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Hacked Bitcoin Financial Site Had No Backups

timothy posted about 2 years ago | from the harsh-lessons dept.

Bitcoin 331

An anonymous reader writes "A fortnight ago the Bitcoin financial website Bitcoinica was hacked and the hacker stole $87,000 worth of Bitcoins. At the time the owner promised that all users would have their Bitcoins and US dollars returned in full, but one of the site developers has just confirmed that they have no database backups and are having difficulty figuring out what everyone's account balance should actually be. A failure of epic proportions for a site holding such large amounts of money."

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331 comments

rsync (0)

MichaelSmith (789609) | about 2 years ago | (#40119879)

FTW!

Re:rsync (-1, Troll)

Anonymous Coward | about 2 years ago | (#40120117)

Black males are about 6-7% of the population. They commit over 50% of all (!) murders.

You name a bad undesirable statistic and blacks dominate it. This costs the taxpayer. A lot. Prisons and executions are NOT cheap. Neither is welfare and other social services that try to deal with broken black families.

On the other hand blacks don't invent or contribute much except for entertainment. This is their one strong suit and it's nearly useless. That hip hop tune might be great (I guess) but it won't cure cancer and it won't get private companies into space and it won't produce faster CPUs.

Let's see now. Costs a lot, contributes very little. Yes I think I see a pattern here. Blacks are a net drain on society. The rest of us would be better off if they all went back to Africa. Also, we wouldn't have to hear their constant complaining about how much they don't like it here. Sounds good to me.

Re:rsync (4, Insightful)

Anonymous Coward | about 2 years ago | (#40120263)

Blacks are a net drain on society.

And you, sir, are an unacceptable drain on the Earth's supply of breathable air.

Re:rsync (-1, Flamebait)

Anonymous Coward | about 2 years ago | (#40120535)

Blacks are a net drain on society.

And you, sir, are an unacceptable drain on the Earth's supply of breathable air.

Excellent counter-argument sir. You sure disproved him!

Re:rsync (-1)

JockTroll (996521) | about 2 years ago | (#40120549)

As igniphiliac as his comment was, it was at least backed by some (questionable) reasoning. Where is yours?

Re:rsync (1)

Anonymous Coward | about 2 years ago | (#40120627)

No he is useful.

He is so full of shit that his body will make a fine fertilizer.

Re:rsync (0)

Anonymous Coward | about 2 years ago | (#40120537)

Hey, Miles Dyson was black. Top engineer at Cyberdyne Systems? Without him we never would have had Skynet. That was certainly a contribution. Oh, wait...

Ha! (1)

Anonymous Coward | about 2 years ago | (#40119893)

Cash doesn't need backups.

Re:Ha! (4, Insightful)

jamesh (87723) | about 2 years ago | (#40119991)

Cash doesn't need backups.

Close. Cash is the equivalent of no backups. Having your money in a regulated, underwritten by government, bank is having your money well backed up. An unregulated industry like bitcoin (as illustrated in TFA) is the worst of both worlds.

Re:Ha! (5, Insightful)

J'raxis (248192) | about 2 years ago | (#40120041)

Until the government decides to steal that money from you: "Freezing your assets" because they suspect you of some crime, "garnishing" or "levying" your bank account because you didn't "voluntarily" pay their taxes, and so on. And then of course, the government can just decide to print more money at will, stealing wealth from everyone, through inflation.

The risk of theft or loss with government-backed banks is the same; the thieves are just more organized. And if you consider inflation, the slow, persistent, and inexorable theft of your banked USDs is all but certain.

Re:Ha! (5, Funny)

Anonymous Coward | about 2 years ago | (#40120411)

Right on; say what you want, at least Bitcoins don't change in value.

Re:Ha! (1)

arose (644256) | about 2 years ago | (#40120443)

If you consider deflation, the slow, persistent, and inexorable theft of your productivity is certain.

Re:Ha! (0, Troll)

Stormthirst (66538) | about 2 years ago | (#40120135)

Good luck getting any bank in America regulated if the Republicans all three branches.

Re:Ha! (4, Informative)

bill_mcgonigle (4333) | about 2 years ago | (#40120611)

Good luck getting any bank in America regulated if the Republicans all three branches.

Like they did in 2002 when the Sarbanesâ"Oxley Act was passed? You're delusional if you think Republicans don't love regulation. Look at their actions, not their words.

Seriously, look into starting a new bank as a startup (I have). It's not possible without massive capitalization and regulation. Upwards of $5M in legal fees alone.

