Cyber attack on bitcoin a big warning to currency's users

[EE_]

Cyber attack on bitcoin a big warning to currency's users
By Emily Flitter

NEW YORK Wed Feb 12, 2014 10:51pm GMT

NEW YORK (Reuters) - A massive cyber attack from unknown sources that has been spamming bitcoin exchanges is highlighting some of the dangers people can encounter when they exchange cash for digital currencies like the bitcoin, experts said on Wednesday.

The attack, which is technically known as a distributed denial of service attack, involved thousands of phantom transactions, forcing at least three of the online platforms that store bitcoins and trade them for traditional currencies to halt withdrawals of bitcoins until they can determine which transactions were real.

It showed that bitcoin, which exists solely in cyberspace and operates on a software code written by an unknown programmer or group of programmers, is as vulnerable to such an assault as any other Internet-based business. It exposes the higher risks involved in owning and trading the instrument compared with the dollar and other traditional currencies. Bitcoins slumped in value as a result of the disruptions.

"Bitcoin is still an experimental protocol in its infancy," said Micky Malka, a venture capitalist who is on the board of Bitcoin's trade group, the Bitcoin Foundation.

"It will grow and mature over time," he added. "No one should be investing an amount they cannot afford to lose."

This week's attack was not the first, said Andreas Antonopoulos, chief security officer for blockchain.info, a website that tracks bitcoin activity and provides online storage services for bitcoin users.

Antonopoulos is also a member of a group of core bitcoin programmers and is part of an emergency response team of programmers who have been working to fix the flaws in the code governing some bitcoin transactions that the attackers were exploiting. He said that work that should be completed by the middle of next week, echoing an estimate provided by a spokeswoman for the Bitcoin Foundation who said its core developers were all participating in the effort to fix the code.

Bitcoin is a decentralized digital system of value transfers that is not governed by any central bank, company or government. No assets back the bitcoin, whose value has fluctuated widely as its visibility has increased. Last September, a bitcoin was worth around $150. By late December the value was near the $1,000 mark.

Regulators around the world are struggling how to categorize the bitcoin. Some want to call it an asset class, others a commodity. Bitcoin users call it a currency and many advocate for its mass adoption, claiming it can help solve problems created by expensive and time-consuming bank transactions.

Early adopters also liked the anonymity bitcoin has offered, since it can be transferred between users without any exchange of personal identification information. However, moves by various authorities to pursue bitcoin users who they say have laundered money using the currency and attempts to regulate bitcoin exchanges could soon lower the level of anonymity in transactions.

On Tuesday, Slovenia-based Bitstamp became the second major bitcoin exchange to halt customer withdrawals in the past several days, citing "inconsistent results" and blaming a denial-of-service attack.

That was a day after Mt. Gox, based in Tokyo and the best-known digital marketplace operator, said a halt on withdrawals would continue indefinitely. Traders reacted to the halt by sending the bitcoin value to its lowest level in nearly two months.

A Bulgaria-based bitcoin exchange also had to halt withdrawals, Antonopoulos said.

The price of bitcoins, which have gained wider acceptance in recent months, dropped in the wake of the attacks from around $850 late last month. On Wednesday, they were quoted down nearly 2 percent for the day at $656 per coin on the bitcoin tracking website CoinDesk.

"Anyone who plays in this space, you better have a plan for when an attack happens because it's going to be a when, not an if," said Brian Krebs, a Washington-based cyber security expert who runs the blog KrebsOnSecurity.com.

The lesson for investors was that the bitcoin wasn't as liquid as initially advertised, said Jason Scharfman, a financial due diligence expert and managing partner at consulting firm Corgentum.

"These types of attacks, they're effectively freezing some of the accounts because the exchanges don't want to pay out to the wrong person," he said. "If something's frozen or there's a question about me being able to redeem my bitcoins, the value of them drops."

"Does this spook financial investors?" he added. "The answer is yes."

Scharfman said one way to mitigate the risks of such attacks would be to spread holdings of bitcoins out among several different online storage facilities. That way if one were attacked the other might still have a chance at being safe.

Scharfman said the more regulatory scrutiny that bitcoin exchanges received, the safer they were likely to be.

"Regulation will sort of normalize which exchanges are the most secure. They'll mandate security measures and smaller exchanges just won't be able to afford it," he said.

