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Comment by eis | Hacker News Reader

A little bit explanation:

Mt.Gox is the biggest bitcoin market place by far. During the last 1h the whole volume of about 500k BTC was traded making the price drop from somewhere around $17 to virtually nothing.

Details are not available yet. It could have been a bug or an intrudor.

Rumors have it that someone with a huge wallet got hacked.

<+MagicalTux> someone with lots of coins did get hacked

MagicalTux is working on Mt.Gox

Also some other markets like btcex or tradehill are seeing problems and/or price drops.

Update: Mt.Gox have published an announcement:

https://support.mtgox.com/entries/20208066-huge-bitcoin-sell...

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I'm surprised that people with large amounts of bitcoin don't have better security measures. For that amount of money, I'd consider securing the private key in a safety deposit box. Probably several safety deposit boxes, actually.

They apparently had 500k BTC in their MtGox account, which is insane. Unless they were actively trading all of that they should have withdrawn from MtGox to the BitCoin network.

If they were Satoshi, they could be sitting on enough early-adopter bitcoins that 500k is relatively not insane.

I keep reading about people only being able to take a small number (50 or 80 BTC) out of the market at once, which is why the hacker couldn't do the same.

If that is true, then once you have your 500k BTC in the exchange, it will take you over a decade to get them out, either as cash or as bitcoins.

And therein lies the seed of the eternal cat-and-mouse game that is key management.

Technically, each layer of security you impose is also an impediment to the bitcoin market's liquidity.

Technically true, but no-one can sell off 500k bitcoins without the market crashing anyway, so from a practical perspective, no liquidity is lost.

Agreed. It seems the real fallout of this incident is the fact that the rollback can never recover BTC taken out of the exchange accounts and put into anonymous local "wallets". I wonder who will cover those losses?

"to virtually nothing" - I believe this is misreading the chart. I had to take a second look myself. The light red column at 5:10pm is trade volume (240K sold). The price stayed between $17-18. The sale of 260k at 5:50pm was priced between $10-$13. The lowest price during the 'crash' is $10.

My theory is there are miners with large amounts of BTC and someone decided to sell a lot in a relatively small market. According to the depth-of-market calculator and there is only about 2000BTC in total on the buying side right now. Its easy to swing the market.

No, there were definitely transactions for $0.01 per BTC in the live feed.

Here is another nice graph: http://leanback.eu/bitcoin/plots/20110619195756-mtgox.png

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