Topic: Dear Bitcoinica Hacker (Read 5012 times)

Anyone who entrusts Mt. Gox with more value than they can absorb as a loss, OR more value than they need to get a particular job done is, IMHO, 'a fool'.  This stands as a statement I believe before or after the aforementioned hack.  It also is not specific at all to Mt. Gox and in fact (again IMHO), Mt. Gox is the most proven and probably reliable entities in Bitcoin-land.  They are also one of the largest which makes them a target for some of the more threatening types of risk though.

There are all kinds of calculations which go into deciding how to place assets, and laziness is a valid one of these.  Lamentably it remains a weakness of Bitcoin that one really should be fairly bright and have a broad range of knowledge if they are going to be doing much with it.  I do hope that this changes.

high return = high risk, etc etc. I've lost money in investments before, too. Again, the problem occurs when you give your money to other people for periods of time.

tell that FDIC-insured thing to the people who had depsoits with MF Global or any other non standard interest bearing account for that matter.  ;p

http://lmgtfy.com/?q=what+fdic+insurance+does+and+does+not+cover

No, I keep it in an FDIC-insured bank. Unfortunately, there's no such thing in the Bitcoin world, so beyond "depositing" which is really closer to "lending" and should be treated as such, my coins stay in my well-secured wallet.

this thought keeps me up at night.....

I keep mine under my tinfoil hat.

I have mine protected by 100 ninja minons.

No, but I might keep some there; and some in my backyard behind the doghouse of my 130 pound, foaming-at-the mouth rotweiller, and some hidden in my attic with booby-trapped access, and some in my fireproof safe, and some in a bank safe deposit box, and some in the bank, and some...

+1

So you keep all of your cash under your pillow then?  What about when you go out to eat?  Are you a greedy fool if someone breaks into your house because you didn't take it with you, but it would have been 'oh poor shock' if you got mugged while going to lunch?

Having discovered one weakness, why would on earth would they not look for more - and why would others not also be encouraged to look for further vulnerabilities?  In the physical world, homes are often robbed twice in close succession because it's assumed that the first lot of stolen items will be replaced - often by newer items at an insurance company's expense.

It was fairly safe to assume that Bitcoinica would transfer both USD and BTC to MtGox to make the refunds - they'd been asking people to tell them their preferred method of repayment - and that they'd do so in significant amounts.

A trip down memory lane from the Linode attack thread.


I guess that question finally got answered.

its quite possible the same group (or one of the 3 up to this point) already knew and were waiting for the 'no secondary auth', gox account to get loaded up nice and fat for them. ;p

not likely, but I wouldn't put it past them. Espeically the RU grp that likely took linode. them dudes be some smart cookies.

Very well stated.

Mark has always discouraged people from using MtGox as a wallet.  This time last year, people were putting money into MtGox, trading and taking it out before the weekend.  Then people got sick of missing out on significant movements because they had no funds on MtGox (and couldn't get any on there quickly) and started leaving them on there.  No-one's ever suggested that is wise.  Those deposits - whether currency or Bitcoin - aren't insured or guaranteed so there will always be some level of risk in parking funds on any exchange.  Even MtGox's capacity to absorb losses isn't unlimited.

Directly after the hack? Absolutely. They'd still be fools to leave any significant sum in there (signifigant meaning you can't afford to lose it) or any amount for a long period of time. Mtgox has at least gone a year without a catastrophe on this level and I'd say the same there. Bitconica on the surface was drastically more sketchy and appealed to greedy fools but yeah, don't leave shit you can't afford to lose in other peoples' hands, be that mtgox or anyone else. What's so difficult about that?

 

So are people fools for continuing to use Mt. Gox after they were hacked? Or do we decide who is a fool retroactively?

The problem is people placing money which they can't afford to lose or to which they need near immediate access.  Look at how often there are threads about delays in withdrawals from exchanges leaving someone able to pay their bills.  Bitcoinica was inherently higher risk than the exchanges and using either it or the exchanges as a wallet only compounds the risk.  Neither's a safe place to leave your hard earned savings - solvency doesn't guarantee that they won't be shut down or have funds frozen.

And yeah, people were pleading for someone to offer the options which Bitcoinica provided and were quick to jump onboard when it first emerged (which was only in September last year).  Far too often, though, people are quick to praise something as the new best thing - how many different payment processors have been embraced by the community only for them to be rejected only months later - and complain when inherent risk bites them on the ass.

***ding ding ding***

These people were sunk by their own greed, laziness and lack of caution.

In their (the user's) defense...since I always like to take the opposite side of an argument...there were really no other options for one who wanted to play Forex hot-shot with non-trivial sums.

I can, and do, call people who bought homes in the obviously inflated 'ownership society' market fools.  But on the other hand the only realistic option was to defer buying a home in the decade it took for things to implode and in our society (the US) one can understand how relatively few people had the combination of fiscal flexibility and analytic capabilities to avoid becoming basically entrapped.

I retain my next-to-zero empathy for anyone who lost more in the Bitcoinica goings-on than they anticipated were possible.  I personally remain willing and able to lose all of the value I have stored in Bitcoin generally, and specifically those which I have entrusted to other people (e.g., Instawallet) so my sympathy for those who differ in their mindset is minimal.  Even the core developers will tell you that Bitcoin itself is an experiment and a cursory glance at the history entities who helpfully hold Bitcoin (or other denominated value) on a user's behalf should be enough to instill a high degree of wariness.  If not, or if a person sunk large amounts without significant research, how can they deserve much sympathy?

And to clarify, yes it's painfully obvious at this point that all involved with bitcoinica are either:

1) Complete fools
 or
2) Thieves

In either case, lack of caution on the part of those using this questionable service after the initial hack and indications that this could be nothing more than a bucket shop allowed those running bitcoinica to either prosper by running off with funds or lose a significant portion of user funds through negligence.

People need to be smarter. bitcoinica is to blame, the users of bitcoinica are also to blame. This whole fiasco is a lesson. I'd like to see them all strung up, including the users. Fools and fish will be fooled and fished. I don't think this point can be driven home hard enough.