Bitcoin Exchange Mt.Gox Suffers Serious Attack, Instawallet Offline

Bruce66423 writes "The BBC reports that Mt.Gox, the main exchange dealing with Bitcoins, has been attacked, and other resources are off line. A scary reminder of how insecure ALL money is in the computer age..." Also at TechWeekEurope. A message at bitcoin storage service Instawallet's site begins "The Instawallet service is suspended indefinitely until we are able to develop an alternative architecture. Our database was fraudulently accessed, due to the very nature of Instawallet it is impossible to reopen the service as-is."

Re:BitCoin apologists

[Laser_47]

That isn't a problem with the BitCoin protocol, but Instawallet's website.

Re:A reminder of how insecure ALL money is?

[Wonko the Sane]

Those depositors were generally not "people in Cyprus" but rather "people in Russia with money in Cyprus".

No, the Russians were all tipped off ahead of time, and were able to withdraw their money via overseas branches that remained open during the freeze in Cyprus. The only people who were affected were regular people and small businesses.

Old news?

[prisoner-of-enigma]

This is semi-old news. Mt.Gox has been under attack for at least a couple of days but they appear to be handling it pretty well. I haven't noticed any problems with using them at least. Trades might be taking a tad longer but nothing big that I can see.

Instawallet, on the other hand, crumbled at least a day or two (I read about it early yesterday morning). Their problem had nothing fundamental to do with BTC but more to do with the unique way Instawallet did business with (I believe) greater anonymity. The whole "we gotta rearchitect this thing" press release was that their fundamental way of doing business made them uniquely targetable by fraudsters, thus they gotta figure out something new.

Re:Dwolla Also Hit

[Kiwikwi]

If you'd get off your horse for a moment, you might realize that MtGox offers two-factor authentication and has for a long time.

For those of you too lazy to RTFA

[slashmydots]

Hackers DDOSed just the website itself to scare people into a sell-off then bought up the cheaper coins and waited for the price to rise again. This has nothing to do with the bitcoin network or protocol, zero coins were stolen, and no security was breached at MTGox. So everyone above me, STFU and read the article or this before talking out your ass about bitcoins.

Re:Is it?

[Archangel Michael]

This wasn't a hack of the database. It was a DDOS attack. The database was not at risk in this case. People who don't understand technology need to not talk about it like they do.

And unlike most other exchanges, I can actually hold on to my own bitcoins, and submit to the exchange only when I want to trade them for other currencies.

Re:Full faith and credit

[Anonymous Coward]

Within the past century, 95% of the purchasing power of the US dollar has been taken away by inflation. Exactly how safe do you think the US dollar is again?

Try to keep in mind that you make a lot more of those US dollars over that same time period as well, so your point that inflation has eroded the US dollar is not taking into account that wages have inflated right along with prices. So unless you have kept your wealth in actual currency for the last 100 years (which would be about the stupidest thing ever) then your point is a bit weak.

Nice graph of 100 years of wage and price data [usembassy.de]

Average wage in 1900 $438 a year
Price of a pound of butter 26 cents

Average wage in 1990 $23602 a year
Price of a pound of butter $2.10

Re:Is it?

[Algae_94]

Just to clarify, TFS is correct, but Instawallet is not an exchange. MtGOX is an exchange that is undergoing a DDoS attack. Instawallet had their DB attacked. As far as I can tell Instawallet is just a company that will hold your bitcoins for you, like a safety deposit box, only without the safety in this case.

Re:Is it?

[AuMatar]

No, it does so in the opposite direction.

I bid $10. Someone asks $9.99. Obviously we're going to make a deal. There's an overflow of 1 cent- one of us will make 1 more cent than they expected to. Either of us could move, we could split the difference, or we could just set an exchange wide rule for this (say the seller always makes it, or the buyer).

Now add in HFT. Same scenario. The HFT sees my $10 bid before the seller does, and sends a buy for $9.99 exactly to the seller, buying the stock. He then sells to me for $10. He makes that extra penny. Has he helped me? Not at all- he took an average of half a penny from me. Does he help the seller? Nope, he took half a penny from them, for the service of completing the transaction a few microseconds sooner.

HFT are parasites. They provide no value to either side, but make a vig. There is no bid-ask gap that they reduce because the bid is higher than the ask. If it wasn't there'd be no money for them to make. Its immoral, unethical, and ought to be illegal. It also siphons millions to billions from the economy.