This is the biggest loss in #Bitcoin history.
2,609 are forever!
23 transactions in Block 150,951 on 28 October 2011.
Why are they lost?
Who lost them?
🧵Thread👇
As the blockchain is public we can see which coins are provably lost.
We see coins being burned quite often in small amounts.
(prolly new tokens being issued on Bitcoin)
But if we look at the biggest losses, we can tell they were not burned on purpouse.
It's human error.
When you give someone an address you are actually giving them a box, which ONLY you have a key that can unlock it.
This is guaranteed by the fact that only the entity that has the private key corresponding to a public key can provide a signature to unlock the box.
These locks are called Bitcoin Scripts.
They are small programs that sit on top of each Bitcoin. When you move Bitcoins, when you run these programs.
If needs to return success, coins move.
And the good part is that you can add very various conditions here.
Multi-sig is an example of such conditions.
But it is up to you to make sure you set the right conditions.
One way to make an error would be to add someone's else address.
Another way is to add invalid address, or create some conditions that can never be fulfilled.
Bitcoin addresses have a checksum at the end to avoid sending Bitcoin wrong address.
This safety check is done in the wallet, there is no such check in the Bitcoin script.
To get an address Public Keys are hashed RIPE160.
The same hash function is also used in the script.
All the TXs above have the same script.
The script says:
These Bitcoins can be moved by the public key that when hashed with RIPE160 has a 1-byte-output.
This is impossible, as the function always outputs 20 bytes.
RIPE 160 bits = 20 bytes
This condition can never be meet
The TXs were constructed by Mark Karpeles aka MagicalTux CEO of MtGox.
We know this as he admitted it on #MtGox IRC channel
At the time worth only $10,957 and only a week of profits for Gox.
Today they are worth $120,200,000.
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