
Bitcoin Exchanges Under ‘Massive and Concerted Attack’ - qwerty69
http://www.coindesk.com/massive-concerted-attack-launched-bitcoin-exchanges/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CoinDesk+%28CoinDesk+-+The+Voice+of+Digital+Currency%29
======
zacinbusiness
I've not bought in to Bitcoin yet. It just seems like a massive, world-wide
scam to me. I'm not saying that it is a scam, I'm just saying that Bitcoin is
something that I don't really understand, and so I don't entirely trust it.

That said, this event is extremely encouraging. Not only is the security and
the viability of the currency being tested. But more importantly, the
communication and cooperation between the major players in the Bitcoin
ecosystem is being tested. And so far, the community is kicking ass.

To me that signals that perhaps Bitcoin really is a viable currency for the
long term, and that it may really be a great way to think about money and
value exchange.

~~~
lukifer
It's easy to get confused by BitCoin's technicals; it's the difference between
reading an article on Wikipedia, and examining that article's source code (or
the various web protocols that deliver it to you).

At its core, BitCoin is unbelievably simple: a ledger of account, no different
than an Excel file, distributed across millions of computers, kept honest
through offering rewards for protecting the ledger's integrity. There's really
no such thing as a BitCoin, just a row in that ledger that says "1.23456", and
only the holder(s) of the key for that row can send a portion of that number
to a different row. Like with any form of money, any value derived from that
ledger is purely a product of collective belief.

BitCoin is roughly at the place where Mosaic was in the early 90s. The real
story isn't about BTC becoming the new world currency; it's a technological
and sociological prototype of a new type of distributed application which has
only barely begun to be explored.

~~~
brian_cloutier
Unfortunately in that respect Bitcoin is a bit of a one-trick pony. It relies
on the honesty of a plurality of the network hash-strength.

Systems which use the bitcoin mechanic need a lot of adoption before they
become trustworthy.

~~~
bduerst
Not only that, but the bitcoins themselves need solid liquidity before
becoming a feasible currency. That's impossible with the impending cap.

Right now, bitcoins are treated like digital gold. People hoard them and treat
them like investment assets.

And for the same reason the world's major currencies unlinked from gold,
bitcoins also exhibits recessionary behavior. (bad news for a currency)

~~~
dnautics
Another narrative goes as follows: The world's major governments unlinked
their currencies from gold because it proved inconvenient for their regressive
redistribution activities - cronyism, military-industrial complex, propping up
the banking system, etc (not saying it's a conspiracy, just a natural
consequence of authoritarianism). Note that the US unlinked in 1970 and the
last year that the GINI coefficient improved was 1973. FDR temporarily
unlinked in 1933 and we had the great depression [1].

This narrative is consistent with 1000s of years of history, e.g. Diocletian
cutting his gold dinars with silver [2] (and enforcing its fiat trade value),
many many examples in small european fiefdoms prior to the dark ages, and
again at the end of the renaissance.

At the end of all of these periods, the survivor was gold, because it kept its
value and inflation proved to be unsustainable and extremely destabilizing to
the society by propping up incompetent economic and political 'winners'.

[1][https://www.youtube.com/watch?v=JUvm9UgJBtg](https://www.youtube.com/watch?v=JUvm9UgJBtg)
[2][https://en.wikipedia.org/wiki/Diocletian#Currency_and_inflat...](https://en.wikipedia.org/wiki/Diocletian#Currency_and_inflation)

~~~
mpyne
> Note that the US unlinked in 1970 and the last year that the GINI
> coefficient improved was 1973. FDR temporarily unlinked in 1933 and we had
> the great depression [1].

The U.S. domestic economy unlinked in 1933, permanently. _Only_ international
trade continued to use gold-backed currency, and it is that aspect which was
finally eliminated in 1973.

Likewise you have mixed up your cause/effect for the Great Depression, which
started 4 years before 1933. On the contrary, the very election of FDR in 1932
was due to the economic crisis, and the unlinking of gold reserves was in
response to the depression, not the cause of it.

One funny thing is that many people who are otherwise economically intelligent
get so confused with gold. Holding currency to a gold standard by some fixed
price would be called "price control" in any other context, and we already
know price controls to be bad policy. By unlinking currency from gold we can
well and truly "let the market efficiently decide".

The biggest irony for me with regard to Bitcoin is that it _proves the fiat
concept_. Bitcoin is literally worth nothing more than what people think it's
worth; there's no physical thing of intrinsic worth underlying it after all.
But this is of course more or less exactly the claim for fiat currency.

