Interview with core Bitcoin developer Gregory Maxwell

We caught up with Gregory Maxwell, the core Bitcoin developer regarding the current transaction malleability bug and Mt. Gox.

Are Mt. Gox blaming their own coding incompetence on yourself and the other Bitcoin developers?

It’s hard to tell what MtGox is doing or thinking as they are very poor at communications.

I was very surprised by their press release, it was completely out of the tone of the discussion I had with them last week. I was also pretty insulted by it, I sought them out to advise them that they had issues and what I believed them to be— as a pure act of helpfulness on my part— and I got nothing out of it, except their press release using the fact that they’d talked to me to straighten their somewhat misleading claims.

MTGox runs software they wrote themselves, they have no one else to blame for it but themselves.

Will updates from your end be pushed or will it be up to the exchanges?

Entirely separately from MTGOX, someone suddenly started dos attacking the network with mutated transactions about 24 hours ago. They’re a nuisance and gumming up some services, but not causing any loss of funds like mtgox experienced. MtGox’s issues were their own mistakes.

We’ll probably issue some updates to filter out the DOS attack, however.

How much damage has Mt. Gox caused to the community?

I think they’ve done more damage to the remaining goodwill the Bitcoin community had for them than anything else. Market prices sometimes just reflect the most nervous parties, so I’m not sure how much weight to give the impact there. Bitcoin itself works fine regardless of what price people are buying it at.

As someone who personally has some funds in MtGox I’d personally like to know how much they lost. Prior to their press release I’d assumed the amount must be small or internal controls would have caught it,
instead of people reporting it to them on chat. The intensity and character of their response leaves me worried that my initial estimates might have been incorrect.

Passing the ‘buck’! Mt. Gox’s incompetence continues to cause Bitcoin chaos

Mt. Gox, the worlds largest Bitcoin exchange recently suspended customer withdrawals across all accounts, stating that funds will not be released until Bitcoin fixes a known bug within its protocol. As expected however this has forced a huge backlash from its users and the Bitcoin community at large blaming the exchange for lax security implementations. So who’s to blame, Mt Gox or Bitcoin?

The customer withdrawal suspension was initially due to a problem with the exchange’s own payment processing system, but the most recent statement released by Mt. Gox regarding the freeze puts all the blame on Bitcoin developers without holding itself responsible.

What has come to light very recently however is that Mt. Gox have known about the security flaw and bug within the transaction malleability since 2011(view here), courtesy of core Bitcoin developer Greg Maxwell.

Maxwell alerted the exchange and explicitly warned them of the possible flaw in their platform yet recent events suggest this advice went unheeded.

No doubt the claim made by the company is monumental. Essentially they are saying the bug makes it possible for an attacker to covertly spoof transaction details and make them seem like bitcoins were sent to a wallet when in reality they did not.

If Mt. Gox’s claims hold water and are as infamous as advertised this could be an epic blow to the future of bitcoin. If false however the exchange is likely to die.
Many within the Bitcoin community have stressed their anger at Mt. Gox and questioned why withdrawals have not being actioned for several months with the exchange now conveniently freezing itself whilst other exchanges continue to operate.

One exchange that seems to be pushing on despite this ‘bug’ is Kraken:

Well known security researcher Oleg Andreev has researched Mt. Gox’s claims and has confirmed that there is no bug in Bitcoin Itself.

“If you need a quick answer: there’s no bug in the Bitcoin itself. You may go to Bitstamp/Coinbase/BTC-E/Bitcoin-Central and buy more BTC with a huge discount before it gets back to $800-$900.”

It’s clear that Mt. Gox does not want to hold itself accountable and instead wishes to pin the blame on somebody else, even if that has to be the Bitcoin developers themselves. Due to the Bitcoin community being tech-savvy it seems the news will only weaken the confidence in the company and ultimately strike it from the top spot in the exchange world.

Andreas M. Antonopoulos gives insight into the current Bitcoin chaos

We spoke to Andreas M. Antonopoulos, Bitcoin Entrepreneur and security systems expert regarding the current Bitcoin transaction malleability problem.

