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Tokyo-based cryptocurrency exchange hacked, losing $530M: NHK (reuters.com)
370 points by RmDen 5 months ago | hide | past | web | favorite | 295 comments



Posting this as a top level comment as well (probably a better idea):

The coins stolen are XEM (https://nem.io/) not Bitcoin. They're currently tracking the stolen coins to ensure they are not sold.

Preliminary evidence suggests that it was a private key stolen and not a network problem.

Disclaimer: Am somewhat associated with the team, and I hold a small amount of XEM.

Feel free to ask questions.


Over 100 Million XRP ( Ripple ) worth 130 Million USD was also allegedly stolen.

Source:

Here's the original tweet from Bloomberg Tech Reporter in Toyko, Yuji Nakamura. https://twitter.com/ynakamura56/status/956790270036619265

Tweet In English:

> Japanese crypto exchange Coincheck halts withdrawals, deposits, trading in NEM. Rumors is a big chunk was moved from their wallet. Also seems >$130m of XRP moved out too. I called Coincheck, but they wouldn't answer questions and asked me to email them

Here's the actual Ripple XRP Transaction that is moving the 101-ish Million XRP out of the Coincheck account. https://xrpcharts.ripple.com/#/transactions/FC32DBF1C0CE6780...

Here's a news page / story that is following this and updating it frequently. It mentions that XRP was also stolen in addition to NEM. https://bitpinas.com/news/coincheck-suspends-nem-trading-rum...


The stolen 101m xrp moved into an account that already had 3billion xrp? That seems odd to begin with. Is it another exchange or coin tumbler or something?


That wallet only has 45 transactions on it -- that doesn't seem reasonable for a tumbler or an exchange, does it?

Also, 3 billion XRP means that they have 12% of all circulating XRP right now.


The 530M figure was in XEM (been floating around $1) - but that may be an additional amount.


'Am somewhat associated with the team'

Can you please be more specific? It was almost not worth saying unless you'll be more specific IMHO.


Sorry, I'll clarify. I'm in the chat group quite a bit and have contributed to the wallet source code. I said partially as I'm not involved as an "official" capacity.


Thank you for responding!


So if they're tracking the coins to ensure they're not sold, and assuming it's never sold, wouldn't that mean the price of XEM should increase, as the supply has now decreased?


If 100 million of them were stolen you could also imagine that decreasing demand.


any calls for a hardfork yet?


The president of the NEM.io Foundation is against it [1]

[1] https://twitter.com/2017Lon/status/956880456154099712?s=17


Nope, they're against hardforking. The current measure being taken is just tainting the hacker's accounts and blocking them at exchanges.


Genuinely curious: How do you know a private key is stolen with a cryptocurrency? Is there some sort of secondary proof mechanism?


If funds move out from your wallet without your intervention then somebody else has to have your key.


Yes, but from the exchange's perspective: How do they know?

I'm presuming that in this case (given the amount) that this was not a typical user. But is there some framework of dispute for lesser amounts?


If a key was indeed stolen, they must have stole the keys to the exchange's wallet, not a user's wallet. I heard in the press conference they don't have a multi-sig wallet so all it took was one key and not multiple keys.


It is not possible to move funds unless you have the private key, or if you have broken the cryptographic scheme the key uses.

Since the funds have moved (visible on the overall distributed blockchain system, where everything is public), either of the two scenarios must have happened. It really is that simple, there are no other "moving parts" or "possible human error" in other parts of the system here.


So you have a case like this: the funds were moved with the private key. 24 hours after the owner comes and says: ‘I didn’t do that! Someone else must have copied my key and made that transaction!’

How does the exchange handle that? What’s the dispute mechanism?


It's the exchange's own key that is thought to be compromised, not one of their customers'.


Dispute?


You can create addresses which require multiple valid signatures (private keys) in order to spend the contents. And other sort of smart-contracts.

But it’s still based around having the correct mathematical keys to unlock an address.


Sorry, do you have a source for any of your claims?


The Japanese press conference - English translations are here: https://twitter.com/kanemoneyqian


>and I hold a small amount of XEM.

*held

:^)


I doubt someone who actually understands crypto currencies is keeping their money on an exchange, since this exact thing can happen.


Yup, my coin is safe.


They are tainting the stolen coins to avoid them to be sold. What’s the point of having a decentralized currency if a centralized entity make the decisions anyway at the end of day?


Perhaps I am misunderstanding how tracking coins typically happens, but if "tainting" the coins effectively prohibits the actors from withdrawing at their perceived value, how would this work if the actor decided to send the vast majority coins to many random, arbitrary accounts? (e.g. arbitrarily sending coins to everyone who has committed a trade on some exchange in the last X days.) Would enough information be known to allow an actor to enumerate arbitrary public addresses thus use this to attempt to hide in the crowd?


> how would this work if the actor decided to send the vast majority coins to many random, arbitrary accounts? (e.g. arbitrarily sending coins to everyone who has

Then they'd have to take those coins off the blacklist, or else prepare to deal with an increasingly intractable tracking problem. Ethically, that would be the less bad option, since the thief would be deprived off the income, even if it's not returned to the victim.


What if a portion of those sent coins are sent to attacker-owned wallets?


If it's a non-negligible amount compared to other wallets, that would be pretty easy to track down. I mean, you'd look at new wallets compared to existing wallets.


The attackers can still poison new wallets that appear on the chain - either you effectively shut down new wallet creation, or let the attackers possibly spend their coins.


Crypto laundering seems pretty interesting.


Let's say I'm an innocent holder of the currency, and I receive x coins from a tainted account. I can post a transaction that sends x coins (or x - transaction_fee) to an unreachable address (say 0x0).


NEM (the cryptocurrency that was stolen) isn't decentralized.


Why not using a web site built on postgres or mysql database to track balances then, instead of using blockchain and call the thing "cryptocurrency"?


Lots of companies do exactly this. For example, in Japan, where I live, the train and bus companies will give you a card. You can "put money" on the card and then spend it on travel. You can also use the cards to buy things in the convenience stores, some restaurants, vending machines, etc, etc.

You can think of this as a "coin" that's pegged against prevailing currency (in my case, the yen). It's not a "cryptocoin" since there is no "crypto" involved, but as there is barely any "crypto" involved in cryptocoins anyway, I think that's a bit of a moot point.

There are problems with this model. First you have to trust the central authority with your money. They could do a runner and there would be nothing you could do about it. In fact, when I lived in the UK, I discovered that London Transport often mischarges - it forgets where you "tapped in" or "tapped out" and charges you the maximum possible charge for your journey. In order to get your money back, you have to register your card and apply within a specific time period to get refunded. If you don't know the procedure, don't want to give out your person information, don't realise you were mischarged or wait too long -- sorry, your money is gone (Really big piece of advice for anyone using an Oyster card: Register it and check the charges every day. Unless things have gotten better in the last few years, I'm sure you will be extremely surprised at the charges).

The problem here is that the payment processor has all the power in the transaction. They can just take your money if they feel like it. Also, they can refuse to pay for things if they feel like it. Finally, they are a single point of failure. If they have technical (or financial!) problems, then you may not be able to spend your money.

Whether or not you assume initiatives like Bitcoin were started as a scam, the implementation potentially solves a lot of the problems of these payment processors. Importantly, if you put your coins in a central exchange you are right back to square one! No amount of crypto goodness will save you from the exchange shenanigans because they control your wallet.

