Last year’s FTX debacle rocked the Bitcoin ecosystem, but a bigger failure nine years ago made it even worse. what does it tell us?
The Collapse of FTX, a Crypto Empire That Deceived Investors, Customers, and Employees $8 billion scalerattled the ecosystem, and many worried about whether the ecosystem would survive.
But this wasn’t the first time a failure of this magnitude had occurred in space. Unknown to many crypto novices, in 2014 the world’s largest Bitcoin exchange, Mt. Gox, went bankrupt after a series of hacks and mismanagement. The drop cost the customer more than 800,000 Bitcoins. This is the level of worry that makes FTX seem like a fleeting moment in time.
The domain (MtGox.com) is originally Registered in 2007 to host trading site for popular Magic: The Gathering game cards.
An avid programmer and bitcoin enthusiast, Karpelès enhanced the web platform’s code to handle the growing number of bitcoin transactions and buy and sell orders. Ultimately, the exchange’s failure showed that he was not doing a good enough job, both technically and managerially of the business, as he tried to fill the role of CEO of Mt. Gox with little experience. rice field.
February 24, 2014, Mt. Gox has stopped trading and gone offlineUltimately, it was revealed that Mt. Gox’s infrastructure had been repeatedly exploited by the attackers over the years. Attackers slowly stole Bitcoin exchanges by manipulating some of their transaction data. transaction flexibility — Mt. Gox now sends requested funds multiple times, tricking you into believing that certain withdrawals have not been made.
Earlier that month, Mt. Gox went offline for a few hours and the team issued a press release. Blame the Bitcoin protocol itself Due to flaws in the transaction monitoring mechanism. Upon receiving a withdrawal request, the exchange observes the Bitcoin blockchain for the withdrawal transaction ID (a hash constructed from the transaction data). However, transaction IDs are final only when the transaction is confirmed on the blockchain. This is a property that allows an attacker to modify parts of a transaction (except inputs and outputs) to change his identity. result? Mt. Gox’s database does not show a successful withdrawal as the specific transaction ID that the exchange was monitoring never entered the block, but since the modified transaction was confirmed, the attackers still have a bit of a chance. Receive coins. (This is Mt. Gox’s failure, Not Bitcoin Protocol.)
Despite this accounting discrepancy, Surprisingly, it has never been discovered24 February 2014 Mt. Gox internal documents leaked, which details just how big a hole it actually dug itself. All in all, it’s now worth nearly $18 billion. 9 years later and Customers are still waiting to get some of their bitcoins back.
Presumed to have been handled by Mount Gox at the time of failure 70% of Bitcoins traded worldwideFor comparison, FTX’s drop is over $8 billion in fraud, less than half of its bitcoin counterpart lost on Mt. Gox. Sam Bankman-Fried’s exchange was a prominent exchange, but did not hold the top 1 post in the world at the time of its failure.
Although the two exchanges differed in how they collapsed, the backbone issues were the same. In both cases, the CEO betrayed customers who trusted him to control Bitcoin. For all exchanges, the risk of error, fraud, or bankruptcy is a ubiquitous threat and should be treated as such. It’s never too late to get into self-management and control your Bitcoin.