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back to article MtGox: Yup, we're pretty sure your Bitcoin were stolen. Sorry about that.

Defunct Bitcoin exchange MtGox has revealed a little more information about its problems, updating its sparse webpage with an “Application for commencement of a procedure of Civil Rehabilitation”. The new statement (with MtGox's punctuation intact) says that “At the start of February 2014, illegal access through the abuse of a …

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Anonymous Coward

In short

We looked everywhere, behind the fridge, in the weird guy's cubicle and even down the back of the sofa, but.....

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I still call...

Bullpucky

You have thousands of obsessive nerds going through every blockchain to find those coins. And no one has found anything even approaching that Mt Cox is reporting to have happened.

As Richard Nixon's head would say.... "You've been scammed baby ! Arrroooooo! "

Mt Gox is just trying to throw up enough smoke and mirrors so he can lay low until this all blows over and bitcoin recovers it's value. Then he'll cash in for all the latte's he can drink.

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This post has been deleted by its author

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Re: I still call...

It bounced back last night. maybe the increased scarcity courtesy of Mt. Gox has boosted the price.

http://bitcoinity.org/markets/bitstamp/USD

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Anonymous Coward

It bounced back last night.

It bounced back as European regulators are looking into it, giving it a boost and making it seem legitimate.

The Americans have already shot down the idea.

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FAIL

That read like a 419 spam!

All he needs to do is mention his modalities and how his parents were killed in a plane crash.

Your's In Christ

KenYN

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Anonymous Coward

Re: That read like a 419 spam!

Beat me to it - as I read it I was thinking, "Well, now we know what the guy who wrote all those 419 spams is doing these days..."

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Silver badge

This website has had problems for years. It is far more likely to me that they just screwed up. Some sort of idiot must have written that. In what language does one capitalise every other word, for example? It reads like something an ill educated single mother trying to be posh and formal on the Money Saving Expert forums would write.

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Alien

I was wondering

Where Amanfrommars worked. Now I know.

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Fairly Typical.

"In what language does one capitalise every other word, for example?"

It's fairly typical proletarian usage.

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Windows

The MtGox writer....

...will have no trouble finding new employment. As a spam mail author.

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Facepalm

No sympathy.......

If somebody invested their money into "left handed sky hooks" and then lost it all, where would the sympathy be ? Nowhere.

Likewise, for those who spend their money on fake money in the hope of making money...... tough.

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Re: No sympathy.......

That's all fair and well, but Bitcoins aren't 'left handed sky hooks'. The technology behind them is proven, and what they provide, which is arguably of some value, is a fully audited, globally distributed audit of all transations, via the block-chain.

It is up to the users to decide what this is worth to them, but consider the following - if you want to buy something from another country at the moment, for example if you were to buy a book from a seller in France, and you live the the UK, you need to carry out the transaction in Euros - assuming you have a UK bank account, it is going to cost you to do so - if you make a transfer through your bank account, you bank is likely to charge you a transaction fee (£10 for the large UK bank I happen to bank with), and the conversion rate will not be in your favour (for example, the exchange rate is hovering around 1.20 Euros to the Pound at the moment, but your bank is likely to give you a rate of around 1.15 or worse).

Alternatively, you could do the transaction through a service like PayPal, and they will take their 10%, either from the buyer or the seller depending on how you carry out the transaction.

Either way, you are going to end up paying significant transaction fees. If you buy things online, or pay your energy bills with a credit card, a lot of retailers will add on a few percent to cover the card costs here. The financial companies involved do very nicely out of this, thank you very much.

Now, consider how you might use something like Bitcoin instead. Say I have bought something from a retailer in France that costs 100 Euros, and that the current bitcoin exchange rate is around 500 euros per coin. If I buy 0.2 Bitcoins from someone here in the UK and send them to the retailer in France's wallet, and they then sell them there, they have their 200 euros, and the transaction fees involved are very small (typically 0.0001 BTC per transaction, so a total of 0.0003 BTC, or around 15 Euro Cents in this example), the transaction fees go to the network, in the sense that the miner of the next block in the block chain get these on top of the block's value.

So it can be argued that bitcoins have an intrinsic value as a financial service, along with much more reasonable rates than PayPal.

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Re: No sympathy.......

Loyal Commenter,

Except if you buy your coins from a Bitcoin exchange, you'll be paying a lot more than 0.00000?%. Added to the risk that they lose,or steal, your money.

On the other hand, if I want to make a transaction with someone in euros, I could equally buy some Euros off someone. Which is an equally safe transaction as doing so with some random person in the UK, not via an exchange. As someone has to hand the cash or Bitcoins over first, there's no mechanism for simultaneous transactions.