Re:Ha! (1)

Svartalf (2997) | about 2 years ago | (#40120583)

Actually, you're only backed up to the insurance limit. IF the government has the resources to back it.

Re:Ha! (1)

bill_mcgonigle (4333) | about 2 years ago | (#40120589)

Having your money in a regulated, underwritten by government, bank is having your money well backed up.

Um, no [silverunderground.com].

Even QIC-80 tapes are more robust.

Re:Ha! (2)

WrongSizeGlass (838941) | about 2 years ago | (#40120089)

Cash doesn't need backups.

If I keep my money in coins (a precursor to BitCoins) or in bills (aka foldin' money) and someone steals them I have no cash and I have no backups. If I keep it in a cash server (aka bank, savings and loan, or other financial institution) and they get robbed I do have a backup (even if management are the ones that steal the money or bankrupt the institution, but only up to $250k which is plenty to cover my accounts).

Re:Ha! (1)

Anonymous Coward | about 2 years ago | (#40120167)

Scrooge Mcduck never worried about banks and he was loaded.

Honestly... (2)

FreedomOfThought (2544248) | about 2 years ago | (#40119895)

How are situations like this still happening?

Re:Honestly... (1)

gl4ss (559668) | about 2 years ago | (#40119903)

it seems they might have had backups.

but those instances were deleted as well.

Re:Honestly... (1)

FreedomOfThought (2544248) | about 2 years ago | (#40119971)

I may be wrong, but is it not a standard procedure to rsync files to one backup location that is not directly accessible from the original data and then have a backup of the backup in an offsite location? The backup-backup should contain a pool of data that is no longer on the original drive but is kept for such purposes as this. I may be missing some piece of the puzzle here, but in the scenarios I have been involved in this was the setup and has greatly restricted the ability to lose ANY data. Of course we dealt with small businesses and may not have been subjected to such a large attack.

Re:Honestly... (1)

gl4ss (559668) | about 2 years ago | (#40120029)

of course, that's standard procedure if you want to be sure that the backups remain in existence no matter what. a clone backup is still a backup though, just not a very robust one and even a robust backup can be deleted if the chain of command is broken(their email services were broken and it seems the service was operated mainly through online interaction between the people running it).

maybe they didn't want physical copies of the db around their houses, maybe they were afraid of the feds. just shows you how much to trust in cloud backup.

Re:Honestly... (1, Insightful)

Shavano (2541114) | about 2 years ago | (#40120075)

I may be wrong, but is it not a standard procedure to rsync files to one backup location that is not directly accessible from the original data and then have a backup of the backup in an offsite location? The backup-backup should contain a pool of data that is no longer on the original drive but is kept for such purposes as this. I may be missing some piece of the puzzle here, but in the scenarios I have been involved in this was the setup and has greatly restricted the ability to lose ANY data. Of course we dealt with small businesses and may not have been subjected to such a large attack.

When you're running a fraud, the last thing you want is secured backups held by a third party. Most of the money is probably in Swiss or Cayman accounts held by Bitcoins owners and nobody can prove they are owed money.

Re:Honestly... (1)

Anonymous Coward | about 2 years ago | (#40120391)

The irony of fraud like this of what is essentially a ponzi scheme is great. Anybody stupid enough to be engaged in bitcoins deserves to lose their money.

Re:Honestly... (1)

arth1 (260657) | about 2 years ago | (#40120603)

I may be wrong, but is it not a standard procedure to rsync files to one backup location that is not directly accessible from the original data and then have a backup of the backup in an offsite location?

It may be a common procedure, but it's bad procedure that should not be standard. rsync doesn't handle files that are open well, and you risk ending up with a bad remote copy. Use a real backup procedure instead of rsync.

Re:Honestly... (5, Funny)

Anonymous Coward | about 2 years ago | (#40119915)

How are situations like this still happening?

I think 17 year olds running online currency exchanges is a fairly recent phenomenon.

Re:Honestly... (0)

Anonymous Coward | about 2 years ago | (#40120169)

Yea who thought trusting some pseudo anonymous kids in China with your money was a good idea.

from TFS

A failure of epic proportions for a site holding such large amounts of money

Not "such a large amount" of money, but a definitely epic failure.

Re:Honestly... (0)

Anonymous Coward | about 2 years ago | (#40119917)

They Had no Backups as in: The attackers deleted the backups. ..