Are Mt. Gox trying to pass the blame onto the Bitcoin Developers? Will this cause irreversible damage to the currency ?

Mt. Gox was relying on an incorrect implementation, it appears other exchanges were also relying on incorrect implementations. These incorrect implementations were susceptible to confusion by relying on transaction hashes for *unconfirmed transactions* which cannot be and should not be relied on. Many other exchanges and services, including the one I work as CSO (blockchain.info) had a correct implementation and were therefore not affected by the known issue of transaction malleability.

The issue was known since 2011, and Gox was warned not to rely on transaction hashes that this was not the best practice and could lead to problems.

maxwell-quote

Their attempt to blame the bitcoin software was grossly irresponsible. In the end it will further discredit Gox and reveal their management incompetence. Gox is now a minority exchange that has repeatedly suffered issues related to poor quality control in their software development methodology and has compounded these issues with bad communication and attempts to shift the blame elsewhere.

They represent less than 20% of the exchange volume and after their most recent problems and subsequent communications, they will likely lose more customers. Meanwhile, bitcoin remains unaffected. No transactions were falsified, the network continues to operate normally, and the authoritative ledger contains a correct record of transactions. If Gox had used the authoritative ledger as their reference instead of relying on an unreliable identifier, they would not have been defrauded by customers or had to suspend withdrawals.

In other words, Gox was sloppy, then they blamed someone else. Then they were rightly corrected by several well informed participants and many of the core developers.

Today we are seeing malicious actors trying to flood the bitcoin network with such malformed transactions in an effort to find other exchanges with similar implementation errors.

Some exchanges have temporarily suspended withdrawals in order to ensure they can process everything accurately. It’s like a retail customer showing up at a customer service desk with a photoshopped receipt and trying to get a refund. Mt. Gox was fooled because they didn’t check the receipts against the blockchain.

Others are not fooled, but today they saw a flood of such attempts, as if retail shoppers showing up with shoeboxes of falsified receipts hoping to cash in on this problem. These other exchanges are now dealing with a flood of these which is delaying legitimate withdrawals and some suspended withdrawals in order to check their implementations

In about a week I expect all the exchanges will have robust and correct implementations, as the network has now been stress-tested. Some will resume quickly, Gox might take a bit longer to resume. In the end, the entire industry will be more resilient.

Bitstamp freezes customer withdrawals due to denial of service attack

Bitstamp, the second largest Bitcoin exchange in the world by current trade volume, has frozen customer withdrawals due to an alleged denial of service attack.

The company appears to be in a state of disarray after Mt. Gox also suspended customer withdrawals late last week citing technical issues inline with transaction malleability.

Oleg Andreev, software developer and security expert explained the malleability issue:

If you need a quick answer: there’s no bug in the Bitcoin itself. You may go to Bitstamp/Coinbase/BTC-E/Bitcoin-Central and buy more BTC with a huge discount before it gets back to $800-$900.

In an official statement released by Bitstamp which owns 32% of the Bitcoin USD trade volume they said:

We’re confident everything will be back to normal shortly.

Currently it[Bitstamp] has suspended processing Bitcoin withdrawals due to inconsistent results reported by our bitcoind wallet, caused by a denial-of-service attack using transaction malleability to temporarily disrupt balance checking. As such, Bitcoin withdrawal and deposit processing will be suspended temporarily until a software fix is issued.

Bitstamp has confirmed the customers should not worry as no funds have been lost, suggesting that the Bitcoins have been securely stored in offline storage.

Customers have recently taken to the community boards informing others of their suspicions of Mt. Gox and various other exchanges prior to the official announcement last Friday due to some withdrawals taking months.

The effect of Mt. Gox has sent a shockwave through the Bitcoin community, with many people panic selling.

What is currently unclear and not present in the Bitstamp statement is when customers can access their funds.

At the time of writing the current Bitcoin price is just $665.31.

CEX.IO pushes update to harden exchange security

Leading Bitcoin commodity exchange, CEX.IO has implemented two-factor authentication to strengthen the platform and increase security for it’s growing customer base.

