
The Final Goxing - pmorici
http://two-bit-idiot.tumblr.com/post/77988833128/the-final-goxing
======
teraflop
Even if this scenario is correct, and the private keys have been lost, there's
no law of physics that says the coins can never be recovered.

The set of legal transactions on the blockchain is determined entirely by what
the majority of miners will accept. So far that has always meant executing and
verifying the transaction's script, but a currently-illegal script could be
declared valid by persuading enough miners to treat it as an exception. In
particular, suppose MtGox can produce an audit trail showing that a particular
set of addresses corresponds to their inaccessible cold wallet, and nobody
else challenges their claim by signing a message from one of those addresses.
Then they could petition miners to grant an exception and have the coins
transferred to a new address by fiat. _(ha!)_

It would certainly be an unprecedented intervention by the core Bitcoin
community. But if it would restore public confidence in the protocol and
economy, then it would be in enough people's interest that I think there's a
slim chance it could be made to happen.

EDIT: it's not quite that simple; see the discussion below.

~~~
atgm
> But if it would restore public confidence in the protocol and economy

It actually scares me. If any private body or group could somehow amass 51% of
the miners in some way, they would then control the currency.

~~~
VMG
No, you basically only control the order of transactions:
[https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...](https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power)

~~~
patio11
You can _also_ rollback history and block transactions which you disapprove of
from happening with 100% probability. Other than that, no major problems.

~~~
VMG
Technically, you need 100% hashing power in order to block a valid transaction
forever.

~~~
patio11
Oh, you can certainly use your 49% to publish a block or two, or even twelve
in a row -- good for you, probability sometimes works like that -- but
eventually I will have more blocks mined privately than the rest of the
network does publicly, at which point I publish them (with my choice of
confirmed transactions) and all your work, the transactions which you chose to
confirm, and your mined coins just go down the memory hole.

~~~
VMG
The mined coins, sure, but you can include the _transactions_ that were
omitted in the revealed fork in the blocks after that. That's why the document
states _An attacker that controls more than 50% of the network 's computing
power can, _for the time that he is in control__

I'm not saying that when this would happen it would be a good day for Bitcoin
by the way.

~~~
tlrobinson
I don't understand. I think "for the time that he is in control" means "as
long as he has > 50% hashing power". No need for 100%. As long as he has > 50%
he can eventually overtake any fork that includes a new transaction.

In theory, given enough time (a _very_ long time), someone able to maintain
50.0000001% of hashing power could eventually rewrite the _entire_ blockchain
after the genesis block.

------
gkoberger
This doesn't say what _did_ happen (theft? lost key?) or why it happened now
(feds? out of money?); it just says what _didn 't_ happen (collusion). We
still don't know where the 750k bitcoins are.

Two interesting theories, the second being my favorite (but both agreeing
there's no way 750k bitcoins could have been stolen):

[http://jesse.forthewin.com/blog/2014/02/unilateral-
statement...](http://jesse.forthewin.com/blog/2014/02/unilateral-statement-
regarding-fucked-up-shit-and-the-greater-good.html?cpm=329)

[http://letstalkbitcoin.com/somethings-not-right-at-
gox/#.Uw6...](http://letstalkbitcoin.com/somethings-not-right-at-
gox/#.Uw6btIWrFsw)

~~~
fchollet
The second scenario (lost access to 2nd tier of cold storage) seems the most
likely. It is also compatible with Mark's statement that the coins are _"
technically speaking [...] not 'lost' just yet, just temporarily
unavailable"_. [1]

[1] [http://www.wickedfire.com/shooting-shit/179038-my-
conversati...](http://www.wickedfire.com/shooting-shit/179038-my-conversation-
mark-karpeles-mtgox-2.html#post2164682)

~~~
anonymoushn
It looks to me like a more likely reading is "I believe I have not lost my
coins, although Gox does not have them, because Gox will make customers whole
using future profits."

------
iandanforth
This is Mt. Gox getting thrown to the wolves. I think there is a constant
undercurrent of fear, and rightly so, in the bitcoin community that regulation
will mean the end of bitcoin. Also, for those who are speculating heavily on
BTC, anything that undermines confidence is a direct threat to their holdings.
So here we have a potential massive fraud (or fear-compounded incompetence)
and publicity discussing fundamental security flaws with the BTC system. A
double threat. It's a perfect rationaly-self-interested reaction to try to
distance ones self from threats as quickly and thoroughly as possible, but I
can't bring myself to think of this as anywhere near altruistic or civic
minded.

------
andrewljohnson
_" Sources also tell me that multiple investors who were approached restricted
their own employees from buying or selling bitcoin themselves as soon as they
realized the extent of the damage at Mt. Gox."_

I wonder how many employees felt all that "restricted," given that it would be
very hard to enforce such a dictate.

