A consensus network, or how to stop a big lose (fork it!)

[Serge]

The problem is that 850k is more than the whole demand of bitcoins in all the exchanges combined. Actually I think it's almost three times the current demand. We don't know the intentions of this bad actor, the only thing we know (in our universe of discourse...) is the amount stolen. The bad actor could manipulate the market for years, for example one could mix those coins and sell otc just small fractions (best case scenario), or send everything to one single address, write some scary message (like "in one hour I will drop 100k in BitStamp") and sign it, get profit from shorts, or talk with some external entity who hates Bitcoin and make some real deals with them. If I were a big bad bank I would try to find the hacker right now, create an alt-coin, destroy bitcoin's economy with occasional drops, let people speculate about future drops.

it looks like either you're full of fear yourself or trying to spread fear in 'masses'.

you have no idea what the real true demand is at any price point below current, you only see demand that is on display on order books. at the very worst or best, depending how one looks at it, 850k btc priced at $0.01 for instance costing $8500 would be snapped in an instant.

that's your worst case scenario which btw has close to 0 chances to play out in reality

[btcxyzzz]

In the light of possible collapse of value of Bitcoin, what do you people think it will happen to strongest alt-coins out there: LTC, PPC... Would they suffer the same fate, or they will shoot up so hard?

[Buffer Overflow]

In the light of possible collapse of value of Bitcoin,

Why would that happen? Has network security been broken or something? Are transactions not being processed?

[BurtW]

In the light of possible collapse of value of Bitcoin, what do you people think it will happen to strongest alt-coins out there: LTC, PPC... Would they suffer the same fate, or they will shoot up so hard?

It is simple.  If you believe this buy them.  If you are right you profit.  If you are wrong then not so much.  What does the opinion of random people have to do with it?  Make your own decision and go with it.

[pera]

The problem is that 850k is more than the whole demand of bitcoins in all the exchanges combined. Actually I think it's almost three times the current demand. We don't know the intentions of this bad actor, the only thing we know (in our universe of discourse...) is the amount stolen. The bad actor could manipulate the market for years, for example one could mix those coins and sell otc just small fractions (best case scenario), or send everything to one single address, write some scary message (like "in one hour I will drop 100k in BitStamp") and sign it, get profit from shorts, or talk with some external entity who hates Bitcoin and make some real deals with them. If I were a big bad bank I would try to find the hacker right now, create an alt-coin, destroy bitcoin's economy with occasional drops, let people speculate about future drops.

it looks like either you're full of fear yourself or trying to spread fear in 'masses'.

you have no idea what the real true demand is at any price point below current, you only see demand that is on display on order books. at the very worst or best, depending how one looks at it, 850k btc priced at $0.01 for instance costing $8500 would be snapped in an instant.

that's your worst case scenario which btw has close to 0 chances to play out in reality

I don't understand your point. Obviously when I said "demand" I was referring to the bids in the order books.
If the bad actor sells only 10% of its loot in BitStamp the price would go to $1. Could people start buying coins like crazy? of course yes, but would they do such thing when someone with obvious bad intentions is dropping massive amount of coins? I don't know.

The reality (in our universe of discourse) is that now there is a single entity with a lot of power over the economy. I am not trying to spread FUD, I am just trying to analyze this hypothetical situation.

What I now understand is that Bitcoin can be perfect, but our ecosystem is far away from being perfect. We took an amazing distributed technology and we are basing its economy on centralized services (exchanges, virtual wallets, mining pools). While some of you may think "fuck Mt.Gox, I have never used them, this doesn't affect me" the reality is that we are all tied together.

[T.Stuart]

All things considered I don't know whether or not this situation should warrant a fork - I'm inclined to hope that the idea would at least be discussed seriously by the community and devs although having been Goxxed I must be somewhat biased - but surely the possibility should not be excluded on principle.

On the contrary, given consensus it should in principle always be an option - to nullify huge fraud, criminal manipulation or catastrophic loss on behalf of the majority of actors in the ecosystem.

I can't see why this is seen as a dangerous precedent. Most of the people saying this are also probably happy to say that Bitcoin sets a dangerous precedent to the current financial hierarchy. It's all about setting groundbreaking precedents.

[BurtW]

I just wish these folks who start all these "let's fork the blockchain because ______" threads would stop talking about forking for their favorite reason du jour and just get off their ass and do it.

