...unless Gox had horrible security and management...
You've successfully identified the biggest fear!
Topic: Gox, malleability, and cold storage (Read 834 times)
You've successfully identified the biggest fear!
Ok so I am very familiar with how the Bitcoin system works from a non-technical point of view, and the more I think about transaction malleability the less it seems to be a problem.
Firstly, transaction malleability doesn't steal coins, it just makes viewing the records of transactions impossible, so you need to have someone who resends coins when they don't see the record. Gox BTC are currently trading at 50% of other exchanges, in order for the price to reflect reality, this means someone was able to have Gox empty out 50% of its stores before it checked on why there were so many withdrawals with issues. This is highly unlikely, although possible.
Secondly, Gox uses cold stoarge so unless I'm missing something on the technical side, they cannot spend these coins without importing these keys, this means there was a set of eyes, whether a person or code, watching how many keys were being imported and the ratio of cold to hot storage.
Finally you could make the argument that if they go bankrupt, but if they go bankrupt someone will buy the company at a low price and re-open using the same infrastructure (buildings, employees, trade connections, code structure) of Gox, but be re-opened as some other exchange. This means the exchange shouldn't ever stop operating, and once malleability is fixed users will be able to send Bitcoins to another wallet without delays.
Maybe I'm missing something, but it seems that unless Gox had horrible security and management of their Bitcoin balances they shouldn't have lost many Bitcoins, I'm thinking 5-10% max, but even that seems way too high. I understand the Silk Road lost all of theirs, but they were all in hot storage, the site is in the darknet and so they can't have well defined systems of management and security as it would alert authorities of their presence. Let me know if I'm missing something, but I don't see how they lost any significant amount of Bitcoins, at least not enough for the current price discrepancy.
Firstly, transaction malleability doesn't steal coins, it just makes viewing the records of transactions impossible, so you need to have someone who resends coins when they don't see the record. Gox BTC are currently trading at 50% of other exchanges, in order for the price to reflect reality, this means someone was able to have Gox empty out 50% of its stores before it checked on why there were so many withdrawals with issues. This is highly unlikely, although possible.
Secondly, Gox uses cold stoarge so unless I'm missing something on the technical side, they cannot spend these coins without importing these keys, this means there was a set of eyes, whether a person or code, watching how many keys were being imported and the ratio of cold to hot storage.
Finally you could make the argument that if they go bankrupt, but if they go bankrupt someone will buy the company at a low price and re-open using the same infrastructure (buildings, employees, trade connections, code structure) of Gox, but be re-opened as some other exchange. This means the exchange shouldn't ever stop operating, and once malleability is fixed users will be able to send Bitcoins to another wallet without delays.
Maybe I'm missing something, but it seems that unless Gox had horrible security and management of their Bitcoin balances they shouldn't have lost many Bitcoins, I'm thinking 5-10% max, but even that seems way too high. I understand the Silk Road lost all of theirs, but they were all in hot storage, the site is in the darknet and so they can't have well defined systems of management and security as it would alert authorities of their presence. Let me know if I'm missing something, but I don't see how they lost any significant amount of Bitcoins, at least not enough for the current price discrepancy.
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