This is why things like the Lightning Network are interesting. It allows for centralised payment processors, but with distributed guarantees about who owns the coins and where and when they can spend them.

I find it incredibly unfortunate that "cryptocoins" endure such incredible hype and involve so much real (and imagined) money. So many power plays, so many scams, so much FUD. But at the centre of it, these are interesting real problems. Once the dust settles it will be quite nice to see what useful results actually emerge.


I predict nothing useful will emerge.

The blockchain is an interesting Computer Science toy. But in the 10+ years since it was invented, the only real application that anyone has found for it is Massively Distributed Ponzi Schemes.

The problems that you point out with London Transport aren't solvable by a distributed blockchain, because London Transport is a single central authority. It's completely pointless creating a distributed ticketing mechanism for them where they don't have all the power, because the ticketing mechanism is for the trains that London Transport run and control completely. There's no point having a ticket that London Transport don't recognise as valid. They're always going to be a single point of failure because they run the whole system. Sorry to be so blunt about it.

The solution to this problem is not to add in MORE complexity, networking and distribution. It'll be in removing complexity and improving connectivity.

But, of course, your stock price doesn't increase by removing complexity. You need the blockchains to impress the idiots who buy shares.


I think you're blinding yourself with the hype. The "blockchain" is nothing more than a merkle tree. We've known about these for a long time. The insight is that by publishing a merkle tree we can show that various actors are following a protocol. This is very valuable. For an example of another application take a look at certificate transparency (not actually a fan of CAs, but it was the most readily available example).

It's interesting that you say that creating a payment processor for transportation fares that is not controlled by a monopoly is pointless. I currently live in a country that has at least 5 payment processors for train fares and it's taken them decades to figure out how to interoperate Even now I still can't use my rail card in Tokyo.

These are real problems. "Computer Science toys" seems like another word for "research" to me. That the research was done by some random guy on the internet with unknown motivations is completely beside the point. Yes, like most people, I could definitely do without the scams. I could definitely do without the "OMG! Blockchain" knee jerk reaction. But would it be too impolite to also complain about the "Blockchain? Pfft!" knee jerk reaction? Lightning is a great example of a useful protocol -- full stop. I don't care if it's implemented on top of Bitcoin or on top of some byzantine 18th century payment exchange based on carrier pigeons. We need more of this stuff, not less.


My point about the transport fares was really badly put. Sorry. I meant that the whole system has an inherent single point of failure and single central authority: the train system. A train ticket for a train that doesn't run is useless ;) Using a distributed, authority-less system to provide the tickets doesn't change that.

I totally agree about pure research giving us CS "toys" that eventually turn out to be useful. But we've had ten years to find some use for blockchain that isn't cryptocurrency, and as far as I'm aware, no-one's found one. My suspicion is that this is because the problems that the blockchain solve only rarely need solving. It's unlucky that one of those rare occurrences is currency, hence all the bullshit.


Why is "Statistics" called "Machine Learning" ? $$hype$$


insinuating that the only reason people say machine learning and not statistics is just false. the term machine learning refers to a specific part of statistics that is very different from statistics as a whole.


A lot of it is actually called Statistical Learning. Google that term. Some techniques are not classified as such, at least not yet, e.g. deep convolutional neural networks.


He is making that exact point.


hmm still sounds like statistics to me


why are apple not just called fruits? because there is utility in calling apples apples and not just fruits, because we want to know specifically which subpart of the group fruits you are eating or there is in the pie, not because apples are so damn popular


Because this way you have a public ledger that can't be mutated without notifying the public. Not everything that blockchain gives is for the trust distributed use case. For that fact, proof of work is the only thing that is purely there because bitcoin's blockchain needs a distributed trust system.


> Because this way you have a public ledger that can't be mutated without notifying the public.

Can't this be done with something like git?


Which is basically what a blockchain is... Just that instead of a cryptographically append-only acyclic directed graph, its a cryptographically append-only linked list.


Because one gets millions in investor rounds and the other doesn't, regardless of technical merit.

Dollar signs a person doesn't understand but sees as easy cash is the equivalent to a lightbulb being turned on amidst a swarm of insects.


See Blockchain or Bullshit on Hackernoon:

https://hackernoon.com/blockchain-or-bullshit-429653de42d3


One could argue that it offers more transparency.


Okay, then why not using a web site built on a SQL database with a read-only public login?


the transparency is this case is more than just being seen, but also that it can be proven to not have been altered.

(I think there are better ways to do this than a blockchain)


Because then it would be evident to anyone that you were running a pyramid scheme and law enforcement could shut you down by just closing down a single server?


Is it still applicable to NEM, as it's centralized?


What pyramid scheme?


And neither is Ripple, both of which seem to be the most affected.


What do you mean? It is intended to be decentralized, I am curious as to why you think it isn't. (Possible misunderstanding/etc?)


Saying something isn’t decentralized in the crypto world can mean any of a number of things. The problem is that decentralization isn’t one specific thing that can be measured. There’s absolute centralization like a mainframe controlled by a single individual not connected to the outside world. Beyond that nothing else is absolute, there’s just varying degrees of decentralization.

You could have a slightly decentralized governance like a consortium that votes on how to manage the mainframe. You could have a distributed network of computers all managed by a single entity. Each of those have elements of centralization and decentralization. Within those categories there is varying levels of decentralization. For instance there could be a completely democratic organization that votes on how to manage the mainframe or more of a republic style where members vote on a person to manage the mainframe for them.

So, when someone says something isn’t decentralized in the crypto world they typically mean some element is centralized or is slightly less decentralized. For bitcoin you will see people say this in reference to large mining pools that have the power to control consensus to a certain extent. For NEM, they’re probably referring to the fact that the nodes that control the network are closed source. Since they are closed source that means one entity can control the direction of the network, and one can’t simply fork what they’re building.

I’m of the opinion that there will never be complete decentralization, and every project will have some degree is centralization. We’ll get better with time, but I think decentralization is an inherently intractable problem.


I wonder what would happen if they did an airdrop of part of those stolen coins in some random wallets. Like $1M USD each for random 100 lucky winners. Would they be able to redeem them?


The hacker can still move coins around on chain, they just can't turn it into fiat (since they broke a real law by a real government, they can't be given the fiat.)


Stop! You're using reason and logic! You sound rational!


The 0x protocol will allow for decentralized exchanges, so hacks like this would be a thing of the past if it gains adoption.

https://0xproject.com/


It's still impossible to have a decentralized exchange convert between USD and a coin.

XEM (the coin that was stolen) doesn't have plans to implement 0x, but there are other plans for decentralized exchange.


OmiseGo is building a decentralized exchange that converts between USD and a coin (any coin any currency).

http://www.tristone-llc.com/omisego-the-global-standard-for-...


Isn't that just what Kraken or Coinbase already does?

Someone needs to be the operator of exchange between fiat and crypto, at which point they and you will be subject to tax and regulation.

Anyone who operates an exchange is subject to money transmitter laws and KYC laws.

Anytime you convert from cryptocoins to fiat, you're subject to capital gains tax if you're a US citizen.

https://www.usatoday.com/story/tech/2014/01/27/bitcoin-deale...

https://cointelegraph.com/tags/localbitcoins


> Isn't that just what Kraken or Coinbase already does?

No. It's more akin to an operating system of money rather than a proprietary siloed app.


Except you can't get usable fiat out?

