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Author Topic: If the bitcoin ledger is available to all..  (Read 973 times)
mmsen
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September 15, 2014, 11:45:02 AM
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...then how did the Mtgox money vanish into (seemingly) thin air?

Is the ledger incomplete? Is it possible to keep transactions 'off the book' so to speak?

Please help this n00b to understand what happened.
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JJB
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September 15, 2014, 11:51:35 AM
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The bitcoins that are on the exchnages are usually off the chain transactions ie you send the money and your account gets credited, but those coins will go somewhere else like a hot or cold wallet so you essentially just have an IOU.
mmsen
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September 15, 2014, 12:02:20 PM
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The bitcoins that are on the exchnages are usually off the chain transactions ie you send the money and your account gets credited, but those coins will go somewhere else like a hot or cold wallet so you essentially just have an IOU.

That sounds like a recipe for disaster - what measures were put in place to avoid fraud? If any? That is to say - why did so many people feel comfortable trading with/within such an entity?
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September 15, 2014, 12:06:44 PM
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The bitcoins that are on the exchnages are usually off the chain transactions ie you send the money and your account gets credited, but those coins will go somewhere else like a hot or cold wallet so you essentially just have an IOU.

That sounds like a recipe for disaster - what measures were put in place to avoid fraud? If any i.e. why did so many people feel comfortable trading with/within such an entity?

Well I think that was the problem - a fraud was committed. People were buying and selling coins that didn't exist any more. Theres not much difference between this example and the banks though. They lend out money they don';t have for example.
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September 15, 2014, 12:21:31 PM
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What is, in simple words, the bitcoin ledger?
Towlie
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September 15, 2014, 12:25:21 PM
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What is, in simple words, the bitcoin ledger?

lol the blockchain is the bitcoin ledger.
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September 15, 2014, 12:33:16 PM
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...then how did the Mtgox money vanish into (seemingly) thin air?

Is the ledger incomplete? Is it possible to keep transactions 'off the book' so to speak?

Please help this n00b to understand what happened.

mt gox was selling bitcoins they didn't have, therefore those coins never existed on the blockchain.

but the mtgox bitcoins they did have, are still on the blockchain, however mt gox lost the private keys or the private keys got stolen.

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September 15, 2014, 12:43:35 PM
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but the mtgox bitcoins they did have, are still on the blockchain, however mt gox lost the private keys or the private keys got stolen.



Can the private keys not be traced though? If someone spends the private keys wont it show on the blockchain where they went?
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September 15, 2014, 02:35:00 PM
Last edit: September 15, 2014, 02:45:04 PM by BurtW
 #9


but the mtgox bitcoins they did have, are still on the blockchain, however mt gox lost the private keys or the private keys got stolen.



Can the private keys not be traced though? If someone spends the private keys wont it show on the blockchain where they went?
If they were stolen then they have been mixed and are not traceable.

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September 15, 2014, 03:26:08 PM
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What is, in simple words, the bitcoin ledger?

The bitcoin ledger is the blockchain (not the website blockchain.info, but the chain of blocks from the genesis block 0 to right now block 320828).

It records all the on-chain bitcoin transactions starting from the birth of bitcoin.

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September 15, 2014, 03:31:08 PM
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It is also of little value to know the addresses involved in a transaction. One can see that address A sent to address B, but who they are and the reason the transaction happened is unknown. The ledger is basically anonymous.

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September 15, 2014, 04:10:19 PM
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The bitcoins that are on the exchnages are usually off the chain transactions ie you send the money and your account gets credited, but those coins will go somewhere else like a hot or cold wallet so you essentially just have an IOU.

That sounds like a recipe for disaster - what measures were put in place to avoid fraud? If any? That is to say - why did so many people feel comfortable trading with/within such an entity?

Many people felt comfortable leaviing bitcoins in their Mt Gox accounts because they were unaware of all the troubles that Mt Gox was having.

Anyway, the practice is common. For example, you don't really own any of the shares in your stock broker account. They are owned by the broker.

It is also necessary. Exchanges could not function efficiently if trades went through the block chain.

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