Re:Honestly... (3, Insightful)

beelsebob (529313) | about 2 years ago | (#40120137)

Backups are things that aren't connected to your system –they protect you against rm -rf /*, viruses, attackers and all kind of other things. What you're referring to is redundancy, not backup.

Re:Honestly... (1)

realityimpaired (1668397) | about 2 years ago | (#40120417)

Backups are things that aren't connected to your system –they protect you against rm -rf /*, viruses, attackers and all kind of other things. What you're referring to is redundancy, not backup.

Correct. And while it's absolutely deplorable that these folks were able to lose everything like that, I doubt that most people designing websites really think about the nitty gritty. They *should* have had rsync running on a schedule to an external server at a minimum, but unfortunately most people don't think of things like that until after they get burned by it. $87,000 is a margin of error in most banking circles, but it's still an expensive lesson to learn for the little guy.

Re:Honestly... (1)

arose (644256) | about 2 years ago | (#40120469)

Rsync would have dutifully replaced the so called backup with blank files.

Re:Honestly... (1)

aaarrrgggh (9205) | about 2 years ago | (#40120525)

Which is why it should be set up for snapshots. However, that doesn't help much format database directly...

Re:Honestly... (1)

leonardluen (211265) | about 2 years ago | (#40120545)

i have written rsync scripts before that would automatically abort if a threshold was hit for either number of files deleted or total mb deleted.

Re:Honestly... (0)

Anonymous Coward | about 2 years ago | (#40119945)

If your backups are available to be deleted , can you even call them backups? Extra copies maybe, but not backups. Jeez people, think.

Re:Honestly... (0)

Anonymous Coward | about 2 years ago | (#40120079)

What good does it do if you cannot delete them, if they are still on the same planet! If they are exposed to a global catastrophe, can you even call them backups? You lack imagination... Jeez man, think.

Re:Honestly... (2)

WrongSizeGlass (838941) | about 2 years ago | (#40120053)

How are situations like this still happening?

Because some people who are in control of servers, databases, etc seem to think that a copy of their data is a backup even if it resides on the same hard drive or computer. Send a copy of it to a different drive ... attached to a different computer ... in a different location. The cost of being prepared for a data disaster is vigilance. The cost of not being prepared is ...

Re:Honestly... (1)

Shavano (2541114) | about 2 years ago | (#40120059)

P.T. Barnum explained it perfectly.

Re:Honestly... (0)

Anonymous Coward | about 2 years ago | (#40120353)

Except that he had it slightly wrong by an order of magnitude. It should be every second not every minute.

Let me be first to say... (1, Insightful)

Anonymous Coward | about 2 years ago | (#40119905)

HA!

This is what happens when you deal with an unregulated currency supply. Nevermind all those people trying to make a quick buck, or the ones who were hoping to achieve "legitimacy." Bitcoin has made //. several times now, almost always at its users' expense. I can only imagine the magnitude of ripoffs going on behind the scenes.

If you haven't come to this conclusion yourself by now, let me spell it out for you: If you don't need to buy drugs or guns, stay the fuck away from BC. The money to be made has aready been made. It's now just a facebook-like gamble.

Re:Let me be first to say... (5, Interesting)

IamTheRealMike (537420) | about 2 years ago | (#40119987)

This is what happens when you deal with an unregulated currency supply.

Regulation of currency has nothing to do with this. In fact shortly before it closed Bitcoinica was boasting that it had recently come under regulatory supervision. And do you think dollars and euros are immune from incompetence leading to massive losses? If so, where have you been in the last few years?

The underlying problem here is simple, and actually has little to do with Bitcoin itself. The problem is that Bitcoin has grown so extremely fast that almost anyone who sets up a unique financial service, as Bitcoinica and MtGox did, is immediately flooded with users and vast sums of money. These guys are then plunged into the pain of scaling up their operations from zero almost overnight .... setting up customer support, dealing with bugs and new features, figuring out the relevant regulations so they can start to comply with them and attempting to secure their operations.

It does not help that many of these operations started out being run by rank amateurs. MtGox was written in amateurish PHP and had to be almost completely rewritten from scratch by Mark Karpeles, who appears to be fairly competent. Their big security breach came when the previous owner (the amateur) got hacked, he had retained too much access to the business internals. Bitcoinica was, notoriously, set up by a Chinese 17 year old who was able to build a nice UI and working trading platform, but quickly realized he was in over his head with regards to building a rock solid secure operation.

