UPDATED 11:25 EDT / SEPTEMBER 20 2011

NEWS

Bitcoinica Growing Pains Result in Data Errors

Last week, I reported on an emerging trading platform for Bitcoin, Bitcoinica, that presented itself as a Forex service and did so without trading any bitcoins with customers. The Bitcoin service runs in the cloud and has a lot of interesting elements going for it—it even had an excellent week last week trading over ฿160,865.33 during the seven days since its initial launch. The service has now been running ten days and they’ve already run into some of their first issues.

In an e-mail sent out today, Bitcoinica explained that users may have suffered losses during the recent flurry of trades in the Bitcoin market. The past three days, Bitcoin prices have spiked, recovering from a four day drop (during an overall downward trend since the previous bubble) but this generated Bitcoinicas first trading flurry and caused them some scaling issues.

As explained, these issues generated numerous errors in their system because they weren’t running enough processors to handle all the trade requests. So they expanded the number of processors to handle the increased load—as Bitcoinica runs in the cloud-computing platform Heroku these processes are called dynos. However, because they didn’t lock transactions, some of them ran in multiple processors at the same time causing many duplicate transactions.

This problem has since been corrected, with some growing pains, by implementing database transaction locking. Locking prevents two processors from accessing the same data at the same time (thus preventing duplicate transactions from occurring.) The initial programming of the locking, however, was not implemented correctly and this caused a tremendous rise in duplicate errors.

Bitcoinica has fixed errors arising and has corrected losses incurred to their customers from their error from their own funds.

What to do next?

If you trade on Bitcoinica, they’ve asked that you look into your finances to make sure all of your data is correct with what you expect and contact them if not.

You should check your account, and make sure that all the data is correct.

If there are still some incorrect data entries, please send an email to support@bitcoinica.com, including the following information:

– Your username

– What is incorrect

– What should be the correct value

We will verify your information as soon as possible.

If you were made better off because of the errors, or you simply want to share part of your profit with us to help Bitcoinica grow, you can donate to Bitcoinica anonymously by sending any amount of Bitcoins to this address:

196D4C3f2MgFrjfRoAh4mkQKfALBvPEnB1

At this moment, our finances are healthy and we can absolutely afford to compensate for this issue. More importantly, we will keep Bitcoinica continued and more exciting features will be announced soon.

Bitcoinica bug bounty

Included in the statements about their growing pains, Bitcoinica is offering a bug bounty to anyone who discovers problems or security loopholes.

For each security related loophole discovered they’re offering a bounty of 5-100 BTC; for operational bugs they’re offering 1-25 BTC; and for user experience issues they’re offering 1-25 BTC each. With BTC currently hovering around $5 that means that a massive security hole plugged could mean $500 USD for a lucky person to stumble upon it.

Offering bounties for bugs discovered is a common way for even large corporations to put their userbase into a mood of improving their own product, not just by complaining, but by being part of the frontlines of bug resolution.

With the current apparent low quality of Bitcoin exchanges on the market currently, anything to make sure that Bitcoinica is stable will raise their reputation. In the recent past we’ve seen what bad implementations can do (especially cloud-computing) when Bitomat.pl lost their wallet or how security issues can change the entire Bitcoin economy as with the MtGox hack and crash and the MyBitcoin hack.

Good luck to you, Bitcoinica.


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