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Author Topic: PC World Claims Counterfeit Bitcoins  (Read 8573 times)
cmh
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July 02, 2011, 07:25:48 AM
 #41

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Nah, I wouldn't even go that far.  Since the bitcoins don't even have a fakechain block they can't be fake.  All they are is someone saying they have more then they do.  When it comes time to deliver all they have is air.  They don't exist.  Nada, nothing.

Is there any reason an exchange operator couldn't create an account and sell a bunch of "fake" bitcoins? By "fake" I mean just setting bitcoin_balance in the database to 1,000,000 without actually having any bitcoins. As long as they stayed on the exchange everything would be fine. That is until they didn't have enough "real" bitcoins to cover transfers. I don't believe that's happening, but I'm just trying to convince myself for sure.
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July 02, 2011, 08:58:38 AM
 #42

This is a clear example of low quality press, pcworld which is supposed to be a technical magazine proves that it is not, it tries to create news that sell at the expense of lying, most low tech readers will believe the article.

There is no such thing as a fake bitcoin, a counterfit bitcoin does not exist, the only way a counterfeit could exist is if someone discovered a flaw in the bitcoin algorithm and up to present time it has not happened, and it is not likely that it will happen since bitcoin has a few years in existance and it is open source.


So to make things clear there are no phony or fake bitcoins, if you have a bitcoin it is the real thing.

What happens is that the database of a bitcoin exchange got compromised, and a thief stole bitcoins, the bitcoins that the thief stole were the real thing, however it appears that he altered the entry on the database for more bitcoins, that does mean a bitcoin  can be fake, since in the wallet is where the bitcoins are actually stored and those are real.

It is just bad press, since the average person will think bitcoins can be fake, when in reality they can not.
The average person will think that the security of the bitcoin protocol has been compromised when in reality it is strong as ever, the only thing that was compromised was the security of the exchange and that has been fixed and improved.

For example if someone writes a check without funds no one in their right mind will say that the dollar has been hacked and it is faked, only the entry in the checkbook is fake not the dollar, same with bitcoin, if a microsoft virus steals your bitcoins it is not the bitcoin protocol that is insecure it is your windows pc.

The article mentions  "the price of the online currency crashed, creating a buying frenzy", not true it was a hacker selling massive amounts of bitcoins and therefore bought the price down at the exchange, the price of bitcoin as a whole remained stabled at other exchanges at around 15 to 17 dollars, the buying frenzy was created when the hacker sold massive amounts of bitcoins, but it was only at the exchange, and it was because of a hacked account. The bitcoin currency never crashed, saying otherwise is misleading.

It is well known that a thief will sell what he/she steals below market price after all it costed him/her 0.

People do not say the dollar crashed because a bank got robbed, why create this nonsence with bitcoin, I got a feeling that the bitcoin got past the step where it was being ignored, now it is being attacked and using low quality press for that, after the bitcoin has a large percent of the market it will no longer be atacked, the same persons that talk bad about bitcoin, they will be saying that they new all along the bitcoin was going to be a great thing.

I used to be a cryptographer, and any good cryptographer will tell you the same thing there are no fake bitcoins. Someone can write an entry in a database saying they have 30 million bitcoins or on a pice of paper, so what those are not bitcoins, in the case of the dollar in can be countefeit, but countefeit for most people means something that looks like the real thing but it is not, not an entry on a database or something very different like the liberty dollar.

When I say the bitcoin can not be fake or phony I am talking in terms of computer science, math, and cryptography, under the law anything is possible some day some legislator could by definition define the bitcoin as counterfeit money, but at the same time on some other country it could be defined as legal tender money, so under the law anything is possible, but not under math, computer science, and cryptography which are sciences clearly and well defined.

By law the liberty dollar is counterfeit money, but using math it is not, the weights are different, the metals are different, a simple computer program or even a 3 years old could clearly see the difference between a quarter and a liberty dollar, but the real reason it was that it was not convenient to the government to have a competing currency.

The enemy of the bitcoins are the bankers, the bad press, and ironically the government.

The good news, once bitcoins survives the period of attacks by bankers, the bad press, and some governments, it will then be highly recognized by everyone, then the banks, the bad press, and the governments will be saying good things about the bitcoin, and its value will skyrocket by then, we will then speak of the milibitcoin.

For those of us that believe in the strength of the bitcoin we will be rewarded later, just like the early adopters have been rewarded already.






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July 02, 2011, 09:06:53 AM
 #43

did we get to "...then they fight you..." stage already?


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FlyingFlapjack
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July 02, 2011, 10:01:07 AM
 #44

Is there any reason an exchange operator couldn't create an account and sell a bunch of "fake" bitcoins? By "fake" I mean just setting bitcoin_balance in the database to 1,000,000 without actually having any bitcoins. As long as they stayed on the exchange everything would be fine. That is until they didn't have enough "real" bitcoins to cover transfers. I don't believe that's happening, but I'm just trying to convince myself for sure.

You're closing in on the idea that was probably the most significant to the history of banking after the invention of money itself.

Fractional reserve banking.

To the extent that an exchange like MTGOX is being used as a place to just park funds, they are in a position to do that. They have both a cash reserve and a BTC 'reserve.'

For example, they could invest some of the cash deposits and earn interest. Some of their depositors money probably already sits in something like a savings account generating interest for MTGOX. A somewhat more aggressive approach would be buying things like bank CDs with a slightly higher interest rate, which could be sold in a short amount of time if they needed the cash to cover depositors demanding their funds.

They might also explore the idea of making 'Bitcoin loans' but that is probably a bit too ridiculous for them to consider at this moment, given all that would have to be involved in the process for it to work, and that they clearly have their hands full for the time being.

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FlyingFlapjack
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July 02, 2011, 10:10:23 AM
 #45

did we get to "...then they fight you..." stage already?

Sort of...

At the very least,  as soon as sites like Wall Street Journal and Forbes were aware of BTC, what the average user here needs to understand is that the very very serious money sharks were aware of BTC.

Some of them were aware before those articles came out, and many many others became aware because of those articles.

Even before the mid-May explosion in interest, if you look at google trends, you see that San Francisco was very hip to BTC. While there is possibly some connection to drugs and prostitution, San Francisco is also a major banking center.

Fighting it? Mayyyybe. Exploiting it? Expect that. This particular PC mag article is probably just some overworked and underpaid content farmer who has a word count to hit and is too overworked and underpaid to give a damn at that detailed a level. The MTGOX attack/hack is more suspicious to me because it happened through their auditor.

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Vladimir
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July 02, 2011, 10:18:28 AM
 #46

I now understand that "auditor" is Jed and somehow his account got compromised either via SQL injection and brute force attack on his password hash or otherwise. At least I think it is what they tried to say (or not to say) in the 'press release'.


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