In case you haven’t noticed, Bitcoin is going through some pretty intense tribulation right now, with tens of thousands of unconfirmed transactions, thanks to a “stress test” and, on top of that, forking issues due to invalid blocks being mined and propagated by large mining pools. What exactly is going on there? Let’s have someone else explain it for us:

Three months ago I discovered a miner with ~1% of the hashrate that was processing transactions with no signature validation at all. If I had sent that miner a transaction where I spent a million of other people’s bitcoins they would have mined it and the half of the non-verifying miners would likely have given it 6+ confirms for any SPV client; and thats the more fundamental issue here which no amount of version checking would help with.

Well that certainly doesn’t sound good. Maybe it should be fixed…�jstolfi weighs in:

The core devs tried to activate BIP66 through a very soft fork, so that clients would not even know that it was happening (otherwise they might get alarmed at the word “fork”). So they just let the new rule to be silently activated as soon as 95% of the miners signaled that they had upgraded to the new version of the software (v3). To make the transaction as smooth as possible, they allowed the players (clients, relay nodes, and miners) running both v2 and v3 to talk to each other even after the transition.

But that plan backfired because some v3 miners got a block B from one of the few remaining v2 miners and started to mine on top of it, not realizing that B was invalid under the v3 rules. For a while, that was the longer branch. That branch was perfectly valid for clients still running v2, and was assumed to be valid by some v3 wallet apps that did not do full checking of the blockchain. Meanwhile, other v3 miners, realizing that B was invalid, ignored that branch and started growing (more slowly) their own branch. The ‘bad’ branch was already 6 blocks long when the core devs (who fortunately were watching the blockchain at the time) managed to warn those miners that they were mining an invalid branch. Those 6 blocks were then discarded, and the ‘good’ branch soon overtook it. Fortunately there were no double-spends, and all transactions that were confirmed in the ‘bad’ branch were eventually confirmed in the ‘good’ branch too.

The same problem occurred again a few hours later, and this time the ‘bad’ branch only got to 3 blocks before being abandoned. It is not known whether there were double spends this time.

To guard against possible repeats of the incident, possibly with double-spends, the devs had to issue a warning to all clients (even v3 ones, depending on the software they are using) to wait 30 confirmations (5 hours) for safety.

Thus, what was supposed to be a “stealth” fork became a major PR disaster.

IMHO, the devs blotched the fork. They should have programmed a delay of (say) 2 weeks between the “95% majority” event and the enabling of the BIP66 rules. Then they could have sent a waring to all v2 players, especially the remaining v2 miners and relay nodes, that they should upgrade before BIP66 went into effect. But that would have been bad PR… ha ha.

One thing is the ‘consensus rules’ that say when a block is valid. Another thing is the algorithm that miners use when building the blocks that they try to mine. The ‘v3’ label refers to the former only. By stamping ‘v3’ on their mined blocks, they only indicated that they agreed to the version of the ‘consensus rules’ that enforces BIP66 after the triger event.

The software that those miners were running would indeed have checked the BIP66 rule, if it got a chance to do so. But the software only checked the transactions to be included in the block that they were mining, and not those of the parent block that they got from another miner.

The v3 ‘consensus rules’ say that a block is valid after the trigger event only if the transactions satisfy BIP66 (among other conditions) and the parent block is valid. But the v3 rules don’t say that miners have to fully check that the blocks that they issue are valid. It would be better for bitcoin if they did, but miners have the ‘right’ to create their blocks any way they want, even post blocks full of random bits.

The miners should want to post valid blocks rather than invalid ones, because invalid blocks don’t pay anything; but they must win the race against other miners to earn anything. They figured out that they would earn more by gambling that the previous block was valid, and mining on top of its hash only, than by downloading it and verifying it first. If the previous block was v3-valid, their block would be v3-valid too. If the previous block turned out tobe invalid, well, bad luck.

The Bitcoin Core release that includes v3 does verify the parent block before mining on top of it; but miners are not required to run BitcoinCore, and the v3 ‘consensus rules’ do not require anyone to run a particular version of the software.

An interesting detail is how the big pools steal the hash of the most recent block from other pools, even before it gets out to the relay nodes. That is why they couldnot even check its version stamp.

All they have to do is subscribe anonymously as members of the other pools, and they will get that information as soon as the pool manager receives a mined header from some other member. The pool’s interest is to make sure that the block just mined is valid, and to put all its members to mine on top of it as soon as possible, while it its still sending it out to the relay nodes.

