A Bitcoin Blunder for the Ages: $40 Billion Accidentally Given Away (msn.com)
- Reference: 0180766250
- News link: https://slashdot.org/story/26/02/10/1619231/a-bitcoin-blunder-for-the-ages-40-billion-accidentally-given-away
- Source link: https://www.msn.com/en-us/money/other/a-bitcoin-blunder-for-the-ages-40-billion-accidentally-given-away/ar-AA1W37pj
> The hundreds of prize payouts were mostly just a few bucks each, part of a promotional campaign by a South Korean cryptocurrency exchange. The total reward pot: 620,000 Korean won, or about $425. Then came a colossal mistake. A staffer for Bithumb, South Korea's No. 2 crypto exchange, didn't distribute 620,000 Korean won. Rather, the prizes, due to an input error, [1]emerged in a different currency: 620,000 bitcoins , valued at more than $40 billion.
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> That meant a winner who should have received a sum of 2,000 won -- enough to buy a cheap cup of coffee -- reaped, at least momentarily, more than $120 million in bitcoins. Enough recipients sought to sell or withdraw bitcoin that the market sank 17%, before Bithumb halted transactions after roughly 30 minutes. Those affected included investors who had held bitcoin before the botched giveaway. The losses totaled about $685,000, Bithumb says.
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> The company has since said it has reversed the transactions or had recipients voluntarily return more than 99% of the misdistributed bitcoins. But Bithumb is still trying to convince users who during the brief window of trading managed to offload more than 100 bitcoins, valued at roughly $9 million, to give back the equivalent funds.
[1] https://www.msn.com/en-us/money/other/a-bitcoin-blunder-for-the-ages-40-billion-accidentally-given-away/ar-AA1W37pj
'reversed the transactions.' someone explain. (Score:5, Insightful)
Bitcoin's selling point was that all transactions are permanently on the ledger - and that it was anonymous and untraceable - you mean they lied?
Re: 'reversed the transactions.' someone explain. (Score:4, Interesting)
I think this is because making actual bitcoin transactions is too expensive. Instead, the exchange keeps all of it in one wallet and makes a note of who has how much in a spreadsheet. This way no actual transactions need to take place until someone withdraws the coins into their own wallet.
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That's correct. Bitcoin transactions are too slow and expensive, so exchanges don't actually execute them all or truly move them among wallets. They just keep track of where the various amounts belongs and can move it as needed within their own system, then pay it out when requested. Much like your bank doesn't physically move a pile of money from one account to another, they simply change their ledger as of where to move it.
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So in other words, they're lying to you, telling you that you're invested in Bitcoin, when actually they just gave you an account that is "supposed to be" backed by Bitcoin.
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The moment an individual bitcoin transaction became too expensive was the day bitcoin failed. These brokers or exchanges are just propping up a failed system. By failed I mean the underlying system was no longer usable as intended. Bitcoin was not supposed to be only used as a central bank between smaller banks/exchanges. It was supposed to be the sole transaction system .
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Well, if all of the business is transacted in Bitcoin, then there isn't much tying a person to an address.
The problem is when people want to convert Bitcoin to anything else. Money changers often like to know who they are dealing with :)
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If your bitcoins are held by an exchange, you're at the mercy of the exchange.
Re: 'reversed the transactions.' someone explain. (Score:2)
Again, wasn't the point of bitcoin that you didn't need to trust some other jerk to store your assets?
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Not quite. In these Bitcoin exchanges, you don't really truly control your wallet. The exchange does. They have full access and control of your wallet. This allows them to automate transfers. In reality, you don't actually possess the bitcoin, they do. So they can simply reverse the transaction.
Much like your money in your bank isn't truly in your control, it's under the banks control. They can move things around on their ledger and if they make a mistake they can reverse it.
Now, if this wasn't an exchange
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except a bank is fdic insured. If they clusterfuck themslves, I still get my money after a day or so. I don't think the btc exchange offers me that protection. I can't think of the name anymore, but there was a case last year or year before where a money service app that people thought was a bank, but was not. They went into bk and the customers lost money.
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No they didn't lie. Transactions on the ledger are permanent and not reversable. The thing is, it takes anywhere between 10-60 minutes for a confirmation of a ledger entry, and most financial entities require multiple confirmations before recognising the transaction as legitimate, so it could take several hours before a transaction is considered immutable.
So unless you like your pizza really really cold and starting to go stale, someone (usually an exchange) will act as an escrow for the transaction.
That means they had 620K in BC, right? (Score:2)
That's a lot of bitcoin to possess.
> South Korean lawmakers have raised concern over the so-called âoephantom coinâ issue: How Bithumb was able to distribute 620,000 bitcoins when its own stockpile appeared to have numbered closer to 50,000.
Wait, how does the blockchain even allow you to spend what you don't have?
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> Wait, how does the blockchain even allow you to spend what you don't have?
Ask the Federal Reserve.
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The Federal Reserve understands how BC's blockchain works??? Who knew?
As for "printing money"/spending what you don't have, yes, I'm familiar with how that works in fiat currencies. I just didn't think it was possible with BitCoin.