There needs to be an endpoint distributor of physical cash, SWIFT, or wire transfers of real fiat and those end points are subject to regulation just like localbitcoins or ATM machines are subject to regulation.

Can you explain how a decenteralized exchange provides USD?

abstracted IOU "stable-tokens" like Tether are NOT USD, see the case of Liberty Reserve [1] or [2]

[1] https://en.wikipedia.org/wiki/Liberty_Reserve

[2] https://hackernoon.com/the-curious-tale-of-tethers-6b0031eea...

https://medium.com/@bitfinexed/are-fraudulent-tethers-being-...


> Can you explain how a decenteralized exchange provides USD?

A major part of the OmiseGo plan is full cash-in/cash-out capabilities via as many ATMs as they can get connected to.

They have access to quite a few thousand ATMs out the gate via strategic investments and partnerships with a number of very large banks in Aisia.

Their parent company is Omise (basically the Asian Stripe) already has a cashflow of $100-$500m/day. FYI They will be switching all their existing business to run on the new dex, so from the get go it will start with a large volume as the test case.

Checkout the OmiseGo white-paper for the main details.


Someone in the Stellar community is working on that.


Why not? By using a usd-token like usdt it become possible. Bitshare usd also has been very stable lately and it is fully decentralized.


Somebody has to guarantee that the the USD are actually there to perform a trade. There's no other way to guarantee that that doesn't imply going off-chain.


MakerDAO uses collateralized smart contracts to provide stability to their Dai token. Right now, only ETH can be used as collateral, but in Q2 they are starting multi-collateral support.

https://makerdao.com/ https://coinmarketcap.com/currencies/dai/


Their whitepaper's explanation of how this works is horrendously complicated. There's no way you can encode that sort of logic into a cryptocoin in a bug-free manner. Steer clear of this.


Their contracts are up. If you can find a way to exploit one of the bugs, you can profit massively.


If your profit is massive enough they may even roll back the chain and do a hard fork!


And who will abitrate the collateral? While it's smart wallets and crypto currency it can be enforced by cryptographic proof but when the collateral is USD then it's going to have to exist somewhere.


And you're likely to sue the shit out of someone if there's a bug in the encoded contract or it turns out there's no collateral because blockchain.


> Somebody has to guarantee that the the USD are actually there to perform a trade.

That's what kids in my day called "a risky click".


A usd-token requires trust that the token issuer isn't just printing magic internet money. You've just moved your point of failure from the exchange, to the token issuer.

All evidence points to USDT being just that - magic internet money, with nothing backing it.


Dozens of exchanges risking their reputation on it suggest otherwise.


I'm not sure if you're legitimately confused on this subject, or are deliberately misinforming people.

Just because an exchange trades tether doesn't mean their reputation is staked on it. Exchanges do not vouch for the instruments that are being traded on them.

Tether is issued by Tether Limited, which is a shell corporation wholly owned and controlled by one exchange - Bitfinex. Not 'dozens of exchanges.'

Allegedly, when someone gives Tether Limited $1 USD, they give that person 1 USDT. In reality, Tether has never actually been audited, and for all we know, they just give themselves 1 USDT, and sell it on the market... Without keeping a 1:1 reserve.


Do you honestly believe Tether has 2.2 billion dollars in a bank account?

Tether is a huge red flag to me..Enron level.


Yes, the I believe the sum of fiat deposited on bitfinex, bittrex, huobi,... is close to that amount. I even see people from high school "investing" in crypto now.

It's really not hard to believe when you consider how many millions of people are on these exchanges. Binance touts 3 million users, and has 425,819,642 tethers. 141$ average a user is completely believable.


You're being taken in by a basic accounting trick.

Let's suppose I buy 100 USDT on an exchange.

What Tether claims happens:

0. Bob and I own $100. Tether and Bittrex own nothing.

1. Bob sends $100 to Tether Limited.

2. Tether limited sends Bob 100 USDT. They now have $100 in their bank account.

3. Bob transfers 100 USDT to bittrex.

4. I send $100 to bittrex. I buy 100 USDT using that $100 from Bob.

5. Bob withdraws his $100 from Bittrex. I withdraw my 100 USDT from Bittrex.

6. Now, I own 100 USDT, Bob owns $100, Bittrex owns nothing.

7. Tether Limited has to hold $100 in reserve. It's not their money - it's supposed to be backing USDT. In addition to having assets of $100, they also have $100 of liabilities.

The reality:

Steps 0-6 are the same.

Step 7: Tether Limited buys a vacation to the Bahamas with their $100, and ignores the $100 liability. They are actually insolvent, and I have no recourse against them, because the Tether TOS make it very clear that I cannot redeem my USDT for USD from them.

The whole point of tether is that it is supposed to be backed 1:1 with USD in Tether Limited's accounts. They have not proven to anyone that this is actually the case. For all we know, all that money went to the Bahamas, or a Swiss bank account, and they are just issuing USDT, pocketing what people pay them for it, and keeping none of it in reserve.


While I think you're absolutely right in general, there are a few exchanges that are registered as serious financial institutions, which means they need to follow stricter regulation and actually back 100% of their user's assets. As far as I know at least Coinbase and Bitstamp are among these.


Yes, and to my knowledge the legit folks like Coinbase aren't using Tether. They're using actual USD. They'll still likely get hurt when the scam collapses, but nowhere near as much.


considering that multiple exchanges in addition to bitfinex ONLY deal with USDT (instead of regular USD), that's not too implausible.


For the Tether to exist, someone's supposed to give Tether USD in exchange to USDT. If these exchanges are trying to avoid USD, where's the USD to buy the Tether coming from?


You can wire real USD to Bitfinex.



Sure, I'm not disputing this, just giving one plausible way Tether might be getting real USD.


Oh, they're certainly getting some.

The suspicion is they're siphoning it off to their personal accounts, and that they're claiming to have received way more USD than they actually have so they can issue USDT that aren't actually backed to manipulate the market.


In that case, I'm confused by your question: "where's the USD to buy the Tether coming from?"

You seem to have changed what you're suspicious about.


For clarity, there's a variety of very suspicious things about Tether. While they're clearly receiving some USD, they're printing $100M in Tether every couple days now.

If I claim to have $50k, you'll probably assume it comes from my job. If I claim to have $2B, as Tether does, you'll probably want some proof. Tether's promised regular audits, but they've released none and their supposed auditor has now scrubbed any mention of them off their site.


There's been a fair amount of conspiracy-theory-like thinking around Tether in general, with people making a morass of self-contradictory claims about it and shifting their positions every time someone points out one of the claims doesn't stand up.


To be fair, tether really is quite shady. I think the real truth is probably somewhere in between.


The USD is in the cloud, duh! It's magical cloud thinking all the way down, at least until you reach the turtles.


I like bitshares and own some. But it's not decentralized. Its delegated proof of stake I think.


0x is specific to ERC20 tokens though, staying strictly on the Ethereum main chain.

There are some other decentralized exchanges in development however.


Work in progress and only erc20.

Surprises me that Komodo keeps going under the radar. Nearly 30,000 atomic swaps between btc/zcash protocol coins and a working decentralized exchange (BarterDex) with assetchains.

