So if you had already done a legitimate trade it's gone? "Sorry you made some money there, but someone else got affect by something else, so we've undone that". So much for "There are no chargebacks on BitCoin"
I don't understand all the anger at the idea of rolling-back. Hasn't anybody trading bitcoins been watching how major equities exchanges have worked for decades?
Take the flash-crash last year. Yes, if you were a lucky one who bought GE at $3/share then hell yes you wanted that trade to count.
But to have an exchange it takes everybody acting in the interest of the group as well as themselves. The value to that over purely selfish motivations is that it creates a liquid market which benefits everybody involved.
Part of this is the acceptance of situations like this. In cases of attack or software defect, the only real viable option is to rollback. The only people this hurts are the 1% who tried to profiteer on the situation. Not rolling back would harm the other 99%. It's an easy call.
The only real tragedy would be if they cannot rollback accurately. You'd think this wouldn't be possible, but you never know... It seems as tho this site has had a known CSRF bugs for a while. This is not a hard thing to fix. It doesn't shine well upon their competence.
Just to be clear, I'm not taking a position, only asking a question: how does the exchange layer affect the fundamental goals of bitcoin, esp. the notion that no centralized authority controls monetary policy?
In principle, it doesn't affect that goal. An exchange doesn't control monetary policy, i.e., it doesn't set interest rates or increase the quantity of currency.
Of course, an exchange can affect the value of the products it is trading. Since Mt. Gox is the biggest bitcoin exchange, if a vulnerability is found then people might stop trading there, decreasing the liquidity and consequently the value of bitcoin. But this doesn't contradict the goal you mention.
As an analogy, if company ACME only trades on Nasdaq and there's a system problem with Nasdaq, some people will be scrambling to get rid of their ACME stocks so ACME's price will go down. That doesn't mean that the exchange controls the price of ACME.
But if MtGox's technical failure effectively took USD$120M of bitcoins offline, then MtGox has reduced the supply of BTC for some period of time, no? I understand that exchanges are secondary markets, but they seem to be contrary to the philosophy of no centralized control over supply/demand. I always understood bitcoin to be a per-transaction, ad hoc currency – not an exchange-traded commodity. Of course, people are free to do whatever they want with their stuff...
Edit: I realized after posting that I called bitcoin a "currency" above. I realize that it's a controversial position, but my feeling is that, as a medium of exchange, it qualifies a currency.
Well this is trading through an intermediary, you can't really expect it to work that way otherwise something like this would have a lot more incentive for wrongdoers.
If you really want to have no chargebacks you have to go the harder route of one on one trading, with everything that comes along with that.
When designing a system like this you have to have a veil of ignorance. There may from time to time be attacks or defects that mean some people lose a lot of money while others gain some. Not knowing which will happen to you, how would you want the system to work?
You don't understand. There is a difference between the currency and the exchange. The exchange stores the trades internally without actually doing any bitcoin transactions until the time of withdrawal.
