$300m in cryptocurrency accidentally stolen and lost forever due to bug

[crimethink]

https://www.theguardian.com/technology/2017/nov/08/cryptocurrency-300m-dollars-stolen-bug-ether

More than $300m of cryptocurrency has been lost after a series of bugs in a popular digital wallet service led one curious developer to accidentally take control of and then lock up the funds.

Unlike most cryptocurrency hacks, however, the money wasn’t deliberately taken: it was effectively destroyed by accident. The lost money was in the form of Ether, the tradable currency that fuels the Ethereum distributed app platform, and was kept in digital multi-signature wallets built by a developer called Parity. These wallets require more than one user to enter their key before funds can be transferred.

On Tuesday Parity revealed that, while fixing a bug that let hackers steal $32m out of few multi-signature wallets, it had inadvertently introduced a new flaw into its systems that allowed one user to become the sole owner of every single multi-signature wallet.

The user, “devops199”, triggered the flaw apparently by accident. When they realised what they had done, they attempted to undo the damage by deleting the code which had transferred ownership of the funds. Rather than returning the money, however, that simply locked all the funds in those multisignature wallets permanently, with no way to access them.

“This means that currently no funds can be moved out of the multi-sig wallets,” Parity says in a security advisory.

Effectively, a user accidentally stole hundreds of wallets simultaneously, and then set them on fire in a panic while trying to give them back.

“We are analysing the situation and will release an update with further details shortly,” Parity told users.

[Ares]

As much as it sucks having to house your own wallet due to the blockchain size, it really is the safest way to "hold" your crypto currencies. Always write down and backup the Private Key. I don't even transfer funds to a wallet until I have the private key already backed up.

[madfranks]

the money wasn’t deliberately taken: it was effectively destroyed by accident. The lost money was in the form of EtherWell, the ether developers have an established history of hard-forking the ether chain to recover stolen money, so if this $300 million makes enough turbulence, I don't doubt they'll hard-fork the ether chain once again to insert an additional $300 million back into the victim's wallets.

Ether, unlike the spirit of bitcoin, has an aspect of centralized control to it, and those in charge have proven that they'll use it for their own advantage, which is why I have stayed away from Ether for a long time now.

[Jewboo]

As much as it sucks having to house your own wallet due to the blockchain size, it really is the safest way to "hold" your crypto currencies. Always write down and backup the Private Key. I don't even transfer funds to a wallet until I have the private key already backed up.

http://www.dvorak.org/blog/wp-content/uploads/2015/04/grope_dees.jpg https://media1.tenor.com/images/bee6a1a03fc6068588e88b61d421a956/tenor.gif

Depending on a physical flash or spinning drive ?

So many ways digital money can go POOF.

:(??

[sirgonzo420]

http://www.dvorak.org/blog/wp-content/uploads/2015/04/grope_dees.jpg https://media1.tenor.com/images/bee6a1a03fc6068588e88b61d421a956/tenor.gif

Depending on a physical flash or spinning drive ?

So many ways digital money can go POOF.

:(??

Pen and paper work too for storing bitcoin private keys.


You should know about pens and paper, right, BOOK?

;)

[madfranks]

Pen and paper work too for storing bitcoin private keys.


You should know about pens and paper, right, BOOK?

;)

Ha ha, I actually keep a physical printout of my wallet keys hidden where only I know where they are.

[sirgonzo420]

Well, the ether developers have an established history of hard-forking the ether chain to recover stolen money, so if this $300 million makes enough turbulence, I don't doubt they'll hard-fork the ether chain once again to insert an additional $300 million back into the victim's wallets.

Ether, unlike the spirit of bitcoin, has an aspect of centralized control to it, and those in charge have proven that they'll use it for their own advantage, which is why I have stayed away from Ether for a long time now.


Yep, and bitcoin is simple compared to ethereum, which is a strength with something being used for money (although ethereum is not designed to be money). Funny, I used to work with Vitalik, the guy who created ethereum, on bitcoin related stuff before ethereum was even created and released. The "exodus" (ethereum's genesis) had a rate of 2000 ether to 1 bitcoin. I was kind of amazed at how quickly banks and big corporations jumped onto ethereum. In my mind, Vitalik is still a 17 year old programming prodigy. I'm still shocked at how far ethereum has gone, likely in part due to people wanting to "get in early on another bitcoin".