Securing IT systems is hard and Bitcoin as it stands today doesn't do much to help you with it. It's worth noting here that if you just want to sell things for coins (the common merchant case) your server does not need to have the ability to spend the received money at all. You can use a split wallet (also called a "watching wallet") on the server, and then only a totally diffferent secure machine of your choosing can actually move the money. So the difficulty mostly affects companies that need to automatically receive and send large sums of money. The community knows how to make improvements - the protocol allows for money to require multiple signatures to move it, so a framework for having an independent second system that verifies/risk-analyses a transaction stream before signing it would be a good step forward. Using trusted computing platforms like Intel TXT + the TPM chip allows you to secure your wallet in such a way that root level compromise of the machine cannot be used to extract the keys. And the use of "cold storage" wallets is already commonplace. Etc, etc.

The Bitcoin world is going through a period of rapid evolution in which amateur wildcat operations prove demand and are then rapidly replaced by companies designed by highly paranoid people. If you are skilled at computer security and willing to do a lot of paperwork, there's golden opportunities for you right now.

Re:Let me be first to say... (-1)

Anonymous Coward | about 2 years ago | (#40120061)

Nice straw man. No where did I say fiat currency is completely immune from losing value. What happened to Bitcoinica would be equivalent to the Federal Reserve suddenly saying, 'Oops! We lost _everyone's_ information. Our bad.' which is a different beast entirely.

Well, you obviously know a great deal more about the ins-and-outs of bitcoin than I do. Most of what you say makes a lot of sense, in that regard. However the reason all these rank amateurs have managed to occupy such an important part of the chain is because there's no regulation. Anyone can participate, which means people are going to get burned whether intentionally or not. I can't open a bank running out of my garage, these people are doing what is very similar to that.

In your scenario, yes, there will eventually become more secure garages. Some may eventually become extremely secure. But do you really want to bank out of someone's garage?

Re:Let me be first to say... (1)

nedlohs (1335013) | about 2 years ago | (#40120615)

No, it would be the equivalent of a comunity bank saying they lost everyone's information.

Re:Let me be first to say... (4, Informative)

Shavano (2541114) | about 2 years ago | (#40120165)

Regulation has a good deal to do with it. Regulations on financial transactions shouldn't allow semi-competent 17 year olds to handle large amounts of other peoples' money, for instance, or to design software for such. They should require that data and transactions be recorded, backed up and auditable and audits should be required. AND insured. If you let a person not sufficiently insured hold your money, you are a fool.

Re:Let me be first to say... (0)

Anonymous Coward | about 2 years ago | (#40120229)

They should require that data and transactions be recorded, backed up and auditable and audits should be required.

Then it ceases to be the electronic equivalent of cash. Perhaps we need to distinguish between bitcoin the currency - where you'd have large amounts stored in well-regulated banks - and bitcoin as cash - where you'd typically only be dealing in amounts you could afford to lose.

Re:Let me be first to say... (2)

TeknoHog (164938) | about 2 years ago | (#40120269)

Regulations on financial transactions shouldn't allow semi-competent 17 year olds to handle large amounts of other peoples' money, for instance, or to design software for such.

So using Free software would be out of the question, because it might include code written by a minor? Or by somebody with a false identity, a codename such as "Satoshi"?

I agree on your main point about handling other people's money responsibly. But the designer of the software has nothing to do with this, you still have to choose the software responsibly.

Re:Let me be first to say... (1)

Svartalf (2997) | about 2 years ago | (#40120601)

Bitcoins are not currently money. They're more like arcade tokens, really. No value outside the venues honoring them.

Currency, on the other hand...

Re:Let me be first to say... (0)

Anonymous Coward | about 2 years ago | (#40120217)

If securing people's money is hard, then that is an excellent reason to regulate it. Markets need trust to operate.

And even if you could build a super secure bitcoin site, there is absolutely nothing stopping the owners from outright stealing your money at the end os the day.

People who claim you don't need regulations fools. You need them to protect from incompetents, cheats, and liars.

Re:Let me be first to say... (1)

TapeCutter (624760) | about 2 years ago | (#40120381)

shortly before it closed Bitcoinica was boasting that it had recently come under regulatory supervision.

...and now their database and all the backups vanish? - I feel a conspiracy theory brewing.

