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Author Topic: BTC-E.COM NICE RECOVERY FROM THE HACK! =)  (Read 50573 times)
proudhon
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July 31, 2012, 02:12:26 PM
 #321

Everybody, please, repeat after me:

"The bitcoins I have on an exchange are not my bitcoins. They are an obligation of the exchange to pay me back said number of bitcoins."

If the exchange gets hacked and loses its bitcoins, it cannot meet that obligation, and you will have no bitcoins to withdraw. Hence, they were not and are not your bitcoins, they belonged to the exchange.

It's like having money in a bank without deposit insurance. It's not actually your money, it's a bank's obligation to pay you back the money on demand. Will they be able to meet that obligation? Who knows.
They are still your bitcoins, because they can be used as them on demand. That's like saying the money I have at the bank is not my money. Really, all money is just an obligation of someone to pay me back for something.

I don't think you read what he wrote very carefully.  In a simple practical sense, a bitcoin is yours if you control its disbursement.  If an exchange gets hacked and all its bitcoins stolen, and you had bitcoins on the exchange, you no longer have the ability to disburse those bitcoins.  In other words, they're not yours anymore.

And, as runeks pointed out, there's a big difference between money in a BTC exchange and money in a bank.  Typically you have some state backed deposit insurance with the later.  There is no such infrastructure in place for bitcoin, and there likely will never be.
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runeks
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July 31, 2012, 02:14:25 PM
 #322

They are still your bitcoins, because they can be used as them on demand.
Tell that to ThiagoCMC.

Really, all money is just an obligation of someone to pay me back for something.
No. Money is not necessarily an obligation. Money is the most fungible commodity in an economy. And just like with every other commodity, no one is obligated to give you anything for the money commodity.

Now, currencies - or money substitutes - are obligations. Traditionally, the dollar was an obligation (of the Federal Reserve) to pay someone back in gold, on demand. The British Pound was an obligation of the Bank of England to pay back the holder of said currency in sterling silver. Neither of these currencies are obligations any longer.
dree12
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July 31, 2012, 02:18:00 PM
 #323

They are still your bitcoins, because they can be used as them on demand.
Tell that to ThiagoCMC.

Really, all money is just an obligation of someone to pay me back for something.
No. Money is not necessarily an obligation. Money is the most fungible commodity in an economy. And just like with every other commodity, no one is obligated to give you anything for the money commodity.

Now, currencies - or money substitutes - are obligations. Traditionally, the dollar was an obligation (of the Federal Reserve) to pay someone back in gold, on demand. The British Pound was an obligation of the Bank of England to pay back the holder of said currency in sterling silver. Neither of these currencies are obligations any longer.
Money is an obligation in the sense that it only has value if people pay you back for it.

I don't like how people tell others that the deposits aren't money, because for practical purposes they are. They aren't risk-free though, but nothing is.
caveden
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July 31, 2012, 02:18:39 PM
 #324

There is no such infrastructure in place for bitcoin, and there likely will never be.

Why do you say so?
I see a demand for deposit insurance in bitcoin world. If nobody has offered that yet is probably because nobody has the skills and money to start one, or those who eventually have the skills (and money) are not aware, or do not believe in, such demand. In any case, this may change.

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runeks
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July 31, 2012, 02:21:59 PM
 #325

Money is an obligation in the sense that it only has value if people pay you back for it.
That's not what an obligation is. Just because something only has value (to you) if people are willing to exchange it for something doesn't make it an obligation. No obligation has been entered into by anyone.

I don't like how people tell others that the deposits aren't money, because for practical purposes they are. They aren't risk-free though, but nothing is.
No, for practical purposes, the bitcoins you have at BTC-e right now are not money. They are numbers on a website called btc-e.com.
dree12
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July 31, 2012, 02:23:09 PM
 #326

Money is an obligation in the sense that it only has value if people pay you back for it.
That's not what an obligation is. Just because something only has value (to you) if people are willing to exchange it for something doesn't make it an obligation. No obligation has been entered into by anyone.

I don't like how people tell others that the deposits aren't money, because for practical purposes they are. They aren't risk-free though, but nothing is.
No, for practical purposes, the bitcoins you have at BTC-e right now are not money. They are numbers on a website called btc-e.com.
The bitcoins you have right now are also not money, if you define it that way. They are numbers on your computer.

