Bitcoin Forum

How many more hacks does it take for people to realize that the centralized control models are vulnerable. Almost every centralized bitcoin exchange got hacked, if they didn't they probably will be in the future. And who knows how many of these hacks were actually inside jobs?

MTGox
BTER
Cryptsy
BTC-E
Shapeshift (althought shapeshift's model is stil safer, because they dont store customer funds)
Bitfinex
.... list goes on

Now everyone pays for this by bitcoin losing value, MTGOX crashed the price 80%, Bitfinex crashed the price 20%. Everyone pays for the stupidity and negligence of a few...

How many more hacks does it take for people to wake up and start storing their bitcoins on their own, and use decentralized exchanges like Bitsquare?

Customer: Should I store my bitcoins in your exchange?
Exchange Owner: Yes, our exchange is ultra-secure, impenetrable, unhackable.
Customer: Why?
Exchange Owner: Because we said so!
Customer: Ok.

[Hack happens]

https://i.imgur.com/zY1I9TI.jpg

1) when did btc-e get hacked? i can't find anything on the internet except newbie accounts on bitcointalk complaining about losing their account because of having week password.
can you give a reference?

2) Bitcoin Savings and Trust was a ponzi scheme (https://en.bitcoin.it/wiki/Bitcoin_Savings_%26_Trust) in other words a scammy place to invest. why are you mentioning it among list of exchange services that got hacked, for a longer list?

3) shapeshift is not that kind of exchange service that you are thinking of. you don't keep anything there to get hacked. the hack was the owner's supply since people receive their money right after they click change.

4) can you explain about this, like a link to their announcement or how long they have been operating and how does it work?

Yeah, hopefully this will push users to migrate trading action to truly decentralised exchanges like bitsquare or shapeshift to take out the middle man risk

https://bitcointalk.org/index.php?topic=83794.0#post_toc_37



Still people invested in it, and 4000 BTC vanished...



Yes shapeshift is much better than the others, but you still have to trust them to give your money. A completely decentralized one is much superior.



Bitsquare is about 1-2 months old, it is still a fairly new software, but it's completely decentralized. It will take more time until it becomes established but I think it will become an inevitability with all these nasty hacks going on.

Just read more here: 
https://bitsquare.io/community/ (https://bitsquare.io/community/)
https://bitsquare.io/faq/

Bitcoin loses legitimacy because of a few people, and it's not good. I know it's not bitcoin's fault, but just expect 2 months of mainstream media bashing of bitcoin....

https://btc-e.com/news/81
apparently they have lost 4500BTC (i think about $50,000) from their own pocket and paid their users in full
and they are still active today and giving service to many users so it is not like other hacks.


still it doesn't justify mentioning it among hacked exchange services. lots of scams, and hacks happen every day and people lose their money in many different ways.


again, this hack was also out of the owner's pocket not the users because you can not keep coin in there because there is no place to keep!


that is just not right at all.
people have accidents with cars and die every day, does the rest stop using cars?

A hack is a hack, who knows if it will repeat again. If it happened once, it can happen twice...


Ok removed.


Yes I know, but a hack is still a hack.

Some shifts take a while to wait for confirms and who knows how many funds are stuck in limbo if a hack happens during that time, so customer fund loss is limited but still possible with shapeshift.



Tell that to mainstream media shills and pundits. If they have an agenda against bitcoin they will find every weakness it has and magnify it and over-exxagerate it.

no argument there. but you can never find a perfect system that is un-hackable. every system has its flaws that can be exploited and used for hacking purposes.
the important thing is how the owners react to such incidents and how can they recover from it.


this is nothing new, it has been going on for years starting with the day bitcoin was introduced to us. i agree that if it wasn't like this bitcoin could be in a better place but where we are now is not bad either.

Okay, I sure about your title of this topic the centralized exchange are very bad, but I have questions for you can you give a scheme about the working system of bitsquare? or giving short explained about it.

But you can reduce the risk by orders of magnitude if you decentralize it.

We already know that the middleman design is very unsafe from hacks to scams to accidents, all things could happen.

In a dencetralize mode like bitsquare you store all your coins and orderbook, and the exchange happens with escrow. It is a way superior trust model than: " hold the coins with me because I promise to store them safely".




And how many potential bitcoin users have we lost because of their hate campaign? It doesnt help bitcoin's reputation if it constantly gets painted with bad stuff from hacks to scams and to other bad things.


Just read the faq, it's a very good design with local coin storage and local orderbooks and escrow system. It is trustless escrow-based P2P trading online basically.
https://bitsquare.io/faq/

 Blocknet is a "truly" decentralized exchange: https://bitcointalk.org/index.php?topic=829576.0

What do you mean "truly?  I havent heard of it before but i have to learn more about it.

Folks will always use their money how they choose. There's always a handful that will be ignorant to the fact or tell themselves "Hey, it won't happen again" at their own risk. The fact is people will be people and no matter what they will vest their coins where they'd like. I'd like to think that the number of people will dwindle as more proof that it's not a good idea is presented, but hey, what can you do?