And nothing of value was lost (1, Funny)

Anonymous Coward | about 2 years ago | (#40119937)

A failure of epic proportions for a site holding such large amounts of money

Wait, what money? All they lost was just a bunch bitcoins. :D

Re:And nothing of value was lost (2)

betterunixthanunix (980855) | about 2 years ago | (#40120113)

There are plenty of people who are trying to use Bitcoin as currency. They are really going to be unhappy when the hype dies down...

Don't care. (0)

Anonymous Coward | about 2 years ago | (#40119947)

Bitcoins are stupid and Slashdot needs to stop posting articles about them.

Re:Don't care. (3, Funny)

goodmanj (234846) | about 2 years ago | (#40120013)

Bitcoins are stupid and Slashdot needs to stop posting articles about them.

I used to think that too. Soooo sick of Bitcoin articles. But now, every Bitcoin article is a new hilarious episode of idiocy, and it gives me my daily dose of schadenfreude, so I'm loving it.

natural selection (1)

lostsoulz (1631651) | about 2 years ago | (#40119965)

For as long as idiots run commercial websites without backups, one can only hope they're found out...exploited and then relegated to an evolutionary dead-end. It's not as if offsite backups are particularly hard to figure out.

No problem (3, Funny)

Anonymous Coward | about 2 years ago | (#40119977)

Just check out the WayBack machine. Use the same security hole the hackers used, and just read off everyone's bank balance. Sorted!

Re:No problem (0)

Anonymous Coward | about 2 years ago | (#40120197)

Brillant

Unbelievable (0)

Anonymous Coward | about 2 years ago | (#40119995)

They could have gotten a free backup of their code and database, e.g. CodeGuard [codeguard.com]. Retrieval of that free backup costs a whopping $25. I guess the cost was prohibitive...

Re:Unbelievable (2)

Frosty Piss (770223) | about 2 years ago | (#40120173)

Retrieval of that free backup costs a whopping $25.

Think about that statement for a minute...

Re:Unbelievable (0)

Anonymous Coward | about 2 years ago | (#40120425)

Backup is free. Retrieving said free backup is what costs you.
 
Kinda like when your 'friendly' local dope dealer fronts you the first taste free cause he knows it's good advertising.

Technology meet money & power (0)

Anonymous Coward | about 2 years ago | (#40120005)

This kind of things are bound to happen when really game changing technology interacts with money. Bitcoins are obviously a technology with a massive potential. It's cutting edge technology distributedly developed. New frontiers. Can be compared to the invention of paper money.

The powers that be love the status quo, they have everything to lose. They can pay very well to do their dirty laundry. And there are always scammers and crackers abound.

All in all, this is a minor setback, nothing more. If you want to stop Bitcoin, you need to find an error in the logic. You can kill all Bitcoin developers if you will but you can never kill an idea. The genie is out of the bottle. Pandorra's box is wide open.

Where's the professional paranoia? (1)

DarkIye (875062) | about 2 years ago | (#40120039)

I've actually been relatively open-minded about Bitcoin in general, but this really does make them look like they're trying to cut everyone off and make off with the money. I mean, the combination of risk and technical know-how here really ought to result in a certain standard of paranoia.

Re:Where's the professional paranoia? (1)

betterunixthanunix (980855) | about 2 years ago | (#40120081)

I've actually been relatively open-minded about Bitcoin in general, but this really does make them look like they're trying to cut everyone off and make off with the money

No surprises there. Bitcoin was one trading at like $0.10, and the people who joined the scam back then made lots and lots of (real) money. People have been calling Bitcoin a scam for years at this point.

Re:Where's the professional paranoia? (1)

VortexCortex (1117377) | about 2 years ago | (#40120241)

You're conflating a currency exchange with the currency itself, which is actually working in this instance somewhat like cash is... Here, let me show you what you sound like:

I've actually been relatively open-minded about Euros in general, but this bank robbery really does make the EU currency system look like they're trying to cut everyone off and make off with the money. I mean, the combination of risk and technical know-how here really ought to result in a certain standard of paranoia.

Re:Where's the professional paranoia? (3, Insightful)

benjamindees (441808) | about 2 years ago | (#40120283)

First of all, Bitcoinica is not Bitcoin. It is a broker of Bitcoin futures contracts. And one that is unaudited, poorly-backed, unregulated, and run by a 17 year old Singaporean student.

So, those who were paying any attention at all know that using Bitcoinica was always a highly risky proposition. Making such a thing work flawlessly was never guaranteed to even be possible, let alone without bumps along the way, even though Zhou Tong did a relatively stellar job in my opinion, all things considered.