However, ethereum, like bitcoin, but to a greater extent due to the promotion of "smart contracts", enables users to mess up very, very badly. This, like the DAO fiasco which resulted in the Ethereum Classic fork, is a similar predicament; an application using ethereum was flawed and resulted in the freezing of customer funds. Vitalik will likely "roll it back" in an update, which is the sort of reason why I am not trumpeting ethereum. Ethereum is considerably more complicated with a wiiiiide field of attack.

[EE_]

My guess is more money is being stolen from crypto accounts then the people behind cryptos will admit. Much of it will never be known unless everyone tried to cash out.

[Ares]

Yep, and bitcoin is simple compared to ethereum, which is a strength with something being used for money (although ethereum is not designed to be money). Funny, I used to work with Vitalik, the guy who created ethereum, on bitcoin related stuff before ethereum was even created and released. The "exodus" (ethereum's genesis) had a rate of 2000 ether to 1 bitcoin. I was kind of amazed at how quickly banks and big corporations jumped onto ethereum. In my mind, Vitalik is still a 17 year old programming prodigy. I'm still shocked at how far ethereum has gone, likely in part due to people wanting to "get in early on another bitcoin".

However, ethereum, like bitcoin, but to a greater extent due to the promotion of "smart contracts", enables users to mess up very, very badly. This, like the DAO fiasco which resulted in the Ethereum Classic fork, is a similar predicament; an application using ethereum was flawed and resulted in the freezing of customer funds. Vitalik will likely "roll it back" in an update, which is the sort of reason why I am not trumpeting ethereum. Ethereum is considerably more complicated with a wiiiiide field of attack.

Its kind of why I'm liking the Waves platform. It improves upon Ethereums flaws. Now whether it takes off or not, that has yet to be seen. But they've implemented a Proof of Stake algorithm and can handle with the current test Waves-NG client 5,000 transactions a minute. That many transactions would choke the ethereum network at the moment.

The thing I like most about the Waves Platform is that they have a Decentralized exchange. The funds never EVER sit in the Exchange wallet, they reside in yours and are there until you buy or sell.

[sirgonzo420]

Ha ha, I actually keep a physical printout of my wallet keys hidden where only I know where they are.

That works.

That's an old school way of handling it.

Earlier in bitcoin's life, when I was trying mostly in vain to suggest that people here avail themselves of the opportunity of obtaining very very cheap bitcoins, the only way of handling bitcoin was with individual private keys.

Now there are more convenient options.

Several improvements to the bitcoin protocol allow for some helpful things:


BIP-0032: https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki
This document describes hierarchical determinstic wallets (or "HD Wallets"): wallets which can be shared partially or entirely with different systems, each with or without the ability to spend coins.


BIP-0039: https://github.com/bitcoin/bips/blob/master/bip-0039.mediawiki
This BIP describes the implementation of a mnemonic code or mnemonic sentence -- a group of easy to remember words -- for the generation of deterministic wallets.

BIP-0044: https://github.com/bitcoin/bips/blob/master/bip-0044.mediawiki
This BIP defines a logical hierarchy for deterministic wallets based on an algorithm described in BIP-0032 (BIP32 from now on) and purpose scheme described in BIP-0043 (BIP43 from now on).




Now one can generate a wallet with near infinite addresses/keys, represented by 12, 18, or 24 random words.

You can more effectively memorize 12 or 24 random words than a case sensitive private key, and the seed words generate as many addresses as you need.

Hardware wallets like Trezor and Ledger also exist, where you can have your 24 seed words which you keep secure, and the physical device allows you to safely spend your coins without worrying about the computer being compromised. You can also secure different cryptocurrencies on one hardware device.



https://i2.wp.com/blockonomi.com/wp-content/uploads/2017/10/trezor.jpg?resize=808%2C555&ssl=19423

[Ares]

My guess is more money is being stolen from crypto accounts then the people behind cryptos will admit. Much of it will never be known unless everyone tried to cash out.

Only way that would happen would be with the Centralized Exchanges. If you hold crypto in your own wallet with your own private key it's nearly impossible to have it leave your wallet. There are hardware wallets (Trezor, Ledger, etc.) which I use so that the private key never exists anywhere other than on the hardware wallet. You have to type in a 6-8 digit pin code in order to "sign" a Bitcoin transaction to broadcast it to the Bitcoin network. Without that Private key, the transaction is never considered by the Bitcoin nodes and would quickly be discarded as invalid.

[sirgonzo420]

Its kind of why I'm liking the Waves platform. It improves upon Ethereums flaws. Now whether it takes off or not, that has yet to be seen. But they've implemented a Proof of Stake algorithm and can handle with the current test Waves-NG client 5,000 transactions a minute. That many transactions would choke the ethereum network at the moment.


