Major bitcoin exchange not executing withdrawals; now owes clients $38m in disappeared money – falkvinge on liberty how to buy bitcoin in malaysia

Now Falk will claim, with the sting of his personal loss as a spur, that Bitcoin is too sensitive a subject to leave unregulated, and that he, and his “democracy” has the answer through legislation bitcoin buy and sell. Sorry Falk no one with half a brain cell will accept your ideas of how the world should work. You should have printed your Bitcoin out with Armory or bought a Mac, transferred the Bitcoin to it and kept it in a safe. The world does not need you to keep people safe from MTGOX, and your reckless carelessness with your own money disqualifies you from forcing a Bitcoin solution on others, quite apart from the basic immorality of the job you do.

Although many will dislike it, as there is always money to be made in unregulated markets, if Bitcoin ever wants mainstream acceptance, it will eventually be regulated to some extent.

And governments requiring e.g. insurance on accounts seems like an entirely reasonable regulation which prevent many situations like these. The FDIC bolstered consumer confidence in banks for decades, and reasonable, common sense regulations from Glass-Steagall ushered in the longest peace time economic expansion in history.

No offence, but I would imagine that someone who invests such amounts of money into Bitcoin would do some more research about what is considered trustworthy. MtGox wasn’t considered a secure place for that for at least the last few months already. I’ve heard stories about withdrawals being stuck for *months* months ago, so this isn’t anything new.

If you want a secure storage (you’re right that just keeping bitcoins on your computer isn’t good enough), look into how to set up a cold storage wallet (e.g. with Armory or Electrum). You can keep a wallet on a pendrive or external disk, backups on paper, and you can use it to send transactions securely without the wallet ever touching Internet even for a moment.

Traditionally, Gox has set the exchange value on Bitcoin for the whole planet … essentially defining the very value of the currency itself how to transfer bitcoin to bank account. If Gox said it was worth $850, then By-God, That’s what it was worth … Period.

Along come the robber barons, Bitstamp, Bitfinex and BTCe who, together with the likes of coinbase, conspire to manipulate the market, destroy MTGox and make a real ton of money in the process.

THEY decided together to set the value of Bitcoin from $100 to $200 less than Gox. YOU see the difference as the lower price that THEY are willing to pay when you try to buy or sell coins through their exchanges.

Coinbase, for instance, might typically give you only $834 for a Bitcoin that Gox says is worth $1000 … tack an extra 10% fee on top of the transaction and then exchange their “stolen” Bitcoins for an even bigger profit by moving them through a Gox trade.

I started looking at arbitrage-rally-news when I realized the price difference between mtgox and bitstamp seemed to be increasing extremely rapidly…almost felt like two completely separate markets. Serendipity or perhaps, but within 24 hours I started seeing people pissed off and conspiracy theories everywhere. Thought: if the current bitcoin community, which is pretty steadfast, can withstand SilkRoad, China, etc. I think the basic tenets of the market will survive if mtgox ends up going belly up or other nefarious plot-twists. It’s only if the structure/encryption/method bitcoin introduces gets a gaping hole that the currency/commodity/whatevs will collapse fully. If MtGox is indeed going down, I will spend my measly hoard on cute electronic doo-dads, then try to find the bottom of the pit and buy back in what’s the price of bitcoin. I’m looking at $500 or less on bitstamp then jumping right back into the game because through all the trolling and fundamental economical doomsday predictions this sucker has teeth and will not go away. Rick, best of wishes on your six figures, but don’t give up on the method if a branch falls off!

The number of transactions trying to use the same input is surprising, but more than one is common for stuck transactions. MtGox will try to cancel transactions which have been stuck for a while by spending one of the inputs in another transaction, and thereby make the first transaction invalid so it can be tried again. I’ve seen them do this several times over, but 5 transactions at once is a new record.

I am somewhat puzzled by the fact that they still allow users to withdraw and attempt to do the transactions despite of the sad state of their wallet. I think it would be less frustrating for their users and easier for MtGox if they just put withdrawals on hold, waited a reasonable time to allow for confirmations, did the accounting, got their utxo set in sync and then start up again when everything is in order www bitcoin com. But it is easy to give advice when I don’t have the complete picture..

I can understand why they aren’t more open about the source of their problems, since other exchanges, merchants and online wallets may be vulnerable to the same bug or a variation of it the bitcoin. Just very much harder to exploit.

