There is no but.

If you're going to take on the responsibility of handling other peoples' money you need to recognize what you are and are not capable of. I would feel bad losing $1 of someone else's money. MtGox was handling millions. He wasn't "nearly there" simply getting tripped up by a fluke. As I pointed out, he was completely in over his head, having admittedly lost at least $26K all by himself with a scripting error.

When I used the term double-spend I meant use the same money to pay twice. That's not what happened here.

MtGox sent out new transactions because they were fooled into thinking their own transactions had not been accepted. No technical person worth their salt thinks to their self, when something doesn't work, oh well push the button again and see if it works this time! That isn't how it works. The very first time someone told MtGox they didn't receive a transaction their system sent out MtGox should have investigated and corrected the problem, and halted all withdrawals if need be until resolution.

Put transaction malleability aside for a second. Apparently MtGox's horrible software was sending out invalid transactions on it's own, which is why they then automated re-issuing new transactions. Imagine someone fooling around told them they didn't receive a transaction 100 times in a row. Would MtGox re-issue 100 new transactions, hoping one would stick? How does that make one iota of sense?



People that use Bitcoin correctly understand unconfirmed information can change, at least most people seem to understand this.


I don't think so. Remember, once confirmed the transaction ID will not change (without a re-org) so you only have to check for two possible cases, the ID you're expecting, or an alternate ID which gets confirmed. How is that a serious problem?

I agree. I'm getting a bit tired of people who language bash. For example, DeathAndTaxes, whom I respect is killing MtGox in this thread, but he hasn't once faulted the language of choice. Often people who bash don't have much achievement of their own which they can point to, which is telling.


Umm, Facebook was built on PHP and they just bought a company for $19 billion. Magento, also built on PHP, was bought by eBay for $180 million. Which apps have you done lately that are worth millions of dollars?

A good programmer can usually do well with most any language, although some may be better fits for a given application. It depends more on style and preference, which is why Google, which probably knows a thing or two about software, allows people to write in the language of their choice for their annual Code Jam with $15K prize. They are not so ignorant as to think various programming languages, which are just tools, can't be used effectively.

You're right. This is one of the things I forgot to mention in my "complexity" explanation. With Bitcoin different kinds of changes require different consideration for if and when they can even be implemented. As a currency, forks are not something you want to have at all ideally, so if they must be done it should be kept to a minimum. Due to the consensus nature of Bitcoin these type changes require extra ordinary planning and consideration.

Using coin fees to pay devs was the idea behind DevCoin I believe. I don't see much to that.

As for forum advertising I believe that goes to maintenance of the forum, and paying moderators. You're right there would be some concern about anyone formally paying devs having influential special interests. For that reason a crowd funding model is probably better. We just need to set something up.

Cool  Wasn't aware of that.

I don't think that will end up being a limiting factor for Bitcoin.


That's not talking about how Bitcoin works fundamentally. That won't change. However, there are many other transaction types possible. Any added features we see with Bitcoin will likely be optional usage additions, which can enhance usability. The way basic transactions work won't change.

There is no explicit need for keeping history... So there is no need for keeping a ledger, in other words.

Yes, I've looked over some of Ripple's documentation. How does a node verify the amount of XRP in existence? From what I could see the basis is supposedly a "genesis ledger" as opposed to a genesis block, but there seems to be no way to access the genesis ledger.


That's a numeric statement posted on a website. That doesn't cut it.


That doesn't cut it either. It needs to be mathematically verifiable.

I really like the idea of Ripple, but the current problem I have with it is there seems to be no way to verify how many ripples exist. If people complain about Satoshi possibly having 1M or about 5% of all bitcoins, when there is a known amount, what can they say about the creators of Ripple?

Also, keep in mind things change. I believe everyone involved in Bitcoin does better as time goes by, if for no other reason than price appreciation. Another example is that Gavin is formally paid to work on Bitcoin now, via the Bitcoin Foundation, as opposed to early on when it didn't exist.


