Cyanide & Happiness @ Explosm.net
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Apt.....But bitcoin is probably far from dead.
Here's what happened:
MTGox, the biggest bitcoin exchange (apparently something like 90% of all bitcoin-fiat currency transactions went through here) had some bad code which allowed people to 'Double Spend' bitcoin that was held by the exchange. This theft went on unnoticed for several years and amounts to some 750,000 bitcoin going missing.
So, how did they manage to steal the coins? They used a known bitcoin issue called malleability:
Basically a MTGox user requests a withdrawal of bitcoin from the exchange. This transaction includes a transaction number and a transaction ID. At the same time, the user quickly sends a second transaction through the bitcoin system with the same transaction number but with a zero added on the front to trick the bitcoin system into thinking it's different, and with a new transaction ID. If done quickly enough, the bitcoins are actually transferred (the transaction number is numerically the same) from the exchange but the sending exchange sees that the initial transaction ID has not been accepted (it only sees the second new ID) and then automatically tries to resend the value of bitcoins. Thus double the amount of bitcoins are send from the exchange!
Anyhow, this all means that the value of bitcoin has dropped to about half the level it was at. But it's only one exchange. The others will learn from the mistake and check that their systems don't do the same (in fact many exchanges closed shortly afterwards for a period to check that their systems didn't include the issue).