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Funny, mostly what the Fed does is *destroy* money. "Money" is naturally created because banks can lend out what is deposited, over and over. The Fed limits that by charging banks a fee if they lend out too much. But the money that goes to the Fed to pay the fee vanishes. It is funny how badly people who bad mouth the Fed misunderstand how fractional reserve currency actually works.
What's that saying again? (Score:1)
> But Bithumb is still trying to convince users who during the brief window of trading managed to offload more than 100 bitcoins, valued at roughly $9 million, to give back the equivalent funds.
What's that saying again? "Code is Law"?
Those 100 bitcoins are gone. Tough shit to those guys.
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Why? If any coins moved at all (bold assumption) it was no doubt into accounts controlled by the owners. "Oops we accidentally gave away $40 billion, that totally happened and we're not crypto scammers trying to promote ourselves!"
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If a bank deposits money into your account by accident, and you spend that money, you are liable for returning it. It's settled law. You can't claim you didn't know or thought it was a "gift" from the bank.
If these people choose not to return the money then the next step would be to freeze their wallets/accounts.
Re: What's that saying again? (Score:2)
They aren't a bank.
Re: What's that saying again? (Score:2)
Bingo.
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What is bingo? The complete lack of understanding of laws? The law isn't about banks, it's about transactions. Being a bank or not is irrelevant.
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Irrelevant. "Bank" in this case is just a party to the transaction. You're not entitled to keep anything that was obviously sent to you in error, even if it's a private transaction between individuals.
On top of that, quickly turning around the transaction to try and prevent the money getting clawed back is usually considered by the courts to be direct evidence that a party knew the transaction was in error.
It's like if you go to an ATM and get out $5 and it spits out a $50. You often get to keep it. If you
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Actually the law is law, and the code is code, and the code of bitcoin is not anonymous (quite the opposite). The law says the people who tried to make the 100 bitcoins disappear are in trouble if someone investigates them and follows up on this.
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WHERE'S MY LAWSUIT YOU TROLL
They got it all back (Score:2)
well, 99.7% of it anyway.
The transactions were reversed by the company. So much for "code is law".
Tech Writers (Score:2)
> That meant a winner who ...
One winner?
> Enough recipients sought to sell or withdraw bitcoin
More than one winner? Or not winners, just exchange clients? Did one winner start disbursing to his friends?
> the market sank 17%
The global market sank? Because of 10 lost Bitcoin? Was there a rumor that went viral? Was it the exchange's local bid/ask table?
> before Bithumb halted transactions
BTC txns? Their database of custodial accounts?
> Those affected included investors who had held bitcoin
Had held? Did something
"Promotional campaign" (Score:2)
Promotional campaign, yeah I'm sure. I'm sure they had 40 billion worth of bitcoin lying around and managed to transfer it to actual other bitcoin accounts without anyone noticing.
real-life Michael Bolton (Score:2)
"I must have put a decimal point in the wrong place or something. I always do that. I always mess up some mundane detail."
Headline is wrong... (Score:2)
They didn't accidentally give away $40 billion. They accidentally gave away the equivalent of a little less than $10 million. $40 billion was just the theoretical value attached to their fat finger error had they actually given away the number of bitcoin instead of the Korean won they intended.
Life Imitates Art (Score:3)
"A bank error in your favor, collect $120 million in Bitcoin."
Yeah, I am a pretty honest guy and I love my currently life; but if I saw that much in show up in my account I would move it immediately and then seriously consider disappearing to another country and starting over.
Good luck getting that $9 million in untraceable money back.
Re: Life Imitates Art (Score:2)
Bitcoin is the opposite of untraceable. There's literally a public journal of every transaction. If you can be connected to a wallet then every transaction you've conducted is exposed.
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Good point.
0.000000294 Bitcoin has been added to your account (And now I have your wallet address).
Re: Life Imitates Art (Score:5, Insightful)
it is entirely traceable and at least in the US and UK and it consider theft if you knowingly keep a deposit paid to you in error. My 'guess' would that courts would consider that applies to crypto currency ledgers as well.
Now when this crypto stuff was new I suspect prosecutors would have said 'wtf is a bitcoin, I am to busy for this computer nerd nonsense' and let you skate, but we not there anymore.
Sure maybe this no financial institution that can undo your transaction but property law broadly exists outside of banking and finance, and the notion that if someone over pays you a few million dollars worth of bitcoin and your going to say 'sorry Charlie, mine now' is just plain stupid. Some guy in a black robe is going to say return the money and I am going to jail you for contempt if you don't until you do' at least if you are ripping off any of the sorts of people governments tend to protect. If you are ripping off the other sorts of people with millions worth of bitcoin to over pay you in the first place well better look over your shoulder...
take that bitcoin and let the courts work it out w (Score:2)
take that bitcoin and let the courts work it out will the rules of bitcoin in the court room
Re: Life Imitates Art (Score:2)
How would you react if the bank would take $120 millions from your account to your detriment... by mistake?
Also, I would be cautious about "untraceable". I would say "hard to trace for someone who is not determined to look it up".
But maybe that's just me...
Re: Life Imitates Art (Score:2)
They're not a bank.