A decentralized exchange is a good idea. The methods we currently have implemented are not. There have to be ways to independently verify the occurrence of an exchange, similar to how miners verify transactions through mining. If we can get something like that working (but it moves quite quickly), then we might see something of value come out of this idea, but there are still some things that have to be worked out. Not all of it is good enough yet for it to be implemented.

Somehow i get the feeling, that this is not the first time this is discussed.
a decentralized Exchange is not that easy and if you deal with money there is almost every time at some point trust involved. This will be hard to change.
My suggestion would be to start using Bitcoin full time and thus eliminate or minimize the need for Exchanges centralized and decentralized.   

Decentralized exchanges have been talked about for a fairly long time, and the first time I remember hearing about it was something like a month or two after the Mt.Gox collapse. I've heard it off and on since then, but I guess now it's really being talked about.

While your suggestion for using Bitcoin full-time is a good idea, there a lot of things that have to be built up and developed first. We need a quicker network system, and we need easier wallets for everyone. While they are already easy, it isn't easy for a lot of people.

It no needs a full time for using bitcoin but you must implement in yourself about every time you doing the trading and after finishing your trading you will always remember to sending all of your amounts into your wallet, without sacrifice a lot of your time.

But now we have a fully functional one. It was really a question of time until they come out. And it's not just the hacks but all the red tape that exchanges make you go through, and the fact that they can freeze your account without any reason, anytime, is just unbearable.

I still can’t understand why people don’t store their bitcoins in offline wallets? Don’t they trust themselves? Or they find difficulties in tuning with technology?
I think there is lack of awareness among new comers about the security and how it works. Although I use online wallets and I have my funds in exchange too still I have my offline wallets to store main balance. I don’t think such exchange hacks will have any positive impact on bitcoin users, they will still trust exchanges till they personally meet any trouble.

yeah the price might take a hit in the short term, but bitcoin dos not care about hacks and just keeps plodding on.......  ;D

Yes but if people keep being irresponsible idiots all the time then its bad for bitcoin.

Damn I just wish bitcoin users were a little bit smarter.

The concept of a decentralized exchange is good, but the first one to get high volume will become the target of the same hackers that go after centralized exchanges. Any bugs in the code will be exploited, and there will probably be bugs at first. I suspect the first decentralized exchange to get high volume will get hacked, just like the decentralized exchanges do. Making it decentralized doesn't make it invulnerable to hacks.

I cant be hacked, the money is stored on your PC, and the hacker to go after 1 person is stupid. The risk is distributed, there is no central wallet to steal from.

That is the point, the bugs will only do minor damage in my opinion, and can be quickly corrected.

I think actually exchanger should be more careful and smarter because they asked people to trust them with their bitcoin claiming their system is unhackable, unbreakable etc however at last all loss because of security bug in exchange platform. And it will be hard to trade without keeping good sum of bitcoin in exchanger even knowing that this is not safer practice, so i think main fault is how exchanger manages deposited bitcoin and their security system.

The money is stored on your PC when you aren't trading, but after you start trading it would be under the control of whatever code the decentralized exchange runs on. A hacker who found a bug in that code could make a bot to exploit it through thousands of different trades simultaneously. Anyone trading at that time could have their Bitcoins stolen.

Because greed and convenience outweigh the desire to be sensible. If Bitfinex opens its doors again I'm relatively sure even the people they buttfucked will still use it. That's how mindless most people are.

still trying to get my head around Bitsquare, its not bad just i am a bit slow sum times.....lol  ;D

Stupid people never learn, that is the curse of humanity.

It took 5000 years to abolish slavery, invent medicine, computers, and the wonderful technology.

It could have been done in 50 years, but it took the other 4950 years convincing the idiots to join us.

Are you blind, didnt you read what I wrote earlier. Decentralized exchange cant be hacked because there is no central wallet.

Everyone store the coins on its own, so a hacker can only target people 1 by 1, which is not profitable for him. So its much safer than central wallets.

No it's multisig wallet with escrow, the coins cant be stolen, and the fiat part of the transaction is also safe because bank transaction can be reversed.

Also scammers are discouraged too because it works with security deposits, that they lose if they scam, and the arbitrators have security deposits too, and they are trusted people.

So the risk of theft/scam is low.

I agree that decentralized exchanges are needed, but is is being said for a long time now. Appearantly it is not so easy to build one because at one point there is the centralized component of the fiat exchange.

There is no way to have a decentralized way to exchange fiat currency as any method to put fiat for trade requires a trusted third party.

Crypto to crypto should be possible in the near future, but crypto to fiat will not likely be possible in a decentralized way.

Yes but it works with escrow and multisig, so its no problem. The banking system is as it is, there is no way to change that.

Hopefully in the future we wont have FIAT<>BTC transaction, and everyone will use BTC, but until then we have to rely on escrow and multisig wallets.