I for one can't wait to cash in all the alt coins created for me and buy real Bitcoins with the proceeds.

I have a suspicion that the reason that it is always just a bunch of hot air and no on every actually does it is because all these "fork the chain" folks know that their alt forks are doomed out of the gate and it would be a total waste of their time to even try it.

[jl2012]

I just wish these folks who start all these "let's fork the blockchain because ______" threads would stop talking about forking for their favorite reason du jour and just get off their ass and do it.

I for one can't wait to cash in all the alt coins created for me and buy real Bitcoins with the proceeds.

I have a suspicion that the reason that it is always just a bunch of hot air and no on every actually does it is because all these "fork the chain" folks know that their alt forks are doomed out of the gate and it would be a total waste of their time to even try it.

Yes, those who want to fork please do it yourself, and convince miners, investors, and merchants to accept your bailout coin.

[BurtW]

I don't understand your point. Obviously when I said "demand" I was referring to the bids in the order books.
If the bad actor sells only 10% of its loot in BitStamp the price would go to $1.

The point is that you are wrong and the price would not go to $1.  Not even close.  

First, there are a lot of orders, a lot of large orders, that are not listed in the public order books that you are using.

Second, many people have large sums of USD and other currencies at the exchanges that are not currently committed to orders, it is just sitting there not in the order book.  I personally, and many others, have a large stash of cash at the exchanges just waiting for a meltdown.  In the case of a meltdown we jump in and buy from all the panic sellers.

You cannot use the order book to make any realistic assumptions about where the price would go in a large sell off so please stop trying.

[Buffer Overflow]

So what you lot going to call this new fork? Obviously you can't call it Bitcoin, as Bitcoin's transactions are irreversible, which is why we trust it, hence giving it value.

[jl2012]

I don't understand your point. Obviously when I said "demand" I was referring to the bids in the order books.
If the bad actor sells only 10% of its loot in BitStamp the price would go to $1.

The point is that you are wrong and the price would not go to $1.  Not even close.  

First, there are a lot of orders, a lot of large orders, that are not listed in the public order books that you are using.

Second, many people have large sums of USD and other currencies at the exchanges that are not currently committed to orders, it is just sitting there not in the order book.  I personally, and many others, have a large stash of cash at the exchanges just waiting for a meltdown.  In the case of a meltdown we jump in and buy from all the panic sellers.

You cannot use the order book to make any realistic assumptions about where the price would go in a large sell off so please stop trying.

And even the price is going to $1, this is not a reason to fork.

[BurtW]

So what you lot going to call this new fork? Obviously you can't call it Bitcoin, as Bitcoin's transactions are irreversible, which is why we trust it, hence giving it value.

RollbackCoin, GoxCoin, BailoutCoin, ForkingCoin (because once you do this once you will do it again and again) all come to mind.

[jl2012]

So what you lot going to call this new fork? Obviously you can't call it Bitcoin, as Bitcoin's transactions are irreversible, which is why we trust it, hence giving it value.

Call it goxcoin or bailout coin, and will be traded on bitcoinbuilder.com

[pera]

So what you lot going to call this new fork? Obviously you can't call it Bitcoin, as Bitcoin's transactions are irreversible, which is why we trust it, hence giving it value.

You are wrong. Transactions are reversible but it's "computationally impractical" to do so, though in some extreme situations the network agrees that it's better for the majority to reverse/fork the blockchain. As we already discussed in this thread last year a technical problem within old clients "splitted" the network in two, the longest chain was abandoned by the consensus of the miners in order to join the network and give time to people to update their clients. IIRC the Bitcoin Foundation retributed bitcoins for those who lost money.

So we are using a hard-fork of the blockchain, did we changed the name of Bitcoin? nop.

If we already hard-forked the blockchain for technical (and in many ways economical) reasons, why we shouldn't consider to fork when some potential catastrophic situation could destroy our economy?

btw I am amazed that some people here thinks that a currency could work with one bad actor owning 40% of the market cap.

