Bitcoinica shutdown is potentially permanent

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Replace transaction merkle tree with a Merkle-sum-tree. This allows SPV nodes to stochastically validate the subsidy in blocks by fetching a random leaf and then fetching its txins. This way if you have a stream of utxo queries coming in, you can make the work of them mine for you. Validation then, is mining. If you don't have enough queries coming in you just make some up at random. Represent the script as a merklized abstract syntax tree.

The P2SH address is the root. When spending the spender only may provide only the branch they are executing, and hashes for the unexecuted branches. This increases privacy and can compress long scripts bitcoinica shutdown is potentially permanent spend.

Pruned history Structure transactions so that the parts needed for validation txins, scriptsigs are separate from the output data scriptpubkey, output and fee values and put them in separate hash trees. All nodes fully prune all data more than a few thousand blocks back.

Massive space savings and improvements in syncup speed. Massive security loss— an attacker that can construct a large reorg can steal all the transacted coin beyond a certain depth. Normative and committed merklized UTXO data structure allows full validation of current blocks by bitcoinica shutdown is potentially permanent nodes with SPV security Can be complimented by proof-of-misbehavior messages that show a block is invalid by packing up the tree fragments that provide bitcoinica shutdown is potentially permanent data needed to see its invalidity.

ZKP Validated checkpoints— Is it possible to use computational integrity to create compact constant size checkpoint proofs that show that a checkpoint was the result of a faithful validation of the blockchain? This could be used to give pruned history the same security as full Bitcoin up to the limitations of the integrity proofs. Chain folding If nodes don't actually need to validate old chain data because of committed UTXO and pruned historyit would be possible to 'fold up' the historic chain: Nodes which are validating just to gauge difficulty can skip the intermediate blocks.

This can be applied recursively. If the backpointers are randomized and every block is a candidate summary you end making the chain a merklized skiplist.

Alternatively, do not store a UTXO set. Instead encode the transactions outputs in the blockchain in a merkle mountain range an insertion ordered fully populated binary tree, setup to make appends cheap over the whole chain. Transactions bitcoinica shutdown is potentially permanent required to provide the update proofs that show their inputs in the tree and thus also allow you to null them out.

This means that fully validating nodes and miners can be basically bitcoinica shutdown is potentially permanent, but wallets must take on the cost of remembering their own coins.

A transaction is mined but it isn't clear which inputs its spending. Fees are paid by unblinded inputs to prevent DOS attacks. Blinding is done in such a way that double spends are still obvious. If full nodes become expensive to operate in the future then they may become uncommon and this could compromise the security of Bitcoin. This risk can be reduced if it's made possible for Bitcoin nodes to check all the rules at random and transmit compact proofs of rule violations.

If this bitcoinica shutdown is potentially permanent done even if there is only one honest full node in the world the system is secure so long as it can communicate to all bitcoinica shutdown is potentially permanent. In general, in any deterministic computation process if you have simple state updates and commit to the sequence of states a compact proof of invalidity can be generated by producing a hash tree fragment to the first invalidate state transition.

Ideas in this space have been previously discussed under the banner of proof-of-treachery [1]. Right now not all of the rules can be checked randomly or have compact proofs. SPV header checks — time, target, difficulty, already have them. But if future SPV nodes don't really check all the headers in the future it may be useful to arrange old header times in a merkle mountain range to proofs of sum difficulty and compact proofs of incorrect difficulty.

Proof of invalid script Possible in the current system: Proof bitcoinica shutdown is potentially permanent tree fragments for the invalid txn in question as well as one invalid input no need to include more than one. Could be made more efficient by including commitments to intermediate states, but with the opcode limit all scripts are compact to verify in Bitcoin without doing anything fancier.

Also proves nlocktime, etc. To prove output value greater than inputs all inputs must be provided in the proof. Proof of double spend Possible in the current system: Proof is tree fragments for the two transactions which spend the same input. Proof of false inflation Not possible without more data: The coinbase payment is the sum of fees in a block and the subsidy. Fees require knowing the transaction's inputs output values, to check subsidy you must not only have all the transactions but all their inputs as well.

Nodes can randomly check this by grabbing a random txn and checking its inputs, and compactly prove violation by showing where the fees don't match their commitments.

Proof of block too large Similar to false inflation, requires all the transactions, can similarly be solved by including the sum of txn sizes in the tree. Proof of spending a non-existing input Requires additional data: Proof is a pair of tree fragments for the higher and lower records for the missing entry, and another pair for the outputs created within a block but consumed.

