Ask HN: If Blockchain and Bitcoin tech are secure, how did Mt. Gox happen?
2 comments
At this point, public knowledge is that MT Gox didn't manage well the transaction malleability issue of Bitcoin's implementation. Here's a related article with a couple of excepts to help you understand.
10 things you need to know about Mt. Gox's Bitcoin implosion - From PC World (http://www.pcworld.com/article/2105280/10-questions-on-the-m...)
1. Stolen Passwords Success seems to have bred complacency at the highest levels of Mt. Gox. In June 2011, about $8.75 million in bitcoin was stolen from the exchange through an online attack using stolen passwords. Any security improvements implemented since then were obviously not up to scratch if the latest loss is the result of a massive heist. Anecdotal accounts have suggested a corporate culture that tended toward laissez-faire rather than strict diligence.
2. Transaction Malleability How do you lose 850,000 bitcoins? That, of course, is the million-dollar (or bitcoin) question. The coins may be missing due to a long-known security flaw called transaction malleability that can in some cases enable fraudulent withdrawals. Some observers and investors, however, are accusing the company of fraud, even alleging the collapse was an orchestrated scheme. Other commentators have said Mt. Gox had the best intentions but was just poorly managed.
10 things you need to know about Mt. Gox's Bitcoin implosion - From PC World (http://www.pcworld.com/article/2105280/10-questions-on-the-m...)
1. Stolen Passwords Success seems to have bred complacency at the highest levels of Mt. Gox. In June 2011, about $8.75 million in bitcoin was stolen from the exchange through an online attack using stolen passwords. Any security improvements implemented since then were obviously not up to scratch if the latest loss is the result of a massive heist. Anecdotal accounts have suggested a corporate culture that tended toward laissez-faire rather than strict diligence.
2. Transaction Malleability How do you lose 850,000 bitcoins? That, of course, is the million-dollar (or bitcoin) question. The coins may be missing due to a long-known security flaw called transaction malleability that can in some cases enable fraudulent withdrawals. Some observers and investors, however, are accusing the company of fraud, even alleging the collapse was an orchestrated scheme. Other commentators have said Mt. Gox had the best intentions but was just poorly managed.
Mt. Gox did not use the blockchain because it's too slow and expensive for daytrading. And the blockchain cannot currently properly record currency exchange transactions.
Supposedly Blockchain / Bitcoin are awesome.
So how did Mt.Gox manage to lose track of Bitcoins?