Just demonstrated one of the first implementations of a btc/erc20 swap as well.

https://www.komodoplatform.com/en


Lol, hope it isn't made using Solidity


Care to elaborate on these hopes? And the underlying humour…


There's a lot of sentiment against Solidity as a language, for fairly good reason. See:

https://news.ycombinator.com/item?id=14810008 https://news.ycombinator.com/item?id=14691212


Solidity answers the question "What if smart contracts used a lot of implicit behavior to hide necessary (as opposed to incidental) complexity, and used a JavaScript-like syntax and encouraged intermediate state mutation in order to attract your average web front-end-developer?"


Loopring as well


I don't understand why news like this doesn't have that huge of an impact of bitcoin's price.. Bitcoin seems to be hovering around 11k~ as I'm writing this. It's been at the same price it seems for the past couple of days...


'Money ain't got no owners, only spenders' -Omar Little

This quote applies to unregulated markets: drugs or cryptocurrencies.


I had to look that quote up to fully understand it, plus find the clip online, so here is the context:

https://www.youtube.com/watch?v=AtoM9x-Bfu8

Omar robs drug kingpin Marlo who is at a card night, sat round the table, raking in winnings. Marlo claims the money is his, in response Omar says “Man, money ain’t got no owners, only spenders.” He then goes on to take Marlo's ring rather than just run off with the $$$.

So, in the context of the show, Marlo thinks he has just raked in all of these chips and made himself rich, there is the stack of these bits of plastic chips in front of him.

Meanwhile, the $$$ gets handed to Omar straight from where it is kept in the back of the room, the 'bank' off table. All the money for all the chips that are on the table is kept in this one area that Omar is able to head off with, leaving Marlo with his useless chips on the table. At the instant that Omar takes the money all the chips on the table are rendered useless for all players and no longer of value. It is apparent for all that the chips will not be exchanged for USD at the 'bank'.

Marlo doesn't just lose the 'fiat' $$$ that he thought he was winning, he also loses the ring on his finger. Although the money may be just money and he may not have lost as much as the prize pot, the ring is an item that cannot be so easily replaced. It has value beyond nominal gold value, sentimental value.

Before Omar rocks up the card game is being played in an unregulated way with the players having to trust but verify each other. Nobody cheats at the game. The card deck has its own blockchain technology.

The Wire was a long time ago and now Omar has realised that it is more lucrative to move into crypto. So in the 2018 remake Omar does not need a gun to steal all the money from all of the gamblers using a set of chips. He uses chips he printed earlier and limits the available chips so new players wanting to win big in the unregulated card game have to pay more for their chips.

Not all players play every game, most just hold on to their chips hoping others wanting to play will want to buy their chips. So they tell others to play the game. The value of their chips goes up so notionally the chips are now worth millions even though there is only a huge but nonetheless smaller pile of money in the 'bank'.

Because any one player can cash out at any time they do not care if there is less than the sum total of all play money in the 'bank'. So long as there is a multiple of what their chips are worth they have no real concern, unless everyone else starts cashing out.

Because the bank is quite slow and everyone has to queue, some players start to sell their own tokens. These can be placed as side bets on the major games. These coins are copies of the original coins but are super lightweight and have an alleged advantage of being totally anonymous, nobody can track them.

Some of these players are making good business on this side betting and they tell their customers that their coins will one day be able to be useful for more things than side bets. One day they will be able to do every day things with the tokens like get a shopping trolley at a supermarket with one, thereby not needing a 'fiat currency coin'.

So Omar rocks up and rather than use a gun he simply takes his position on the coin to run off with all the money. The people with the chips thought they were the lucky ones owning all the money but no, Omar goes and spends it for them.


I just finished watching all The Wire seasons for the first time and freaked a little when I saw your comment. I often see something on Hacker News that I just recently had contact with and is not that popular.


Welcome to the Baader-Meinhof Phenomenon [0].

[0]: https://www.damninteresting.com/the-baader-meinhof-phenomeno...


You’re nuts — The Wire, by acclamation, is to TV as Shakespeare is to literature.


the wire had something like 30M viewers at peak and was absurdly well received....


Do you have any links or citations for a number even close to that? It’s live viewership numbers are lower than current HBO shows like Westworld that don’t overall get 30M viewers per episode.

Or did you have a different meaning for 30M than per episode? Usually that’s what people mean for tv so I am assuming that.


According to wikipedia the peak viewing for individual episodes is about 4m. Although it's not a stretch to assume it reached a lot more people than that via legal streaming services and illegal downloads.


It was not incredibly popular during it's time on the air. This is part of the reason for multi-year gaps between seasons. It has become somewhat of a post-airing success / cult classic.


And DVDs (this is a 15-10 year old series). Plus the recent re-release on BluRay.


Apparently, Still not enough to get an Emmy. I lost my faith on Emmy's because of that.


I'd be surprised if you could find a "Best TV Show of all Time" list that doesn't include The Wire in the top 5. Most them of them have it #1 or #2 depending on how the ranker feels about The Sopranos.


Curiously, not very well known in Europe, in my experience, whereas everyone has heard of the Sopranos.


This sort of news does not affect global percentage points of participation. Now, requiring Proof of Identity for every exchange in South Korea -- that is news that effectively changes Global Participation and therefore Supply and Demand are commensurately affected. Day to day news has little do with the super tall stack of limit buys and limit sells.


Crypto wallets changing hands is a non-event for prices.

This however might have potentially positive impact on prices of truly anonymous cryptos - typical direction of thiefs to "lose tails"


> Crypto wallets changing hands is a non-event for prices.

Surely the point was more: "Why doesn't the obvious risk events like this represent affect the price of the commodity?"

I mean, at this point I have to believe that the likelihood of a given dollar-equivalent of crypto currencies being stolen is much, much higher that it is for literal paper money. And paper is uniformly considered too risky to use as an asset.

It's insanity. This is the way bubbles look before they pop. I can't tell you when it'll happen, but it'll happen.


There will be so many small time investors losing money when the bubble pops it's starting to make me wonder if it won't lead to some serious global destablization.

This isn't just some investment play-thing of otherwise well-off individuals in developed countries. A lot of dumb money has flowed in, and it's from people who probably can't really afford to lose it without taking a serious hit to their net worth.

Interesting times, maybe 50 years from now historians will be talking about the crypto-bubble and rising nationalism as the precursors to the next big war.


Based on some surveys I did within the general US population, a significant number of people (around 30%) haven't even heard of Bitcoin or cryptocurrencies and most (60%+) have heard of it but haven't put money in it.

Keep in mind that statistically speaking, you and I live in an echo chamber. Hacker News is a bubble of engineers with a penchant for business and finance (startups, the main thing here, are where geeks who also like money gravitate towards). My subjective experience in meatspace is similar to yours: a lot of people around me are involved somehow with cryptos, but I think that is likely caused by me fitting the aforementioned demographic.

I think (and surveys validate) that the general penetration in the general population is still low. Total market cap for cryptocurrencies is 500B as we speak. Actual capital involved is much less.

This is peanuts when compared to any measure of the global financial system. Most people have heard and operate by the mantra "this is crazy, don't put anything in that you are not willing to lose".

500B is a little over half what Apple alone is worth on NASDAQ. The difference being most people don't invest in Apple directly. A lot of people are probably exposed to Apple stock, but I don't think any mutual/hedge funds have significant positions in cryptocurrencies where a crash would affect the common folk.

That is very different from a subprime mortgage used to buy a house you live in. No one that I know sells during dips or crashes, because cryptos are to some extent "play money". This, I think, explains the resiliency of the market to its wild fluctuations: no one expects anything else but crazy volatility.

