Litecoin wallet wiki

While the big news from Mt. Gox today was a bankruptcy filing, its stated assets and liabilities only tell a small portion of the financial story. Left out of the exchange’s $64 million in liabilities were nearly 750, 000 Bitcoins that have apparently been siphoned out of customer accounts. At the current BTC price of $570, that is around $427 million dollars missing or stolen. Separately, there are some relatively smaller oddities, like the “$27.3 million discrepancy” Mt. Gox said it found in its bank accounts this week, but the stunner is certainly the large-scale disappearance of supposedly escrowed customer coins.

Transaction malleability: Mt. Gox’s scapegoat

We’ve written before about the basic flaw in its code Mt. Gox says made the theft possible. By taking advantage of a loophole in the Bitcoin protocols, known as transaction malleability, a would-be thief can submit duplicate transactions, and essentially get paid twice. Most Bitcoin exchanges have coded around this known issue, but Mt. of many smaller thefts adding up over the course of several years. It is actually even possible that the bug in Mt. Gox’s software caused them to lose money on apparently duplicated transactions without anyone hacking them at all, but so far there is no way to confirm that possibility.

Possibly worse than leaving the bug in its code that allowed these thefts to occur, Mt. Gox also had a more serious underlying flaw in its architecture — something it has euphemistically described as a “leak” in its online (or “hot”) wallet. Most serious Bitcoin traders and investors keep only a fraction of their holdings online and accessible at any given time — to reduce the possible losses if they are hacked. The remainder are kept in what as known as offline or “cold” wallets — computers or USB keys not connected to the Internet, or paper printouts. For individuals, software such as Armory features this capability.