[Serge]

how is 850k of 12+million of existing coins is a 40% "market cap"? it looks to me less than 10% and less than 5% of all 21 million coins

as i said earlier back on first page of this thread if we do this rollback by forking, lets also roll back all other stolen, missing and lost coins although even from simple, pure logic perspective that task is impossible, technically doable but realistically no way in hell.   
please provide one single reason why mtgox missing funds are worth of blockchain forking over any other hack, theft, loss, etc? there are some large instances of btc's disappearing in bad faith in the past, not as big as 850k but nonetheless pretty substantial, so why 850k deserves a fork in your view and others do not?

IF by some weird strange accident we end up with a fork over this issue here's the outcome that will happen: fork #1: genuine authentic Bitcoin blockchain; fork #2: all those missing 850k mtgox coins.

btw we don't know anything about missing 850k, i'm not sure how you came to conclusion it is a single bad actor as being an already known fact.   besides, by your logic, if this bad actor comes to exchanges - it will be pretty easy for law enforcement to track him/her up and lock up while freezing these funds at entered exchanges.

[rikkejohn]

So what you lot going to call this new fork? Obviously you can't call it Bitcoin, as Bitcoin's transactions are irreversible, which is why we trust it, hence giving it value.

You are wrong. Transactions are reversible but it's "computationally impractical" to do so, though in some extreme situations the network agrees that it's better for the majority to reverse/fork the blockchain. As we already discussed in this thread last year a technical problem within old clients "splitted" the network in two, the longest chain was abandoned by the consensus of the miners in order to join the network and give time to people to update their clients. IIRC the Bitcoin Foundation retributed bitcoins for those who lost money.

So we are using a hard-fork of the blockchain, did we changed the name of Bitcoin? nop.

If we already hard-forked the blockchain for technical (and in many ways economical) reasons, why we shouldn't consider to fork when some potential catastrophic situation could destroy our economy?

btw I am amazed that some people here thinks that a currency could work with one bad actor owning 40% of the market cap.

I tend to agree with you. It's impractical of course, and it won't happen. The principle is sound enough, though. But as far as I understand it, Gox swiped the coins over a couple of years. Maybe it siphoned coins every few weeks or so. It wouldn't surprise me if there were also others behind it (Karpeles as one of a group, perhaps coerced even).

It amazes me that people still place such moral value in BTC actually. It's hardly how I view a free market, more a "war of all against all". Ever since it hit $30 it has been insane, with the few controlling the masses, who in turn are terrified that the masses are cleverer than them and are able to turn the tables.

I wonder how many of the so-called Whales got burnt in the last pump. I am guessing the hierarchy changed somewhat even before the Gox fiasco.

But anyway, let's move on, it's probably the government's fault at the end of the day. That Obama guy, plus bankers and financiers, masterminded the whole thing. You see they're scared of bitcoin ..... lol

[leopard2]

such a fork is only debatable if a large amount of coins were lost (e.g. if  a government destroys coins from a seized wallet etc.)

the stolen coins still exist, and how would you fork those, huh? you could only create some more coins, so that there are not 21 000 000 coins but 21 800 000, and then you have a currency that is increasing its money supply everytime there is a major theft.

hmmmm....reminds me of bank bailouts 

[Buffer Overflow]

It amazes me that people still place such moral value in BTC actually. It's hardly how I view a free market, more a "war of all against all".

Bitcoin is free. As in speech, not beer.

You are free to fork the blockchain however you choose.
You are free to rollback the blockchain to whatever block height you choose.

But remember; others are free with the choice of using your fork or not.

Can't get much more free than that.

[rikkejohn]

It amazes me that people still place such moral value in BTC actually. It's hardly how I view a free market, more a "war of all against all".

Bitcoin is free. As in speech, not beer.

You are free to fork the blockchain however you choose.
You are free to rollback the blockchain to whatever block height you choose.

But remember; others are free with the choice of using your fork or not.

Can't get much more free than that.

Nothing is free of consequences, and bitcoin is not even free to own or compete to own. It currently costs $530, making more than half the world not at liberty to purchase it. They don't even have the liberty to open bank accounts and verify their identities to current standards asked by the exchanges in this free trade paradise.

"Free" is such an abstract concept anyway, especially when it gets onto trade.

NB: I don't want to fork the chain. I said the principle was fine but implied the timeframe was too wide.

[thelema93]

In the light of possible collapse of value of Bitcoin, what do you people think it will happen to strongest alt-coins out there: LTC, PPC... Would they suffer the same fate, or they will shoot up so hard?

Definitely LTC. Buy LOTS while you still can!