be a new kind of community
with no central authority,
powered by the people who
joined it. That had worked
until now because the people
involved wanted to see it
succeed. But what if the
people joining in had no such
interest?
Should
some
authority
figure
intervene
and, if so, who could it be?
Some of the leading
developers
working
with
Gavin
suggested
that
moderators
should
more
aggressively
police
the
forums and potentially even
move
the
forums
from
Bitcoin.org,
so
that
the
conversations on the forums
didn’t look as though they
had some official status
within Bitcoin.
Martti, who had been
given final say over the
websites by Satoshi, was
uneasy about these changes.
He said he had long avoided
determining what should and
should not be discussed on
the forum, as long as illegal
transactions
weren’t
happening on the forum itself.
Gavin largely stayed out
of the public debate—he
knew it wasn’t worth fighting
—but he quietly found a way
to move forward by creating a
mailing list dedicated to
Bitcoin
development
that
would be easier to control, a
move that did not go over
well with everyone.
Around the same time,
Gavin made his visit to the
CIA to present Bitcoin to a
conference
on
emerging
technology. He reported back
immediately to the forums
and was transparent about
what he had said during his
visit and what the response
had been (everyone at the
CIA meeting seemed to be
interested). Many people on
the forums were supportive of
his decision to make the visit,
but not everyone was. Those
debates, though, were quickly
overshadowed
by
bigger
questions about whether the
people
building
this
community had the skills to
keep it growing.
CHAPTER 8
June 19, 2011
The Tokyo sky outside Mark
Karpeles’s window was still
dark when the iPhone on his
bedside table jolted him
awake just after 3 a.m. Mark
was still trying to get his
bearings when he picked up
the phone. On the other end
was the panicked voice of his
friend William, a Frenchman
living in Peru who had first
introduced Mark to Bitcoin
back in 2010.
For the last few weeks,
William had been helping
Mark keep up with the
seemingly
irrepressible
expansion of Mt. Gox, which
had
grown
from
three
thousand users in March to
over sixty thousand users in
June. Just how little Mark
was prepared for the recent
growth was clear from what
William was trying to tell him
on the phone. Something
about the exchange’s servers
slowing down to a glacial
pace—and
the
price
of
Bitcoin plummeting from $17
to 1 penny in less than an
hour.
Suddenly
alert,
Mark
leaped out of the bed he
shared with his new wife and
ran to the home office in their
compact Tokyo apartment,
one floor up from the narrow
street.
Mark
was
not
generally known for moving
fast—most who met him
immediately
noticed
his
slothlike way. But once he
had
his
Mt.
Gox
administrative account up on
the screen, Mark wasted no
time in bringing the crisis to a
screeching halt. He shut down
the link between the Mt. Gox
website and his server and
moved Mt. Gox’s 432,000
Bitcoins—some $7 million at
yesterday’s prices—to a new
address that had a more
secure password.
These
moves
were
enough to stem the run on Mt.
Gox, but immense damage
had
already
been
done.
Hackers had enjoyed nearly
an hour to do their work,
while confused and terrified
Bitcoin users looked on.
Starting at around 2:15 in the
morning in Japan, the hackers
had
begun
selling
large
quantities
of
Bitcoins,
pushing the price down
dramatically.
“Everyone! Panic sell!”
someone wrote on the chat
channel, seeing the price
dive.
“Holy
fucking
sht,”
another wrote.
One user had the presence
of mind to record the charts
showing the decline and
narrate a video of it in real
time. Others, who had dollars
in their Mt. Gox account, saw
an opportunity and began
buying up the cheap Bitcoins.
The selling continued until
260,000
Bitcoins
were
purchased for $2,600 shortly
before 3 a.m. Japan time—a
99.94 percent discount from
their value just an hour
earlier.
After Mark had shut
everything down, he sat in his
dark apartment and began to
piece together what had
happened. The user logs
showed that someone had
signed
in
with
the
administrator account of Jed
McCaleb,
the
Mt.
Gox
founder who was still helping
Mark out. The computer
appeared to be in Hong Kong,
but it was likely the hacker
was porting in to a computer
there from elsewhere. The
Mt. Gox software enabled the
hacker to change the balances
in accounts and he created
over 100,000 new Bitcoins
out of thin air and put them in
a new Mt. Gox account.
These were not real coins on
the official blockchain; they
existed
only
in
Mark’s
accounting system. But that
was enough for the hacker to
begin using them on the Mt.
Gox exchange.
The hacker had clearly
planned in advance and knew
that Mt. Gox allowed users to
withdraw only $1,000 worth
of Bitcoins at a time. In order
to maximize the amount of
Bitcoins
that
could
be
withdrawn, the hacker began
selling some of the newly
created coins to push down
the price. As the price
dropped, it was possible to
withdraw more and more
Bitcoins under the $1,000
limit, until the relatively
primitive design of Mt. Gox
came to its rescue. As the
servers slowed to a crawl,
owing to the traffic created by
the
hacker,
withdrawals
suddenly became impossible.
By the time Mark got up,
most of the hacker’s Bitcoins
were still stranded inside Mt.
Gox, though hundreds of
thousands
of
coins
had
already been sold at distorted
prices.
It was not until an hour
after he first got online—and
two hours after the melee