~~~
dnautics
> The U.S. domestic economy unlinked in 1933, permanently. Only international
> trade continued to use gold-backed currency, and it is that aspect which was
> finally eliminated in 1973.

If the iternational market for dollars is still linked, in spite of domestic
unlinkage, there is still some level of grounding, because of the possibility
of commodity arbitrage (both directly and indirectly). Certainly there was
inflation during that era, and the dollar slipped so far that it led to
Nixon's actions... But for the most part the standard of living was able to
keep up, largely thanks to technological and infrastructural improvements.
Moreover, you couldn't soak the bankers/financial sector quite as easily
because of the international connection to gold (and international currency
arbitrage is more important to bankers and finance than your average domestic
schmoe).

> Likewise you have mixed up your cause/effect for the Great Depression

Sorry, I should have said, I believe if we hadn't unlinked it we would have
only had a shorter, not-so-great depression (emphasis on great, not on
depression). Obviously, I'm aware that the unlinking came after the stock
market crash of 29.

> Holding currency to a gold standard by some fixed price would be called
> "price control" in any other context, and we already know price controls to
> be bad policy.

No, price controls are setting the price relative to a standard that's backed
up by guns (guns = "control", as in, if you don't do what I say I can shoot
you, or point a gun at you and take you to jail). Dollars are already backed
up by guns, so the notion of 'price controlling' dollars makes no sense. If
anything, you want to back dollars by gold to keep the people with guns
honest.

The dollar is already an 'amarket' entity by virtue of its backing by the
state. A better example of 'letting the market decide' in the context of
'valuing currency' would be letting the interest rate float, without
manipulation, which is also something we most certainly don't do.

>The biggest irony for me with regard to Bitcoin is that it proves the fiat
concept.

There are goldbugs who insist that Bitcoin is silly because it's not tied to
anything with 'intrinsic value'. That's one interpretation of the fiat
concept. But I (and many others) interpret fiat to mean 'by a higher power'
(by analogy to _fiat lux_ ) except in the general case of state currencies,
the higher power being the authority of the state.

Indeed a gold-backed dollar is still a fiat currency, albeit a _more
responsible_ one.

~~~
mpyne
> No, price controls are setting the price relative to a standard that's
> backed up by guns (guns = "control", as in, if you don't do what I say I can
> shoot you, or point a gun at you and take you to jail). Dollars are already
> backed up by guns, so the notion of 'price controlling' dollars makes no
> sense.

On the contrary, with a fixed-ratio gold standard currency it is still the
state who said that a dollar was by definition equivalent with, say, 1/35th of
an ounce of gold (as it was just before the U.S. finally abandoned the
standard for good). But the only reason the government would give you $35/troy
ounce was because of the men with the guns, and the government could change
their minds.

In fact, the U.S. _did_ arbitrarily change their mind several times throughout
their history about "what gold was worth". This didn't change the market value
of gold of course, but this didn't stop the politicians from abusing fiscal
policy for their own interests.

The interesting thing is more that there was a market value of gold which was
_different_ from the "official" government price of gold, which should
illustrate by itself the issue.

Rather there was never anything special about gold except that people thought
it was special. The U.S. started off on a gold _and silver_ standard after
all, which led to problems fairly soon after since the difference between gold
and silver value that Congress decreed was not always the difference the
markets created.

While I'll agree it's possible to have gold-backed fiat currency (like the
Civil War-era greenbacks), there's no reason why it's "more responsible". It's
still just as susceptible to government intervention and it unnecessarily
conflates non-orthogonal concepts for the sake of... what?

Gold was only valuable because people thought it was valuable. If you went to
a desert island you could form an economy on water bottles. Prisoners actually
_did_ form economies on cigarettes, and when cigarettes were banned the
currency shifted to cans of mackerel.

As far as I'm concerned gold-backed dollars make as much sense as dollars
backed by sardine cans. At least true fiat currencies (and Bitcoin) finally
gave up the middle-man and acknowledge that their currencies are worth what
people think they're worth. It may be too spooky, but it's the truth.

