Bitcoin Forum

The bitcoin bandwagon brigade has always preached how secure crypto is but it seems like every exchange has gotten hacked. Is securing crypto a pipe dream? Is this what the BTC experiment has taught us?

no it's an evidence, that there is really no competitive exchange owner out there, they treat the cryptoscene, with too much negligence

they need to separate altcoin(scam coin) from bitcoin, when they do cold storage thing, altcoin must be put in a separted environment

i would ever do a virutal machine for every new alt, to feel really secure, this was the case for cryptsy

for bitstamp, they had problem with email/2fa, so again heavy incompetence there

the site was fraudulent from the start,

It's only evidence that ppl using crypto have no idea how to use em in secure manner.
Keeping BTC and bunch of scamcoins in same environment is just not something that anyone should ever do. It's like buying most secure doors and installing em, and in same time removing windows and leaving gaping holes to that same room. No...doors are fine, they are secure....

Now they have declared bankruptcy they are liquidating some coin

waited for a nice price too,

IMO yeah, pretty much.  Even a very secure system is ultimately dependent on the employees, so will always be susceptible to an inside job.  One of the selling points of crypto, the non-reversibility, ends up being the flaw for these sorts of situations.  Even the NSA can't secure their systems so I don't see this problem going away.

It was a fraudulent scheme from the start, warnings where put out

scam acussations go back for years

Nothing can be secured from a man's hunger to scam. I don't believe they were hacked and coins were stolen. This is all a big fat alibi to save their ass. Its getting too easy, do an exit scam, call it a theft.

I find it suspicious that their cold storage got hacked along with the hot wallet. Practically, exchanges should at no time keep more than 10-30% of their total amount in the hot wallets and for a better security, keep wallet files and clients separate. It is fairly easy for exchanges to manage security as long as they create their cold storage address and spend it securely. They didn't AFAIK, done any proof of solvency which would've proved their insolvency.

call it unregulated market, jungle.

there are such things in a regulated market as well but in an unregulated one?

BTC is a HIGH RISK investment. it's like you invest in a ponzy scheme and then you complain that someone took your money. :)

Well, you should have known Bitcoin is manipulated and there a huge risk to lose the money.

Few weeks ago I compiled a list of cracked cryptocurrency exchanges (http://www.coincer.org/history-of-cracks/). Quite huge numbers...

no exchange should have any hotwallet (on same server as the website front end)
there is no excuses,

there are multiple ways of implementations, while protecting the remote transaction processor (cold wallet)

I have never had any bitcoins stolen from me. I have had USD stolen from me from PayPal.

Crypto works.

With respect to online wallets - the advice has ALWAYS been never keep very much in them.

I currently only use coinbase. It is possible my bitcoins there will be stolen. But I have this rule :

A) Never have more than 20% of my liquid bitcoins in coinbase
B) Never have more than $650 USD in coinbase

I define "liquid" bitcoins as bitcoins that are not in a cold address (paper wallet)

With that philosophy, I will never lose more than $650 and honestly rarely even that much is at risk, right now I have less than $10 USD there.

If you keep the bulk of your bitcoins that you are not planning to spend in properly generated cold addresses, they won't be stolen.

For bitcoins not in a cold address, if you keep the bulk of them in a full node wallet on an inexpensive PC that is dedicated to bitcoin and not used for other things (such as browsing this forum) - they won't be stolen. I personally use the standard bitcoin-qt client for that running in CentOS 7 but the actual distro is not terribly important. Point is Linux with no flash / java and only using the browser for business (pay bills in bitcoin, transfer purchased bitcoin out of coinbase to a generated address) then the risk of malware is extremely low.

Good idea to run unbound on the bitcoin machine but only listening on localhost. That helps protects it from DNS spoofing, but that's an advanced topic.

An Intel NUC is good for this. Cheap, small, low power. Samsung 250GB M.2 SSD gives plenty of room for the blockchain to grow. 8 GB (2x4) is enough. Use 64 bit distro.

