back to article MtGox claims to have a fix ready for Bitcoin withdrawal woes

Bitcoin exchange MtGox says its customers should soon be able to withdraw Bitcoins from their accounts again, although the company is still not sure just how long the process of restoring access will take. MtGox suspended withdrawals last Monday after claiming it was hampered by a security flaw related to "transaction …

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WTF?

Protocol flaw? OK, it happens.

It's not the fact that there was a flaw in the Bitcoin protocol that pisses me off the most, as I was always mindful of that possibility even before this tanker of manure crashed right in to the HVAC showroom, but the fact that it was known to the developers!!

Still, at least I'm only down about a tenner at the moment.

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Re: Protocol flaw? OK, it happens.

I'm sorry, did you mean to say "known to the developers and patched in the official client?"

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Anonymous Coward

Re: Protocol flaw? OK, it happens.

If the protocol is flawed then expecting the client to be the fix isn't the answer.

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Re: Protocol flaw? OK, it happens.

Do some research. The flaw only affects exchanges that rely on a transaction id before that transaction has entered the Blockchain ledger. Use another identifier and you're unaffected.

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Re: Protocol flaw? OK, it happens.

You know, I've done a little more reading on this, and I have to say it does sound like something that should have been fixed before now. Apparently even in the official client, it's possible for this to have some effect. Not so you would lose your money, but it could cause the second of two rapid* transactions to fail if the first one got modified.

*Where rapid means less than one block (i.e. ~10 minutes) apart.

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Withdrawal limits?

Do they really expect people to believe this is because they're "testing" this new software? I wonder how many years will it take for large holders to be able to withdraw everything under these limits?

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Trollface

Get in now!

Or miss being fleeced forever!

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Happy

Bubble has burst ..... ?

Looks like from the high of $1000 Bitcoin is now down to $250 ... just maybe people are getting bored with tulips?

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Re: Bubble has burst ..... ?

Only on MtGox. Because people are presumably selling cheap to get cash out - as they can't get the Bitcoins out. The other exchanges seem to be pricing around the $600 mark.

Not that I'm saying BitCoin isn't a rubbish idea, or supporting it or anything. I had a look at one of the stats sites yesterday, which indexes multiple exchanges. And it looks like a transaction of 0.1 BTC can change the global market price by about 0.5%!! Sticking 1,000 transactions through in an hour, rather than the more usual couple of hundred, can move the price down by 5%.

If you get a zero loaded for foreign transactions credit card, then 0.5% spread over the current market exchange rate is probably more than you'll pay. For much larger transactions than 0.1 of a BitCoin too. And I certainly never paid 5% on transactions between my UK bank account and my Eurozone one, when I used to live over there.

So given BitCoins are a massive risk, and are crap as a way of dealing across foreign currencies, I struggle to see what the point of them is.

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Re: Bubble has burst ..... ?

Other exchanges are $600-$650 (Mt Gox price hasn't been meaningful for months due to difficulty in withdrawing USD from it). If $1000 to $650 is a "bubble", then sure, the Bitcoin bubble has burst, just as it bursts regularly, and has done several times in the past. It also booms multiple times too.

But I don't see how this means people are bored (nor does it have anything to do with tulips, which don't share any useful properties of a currency - not to mention "X is a bubble, therefore Y must be a bubble too" doesn't seem a good argument to me). I mean, in April the bubble burst to around $60, but now it's at $600. I'm not convinced how an increase of 10x in less than a year is a bubble bursting, or people getting bored of it?

The thing to remember is that the "Bitcoin is a bubble" critics have been saying this since the price was increasing from around $20 last year. The fact that Bitcoin later on drops from $1000, but only to $600, hardly proves those critics right. Any useful prediction about Bitcoin needs to include timescales and prices - anyone can say the price will go up or down in future (I'm sure it will do both!)

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Re: Bubble has burst ..... ?

nor does it have anything to do with tulips, which don't share any useful properties of a currency

in April the bubble burst to around $60, but now it's at $600. I'm not convinced how an increase of 10x in less than a year is a bubble bursting

Mark .

Which is it? Is Bitcoin a currency or an investment? If it's an investment, then a cycle of oft-repeated price spikes (bubbles) is no issue at all. Jus invest wisely and take your profits when appropriate.

But you also say that tulips share none of the useful properties of currency with Bitcoin. Bitcoin has very few of the useful properties of currency. It does however share many of the non-useful properties of weird bubble investment with the stories of tuplip mania.

I can't give you timescales and values. I do think Bitcoin will fail. I may be wrong. It's certainly proved pretty resilient so far. I also don't think it will go mainstream. It's too hard to use. And you can already move your money around with credit cards and banks for less cost and hassle than Bitcoin causes. But it's too volatile and deflationary to work very well as a currency.

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Re: Bubble has burst ..... ?

"I had a look at one of the stats sites yesterday, which indexes multiple exchanges. And it looks like a transaction of 0.1 BTC can change the global market price by about 0.5%!! Sticking 1,000 transactions through in an hour, rather than the more usual couple of hundred, can move the price down by 5%."