I haven't delved too deeply into Waves specifically, but there is a lot going on with this kind of thing right now and it is only going to increase over time. Survival of the fittest!

[Ares]

I haven't delved too deeply into Waves specifically, but there is a lot going on with this kind of thing right now and it is only going to increase over time. Survival of the fittest!

Agreed, and Waves has taken the Ethereum idea with ICO's and Smart Contracts and taken it to the next level. They included a Decentralize Exchange (DEX) so that your funds never leave your wallet. I actually purchased quite a few of them. If you want we can take this conversation about Waves to the virtual currencies section as I probably spent a good 6 months watching and researching Waves before diving in.

[EE_]

Only way that would happen would be with the Centralized Exchanges. If you hold crypto in your own wallet with your own private key it's nearly impossible to have it leave your wallet. There are hardware wallets (Trezor, Ledger, etc.) which I use so that the private key never exists anywhere other than on the hardware wallet. You have to type in a 6-8 digit pin code in order to "sign" a Bitcoin transaction to broadcast it to the Bitcoin network. Without that Private key, the transaction is never considered by the Bitcoin nodes and would quickly be discarded as invalid.

A lot of people that are not as tech savvy as you, are buying in and may not be taking the same precautions you are. They are exposed to theft.

[cheka.]

A lot of people that are not as tech savvy as you are buying in and may not be taking the same precautions you are. They are exposed to theft.

and why are they buying? because it's going up. can't argue with that :)

ares - thanks for your posts on this stuff. i dont understand it, but it's comforting to know that one of the good guys does \uu\

[Hitch]

This story is really quite remarkable because it's the actual, true, definition of the "poof...and it's gone" scenario. Those bitcoins are gone...truly gone. It's like the idiot with the fat finger pushed the wrong button.

Before, thanks to southpark, the poof and it's gone was related to FRN's and banking. In those cases though, wealth didn't really disappear, it just changed hands. It seems like it's gone to the poor victim, but someone somewhere benefited from it.

In this case, there was no benefit....just poof! and a big ooops. Gone, just like that. Wow!

[EE_]

Imagine running off with a few hundred million dollars in cryptos and no one can do a damn thing about it. What a beautiful heist!

[Neuro]

Ha ha, I actually keep a physical printout of my wallet keys hidden where only I know where they are.

The deflationary death spiral of cryptocurrencies. When the owners die or forget where they put their coins, the coins are gone forever. You may use it to pay Charon when crossing the Styx I suppose! :)

[Neuro]

This story is really quite remarkable because it's the actual, true, definition of the "poof...and it's gone" scenario. Those bitcoins are gone...truly gone. It's like the idiot with the fat finger pushed the wrong button.

Before, thanks to southpark, the poof and it's gone was related to FRN's and banking. In those cases though, wealth didn't really disappear, it just changed hands. It seems like it's gone to the poor victim, but someone somewhere benefited from it.

In this case, there was no benefit....just poof! and a big ooops. Gone, just like that. Wow!

Actually it benefits all the other holders of the coin, as demand has less supply to work on, hence a higher price!

[singular_me]

keep that in the back of your mind.... that everything comes to an end... security is elusive... meanwhile the threat is 10-15 years or so away... another mother of all crashes taking shape. All booms are bound to crash down. Natural Law. Nothing can escape the law of equilibrium

===================

Could quantum computing make crypto currencies...(2017 ...
Quantum Computing is a very interesting beast. Given its potential power it could have an adverse security effect.

Is Quantum Computing an Existential Threat to Blockchain ...
Does quantum computing pose an existential threat to blockchain and cryptocurrencies? Maybe, but not if we can develop a solution first.

Quantum Computers, Parallel Universes and Cryptocurrencies
Quantum computing is not only a theoretical speculation, it's already here !

[Ares]

A lot of people that are not as tech savvy as you, are buying in and may not be taking the same precautions you are. They are exposed to theft.

Agreed 100%, I'd be willing to help anyone here who is looking to get into crypto's on what precautions to take and best practices so that you do not lose your coins.

[Ares]

Those bitcoins are gone...truly gone.

Not Bitcoin Ethereum, and Ethereum is in a bit of a different league compared to other crypto's on the market. They are the first to utilizing blockchain for a purpose outside of a currency and created it in way to allow for "smart contracts".

They've made a number of mistakes along the way, but this one wasn't Ethereums issue, but with the wallet provider in this case.