Also, BTC-E codes were accepted by companies before the hack. These people are (or were) willing to exchange BTC-E codes.
runeks
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July 31, 2012, 02:24:10 PM
 #327

Quote
Новости / Trade is stopped

16:04 31.07.12 from support
Dear users of the Exchange Btc-e.com

The exchange is not going to close. We will refund all losses from our reserves.

Neither the servers nor the database were compromised. There were no SQL injections.

At 04:07 MSK (GMT+4) our LR API Secret Key was compromised. It's 16 uppercase, lowercase letters and digits. They may have bruteforced it for long.

Using the key the hacker imitated LR deposits from many accounts and bought up Bitcoins, Namecoins and Litecoins.

We lost our daily volume, approx. 4500 BTC. The attacker couldn't withdraw more
as most BTC were distributed over several offline wallets.

At 10:30 we restored the database to the state it was at 04:00, right before the attack. All trades after 4:00 are reverted.

People who attempted withdrawals before 04:00 MSK will get their funds withdrawn later today.

For people who deposited BTC, LTC and NMC after 04:00 MSK the funds will be put to their balances before market opens.
We are working on the scripts for this.

If you deposited USD after 04:00 MSK you should send us your login, amount and payment system used by email or PM.

Our plan:

1. The trade will be disabled until we restore the balances to the point before market crash.

2. After that, the trade and deposit/withdrawal will be back on, approx. within 1-2 days.

Icq - 610112128
Skype - btc-e.support
E-mail - support@btc-e.com

https://btc-e.com/news/81
runeks
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July 31, 2012, 02:28:44 PM
 #328

The bitcoins you have right now are also not money, if you define it that way. They are numbers on your computer.
No. Because these numbers I have on my computer are actually exchangeable for something. The numbers on btc-e.com are not.

Quote
Also, BTC-E codes were accepted by companies before the hack. These people are (or were) willing to exchange BTC-E codes.
I imagine that will change very quickly. But if this is the case then you are completely correct, a balance at btc-e.com is a sort of money, just not as widely accepted as bitcoins.

I guess my basic point was that it is an error to view as equivalent bitcoins and a bitcoin balance on an exchange. They are not equivalent. Bitcoinica is, perhaps, a better example of this than BTC-E.
proudhon
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July 31, 2012, 02:39:35 PM
 #329

The bitcoins you have right now are also not money, if you define it that way. They are numbers on your computer.
No. Because these numbers I have on my computer are actually exchangeable for something. The numbers on btc-e.com are not.

Quote
Also, BTC-E codes were accepted by companies before the hack. These people are (or were) willing to exchange BTC-E codes.
I imagine that will change very quickly. But if this is the case then you are completely correct, a balance at btc-e.com is a sort of money, just not as widely accepted as bitcoins.

I guess my basic point was that it is an error to view as equivalent bitcoins and a bitcoin balance on an exchange. They are not equivalent. Bitcoinica is, perhaps, a better example of this than BTC-E.

runeks, I think there's a lot of confusion around here about things like securities, obligations, commodities, currency, money, etc.  You're addressing a nuance that I don't think most people grasp, because a year and half ago I know I didn't.  But I appreciate your effort.  People like you helped me better understand these things.
cryptoanarchist
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July 31, 2012, 02:48:31 PM
 #330

There is no such infrastructure in place for bitcoin, and there likely will never be.

Why do you say so?
I see a demand for deposit insurance in bitcoin world. If nobody has offered that yet is probably because nobody has the skills and money to start one, or those who eventually have the skills (and money) are not aware, or do not believe in, such demand. In any case, this may change.

Modern day deposit insurance is a moral hazard that only exists because the ability to print fiat from nothing exists.

Since bitcoins can't just be created out of thin air, I think it would be very difficult to insure them.
SkRRJyTC
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July 31, 2012, 02:52:07 PM
 #331

There is no such infrastructure in place for bitcoin, and there likely will never be.

Why do you say so?
I see a demand for deposit insurance in bitcoin world. If nobody has offered that yet is probably because nobody has the skills and money to start one, or those who eventually have the skills (and money) are not aware, or do not believe in, such demand. In any case, this may change.

Modern day deposit insurance is a moral hazard that only exists because the ability to print fiat from nothing exists.

Since bitcoins can't just be created out of thin air, I think it would be very difficult to insure them.