I think you can even pull that off as a soft-fork I get your point, sometimes just trust-less is enough I think the big question is do you need the self-modifying code that forth makes possible? IE things like SPV-verifiable colored coins I think it makes most sense when the only pow is in tx's, although exactly what that'd look like is an interesting question I'd still be in favor of improving things generally, e. What I'd do is just implement a generic snark validation, and providing the snark verification key in the transaction.

Though I'm not aware of any way to do that which we'd consider in scope for this discussion. I propose that if our choice operator s are good then a bitcoinica shutdown is potentially permanent efficient winternitz signature will be completely natural. The public key is just the root hash over this data. So, bitcoinica shutdown is potentially permanent there a way with ECDSA, given three messages pick a pubkey,r,s such that pubkey,r,s is a valid signature of any one of the three messages?

I think the most fundemental thing I've discovered is the concepts of how mining can be separated into timestamping and proof-of-publication Is it back in your possession now? What if that data has been further split into multiple parts with an error correcting code and spread to multiple machines. Now where does the coin reside? But there is no need that the best analogies need to be physically intutive, in fact basically all of higher mathmatics is about manipulating abstractions which are in no way physically bitcoinica shutdown is potentially permanent.

I think relating to a payments ability to require transferable restrictions on the next transaction. But make the covenants temporary, the coins themselves perishable, or applied to user issued assets not colored coins but separately issued assets a la freimarkets bitcoinica shutdown is potentially permanent, and it is a different story IMHO.

Some of your competition doesn't mind disclosing this however. I think they should just take the scheme we discussed previously and execute it under a ZKP for general programs. It would be similar in size to the bitcoinica shutdown is potentially permanent proofs. Verifer does this too. Both prover and verifier get a hash root. The verifyer verifies the signature and the zkp.

But it shouldn't be terrible. I believe it would be cheaper than another sha hash in any case. Or of an encrypted value or. I bitcoinica shutdown is potentially permanent not, at least not with the GGPR12 stuff as the arith circuit field size is set by the size of the pairing crypto curve.

You could get more elaborate, like timelocking the funds and show that funds beyond the withdraw daily limits are actually unspendable by the network, but perhaps I'm getting to cipherpunk there.

I'm thinking for a merklized AST what makes sense is merklized forth. The forth dictionary concept is perfect for it, and means you have a simple, easy to implement language already used for embedded andother things and bitcoin scripting along with all the usual nice things like editor modes and what not So you've got your parameter stack and return stack, and are bitcoinica shutdown is potentially permanent at the point where you can recreate Bitcoin scripting.

Now the interesting thing to do is add TPM functionality, which means a PCR opcode and stack to allow you to select what you want to consider as the start of the current trusted block of code.

Then add an encrypted stack, as expected encrypted with H sec PCR tipand some sort of monotonic counter thing.

That should give you enough to do trusted computing with an extremely stable API, and that API itself can be just AST heads of useful library function calls that may actually be implemented directly in C or whatever rather than the bitcoinica shutdown is potentially permanent themselves. I don't know that explicitly supporting that makes sense. Equally, forth is already common in applications, IE spacecraft, where you need relatively bare metal languages with simple frameworks and symantics; note how with forth it's much easier to get to the level where you trust that the code being run is what you actually wrote than, say, C.

Equally, forth is already common in applications, IE spacecraft, where you need relatively bare metal languages bitcoinica shutdown is potentially permanent simple frameworks and symantics; note how with forth it's much easier to get to the level where you trust that the Just be clear what the maximum's are for the variou parts of the stack. Dunno bitcoinica shutdown is potentially permanent what the stack datatype should be, MPI's are nice but there is the subtle issue that it'd be good to have some clear idea of how many operations an operation takes.

Of course, really simple would be bit ints and implement everything higher level in forth. Maybe a merkle mountain range of every value ever associated with a given key? I mentioned to TD earlier today the idea of miners committing to a merkle tree of txids in their mempool, just to prove visibility, you could use that if the commitment included txins being spent.

Appending needs to touch only the "mountain tips", that is the perfect merkle trees already bitcoinica shutdown is potentially permanent, and for n items stored you'll have log2 n trees. I've got an idea where you'd make transactions have commitments of previous ones with a merkle-mountain-range-like scheme so you could efficiently reference any previous transaction up to the genesis block.

This is easiest to understand if transactions can only have linear history, but a dag history is doable too. Anyway, wallet software would receive that history to know the coins are valid, thus pushing validation directly to the users. Obviously some way of pruning that history is important, SCIP is heavy-weight and complex but could work. So one possible accumulator would be to construct a merkle tree of a bit field with one bit for every integer between 0 and 2 You can prove you added an integer to that set by showing the leaves for an operation updating bitcoinica shutdown is potentially permanent appropriate bit, and you can remove an integer with another set of leaves.