A couple of small Bitcoin transfers out from MtGox failed for me. The first one for 1 BTC on 30th Jan14 was returned to my account and the fee credited back yesterday. I immediately resubmitted the transfer out and this many hours later is has still not arrived at it’s destination. I presume, that like for the first attempt, it never reaches the blockchain. Any US withdrawals going back to 2 Nov 13 were not submitted to their bank for international withdrawals, and SEPA withdrawals look to have been delayed indefinitely, even though I got a couple through last last year. Looks like it’s too late to expect anything more out of MtGox. I’ll be amazed if this is not yet the end of it. (Please surprise me Mark K…

Happily, my losses with MtGox only make me break even with the Bitcoin adventure, and I understood the risk from the beginning, so never depended too much on it bitcoin capitalization. But here’s the lesson of real life:

Even when you know someone is excited by the same ideals as you are, there is a sliding scale of the amount of trust you can extend to them depending on the amount of money involved. It’s very hard to keep that in mind when you are sharing the same excitement. Your own normal defenses fail to protect you from doing foolish things in that kind of context.

Moreover, remember money or assets that came easily are just as valuable, in fact let’s say it is twice as valuable as money or assets that you had to work hard for — that’s because they represent the freedom that mere hard work never entirely gets for you! So those freebies in life — be absolutely paranoid and protect them like crazy. Trust no one! Don’t consider them less valuable, consider them more so bitcoin logarithmic chart. Calculated risks re-investing them — well OK, but spread the risk, and don’t keep it in one place. And remember the meaning of “TRUST” — especially in contexts where it likely has no meaning!

Think about it. Most people you meet could hold $5 for you and return it later. Some people could hold $1000 for you and return it later. There are very few people who could casually hold $1 million for you and be trusted bitcoin price chart all time. Consider, if they could get away with that one theft, just once, it could make their whole life a different story. It’s an almost irresistible temptation. Tempt them with $100 million dollars — how many reading this could resist, if it looked like they could get it from strangers they don’t even know, and maybe entirely get away with it because of lack of regulation.

I don’t criticize Rick F. for being human. His ideals are admirable. Learning how far to trust strangers is not the same as wishing to stop the abuse of copyright controls, and wishing to stop abuse of central control by governments and the banking system.

Of course there is also this connection — governments would have never gotten as far as they have, if there wasn’t a dynamic that caused people to create them in the first place. It’s not so much that we can’t entirely trust governments, it’s more like spectrum of trustworthiness. You can hardly trust anyone at the level of total lawlessness, and then as you build social and “legal” structures around the problem you can create degrees of trustworthiness, increasingly so depending on how well society manages to construct them. However, there gets to be a point of no return, where increasing delegation to administrative structures starts to reduce trustworthiness again bitcoin in us. Naturally we react against that, but the answer may not be to return entirely to lawlessness. So it’s not that delegating the problem of trust to social institutions is an entirely bad idea, it’s that it has never yet been good enough. It’s not something to merely react against, it’s just something that needs a total overhaul to make better.

Yes, resisting the excess and failure in government is important to make this happen. But no, we must not fall into the traps that these defective methods were intended to fix, if just because the fix was not good enough. There is the expression: “out of the frying pan… into the fire.”

Bitcoin, the algorithm, looks to make a cleaner process for us to work together with bitcoin cloud mining sites. But certainly the answer is not to emulate the old system by allowing too much trust to fall into the hands of one or a few companies, or institutions. This a serious technical mistake in understanding the issue that Bitcoin is intended to prevent.

We are so used to working with banks and governments we take a great idea, and throw it to the wolves immediately, by adding a layer of the same old stuff, as soon as we start to rely on “exchanges”.

Perhaps we can delegate quite a bit of trust to a non-human algorithm, but we should never delegate too much to other human individuals or small collections of them. Naked capitalism sounds like a great idea when we only focus on it’s benefits, but actually capitalism, to work at all, is entirely dependent on governmental structure and law. It is not some kind of natural wonder, in and of itself.

Yes, we could use the Bitcoin concept to shift and reduce over-regulation, but until governments make it easy to enforce implicit contracts internationally, it is exceedingly dangerous to trust any of your Bitcoin to operators not in your home town, and in that case you may as well, just learn how to maintain and protect your own wallet. For now, everyone excited by Bitcoin has to understand the process completely, and be in firm control, offline and virus protected. If you don’t have the time to get total control, time to understand how your smart phone is hacked all the time, and understand at least the structure of the algorithm behind Bitcoin, it’s like leaving all your money on your front lawn, or in the community laundry room, and hoping people will respect your right to it. In that case just don’t play the game yet.

The fact is that your chances of getting your money back from strangers, e.g, Mark Karpeles and MtGox, is very small, if you just hand some to them in a context that might not easily be covered by law.