I'd really like somebody to dig up this chat, because I'm pretty sure I didn't say that.

All of those things are probably true.  Their cumulative effect is to push the price down.

I guess I should finally answer these questions since they keep getting politely asked.  Here goes...


No, not right now.


I just don't have a belief about it, really.  I think it's plausible to have been orchestrated, but I don't have a confident view on what purpose.  I also think it's plausible that it was just the weakness of the infrastructure breaking under strain of interest.


Yes, I do own some.  I don't want to say how many.

It's already over in terms of a long slow slide down being inevitably in place now.  We're just watching people struggle to accept it.  When they do, yeeee haw!

If there's money coming into the exchanges it isn't showing up anywhere where people can detect it.  What is coming into the exchanges are tons of bitcoins.  The MtGox order book has more bitcoins on it now than it's had since November/December of last year.  I agree that the price won't sit at "support" for very long, because it's going to break very strongly to the downside again.

The dam was the fear of selling people had on the way up.  It was breached by the events of the past few days.  The flood is the flood of bitcoins piling onto the order book right now, and it's eventually going overwhelm and consume the bids and bring the price to levels most people don't expect.

We're already breaking to the downside, and sell orders on MtGox are the highest they've been since late November/early December of last year.  People are sending their coins to MtGox who haven't had coins there in a long time because they're worried it's time to cash out.  The magnitude of the group behavior behind this shouldn't be ignored, as it indicates a long slow continuation down.  We're witnessing a very large bull trap.

Welcome back, Nagle.  I've tried to keep things sensible around here while you were gone.

This thread and others like it worry me.  I suspect a lot of people are buying and have bought something they don't understand, and I'm concerned that thefts are going to increase as a result.  If this is you, please read this.

Wallets

To access your bitcoins and transact with the network you're going to use a wallet.  This will either be a piece of software you install on your computer or an online wallet service like blockchain.info.  The wallet jargon is just a convenient way to refer to what's going on under the hood.  Every Bitcoin address has an associated private key, and the private key is really just a string of numbers and letters.  You can only spend bitcoins at addresses for which you also have the associated private key.  If you happen to find somebody else's private key, then you can import it into other Bitcoin clients or online wallets and then you have the ability to spend any coins associated with that private key's addresses.

Most wallet clients give you the option to encrypt your private key.  Please do that.  That means you can protect it with a password.  You will be asked for this password to create transactions.  Your blockchain.info login password serves that purpose, for example.

Passwords

Use strong and unique passwords.  That advice applies to your entire online life, really.  If you use weak passwords and/or you don't use unique passwords, then you are at risk of somebody guessing your password using a computer designed to make lots of guesses.  If your passwords are not unique that gives attackers the opportunity to compromise more than one service.  It's best to use a mix of lower case, upper case, numbers, and symbols in your passwords.  Your passwords should also be sufficiently long, around 16 characters, for services that you would really hate getting compromised.  You should still use unique passwords for services you don't consider critical, but for those services you might not feel it's necessary to use long passwords with a mix of all character types.  Of course, this is all up to you.

Passwords managers can help you organize lots of strong, unique passwords.  Lastpass is a fantastic password manager.  It works across all the major browsers and they even have mobile apps.  You create one really, really strong password that you must never forget, and then Lastpass organizes and remembers all of your other passwords for you.  Lastpass encrypts all of your data before it's sent to their servers, so they can't see your passwords.  If you forget your Lastpass password, then you lose access to passwords stored with them, unless you remember them or have them stored somewhere else.

You can make strong passwords easier to remember by increasing their length with a relatively simple pattern while still using each character type.  This is called password padding.  Security researcher Steve Gibson explains by comparing two passwords:


Strong, unique, but memorable passwords depend on using all character types and adding memorable length.  You really should also avoid dictionary words and common modifications of simple dictionary words (e.g. dog, d0g, etc.)  Consistent with the advice to use unique passwords, you wouldn't want to use the same padding technique for more than one critical password.

Multi-Factor Authentication

Many online services (e.g. gmail, blockchain.info, MtGox, Lastpass) offer the option to use multi-factor authentication.  If this service is offered, you should use it.  This means that you need more than your password to log into your account.  It can come in the form of a number sent as a text to your phone, a usb key that must be plugged into your computer, or an app like Google Authenticator.  When you log into a service for which multi-factor authentication has been activated you will be asked for both your password and an additional pin sent to or derived from a separate device.  This offers you some protection from key loggers which an attacker can install on your computer to see everything you type.  Even if they discover your password, they will be unable to log in without the additional pin from, say, your phone.  A previously used pin will not work, they would need one generated specifically for the most recent attempt to log in.

