Stamp hot wallet problem?

[N12]

1: They need to prove right now how much money they have in cold storage
2: Bitstamp needs to be actually audited (by financial professionals) on a regular basis in the future
3: IMPLEMENT MULTI-SIGNATURE FOR WITHDRAWALS

If 3 doesn't happen, this will keep happening forever. We have the tools, but we haven't forced our complacent, amateurish, borderline criminal exchanges to adopt them.

It's time to pressurize them.

[Bitalo_Martin]

there are exchanges like bitalo.com out there that do not take control over the coins at all but have user-side generated keys that are stored only in encrypted form on the servers, combined with full multi-signature wallets and backup transaction so that you can get the coins back, even when the site loses all data or goes completely offline.

People just need to use it :-)

[N12]

there are exchanges like bitalo.com out there that do not take control over the coins at all but have user-side generated keys that are stored only in encrypted form on the servers, combined with full multi-signature wallets and backup transaction so that you can get the coins back, even when the site loses all data or goes completely offline.

People just need to use it :-)

Good initiative, thanks for showing us that this can work, and illustrating how irresponsible and borderline criminal established exchanges are for not adopting such practices.

Think about what Bitstamp have been working on instead: A fancy chart UI for trading and an Android app. Meanwhile, they can't even ensure or prove that cold wallet coins aren't lost.

[hgmichna]

I believe Bitstamp will sort this out. …

Does that remind me of a posting around the beginning of 2014? Only then somebody wrote, "I believe Mt. Gox will sort this out."

[podyx]

I have half my stash on stamp...

Should I be worried?

[N12]

I believe Bitstamp will sort this out. …

Does that remind me of a posting around the beginning of 2014? Only then somebody wrote, "I believe Mt. Gox will sort this out."

Those criminals need to prove they have cold wallet funds pronto.

[akujin]

Buying stamp coins for $10/BTC

[seleme]

But the fact we had a crash just before Stamp announced this is very, very suspicious.

[hgmichna]

But the fact we had a crash just before Stamp announced this is very, very suspicious.

But what could it mean? Some odd thoughts:

• Bitstamp speculated on a rising bitcoin price with their clients' money. The crash came out of nowhere, and they had to cover or went bankrupt altogether. This means the crash was the cause, the Bitstamp failure was the consequence.
• Bitstamp knew they had a problem and speculated on falling prices after they would tell the world. They sold lots of their clients' bitcoins, then let the bad news leak. Then they bought them back at the lower price, driving the price back up to what it is now. This means the Bitstamp failure was the cause, the crash was the consequence.

I admit, these are wild conspiracy theories. I do not actually believe in either of them just yet. But everything is possible with bitcoins.

We have to take into account that the Bitstamp failure lowers their reputation. Clients will flee from Bitstamp. The only thing they can do to mitigate that is to get everything up and running again very quickly and be very open with information.

[marvinrouge]

But the fact we had a crash just before Stamp announced this is very, very suspicious.

More volume = more BTC to steal in hot wallet. Simple.

[p4n]

Stamp didn't have the initiative yesterday, neither in the downfall or in the upwards bounce. That doesn't make sense.

[Diabolicus]

I have half my stash on stamp...

Should I be worried?

No, the other half at MtGox is completely safe!

[Cablez]

Is the Bitstamp hotwallet adress/es known so others can follow the coins?  Do they make it public?



As an aside, where can one find that Bitstamp depth sum chart on the first page?

[Wandererfromthenorth]

As an aside, where can one find that Bitstamp depth sum chart on the first page?

Here:

http://coinsight.org/bitstamp

[MrTeal]

Is the Bitstamp hotwallet adress/es known so others can follow the coins?  Do they make it public?



As an aside, where can one find that Bitstamp depth sum chart on the first page?

https://blockchain.info/address/1L2JsXHPMYuAa9ugvHGLwkdstCPUDemNCf

[Cablez]

Thank you both for your help. 

[ChuckBuck]

Unreal start to 2015.  

Not saying it's going to be Gox 2.0 where people lose their funds, and the exchange operator just up and leaves, but just the sentiment.

Things like this shouldn't happen to a major exchange.  Period.  Leave a bad taste to the community and it's supporters.

Just unreal that 2 years in a row, 2 of biggest Bitcoin exchanges get compromised.  This one may not be from seedy operator at the top, but just the fact it happened, hurts.

Not trying to spread FUD or giving up or anything, but this piece of news is very disappointing, to say the least.

[hgmichna]

Unreal start to 2015.  

Not saying it's going to be Gox 2.0 where people lose their funds, and the exchange operator just up and leaves, but just the sentiment.

Things like this shouldn't happen to a major exchange.  Period.  Leave a bad taste to the community and it's supporters.

Just unreal that 2 years in a row, 2 of biggest Bitcoin exchanges get compromised.  This one may not be from seedy operator at the top, but just the fact it happened, hurts.

Not trying to spread FUD or giving up or anything, but this piece of news is very disappointing, to say the least.

This should make it clear to everybody that the exchanges are bitcoin's Achilles heel.

As long as bitcoin is still young, we need exchanges to get in and out of bitcoin. If the exchanges keep losing or stealing our money, bitcoin itself is dead.

[raid_n]

there are exchanges like bitalo.com out there that do not take control over the coins at all but have user-side generated keys that are stored only in encrypted form on the servers, combined with full multi-signature wallets and backup transaction so that you can get the coins back, even when the site loses all data or goes completely offline.

People just need to use it :-)

Good initiative, thanks for showing us that this can work, and illustrating how irresponsible and borderline criminal established exchanges are for not adopting such practices.

Think about what Bitstamp have been working on instead: A fancy chart UI for trading and an Android app. Meanwhile, they can't even ensure or prove that cold wallet coins aren't lost.

You do realize that a multi-signature address on an exchange involves other issues that greatly impact usability as an exchange
Multi signature means both you and the exchange need to agree for funds to be spent. If the exchange is compromised in a way that does not let them use their own keys your funds will still be stuck.

Multi-sig cold storage on exchanges would be a neat feature for added trust but it would make a lot of things more complicated (try filling up a hot wallet from cold storage if you require the signatures from different users. You'd need a whole new scheme where a part of the cold wallet is still owned by the exchange which kind of defeats the whole point).

The bottom line is that if you want to be able to make fast trades in both directions (usd <-> btc)  you will have to place trust in the system to some degree because the blockchain can't help you here.

I would actually argue that currently for the majority of users it is best that an exchange handles their funds rather than sharing that responsibility (if you lose your key(s) for a multisig address on an exchange the funds are basically gone).

Transparency on how cold storage is implemented however is of prime importance. We'll see what bitstamp has to say soon and if they have done their job remotely well the damage should be minimal.

Btw it is clear that people can't withdraw if the hot wallet might be compromised. If I were running the exchange that would be my first reaction too. Stop all movements of funds until it is clear what is safe and what is not.

[N12]

Satoshi created a currency unit without a central party being necessary to prevent unit duplication.

And you want to tell me it's impossible for centralized exchanges to build a clever system that enables users to have some form of control over their trading funds? Well, perhaps it is.

Yet our bitcoin exchanges  miss other things too that could alleviate theft and fraud. Lack of audits, insurance, ...

Luckily, it's only a matter of time until we'll be able to safely trade Bitcoin on traditional brokers via ETFs. Until then, we'll have to cope with this amateur hour.