To be precise, a miner gets bitcoins for being the first to mine the next valid block. They are not required to verify anything (and it is not possible to check whether they are indeed verifying anything.) They only verify enough to maximize their expected gain.

In particular, when they steal the hash of a recently mined block from some other pool, they are quite confident that it will be a valid block. So they don’t bother to check it, and that gives them a few precious seconds of advantage in the block race.

Usually that is a safe assumption; it failed in this case because of the switch-on of BIP66 and the “victim” of the theft rbeiong out of date.

Bitcoiners are blinded by greed? No way that’s possible!

The post Fork you, got mine appeared first on Buttcoin Foundation.

This a guest post from security researcherNicholas Weaver. Nicholas is a part of Berkley’s ICSIprogram and he’s here to tell you a bit about how broken bitcoin is and how you too can profit!.

OK, now I may be just be a simple country Hyper-Chicken, err Ph.D. security researcher, but I think by now I get something very important about Bitcoin: How to make money with Bitcoin. Now I’m also a lazy security researcher, so heck, lets reveal my super secret 10 step plan on how you too can make lots of money with Bitcoin.

Step 0:

You gotta move to Sochi. Now the Bitlievers like to claim that their digital Quatloos free them from the oppressive yoke of government imperialism, but at the same time they go screaming like little girls to the government to help them out if you steal too many of their Dunning-Krugerrands. So you gotta go to some country where the local language defines MLAT as “Tell the FBI to go fuck itself”. And although most of Russia is a frozen hellscape dominated by a shirtless, humorless tyrant, Sochi is, after enough billions of corruption, a nice place to live. Hey, they even have a F1 race.

Step 1:

Break into blockchain.info and all the other “web wallet” services. Oh, but wait, aren’t these companies run securely, with lots of venture capital money? Well, if you consider the VC fundedRNG Improvments[sic]to their code, do you think the rest of their security is much better? And breachCoinbase too while you’re at it…

Step 2:

Download all the saved web wallets. Now these wallets are all encrypted by the suckers users passwords but that just means most are protected with passwords only slightly more sophisticated than “123456”. So start throwing it at your password cracker. As a bonus, get everyone’s email addresses and download all the other password information. And get crackin…

Step 3:

In the meantime, its time to provide another “improvment” [sic] to Blockchain.info’s JavaScript. Just tweak things to leak passwords out to you. Something subtle, or blunt, or whatever. Just as long as it works. For some presumably humorous reason, the Bitcoin community somehow thinks that downloading JavaScript from a server to access your wallet is more “secure” than just having all your digital Latinum stored by someone else. So be sure to laugh manically as each password rolls in.

Step 4:

Wait. Patience is a virtue, young padawan. Until your improvments [sic] are noticed, they will continue to work, snagging all the suckers who somehow, despite believing in a decentralized digital Clams, insist on trusting centralized companies because “the market will eliminate bad actors” or some such Randite fantasy. I mean, the market eliminated bad exchange actor Mt. Gox pretty quick and they in turn eliminated over $500 million of bad bitcoin actors from bad customer actors too!

Step 5:

Once you are discovered, only then do you transfer all those virtual Cubits into your own accounts. Conveniently, the wallet service will tell you when you are discovered and should move the loot because well, they’re going to have to post a big announcement and remove your improvments [sic].

Step 6:

Join the throng on /r/bitcoin who mock those who lost their binary Ankh-Moorpork Dollars to your attack, because everyone knows you should only store your Bitcoins on your own computer. This computer must run a self-burned live linux distro and never be connected to the internet. In fact, make sure to glue the ethernet ports shut. Don’t forgetto include posts noting how the thief is performing a public service in this objectivist paradise by educating the victims on how computer security works.

Now this is all fine and good, but why stop there?

Step 7:

Start writing your malcode module that looks for Bitcoin wallets. This pretty little malicious program should copy both unencrypted and encrypted wallets. It should also add an improvment [sic] to any Bitcoin client it finds to once again tell you the password. Don’t want to actually write the infection routines? Well, there are services you can use, just find your friendly PPI service.

Step 8:

For each stolen wallet, if you crack it, don’t rob it. Well, not right away. After all, probably the best host based IDS is an unsecured Bitcoin wallet, and you don’t want word to get out too soon. Wait a little while. Meditate on the fragility of all things. And then, get impatient and rob em blind.

Step 9:

Join the throng on /r/bitcoin who mock those who lost their binary Ankh-Moorpork Dollars to your malcode, because everyone knows that you should only store your Bitcoins using a paper wallet. Once again, be sure to include posts noting how the thief is performing a public service in this objectivist paradise by educating the victims on how computer security works.

