Bitcoin lovers lament transaction malleability: Got goxxed?

Bitcoin lovers lament transaction malleability: Got goxxed?

Summary: The end of MtGox. The wildly fluctuating prices. The major losses and hacks. The utter nonsense of it all. It hurts, doesn't it? But you know what? I told you so.

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TOPICS: E-Commerce
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No one wants to hear those four small words: I told you so. The reason that they're so hard to hear or read is that it means someone had forewarning of a disaster but ignored it. I had never heard the term "transaction malleability" before this whole MtGox Bitcoin thing blew up. But you know what? I didn't need to hear it to know that Bitcoin is inherently flawed. One of its biggest problems, in my opinion, is that is just isn't needed. Why do we need such a currency? What is its purpose? My guess is that its purpose now is to rob people of real money in exchange for nothing or getting "goxxed".

Currently, there are a number of cryptocurrency exchanges, including MtGox, under investigation and a US Sentor (Joe Manchin (D - W.Va.) calling for a ban on Bitcoin.

Before I go on, here is an excerpt from what I'm calling the Virtual Book of Lamentations, written especially for Bitcoin and MtGox:

How deserted lies MtGox,
once so full of Bitcoin!
How like a widow is she,
who once was great among the nations!
She who was queen among the exchanges
has now become a slave.

Bitterly she weeps at night,
tears are on her cheeks.
Among all her lovers
there is no one to comfort her.
All her friends have betrayed her;
they have become her enemies.

After affliction and harsh hacking,
MtGox has gone into exile.
She dwells among the nations;
she finds no resting place.
All who pursue her have overtaken her
in the midst of her distress.

Yes, those lines are a blatant ripoff of the opening lines from the book of Lamentations from The Bible but don't you think it fits? I do. It hit me that Bitcoiners everywhere will soon sing the song of lamentation for their beloved but heartless mistress. For she is the harlot who betrays her suitors.

Sorry, it's more than just a little funny to me. I did try to warn you. And later, I even gave you more warning. Cyberspace dwellers are a tough crowd. They believe in their false ideologies and their false profits all the way into bankrupt oblivion.

Reportedly, almost 750,000 BTC has gone missing from MtGox due to transaction malleability problems. That's a lot of money—real or imagined. Lost. Forever. Because, you know, no one backs up Bitcoin or its transactions. You know, like, if your bank had been robbed, it wouldn't affect your personal bank account. Credit card hacks, like the one that hit Target stores, would also not affect your account. You wouldn't be liable for any fraudulent charges. Isn't that awesome? Yes. Yes, it is.

I've seen tweets describing the fallout from all this malleability stuff that say everything from it's a good thing that MtGox is gone to Bitcoin isn't dead to Bitcoin is doomed.

Frankly, I still just don't see the point to it. If you're buying currency, so that you can buy stuff, it's just silly. Just use the money you have. If you can buy it with money, use money. I doubt that there is anything that you can only buy with Bitcoin. Well, unless it's illegal, that is. And I'm pretty sure that they still take greenbacks as well. I've never met anyone so corrupt that he wouldn't accept good ol' American buckazoids.

I think that, in the future, cryptocurrencies might—read might—have a chance in the real world. But it won't be Bitcoin or any of the other ones available now. Why? Because with current offerings, there are no guarantees. It's a gamble. And a very bad one at that. You need a currency that has some guarantee against fraud and hacking. Sure, people do stupid things with their money, regardless of its format, but Bitcoin and other current cryptocurrencies are too risky. Again, you've been warned.

All I have to say to the Bitcoin laments is, "I told you so". 

But this isn't the end. It's only the beginning of the end. Stay tuned.

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Topic: E-Commerce

About

Kenneth 'Ken' Hess is a full-time Windows and Linux system administrator with 20 years of experience with Mac, Linux, UNIX, and Windows systems in large multi-data center environments.

