re: 4,400BTC (~$2.7M) stolen from Silk Road 2.0 escrow account

quote:

---

The purpose of bitcoin is to take away the need for trust.

---

Impossible. It is the human element that causes mistrust. How do you remove the human element from a commercial transaction?

quote:

---

No it won't, the communication happens on the blockchain through encryption. Only the people with the private keys would be able to read it.

---

How does the seller prove to the buyer and/or escrow agent that he has performed his contractual requirements? How does the buyer inform the escrow agent to release the funds held in escrow? How are those messages verified? Since a single sale from A to B require multiple transactions involving C, aren't the claims about transaction volume overstated by at least 100% since every sale requires at least 2 transactions on the blockchain?

quote:

---

There will assuredly be a lot of identifiable persons acting as escrow agents, because this won't be limited to the Silk Road and illegal activities. For Silk Road users, who are used to a pseudonymous reputation system, it will be based on the reputation of pseudonymous people.

---

Now you've actually made me laugh. If I wanted to rip people off all I'd have to do is establish multiple Silk Road identities and multiple Bitcoin wallets. I wouldn't have to give a damn about the reputation of any single identity. Repeat after me - there is no honor among thieves.

quote:

---

Repeat after me - there is no honor among thieves.

---

quote:

---

the debate is pretty much over

---

Which debate is that?

quote:

---

The core bitcoin protocol does work. It's the third parties that are fallible. So we just have to continue to get rid of the third parties.

It IS working.

---

No, for bitcoin to work both parties need a third party who is trusted. Otherwise this is how this shite will end up. No one will use these damn things if they cannot trust anyone.

Part of being regulated and backed by a government is for that very reason. Security.

quote:

---

It's not impossible, I've taken part in it.

---

Weren't you part of the human element then? After all, you just admitted you took part in the commercial element.

Your response couldn't have been better to prove my point. Thank you.

quote:

---

Math.

---

So math creates a problem, finds a solution and a trade occurs. All without human impetus, or administration. Sorry, but it just doesn't happen. The best that math can do is reduce the mistrust. It can't eliminate it. Why do people making Bitcoin transactions insist on verification? It's because they don't have absolute trust in the other party to the transactions. And math can't change that.

You're missing the point. In order for a commercial system to work people have to trust in and have confidence in the system. How can anyone trust btc at this juncture with its susceptibility to theft and the wild price fluctuations?

quote:

---

You're missing the point. In order for a commercial system to work people have to trust in and have confidence in the system. How can anyone trust btc at this juncture with its susceptibility to theft and the wild price fluctuations?

---

Bitcoin is an attempt to craft a technical solution to a non-technical problem.

quote:

---

You're missing the point. In order for a commercial system to work people have to trust in and have confidence in the system

---

You're missing the point. The bitcoin protocol is trustless. There is no need to trust anyone because the cryptography takes care of the trust.

quote:

---

How can anyone trust btc at this juncture with its susceptibility to theft and the wild price fluctuations?

---

Bitcoin is not responsible for the thefts that have happened, the third parties are. They will get better and the protocol will get stronger.

quote:

---

Wait, hold the phone....

Everyone and their brother is screaming about the vulnerability in the protocol and that is what is creating some of these situations.

Protocol flaw, exchange shutdown, and $2.7M heist prompt speculations about Bitcoin's end

Bitcoin glitch

LINK

---

This has been discussed and explained ad nauseum by Wiki.

Transaction Malleability wasn't a problem with the bitcoin protocol it was a problem with the security administration maintained by exchanges.

From Andreas Antonopolous:

quote:

---

Mt. Gox was relying on an incorrect implementation, it appears other exchanges were also relying on incorrect implementations. These incorrect implementations were susceptible to confusion by relying on transaction hashes for *unconfirmed transactions* which cannot be and should not be relied on. Many other exchanges and services, including the one I work as CSO (blockchain.info) had a correct implementation and were therefore not affected by the known issue of transaction malleability.
The issue was known since 2011, and Gox was warned not to rely on transaction hashes that this was not the best practice and could lead to problems.

Their attempt to blame the bitcoin software was grossly irresponsible. In the end it will further discredit Gox and reveal their management incompetence. Gox is now a minority exchange that has repeatedly suffered issues related to poor quality control in their software development methodology and has compounded these issues with bad communication and attempts to shift the blame elsewhere.
They represent less than 20% of the exchange volume and after their most recent problems and subsequent communications, they will likely lose more customers. Meanwhile, bitcoin remains unaffected. No transactions were falsified, the network continues to operate normally, and the authoritative ledger contains a correct record of transactions. If Gox had used the authoritative ledger as their reference instead of relying on an unreliable identifier, they would not have been defrauded by customers or had to suspend withdrawals.


In other words, Gox was sloppy, then they blamed someone else. Then they were rightly corrected by several well informed participants and many of the core developers.
Today we are seeing malicious actors trying to flood the bitcoin network with such malformed transactions in an effort to find other exchanges with similar implementation errors.
Some exchanges have temporarily suspended withdrawals in order to ensure they can process everything accurately. It’s like a retail customer showing up at a customer service desk with a photoshopped receipt and trying to get a refund. Mt. Gox was fooled because they didn’t check the receipts against the blockchain.
Others are not fooled, but today they saw a flood of such attempts, as if retail shoppers showing up with shoeboxes of falsified receipts hoping to cash in on this problem. These other exchanges are now dealing with a flood of these which is delaying legitimate withdrawals and some suspended withdrawals in order to check their implementations
In about a week I expect all the exchanges will have robust and correct implementations, as the network has now been stress-tested. Some will resume quickly, Gox might take a bit longer to resume. In the end, the entire industry will be more resilient.

---

quote:

---

Bitcoin is an attempt to craft a technical solution to a non-technical problem.

---

I've never thought of it that way, but that is an excellent point!