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When it comes to bitcoin mantras, “not your keys, your coins” are as pure as it is.
But its levels are. Certainly, you may be self-custoding, but you may still need to rely on a wallet explorer, for example, to tell you your BTC balance.
However, run your full node, and you will only need to rely on your copy of bitcoin laser.
So here is one of the oldest caution stories of bitcoin as to why the above still matters after a decade and a half.
This picture: It is in mid -2011, and there are two major exchanges to buy and sell bitcoins: Mount Goks, around 80% of the global market share is working outside Japan, followed by Tradehill in California.
Eastern Europe had its own primary site: Bitomat from Poland.
Bitomat’s trading volume was smaller than Mount Goks, only about 17,000 BTC per month – Below 1 million BTC of Mount Goks (at that time $ 7.5 million). But it is still considered the third largest bitcoin trading platform in the world for bitomat.
Until there was trouble.
On August 1, 2011, the admins of Bitomat revealed that the worst was: he accidentally removed the wallet for the platform’s hot wallet. Immediately lost access to the bitcoin of its users, by chance of 17,000 BTC.
The exchange was stopped for about a week to that point. The Barthek Sazabat, the administrator of the bitomat, saw that the main server – an Amazon EC2 operated by the virtual machine – was running at full capacity, and opted to promote its allocation of RAM.
This virtual machine institute will need to be rebooted.
But the administrator forgot to enable frequent storage in the configuration settings of the cloud server. Therefore, when the server was rebooted after adding more RAM, the local storage of the virtual-machine institute, which included the only wallet file of the exchange, was wiped out, with it a private key to the users of Betomat was taken with a private key.
Amazon was unable to recover the web service file.
In an open letter to the Bitcoin community, Sazabat sought help in the status check (post has been automatically translated and edited for clarity):
“At this time, I am unable to clearly determine the cause of accidents. I think it is the result of third parties, who are crashing to the server to hide their illegal activities, or intentionally want to disappear the website,” he wrote.
“If my suspicion is confirmed, I will tell the police and prosecutors, (and) at the same time, take possible action, through which it will be possible to recreate the lost data. But I need to interact with the owner of the server (Amazon Web Services), and as I have mentioned above, it is difficult …
“At the same time, I am relying on your help to solve the problem.
Sazabat then offered to sell users equal to the euro equal to the euro of 17,000 BTC ($ 220,000, today $ 1.95 billion today) to make users complete.
He said, “I want to inform you that I had several conversations with potential investors from home and abroad,” he said, and directed anyone wishing to reach via email.
It was actually Mark Karpelles and Mount Goks who responded to the call. The deal meant that the bitomat would be completely closed and its domain would carry forward the existing users to the polish-language localized version of Mount Goks, where they could log in as a normal and business bitcoin through a new polish zoti pair.
“Acquisition of bitomat.pl is a windfall for its users, especially in view of such a sudden and unstable phenomenon. Also, for the first time on bitcoin exchange, users are now able to reach a large market with their local currency, so we feel that it is a pleasant end,” Carpelles. Said Those days.
Mount Goks were faced only two of their hacking events only months ago, for an 80,000 BTC ($ ~ 65,000) when a thief was able to copy the own wallet. DAT file of the platform, and two months later, for 300,000 BTC ($ 1.5 million), with a hacker, with a hacker, returning 3,000 of Stuns.
Of course, Mount Goks will be completely stomach-up after nearly three years, potentially affecting any bitomat users who were migrated for the second time.
There is no question that modern days are different animals compared to early platforms such as crypto exchange, at least top level, bitomat and mount gox. But for all their assurances, we can never really do Know to make sure How well exchange users are storing bitcoins.
It is both the best and difficult part of using bitcoin: it believes to store bitcoin and important operating safety (although multi-sigs help). Something else is only managing the exposure.
If it was easy, everyone would have done this. Till then, in exchanges we trust.
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