(Reporting by Emily Flitter; Editing by Leslie Adler)

[Horn]

Antonopoulos is also a member of a group of core bitcoin programmers and is part of an emergency response team of programmers who have been working to fix the flaws in the code governing some bitcoin transactions that the attackers were exploiting. He said that work that should be completed by the middle of next week, echoing an estimate provided by a spokeswoman for the Bitcoin Foundation who said its core developers were all participating in the effort to fix the code.

No more exultation of the Satoshi character, he is to be ridiculed from the face of the planet for such a weak code...

the above is evidence MSM does just as much to promote as scold Bitcoin, it has nothing at all to do with the current situation.

[EE_]

Bitcoin shill Max Keiser is blaming JPM.
I used to think this jack-off Max, gave a shit about something. He like all the economic guru's, politicians, TV personalities are only in it to enrich themselves. It's the American way to wealth. First you get heard by saying a bunch of shit that people agree with, then, once you have a fan base you promote anything that will fill your pockets. They all do it.
Look at the Clintons speech for profit business, Fox News shills all writing books...or should I say having books written with their name on it and Max Keiser is no different with his own "MaxCoin". None of them produce anything of value.
Crypto's are a joke! The only real beauty of cryptos, is there's a never ending supply of suckers in the world. PT Barnum said it best.

Max Keiser: JPMorgan Behind Bitcoin DDOS Attacks!
February 12, 2014 By The Doc 23 Comments

The cryptocurrency known as Bitcoin has endured several flash crashes this week as first MtGox, and then BitStamp were forced to halt withdrawals due to issues with Bitcoin transactions settling due to massive DDoS cyber attacks.
JP Morgan, who according to reports continues its attempts to launch its own cryptocurrency (in competition to Bitcoin) has issued several scathing attacks on Bitcoin in the past week.
In response, longtime Bitcoin advocate Max Keiser is publicly alleging that JPMorgan is behind the Bitcoin DDoS attacks!

[Shami-Amourae]

Bitcoin shill Max Keiser is blaming JPM.
I used to think this jack-off Max, gave a shit about something. He like all the economic guru's, politicians, TV personalities are only in it to enrich themselves. It's the American way to wealth. First you get heard by saying a bunch of shit that people agree with, then, once you have a fan base you promote anything that will fill your pockets. They all do it.
Look at the Clintons speech for profit business, Fox News shills all writing books...or should I say having books written with their name on it and Max Keiser is no different with his own "MaxCoin". None of them produce anything of value.
Crypto's are a joke! The only real beauty of cryptos, is there's a never ending supply of suckers in the world. PT Barnum said it best.

Max Keiser: JPMorgan Behind Bitcoin DDOS Attacks!
February 12, 2014 By The Doc 23 Comments

The cryptocurrency known as Bitcoin has endured several flash crashes this week as first MtGox, and then BitStamp were forced to halt withdrawals due to issues with Bitcoin transactions settling due to massive DDoS cyber attacks.
JP Morgan, who according to reports continues its attempts to launch its own cryptocurrency (in competition to Bitcoin) has issued several scathing attacks on Bitcoin in the past week.
In response, longtime Bitcoin advocate Max Keiser is publicly alleging that JPMorgan is behind the Bitcoin DDoS attacks!

How do you know he's not telling the truth. JP Morgan hates Bitcoin.

And for the love of God. I wish people would stop saying Bitcoin has been attacked. No it's the exchanges. The Bitcoins have been perfectly fine.

[Ares]

How do you know he's not telling the truth. JP Morgan hates Bitcoin.

And for the love of God. I wish people would stop saying Bitcoin has been attacked. No it's the exchanges. The Bitcoins have been perfectly fine.

Exchanges use CUSTOM CODED bitcoin wallets to do the transactions that are being exploited. The Bitcoin Foundation warned them about the flaw in their custom code back in 2011. The protocol itself is fine, it's the exchanges that manipulated the code so that their transactions would be confirmed first that screwed them.

Basically what the exchanges were doing is manipulating the transaction ID's so that their transaction could "cut in line". Someone found a way to exploit that flaw in their manipulated code and drained Gox most likely. What would happen is they would send out a coin(s) it wouldn't get confirmed so the exchange would send it out again. Someone(s) was able to exploit that flaw and steal bitcoins. Now for every day users this isn't an issue if you're using a standard Bitcoin wallet because you aren't trying to cut in line to transact bitcoins. So the problem is with the exchanges trying to confirm coins faster than what was designed within the protocol and it looks like they are paying for it. Gox is probably finished after this.