~~~
dnautics
Not entirely true. Gold is a good choice because it's chemical properties make
it fungible, durable, and easily verified (using low tech touchstones). These
properties reflect themselves in bitcoin. As for why it's more responsible to
have a commodity backed currency, it's because the exchange rate is set by
statute and any legislator that messes with it is potentially accountable to
the downstream effects.

------
nwh
It's interesting to watch actually, submit a transaction to the network at the
moment and there's a rogue node that will mess with the padding of the
signatures and rebroadcast it _faster_ than the original. It confuses the
reference client into duplicate display, which is what Gox is relying on for
the failed/success display. That they're winning races over the normal related
transactions isn't that unnatural as the transaction processing stuff has a
100ms sleep() in the middle of it.

~~~
ayanb
Also worth noting is the fact that the Bitcoin Price Index has been massively
resilient to all the bad "news" thats been pouring in this month. It has been
consistently hovering around the 670-700 mark.

~~~
eterm
I can't find the article now, but there have been several good articles
explaining the lack of gravity on bitcoin in general.

Basically, the price goes up quickly when new people are attracted to bitcoin
and rush to buy. When the price dips however, because so much is bought for
long term speculation, the price doesn't really dip much, as no one is
incentivised to sell and hold out for when it gets better.

At some point the nerve of those holding out may crack, but if you read silly
saurus2's post, its quite clear that many will hold out indefinitely on the
belief or hope it will one day recover. So in this manner the bubble can
deflate slowly. (If you call 10% in a day slow).

There are no settlement dates or ways to easily move money out (especially
now) so a crash is prevented.

If a crash happens it'll probably happen before people realise it, but
suddenly there just won't be anyone wanting to buy coins anymore.

But even that might not happen as people already invested into bitcoin use how
wealthy they feel to buy bitcoins from each other. That can cycle for a long
time before people realise there isn't new money in bitcoin.

If you had bought coins at 800-1000, why would you sell now? No one likes to
cement a loss.

Those with the most reason to sell right now are the early adopters, but it's
not actually clear how many of those coins are actually reachable.

~~~
pjc50
Also worth noting: you can't buy bitcoins on margin. So no margin calls to
suddenly detonate the market.

~~~
hangonhn
Hang on. Isn't that just a matter of someone setting up a market and contracts
for it? What you mean is that no one has setup bitcoins margins market yet
right? Or am I misunderstanding something fundamental about BTC that prevents
margins?

~~~
vidarh
You can trade contracts for difference (CFDs) on Bitcoin with 1:10 leverage,
including shorting them, at places like Plus500

Great way of taking the risk created with the volatility of Bitcoin and
multiplying up the risk massively so you can lose money even faster...

~~~
roel_v
How are those contracts validated and enforced on sites like that? The SEC
used to watch naked shorts relatively closely before 2008 and it's been banned
since then; but how is that arranged in practice with a currency whose primary
selling point is its anonymity?

------
pistle
Day one: Slander the biggest exchange and hang your neck out calming the
entrenched. "They are amateurs. This is that exchange's problem. $1000 is but
days away."

Day two: Uhh... "Stay calm. This is just the expression of that non-issue
looking like an issue. We know what we're doing."

Bitcoin has, generally, intrinsic crash protection right now. The price can't
plummet if you can't find trading partners. Nobody really knows the price. The
dotcom crash was from lofty to zero. As the price eats through panic sell
thresholds, pants are shat. At least with commodities, people can point to the
ones that went to 0 and stayed there. Since it hasn't happened with bitcoin,
people can still sing the "it always bounces back" tune.