Yes, I think there is somewhat. That might have been on display with the unintentional version 8 software bug/fork. At the same time I think management of the project is somewhat crowdsourced. For example, I don't contribute core code but I think about the overall system and potential issues with possible solutions all the time. The block size/scalability issue is the biggest example of that. I've weighed in often on the subject and actually have my own ideas for solution which are separate, but complementary to the official answer at the wiki.

You ask a complex question. There are several problems and actually there is more than one answer.

The TL;DR answer IMO is no, there isn't a lack of progress. Bitcoin as it stands today works. It's for the most part secure. It has been attacked in theoretical and real world ways, scrutinized, built on top of, and still it powers ahead. At the end of the day that's all you really care about, that the system works as it should.

Now is it perfect? No, but the same could be said about the Internet and TCP/IP. Yet, how much is done with the Internet and TCP/IP today? A lot.

Another problem with your question is the definition of "progress". Gavin, as the current lead developer, has indicated some of the things he is actively working on, like the payment protocol and floating transaction fees, but that doesn't immediately translate into produced code. Writing good software is more than about actually writing lines of code. It also involves planning, especially for complex applications, and Bitcoin is certainly that.

The next thing to consider is Bitcoin isn't your typical programmed application. Usually, and many people can relate to this, businesses hang out a "down for maintenance" sign whenever they need to do major modifications. That's not an option with Bitcoin. As some aptly describe it it's like working on a 747 going hundreds of miles an hour; if you make too big a mistake the whole thing could crash and burn, or at least scare the hell out of the passengers. Not many people are eager to put themselves in that situation, so major changes are not taken lightly.

Last, there is a very real problem with open source software, which is under funding. There are brilliant developers contributing core code to  Bitcoin, but as of now Gavin is the only one getting paid for it. Just think how great Linux is as an OS, and completely free at that, yet how dominant Windows is in the world. It comes down to funding. Brilliant people working on Linux don't care about average user experience and marketability, as long as things work for them that's good enough. That's not the approach of a profitable software company like Microsoft.

So could Bitcoin core development use a boost? Yes, I agree it could, a financial one. Other than that, it's made up of scrappy coders sacrificing whatever labor they can to make it work well enough.

No. The original transactions will have gone through, especially if using something like the reference client Bitcoin-qt/Bitcoind, which will not usually broadcast invalid transactions. The only thing which doesn't "go through" is the expected transaction ID.


Actually that's what they should have done. They should have assumed their transaction was valid/approved once broadcast. When and if they believed it wasn't they should have investigated the reason(s) why, instead of simply sending new transactions.


No. Once a mutated version of the transaction was confirmed MtGox's accounting system had a problem because a transaction it assumed was confirmed, was confirmed, but someone told them it wasn't, and to check they used the irresponsible method of relying on transaction ID (which has the known malleability issue).

The problem with MtGox wasn't exactly related to the core Bitcoin system. For example, if MtGox had a rogue employee helping an outsider to make duplicate fraudulent withdrawals by erasing prior evidence of them, then that's only an internal problem with MtGox.

Similarly, MtGox was checking to see if withdrawals their system sent were accepted by the Bitcoin network using the transaction ID. However, a documented and known problem is that the transaction ID can change (it's malleable) until there is confirmation of it (and the more the better). If an attacker was aware of malleable transaction IDs and MtGox wasn't, they could successfully trick MtGox into re-issuing new transactions, and get paid repeatedly, since the earlier transaction was valid, just with a changed ID (which MtGox was unaware of). Apparently MtGox had an automated system in place just for re-issuing transactions. They seemed to expect the need for that because they had prior problems from their custom software for making network transactions.

So there is no double-spend within core Bitcoin there. It's only MtGox internally being fooled into doubling (or more) someone's withdrawals.


It's not a double-spend problem. It's not a double-spend problem for people that use confirmations, which has always been the way explained for using Bitcoin. With Bitcoin, since it's a trustless system, the only thing you can trust is confirmations. The more confirmations you have the better, but you need at least one to make any real world decision involving more than say a couple dollars of value.