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22 comments
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  • You did indeed

    I don't think there's any reason to ban it, though; and I still think there's a good chance the protocol will survive and find a niche, but it's not the future of money.
    John L. Ries
  • Fascinating

    I find the whole thing fascinating. Fascinating that the internet enables these kinds of real world experiments just by thinking up an open protocol. To me the experiment is this: a lot of people believe the current financial system is broken... OK that's fine - invent a better one! This is one of the first tries at inventing a better one and we've seen the whole gamut of ideology and greed played out in five years. We've never had the real option of an alternative currency until now. Perhaps after some more iterations we'll get it right.
    Nick.McDermaid@...
    • Agreed in full

      There are a lot of people out there who believe we should never have left the gold standard, and others who believe that the money supply should be completely free of state control (the ideas are closely related. Bitcoin is an opportunity to test out both ideas. If it works, we learn something; if it doesn't, we still learn something. And I think the Bitcoin experience has already illustrated some of the reasons why monetary systems have evolved in the way they have over the past two centuries or so (whether they should have or not). It's probable that mistakes were made (any number of economists have said so), but we still have to figure out where to go from here. If the Bitcoin experiment helps us do that out even in part, then we're all better off, even if Bitcoin itself fails utterly (which I don't think it will).

      The experiment continues.
      John L. Ries
  • Just an expiriment - twisted upside down

    "Pascal's wager", I think it's called. You obviously have a dislike of the idea of bitcoin and that's fine (it's pretty crazy/uncertain). It could crash within a week, and it seems like you'd love that. Your subjective attitude and first-impressions aside: Have you noticed bitcoin seems to be doing ok relatively despite weeks of incredibly terrible events? Is there perhaps a reason the protocol is surviving and even thriving due to some inherent and innovative nature in how the system works? There is NOT some horse-blinders on thousands if not millions of very tech-savvy people making them think this is a golden trophy when it's a trojan horse (ponzy -scheme etc). There are very intelligent people working on this and the blinders may be on the observers/journalists who don't understand that this is not a get-rich-quick scheme, this is a new paradigm/protocol in financial/contractual consensus in a decentralized manner. You can scream all you want about the exchange rates. Sidenote: I've purchased many things (online and locally) using bitcoin, am careful, and total cost == $0. Stop pouting and experiment! Will this work out in the long run? Unknown. Does it help to understand, assist, and evolve currency? ABSOLUTELY.
    wontonotnow
    • not Pascals wager

      The problem with Pascals wager, is its starting conditions, it makes the claim that you cannot prove God does not (or does) exist by human reason.

      You cant prove a negative, and belief is not proof, no one (even the bible) claims that God exists in any reality that humans exist in, and even if God exists in another reality (not ours), then there is no proof that because he exists that you will life an infinite life of happiness and joy.

      replace the word "God" with the word "Love" and try to prove "love" exists ! Love does not exist in our physical world, you cannot see it, it exists in our mind as a construct, but you can (and a lot of people do) argue it is real. But most agree is does not "exist" in its own right.

      The only way love exists is in someone's mind, the only way .... exists is in someone's mind.
      (this ends todays sermon)
      Aussie_Troll
  • Bank Robbery

    When I worked at a bank in the late 80s, the bank recovered stolen money through insurance it carried. It may have been a regulatory requirement from either the state or the FSLIC (an agency merged into the FDIC when the s&l industry held a dress rehearsal for the liars loans and "risk understatements" of oh-seven.) Now it would be impossible to tie the money taken in a robbery to a specific account: deposit insurance is about bank insolvency which is about malfeasance, incompetence, or a widespread problem in the economy that has caused loan repayments to stop, or the return on funds to be less then the cost of funds.

    To the libertarians who applaud the purity of BitCoin, I say bank runs and failures are ugly things. One gets the feeling they applaud such things, though, as tough love and enjoy a modicum of cognitive dissonance in the belief that they'd always be the smart ones who got out in time. Well, I won't convince them otherwise.

