplied it by the risk of it sinking (e.g. 0.1), and then charged that amount PLUS A BIT (e.g. £125) to each ship owner. When 10% of the ships sank, thay paid out the £1000, but in this example, on average, they made £25 profit on each. As long as insurers calculate the risks correctly, and always charge a premium over that risk, they make a profit. It doesn't matter in the least how badly the ships are built in the first place.
At a loss of around 7%, that company may be in big trouble if the insurance had just 2% markup... :/
I would have thought this would be more like car insurance where the premium is closer to the cost of the actual vehicle, than house insurance where it's negligible.
Keeping the BTCs on Mt. Gox. Sure, many people were speculating and thus going to and fro between BTC, USD, EUR and such. The thing is, if you really care about the amounts, you really really shouldn't leave a large balance on the exchanges. I learned that the hard way during the Second Life bank collapse of 2007. Though the worst money loss wasn't the broken banks … it was the World Stock Exchange which basically made off with a lot of money. Hell, the story even was similar to Mt. Gox sans the legal action.
Why would someone invest £200K in a one-man-band website written entirely in PHP by a self-taught coder who only a few years ago was sending plaintext passwords in the site's URL and posting repeated "hey guyz how I maek SQL work?" questions on forums?
I can understand non-techies being swindled out of their money by the Magic: The Gathering Online Exchange ponzi, but for anyone with even a slight technical leaning (and certainly for anyone with a developer background) the site was a laughing stock of coding horror and disasrter to avoid at all costs.
Having seen some (alleged - http://pastebin.com/W8B3CGiN) source code from MTGox, I'm starting to lean more towards a hack of their pretty dodgy code as the source of the leak (structurally it's not bad, but lacks any manner of sensible error logging, or indeed much logging at all, and it's somewhat inconsistent, oh, and coding bank/exchange-lite software using PHP(!)), rather than any issue in the bitcoin source code. There have been accusations that Mark Karpeles vanity may have been to blame. At least they are using transactional SQL, lack of which was blamed for another exchange hack this week.
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