Bitcoin Forum

From Reddit:

https://i.imgur.com/8aWS157.jpg

gox 2.0

Email received as well. Not good, at all.

Holy balls.

this might push us down.

Or up? Can't send coins to the exchange to dump?

Their Twitter account is not posting anything, usually it's the first thing they do...

Doesn't sound disastrous, whatever it is. Already deposited coins not affected.

http://www.reddit.com/r/Bitcoin/comments/2rd2xe/bitstamp_is_apparently_broken_or_hacked_i_suggest/

Eh, like it is the only exchange. Hopefully it won't be a big blow up otherwise it would be shit, you know how market reacted on Gox being goxed.

Don't worry, they got plenty:

http://coinsight.org/graphs/bitstamp_btcusd_depth_7d.png

You're sure about that?

Had any one tried withdrawing bitcoin from their account recently? Or fiat for that matter?

apparently, withdrawals are frozen too.

Or so they say.

I always keep a very pessimistic approach to anything that is "official news" of an exchange.

"Come on TeamSpeak and speak to BTC Traders that can't get their coins out" on the reddit thread. Don't know if true.

I don't have any funds in there right now so I can't try...

If their cold wallet is OK, I guess we'll be fine. I don't trade there for months but I believe they are legit enough to deal with it in good manner unless it's some catastrophic event.

They have frozen withdrawals.

Why would they not have a backup of the hot wallet private keys?

Absurd...

Could someone stole their keys and emptied the hot wallet so they don't want people to send to those addresses again?

I would agree with this interpretation. Lost doesn't mean "We can't find them anymore", lost means someone else might know all the hot wallet private keys.

Scary news. I have a lot of trust in bitstamp though. They will probably come with a fix soon.

Ok I just checked if I received the email, I didn't...

They were not specific which meaning it was. Until then it is simply speculation  :D

It is a bad idea to ask your customers to send bitcoin to your hot wallet. In this case, the amount of hot bitcoin could not be controlled and it is difficult to manage the risk.

Bitcoin should be sent to a cold wallet, and manually replenish the hot wallet if needed.

Official Posting

https://www.bitstamp.net/article/bitcoin-withdraws-suspended/

That's from February 2013

The deposit page shows this:


https://i.imgur.com/Hn2QjQA.png

so confirmed

this ^.

Seems they have it backwards.

Yes, but if it's a bug in the way keys are handled, then the cold wallet could end up with the same problem and it's a much larger problem at that point. Something simple like a flipped bit can cause this.

What are the chances all the sales were of fake coins?  Haha...

it is possible...

but what if, just like gox, there were users that had the capability of putting in buy orders and when those orders get filled their account doesn't have fiat deducted from it.

Essentially free coins.  ::)

Wasn't bitstamp the last exchange to dump?

Anyone able to withdraw?
I can't get my coins out... :/

what happens when you initiate a withdraw of BTC?

Any message? Error?

Buy XRP (ripple), send the coins to poloniex.com (make an account there) and exchange them for BTC if you want.


It works, it's currently the only way, do it, to stay safe.


https://twitter.com/mBTCPizpie/status/551964995932540928

Honestly how is ripple safe if it depends upon trust networks?

Still to this day I won't touch ripple with a 1000 foot pole.

Exactly, Up would be logical.

The Ripple consensus ledger is a whole lot safer than holding any BTC on an exchange...

really? I see no difference. counterparty risk is simply that...counterparty risk

1: They need to prove right now how much money they have in cold storage
2: Bitstamp needs to be actually audited (by financial professionals) on a regular basis in the future
3: IMPLEMENT MULTI-SIGNATURE FOR WITHDRAWALS

If 3 doesn't happen, this will keep happening forever. We have the tools, but we haven't forced our complacent, amateurish, borderline criminal exchanges to adopt them.

It's time to pressurize them.

there are exchanges like bitalo.com out there that do not take control over the coins at all but have user-side generated keys that are stored only in encrypted form on the servers, combined with full multi-signature wallets and backup transaction so that you can get the coins back, even when the site loses all data or goes completely offline.

People just need to use it :-)

Good initiative, thanks for showing us that this can work, and illustrating how irresponsible and borderline criminal established exchanges are for not adopting such practices.

Think about what Bitstamp have been working on instead: A fancy chart UI for trading and an Android app. Meanwhile, they can't even ensure or prove that cold wallet coins aren't lost.

Does that remind me of a posting around the beginning of 2014? Only then somebody wrote, "I believe Mt. Gox will sort this out."

I have half my stash on stamp...

Should I be worried? :-[

Those criminals need to prove they have cold wallet funds pronto.

Buying stamp coins for $10/BTC
http://st.deviantart.net/news/april-fools-trollface/trollface-gear.png

But the fact we had a crash just before Stamp announced this is very, very suspicious.

But what could it mean? Some odd thoughts:

• Bitstamp speculated on a rising bitcoin price with their clients' money. The crash came out of nowhere, and they had to cover or went bankrupt altogether. This means the crash was the cause, the Bitstamp failure was the consequence.
• Bitstamp knew they had a problem and speculated on falling prices after they would tell the world. They sold lots of their clients' bitcoins, then let the bad news leak. Then they bought them back at the lower price, driving the price back up to what it is now. This means the Bitstamp failure was the cause, the crash was the consequence.