I've kicked the dead horse of stability. I've hinted at liquidity issues, but
this is a grave lack of liquidity. The only thing left is any belief that
there is value. If that starts to deteriorate due to the other issues, _poof_

~~~
NkVczPkybiXICG
Then put your money where your mouth is. There are bitcoin derivative markets
that let you short it. Hell, PM me and I'll personally bet against you on a 6
mo time horizon.

~~~
pistle
If I had a position, I couldn't be considered objective.

Not to mention... the primary exchanges seem to produce that sort of clunky,
bug-riddled system that undermines my confidence. A derivatives exchange? So,
what the come-latelies are working on? They ain't even no Satoshi.

------
rtpg
In another thread, there's a comment that kinda explains what is happening
exactly, in a nice analogy
[https://news.ycombinator.com/item?id=7219266](https://news.ycombinator.com/item?id=7219266)

------
plg
Is the real goal of these attacks perhaps to drive down the price temporarily,
so that the attackers can purchase at a discount, and then sell shortly
afterwards when the price goes back up?

~~~
waterlesscloud
Quite possible a side benefit for the attackers.

~~~
JTon
If financial gain is a side benefit. What do you think the primary benefit is?

~~~
watty
Enjoyment. Some people just like to watch the world burn.

~~~
tedks
That's a very quotable statement, and it is indeed true -- some people are
intelligent and sociopathic enough that they care about their own amusement
more than anything else.

But sadism is very rare, in reality. Most robbers _don 't_ give the rubies
they steal to the village children. Most galloping animals with four hooves
are horses, not zebras.

~~~
pbhjpbhj
If you're on the plains of the Serengeti however ...

------
JohnTHaller
Didn't coindesk just report yesterday that the 'transaction malleability
problem' that MtGox was worried about was already known and a non-issue?

~~~
o_nate
It turns out that "non-issue" might have been a slight exaggeration. I can
understand where the Bitcoin developers are coming from. I mean no one likes
to admit there's a bug in their code. Just read through Microsoft support
archives. How many times will you find that some bizarre, head-scratching,
counter-intuitive behavior of some API or other is "by design"? Does that mean
they won't eventually (quietly) patch it? Of course not.

~~~
zAy0LfpBZLC8mAC
The bitcoin developers "admitted" long ago that that behaviour is not quite
optimal, and they are actually working on fixing it, albeit not quietly,
because that would risk breaking bitcoin, as would doing so fast.

It's a non-issue in so far as it does not prevent bitcoin from working as it
should if you do implement things as the original client does it, it's only an
issue because it's something you might easily get wrong when implementing a
new client (which apparently happened to some other developers), and it would
have been avoidable - but changing the behaviour now has to be done very
carefully, coordinating with all implementors of bitcoin clients, in order to
make sure the fix does not cause a blockchain split, so that is what is
happening.

~~~
yetfeo
> It's a non-issue in so far as it does not prevent bitcoin from working as it
> should if you do implement things as the original client does it

This is not correct. The original client gets one edge case wrong and it is
this that is causing the issue with most of the exchanges that use it:
[http://www.reddit.com/r/Bitcoin/comments/1xm49o/due_to_activ...](http://www.reddit.com/r/Bitcoin/comments/1xm49o/due_to_active_malleable_transaction_relayers_it/)

~~~
maaku
Yes, but the bitcoind reference client fails safely: the child transactions
are orphaned and no funds are lost. It's behavior alone is not exploitable.

~~~
yetfeo
Unfortunately it does not fail completely safely. The change transaction seems
to still be available for coin selection and causes sends to fail. The
getbalance command shows an incorrect balance due to counting the change
address twice - once in the double spend and once in the accepted. The
accounts system also has balances messed up which some merchant sites rely on.

It is not "lose money" exploitable (unless combined with social engineering)
but is definitely "lose time, lose effort" exploitable.

------
mschuster91
Funny: everyone said "oh, gox is stupid, no one else is affected"... one and a
half days later, all those are proven wrong.

