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Shoot me down, but a few members seems a bit obsessed with this thread.  There are a lot of threads on HOUSEpricecrash and other things to do in general than aggressively defend Bitcoin (e.g. see fami

They could certainly put various things in place to try and stop but I just don't seem them doing it. Obviously they could make dealing, trading, holding or using bitcoin punishable with 10 years

Bitcoin Cash can and will scale on chain. The technology advance within the next decade will allow it to happen with ease and always remain ahead of demand. What Core have done to Bitcoin is criminal

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The MtGox team are stalling for time...

I'm surprised that Roger Ver (so-called "bitcoin jesus" and major investor in mt.gox) hasn't distanced himself from this pile of 5hit.

- or at least come out and explained what's going on.

He is one of the biggest and most respected people in Bitcoin and people listen to him and trust him. He could assure people that everything was OK.

If he is not saying anything, something is wrong.

edited for clarity

Edited by dolce vita
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Interesting tale about a visit to Mt Gox

Interview with Gonzague Gay-Bouchery, Manager Business Development

Q1. What is causing the withdrawal delays?

• Well, because Gox is the best known of all the exchanges, we have been under the regulatory spotlight.

• This has created problems with government agencies, and also with our banking partners.

• There are also some ongoing investigations, which we cannot talk about.

3. A great way to buy time for a liquidity problem?

• No, it’s a technical issue.

Q5. Try to explain it to me.

• Its technical

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I was told that up until a few weeks [at time of the interview] ago, there was hardly any development environment to test changes. Most changes were done straight on the production environment.

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I'm surprised that Roger Ver (so-called "bitcoin jesus" and major investor in mt.gox) hasn't distanced himself from this pile of 5hit.

- or at least come out and explained what's going on.

He is one of the biggest and most respected people in Bitcoin and people listen to him and trust him. He could assure people that everything was OK.

If he is not saying anything, something is wrong.

edited for clarity

An alternative, less conspiratorial explanation from Reddit:

Because the quotes are irreparably messed up I'll write up a long form explanation:

Some background: MtGox runs custom wallet software.

This is a reasonable and common practice for a service of its size and nature.

Getting a wallet implementing right isn't easy as there is very little room for error, much like the rest of the Bitcoin system.

Some have criticized their use of custom software here but it is a reasonable and common practice for a service of its size and nature. The reference client's wallet is basically suitable for small scale single party use. I would not recommend something like MtGox use the reference node wallet, at least not without a healthy layer of abstraction on top of it— relieving it of duties harder than key management and chain monitoring— or otherwise improving it greatly.

(For that matter, MtGox's wallet software has caused them fewer concerning problems than some other companies. (E.g. some have completely re-implemented the Bitcoin protocol, incorrectly, and exposed it to the outside world and suffered numerous local blockchain rejecting glitches). Though its certainly taken Gox a fair amount of time to sort things out.)

I first heard people reporting stuck transactions back in ~September. I looked into it and determined that Mtgox was spending immature coins. Freshly generated Bitcoins (from mining) can not be spend until they are at least 100 blocks deep in the blockchain. This prevents the funds from vanishing forever if the chain reorgs. I pinged magicaltux and after a couple tries got ahold of him. I think they also wasted some time on dead ends trying to resolve this before the actual nature of the problem was brought to their attention, e.g. raising their transaction fees with a mistaken belief that their fees weren't high enough.

Mtgox wasn't tracking if the coins were freshly generated or what their height was in their software. Including this data would apparently be a non-trivial change, and for high risk finance software even a trivial change takes a lot of work. I suggested a workaround (basically, just try to spend the oldest coins), and as far as I know they implemented it and it was effective.

They continued to have problems with stuck transactions after, and further analysis revealed that they were producing transactions with excessively padded signatures. A minor tangent is required here:

There is a design flaw in the Bitcoin protocol where its possible for a third party to take a valid transaction of yours and mutate it in a way which leaves it valid and functionally identical but with a different transaction ID. This greatly complicates writing correct wallet software, and it can be used abusively to invalidate long chains of unconfirmed transactions that depend on the non-mutant transaction (since transactions refer to each other by txid).

This issue arises from several sources, one of them being OpenSSL's willingness to accept and make sense of signatures with invalid encodings. A normal ECDSA signature encodes two large integers, the encoding isn't constant length— if there are leading zeros you are supposed to drop them.

It's easy to write software that assumes the signature will be a constant length and then leave extra leading zeros in them.

In order to eventually remove this malleability flaw we've been gradually tightening the rules that govern what transactions nodes in the network will consider valid when they relay them or mine them. In Bitcoin 0.8— after months of work chasing down software authors to get them to fix their bugs transactions with these invalid encodings were no longer relayed.