And without deposit insurance, depositers are forced to consider the risk of depositing with any third party... isn't that terrible  Tongue
Mike Jones
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July 31, 2012, 02:55:56 PM
 #332

Insuring willful failure only disrupts progress and growth. Deposit insurance will hopefully disappear one day.

Don't you worry about Bitcoin, let me worry about Bitcoin.

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runeks
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July 31, 2012, 03:02:04 PM
 #333

runeks, I think there's a lot of confusion around here about things like securities, obligations, commodities, currency, money, etc.  You're addressing a nuance that I don't think most people grasp, because a year and half ago I know I didn't.  But I appreciate your effort.  People like you helped me better understand these things.
Well you're very welcome. I didn't understand it either one year ago. But bitcoin got me interested in monetary theory and I've read a book on it and seen a lot of talks on the subject, and it's actually not as complicated as many make it out to be. And it's a really fascinating subject.

Money has changed so dramatically over the past 500 years that few people really know what actually constitutes money, in its essence.
Yankee (BitInstant)
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July 31, 2012, 03:05:20 PM
 #334

Trading has resumed: https://bitcointalk.org/index.php?topic=96912.0;topicseen

Bitcoin pioneer. An apostle of Satoshi Nakamoto. A crusader for a new, better, tech-driven society. A dreamer.

More about me: http://CharlieShrem.com
caveden
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July 31, 2012, 03:06:06 PM
 #335

Modern day deposit insurance is a moral hazard that only exists because the ability to print fiat from nothing exists.

Since bitcoins can't just be created out of thin air, I think it would be very difficult to insure them.

I see your point (same of Mike Jones above, I believe).

Yeah, it's probably very difficult to insurance against something that could so easily be a "voluntary failure". Perhaps really impractical.

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caveden
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July 31, 2012, 03:10:06 PM
 #336


This worries me.
Have they figure out how the password leaked?

It definitely was not brute-forced. In the best case, it was "guessed" or "dictionary attacked" if it was not random enough, and then changing it should be enough. But if it has leaked (what I find most likely), and BTC-e doesn't know how it leaked, then the same thing may just happen again.

The platform should not resume its operations before understanding what happened and taking measures for it not to happen again. At least Liberty Reserves deposits and withdraws should be temporarily closed, since that's what leaked.

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July 31, 2012, 03:20:30 PM
 #337

The platform should not resume its operations before understanding what happened and taking measures for it not to happen again. At least Liberty Reserves deposits and withdraws should be temporarily closed, since that's what leaked.

+1

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runeks
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July 31, 2012, 03:30:38 PM
 #338

Insuring willful failure only disrupts progress and growth. Deposit insurance will hopefully disappear one day.
Governmental deposit insurance really is just a symptom of our current monetary system. It follows naturally from government-supported fractional reserve banking. When central banks encourage fractional reserve banking, we cannot have a stable monetary system without deposit insurance. Some would argue that's a case for deposit insurance. I would argue it's a case against centrally controlled fractional reserve banking.

Private, voluntary insurance of deposits at private banks I can see nothing wrong with.
mc_lovin
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July 31, 2012, 03:35:17 PM
 #339


This worries me.
Have they figure out how the password leaked?

It definitely was not brute-forced. In the best case, it was "guessed" or "dictionary attacked" if it was not random enough, and then changing it should be enough. But if it has leaked (what I find most likely), and BTC-e doesn't know how it leaked, then the same thing may just happen again.

The platform should not resume its operations before understanding what happened and taking measures for it not to happen again. At least Liberty Reserves deposits and withdraws should be temporarily closed, since that's what leaked.
Just in case, I would change my password if I re-used one from a BTC-e account.

cryptoanarchist
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July 31, 2012, 03:44:02 PM
 #340


This worries me.
Have they figure out how the password leaked?

It definitely was not brute-forced. In the best case, it was "guessed" or "dictionary attacked" if it was not random enough, and then changing it should be enough. But if it has leaked (what I find most likely), and BTC-e doesn't know how it leaked, then the same thing may just happen again.

The platform should not resume its operations before understanding what happened and taking measures for it not to happen again. At least Liberty Reserves deposits and withdraws should be temporarily closed, since that's what leaked.

I'm no expert, but I don't think it was "guessed" or "dictionary attacked" because it wasn't that kind of password. An API key would just be a random string, like a btc address. (like "wE7rtGvs19EImfY5")
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