On the other, other hand I can get a credit card. I believe that Halifax and/or Nationwide do one. Which has zero loading of exchange rates, and no commission on them either. So you get the straight inter-bank rate, at the time the transaction goes through. They of course take their 2% merchant fees or whatever. But then most merchants don't account for that individually, they set their prices for all transactions the same.

Then there's the other cost you ignore, which is the merchants' cost of turning Bitcoins back into real money. As most of their suppliers probably won't take Bitcoin yet.

Then you ignore fluctuations. Foreign currency tends to move by 1% on a really bad day. The pound might lose/gain a penny on the Euro every couple of months. Most days it moves in fractions.

Bitcoin can move by 10% in minutes. 20% in a day is not at all uncommon. So depending on when you buy your coins, your transaction costs could be truly enormous. Which means the merchant is going to have to charge a premium for Bitcoin.

Also your credit card costs you some money, but gets you insurance on all transactions over £100. And the change of chargebacks at lower amounts, if you get ripped off. Bitcoin doesn't.

I looked at one of the big Bitcoin exchanges a couple of weeks ago. They'd posted the last 10 transactions. Not a single one of those was for a while Bitcoin, it was 0.1BTC, 0.2 BTC etc. Over about a 10 minute period. The price had fluctuated between about $618 and $622. So the whole global bitcoin market was moved by nearly 1% in value in 10 minutes, on transactions of a total value of less than $1,000! That is an astonishingly unsafe market for retail investors to get involved in. Most people don't have the knowledge, or appetite for risk, to ever be involved in that kind of trade. Nor should anyone in good conscience advise them to do so.

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Anonymous Coward

Re: No sympathy.......

"So it can be argued that bitcoins have an intrinsic value as a financial service"

So what you're proposing is either:

a. Instead of a single currency conversion, having 2 currency conversions (£UK to BC, BC to Euro) plus BC transaction fees and take the risk of the BC exchange house falling down during the limited time you're exposed to it. Or

b. Both buyer and seller use BC as their main business currency and keep major holdings in a Ponzi gambling chip which goes up or down relative to conventional currencies by typically 20% in a day, and where loss of ( or a mistake using ) a private key results in any amount of BC vanishing into a black hole never to be seen again.

Option a. will be more expensive, due to the Bitcoin exchanges having to charge high conventional/BC commissions, as well as being dodgy operations based upon the best possible analysis of the way they do business, demonstrated by multiple recent failures. (Had MtGox even heard of the Clarke Wilson model and have any of the other exchanges still in operation even had a basic audit ?).

Option b. will seem totally insane to most people reading the article for obvious reasons. Despite being someone who teaches crypto for a living, I'd put my money under a mattress if that were my only option in preference to putting it into your hare-brained scam. Or maybe it's because I teach security for a living that I wouldn't touch Bitcoin with a space elevator if I had one. The stench is too foul.

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Anonymous Coward

@ Loyal Commenter

I buy goods from abroad all the time. The currency conversion fee that Paypal charges me is pennies.

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FAIL

Re: No sympathy.......

...what they [Bitcoin] provide, which is arguably of some value, is a fully audited, globally distributed audit of all transa[c]tions, via the block-chain.

Which is why the missing Bitcoin were found immediately after the loss were discovered,right? If the transactions were fully audited, actual source and actual destination would be known, and this problem wouldn't exist.

About the only thing right about what you said was the word "arguably."

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Anonymous Coward

Re: No sympathy.......

"That's all fair and well, but Bitcoins aren't 'left handed sky hooks'. The technology behind them is proven, and what they provide, which is arguably of some value, is a fully audited, globally distributed audit of all transations, via the block-chain"

should find them easily enough then using that fully audited transaction tracking thingummy

Oh.....wait a minute.......

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Re: @ Loyal Commenter

I buy goods from abroad all the time. The currency conversion fee that Paypal charges me is pennies.

...And if you ever sell through ebay, you'll know they charge the seller 10%.

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Re: No sympathy.......

Which is why the missing Bitcoin were found immediately after the loss were discovered,right? If the transactions were fully audited, actual source and actual destination would be known, and this problem wouldn't exist.

About the only thing right about what you said was the word "arguably."

The block chain is a full audit of every transaction. The fact that MtGox were obviously not verifying any of their transactions against the block chain properly, or indeed doing any sort of accounting whatsoever by all appearances is another matter. This is a weakness with MtGox, not the block chain. In matter of fact, every transaction can be identified in the block chain, although the owners of the addresses involved cannot (that's the anonymous part).

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Re: No sympathy.......