That being said, I am certain that cryptos will take a page in the history books. I have personally witnessed people doing and saying things that immediately make me think I should probably be working on the script for the cryptocurrency edition of The Big Short.

Source: I have a bit of skin in the game.


> Based on some surveys I did within the general US population, a significant number of people (around 30%) haven't even heard of Bitcoin or cryptocurrencies and most (60%+) have heard of it but haven't put money in it.

I hope these numbers aren't in any way accurate or representative, because they are absurdly high. If 40% of the population has invested in cryptocurrencies, that can't be anything but dangerous.


That doesn't sound right. I believe he was referring to 30% and 60+% making it 90+% who haven't touched crypto at all. Or in other words, at most the US crypto population would be under 10%. To me, that still sounds generous, and I would expect the actual number to be around a few percentage points only, but I don't have any data to back it up.

Where I'm from, discussing with friends and acquaintances in real life, I haven't been able to find anybody at all who owns any cryptocurrencies whatsoever. So, there certainly might be a bubble (price market exceeding utility), but at this stage it would affect a very insignificant percentage of the overall population.


And on the flip side a movie lime "wolf of walstreet"


The parallels to penny stocks in the 80s are rampant.


Because Coincheck isn't even a top 10 exchange and $500 million isn't that much money in today's cryptomarket anymore. Plus, I think there's some "fatigue" with negative crypto news from the past few weeks, and most people expect cryptocurrencies to start a bull-run soon. So they just shrug this off.

If this would have happened after a month of two of a bull run, then yeah, I could see some panic selling and a significant price correction then.


Because the price is driven by bitfinex printing tethers and pretty much nothing else.


I don't know why you're being downvoted. There is more and more evidence of this coming out. Bitcoiners' response is to censor. They should be selling instead.


Yep. Whenever the price falls more Tethers appear and the price goes back up again.

The Bitcoin price hasn't reflected fundamentals for years. The fact that the Bitcoin Conference stopped accepting bitcoins because the system is so broken, yet it had no impact on price, should be a hint.


Could you share why you think it would impact the price of Bitcoin? With a market cap of 186 billion dollars, and a daily volume of 10 billion I couldn't see how it'd have that much of an impact.


Because it makes it seem like exchanges are not trustworthy places to keep your crypto, and for basic users a lot of people just keep their crypto there. Fear, no matter how how misplaced, can cause markets to sway heavily.


Exchanges are not a trustworthy place to keep your crypt. I think that is accepted. What does it have to do with the value of the thing?


Imagine you have 2 sets of keys to your house and if you lose both then your house is not yours anymore. That's what keeping your money outside an exchange seems like to me. Exchanges are easy and familiar to people.

If there was some secure way to do password recovery that was built into the currency that might be a game changer. That might be impossible by definition, not sure.


I think you definitively could make something like Keybase on Bitcoin, by using multiple third-party institutions (chosen by the user) as a fallback.

When sending coins to your storage address, you'd say "anyone can use this money if they have this private key OR if they get a digitally-signed certificate from 3 out of 4 of these keys (A, B, C, D)". Those keys could belong to different institutions (or persons) that would declare they vouch for your identity.

Then if you lost your key, you'd go to each of them to get your certificate signed and could then use the coins again.

--

Of course, this means that if those institutions colluded, or all got hacked, you could still lose your coins, but it'd be harder than just keeping them in an exchange.


It's called "multisig wallet", and a lot of reputable online wallets implement this.

Instead of doing what you suggested, normally it's 2 of 3 where it's your cold wallet, your hot wallet, and the online wallet provider.


Too bad Bitcoin uses ECDSA instead of Ed25519 (or any other signature algorithm supporting threshold signatures). With threshold signatures, you don't even need something in the wallet saying "any N of the following M", you could just give secret shares to those M parties, and any N of them could collaborate to sign something using your single public key.


You could just do that anyway by running Shamir's Secret Sharing Scheme on a Bitcoin private key, splitting the key into M parts where any N of M parts can be combined to recover the original private key.


That's a fair point, but threshold signatures are more generally useful, such as N of M board members authorizing payment to X, without having to place trust in a single board member not to change the transaction to a different amount or address.


Do you have M friends, of which you're certain at most N-1 would collaborate to steal from you and/or get hacked? In that case, you can do secure password recovery.

Shamir's secret sharing algorithm can be applied over many groups other than GF(2^N). In particular, you can generate a polynomial of degree N where F(0) is your ECDSA private key, and for 1 < x < M, tell trusted party number x that they're party x and F(x) = y. Cooperation/collusion among any N of the M parties is sufficient to reconstruct the polynomial and calculate F(0). However, N-1 collaborators learn nothing about F(0), as long as you've generated all of your coefficients randomly and uniformly over the size of the subgroup generated by your elliptic curve's generator.

You can even have N parties each generate their own secret random polynomial f of degree N, and publicly share f(0)*G and privately share f(x) with party x. You add up all of the publicly shared elliptic curve points to get a public key for which no one party knows the secret key. Each party remembers the sum of the f(x) secrets they've been told. For polynomials, f(x) + g(x) + h(x) = (g+g+h)(x), so any N of the participants can collaborate to calculate the previously unknown polynomial for which f(0) is the private key. You need to first share Pedersen commitments of the public f(0)G values, perform a sanity check on those, and then reveal the f(0)G values and perform some more sanity checks in order to rule out cheating. See https://duckduckgo.com/?q=gennaro+distributed+key+generation

Once you have your public key for which nobody knows the private key, you can perform the same procedure to generate the random R value of the (R,S) pair of a Schnorr signature. Each party can then perform a Schnorr signature on H using their secret share of R and their secret share of the public key. They each reveal their signatures, and any N of those signatures can be used to reconstruct a polynomial where F(0) is the S value in the (R,S) signature on H. At the end, all of the sub-signatures and the final signature can be made public without anyone learning anything about the secret values. This is called a threshold signature scheme. (There are other threshold signature schemes. I had to implement threshold RSA in Rivest's 6.857 class.)

Unfortunately, ECDSA isn't a Schnorr signature scheme, but Ed25519 is. Any coin built using Schnorr signatures for wallets would allow you to construct threshold wallets where any N of M parties can collaborate to spend from the wallet, but generating transactions doesn't leak information to anyone about how to generate transactions alone.


I should add that with Schnorr signatures, if you have a bunch of signatures on the same H, you can add up all of the (R,S) pairs of signatures, and the result is a single signature where the public key is the sum of all of the public keys of the N signers. This allows very compact storage and verification of multi-party signatures. All of these nice properties are just consequences of the linear composability of Schnorr signatures.

BitCoin, at present, only supports ECDSA signatures, which aren't linearly composable.


I can't believe this is downvoted; this has been a mantra in the cryptocurrency community for years. If you don't control your private keys, you don't control the coin.

Traders take a risk in putting funds, fiat or otherwise, on an exchange. Many use domestic exchanges that have higher fees in an attempt to mitigate this risk. They are all well aware, but see the reward to be worth it.


Bruh if it's accepted then why did people just lose over a half a billion $ storing their cryptocurrency in one.


I don't hold a lot of crypto or anything but one of the most repeated sentiments in communities, guides etc is "don't store money in an exchange". People do it, just like people sometimes buy drugs on DNMs without using PGP encryption, and /usually/ it doesn't end badly for them, but the worst-case scenario (exchange hacked or exit scams and arrest respectively) is pretty bad.


