$4.1m goes missing as Chinese bitcoin trading platform GBL vanishes
coindesk.com
coindesk.com
It does look like a similar case to inputs.io and a few other sites too, people "invest" or store large amounts of money with a person despite the community making every attempt to warn people that it is a terrible, awful, terrible idea to do so.
The difficulty would be making the blacklist fast but accurate, i.e. there'd need to be high standards of proof that coins were stolen rather than traded fairly. But if blacklisting took too long the thief could already have fenced the coins for real assets before the blacklist took effect.
Ultimately it could end up looking like credit card fraud alerts - suspicious bitcoin transactions could be put on hold (temporarily blacklisted) until confirmed by the wallet owner. But at that point you lose anonymity. I guess you can't have anonymity and accountability...
Well, you could say NameCheap wouldn't accept those coins in the first place, but can you really expect every store and person to be using this list?
What happens if you take those 4m worth of bitcoins, send 3m to your own wallets, and distribute 1m to random wallets of strangers? How do you know which wallets to blacklist? All of them? You're just going to put tens of thousands of people in the dark, and say their bitcoins are now worthless and blacklisted, because they received a random payment?
Hmm, I didn't realize you could send money to people without their consent. That would make blacklisting more difficult. But if receiving the bitcoins was indeed unintentional on their behalf, you could just temporarily blacklist them until they returned the stolen bitcoins to the original owner.
In theory this could lead to attacks where small amounts of stolen bitcoins are continually deposited in victims' accounts, but that could be avoided if the exchanges themselves enforced the blacklist and refused to process transactions from blacklisted accounts (except back to the theft victim).
> Well, you could say NameCheap wouldn't accept those coins in the first place, but can you really expect every store and person to be using this list?
It would certainly require a cultural shift in bitcoin use, yes. I just find it funny that the entire transaction history is public record, yet bitcoins can still be stolen!
I think the point of blacklisting would mean that miners wouldn't include transactions from those addresses in blocks. Once the transaction is in a block then there's not much that can be done, so blacklisting will require cooperation among a majority of miners.
People aren't going to maintain such lists individually. So you'd want some central operators, like the antispam DNS services. But then they have to decide what counts as "stolen". Ordered something and then claim it doesn't arrive - who do you believe? You're back to the paypal situation, except rather than reversing transactions you're declaring bitcoins "stolen".
Not to mention the difficulties of running a collaborative central operator in a community of radical individualists.
Who will create this blacklist?
"I guess you can't have anonymity and accountability..."
Actually, you can:
People that received tainted coins could repudiate them with high fee transactions to invalid addresses (so that most of the coins go back into the network as mining fees). I guess 'invalid address' is the wrong language, but you get the idea, an address with no private key.
Who and how would decide whether given bitcoins are stolen?
Forex traders may have been attracted to a market without regulation but their customers were there to make foreign currency trades. I'm sure that not as many bitcoin users would be happy to lose their anonymity to gain that accountability.
I'd say that more and more bitcoin users are using it because of the hype, not because of the anonymity.
>>I'm sure that not as many bitcoin users would be happy to lose their anonymity to gain that accountability.
Maybe not yet. But if everybody currently holding and hyping bitcoin achieves their goal of mainstream adoption, then at that point the new majority bitcoin user demographic will probably be very happy to lose anonymity to gain accountability.
What about the other side of regulation? Not from customers demanding safety but from governments demanding reporting? (E.g. anti-money laundering, tax-evasion laws, commodity markets laws)
I don't know nearly enough about the mechanics of bitcoin to say anything remotely meaningful, but it seems like there is no way that bitcoin won't be regulated like any other commodity. At least in the US, the CFTC will absolutely regulate it by criminalizing anyone for not registering their holdings. Or, even outside of commodities, you could get something like FACTA that forces people/banks to report stores of value in offshore centers where US citizens are involved. This is all US-centric, sure, but why wouldn't it be like this generally? Or, rather, do the mechanics of bitcoin mean you could stay anonymous while not becoming a criminal under the regulation that is going to come?
That's why Wells Fargo has a market cap of $225BN but has assets over a trillion, right?
Banks are in an unusual position. They have cash, but it's not theirs. Depending on the report and reporting rules, it might be reported as either an asset or a liability.
Me. I'd been slowly weaning off credit cards due to the potential for purchase profiling and then two years ago Visa and MC both started in double-talking about selling "anonymized" purchase histories for online ad targeting -- as if you can anonymously target specific individuals.[1] That obvious prevarication was enough to convince me it was now open season on customer privacy so I cut my usage down to the bare minimum necessary to maintain one account for emergency use.
