reason,
owing
to
the
deceptively simple answers
they promised for much
bigger problems.
Roger had chosen his
apartment in Tokyo largely
because it was near his jujitsu
studio, or dojo, and during
Jesse’s visit to help at Mt.
Gox, the men went to the
dojo to grapple with each
other and let off steam. But
they spent almost all of their
time working through the
constantly growing pile of e-
mails that had been sent to
info@mtgox.com.
Mark, for his part, spent
these days silently parked in
front
of
his
computer,
investigating the cause of the
hack. He determined that the
attacker had gained access to
Jed’s Mt. Gox administrative
account by either guessing
the password with the brute
force of a computer program
or by gaming the system that
allowed users to create new
passwords. In the end, Mark
calculated that the site had
lost only a few thousand
Bitcoins, which he promised
to
reimburse
with
the
company’s money.
Mark then moved on to
rewriting the Mt. Gox code so
that he could reopen the site.
Two days after the crash, he
appeared briefly, via Skype,
on The Bitcoin Show, a
relatively
new
online
production created by an
enthusiast in New York.
Mark took the opportunity to
blame the code he inherited
from Jed McCaleb, which he
said had “a lot of problems.”
“The new system was
written from scratch with
absolutely no code from the
old system,” he said. “It was
made from state of the art
techniques.”
Two days after that, Mark
made a transfer of 424,424
Bitcoins that was visible on
the public blockchain, in
order to prove that he had his
customers’ coins.
“Ready guys?” he asked,
right before making the
move. “Don’t come after me
claiming we have no coins
after that.”
“Hopefully I’ll be able to
work without getting too
much disturbed after that,” he
said.
Roger and Jesse were
initially impressed by Mark’s
calm during the crisis. Every
day he sat quietly at his desk,
eyes fixed on the screen. But
as the week progressed,
Mark’s silence put him at an
uneasy distance from the
surrounding world. Jesse and
Roger grew concerned that all
Mt. Gox’s technological and
financial affairs were in the
hands of one person, with no
one else in a position to
question his decisions or
stand ready if things went
wrong. They also worried
about
Mark’s
ability
to
prioritize
tasks
properly.
They frequently noticed that
when Mark was supposed to
be working on fixing the site,
he was instead on the Mt.
Gox chat channel, trying to
address customer complaints.
At the end of the week, Roger
and Jesse asked what time
they should come in the next
day.
“Oh no,” Mark said. “We
can just start again on
Monday.”
“But this site isn’t even
back up,” Roger said. “I think
we should keep working until
we get it up.”
Mark
said
something
about the office tower being
closed during the weekends
and
shut
off
further
conversation. While walking
back to Roger’s apartment,
Roger and Jesse wondered at
Mark’s lack of urgency.
Mark
himself
worked
through the weekend, from
his apartment, and opened the
site for trading on Monday
morning. As soon as this
happened,
the
price
of
Bitcoins began falling. In the
week that Mt. Gox had been
closed, the public perception
of Bitcoin had taken a
decided turn for the worse,
with a series of news articles
suggesting that the hack
marked the likely end of
Bitcoin. The day after Mt.
Gox reopened, Forbes, which
had been among the first to
write
positively
about
Bitcoin, said that “it’s likely
to go the way of other online
currencies,” the first of many
public obituaries for Bitcoin.
CHAPTER 9
July 2011
In the weeks after Mt. Gox
got back online, it was
contending
with
new
exchanges that had been
started
during
the
busy
spring. But for the people
who stuck around Bitcoin
after the Mt. Gox attack, there
was seemingly no end to the
bad news.
In July, the founder of a
small
Polish
Bitcoin
exchange,
Bitomat,
announced
that
he
had
accidentally deleted the files
where he kept the private
keys to the Bitcoin addresses
at which his customers’
17,000 Bitcoins were stored.
The coins were still visible on
the blockchain, but without
the private keys, nothing
could be done with the coins.
This pointed to a danger
that was the flip side of one
of
Bitcoin’s
supposed
strengths. Satoshi Nakamoto
had designed Bitcoin so that
each user had complete
control over the coins in his
or her addresses. Because
only the person with the
private keys to an address
could
access
the
coins
assigned to that address,
governments
could
never
seize the coins and banks
weren’t needed to hold them.
This design also meant that
the coins themselves weren’t
stored on any particular
computer; if a computer
holding a wallet file with the
private keys crashed, the
coins were still on the
blockchain, as long as the
owner still had copies of the
private keys.
But the design also meant
that if a person lost the
private keys for a particular
address and had no backup,
there was nothing anyone
could do to access the coins
held by that address. People
were
already
taking
precautions to guard against
this, writing down the private
keys on a piece of paper or
maintaining
backups.
But
what if the piece of paper was
lost,
or
if
the
secure
document with the keys in the
cloud, as in Bitomat’s case,
was
accidentally
deleted,
along with its backups? Not
everyone, it turned out, was
good at keeping track of
valuable things.
Another incident just days
after the Bitomat losses
reminded everyone that the
companies holding customer
Bitcoins
had
another
vulnerability—the integrity of