Not to be an excuse for the consistent problems with MtGox, but everyone who
is affected by the current DDoS attacks should just shut the f..k up.

------
iblaine
Didnt this same thing happen in April 2013? Somehow a DDOS attack drove the
price from $250 to $75. Then it went back up. My guess is the same thing
happens here. Two years ago people used to bitch when the price dipping below
$15. Here it is at $650. A week is not complete unless someone claims to be
witnessing the demise of bitcoin.

~~~
ihsw
That was lag. Although this issue is lag-related, it cannot be mitigated with
DDOS protection.

------
fredsted
This will make them only stronger. Bitcoin is not going anywhere.

~~~
d0ugie
Hmm, I see. Makes me wonder where bitcoin would be trading were its history
not riddled with political/legal/fraudulent/technical/reputation snafus.

~~~
zanny
It wouldn't be trading at all, because it is paving new ground. If it wasn't,
it would have no reason to exist, because a predecessor coin would exist and
it would be unlikely that btc would have enough differing features to justify
the risk transitioning to it.

The drama isn't because of bitcoin, it is because it is the first cryptocoin
breaching new markets consistently. So as it treads new ground there will
always be resistance.

------
arasmussen
I think a lot of people are viewing this as a bad thing, hence the BTC price
sliding. If BTC is going to become a global currency then exchanges and banks
better be prepared for this kind of stuff. After fixing this issue, I doubt
many companies will make the same mistake in the future.

Better to get these bugs out of the way now than in two years when market cap
is much greater.

------
ChuckMcM
Marks another interesting step toward maturity of the concepts of crypto
currency. It is interesting to watch this in the context of other technologies
(like air travel) which went from novelty to everyday thing, albeit through a
series of 'events' which at times seemed likely to doom the idea.

------
yetfeo
The reason why exchanges and other software are having trouble with malleable
transactions is not due to bad software using transaction ids. It's an edge
case with the reference bitcoin client. See:
[http://www.reddit.com/r/Bitcoin/comments/1xm49o/due_to_activ...](http://www.reddit.com/r/Bitcoin/comments/1xm49o/due_to_active_malleable_transaction_relayers_it/)

Basically the reference client allows an edge case where it allows spending an
unconfirmed output if that output was generated by the wallet itself as
change. This can form a chain of unconfirmed transactions. When the malleable
bot modifies the original one they all become invalid. The reference client
does not handle this case well, it gets balances wrong, and clogs the wallet
up.

It's unfortunate that Mt Gox got a lot of heat for calling out the issue from
the foundation and core developers saying that malleability was known and
wasn't a bit issue. in fact it is an issue due to this edge case in the
reference client.

------
smrtinsert
The most fascinating thing about this whole process is watching the btc
community try to keep it moving. As someone who doesn't know anything about
digital currencies, this seems like one of the first major tests of an
philosophy of unregulation.

------
keyme
Setting up a rogue node that messes with all transactions is the best way of
hurrying a proper fix to the protocol that will also be deployed ASAP and
accepted by everyone!

------
zcarter
Given the asymmetry in the difficulty market participants have with selling
(and withdrawal in fiat, in a timely manner) or shorting bitcoin, as compared
to the effort involved in buying bitcoin, any news is bullish news. This
should hold generally and is not specific to publicity about the attack.

Assuming equal reach for would-be-sellers and would-be-buyers, more buyers are
capable of expressing their opinion in the market than are sellers.

------
kbar13
Is this why I saw a bunch of super small incoming transactions to my coinbase
wallets that then promptly disappeared?

------
mark_l_watson
I have no proof what so ever, this is just a conjecture: there are powerful
government and private entities who profit from manipulating the current
monetary system. I have to ask: is it unreasonable that state actors would try
to crash Bitcoin out of self interest?

~~~
untog
_is it unreasonable that state actors would try to crash Bitcoin out of self
interest?_

Is it unreasonable? No. Is there any evidence to suggest it? No.

~~~
pjc50
There was an article going around just the other day alleging that GCHQ were
DDOSing the QuakeNet and Freenet IRC systems. Not the same, but a similar kind
of thing.

------
snake_plissken
What was the intent of including something like transaction malleability in
the Sotahsi client?