[mick silver]

JP Morgan 2003 started working on their own type of bitcoin , thats been posted here on this forum

[Ares]

JP Morgan 2003 started working on their own type of bitcoin , thats been posted here on this forum

Yep: http://www.ft.com/intl/cms/s/e230307a-61c4-11e3-aa02-00144feabdc0,Authorised=false.html?_i_location=htt p%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fe230307a-61c4-11e3-aa02-00144feabdc0.html%3Fsiteedition%3Dintl&siteedition=intl&_i_referer=

They've tried to patent it 3 times already and keeps getting rejected. Someone beat them to the punch and open sourced it so now the concept and idea are not patentable.

[mick silver]

JPMorgan Chase has patented a digital payment system that could rival Bitcoin. The system includes digital wallets, the ability to transfer money to anyone and anonymity too, according to a patent application (http://appft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PG01&s1=20130317984&OS=20130317984&RS=20130317984) filed to the U.S. Patent and Trade Office on Aug. 5. A blog on Let's Talk Bitcoin (http://letstalkbitcoin.com/jpmorgan-chase-building-bitcoin-killer/#.UqiEePRDt8F) first reported the story.




JPMorgan (JPM (http://money.cnn.com/quote/quote.html?symb=JPM&source=story_quote_link), Fortune 500 (http://money.cnn.com/magazines/fortune/fortune500/2013/snapshots/2608.html?iid=EL)) has also patented payment software that would latch onto your Internet browser and allow you to shop without pausing to fill out forms with personal financial information. And with what the bank calls its Internet Pay Anyone Account, moving funds would be anonymous and as easy as sending an email.
Related: 15 best financial sites and apps (http://money.cnn.com/gallery/pf/2013/12/11/best-financial-apps/index.html?iid=EL)
"The credit pushes can be made completely anonymously, with the recipient of the credit having no way to determine from where the credit originated," the bank says in the application.
Another aspect of the digital payment system is a virtual private lockbox. Think of it as a bank account that can only accept funds. That way, users can receive funds from anyone by publishing its digital address publicly without fear that someone can pull money out of it.
The impetus for the project is likely Bitcoin (http://money.cnn.com/infographic/technology/what-is-bitcoin/?iid=GM), the independent electronic currency created in 2009 that has gained lots of recent attention (http://money.cnn.com/2013/12/10/technology/bitcoin-currency-fred-wilson/index.html?iid=EL). But the patent application shows no mention of Bitcoin.
It does, however, say what led to its development: The modern financial system is outdated.
In the patent application, JPMorgan notes two trends that are making the old banking system obsolete. One is that merchants are establishing direct relationships with customers -- and they don't want middlemen slowing down the transfer of money. The second is that digital products are often sold in small increments for very low prices, and the currently high price of per-transaction fees don't make sense.


"A new marketplace has emerged for low dollar, high volume, real-time payments with payment surety for both consumers and producers," the bank writes in the application. http://i.cdn.turner.com/money/images/bug.gif (http://money.cnn.com/2013/12/10/technology/bitcoin-jpmorgan/?iid=EL#TOP) http://money.cnn.com/2013/12/10/technology/bitcoin-jpmorgan/

[Horn]

Bitcoin is Shit by Bill Holter
Bill H:

Bitcoin revisted
Bitcoin "flash crashed" on Monday by 80% and traded very briefly at $102 before recovering...all the way back to $600. This $600 is about half of the $1,100-$1,200 that it reached back a month ago. Quite the ride huh? $100-$1,200...$700...$100...$600. I'd like to look at this from a couple of different standpoints and some of what I will write will only be what I've written before.
So why the flash crash? Mt. Gox, one of the Bitcoin "exchanges" shut down much as a bank that closed its doors. I am not a computer whiz by any means and do not understand what actually happened and how they were supposedly "cyberattacked" but they are not completing transactions. "Not completing transactions" meaning you cannot get "dollars" euros or anything else for your Bitcoin. It has been said that a whopping 6,000 Bitcoin sale caused the 80% drop, I will get into that shortly. What prompted this "massive" (sarcasm intended) sale is anyone's guess. Did they know that Mt. Gox was going to "go dark" or an ignorant sale or a fat finger nobody knows...but it shouldn't matter.
I am and have been of the opinion that Bitcoin is a dry run or trial balloon for what will come after the current system collapses. Whatever it's called, it will be "cyber" in nature. I also find it highly unusual that JP Morgan sent out a "hit piece" prior to the flash crash. Are they a part of this? I would be shocked if they were not. But here is the problem as I see it. Bitcoin, though it's supposed to be limited in quantity to 21 million "units" is not "backed" by anything. And we just saw the "flaw" that is so in your face that it's dumb. What if there are NO exchanges open...or the internet is down? These "wallets" cannot transact and basically have no "value". Yes I know, Bitcoin cheerleaders will scream bloody murder at this one but if you cannot "get to" or use your "money", what value does it have?
I know that Bitcoin is still "new" and many will say that it is experiencing growing pains...which is why all the volatility and this is partly true. Others will say that "gold has been very volatile" also... Here is how I see it. Bitcoin is an alternative currency yes but IT goes up and down versus the dollar. Gold is not really an alternative "currency", it is alternative "savings" which is very different. In reality gold does not "go up and down", the dollar does! This is the big difference as I see it. Bitcoin yes is an "alternative" but it is absolutely not something to "save" the family wealth in...because it is so volatile. This volatility is also a problem for any business that accepts it, you finalize a sale today at a "20%" profit margin yet tomorrow you don't even enough capital to pay your suppliers? Anyone who has ever run a business knows that they must know the surrounding "conditions" in order to have their business grow, flourish AND continue into the future. The most important "surrounding condition" is the currency itself, one must know how much they are paying for what they are selling to know what's left over as profit. Any currency that can lose 80% of its value in the course of 1 minute...??? Sorry, this does not fit the bill for any bricks and mortar type business in my opinion.
Some will say OK, the dollar is devaluing versus gold but what happens if gold becomes "illegal"? I would ask you this, will it be "illegal" all over the world? Have you stored ANY of your metal outside of the U.S.? Even if it's "decreed" illegal, will it ever be worthless? Do you need electricity? The internet? Or even banks open for your metal to have value? "Value" as in "utility"? Utility such that you can exchange it for eggs, toilet paper, gas or any other necessity?
There are other potential problems with Bitcoin, the biggest being that it is "man made" and if the original code can be written it can also be hacked. The technical aspect is above my paygrade and a first year computer science student could run circles around me but when push comes to shove I firmly believe that if it's not in your hand or safely stored outside of borders...in a "real" form...you don't own it. Call me old fashioned if you want and browbeat me with as many "digits" as you'd like, you'll never convince me that if you cannot stand face to face with a "trader" under any conditions (including power outage, internet killed switch or the aftermath of an EMP etc.) and "make a deal" then what you have to trade is not "money". "Money" in my opinion, (and here is an add to its definition) must be something that is accepted during even the most adverse conditions.
"Trust" is the most essential element when it comes to a currency. It is necessary when any currency is introduced and must be maintained or else the currency vanishes as all "fiats" have done over time. I have no doubt that a "cyber currency" is where we are headed for many reasons. It will be "government sponsored" for the simple reason that governments will not want to give up "control". I say this because a truly independent currency cuts them out. They wanted "in" to begin with which is why they've tried to demonetize gold and silver. It worked quite well for a spell but gold and silver are coming back INTO the system rather than away from it. It is for this reason that I believe any cyber currency will have to have at least some backing either ratio or fractional to anything introduced. Will this also become a fraud? Of course it will as any and all man made currencies throughout all of history were.To sum this up, I highly doubt that "Bitcoin" will be "it". "It" meaning the new global currency that is sure to arise. The currency will look similar and many "promises" will be made as to safety, security and "backing" to create confidence but...just as it has always been, you are best to save Mother Nature's money and you spend man made money. This is what is meant by "good money drives out bad". Regards, Bill H. Miles Franklin Associate writer
I wrote all of the above Wednesday and then backburnered it because so many people were running around with "Yamshita's gold syndrome". I am glad that I didn't immediately send because since Wed., Mt. Gox has reopened but their pricing is about $150 off from the other exchanges (arbitrage anyone?)...AND another exchange Silk Road 2 has http://sgtreport.com/2014/02/breaking-the-silk-road-2-has-been-hacked-for-2-7-million-in-bitcoin/ (http://sgtreport.com/2014/02/breaking-the-silk-road-2-has-been-hacked-for-2-7-million-in-bitcoin/) apparently been hacked for $2.7 million worth of Bitcoin. I wonder "who" will make good on this pilferage?
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