Step 10:

Enjoy life!

So there you have it, a 10, well, 11 step program to make lots of money in Bitcoin. Whatever, off by one error, who cares? Its not like such errors exist in the core protocol of Bitcoin (*cough* OP_CHECKMULTISIG *cough*).

You can thank me by contributing to 1BitcoinEaterAddressDontSendf59kuE.

You can also follow me on Twitter: @ncweaver

The post How to make money with Bitcoin in 10 easy steps appeared first on Buttcoin Foundation.

What you see here is a briefcase filled with electronic guts and a coin slot that somehow converts your real money into fake money, possibly using a 4G modem and a shady exchange.

What it’s supposed to do is print out a receipt containing two QR codes, the first being the important private key, the second being the public key. We were kindly asked not to photograph people’s private keys as the machine spit them out, since this would be a great way to steal people’s play money.

Once we’d spent enough money on booze and collected a handful of change that wasn’t left on a hotel nightstand, we decided to give this thing a spin just for kicks. Things went downhill almost immediately. Four quarters went in, the display read $0.25, and a penny was found in the coin return slot.

Fortunately, our Bitcoin Heroes were prepared with a sack full of quarters that they kept around “just in case” because this happens sometimes. Once our host had sacrificed seventy-five of his own cents, we received a “paper wallet” that was worth .008 bitcoins. The guy behind us in line was unironically ranting about the instability and worthlessness of the USD. After a quick photo op, we got the hell out of there.

The post Bitcoin Briefcase Converts… hold on I have some more quarters here appeared first on Buttcoin Foundation.

• Sure, but it beats verifying all the transactions by hand like they did in the old days of quaint paper money, hahaha those poor bastards with their ”cash registers” and shillings and whatnot.
• I love this. People who try to make points like this against bitcoin don’t seem to realize how infantile cash and banking systems are in comparison.
• this is governments going OMG/WTF bitcoin is real–it’s a strong currency in the midst of our little currency war. All currencies are competing to devalue, simultaneously. BTC isn’t. This is like prohibition; as soon as inflation picks up, the masses will come.
• Using Xbox or PS3 to mine coins? Anybody tried this before? I know their GPU’s aren’t top of the line, but for people like me who don’t game much they could be going to much better use.
• I don’t think we are near the peak either. It’s fascinating to watch bitcoin grow, evolve and get its financial tentacles all over things.

