Haiku spam and double digit sigma events

Haiku Schmaiku

Howdy Ma'am,
Just spam, I am.
Five syllables short

-- Bloggerel Doggerel blog, 2007

Verse is courtesy of The Climateer, who doesn't write about climate too often, thankfully! He has a great blog description which is perpetually relevant: "In war, everything not censored is a lie."

The Climateer DOES write about investment bankers who blame statistics for their poor trading decisions... or possibly, outright deceptive practices. There was a lot of that going on in 2008. I finally hoisted some posts about double-digit standard deviations from my bookmarks and read them.

25 Sigma Event Very Unlucky

From Climateer Investor and others along the way, it seems like a 25 sigma event is impossible. "How unlucky is 25 sigma?" (2011): When Goldman Sachs was Really, Really Unlucky: 

"One of the more memorable moments of last summer’s credit crunch came when the CFO of Goldman Sachs, David Viniar, announced in August that Goldman’s flagship GEO hedge fund had lost 27% of its value since the start of the year."

As Mr. Viniar explained, “We were seeing things that were 25-standard deviation moves, several days in a row.” 

Bitcoin in the limelight: Questions for buyers and investors

Bitcoin exchange vulnerability

The most high-profile vulnerable Bitcoin exchange was Mt. Gox. In April 2013, Mt. Gox was overwhelmed by a Distributed Denial of Service (DDoS) attack. The point, Mt. Gox speculated, was to destabilize Bitcoin transactions and fuel panic selling. After driving prices down, the attackers ceased the DDoS, and rushed in to buy Bitcoin at a lower price.

Life isn't fair but Bitcoin must be

Life might not be fair, but securities exchanges and currency markets require fairness. Without it, they will die. Trust is essential. Apparently, Mt. Gox was robust enough to withstand this DDoS incident. In their pursuit of unearned profits, the attackers took a selfishly short-term view. DDoS attacks and market manipulation can destabilize Bitcoin exchanges. If that happens often enough, it will undermine credibility in Bitcoin.

Mt. Gox wasn't uniquely vulnerable. In the past few months, there were other DDoS-related Bitcoin extortion incidents: BTC-China was brought down in September 2013, and BIPS, a European payment provider, experienced a DDoS attack two days ago, on 26 November 2013.