The worst-case scenario of losing access to your personal wallet is pretty bad, too.


Why do people drink and drive?


The reason why fiat currencies are main-stream is because there's trust. People trust they can deposit and withdraw their money to and from banks w/ some semblance of protection and have transactions with little friction. News like this signals that you really shouldn't trust any crypto-currency exchange yet (just browse r/coinbase and people are waiting 1+ month to receive funds) , and I'll see a headline like the above and it's not surprising.


That's because people should stop using centralized exchanges that don't have their funds insured, and should instead investigate using decentralized exchanges. Cross-blockchain ones are currently being developed, with OmiseGO and KyberNetwork competing to be the first to launch.

On Ethereum this ecosystem is much more developed, and you can choose between EtherDelta, IDEX, 0xProject and Radex.

These exchanges eliminate counterparty risk because you control your funds at all times. They essentially act as matchmakers between those creating buy/sell orders and those who fill them.


You have to be able to explain this in a way that normal people are going to understand and care about. Whenever issues with cryptocurrency come up the true believers trip over themselves to post how it will all be solved if everyone just does this one additional thing nobody outside of the community understands, or if you just use this other cryptocurrency that solves this problem (but probably has other problems that are solved by this third cryptocurrency).


What is a decentralized exchange?

Why would I want to put my money into something "decentralized" when my bank does a fine job?

Cryptocurrencies are complicated and nonsensical at times. I have yet to see anything in this space that makes me actually think it's the future of anything. It's far too risky.


> Why would I want to put my money into something "decentralized" when my bank does a fine job?

Because you trust that your money will still be in the bank, in full, when you want to withdraw it. People in Cyprus, Venezuela, and Zimbabwe don't have that trust because it's been broken by bailouts and hyperinflation.

As long as the economy doesn't hyperinflate, and the banks don't haircut your accounts, and the IRS doesn't freeze your funds, and the government doesn't use civil forfeiture to take your money because they suspect you could be involved in criminal activity, your money is safe.

Therefore, many people see holding cryptocurrency as a hedge against that type of stuff.


Assuming we want to exchange two tokens, let's say, FBI and NSA.

Centralized exchange: send your FBI to exchange's wallet -> exchange updates your balance in its database, i.e. postgres -> trade for NSA -> withdraw NSA, which causes the exchange to send you NSA tokens (if they have them) and update another record in its DB.

The problem is in "if they have them". While normal banks are FDIC insured and a run on the bank won't prevent them from giving you your money, crypto exchanges provide no such guarantees. If the money is stolen from the exchange, like in the case of the OP, then you are SOL. Basically, you have to trust the exchange as much as you trust your bank. And clearly one entity is way more trustworthy than another.

In the decentralized exchange case, instead of trusting an organization to keep money safe through operational processes and tight regulation, you trust a smart contract. Provided that the smart contract has no bugs, this pretty much eliminates the need to trust the exchange. You trust it just as much as you trust mathematics.

Hope my explanation is not too verbose and makes sense.


>Could you share why you think it would impact the price of Bitcoin? With a market cap of 186 billion dollars, and a daily volume of 10 billion I couldn't see how it'd have that much of an impact.

When hundreds of millions of dollars worth can disappear in the blink of an eye like that, it adds a new element of risk aside from the risk of normal price drops. So it only stands to reason that investors would factor that into the value they place on bitcoin and the price would go down.

Have you ever noticed that currencies issued by corrupt and/or unstable governments tend to be worth little relative to the currencies of stable, well-governed countries?


The coins didn't disappear, they just changed hands.


>The coins didn't disappear, they just changed hands.

To the crime victim, they just disappeared. Owning bitcoin is a very risky proposition for those who aren't extremely savvy in protecting themselves from thieves.


Because it's a great illustration of the hidden risks in holding cryptocurrency.


That's because bitcoin wasn't stolen, XEM was. See my other comment for more details.


As far as I can tell the news hasn't hit the mainstream news yet. Might be a further dip when it does.


Because the entire thing is a sham... and I, for one, am super duper over it.


Assuming that the hacked coins are not immediately sold I'm not sure that it should.


Because BTC/ETH/ICO eco system of today largely attract scammers, gamblers, pump and dump peddlers and "investors" - the same kind that used to send faxes about this wonderful company that could be had for pennies on pink sheets.

Eventually they will get wiped out, become completely largely non-liquid and end up in jail which would cause a cool off. But not yet. We have not yet reached critical mass.


> I don't understand why news like this doesn't have that huge of an impact of bitcoin's price.. Bitcoin seems to be hovering around 11k~ as I'm writing this. It's been at the same price it seems for the past couple of days...

Personally, I would like to understand what it really means to say "the current price of BTC is ___." It's not like stocks where you can see actual bid/ask and daily volume numbers. And since transaction costs and times make arbitrage impractical, the price is not even the same across exchanges.


> It's not like stocks where you can see actual bid/ask and daily volume numbers.

Actually, it's exactly like that.

> And since transaction costs and times make arbitrage impractical, the price is not even the same across exchanges.

Arbitrage across crypto-currencies is happening constantly. As with stocks, bonds, futures, etc. the average person is unable to take advantage. Effective arbitrage requires large sums of money and the ability to execute quickly. Quick execution often means having a preferential agreement with one or more exchanges. This is true in or out of crypto. Price differences reflect friction and risk.


> Arbitrage across crypto-currencies is happening constantly.

Then why doesn't it have the effect of equalizing prices across exchanges, as it does with traditional currencies across traditional currency exchanges?

I'm not arguing, I'm just asking. If I don't know what I'm talking about, I'm happy to be enlightened.


Because the big players are much bigger in crypto arbitrage than the big players in traditional currency arbitrage, relatively. This combined with the unregulated nature makes abusing your position much easier in crypto.


> It's not like stocks where you can see actual bid/ask and daily volume numbers.

Yes it is. Cryptocurrency exchanges have orderbooks like regular exchanges do.


>Yes it is. Cryptocurrency exchanges have orderbooks like regular exchanges do.

Can you show me a current bid on bitcoin? IOW, where someone has obligated themselves to purchase N BTC at a price of $P, if someone is willing to sell that many at that price? Is that information posted publicly as it is with stocks?


Yes, and yes.

Here is an example with GDAX:

https://www.gdax.com/trade/BTC-USD

Here is an example of an API supporting public access through Gemini:

https://docs.gemini.com/rest-api/

Here is another (clunkier) one from Kraken:

https://www.kraken.com/charts

Usually there’s a UI accessible with an account and an API that allows faster, direct access to the feed.



Thanks. Is there a page that explains how to read that data?


https://docs.gdax.com/#get-historic-rates

There are more APIs there, publically accessible, small rate limit, have fun.

GDAX == Coinbase API. Trading on Coinbase makes, AFAIK, a market buy/sell through GDAX.


Yes.


>And since transaction costs and times make arbitrage impractical

This can be mitigated. Exchanging to a less congested coin can be done quickly for fast, low-cost transfers. Keeping a buffer at each exchange will lower overall rate of return but also reduce the frequency of transfers required.


Wow, didn't know Mt. Gox lost 850k BTC, thats 9B USD at the current price. Are these coins traced? Were they quietly sold or are hackers sitting on billions in BTC?