Citation needed? Currently based on the Bitstamp order book, 5663 bitcoins would be needed to drive the price down 10%; 66 bitcoins would be needed to drive the price down 1%. This doesn't include orders that aren't on the books (people manually trading, or bots).

True, volatility is a problem for international transfers (and is why a larger market cap is a good thing), but it isn't as large an issue as you describe.

Doing international transfers with my bank is £15 for within Europe, £25 elsewhere. The zero loaded credit cards (if I even had one) presumably wouldn't help for transfers to individuals.

"So given BitCoins are a massive risk, and are crap as a way of dealing across foreign currencies, I struggle to see what the point of them is."

Risk reduces with time, and it will grow more useful as a Paypal alternative, for example. Many countries also have poor support for online bank transfers (e.g., even the US - it's nothing like what we have in the UK).

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Happy

Re: Bubble has burst ..... ?

Ah, the right-winger troll is back at it…

No my dear, while BTC has fallen from the $1000 mark, they're still doing $612-650 on other exchanges. MtGox seems to be no longer the one and only BTC exchange, and its woes are probably bigger since they started complying with FinCEN's rules (they're actually asking for ID and proof of residence these days). Even though I'm not a US Citizen, I still got bit when OKPAY stopped serving 'em. Had I bought BTC back then, I'd have profited a lot by now (BTC was at $55, the up/down swings would've landed me a truckload of BTCs and USDs by now).

I've probably erred too far on caution on these thingies. Of course I wouldn't send my life savings on BTC, but I would send a stash of my non-critical savings there as it seems it gets better returns than my current bank does (3% per year! meh….) While I am skeptic on BTC, I don't dismiss them as "tulip mania" or even "ponzi scheme" as most detractors do. The BTCs will still hold value even if the exchanges go poof as long as someone's willing to use them as currency or trade 'em for hard cash. The same applies to other currencies like USD, GBP, EUR and such, most of our modern currencies value isn't set but is actually given by us ("us" being the markets, reserves, GNP, whatever.) That's why it's called "fiat currency"… and BTC is also a fiat currency, even though the most fervent BTC followers insist in this not being the case.

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Re: Bubble has burst ..... ? @Daniel B

By definition BTC could be called a “fiat currency” insofar as the believers say “it shall be”. That said an analysis of other currencies suggests that for a “fiat currency” to be successful it needs a critical mass of support, stability (low levels of either inflation or deflation) and this is a point I have suggested before a powerful sponsor. So for example looking at the currencies you have quoted above USD, GBP and EUR all of these three currencies have a vast circulation, and powerful economies sponsoring the use of the currency.

Whilst you might by definition argue that BTC is a “fiat currency” the question is more will it be a “successful fiat currency”. Questions you need to think about are:

Who uses bitcoin (and why)?

Is it stable?

Does it have a powerful sponsor?

I would suggest that BTC success as a currency will be determined by these questions.

On the point of me being a right wing I guess you might assume that because I am saying that a currency needs a powerful sponsor (Banks/Capitalists/Armies ….Tanks, Guns etc). FYI I am commenting more on the reality of the world not the morality of the situation. From a financial point of view I could probably accuse you of the same in that you appear to have money to burn for BTC speculation whereas I don’t.

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Anonymous Coward

Things will settle down once they apply the "Security Containment And Mitigation" patch, AKA: SCAM

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Is this the point when all those free, think outside the normal structures, wild west loving libertarians suddenly discover that a little Government oversight can be a Good Thing sometimes?

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bigger design flaw

afaik there's even bigger design flaw which can cost you ALL of your bitcoins:

1. do a fresh wallet backup - supposedly to keep your poor btc safe from hazards of technology

2. open up a client

3. send 200 small transactions

4. simulate computer hardware failure where your wallet gets corrupted or destroyed (such as hard disk failure)

5. restore your "safe" fresh backup on new computer

6. poof, all btc gone because of the way transactions are handled (limited default keypool, each transaction sends rest of your btc to a new address in your keypool for "security reasons")

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Re: bigger design flaw

But that's because you haven't kept the backup up to date! The way to do backups is documented, so you haven't found a flaw in anything, you've just shown how to do it wrong. (Do you back up your data by only backing it up once, then hope it's magically up to date when your computer dies a year later?)

It would be better if one only needed to do a backup once. But then, such clients exist (e.g., Armory).

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Re: bigger design flaw

this is with the MOST UP TO DATE backup you can make, a fresh one right BEFORE starting the client. the next backup you can then make is when you quit the client. this situation happens while the client is running and your wallet gets corrupted. your btc gets blackholed by a flawed design

keys in keypool (default is 100) are exhausted and new one is generated - and this key is obviously not a part of backup but has your btc now. of course user is not aware of this, not even warned about it. so if your wallet gets corrupted/destroyed, you have no way of knowing/recovering this key

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Anonymous Coward

In other words, MtGox will finally implement a proper wallet (we hope). But wtf is "Bitcoin blockchain must be reindexed"? Thanks, MtGox, for throwing yet more FUD into the mix with that one.

After what happened to some exchanges (e.g. >$2M lost on SR2), a limited release of withdraws is a prudent thing for MtGox to do. So maybe they'll get this right, at least.

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