Topic: I'll chime in finally with a doozie.. (Read 2803 times)

  my thoughts uhzackly

What exactly do you mean by "the security protocols for online"?

When a web site asks you to send them your bitcoins, whether that is in return for a product/service or whether it is so that you can use those bitcoins on that web site (as is the case when the site is a currency exchange), you have irreversibly sent your coins to someone else, and now those coins are theirs. You are trusting them to carry out their part of the deal you struck, i.e. sending you the goods you bought, carrying out the service you paid for, or safely storing the coins for later use.

It is no different to you sending your coins to me and me promising to do something you want with them. The coins are no longer yours; all you have now is the promise from me to you.

Most of the time the site (or me) carries out the promise and everyone is happy.

Sometimes though, the site is broken into, or goes bankrupt and ceases operation. The coins are lost. The promises can't be carried out.

That is the risk of sending your coins (which you completely control as your property, and is therefore your responsibility to secure) to some third party where you no longer control them and they aren't actually your property any more, secured only by how diligent the third party is.

If no banks had insurance and no banks were backed by the government then it would be a similar risk there: you put all your USD in the bank, then bank says "oh sorry, we got ribbed, it's all gone". You're left wondering how they let that happen, who took it, was it an inside job? Even then, at least it is criminal and police would hopefully get involved to investigate.

In the real world, banks do have insurance and often are covered by financial regulations such that bank losses are covered by the government and customers don't need to worry about losing their own funds.

At the moment the bitcoin world is largely unregulated and the authorities don't see things like the MtGox bankruptcy as being a criminal matter. No police are investigating what happened to the bitcoins. People who lost funds in MtGox are left to organise their own civil prosecutions and investigation.

Keeping your access to some third party site secure is your responsibility and certainly if your computer is cracked into and credentials for bitcoin services are stolen from it then they may be used to take your coins off of that service. That does happen all the time.

But what we're talking about here is the breach of promise by the site themselves. As with MtGox, they shut down while holding large sums of customer funds. As has happened to quite a few other bitcoin services as well.

As for whether it is Karpeles's fault and whether he should suffer any consequences: in my own view you can't screw up that badly without there being some degree of negligence. I hope it is investigated fully to determine whether that level of negligence is criminal. He needs to suffer business consequences for his negligence and if it is proven criminal then he needs to suffer legal consequences as well. Anything less is just inviting operators of bitcoin services to run with the funds.

The main reason that neither law enforcement nor courts did anything about Mt. Gox until very recently was that nobody asked them to do anything. Nobody sued Mt. Gox when they stopped US dollar withdrawals last June. Nobody tried to put them into involuntary bankruptcy in Japan when they weren't paying their bills. Even when Mt. Gox filed for "civil rehabilitation", Mt. Gox was getting what they wanted until, finally, in mid-March, the guy behind "mtgoxrecovery.com" filed a petition with the Tokyo District Court alleging fraud and demonstrating that at least some of Mt. Gox's claims were false.

Then, suddenly, things stopped going Mt. Gox's way. The plan for quick entry to "civil rehabilitation", with creditors stalled and Karpeles still in charge of Mt. Gox, got postponed a month by the Tokyo court pending investigation. The Tokyo Metropolitan Police became involved.  Word of this made it to the US courts, and a US bankruptcy judge told Karpeles to show up in Dallas or not get US bankruptcy protection. (Since another US suit names Karpeles personally, losing bankruptcy protection is a big deal for him.)

Courts don't do anything until someone files suit. Then things happen.

Great quote worth repeating.

Ditto. I was just about to post the same when I saw yours

OP doesn't make sense.

How is it the fault of the rest of the financial services industry? That's like blaming Ford, Toyota and Honda for General Motors' running itself into the ground. If Karpeles had wanted outside help he could have hired it while he was raking in the BTC. If I were you, I'd be at least a little mad at Mark.

This is a forum where things get discussed.
Welcome....

We've learned three things.