Running full node client with bitcoin-qt also helps protect the bitcoin network. More people should. And use bitcoin-qt (you can run Armory to interface with the blockchain if you want)

Stop keeping thousands/millions (value in $) of your money on random websites online. Have you learned nothing from Inputs.io, Mt. Gox? This has nothing to do with Crypto, but rather the service. Crypto works and can be easily secured.

I guess what I'm saying is in cases like Mt Gox or Cryptsy - the failure isn't crypto, the failure is human error in not taking advantage of the protection crypto has to offer (full control of your private keys)

No, it's more proof that Bitcoin businesses are being operated by inexperienced children and crooks. It has nothing to do with securing Bitcoin. Just because Cryptsy is gone doesn't mean I've lost anything.

this only proves that people are stupid and "ignorant".
it has been said over and over "do not trust exchangers" and "do not keep your money and coins in their pocket".
it is not the first exchanger to allegedly get hacked and it is not going to be the last. this has nothing to do with crypto security!

good information, some of this is new to me and advanced.  I will start googling. I have a spare laptop that I could dedicate to this.

Or use a hardware wallet (like Trezor (http://www.bitcointrezor.com/)) – not only it's safer, but the need for only one paper backup is a really nice thing (the same applies to Electrum (http://www.bitcointrezor.com/)). Before Trezor I used to use Electrum on an off-line laptop for signing and had a watch-only wallet on-line (although transfering transactions back and forth via USB was a bit tiring ;c)).

We're probably all a little guilty of it.  I always told myself I'd never leave any significant sums on an exchange, but my limit seems to be gradually creeping up.  It started as "I'll never leave more than $20 on there", then it became $50, now I'm above that too, heh.  But yeah, if you've got more than you're willing to lose on an exchange or a webwallet, cut that shit out and withdraw to a secure wallet where you hold the private keys ASAP.

I've been on a bit of a DS9 binge as of late, so finding this (http://cryptorials.io/wp-content/uploads/2015/03/bitcoin-rule-of-acquisition.jpg) quite fitting:   ;D

There are to many other exchanges (more big, more important or less big and less important than Cryptsy) that are not hacked never. Why such importance to this exchange. Much more banks have been object of thieves and never is put in discussion their existence. Why be put in discussion the security of crypto exchanges as a Institution where is changed and traded another kind of currency but yet is money? Why must be different this case by the case of the stolen banks? Have seen various threads today which treat this matter and absolutely all treat this case with fatalism. One for bitcoin, another one for the exchanges another third for all the cryptos and so on. Why this point of view?

What recourse is there when a trezor fails and the company is no more?

What recourse is there when I am dead and my family can't find where I put the trezor?

Maybe there are solutions but that's what I like about paper wallets. Keep the private key in a Safe Deposit Box. I can print them ahead of time and put them in the SDB ahead of time, they just have no value until I pay to the public address which I keep printed local (and signed with my name so I know it is one of my cold addresses)

I want to make sure it isn't too hard for family to recover the funds if a meteorite squishes my house tomorrow (which would destroy a trezor too).

You can write down the seed on a piece of paper. This way it has the same quality as a paper wallet in terms of security. Both papers will probably contain instructions on how to redeem the funds so I think I can call it a solution. ;c) The difference is that the seed is "dynamic". You change its balance without touching it. At every moment it contains all your coins.

Does that mean I can withdraw some coins from the exchange or they will sell my coins and pay back users proportionally?

We don't really know if other exchanges have been hacked or not.  Cryptsy was hacked a long time ago and nobody knew for sure until now.  I've seen similar rumors about much bigger exchanges like OKcoin.  As for banks, yeah they get robbed but usually not of everything.  Are you really claiming that an equivalent percentage of fiat has been stolen from banks as has been stolen from crypto exchanges since 2009? 

no, they are going offline pretty soon, all coins that are not retrievable are gone i think

the alert was there since their first problem with withdrawals

If we will use your kind of reasoning I must tell that since I have not heard about the steal of every bank that doesn't mean that is not stolen every of those. So if we don't have news about the steal of every then bank every bank may have been stolen. Or even if we haven't hear nothing about the steal of every home that doesn't mean that is not stolen every home. I can go further of such kind of examples but the above may give the full idea of what can happen if everyone use your way of reasoning. I'm sorry but I don't use such kind of use of my mind and my reasoning is totally different from yours.