• No government would want BTC. Why would they want BTC when they can print their own money as much as they want out of thin air?
• actually by the time BTC becomes the world currency, $80,000,000/BTC could be a tiny fraction of the worlds wealth. These $$ are printable with no limit.
• When I barter with my Bitcoin, I’m exchanging fair value for fair value.
• is there a site/service where a person could buy a Bitcoin Certificate of Deposit for x Bitcoins with y% interest over z months?
• wow I thought someone had paid a hooker in bitcoin….
• Let’s hear your ideas for plots and situations for a hollywood movie that are only relevant and made possible by Bitcoin.
• Every time you buy something online, ask if they accept bitcoin. If enough people do this, surely the businesses will start taking the hint.
• This is the best scam so far. That’s truly brilliant in its simplicity.
• I will be starting a company in the coming months that will be doing business with people throughout my city, particularly in the hoods. I see this as a great opportunity to get bitcoins into the hands (or computers/cell phones) of those that need them most.
• Can you direct deposit money directly to MtGox?
• I don’t know anyone else who uses them. I have a lot of friends who are vaguely interested, but when I start explaining how one obtains bitcoins, their eyes glaze over. The benefits of bitcoin over fiat currency are just not tangible enough for them to justify keeping a separate bitcoin wallet
• That new fangled Bitcoin magazine site looks great on my Android tablet.
• I think Bitcoin is a great match for making transactions online for a variety of reasons, and would love to explore how it could improve the reddit community. If you have any thoughts, advice, or ideas (e.g. tipping redditors, or perhaps betting on which stories will make the front page), I’d love to hear them!
• I don’t always read economic analysis. But when I do, I prefer to read it in magazines about computer networking.
• buy cars with bitcoin this is huge
• Writing is spelled wrong in the navigation. I will proofread the rest of your site for one bitcoin.
• Whats keeping prices down? 1st the triangel that has formed since the 17th of July, in which final stage we are (jump up or down immanent)
• Super. A few more hacks and controversies, and the price might get back down to 2 dollars again so I can buy in.
• Me and a person or two I know up in Fargo ND would be happy to order some guns for BTC.
• Do you realize, if you put $1000 in Facebook IPO and $1000 in Bitcoin on the same day, Facebook investment would be worth $550, while your Bitcoin investment would be $1780.
• Modern day deposit insurance is a moral hazard that only exists because the ability to print fiat from nothing exists.
• When a EMP from a nuke fries all the computers and magnetic media, all the bitcoins will be wiped out along with the currency of choice(If Bitcoins get adopted).
• there is about 5 billion ounces of gold above ground according to Wikipedia’s article on ‘gold’. And yes, that would translate to about 238 ounces of gold for every whole bitcoin.
• I would emphasize that bitcoin is a strong currency provided by an honest banking system. Strong currency because it cannot be inflated away. And its banking system only does accounting, and no gambling means it will never need a bailout. What is it backed by: The laws of supply and demand, and the laws of mathematics.
• Bitcoin will evolve and in 17 years nation states will all crumble as they are unable to justify their own existence any longer. The bizarre global civilization that will arise out of this will operate well with Bitcoin and only after the freedoms and benefits of a bitcoin based money society are fully realized will there ever be critical mass enough to take it to that whole nother level and do the pure mutual credit thing.
• If you consider just the US money supply alone, M2, which consists of currency and bank deposits, is approximately 10 trillion dollars. If Bitcoin were to replace Federal Reserve notes, one Bitcoin would be equivalent to $330,000.
• I’m scared because I believe I’m beginning to witness the collapse of the current dominant currency (USD), and the rise of a new one (Bitcoin).
• Bitcoin, the poor Americans offshore tax haven.
• Court upholding a Bitcoin contract could definitely affect demand, enhancing confidence in Bitcoin businesses.
• For a nanosecond, Bitcoin market capitalization was 9.65 quadrillion, 138 times world GDP!
• I’m perfectly happy exchanging bitcoins with individuals and spending my bitcoins to friends and coworkers when they buy my lunch with their shiat currency. If we all do this, eventually one of those friends will be a smart CEO (or small business owner) that wants his business to support it. Bitcoin is all about Network Effect.
• The price can only go up. Anyone buying into the market has to cash out at a higher price to make money and anyone with coins won’t want to push the price down. So unless someone comes along with many many coins and just wants to dump them on the market to devalue their own worth there are no factors currently to push the price down.
• PON-Z: the world’s first honest ponzi scheme. Using bitcoin.
• If you own Apple share, sell them and use the money to buy bitcoins.
• Lol, know any hookers that take BTC?
• I look at Bitcoin as not a currency, per se, but rather as a store of value.
• Fraud IS acceptable in bitcoin.
• Can somebody ask this Japanese giant robot manufacturer to accept Bitcoin donations?
• Bitcoin is the only object in the known universe with a known, verifiable, guaranteed, fixed supply.
• It is not a bubble, it’s an inverted correction from last year’s crash.
• If he pulls this off… it will be a Ponzi scheme that didn’t hurt its investors, probably the first. Probably will deserve a paragraph in the wikipedia article on Ponzi schemes.
• Bitcoinica is stealing from themselves to valuate the Bitcoin. Once people start hearing that Bitcoins are being stolen the perceived value of Bitcoin increases as people start to realize that Bitcoin is something worth stealing.
• guess i’m going to wait a week before buying more bitcoin.. shit’s gonna drop like a rollercoaster.
• I love the bitcoin community; every time the price goes up they cheer about how much more their investment’s worth, and every time it goes down again they cheer about how they can buy cheap bitcoins again. That kind of optimism is just heartwarming in today’s cynical world
• Is this the first Bitcoin bank bailout?
• My wife will be so happy when I show her all the bitcoins we will have. I invested all our money without telling her. When I first mentioned the trust fund, she said it was a ponzi and that if I ever sent pirate a bitcoin she would dissolve me in an Alkali Bath. Glad I will be proving her wrong.
• I actually see bitcoin as a commodity, fundamentally, with some currency-like properties. It exists in nature, just waiting to be found (mathematical keypairs) by anyone willing to put in the work, just like gold or oil.
• This guy has balls to rob a digital currency that can be used for assassinations from tech savvy people who know how to find him.
• How could reddit omit bitcoin as a payment option for their new fundraising?
• bitcoin will become the primary international reserve and trade currency. value of each bitcoin will be ~10oz gold each. additional decimal places will be added to support future microtransactions. the institution of central banking will become impotent to manipulate humanity any longer. nation states will fall. infrastructure and law and order will be financed by voluntary donation.
• Looks like total garbage. I’m curious to learn more.
• When the too-big-to-fail popcorns start popping, sudden price spikes, never to return. Remember that traders in TBTF banks have i) lots of their own cash; ii) they are watching bitcoin and they will jump in at some point; and iii) they’ll probably be scared of clawbacks.
• It’s not good for the bitcoin economy if a large fraction of the entire currency is held by thieves…
• Come to think of it, Bitcoin is actually the ideal money for ransom payments.
• Bitcoin is the new ‘small unmarked bills’ – except you don’t have to take the risk of physically picking up a dufflebag / briefcase.
• These thefts and scams are a symptom of Bitcoin’s success.
• At the end of the month I’ll be starting a new job that’ll pay me more than I need at the present so I’ll be saving most of the money. I am also thinking of exchanging a portion of the wage for Bitcoins every month.
• you should hold 15% gold, 25% silver and 60% bitcoins, all the way.
• I am planning to hold the bitcoin I own now for 5-10 years. They are part of my retirement plan!
• Bitcoin is already to the point where backing it with gold is meaningless. It has value. It has usefullness. It has unique properties, which are valuable.
• Bernanke bucks won’t be worth a confederate dollar in a few years.
• It’s based on math and rationality, not whim and arbitrary decisions.
• we all know that the mining of gold, silver, diamonds etc, has and will continue to couse a lot of misery for the people whose lands have been colonised/ invaded for these minerals. Plus the exploitation of miners, slave wages they are payed…just need to look at what’s happening in South Africa at the moment. So could we say that Bitcoin doesn’t have the taint of blood on its hands?
• faith in central banking and nationalism is a religion, and bitcoin strikes at the root of both
• everyone will have to have their keys encrypted and stenographied into a photo of their cat
• With no service level agreement, … you could say Bitcoin delivers 100% and be correct.
• Wife challenged me to explain Bitcoin while we’re having sex later tonight.
• Bitcoin is transmitted nerd to nerd its how we change world
• Why is it ok to say ‘Bitcoin is a haven for anonymous criminals’ when there is trillions of dollars of crime going unpunished with dollars?
• Anyone buying bitcoin below 5000 dollars will eventually be seen as an ‘early adopter’.
• Bitcoins are much sweeter than any candy so this will be my second year giving away bitcoins for halloween.
• Wonder how many coins were destroyed by the hurricane Sandy.