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The official blog of localethereum. Follow us for updates on security and the crypto-financial ecosystem.

One of the primary advantages of cryptocurrency over traditional currency is its elimination of third-party risk. Instead of trusting an entity to keep record of your balance — which is a simplified version of how traditional banking works — blockchains use an immutable public transaction ledger which is constantly audited using cryptographic proofs.

The awesome result of this is that it is mathematically impossible for anybody to revoke, transfer or destroy your cryptocurrency without access to your private key. As long as you keep that long string of text safe your private key — by storing it on a piece of paper, in a hardware wallet, or even in a tucked-away text file on your secure computer — you can be confident that your cryptocurrency is safe.

Instead, your deposits have a significant chance of being lost or stolen because of the compounding risks associated with centralised exchanges:. While any of these threats alone should be enough to make you think twice before trusting a centralized exchange, these risks together is a recipe for disaster. In the very first paragraph of the original Bitcoin whitepaper, Satoshi Nakamoto explained that by enabling peer-to-peer payments, people would no longer need to trust a financial intermediary.

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. And yet today, somewhat ironically, most of the risk we face still stems from trusting third parties. We see headlines about centralized exchanges making terrible mistakes that cost customers millions of dollars over and over, and yet people continue to risk their deposits in these unreliable organisations — likely because, until the introduction of peer-to-peer alternatives like localethereum and EtherDelta , centralized exchanges were the only viable choice.

Vitalik Buterin, the creator of Ethereum, made a similar point in while remembering the early days of developing the concept of a decentralized programming language:. It is now a well-known fact that centralized exchanges tend to be extremely unreliable. It should serve as a reminder of the many times centralized exchanges have proven themselves to be terrible at holding your money.

Although best efforts were made to ensure the information contained in this post is accurate, please contact us if you feel any portion is misleading or inaccurate. In March , Mt. During the flash crash, the attackers used their own accounts to purchase the extremely cheap Bitcoin and then withdrew it. Other traders unassociated with the attackers also capitalised on the flash crash by purchasing the cheap Bitcoin. Gox ended up reversing the trades and claims to have fully reimbursed all customers affected by the hack.

After the attack, the exchange shut down for several days. Bitomat was the first Bitcoin exchange to offer support for the Polish currency Zloty. In July , Bitomat routinely rebooted one of its Amazon-hosted servers and in the process accidentally destroyed a huge sum of Bitcoins. On October 5, , the exchange suffered a massive breach by an unknown entity.

The website was quickly replaced with a message stating that an intrusion included all of their Bitcoin wallets and their entire user database. Approximately 11, BTC was stolen from the exchange, never to be seen again. In October , only a few months after the Mt. Gox auditor account hack, the exchange accidentally sent 2, BTC to a number of invalid addresses. As no private key could ever be assigned to the addresses, the Bitcoins were effectively lost forever. In March , the cloud hosting company Linode suffered a major breach.

Once they gained root access to the servers, they transferred out everything they could find. Of the services targeted, Bitcoin trading platform Bitcoinica was the hardest hit. Bitcoinica said it lost 43, BTC in the theft and pomised to reimburse its customers. Only two months had passed since Bitcoinica reported its first robbery, when it became the apparent target of a second major hack.

Later that year, the Polish Bitcoin exchange BitMarket. Unsurprisingly, Bitcoinica was the subject of a third major heist in a third and apparently unrelated attack.

On July 13, , Bitcoinica said that an attacker gained unauthorized access to its Mt. In the weeks after the incident, a number of well-known figures in the Bitcoin community speculated that Zhou Tong, the seventeen-year-old founder of Bitcoinica, was likely behind the series of thefts.

According to Zhou Tong a. The extremely large buy orders caused a temporary spike in the market. The attacker was quick to withdraw the Bitcoins, but was unable to withdraw the full sum. Official estimates put the scope of the theft at 4, BTC. Last night, a few of our servers were compromised. As a result, the attacker gained accesses to an unencrypted backup of the wallet keys the actual keys live in an encrypted area. Using these keys they were able to transfer the coins.

This attack took the vast majority of the coins BitFloor was holding on hand. Approximately 24, BTC were stolen and have never been returned. BitFloor briefly shut down after the incident, and later returned with the promise of repaying its creditors over time. Only some creditors were eventually repaid. In May , an attacker stole 1, BTC as well as large quantities of lesser-known cryptocurrencies Litecoin and Terracoin.