If the email provider that you use offers multi-factor authentication, and you use that email to register for important services (e.g. online banking, bitcoin wallets, exchanges, etc), then you should definitely enable multi-factor authentication.  If an attacker can compromise your email, then they can potentially access lots of websites your registered at, because they can ask the websites to reset your password.  Websites typically send a password reset email under the assumption that only you have control of your email.  If you don't, an attacker can change the passwords to your web services.  By enabling multi-factor authentication on your email, you can significantly decrease the odds of an attacker compromising your email.  You should likewise use multi-factor authentication with any password managers you use, if you choose to use one.

This might all seem very inconvenient.  However, the security gained far outweighs any convenience lost.

Advanced Bitcoin Wallet Security

The most secure way to safeguard your bitcoin value is to create and keep your private keys on systems that cannot be hacked into.  This can be a computer that is setup without ever touching the internet, or paper wallets.  A paper wallet is just some text based way to represent your private key.  An attacker cannot compromise an offline computer without physical access, and he would additionally need to know the passwords to log onto your offline computer.  If you have offline systems such as offline computers or paper or other physical wallets, then obviously the attack vector is basically physical burglary.

The Armory bitcoin client is a client designed to maximize security options.  Armory makes it relatively painless to setup an offline wallet.  A computer does not need to be connected to the internet to create valid bitcoin private keys with associated bitcoin addresses.  That's because their creation is determined by algorithms that can be copied and run on any computer with or without network connections.

With Armory you can setup offline bitcoin wallets.  In order to send bitcoins to that wallet you just need to copy an address created on the offline computer.  The offline wallet can create what's called a "watching only wallet".  This is a wallet you can import into an online installation of Armory on a different networked computer.  From the online watching only wallet you can see bitcoins sent to your addresses and you can create unsigned transactions.  You can try to broadcast an unsigned transaction, but it will not be confirmed in the blockchain, and is not a valid transaction.  In order to send the transaction into the blockchain and have it validated you will need to copy the unsigned transaction to a USB device, import it into the offline Armory wallet, sign the transaction, then copy and move it back to your online Armory wallet.  From there, it can be sent and received as a valid bitcoin transaction.  In this way it is made practically impossible for a network attack to steal your bitcoins.

It's a good idea to create additional offline backups of your Armory wallets.  Armory has a feature to create printable offline backups.  These can be used to restore your wallet in the event that your offline computer is destroyed or stolen.

Systems like this are more inconvenient, but offer the highest level of relatively easy to setup security.


Thanks, welcome to bitcoin, and stay safe.

-Proudhon

If you want to protect against theft, yes.  If you're using blockchain.info you should have 2 factor auth enabled, at least.  Remember always to use strong unique passwords for everything.

The wallet jargon is just a convenient way to refer to what's going on under the hood.  Every Bitcoin address has an associated private key, and the private key is really just a string of numbers and letters.  If you happen to find somebody else's private key, then you can import it into other Bitcoin clients or even another block chain dot info wallet and then you have the ability to spend any coins associated with that private key.  I think it's really important that people understand that. 

If they got in once, they could have just taken the private key associated with those coins.  After that, they don't need to log in to blockchain.info to spend them.

And the sellers continue to stack those coins up.  This is playing out exactly like last time.

Well, there are plenty of bitcoins to buy.  Now roughly 4x as many on the book as there were 4 days ago.  Probably means we're going up, right?  

Well that's pretty much true.  It's mostly always on.  It's just that sometimes when it's on the market order you execute in a panic doesn't get executed for 30, 60, 90 minutes, or whatever.

Another crash.  That's the only rational thing that can happen at this point.  When the market isn't offering any information about itself, then the rational thing for participants to do, especially those who bought near or above the current price, is exit the market in the hope of minimizing their loss.  Each person trying to minimize his loss will collapse the market in these conditions.  Sit back and watch the giant prisoners dilemma.

Somebody on btccharts chatbox is saying he saw on IRC the lag is caused by tons of fake orders being added and removed.  That would be consistent with the change coming to MtGox disallowing order placement without putting up the funds.  Interesting.