- If we're not in control of our private keys we don't have bitcoins.
- We can't trust those with power, responsibility, or supposed expertise to protect us.
Thus,
- We alone must take responsibility for protecting our digital assets by controlling our private keys and using the free market protection tool of only doing business with the competent.

 

I get his point that supposedly "people" or companies did not rally around Mark to help him when his gaming company outgrew itself, but that is not really the case.  There were several intelligent people that approached Mark and offered him help as well as much needed advice but he was to foolish to take advantage of the help that was being offered to him.  He could have built a very stable and successful enterprise just by being a little humble.

The big players in Gox could afford to lose a lot. It's the smaller traders who put in all their savings that got hit the worst. I hope people can recover something from gox eventually.

 I don't understand why people are questioning what he's saying. You missed the point so far it's hilarious, did he ask for your opinion? NO! Only thing here was a stated opinion, not some request to the 12 year olds of the forum.

If he's a criminal, he's a very stupid one.

Running a currency exchange gives you plenty of opportunities to earn illicit profits without everyone ever noticing anything wrong (insider trading, fractional reserve, market manipulation, you can do pretty much everything you want when you're the one running the system); and let's not even talk about legal profits, which should have been quite high for the most widely known and used Bitcoin exchange.

Having everything blow up in your hands, facing hordes of angry customers running after you with torchs and pitchforks and resorting to ask the government for help... aren't exactly signs of a criminal genius at work.

I would be much more likely to agree if Mark did not have a verified criminal past in France.

For being "a cold-blooded criminal", he doesn't look even the slightest bit in control of the situation. He looks much more like a guy who screwed up horribly, is trying everything to cover his ass, and hasn't been kicked out of his company (and possibly in jail) only because his government doesn't really know how to handle a financial disaster involving a virtual currency and doesn't have the technical know-how required to confirm or reject his tales about hackers and technical problems.

My first reaction was partly wrong.
I agree the higher levels of institutions are corrupt and doing horrible job, but how is that related to BTC and Gox?

1) "We" don't need or want them watching us.
2) It certainly is Mark's fault; Calling him "a semi-retarded kid" doesn't excuse him from being a cold-blooded criminal.

depends on what level the site holds your money, but yes, it is not a looming threat to always be fearful of, just understand that if you dont have the private key, then you dont really have your bitcoin, but if its a well established site your fine keeping small balances there you would want to spend

another example, making a wallet at blockchain.info, they both store your wallet and give you they private key backup in case they go down, it is an extra security weakness because a hacker can possibly get through the password wall, but blockchain doesnt have access to your coin, so they cant spend it and tell you they still have it like Gox did

if you are just getting into coin, DONT keep your full balance on a random site no matter how good a password you think of, start with blockchain.info or another trusted wallet interface that lets you keep your keys, add 2FA and keep a copy of your private key offline just in case

lol

I am glad you "Have many more BTC in reserve." 

Were you keeping the coins on Gox for trading purposes?  Most people saw some of the "red flags" if you will that there were problems.  I had a super small amount on there, like 0.2 and my husband kept nagging me to get that small amount off for months.  I finally moved them like two weeks before the site closed.  My husband also told his budddy at work that he really needed to get the coins off for several months and he even sent him fractions of coins to set up an account at Coinbase as a little pressure to do so.  But the guy never moved them (there were only like 15 coins but still a decent amount)  but the guy said, "They were worth more on Gox."  Worth more?  I guess his reasoning at the time was that the price on Gox was higher than the other exchanges.  But if you can't get the cash out of Gox it doesn't really matter what they are worth does it?  Oh well.

I hope you get some of your coins back regardless!  If you have a decent amount left then all should work out anyways.  Following Rpietila's SSS plan and it looks like we don't even need that many coins to be in a great position in a few years time.   That is my plan anyways.

OP your anger is misdirected, Mark has a good percentage of your coins and regulators, governments and the finance industry don't owe you anything for allowing him to steal them from you. 

I know that's cold but everyone knows bitcoin doesn't have any form of deposit insurance.