The spent change issue isn't a problem either, again, for people that wait for confirmations. It would only be a problem if many network users simply disregarded confirmations, because they could believe they had been paid money which would eventually vanish when it was finally confirmed.


Yes. It doesn't block or change the transaction in any way except for the txn ID. So any exchange or service relying on txn ID, especially if unwisely doing so before confirmation (as MtGox apparently was) would have their system affected. However, as long as they didn't make any financial decisions based on that it would result in nothing more than the irritation of addressing internal records and customer service.

I think you have a point. It would be easier to have all prices standardized. So say I want a car at a cost of 20K USD. Let's call the BTC price now $500, which is:

20K USD = 40BTC = 40,000 mBTC = 4,000,000,000 (4 billion Satoshi)

If/when bitcoin again goes to 1K USD in the future we have:

20K USD = 20BTC = 20,000 mBTC = 2,000,000,000 (2 billion Satoshi)

If/when it reaches 10K USD we have:

20K USD = 2BTC = 2,000 mBTC = 200,000,000 (200 million Satoshi)

I like that whatever convention is used it's easy to see the deflation reflected in Bitcoin's price. It seems most obvious with Satoshis though, which wouldn't change/bounce around in peoples' memory. It's just the one unit.

You have to remember he couldn't have had static accounts, something you might imagine as a personal checking account, where it's easy to understand balances.

Mt.Gox was the largest exchange for a long time and dealt with thousands of users buying and selling. MtGox at one point had 20K users signing up per day. So you've got over 100,000 (at least) users with a good number of accounts alternating amount of BTC/USD from trading. You constantly have new users signing up depositing USD, miners depositing fresh coins to sell for covering expenses, day traders, people withdrawing BTC, people withdrawing USD, through wire transfers, Dwolla accounts (while available). Then you have employees and expenses to manage and pay. The U.S. DHS seizing millions worth of USD in your Dwolla account, an impending merger with CoinLab which dissolves into a multi-million dollar lawsuit, an uncertain regulatory environment everywhere, your own Japanese bank accounts and local regulatory compliance, normal international customer service, normal operations, obvious scams, site security, DDoS attacks and on TOP of all that, MtGox wrote their own custom client to transact directly with the network and did so horribly badly. Their software resulted in double spends, invalid transactions, accidentally lost coins, and broken withdrawals, which they apparently had a policy of re-sending based on transaction ID.

I think Mark Karpeles had a real desire to help Bitcoin succeed with MtGox a big part of that. In many ways it was. I got my first coins from MtGox. Many people did. I just think he was in over his head.

Nobody else has an opinion on my conclusion? Yea or nay?

An upvoted post at reddit currently has falkvinge.net concluding an inside job, which would be more tempting for regulators.

http://falkvinge.net/2014/02/28/the-gox-crater-crowd-detectives-reveal-billion-dollar-heist-as-inside-job/

Yet Falkvinge himself says one of his points doesn't make sense (under his scenario, but it does under mine).


However, such a massive selloff would make sense if outside thieves having successfully extracted that many coins were worried about MtGox folding from the CoinLab lawsuit and crashing the BTC price. At that time it mihgt have seemed better to sell for a sure $75M.

I believe this was actually the result of theft compounded with incompetence, with many of the coins being stolen, with possibly many others being unintentionally locked out (by horrible software).

I believe I know what happened at MtGox. (Spoiler alert) TL;DR: complete incompetence

While I was a supporter of MtGox, in this debacle I have lost not more than about $80 there, because I try to follow my own advice which is: don't ever store longer term more cash/coins in ANY online service than you can afford to lose. Some here must have seen me say this repeatedly in the past. Anyway, there is a lot of question and speculation about what really happened with MtGox. I think I've figured it out. I'll present my case and see if you agree with me.