Some of the BTC were recovered, and it's an interesting case legally because the claims were converted to Yen, and the BTC are now worth far more than the claims. Matt Levine has a good writeup:

>In Mt. Gox's bankruptcy -- as is generally the case in bankruptcy -- claims against it were reduced to yen amounts shortly after the bankruptcy (in April 2015, when bitcoin was mostly in the $400s), and creditors are entitled to recover up to 100 percent of the yen amount of their claims, but no more. But there is more:

>>The bankruptcy estate for Mt. Gox holds 202,185 bitcoins worth about ¥169 billion or $1.5 billion at current rates. Meanwhile, the trustee has recognized claims by exchange customers of ¥46 billion based on the April 2014 bitcoin price, a procedure that lawyers say has a sound basis in bankruptcy law.

https://www.bloomberg.com/view/articles/2017-11-14/bitcoin-b...


Kim Nilsson's group have been investigating the Mt Gox incident for years and he gave a presentation some time ago that summarized some of their findings (https://www.youtube.com/watch?v=l70iRcSxqzo).

One of the best summaries of the Mt Gox incident, as well as the fallout and subsequent investigations that I've watched.


Any TLDW for the primary theory on who did it? Inside job?


Well worth watching IMO. TLDW, MtGox was compromised more than a dozen times and if 'MagicalTux' and Co would have done their due diligence and notified users the scale of the theft wouldn't have been as high as it ended up being.


The coins stolen are XEM (https://nem.io/) not Bitcoin. They're currently tracking the stolen coins to ensure they are not sold.

Preliminary evidence suggests that it was a private key stolen and not a network problem.

Disclaimer: Am somewhat associated with the team, and I hold a small amount of XEM.

Feel free to ask questions.


Interesting. So is the implication here that it was probably an "inside job"? Were the private keys held in cold storage?


More information... looks like they only kept their Bitcoin in cold storage. Their altcoins were not. Dear god, the stupidity: https://bitpinas.com/news/coincheck-press-conference-japanes...


From the coincheck press conference, no, the only private key was "hot".


That is unbelievably stupid.


Christ.


So in the future, someone might pay off the Mt. Gox debt for shits and giggles!


A lot of people take for granted of a bank guarantees from govt. In a bank you are protected if the bank burns down or gets robbed empty. Unlike the Wild West here


I remember naively believing that FDIC covered theft. There are little notes and placards posted all over banking websites and physical locations advertising that your funds are insured by FDIC. I'll bet most people who see those signs believe the same thing I believed: that "insured" in that context meant your funds were protected. Against theft; fire; fraud; etc. Right?

But FDIC _doesn't_ cover theft. Or anything else. It only covers bank failure. Bank runs were a real problem back in the old days, and the fear of it drove most people to leave their cash in mattresses. So FDIC was created to alleviate those fears and get cash back into the banks. That was, and is, its only purpose.

Not that that isn't a useful thing. It certainly came in handy again during our last recession. But this knowledge raises an important question. If FDIC is the only insurance I've seen advertised by banks, and it only covers bank failure ... what covers everything else?

I assume, hopefully, that banks have private insurance policies or something. Maybe they're legally required to have a private insurance policies. I just don't know. I bet most people don't know.

Very interesting stuff.


Theft from the bank doesn't take money out of anyone's individual account, so individuals don't need to be insured against it. Most bank thefts are small relative to assets, but if the theft is so large that the bank fails, then the FDIC insurance ensures that customers get repaid. The same is informally true for cryptocurrency exchanges: theft from the exchange's own wallet doesn't directly affect customers unless it causes the exchange to become insolvent. Then the customers will wish they had insurance.


If money is stolen from the bank it's the bank that loses money, not you. I think banks are generally insured against theft but if if they did lose a lot of money from a theft I'm under the impression that they would fail and the FDIC would cover it.


Kind of an incorrect analogy. Exchanges aren't banks, they're more like open bazaars.

Your own cold wallet is the bank. Once you take the money to the bazaar, it becomes possible to be pick pocketed.


> Exchanges aren't banks, they're more like open bazaars

I believe the SIPC guarantee covers losses incurred as a result of an exchange failure. Practically, I have a hard time understanding how an exchange failing would cause customers to lose funds (outside capital losses). Securities markets segregate exchange and settlement, e.g. the NYSE from the DTCC [1]. The latter is guaranteed, indirectly, by the federal government.

[1] https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_...


For US accounts, you even get 500k of coverage thru SIPC in case your brokerage goes bankrupt. You don't even need to be a US resident for this protection.


Is it a sure thing that you’re protected if a bank gets robbed? Like here?


You are not protected when the bank robs you. Accounts frozen, inflation, using your money for dubious corruption and money laundering schemes - see Nordea.


Up to $250K in the US.


Per bank though right? Like if you have several different banks you could get multiple $250k?


It's per account, I think.

And yes, you could spread your money among multiple banks, but then you have manage multiple accounts.


As someone who knows very little about the blockchain, I was wondering if the Bitcoins are "known"? Like, they have a hash or something? Can't they be then blacklisted from use somehow?

I thought the whole point of the blockchain was that all the transactions were all known?


How would you get everyone to agree on the blacklisting? How would be enforced? What if some clients accept nodes containing 'blacklisted' addresses, and some don't? When if then a client that 'blacklists' addresses sees a block that contains a transaction whose inputs are 99% 'legit' coins and 1% 'blacklisted' coins? Should it honor it?

What you're really proposing is a hard fork, which is a morass of problems. And why should everyone suffer all this grief just because the security team on one exchange in Japan is staffed with people who don't know what they are doing?


Yes, bitcoin transactions are 'known' and are represented by a unique hash; however, It's impossible to 'reject' an incoming bitcoin transaction. Miners can implement custom software that can exclude blacklisted transactions from their list of mineable transactions, but requiring all miners to blacklist an address or transaction would require a hard fork.


The accounts on the NEM network (XEM was stolen, not Bitcoin) can be marked with a non-transferable asset. That was just automated and all known hacker addresses are now tainted.


Interesting - I'm unfamiliar with XEM, I presume the non-transferable mosaic (that were used to mark the accounts to which the stolen funds were transferred) is signed in some manner such that a copy couldn't be spoofed onto an arbitrary account?


Mosaics are a core feature of the platform. Think of it like an ERC20 token, but the creator of the token can impose fees (among other features). The fees are set to another token that the hacker doesn't/can't own - as such the account is stuck owning the asset.


So in a sense you never truly own your XEM tokens? The creator can change the rules ex post facto.


That's configurable. There's tokens where you want it to be centralized and able to change post creation (mutable) and then immutable ones.

Companies using NEM really like the mutable ones.


Is there a roadmap for weaning XEM off this centralized governance structure?


It is very difficult to blacklist coins with the current culture of Bitcoin.

If 1 person refuses to accept the coins, there are thousands and thousands of others who knowingly WILL. And an even larger group of people who aren't even going to be aware of your blacklist and will do so unknowingly.

In order to blacklist coins, it is not enough to just blacklist the 1 address. You have to black everyone who accepts those coins, and everyone who accepts coins from the people who accepted them and so on.

And at that point you have blacklisted the entire network.


You'd need consensus of the miners to do so.


This happened with Ethereum early on. It's the cause of the Ethereum Classic fork since many oppose violating immutability.

In addition, my understanding is that many cash exchanges will not accept funds that have previously been identified in major hacks because they could be forced to return the funds to their rightful owners in addition to the cost of compliance with law enforcement.

There are "privacy"-focused cryptocurrencies that do not have this characteristic, the most well known of which is Monero.