The update secures customer accounts with not only a password but with information only available to the customer, making it increasingly harder for intruders to gain control of accounts using popular methods such as Cross-site request forgery or XSS.

Users will now have the choice of several two-factor features including Google Authenticator, Moreover, Authy and CEX.IO which will use mobile phone verification methods for sending authentcation codes to customers.

Jeffrey Smith, CEX.IO Chief Information Officer, commented:

Users’ security and privacy are of the highest concern for us, especially since our platform deals with financial operations. Therefore, we instantly take measures on raising safeguard level at CEX.IO by means of introducing new security features, such as the Two-Factor Authentication, and informing our users about the ways of keeping their accounts safe from unauthorised access.

The crypto currency industry is often a prime target for hackers who are seeking more ways to exploit industry businesses. CEX.IO is taking this head on building trust for current and future customers.

CEX.IO is owned by CEX.IO LTD which also shares credentials with the popular CHash.IO mining pool.

 

Love thy Bitcoin, Church adopts cryptocurrency

St Martin’s Anglican Parish has become the first church in Britain to accept Bitcoin as a valid method of donation.

Traditionally, donations are made when a tray of some sort (usually gold plated) is circulated throughout the ceremony, enabling church-goers to hand over small sums of money to the church.

church donation tray

Such methods of raising money may be nearing the end of the line as religious institutions smell the coffee and adopt newer methods of collection. It is the 21st century after all!

This isn’t however the first time alternate methods of donation have been explored to reach wider audiences. Churches have in the past considered wirless card machines so as to increase the ways in which donations can be taken. Although this has, for the most part never taken off.

One Bishop said:

Using mobile phones in Hymn might be disrespectful but with the ever growing tech hungry nation, we can’t rely on cash donations.

This is undoubtedly an increasing problem for many institutions as more and more people carry less physical cash and instead turn to either plastic (cards) or more recently virtual currency to settle their purchases.

Worshippers in Sweden jumped at the opportunity last year and praised one Church for going cashless.

It seems Bitcoin could well be a breath of fresh air for many religious institutions as donors can leave larger sums of money anonymously which is currently impractical or not possible with the current banking system.

Reverend Mr Brice of St Martin’s Anglican Parish said:

Parishioners can scan QR codes in the church ceremonies with a smartphone to make anonymous donations.

 

Interview with Tomas Alvarez CEO of Coincove

Say hello to Coincove, an exciting new startup that is ready to bring Bitcoin to the masses in Latin American (and convince them to swap their local money for better digital currencies).

The company is based in San Mateo and founded by dynamic-trio; Tomás Alvarez, Rodrigo González del Cueto and Hannah Kim. Names ring a bell? Thats because they are the founders of Wiitu, a bitcoin transferring service for families.

Coincove is currently operating in and concentrating on four Latin American countries. These are: Argentina, Mexico, Spain and Chile.

Bitcoin is currently taking the region by storm as could be seen through our previous interview with Fernando Paradiso of BitPagos who revealed that a massive number of local merchants were using the payment gateway.

We caught up with Tomás Alvarez, CEO of Coincove to find out more.

What funding has Coincove received so far?

Coincove is currently finishing up in a Silicon Valley accelerator (Boost VC) and are in the process of raising our seed round. This is all the information we can disclose at the moment.

With security vital in crypto currencies, what methods do you have in place to secure customers coin?

We can’t disclose the details of the security measures that we take (half the art lies in how you are doing it!), but we use the best security practices in the Bitcoin space to ensure that our customers’ wallets are safe. For instance, we keep the majority of our funds in offline wallets, we whitelist access to our server by filtering IPs, and all the passwords are encrypted in the database (you’d be surprised how many sites don’t do this). Additionally, to further protect our customers, we encourage them to use 2-factor authentication every time they log in.

What do you think will be your largest market in Latin America? Argentina due to inflation ?