    I don't want to hammer on the naïveté of BitCoin in general or its repositories and transaction facilitators in particular, but cryptography doesn't solve everything. I quote Willie Sutton and my third grade teacher. Willie robbed banks because "that's where the money is." My teacher liked to say where there's a will, there's a way.
    DannyO_0x98
    • Libertarians

      Pursue an ideal that only exists in their heads. They picture a world free from intrusive governments and regulations and taxation. It is an intoxicating vision, where the markets provide for all needs, the air and water clean because businesses take responsibility for pollution, parents competently educate their children by homeschooling, jobs abound for even the most unskilled. The problem is that world never existed, but they pursue it anyway, oblivious to the possible hazards. In that sense Bitcoins represents the perfect money to them.
      oncall
      • re:

        The reality of what Libertarianism in practice would bring would be close to medieval feudalism. Except instead of kings, you'd have CEOs. No thanks.
        Sir Name
        • exactly

          but they think they are going to be the feudal chiefs.
          Aussie_Troll
        • I'd rather have kings

          At least the only hostile takeovers one needs to worry about that way are of the military variety. And while hereditary aristocrats have their vices, money isn't the only thing they worry about (honor is important as well).
          John L. Ries
      • wealth out of thin air

        and you can do it on your computer !

        but never think how that 'wealth' is achieved, without doing anything, just say what the price is for the 'value' of your thin air money, and away you go..
        Aussie_Troll
        • It's a bit more than that...

          ...the supply of Bitcoins is actually limited, but they're only worth what people will give for them.

          But if the main reason for buying something is that you'll be able to sell it later at a profit, then understand that you're taking a risk and that easy money is addictive (just like gambling).
          John L. Ries
          • everything is limited

            yes bitcoin is limited (in number), but so are collectables, baseball cards, and people 'assign' a price and "value" to them.

            but that makes no difference to its 'real' price and actual value.
            just because someone is willing to pay that price does not mean they have any value !

            end result is that if you want to make money, you create your little bitcoin on your computer (nothing physical or useful), and you find someone who is willing to pay you $1000 USD for it.

            now you have $1000 or real money (that someone had to earn), because they gave you that real money for a few bits of digital data !
            Aussie_Troll
          • Comic books and baseball cards...

            ...have intrinsic value, Bitcoins and dollars don't.
            John L. Ries
          • That is to say...

            If your 1950s Superman comic depreciates in market value, you still get to read the stories.
            John L. Ries
          • hell no you cant

            take it out of its mylar bag, and read it, put a single mark on it, and its value falls.

            money also does have intrinsic value, as it is supported by real economies, money is gained by working and so on, not just making up a 'thing' and assigning it a value.
            Aussie_Troll
      • oncall

        that is so well written, and thoughtful... well done !!
        Aussie_Troll
    • yes banks

      as you know, banks have been doing digital management and transfers, and storage, and exchanges of money for a long time, as long as there were computers.

      Now Bitcoin comes along and things they can do it better (and be anonymous) that the banks, as you know, banks are hacked a lot, and over the years people have gone to great lengths to get to banks money.

      Bitcoin, do they really believe they can do it better than the banks, and just "make up' a new currency, and with some Geeky slight of hand ask for up to $1000 USD for this 'made up' (pretend) money? and have it as a sustainable concept !!!!!!

      Oh the hubris !!!

      All these BTC Boosters saying "oh we did not see this coming" !!! WHAT THE F...... !!!!

      You did not see it coming, what are you blind?? how long have you know about this malleability problem?

      How long have you known about the price spread between Mt Gox and the other exchanges ?
      You know, when Mt Gox was trading BTC at $800 and the other over $1000.
      Did you not think this spread would lead to money trading between exchanges and cause an unsustainable situation?
      You did not see this as a looming problem ??

      DO you know anything about finances ?? or is Geeky your thing ?
      Go to CoinDesk and graph out the 4 exchanges for the past 12 monts, and see for yourself.
      Gox is consistently higher than the other exchanges, pumping the price, creating a spread, and allowing people to 'create' $200 per bit coin by trading between exchanges.

      Playing musical chairs with made up money, and crying when the music stops and you find there are no chairs left!
      Aussie_Troll
  • BitConned better/more accurate that Goxxed

    just saying.

    what do they say? "if it sounds too good to be true, it probably is"
    Aussie_Troll
    • I like Buttcoin better.

      Seems lately that's where you're taking it.
      Arm A. Geddon