Before I get started, check out this quote from 2011. It's unbelievably prescient. BTW Magical Tux is Mark Karpeles:


Go ahead, click the link. You'll see it's really from 2011. Now, what would make this guy predict something like that?

Exhibit A:

That quote comes from the following 2011 thread which I believe is the last piece of the puzzle:

someone fucked up and lost ALOT of money

You really need to read/skim the first 2 1/2 pages, which contains the above quote, to get a feel for what happened. The gist of it is that MtGox, possibly Mark Karpeles himself, implemented (badly) custom software for transacting directly on the network.

Now check out this quote on 2/10/14 from DeathAndTaxes whose opinion on the matter I deeply respect:


The whole quote should be read, but at the least what I've highlighted in bold.

We need to jump back to the 2011 thread for a second. As far as I know that was the first indication of MtGox's horrible software implementation. The reason for the thread was it was discovered someone wrote a bad script making about 2,600 BTC permanently irretrievable (about 26K USD back then). In that thread Magical Tux appears to admit it was MtGox saying "<MagicalTux> that's a problem, but not the worst problem we ever faced ... just spent one week of BTC-only income".

So to this point we know as early as 2011 Mark Karpeles was aware his custom software resulted in losing 2,600 BTC. However, there is one more key line in that quote from Magical Tux to focus on: "<MagicalTux> all the broken withdraws have been re-issued".

All the broken withdraws have been re-issued. [sigh]

Let that sink in for a moment. Consider that Mark Karpeles had just realized and confessed to permanently losing 2,600 BTC. Regardless of current events how much would you trust him to competently deal with any problem withdrawals, with shaky software?

Now for the clincher. That thread has over 13,000 views. I don't even run an exchange and I know about the unreliability of transaction IDs, and MtGox was here before me. Isn't it reasonable to imagine an unprincipled person put two and two together and imagined that if MtGox was admittedly having withdrawal issuance/software problems, and was taking the course of action of re-issuing withdrawals, then what if, just what if they didn't know about transaction malleability?

The picture is starting to become clearer isn't it? 800,000 BTC is a LOT of bitcoins, but if there were ongoing withdrawal problems over many months even years, coupled with an influx of fresh users depositing BTC, and books were not reconciled in a way to make imbalances obvious, then, what do you get? Exactly what we see today.

This would explain why Mark Karpeles seems exceedingly reluctant to talk about what happened. It would explain his public statements which shift blame over to the core system itself. There is no telling what exactly happened to all those BTC, but tranasction malleability & theft or not he had lost at least 26K USD all by himself. As the prescient poster above predicted it was only a matter of time before he lost something much bigger.

There is also a project called CoinJoin in the works to help out with anonymity. If this ever gets widely adopted you really won't want to assume the inputs to a transaction come from the same owner, as the purpose of CoinJoin is to make sure that doesn't happen.

The correct answer to your question is to ask your user what address they want you to send refunds/withdrawals to. Thank you for asking instead of making an assumption. By the way, transaction IDs are not reliable without confirmations so don't have our app rely on those either.

DeathAndTaxes is right but you do have a point that concern over unfair Bitcoin distribution is a recurring theme.

I've often promoted Litecoin as providing strength to cryptocurrency overall by offering things Bitcoin simply can't. A desirable alternative to Bitcoin is one of those things. This issue could be a second.

Litecoin was distributed in a far more balanced way. Not only was it not announced with only a handful of people that could realistically participate, but the launch date was voted for democratically. At least thousands of people heard of it and no pre-mining occurred. Even long after launch while Bitcoin was around $12, Litecoin remained $0.04 cents. Even today with Bitcoin at hundreds of dollars Litecoin is less than $14.00. Yet Litecoin is the oldest, most successful cryptocurrency that is not Bitcoin.

Markets like choices, so as I often explain, it's possible to believe in both Bitcoin and Litecoin at the same time.

You beat me to saying that. All publicity is good publicity. People are discussing Bitcoin and that's all you want. They don't have to "get it" at first. Heck even I initially wrote it off, and I'm supposedly tech savvy.