The exchange became insolvent in after subsequent hacks. In November , the Czech Bitcoin exchange Bitcash. In early , the exchange collapsed in what is still considered to be the greatest Bitcoin scandal of all time. On February 7, , Mt. In a press release , they initially explained that they had detected unusual transaction activity on its Bitcoin wallets and had initiated a technical investigation weeks earlier. Gox or Bitcoin, and that the developers of the core Bitcoin client needed to change the software to resolve the issue.

The problem we have identified is not limited to MtGox, and affects all transactions where Bitcoins are being sent to a third party. We believe that the changes required for addressing this issue will be positive over the long term for the whole community. As a result we took the necessary action of suspending bitcoin withdrawals until this technical issue has been resolved.

Nowhere in the initial press release did they say that they were the subject of a massive theft. It was not until an internal company memo was leaked on the web on February 23, titled Mt. Crisis Strategy Draft , that the truth of a massive breach was revealed. For several weeks MtGox customers have been affected by bitcoin withdrawal issues that compounded on themselves.

The truth, it turns out, is that the damage had already been done. At this point , BTC are missing due to malleability-related theft which went unnoticed for several years. The cold storage has been wiped out due to a leak in the hot wallet. The memo outlined a corporate strategy to rebrand the business, re-open the exchange and repay the stolen coins from its profits over the long-term.

Essentially, the memo unveiled a devious plan to cover up the half-a-billion-dollar theft and attempt to continue business as usual.

The stolen , BTC amounted to roughly 6 percent of all Bitcoins in circulation at the time: The company is still undergoing continued bankruptcy proceedings. In March , the cryptocurrency exchange Poloniex — which remains one of the most popular alt-coin exchanges today — lost Instead of taking on the losses as a company, the exchange decided to issue a mandatory haircut of MintPal was once one of the most popular cryptocurrency exchanges for altcoins such as Dogecoin, VeriCoin and Litecoin.

On 13 July, , the exchange announced it was the victim of a theft. The developers of VeriCoin were quick to deploy a fork to return the stolen funds back to the exchange. Later that month, it was reported that MintPal had changed hands after being acquired by Moopay. I […] tentatively reached out to their management and let them know that we were interested in opening up talks in regards to an acquisition, if it was something they were interested in.

After a number of conversations with the current management of MintPal we reached an agreement that both parties were comfortable with, and are just waiting on the paperwork to be signed which will be happening this week. The CEO promised to make security the new focus of MintPay in order to restore faith in the exchange:.

Our first action to take regarding MintPal, is to beef up the security, make a number of performance tweaks; do a formal audit and review of operational procedures,. However, in an abrupt announcement in October of that year only a few months later , Alex Green announced that Moopay would be filing for bankruptcy and would immediately cease all operations. Without warning, the MintPal exchange shut down and stopped processing withdrawals. Claiming that the company had passed the exchange over to new management, Green informed Moopay employees that MintPal was no longer their problem.

It was not long before a former employee of Moopay publicly accused Alex Green of stealing 3, BTC from the exchange. What happened to MintPal is the equivalent of a nuclear bomb being dropped on a City, and a two-man hazard crew consisting of Mike and Ferdous are now in charge of the cleanup — and attempting to follow the trail of a BTC transaction from MintPal, which is now accused of being lodged into a personal account of Ryan Kennedy.

In , Ryan Kennedy a. Alex Green was charged by U. The charges followed a three-year investigation into the sophisticated scam. It is alleged the offences were committed between January — December in At the time the charges were laid, Ryan Kennedy was already serving an year prison sentence after being convicted of rape in Initially, a BTER representative suggested that the exchange would contact the NXT development team and request for a rollback of the blockchain.

However, the organisation in charge of NXT development confirmed that a significant majority of its users opposed the idea. The rollback effort was later abandoned by the exchange. When Bitfinex themselves used to spoof their entire orderbook , published October , allegations surfaced about how Bitfinex cloned bids and offers from other exchanges and ran an internal arbitrage bot on their own markets to give a false impression of liquidity.

In , soon after the exchange first went live, Bitfinex employed a unique arbitrage bot with the goal of making its markets appear more liquid. The Bitfinex arbitrage bot was programmed to copy orders from other exchanges including Mt. As soon as these imported orders were hit on Bitfinex, their arbitrage bot quickly ran to the source exchange and executed the same trade over there.

To the average trader using Bitfinex at the time, everything seemed normal. Big problems arose when the arbitrage bot became even slightly out of sync, which happened often during times of high volatility.

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