That’s a very good question. At the moment, we are starting with Mexico as it is our home turf (two of our three founders are from Mexico) and it is a surprisingly big economy ranking at 11th biggest in the world–just after the UK. We’ve witnessed the Bitcoin demand in local Mexican markets skyrocket since a few months ago, so we believe that this is the perfect time to introduce our service to Mexico. We would be the first Mexican company to allow buying and selling Bitcoins within Mexico, so it is very exciting. We believe that other Latin American markets that show a lot of promise are Brazil and Argentina, as you mentioned, as well as Chile and Colombia. These are all markets that we hope to be exploring in the near future.

What makes you different than other exchanges in Latin America?

You’d be surprised at the small amount of exchanges that currently exist in this vast region, which is what makes Latin America an interesting region to explore. Additionally, we believe that our key differentiator is the simplicity and ease of experience that we provide on our site. We have designed our site to be a friendlier face of the typical Bitcoin-exchange model so that people do not have to be Bitcoin-savvy to interact with it. In essence, we have created a site that makes Bitcoin more accessible to the mass.

Are you fully legalised to operate an exchange in Latin America in terms of do you fear being raided by the Government?

We focused on Mexico for the moment precisely because of our familiarity with the legal landscape there, and we’ve been consulting with lawyers to ensure that we are in a solid legal position. However, as you may know, conditions in Latin America (and especially the Bitcoin world) can change a lot in very little time, so we are aware that we always have to remain alert to these changes and respond flexibly.

What funding methods can customers use to purchase Bitcoins?

At the moment, customers can either make deposits at bank locations or at over 10,000 point-of-sale locations across Mexico. We will soon allow online bank transfers as well as more locations for cash deposits.

Can Bitcoin give terminally ill hope?

Assisted suicide can be a much needed mercy for the terminally ill when all hope of survival or life has gone. It seems Bitcoin has been offering a peaceful way out for many sufferers.

In the United Kingdom for example, assisted suicide whereby a person deliberately helps another or encourages someone who commits, or attempts to commit, suicide is illegal under English Law(Suicide Act (1961). It can carry a maximum prison sentence of 14 years and in some cases manslaughter or murder.

With many countries still not providing a peaceful and dignified way out for terminally ill patients, many are turning to alternative methods including the purchase of drugs with anonymous cryptocurrencies.

Australian doctor, Philip Nitschke claims that when popular online drug market place “Silk Road” was shut down(now re-opened Silk Road 2) hundreds of distressed and chronically ill patients seeking voluntary death were left hopeless with no secure or safe way to purchase the medication. He said that he knew of around 20 people who had purchased muscle relaxants to take their own lives.

The removal of the site will now mean that other less secure avenues will be pursued.

Bitcoin, in combination with anonymous browsing software, allowed the terminally ill or relatives to purchase muscle relaxant drugs such as Nembutal from trusted sellers and peacefully end life.

The current law has been heavily debated with several high profile court cases being lost. One well documented case was launched by ‘Tony Nicklinson’, a paralysed stroke victim who lost a high court case in 2012 to end his life by assisted suicide.

Tony, who suffered with locked in syndrome which resulted in him being paralysed from the neck down passed away at his home in Melksham, Wiltshire due to pneumonia when he refused food shortly after losing the high court battle.

A recent poll found that 69% of those questioned supported assisted suicide, 13% did not agree with the process, whilst 18% were unsure, undecided or had no opinion.

One person who is trying to change the law is Lord Falconer whose assisted suicide bill is currently being debated in the House of Lords. This bill would allow a “terminally ill, mentally competent adult” to end their own life, offering a way out for many long term suffers.

Due to assisted suicide along with muscle relaxant drugs being illegal in many countries across the world many, terminally ill people suffer, have little remaining dignity and in some cases succeed in ending their own life without the support of the law.

So what do you think? Should Bitcoins along with other cryptocurrencies be used by the terminally ill to voluntary end their life?

Q&A with telecoms operator pioneering Bitcoin in the Czech Republic

Czech telecommunications operator NETBOX now accepts Bitcoin as a valid payment method making it the first telecoms company in the Czech Republic to do so.