For me, $100 bills are the new credit card. I get a stack from the teller at my credit union about once every 6 months (careful to stay under the $10K mandatory government terrorist hysteria snitching limit[2]) and spend as necessary. It took a little getting used to, but it quickly became quite normal. I'm confident that my CU does not participate in any schemes to correlate serial numbers on bills with purchases. At least not any non-government schemes.
[1] http://online.wsj.com/news/articles/SB1000142405297020400230...
Unless regulations relax, there will be an ongoing profitable business for people who sell software that does behavioural analysis on compliance-related cash behaviours for the finance sector.
Best case it is really no one's business where, when and how I spend my money. Worst case the info could be used to directly harm me, maybe through blackmail, maybe to enable some other crime against me or maybe even to falsely implicate me in a crime that I would then have to spend time and money to defend myself against in court.
As for the change - my credit union has a coin counter, I bring in a bucket of change, they give me dollar bills in return.
Some of this is probably just due to historical accident, but some of it is also due to differences in the tradeoffs between the various payment methods in different countries.
In Japan, for instance, (1) cash is both easier to deal with in many cases (e.g. ATMs will happily give you very large quantities of it, a lesser crime rate makes using it safer, vending machine bill readers are much more accurate, shops are much more willing to deal with large bills, etc), (2) the presence of other mechanisms like very easy/cheap bank transfers replace some of the use-cases of credit cards in the U.S., and (3) credit cards are more restrictive (e.g. by default you have to pay your entire balance every month).
Also I think credit cards started their climb in the U.S. by replacing checks (which were in many ways very inconvenient), and that gave them enough familiarity and infrastructure to continue from there; in Japan, on the other hand, checks were never really used at all, so credit cards never had that "in."
Basically I used the small notes when my total was close to a round figure. I could leave a $1.39 tip on a $20 meal or I could add a few $1 notes.
Most of the time I used my card (which is another story) so I could do this more easily, but sometimes you're in a hurry and the extra steps involved in US dining are a pain in the posterior. Hence: carrying small bills to allow tipping flexibility.
http://www.amazon.com/The-End-Money-Counterfeiters-Dreamers/...
We need trustworthy exchanges for buying and selling BTC, but once you have BTC I am not sure why anyone would trust someone else to store them long-term.
Some years down the road, maybe we'll see large corporations offering exchange, escrow and hosted wallet services. Currently it's the wild west.
They wouldn't even have to be behind every exchange and instead could let stuff like this (and off-shoots like LiteCoin etc.) happen quite organically and still prove their point, as clearly visible..
The 'noble savage' [edit:absent government humanity is made up of angels meme] is more a favored construct of the left wing. See, for example the art of Gaugain, Picasso and early modernism. Unless your liberterian ideaolagues acquantences were closest cubists or something.
In other words, there are a small number of corrupt people in private as well as government roles, and that's just the way it is. Problem is, in government, they get to dictate the rules that the rest of us have to live under.
Unless I misunderstand, your "evidence" is like saying "the moon landing is bulletproof, impossible to disprove- which is proof they faked it, because if they faked it they would make it as real as possible"
Last week it was Britain, the week before that it was the US Government. Today, its the Chinese Government???
/s
Bitcoin won't die just because people that want to ride the bubble lose some of their investments. It'll slow down, of course, but storing wealth is not bitcoins selling point, and trusted central exchanges are not essential to the model.
I _have_ had someone on another continent charge things to my credit card.
Also, exchanges are natural monopolies. The more people that go to a particular exchange increases the network effect of an exchange. More people == faster trades, faster trades == more fair prices.
Exchanges will centralize because the economics and network effects of exchanges demand centralization.
With a local exchange, you get the best price for BTC in your city. With an internet-exchange, you automatically get the best price for BTC in the world... INSTANTLY, without having to schedule a meetup.
The more BTC exchanges converge, the better things will be overall. Trades will execute faster, at a lower cost, with maximum convenience with maximum fairness. It is damn near impossible to settle on a price without an exchange.
Its simply a matter of which BTC exchange will be trustworthy enough to hold the title of "defacto exchange of the entire internet".
Counterintuitive, perhaps, but it's happening.
Anyway, the forces of physics can be resisted: A thrown ball goes against the flow of gravity, and even Airplanes and Birds can fly for extended periods of time. But in the long term... almost everything follows gravity in the long term.