This caused some problems for a few things.. For example bc.i's iphone app— BC.i itself had been fixed long before but they couldn't update the Iphone app without fear of triggering another review by Apple. Eventually this was just worked around on the server side by mutating the transactions produced by the iphone wallets. (And is moot now, I guess!).

MtGox also had problems with occasionally producing invalid signatures. This would normally be a simple fix. E.g. here is an example where I fixed this type of issue in some python wallet code I've never used (but saw a lot of people were copying): https://github.com/jgarzik/python-bitcoinlib/commit/4c64603ab60b0fa23c51090b3112be2f163aeeac

But as I said before, in high value systems like Mtgox, even simple fixes aren't simple and it took them quite some time to deploy a fix. However, I believe that it is actually fixed now.

My current understanding and inference is that the remaining issues are because while MtGox was producing transactions of the bad form that the network won't relay anymore— some people decided to help out by 'fixing' these transactions like BC.i did for iphone users— making the signatures normal and broadcasting them. Of course, the new transactions— while functionally identical— have different TXIDs.

The difference here is that the MtGox wallet software appears to have not handled this case gracefully at all, and apparently simply wouldn't notice transactions that it "didn't make" spending its own coins.

As a result the Mtgox wallet believed some coins were available for spending which really had already been spent and it began double spending those inputs. This may have interacted particularly poorly with the earlier workaround I mentioned— trying to always use the oldest available coins— if they did implement that workaround.

Worse, some of this may have resulted in users getting paid multiple times and could have been intentionally triggered with that end in mind if someone helpfully fixed some transactions and then noticed they got paid twice. (I think this is unlikely to have caused large losses, before people run off worrying about that, both because of the reuse of the oldest inputs and because of the hot wallet/cold wallet split).

At this point they likely have an accounting mess to clean up— figuring out who did and didn't get paid now with none of the txids matching. Cleaning that up will be somewhat tricky E.g. say there were three payments of MtGox coins to 1Apple in the block chain... and three users that attempted to pay 1Apple, and MtGox's records thinks that only one went through.. etc. So software will have to be written that matches up transactions with their mutants in order to figure out what went where.

I am not personally concerned— at least not by any of the details here. MtGox's slow speed at resolving these sorts of issues and poor communications are not terribly inspiring. They seem to be horribly short staffed— but competent and trustworthy people in this space may be hard to find: The regulatory morass of that business is sure to make many steer clear.

The claims that the delays indicate insolvency strike me as just hysteria: the technical background doesn't support this conclusion, and there may be a bit of opportunism at play from people who want to manipulate the market too. Don't get me wrong: I have not seen their books: Gox may well have financial problems— though with their income its hard for me to see how— but if any problems like that exist they're not being indicated here.

Of course, none of this suggests anyone should be happy with the service MtGox has been providing, but our anger should at least be well informed.

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Bitcoin uses elliptic curve cryptography to provide secure communications and proof of ownership of coins. This is generally regarded as state-of-the-art, and is also the same as is used by the "quark" cryptocurrency.

Quark's main difference is the use of a different "proof of work" algorithm. This algorithm has relatively little impact on the security of the currency, it merely serves as a measure of computing power. Essentially double spending of coins is prevented by distributed, networked computers validating the transaction and then passing it on with a "proof of work". (Gross oversimplification coming warning!) Effectively, the network "votes" on teh validity of a transaction, with completion of a "proof of work" representing a vote. Transactions which don't get 50% votes, are deleted. Since the amount of work that needs to be done automatically adjusts to the amount of computer power available to do it, if some new technology or method comes which subverts the proof of work, then the amount of work that needs to be done will increase in lock-step. We have seen this with the development of GPU mining, then later custom mining chip development.

BTC uses the SHA-256 algorithm as proof of work. It's got a few weaknesses, but they are theoretical for the most part, and the impact of these weaknesses is marginal; they are difficult to apply and only reduce the strength of the algorithm a few fold.

Quark uses 6 different algorithms one after another. Fair enough, if there is a weakness in one, it avoids the whole chain being weak. It's said to be GPU and ASIC resistant, but I don't know how true that is. If it really is 6 chained algorithms, it'll make GPU and ASIC processing more difficult, but not that hard.

A better algorithm is actually used by litecoin, and pretty much all clone coins, called scrypt. This is a repeated application of SHA-256, with a complex, shuffling operation between stages, which uses a large amount of memory. Memory is a major limiting factor for the devleopment of ASIC processing and greatly erodes the benefits and increases cost. It hasn't stopped scrypt ASICs appearing, but they aren't the gamechanger that SHA256 ASICs were for BTC.