The company provides a plethora of telecoms services ranging from broadband, mobile phone plans right through to television subscriptions. NETBOX have over 100,000 customers using their services including governments, schools and other state bodies.

Although the company is embracing Bitcoin, they are still unsure as to whether adopting the digital currency will bring new customers or just add convenience for current users as an alternative method of payment..

The Czech’s have fell in love with Bitcoin since it’s launch in 2011. According to Google Trends the Czech Republic has drummed up the most internet searches for bitcoin related terms.

We caught up with David Otoupalík, Marketing Director at NETBOX to find out more.

What are the benefits of NETBOX accepting Bitcoin payments for customers?

Customer’s can use their Bitcoins and pay for internet and tv bills without any money transaction. We also accepting Bitcoins in our customer’s office.

Are you the first Czech ISP to accept Bitcoin? is this something customers requested?

Yes, we are the first ISP in Czech, which accept Bitcoin as regular payment method. All customers can login into customer’s self care and pay online all the bills.

Are Bitcoins becoming widely acceptable in the Czech Republic?

Not at all. We know only about some Subway’s which accept Bitcoins and also DameJidlo.cz, which is Czech food delivery service.

Have you had any customers use Bitcoin yet?

Yes, after launch, some customers paid their bills with Bitcoins and the transaction was realised successfully. So it works!

Do you see Bitcoin increasing NETBOX revenue?

Unfortunately not.

For more details about the official announcement please see here:

Interview with Samuel Cox, founder of the self updating Bitcoin pricing tag

Meet Samuel Cox,  a creative technologist based in London and founder of the self updating price tag.

BitTag is on a mission to streamline the gap between retailers and customers by providing real time price conversion with a simple shake, cool eh!

BITTAG

BitTag is currently in the prototype stages of development but were showcased at the BoxPark shopping centre in Shoreditch. The device is priced at around £40.00(TBC) but seems to be aimed at quirky high end retailers and not your mass market shops. Think Liberty of London and Harrods etc.

The devices are permanently connected to a computer running the BitTag app using Bluetooth low energy technology. The tag automatically synchronizes the current Bitcoin price based on the set currency. If the connection is lost, the price freezeS to the value before connection loss.

BitTag also uses little processing power with its OLED display and a rechargeable LiPo battery.

Customers can simply shake the device to activate a QR code which can be scanned using the customers smartphone Bitcoin wallet, it couldn’t be any simpler.

BITTAG

We quickly interviewed Samuel, covering a few security issues that popped to mind and to find out when the device will hit the shops.

How safe is the tag in terms of security issues?

The tags don’t process the transactions. Bitcoin Wallets like Blockchain still handle that. So they payment side is external. Because it updates the price wirelessly, there’s a chance someone could possibly change the value. But we’re aware of that and are designing to prevent that. End of the day, no system is ever 100% safe.

What if the WIFI goes down?

If Wifi goes down, then it’ll just display the latest result before the wifi dropped. Again, because the users pay via their phones and are usually on 3G, it shouldn’t effect the transaction.

How do you intend to get popular retailers on board using BitTag? have you got any lined up to trial?

At the minute we’re exploring options with retails. Very much one step at a time.

What were you doing before BitTag? Are you from the fashion/clothing industry?

I’m a creative technologist, which means that i’m always designing objects and experiences that fit in-between the digital/physical with technology. So not from the fashion industry at all. Important to note that BitTag can work in other mediums outside of fashion.

Have you received any funding?

No funding yet – all my own money and time. Looking for raise now.

What is the cost per tag?

Pricing is still TBC as it’s currently a prototype. As low as possible.

You are based in London, how is the Bitcoin scene?

Bitcoin scene is bubbling up nicely here. We’ve got a few Bitcoin ATMs being installed soon, even a pop-up burger joint accepting it. There’s still some way to get it mainstream though.

When is the launch? when can retailers/merchants buy the tags?

Launch is still somewhat of an unknown entirety. Because Bitcoin evolves so rapidly, you almost have to make and run… hopefully in the right direction!