The post This is what Bitcoiners actually believe appeared first on Buttcoin Foundation.

The post Bruce Wagner ADMITS to the hacking of MyBitcoin.com appeared first on Buttcoin Foundation.

From: David

Subject: mt.gox hack 2day

Message Body:

i know the guys who hacked into mt.gox and dumped the data today. they released about 60k usernames/passes (hashed), but say they are hanging on to the good stuff for now, preparing for another major crash (without correction this time they say)

these guys aren’t lulsec or anon, think bigger picture, esp. in an unreg market like bitcoins

He sent me a link to a manafesto from Lionhat Security, who taunts the lead developer storing US customer info overseas and who’s previous experience includes iPhone applications.

Text version:

Another release from lionhat security

bitcoin sure has come a long way lately? people moving their life savings around, putting it all in mtgox. well you saw what happened the other day what we were able to acquire from them. maybe you shouldn’t have trusted an 18 year old whose credentials include an iphone soundboard app with your offsite servers. also, shouldn’t he have been paying attention to transactions instead of attending anime conventions?

well, good luck with the mining and all, we’re halfway there with the next black fridayQQ
so throw a few coins our way and we’ll give you a little preview of what we have in store next in addition to some more goodies we got from the last hack

1A35CqoJwzsBAa8ytyEQk7592avWKuBeJ
— lionhat security –�in kimshe we trust

They included a bitcoin block link so maybe they’re looking to cash in on the same penny BTC action from today, who knows.

Remember, if you have any tips feel free to contact me

The post Lionhat Security takes claim for Mt. Gox hack and user dump, taunts owners and promises next black friday. appeared first on Buttcoin Foundation.

It’s a simple one-click process and will give you instant feedback!

Try it out now at WalletInspector.info

EDIT: While this could be a legit site or a joke site, be mindful of where you upload your wallet files.

The post Bitcoin Verifier will verify the integrity of your wallet appeared first on Buttcoin Foundation.

Probably would have stolen your wallet.dat while you were asleep anyways

The post Finally, a use for Buttcoins appeared first on Buttcoin Foundation.

That’s close to a quarter of a million dollars by today’s valuation.

The post Buttcoin is a P2P currency that can be instantly deleted and lost. appeared first on Buttcoin Foundation.