Similarly, centralizing market forces (in particular: the formation of "natural monopolies") are a known and documented phenomenon. But in the long term, the BTC Market gains more benefits from centralizing... than decentralizing.
Civilization crumbled and humanity disappeared.
In fact you are just dreaming this life. Time to wake up!
<insert dramatic chipmunk music>
What changed is that it became less valuable per unit of volume and mass (due to inflation) and that it became more traceable (due to regulation).
In bitcoin's case, it's designed to be immune to both of these. The wild west is here to stay.
I wonder how the Bitcoins mentioned in the article have vanished? Every body that put money in there should have close look at the Bitcoin block chain and find out where his Bitcoins went.
But as always these kind of articles lack useful details.
That sentence tells me everything I need to know about your thought process.
This has nothing to do with "security", and everything to do with "How can I be sure that the other guy isn't a jackass??". Paypal became popular as a financial service to Ebay purchases.
The startups that are running themselves as trustworthy businesses will get ahead. But a year, two years, or even three years is not enough to gain a decent relationship. Lets see if "Coinbase" can weather the storm
Or will the general public look at Coinbase and think "that newfangled unreliable Bitcoin thingy".
There's a single solution (that bitcoiners tend to dislike) - regulate all such entities, requiring them to (a) verify their identities, and (b) post bonds/statutory capital in proportion to all held funds, to ensure that depositors are paid back if the company folds or turns out to be a fraud, i.e., the same rules as banks have to follow.
The cost of stolen Bitcoins, on the other hand, will be borne exclusively by the account holders. It's the equivalent of having one's checking account emptied to due a bank robbery or a bankruptcy. Ordinarily the FDIC insures account holders against this (in the USA), but there's no such protection for Bitcoin account holders.
Bank with care.
On the other hand, if a BC user had their wallet stolen, then they have zero recourse.
In short, the consumers pay in the end. So at best we have protections in place such that the consumers share the bill.
Very true, and likewise, CC users (both buyers and sellers) have numerous laws and protections that can make transactions annoying, difficult, or even impossible, and Bitcoin fixes some of those problems. Obviously, you shouldn't use Bitcoin unless you feel that Bitcoin's attributes are favorable to credit cards' attributes.
Someone can steal your bitcoins in the same way they can steal your physical cash.
Credit cards are a much better system because they are designed with the assumption that you will be compromised and the system is set up to minimize the damage of a compromise.
Bitcoin's in its infancy so people currently using it are doing so 'on the metal', but the system is flexible and user friendly layers will be built with time.
Also, reversible payment networks can be built on top of a non-reversible-payment foundation, but not the other way around.
Credit cards aren't designed to be compromised, they've just accepted that they can't do anything about it and worked on controlling the damage.
...and that Bitcoin is not even a blip on the radar compared to the daily volume of CC transactions.
As more people use bitcoin, they can only react when things like this happen. Take that lesson and carry it with you.
the tl;dr is "the GOOOOVernment mannnn money money govt sucks MUGGERS. bitcoin is stupid. bitcoin is GREAT! credit cards are like bitcoin but the BANKS are the REAAAAL thiefs post-modernism post-modernism capitalism 'Hello!' the government. THE government. wallets were stupid to begin with. Electronic currency is flawed i hate bitcoin/creditcard cash is flawed cash. Rousseau."
My 2 cents, FWIW... the people I see locally spoutin bitcoin aren't true patriots who believe in ultimate freedom, they're more like get-rich-quick-schemers lol
Slightly tangental: I wish there was some way of judging how much bitcoin is being used as a medium of exchange as opposed to a value store/speculation vehicle.
Ask anyone 9 months ago whether or not trusting Mt. Gox was a good idea. They were the largest and most reliable exchange, and now it has become increasingly difficult to get your money out of it. And now the exchange rate on Mt. Gox itself has been effected by their problems...
I'll tell you what I did, I bought coins and transferred them out of there ASAP. The official line is that their bank will only do 10 outgoing USD wire transfers per day period. Of course limiting outgoing transfers is the same strategy you would want use if you were financially insolvent and wanted to forestall a run on the bank.
People who banked with Refco, another broker, are even less lucky. The fact Refco's CEO and chairman went to jail isn't helping them.
Do you have to have the bitcoin to get the history? Does the transaction history not say where the bitcoin went?
I wonder if it's possible to create a more P2P trading platform for digital currencies.
Some people never learn.
Is gold or the USD a tulip too?