I admit, these are wild conspiracy theories. I do not actually believe in either of them just yet. But everything is possible with bitcoins.

We have to take into account that the Bitstamp failure lowers their reputation. Clients will flee from Bitstamp. The only thing they can do to mitigate that is to get everything up and running again very quickly and be very open with information.

More volume = more BTC to steal in hot wallet. Simple.

Stamp didn't have the initiative yesterday, neither in the downfall or in the upwards bounce. That doesn't make sense.

No, the other half at MtGox is completely safe!

Is the Bitstamp hotwallet adress/es known so others can follow the coins?  Do they make it public?



As an aside, where can one find that Bitstamp depth sum chart on the first page?

Here:

http://coinsight.org/bitstamp

https://blockchain.info/address/1L2JsXHPMYuAa9ugvHGLwkdstCPUDemNCf

Thank you both for your help.  :)

Unreal start to 2015.   :'(

Not saying it's going to be Gox 2.0 where people lose their funds, and the exchange operator just up and leaves, but just the sentiment.

Things like this shouldn't happen to a major exchange.  Period.  Leave a bad taste to the community and it's supporters.

Just unreal that 2 years in a row, 2 of biggest Bitcoin exchanges get compromised.  This one may not be from seedy operator at the top, but just the fact it happened, hurts.

Not trying to spread FUD or giving up or anything, but this piece of news is very disappointing, to say the least.

This should make it clear to everybody that the exchanges are bitcoin's Achilles heel.

As long as bitcoin is still young, we need exchanges to get in and out of bitcoin. If the exchanges keep losing or stealing our money, bitcoin itself is dead.

You do realize that a multi-signature address on an exchange involves other issues that greatly impact usability as an exchange
Multi signature means both you and the exchange need to agree for funds to be spent. If the exchange is compromised in a way that does not let them use their own keys your funds will still be stuck.

Multi-sig cold storage on exchanges would be a neat feature for added trust but it would make a lot of things more complicated (try filling up a hot wallet from cold storage if you require the signatures from different users. You'd need a whole new scheme where a part of the cold wallet is still owned by the exchange which kind of defeats the whole point).

The bottom line is that if you want to be able to make fast trades in both directions (usd <-> btc)  you will have to place trust in the system to some degree because the blockchain can't help you here.

I would actually argue that currently for the majority of users it is best that an exchange handles their funds rather than sharing that responsibility (if you lose your key(s) for a multisig address on an exchange the funds are basically gone).

Transparency on how cold storage is implemented however is of prime importance. We'll see what bitstamp has to say soon and if they have done their job remotely well the damage should be minimal.

Btw it is clear that people can't withdraw if the hot wallet might be compromised. If I were running the exchange that would be my first reaction too. Stop all movements of funds until it is clear what is safe and what is not.

Satoshi created a currency unit without a central party being necessary to prevent unit duplication.

And you want to tell me it's impossible for centralized exchanges to build a clever system that enables users to have some form of control over their trading funds? Well, perhaps it is.

Yet our bitcoin exchanges  miss other things too that could alleviate theft and fraud. Lack of audits, insurance, ...

Luckily, it's only a matter of time until we'll be able to safely trade Bitcoin on traditional brokers via ETFs. Until then, we'll have to cope with this amateur hour.

This is exactly the point: Multi-Signature implementations make it possible that YOU must explicitly agree that the exchange or whatever service provider can move or take control of your coins! That way you keep control, which is the basic principle of Bitcoin and why it was invented. People dont trust banks and go into bitcoin and then they use bank-like and even more shady services like Gox or Stamp? Does not make much sense to me.

Instant trading should be rather done with BTC-IOUs, not with bitcoins

 

THIS times a trillion!

No way in hell would this happen to NYSE, NASDAQ, CME, CBOE, BATS etc...

Now I'm not comparing the scope or scale here, but until BTC exchanges up all their shit together it is indeed Mickey Mouse Club shenanigans like this that would NEVER happen on traditional major exchanges.

The fact that it is centralized means that if the server(s) is in fact potentially compromised of course they can't let you control your funds because how should they know if your actions are legitimate or not?

Cold storage should ensure that in a worst case scenario most of the exchange funds are safe.

This incident will reveal if bitstamp can be trusted further down the road. We can expect a more thorough audit and if indeed only the hot wallet was compromised and users who lost funds are reimbursed
it will be a good thing not only for stamp but for confidence in bitcoin in general.

Now if that does not happen we can expect gloomy times ahead.

The users don't need to hold the keys, that would be disastrous because people could trade, lose and then refuse to pay, but if Bitstamp held 3 keys on different servers and had them all sign each transaction; they would be a lot more difficult to hack.

If Stamp is down is Coinbase not working either? Coinbase is really my only means of complete exit. :-X

freebit13: How do those servers get get the signal to sign transactions?

True...

What are these??

https://blockchain.info/tx/4e2310ee5f5d95ea17878f558406e24d10e6234a614fd960bbcddcb2ccd25dd4

they can periodically check list of pending transactions, correlate that to account balances and then sign if transaction is fine & some validations pass - like unusually high volume of tx going out would require manual intervention, etc

this way single signing server compromise will do nothing, but central db compromise will of course still be a problem, but that is much easier to secure since it does not need outside connectivity.

no they have decoupled from stamp a long time ago. so go, exit  ;D