[Ares]

keep that in the back of your mind.... that everything comes to an end... security is elusive... meanwhile the threat is 10-15 years or so away... another mother of all crashes taking shape. All booms are bound to crash down. Natural Law. Nothing can escape the law of equilibrium

===================

Could quantum computing make crypto currencies...(2017 ...
Quantum Computing is a very interesting beast. Given its potential power it could have an adverse security effect.

Is Quantum Computing an Existential Threat to Blockchain ...
Does quantum computing pose an existential threat to blockchain and cryptocurrencies? Maybe, but not if we can develop a solution first.

Quantum Computers, Parallel Universes and Cryptocurrencies
Quantum computing is not only a theoretical speculation, it's already here !

Like I told you before you over hype quantum computers and I detailed for you before on why Quantum computers are likely to be unable to crack the cryptography used to secure blockchains.

But like anything with you, you have your own self imposed agenda and will not take anything as fact. Quite honestly I believe it's because you truly do not understand the complexities of encryption.

[Dogman]

Like I told you before you over hype quantum computers and I detailed for you before on why Quantum computers are likely to be unable to crack the cryptography used to secure blockchains.

But like anything with you, you have your own self imposed agenda and will not take anything as fact. Quite honestly I believe it's because you truly do not understand the complexities of encryption.

There are bitches and Witcher plus maybe a tad of whatever can be called normal! Believe me or not, I do sorta understand her. (Walk on the wild side).

But understandable!

Hard, to transfer core beliefs into words . We all have thoughts that we know true, at a core leval .


Kudos woman, keep on keep on keeping on !

And punching, tho be warned most idiots will not get it, because they are locked in there own mental hamster wheel!

Grin!

[Ares]

There are bitches and Witcher plus maybe a tad of whatever can be called normal! Believe me or not, I do sorta understand her. (Walk on the wild side).

But understandable!

Hard, to transfer core beliefs into words . We all have thoughts that we know true, at a core leval .


Kudos woman, keep on keep on keeping on !

And punching, tho be warned most idiots will not get it, because they are locked in there own mental hamster wheel!

Grin!

And quantum computers can crack a SHA-256 hash how? Please do tell...

Instead of encouraging others ignorance why not actually contribute to the discussion?

[madfranks]

The deflationary death spiral of cryptocurrencies. When the owners die or forget where they put their coins, the coins are gone forever. You may use it to pay Charon when crossing the Styx I suppose! :)

Interestingly - most of my remaining crypto is in physical coin form. I bought a ton of brass & silver BTC & LTC coins back in 2012 and 2013, which I still have. So if I die, this type of crypto will be easy to bequeath. Here are some of my physical crypto coins:

https://s1.postimg.org/1vifvy8uwf/5_BTC_Hybrid_1.jpg

https://s1.postimg.org/87fq0chf9b/millibitcoin_2.jpg

https://s1.postimg.org/8eixvs2ptr/images.weserv.nl.jpg

https://s1.postimg.org/9affb8byu7/25_litecoins_1.jpg

https://s1.postimg.org/17rgig4upb/Litecoin_Obverse.jpg

[Neuro]

You had a bet with ximmy if I remember correctly. She probably owes you something...

[Dogman]

Who is ximmy ?

Hehehe...

One time that book shows up, and the female sticker, goes poof..!

Gots to love it...


Hell hormones could be kicking in, woman dropping a kid will do that, the kid is everything ...


I still question if book and ximmy are not the same and is the same one..

Old timers know ,when one goes the other ones goes poof, but on the other side of the coin, when one shows up the other one will drag up..

Wonder why..

Lmfao

Neuro! Thank you..!

For reminding me .. (Strange he is here and she is not, she may be carrying a kid) ? ( Or working on a relationship?)

Sump thing historically wrong, by the absence of the mirror member. Male/Female..


;D

Note: Most here live and post the moment, with out a thought that they can remember the past. Unless you delete what you have said, which in time probably will hang some her.


But who in the hell am I ,?

Been a few years, but now, baking and my bread is getting better, For dam sure store ready made is shit. Some here know that.


ximmy where are you?

[Neuro]

Wow to that 5 bitcoin coin you have, must be the most valuable you have in your collection!

[madfranks]

Wow to that 5 bitcoin coin you have, must be the most valuable you have in your collection!

No doubt it is now. At ~$7k per bitcoin, it's a $35,000 coin!

[Neuro]

No doubt it is now. At ~$7k per bitcoin, it's a $35,000 coin!

Congratulations! How much did you fork out for it?

[Horn]

These guys are always equating vs. A $

This is a dollar positive thread +1

[madfranks]

congratulations! How much did you fork out for it?

5.08 btc.