In matter of fact, every transaction can be identified in the block chain, although the owners of the addresses involved cannot (that's the anonymous part).

Which is why it's not a full audit. Without knowing source and destination you have no chain of custody and no accountability.

All you have a list that says 'Amount X was moved from arbitrary account A to arbitrary account B'. That means the block chain is dependent upon external information for full audit purposes. Any failure of the systems managing that external information, such as happened with MtGox and Flexcoin, can lead to exploits.

That reliance on external information for full accountability is the weakness of the block chain.

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Facepalm

Re: No sympathy.......

One of the reasons that traditional payment methods cost more is that they do a large amount of work to protect both parties to the transaction from fraud, default, systems failure, exchange rate risk,...

They may make massive profits at your expense, but a lot of the money goes on legitimate activities that you really, really want them to do, even if you don't realise it.

But feel free to go the cheaper Bitcoin method if you want.

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Read the Bitcoin subforum of Reddit to see how far people go with their Bitcoin obsession. These people make goldbugs looked lucid and rational.

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Facepalm

"due to abuse of a bug"

Proper technical term is "exploitation of a bug". I mean, it is not as if this bug was designed to be there in the first place, right ?!

On the second thought, since the whole "system" appears to have been written in PHP .... some might say it was designed to be buggy :/

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The most likely explanation

Yes, you've lost a bunch of bitcoins. On the other hand, I finally got that gold Psychatog card.

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rand

sincerityFunc()

if rand(100)<=15

CapitaliseCurrentword()

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So what this statement is telling us, is that Mt.Gox were incomptent with their custom Bitcoin wallet software and processes, their cash-handling software/processes and their accounting software and processes.

Perfect!

Or in other words, they've just admittwe that they're at least criminally negligent. And that's if we can get over our natural suspicion that they may have just stolen it. Which is always what comes to mind first to this ex EVE player.

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Flexcoin has now gone too...

Flexcoin had 868 BTC stolen last Sunday and they've closed their doors (see flexcoin.com)

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Anonymous Coward

but why steal them

if the currency fails then stealing them is a worthless activity.

Unless it is a state backed event to stop the currency from working - cue black helicopters...

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Re: but why steal them

> if the currency fails then stealing them is a worthless activity.

I don't use Bitcoin so I had the same thought, but this does not seem to be happening.

After all it seems hundreds of millions worth of coins were stolen recently and news about it have had that "the sky is falling!" feel to them, yet Bitcoin value has gone up 30% in the last 7 days.

Anyone can shed light on this?

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Anonymous Coward

Re: but why steal them

" yet Bitcoin value has gone up 30% in the last 7 days. Anyone can shed light on this?"

Maybe many more people who never want anything to do with Bitcoins are having to buy these to get the keys back from blackmailers who have encrypted their hard disks before these keys get thrown away. If it suits Botnet operators to jack the BC price up this way at the cost of a few of these PCs getting cleaned up, they'll blackmail a few more owners of PCs they've compromised.

Bitcoin demand can be engineered to the extent PCs belonging to users without offline backups can be compromised in this way.

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Cashed oit of Gox in November/December 2013. What was supposed to take a week took 6 weeks. Not convinced about any of this, clearly even back then they had severe cash flow problems, or then had been robbed blind for a long time and were so badly run they did not know it

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WTF?

Weird dates?

I casually noted that the Japanese stuff seems to use a different year system for some reason?

26-2-28 instead of 2014-2-28? Is Japan using another year as their "year zero"?

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Re: Weird dates?

Daniel, that’s most likely the count of years of the current emperor’s reign.

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Boffin

Re: Weird dates?

Yes, it's currently Heisei 26.

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Trollface

Phew, that was close!!

The ZERO Bitcoins I had in Mt Gox are still there!

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Brilliant PR piece

I think this communiqué from MtGoX delivers absolutely everything anyone could want to know about the "company".

First of all, the rambling, incoherent mess of words evoking a thought process but one that is too drunk to realize itself, then the random capitalisation and punctuation (demonstrating a clear lack of knowing how to convey information) and finally the total absence of anything concrete to base a conclusion on.

If I were a Venture Capitalist and had been handed a business plan written like this, I would not have gone further than the second sentence before deciding that this guy didn't have a clue and certainly was not managerial material.

Managing a business requires focus and attention, and this "paper" clearly demonstrates that nobody at MtGoX has either, much less an understanding of what the word "managing" means.

MtGoX never should have gotten off the ground. It never was anything more than a bunch a schoolkid-mentality types who bungled together some software they downloaded and then let things flow thinking they had achieved something.

Now that reality is intruding, their illusions are being shattered big time.

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