Then as for the amount stolen from the banks I'm again sorry, but even without having your accurate data (seems that you are very informed about the amount stolen on all the banks around the world since the beginning of their existence as specifies the word "everything") I am sure that is much, much more higher than all the value of all the amount of all the cryptos in circulation until this moment and not only much, much bigger that the value of the stolen cryptos since 2009. This is an conviction created using the kind of reasoning made from you in the case of the possibility of hacked exchanges based on the hear or not hear about their hackering.

You might have a point if a large percentage of banks had been hacked and then gone out of business losing customer funds, but alas, this isn't so.  Also, they usually don't continue to operate as fractional reserves (see mt gox and cryptsy which continued to accept deposits after being "hacked").  Sorry I know this doesn't fit into you're narrative so must be ignored.

Actually "everything" was referring to the crypto exchanges that have lost everything in the sense that they lost enough to put them out of business.  I guess Gox and Cryptsy etc, wasn't as bad as I thought and you are right and they will be returning our money soon. Good luck with that.  And if you read my post you will see I used the word "percentage," which you then conveniently ignored.  Comparing total amount is kind of ridiculous when when bitcoin market cap is 1/5th the size of Tanzania's GDP.  Using your logic every shitcoin ever invented is more secure than depositing your money in a bank.  Again, good luck with that.

No. It is evidence that this exchange has failed to secure its assets (or has not been honest).

What this theft shows, if the story that cryptsy is telling is true, is that altcoins should not be trusted as easily as is done now.

Much more strict check ups of the code are required and new coins basically won't stand a chance anymore.

I was going to post my two-cents, but after reading the second post down, it looks like Amph said exactly what I was thinking.  Enough said...

An exchange is an exchange not a cryptocoin.

I have big  doubts that Cryptsy has been hacked.Hacked in 2014 like thayare saying It next Mintpal or  CryptoRush,Lets make easy money,create exchange and than cry My exchange has been hacked

Exchanges are not regulated,it is still wild west

This issue once again highlights the need for decentralised exchange.  I urge everyone to pay attention to this project (https://bitcointalk.org/index.php?topic=1316199.0;topicseen), as, if all goes to plan, it should help lessen the impact of failing exchanges in future.

Just FYI, Coincer (http://www.coincer.org/) (topic (https://bitcointalk.org/index.php?topic=1182342.0)) does (in principle) the same thing, but does not tie itself to any particular coin. Instead, it builds its own P2P network to carry out necessary communication between trading parties and building the market. Anyway, good to see alternatives. :c)

so fa,there was some exchange that can do their job with really nice,lets see poloniex and bittrex,that two my favorite exchange have good responsibility to keep any altcoin,i never have a serious problem there,and i hope it can hold long time,so i think have good exchange is not a pip dream :)

Regulations means a lot of money invested in financial license and it's not worth. you need many employees, AML, KYC, audits, accounting, real office. it's very hard to make a such business in a legal way.

And IF you do it, it's not worth because the revenue it's not big at all . the BTC market is 90% black market. the people who are using the black market doesn't want verification and other shits that a regulated exchanger must do. they want something like BTC-e(shady, no due diligence).

If most of the exchangers would become regulated(with financial license), BTC will worth almost 0 because most of its users will use other e-currencies.

It just further shows how important it is to be the sole owner of your private keys and therefore bitcoin's. But we all know this any way, it's just some continue to ignore it.

Sometimes it seems to me that trust based on time of operation is opposite in the BTC world opposed to other companies. Most companies people can say "They have been around a long time, we can probably trust them". But with Bitcoin it is the opposite. "Oh, they were around before Bitcoin got popular, we better use caution with them".

good point. it was the same with MTgox. I think the next one is Bitfinex or BTC-e.

I'll be sure to keep an eye on it.  Added the thread to my watchlist, so it will remind me to look at it when there's an update.  The more people working on stuff like this, the more secure the future of crypto gets.  It's a shame most people get so tied to the price speculating and trading part, they miss the projects like this that could make trading much safer in future.