[I am not an expert, just a casual news consumer of the space]


Nothing to do with miners. It is all about exchanges.


Miners would be the correct level for such a thing.

By blocking a specific address, it would effectively freeze all the funds held by it, preventing them from being transferred to anyone, including exchanges.


Yes... all of the addresses involved should be known and can be blacklisted by major exchanges.

Still - the question is why was it even possible for a "hack" to score so much cryptocurrency? This is a legendary score on par with Mt Gox... they should be holding all currency not required for immediate trading liquidity in cold storage and rebalancing as needed.


Uh. Wasn't the whole goddamn point of blockchains "censorship resistance"? Now people are saying that we can just ban transactions from certain addresses?


You can't ban them, but you could put together a "blacklist" on tokens from a particular origin that exchanges could agree to honour. It wouldn't stop anyone from trying to sell their coins in other ways.


That's basically forming a government. Who decides what goes in the list? Who ensures they'll keep honest? Who watches the watchers? What recourse does a user have against arbitrary measures?


A government? It's a list. Until it collects taxes, has a monopoly on violence and provides basic services, a list is just... a list.


I just had a LISPy epiphany here! All that you mention are ultimately lists.


An elisphany! What is the human body if not a list of proteins? ;-)


What is the universe but a list of 'string's?


Knowing their history is good against faking the coins aka counterfeiting. If someone steals $50,000 from your bank account you may or may not ever see it again. Bitcoin will help you track it down to wherever it ends up, unlike your bank.


You can't fake (counterfeit) bitcoin...


That is what I just said.


They are known, but the point of a decentralized blockchain is that there is no central authority to 'blacklist' them.

Furthermore, there are methods by which bitcoins can be anonymized once obtained: look up 'bitcoin tumbler'.


Conclusion: If you keep any cryptocurrency on an exchange or online service that can or is capable of controlling your private keys - MOVE all your cryptos to your own deterministic wallet YESTERDAY!


The possibility of an exchange getting hacked is much lower than the possibility of users losing founds by transferring them to their own wallet. I run a cryptocurrency forum and in 99% of reported cases users lost their founds by moving money from an exchange to a local wallet or even a hardware wallet. I always recommend everyone to keep it on an exchange.


There may be reporting bias going on. I suspect a high percentage of people who lose BTC by themselves will report it in a forum, since, as far as they know, their case might have unique details in which a more knowledgeable person might find a solution. But a low percentage of people who lose BTC due to an exchange hacked will report it, since the information they need is already in news and blog posts all over the web.


Exactly. And the top notch exchanges keep everything in cold storage AND they take out massive insurance policies on it. Keep coins there unless we are talking millions of $ worth.


The insurance coverage is limited and doesn't cover theft of individual accounts.


No exchange has a full insurance on their cold storage. Not a single one.


Honest question. How is this possible? Isn't it as simple as copy and pasting the public address?


Among other things, there's malware in the wild that rewrites public addresses when you paste them into the major exchange's "send coins" forms.

https://www.investopedia.com/news/new-bitcoin-malware-change...


Take ETH and ETC for example, they both have the same address format and accidentally sending from one chain to another results into your crypto being locked away forever.


You could ask this guy: https://etherscan.io/address/0xa8f889a066519ffb552a571d553b8...

Looks like he copy-pasted a corrupt version of the address. There are three transactions to this destination, from different exchanges.


I've had an instance where the withdrawal to my wallet seemingly didn't even make it to a block on the chain. This happened on Coinbase and took over 2 weeks to resolve. With their non-existent support I pretty much considered that money lost until the whole thing finally got resolved. But I can definitely see somebody fat fingering the wallet address being one of the bigger reasons.


Well, you’ve also got to keep track of the private key...


Counterpoint: I've lost all of the coins I held in local wallets (a variety of stupid reasons, but still gone nonetheless). I still had the coins that I'd been holding in Coinbase for years until I recently sold nearly all of them because I'm reasonably confident the Tether scam is going to trigger a massive price collapse across the board once folks notice they're just printing money over there and gobbling up about half of all miner output with funny money (it's really an astonishingly bold con).


There is risk either way, though. Say you want to sell fast because of something major (that is not just hype). If your monies aren't online you will be the last to try to cash out.


I agree, which is why I prefer to:

- keep only (most of) my long term holds in my hardware wallets (e.g. NEO, OMG, ...)

- spread my shorter term holds over several exchanges


I think the biggest problem is having a single point of failure. I personally keep about half my coins on exchanges, but no exchange holds more than 10%.

Storing your coins might be the best solution in theory, but in practice unless you're very savvy about the whole stack - hardware, OS, software and blockchain tech, it's hard to be sure you're not making a dumb mistake and exposing your whole stack.

Even hardware wallet can have vulnerabilities, and any form of "paper wallet" can be physically lost or destroyed.

My opinion is that you should hedge to make any loss tolerable, instead of trying to prevent it completely.


paper wallet generation software can also have bugs or be intentionally rigged and people have definitely reported both quite a bit.

You're right on with your approach -- I think the answer is multiple wallets -- even multiple brands of hardware wallets, multiple exchanges, multiple computers, multiple different types of paper wallets stored in different places, even multiple cryptocurrencies in case one has a catastrophic issue.


I am not saying your wrong, but that kind of defeats the point of using a crypto coin in the first place.


Absolutely! This is not consumer ready at all. It's important to continuously point that out.


You can keep just 10% on bitmex and use upto 10x leverage. If you get liquidated take another 10% out. If you make profit, send it back to the icebox.


I would have had Bitcoin at a much more opportune time if I could have gotten Armory to work. The idea that one must download the entire blockchain makes maintaining a wallet very difficult for some, esp. if the wallet software doesn't accept the data at the end of the dozens+GB download.


  The idea that one must download the entire blockchain makes maintaining a wallet very difficult
Totally false. There are plenty of wallets that allow you to connect to a decentralized network of servers hosting the blockchain.

Electrum, Multibit to name a few.


For Ethereum as well— the official wallets will let you run them in light mode which brings the chain size from approaching 100GB down to a few GB


NEM (the coin that was stolen) doesn't make any local wallet user download the chain. Instead, it uses a client server model.

https://nem.io/

As such, the wallet is super lightweight and easy for an average user.

Doesn't protect you from exchange hacks though.


maybe, but I don't recall encountering any of these years ago


They have been around for over 5 years. I used them 5 years ago..


You don't need to download the entire block chain to generate a receive address. You don't even need to download the entire thing to spend if you don't care about privacy. You can use vbuterin's python scripts to do the whole thing off public blockchain api's.


I've messed around with Bitcoin and I can't get past the fact that the top 2 most recommended wallets for macOS aren't signed by Apple and you have to verify a PGP signature manually (and the author's key is signed by a bunch of people I've never heard of so even that is a leap of faith). So I refuse to deal with amounts bigger than I assume will definitely get stolen.


eh, not all wallet require the whole blockchain. e.g electrum


You also have to take into account the probability of your exchange of choice being hacked vs. the probability that you'll get your own wallet compromised/destroyed/lost etc...

Given that cryptocurrencies have become pretty mainstream and given the average level of technical literacy among the general public I can understand why some might prefer to keep their coins in somebody else's hands.


You mean probability of people who run the exchange/work there deciding that they have a better use of your coinz?


Some of us think it's worth the risk so that's just your personal conclusion.


tx fees are around 10$ so it's meh

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