~~~
waterlesscloud
There was obvious insider trading, with large dumps of coin just before bad
news broke. Someone was doing it.

------
ghshephard
The interesting thing is that MtGox failing should have zero impact on the USD
value of the Bitcoin, particularly if those Bitcoins were stolen and still in
circulation.

Indeed, if the hypothesis in [http://letstalkbitcoin.com/somethings-not-right-
at-gox/#.Uw7...](http://letstalkbitcoin.com/somethings-not-right-at-
gox/#.Uw7y-_RdVvB) is true, that the Coins were actually LOST from the Cold-
wallet because of a EC bug, or other error - then it's possible that losing
740K coins will drive up the value of the remaining coins.

~~~
ProblemFactory
Price depends on the balance of both supply and demand. Even if there are less
coins to go around:

* Many existing bitcoin users have had their coins and conventional currency holdings wiped out - and don't have enough money left to buy them back.

* Many users who lost their money would not want to re-invest after getting burned.

* Many potential new casual users will be (rightly) scared away by the news.

It seems to me that even if 6% of the coins are gone, demand could drop more
than 6% and still lower the price.

------
panarky

      ... engaging in an arbitrage scheme that leveraged the depressed
      Mt. Gox price to reap gains on other exchanges. This was allegedly
      happening well before the exchange’s breaking point ...
    

Step 1: Drive the Gox price into the basement

Step 2: Buy devalued Gox-BTC using the fiat you have left

Step 3: Sell those coins on other exchanges at full price

Step 4: Rinse and repeat until solvent

What could possibly go wrong?

~~~
conroe64
This would only work if the coins were still there. If the Gox coins are
stolen/lost, then what are you buying? A worhtless claim to coins that don't
actually exist, and that you can't sell.

~~~
tlrobinson
IIRC, Gox was accepting deposits (both bitcoins and fiat) until very recently.

~~~
conroe64
Who would deposit bitcoin in an exchange where the average price is a fifth of
what is was in other exchanges? Fiat deposits wouldn't matter for this plan.

~~~
tlrobinson
I don't know. Who would leave their bitcoins in an exchange that had been
demonstrating withdrawal problems for 6 months?

------
snitko
So now, the only way in which someone would buy Gox is if the crisis strategy
posted earlier is not very accurate. That is, if coins are NOT lost, but
indeed are inaccessible for some reason and there is a chance of recovering
them.

No one would ever touch Gox if they had to return 770k BTC while the public
actually knows those coins were lost. And now you also have authorities
involved... If they could keep it secret - then maybe a buyer would be
optimistic enough he could convince customers everything is going to be fine.
But not now. Unfortunately for Mark, he's going to be in a lot of trouble now
if all this is true. I lost all my savings with Gox, but one thing I'm certain
- I wouldn't want to be in his shoes now.

------
pakitan
I'm curious if any sane investor would be interested in acquiring Gox and
promising to pay, say, 20% of its debts. In that case, a large percentage of
customers may simply sue and the investor will be in a real bad position. So,
if the 700K BTC figure is correct, this scenario is basically impossible as
you can't buy that much BTC for reasonable price, right?

Much better for potential investors would be to just wait for Gox bankruptcy
and pick up the pieces. I'm not familiar with bankruptcy law, just theorizing.

~~~
danielweber
IANA banktupcy L, but this seems like what can happen in bankruptcy, with the
blessing and protection of a judge. You don't assume massive risk just on our
own, you get a court to approve your takeover and attempt to make debtors
partially whole.

------
interstitial
TL;DR: Blah Blah Blah --- never trust the consultancy firm Mandalah with
private documents. Got it.

~~~
berberous
The way I read the situation is that while Mandalah prepared the documents,
MtGox deliberately called meetings where they showed participants the
documents in an effort to get emergency funding/bailout, and then failed to
ensure they did not keep a copy. But who knows what really happened.

