Bitcoin Crash



  • Just yesterday someone posted this video in Youtube: Bitcoin Report Volume 8.

    So the value of a bitcoin dropped from approximately USD 17.00 to USD 0.01. I know some real currencies have gone through such value drops in history, but never so fast and by the hands of a single malefactor.

    They're trying to fix the mess now, but IMO, this is the price you pay for a system so descentralized and uncontrolled, and developed around anonymity.



  • SomethingAwful got blamed for this and someone actually took out a contract to have the site hacked for 5 bitcoins an hour. Even if the plan could have worked, I doubt there'd be any takers at this price.



  • @Soviut said:

    SomethingAwful got blamed for this and someone actually took out a contract to have the site hacked for 5 bitcoins an hour. Even if the plan could have worked, I doubt there'd be any takers at this price.

    I think this is a separate crash, based on malware stealing people's wallet.dat (or whatever) and then trying to sell the ill gotten bitcoins. IIRC, the site is planning to roll back all trading and start over. Reminds me of the Tom Clancy book where the Japanese crashed the NYSE.



  • But if you can rollback transactions just like that, what keeps me from buying something with them, then rolling the transaction back? Because unlike credit card transactions, these things are supposed to be "untraceable".



  • Did the people who designed bitcoin try to make the most unfeasible form of currency or did it just happen out of economic ignorance. Here is the slashdot post about the crash if you want to look at the comments for some reason.



  • [quote user="Renan "C#" Sousa"]
    But if you can rollback transactions just like that, what keeps me from buying something with them, then rolling the transaction back? Because unlike credit card transactions, these things are supposed to be "untraceable".
    [/quote]

    I suspect that there's some sort of escrow process that happens before this place actually does the bitcoin to real life currency. Or something. Who knows. They may simply not push out their transaction immediately, so even though you can see transactions on their page, they haven't propagated to the rest of the world.

    From the MtGox support page

    @MtGox said:

    The bitcoin will be back to around 17.5$/BTC after we rollback all trades that have happened after the huge Bitcoin sale that happened on June 20th near 3:00am (JST).

    One account with a lot of coins was compromised and whoever stole it (using a HK based IP to login) first sold all the coins in there, to buy those again just after, and then tried to withdraw the coins. The $1000/day withdraw limit was active for this account and the hacker could only get out with $1000 worth of coins.

    Apart from this no account was compromised, and nothing was lost. Due to the large impact this had on the Bitcoin market, we will rollback every trade which happened since the big sale, and ensure this account is secure before opening access again.


  • Apparently one of the reasons is that one of the early, early adopters (who owned something like 30-40% of all bitcoins) got his bitcoin ID file (or whatever) stolen, followed shortly by identification of some malware designed specifically to look for bitcoin ID files and steal them.

    So basically they're in a world of shit right now.



  •  It's not that bad, actually. Someone got access to a MtGox account with 500k BTC on it and sold about half of them for $0.01. Since it's impossible to add new orders while another one is "in progress" (WTF!), other people couldn't buy the cheap BTC unless they already had a buy offer open before the attack. So they were watching that big trade to end (it took a few minutes), and then the price was back at 12$/BTC quickly after that. Then MtGox went offline.

     MtGox will roll back all those trades. That's possible because they took place only on MtGox. It's simply shifting some numbers in their database.

     Some traders moved the bitcoins they bought for 0.01$ out of their MtGox accounts (into their private wallet) quickly. These transactions can't be undone, so MtGox probably lost quite a few BTC. But it won't kill them I guess. And there is a payout limit of 1000$/day (or the equivalent amount of BTC).

     

    Sure, it makes BitCoins look bad. But nothing of big value was lost. OTOH, I suspect the exchange rate will go down quite a bit because a lot of people lost their trust in BitCoins. Including me, but I only own 0.81BTC right now, so it won't have any noticeable effect. :)



  • Did anyone really think that Bitcoins would ever work?

    Well, besides the Bitcoin people.



  • @Juifeng said:

    But nothing of big value was lost.

    FTFY.



  • @MiffTheFox said:

    Did anyone really think that Bitcoins would ever work?
     

    Well, it depends on people's goals. I'm sure it would work wonderfully if everyone using the system were dedicated to building the community and making the system work.

    Of course, normal people value a particular amount of dollars more than an "equivalent" amount of BitCoins, so most people will be using the system in an effort to extract from it a greater number of dollars than they put into it. This will continue to happen as long as dollars are more useful than BitCoins. If that doesn't change, then it'll fail eventually even if everyone plays by the rules and no accounts are compromised.



  • [quote user="Renan "C#" Sousa"]So the value of a bitcoin dropped from approximately USD 17.00 to USD 0.01.[/quote]

    Wait... bitcoins are actually worth $0.01? Still seems like a waste of a perfectly good penny.



  • @Alex Papadimoulis said:

    [quote user="Renan "C#" Sousa"]So the value of a bitcoin dropped from approximately USD 17.00 to USD 0.01.

    Wait... bitcoins are actually worth $0.01? Still seems like a waste of a perfectly good penny.

    [/quote]Virtual currency has had value for a while.  Otherwise chinese gold farmers wouldn't exist.  I'm surprised Blizzard hasn't actually tried to make Wow's currency "public" 

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