The latest clone coins have moved to dynamic scrypt - scrypt has a "difficulty" setting which controls the amount of memory used. For litecoin, this has been fixed at 1, and the scrypt ASICs coming to market are designed for difficulty 1 only. Clone coins (like Virtcoin) now change the difficulty with time, gradually increasing it, making it impractical to use ASICs because of the limiting cost of the memory.

Thanks for that rex!

I dont want to libel bill still...it may have been one of his snowden videos that was critical of bitcoin, i watched about a dozen of his vids in a row so may not have been his opinion but a 3rd parties.

I too have heard from multiple sources that litecoin is the better currency security wise, though IIRC from a monetary POV it has more inflation built in.

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I'm surprised that Roger Ver (so-called "bitcoin jesus" and major investor in mt.gox) hasn't distanced himself from this pile of 5hit.

- or at least come out and explained what's going on.

He is one of the biggest and most respected people in Bitcoin and people listen to him and trust him. He could assure people that everything was OK.

If he is not saying anything, something is wrong.

edited for clarity

By bitcoin Jesus, you mean Central Banker Mouthpiece, dont you?

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You don't need to freeze a system to see what's going on, it's utter ********! If you want a snapshot of a system, you simply put a where clause on your report that filters by date or you restore a copy of the database to test with. Do they think we're stupid?

I'm surprised that Roger Ver (so-called "bitcoin jesus" and major investor in mt.gox) hasn't distanced himself from this pile of 5hit.

- or at least come out and explained what's going on.

He is one of the biggest and most respected people in Bitcoin and people listen to him and trust him. He could assure people that everything was OK.

If he is not saying anything, something is wrong.

edited for clarity

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Bitcoin threatens cleptocracy and through that bitcoin saves capitalism

Andreas Antonopoulos nails it again:

Wow!

Can someone post this on the front page or start a new thread? I fear the bitcoin angle will turn some people off, but he talks complete sense.

Rent-seeking, too big to fail..... he sums it all up perfectly.

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Wow!

Can someone post this on the front page or start a new thread? I fear the bitcoin angle will turn some people off, but he talks complete sense.

Rent-seeking, too big to fail..... he sums it all up perfectly.

Andreas is probably the best spokesperson for Bitcoin. Here is a video of him speaking at our Bitcoin meet-up last week....

http://www.iamsatoshi.com/coinscrum-alternative-stage-london/

(He is so polular at the moment, that this meet-up last week was the world's biggest ever - attracting over 200 people, many of whom had travelled a long way to see him)

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They warn that BTC can be used for "illegal activities". A bit like dollars, roubles and sterling?

They haven't banned BTC. Yet.

Isn't declaring something illegal effectively banning it? But does sound to me like it has been banned?.....

""Systems for anonymous payments and cyber currencies that have gained considerable circulation - including the most well-known, Bitcoin - are money substitutes and cannot be used by individuals or legal entities,"

Separately....

I notice, as of few moments ago, that MtGox dollar price is now better part of 100 dollars less than quoted elsewhere - whereas last week, for a period, it was about 100 more.

Edited by anonguest
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Alas most of them seem to be buying London property at the moment. :D

and getting their fiat savings and pensions plundered.

The real suckers have all their eggs in the govt/FRB basket, directly or indirectly. History shows they collapse with a probability of 1.

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No taxpayer bailout for Gox. They screwed up, they are gone.

The beauty of the free market in action.

Oh, for a free market in all other financial dealers!

MtGox have been involved in many of the extreme price moves one way or another. It would be good if they just imploded completely and left it to more competent individuals/companies. I suspect they will be pretty much irrelevant if they survive this episode anyway, mind.

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MtGox have been involved in many of the extreme price moves one way or another. It would be good if they just imploded completely and left it to more competent individuals/companies. I suspect they will be pretty much irrelevant if they survive this episode anyway, mind.

+1. Silkroad gone, Chinese pumping the price up sorted, US Gov not banned BTC, now we just need Gox gone for stability for now, followed by a good old fiat scandel like Cyprus or a another Bear Sterns / Lehman Brothers.

Then the price will break upwards of $1000+. But around the $900 mark was plenty profitable for me mining for now. At $500 not so much but still far from loss making.

M

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As it says, if breaks 500 then going to 100. Probably time to buy then when everywhere will be screaming sell. Certainly worth a punt at 100 ish

This is all caused by MtGox turmoil, which will sort itself out soon enough.

Expect prices to go back up to $800 sharpish soon enough

This is deffo a good buying time. Especially if it goes under $500.

Just wish I could time the sells!

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