Two More Exchanges Hacked - And Solutions for Every Exchange
Bitcoin Incentive for Fraud; Two More Exchanges Hacked: "Flexcoin" Robbed of All Online Coins; "Poloniex" Missing 12.3% of Assets
http://globaleconomicanalysis.blogspot.com/2014/03/more-bitcoin-exchanges-hacked-flexcoin.htmlsourced through:
http://dollarcollapse.com/ - which also has many other Bitcoin related news articles linked there regularly.
I have read and followed Mish at his blog for many years. Although I don't always agree with his economic analysis I highly value his thoughts. A few questions Mish mentions to ask our Exchanges are listed below (from the link above).
"...Questions
------------
Are you holding bitcoins? If so, what kind of auditing is in place at the exchange you hold them? Are they in cold storage? Should they be?
Accounting procedures at Mt.Gox were so bad it did not matter whether or not you had the transactions in cold storage.
Bitcoin Price and Fraud Go Hand in Hand
----------------------------------------------
One final question: Is the runup in price directly related to fraud and theft?
Yes, two ways.
1. Increasing value of bitcoins made them an ideal target
2. Fraudsters who stole bitcoins had an incentive to artificially drive price higher knowing they could take out more than they put in, at more than one bitcoin exchange, and in more than one way.
How high would the price of bitcoin had gotten in the absence of those incentives?..."
---------------------------------------------------------------------------------------------------------------------------
My take on this:
I don't believe any fraud incentives drove the price of Bitcoin higher in the past, nor in the very recent period. Mish is jumping to conclusions in the face of no evidence except pure "outsider" speculation. But I for one am glad he is now at least giving Bitcoin attention at his blog. This isn't the first article about Bitcoin at Mish's blog.
I believe it is the rarity of bitcoins combined with suddenly much more positive exposure of Bitcoin in the mainstream media worldwide from last October to December that have again been driving the price of bitcoins suddenly ever higher than before. Of course there will be large up and down waves until Bitcoin's price level finally matures at what is thought to be much higher levels than ever before. And most likely not for many years to come will Bitcoin's price levels finally mature at much greater pricing levels and with much less volatility in pricing. This is simply the inherent deflationary nature of Bitcoin that is driving it's pricing levels ever higher as more adoption (demand) is had.
As for his questions to ask the Exchanges? That's exactly why I started this thread here, and why I linked his article here, and it's source where his articles are often linked from.
**************************************************************************
Every Exchange has a fiduciary duty to maintain best security practices for their customers.
**************************************************************************
From here out it's best that every exchange make this their absolute highest priority, even if the costs of doing so mean greatly increased fees. After all it's much better to pay more, and receive more, rather than end up with less than one has hoped and planned for.
I will rally around every Exchange that adopts Best Security and Accounting Practices for Bitcoin, and for their Fiat accounts too of course. And I wont be supporting the other ones that don't focus on this as their most important priority, nor any Exchanges that decide it's not best to make public all their overall practices and habits to assure their customers, and for public peer review of such practices.
This entire industry must make Security it's most important priority. I wont drudge up the past, but suffice it to say that finally I believe we're all about to witness much stronger security measures across the entire spectrum. Either that, or broad failure, much like what we all just witnessed.
As for the customers: don't store crypto online anywhere, or anywhere on your PC either. Leave it offline until your ready to spend or trade it. And only keep what you will very soon spend or trade online or on your PC/Phone.
As for Developers: It is time to start Signing all those Crypto-Qt Wallet Clients with Digital sigs so that a lay person can simply right click the exe, then click Digital Signatures tab, then highlight the name of signatory, and then simply click Details tab to see that "This digital signature is OK". Asking them to do more than this, and at most also explaining an easy method of checking the SHA256 Hash is all we can expect of the average user. At least until PGP sigs are much easier to verify, and that too needs to be a top priority.
Also all cryptocurrency sites need to be https (ssl) secured, especially all download sites. And stay as far away from the Mega download site as possible (strong hint...). If they want myself and others to take their cryptocurrency seriously that's step 1. Developers and Admins need to lock all this down securely and swiftly, without any more excuses and delays.
It's up to all of us to make this work. We are half way there, with many tough, brutal lessons finally learned. Let's all learn from those and not repeat them anymore. In a short 1 to 2 years time all things related to Bitcoin Security, Spending, and Trading, will have greatly improved. Until then we are still in Beta.
This Decentralized Revolution wont be stopped, but it may be delayed by outside forces if we let it. Let's not allow that to be the case. Instead it's time to get even busier so that soon enough things will be much better for everyone.
Lastly, I keep signing almost every post the way I do because I keep trying to wake up those that are still seemingly sleep walking into the future.
Caveat emptor - let the buyer beware