~~~
Scaevolus
It's a bug. Signatures have multiple equivalent forms, and the clients don't
require that representations are canonical.

>The first form of malleability is in the signatures themselves. Each
signature has exactly one DER-encoded ASN.1 octet representation, but openssl
does not enforce this, and as long as a signature isn't horribly malformed, it
will be accepted. In addition for every ECDSA signature (r,s), the signature
(r, -s (mod N)) is a valid signature of the same message.

[https://en.bitcoin.it/wiki/Transaction_Malleability](https://en.bitcoin.it/wiki/Transaction_Malleability)

~~~
scintill76
I don't think it should be called a bug. Peter Todd (well-known Bitcoin
developer), said[1]:

> [...]I'm a bit hesitant to bake in assumptions about malleability when we
> have no solid idea if ECC signatures are or are not malleable on a
> fundemental level; if "whack-a-mole" anti-malleability is all we've got it
> could be ugly if a break is found.

I understand this to mean, there may be unknown ways to transform signatures,
like the s sign flip you quoted. In that case there would be no way to know
which representation is "canonical." Thus, malleability is either a
fundamental, fatal flaw in Bitcoin, or just something Bitcoin developers need
to work around.

Now, it seems even the reference implementation isn't perfect about
malleability, and perhaps people could have been better about making the issue
known. So there is work to be done, but it is not a "bug" that can be "fixed",
at least not without upgrading the entire network, and/or risking it popping
up in the future when someone applies more ECDSA signature mutation tricks.
The real solution, if you want to safely fingerprint transactions, is to make
your own transaction hash that is immune to malleability, like [2].

[1]
[http://sourceforge.net/mailarchive/message.php?msg_id=319546...](http://sourceforge.net/mailarchive/message.php?msg_id=31954652)

[2]
[https://github.com/sipa/bitcoin/commit/e7853a91cf646a6a47011...](https://github.com/sipa/bitcoin/commit/e7853a91cf646a6a4701158d148f036924575a97)

------
cordite
It seems like the whole bitcoin community is immature.

~~~
BlackDeath3
By definition, yes.

------
smrtinsert
Someone should pen the next James Bond story around Digital currency
manipulation. What a fascinating world.

~~~
MartinCron
That's probably the easiest way to make a James Bond story that feels out-of-
touch now and out-of-date tomorrow.

~~~
smrtinsert
Haha. Not necessarily, the general public is becoming aware of btc as you can
now pay regular companies with it. also you could tie it into typical James
Bond fare such as funding for terrorist organizations etc.

------
ck2
Massive attack requires massive resources.

Maybe foreign government? Heck, domestic government?

~~~
patio11
_Massive attack requires massive resources._

Not, in general, true. You could rent thousands of botted-up consumer-grade
PCs located in the United States to run your custom bitcoin client for
_hundreds_ of dollars. This particular attack doesn't require any detailed
computation -- all you have to do is observe a transaction broadcast from
Legitimate Node N1, perform nanoseconds of computation on it, and broadcast
the resulting transaction from your Conspiring Nodes N2...N1000 faster than N1
does. Assuming you do, your altered transaction will be the one adopted by the
consensus, not the original one.

The technical complexity of this attack is substantially below several levels
of e.g. the Stripe CTF event, which were designed to be implemented by
intermediate programmers in a few hours of play.

------
shoo
concerted massive attack:
[http://www.youtube.com/watch?v=iKxnCGziUVA](http://www.youtube.com/watch?v=iKxnCGziUVA)

------
chris_wot
Funny if it was Mount Gox trying to prove a point.

------
gesman
TheWayTheyFightBack

------
epynonymous
is btcchina affected?

------
nctalaviya
One of the Best Services... Fiver also accepts bitcons... For more read here:
[http://blog.fiverr.com/fiverr-now-accepting-
bitcoins/](http://blog.fiverr.com/fiverr-now-accepting-bitcoins/)