But lastly, those who were paying close attention should have seen that Zhou Tong made a fatal error after the Rackspace hack, in courting regulation and accepting VC money. It seems like this was done in order to save face and achieve a degree of approval for what was, clearly, a marginalized (yet successful) business model. I'm not privy to the details, so perhaps there was no real choice. But the downfall of Bitcoinica was only a matter of time once that happened. And I said so at the time.

Re:Where's the professional paranoia? (0)

Anonymous Coward | about 2 years ago | (#40120551)

Relatively stellar job? Is that the same kind of oxymoron as the 'relative stability' of bitcoins?

Regulation, anyone? (0)

Shavano (2541114) | about 2 years ago | (#40120047)

Does anybody not see why money should be a government function and banking should be tightly regulated?

this, ladies and gents... (0, Troll)

Anonymous Coward | about 2 years ago | (#40120049)

This, ladies and gents, is why we have governmental regulation of the financial system.

Irony (5, Insightful)

J'raxis (248192) | about 2 years ago | (#40120101)

Meanwhile, the EUR is imploding due to abject irresponsibility on the part of its government backers, banks, and investors, and the USD is probably not far behind. I wonder how long off until we see wheelbarrows full of euros and dollars being used to feed woodstoves rather than as currency. The growing sovereign debt crises and $700T (yes, that's a "T") derivatives market going tits-up are going to make BTC's problems look like a joke.

Yet I see comment after comment of how irresponsible and amateurish BTC is, and how we should only trust regulated, state-backed currencies. Yeah.

Re:Irony (1)

p0p0 (1841106) | about 2 years ago | (#40120185)

All this is happening to BC after just a few years of existing, while it took quite a bit longer for the national cash to get screwed up.

Re:Irony (1)

bill_mcgonigle (4333) | about 2 years ago | (#40120579)

Yet I see comment after comment of how irresponsible and amateurish BTC is, and how we should only trust regulated, state-backed currencies. Yeah.

And what's amazing is that after this debacle, nobody will ever think to insist that their next Bitcoin site show that they have provable backups.

Oh, wait, they actually will, probably insisting that somebody reputable verify that, and such a market regulation only cost $87,000, barely the benefited cost of a secretary for some big government agency.

a lot of money? (1)

cellocgw (617879) | about 2 years ago | (#40120105)

$87k is two day's work for a CEO (or sports star) earning $10 million/year . Not really very much money, at least as far as the 1%-ers are concerned. And we all know they're the only ones who matter.

Do I really need a here?

Re:a lot of money? (1)

cellocgw (617879) | about 2 years ago | (#40120139)

teach me not to preview. that was supposed to read "do I really need a "" here?"

Re:a lot of money? (1)

cellocgw (617879) | about 2 years ago | (#40120153)

ok, I give up -- how do I post a "less than" symbol in a plain text post?

Re:a lot of money? (0)

Anonymous Coward | about 2 years ago | (#40120273)

<

can be achieved with

&lt;

Can't remember what this is called.

This story is completely overblown (5, Insightful)

Beautyon (214567) | about 2 years ago | (#40120145)

This story about the woes of Bitcoinica is grossly overblown. The amount of money is comparatively very small, and the Bitcoin network itself is nothing to do with this theft and is sound.

To put some perspective on the Bitcoinica incidents, in 2008, the estimated UK bank fraud level was £52.5 million; that is 990.28441 times the amount of this Bitcoin theft:

http://www.themoneystop.co.uk/042009/online-banking-fraud-is-on-the-rise-in-the-uk.html [themoneystop.co.uk]

There are people on many sides who want Bitcoin to fail, and who will do anything to stop it from growing. The banks hate it, because it will disintermediate and replace their business. The Statists dont like it because it will defund their socialist dreams. The gold bugs loathe it because it is not gold. Keynesian journalists bristle at the fact that the money supply in Bitcoin is limited, and dream of seeing it destroyed.

None of these people will matter in the end, and they do not understand Bitcoin.

Bitcoin will continue to grow, and events like this will winnow out the weak services and strengthen the existing ones. Each theft, disaster and problem are iterations that add to the unpublished "how to run a safe Bitcoin service" manual. Bitcoin and the services that will grow up around it cannot be stopped, just like Bittorrent cannot be stopped, and the latter is responsible for 53.3% of upstream traffic:

http://torrentfreak.com/bittorrent-still-dominates-global-internet-traffic-101026/ [torrentfreak.com]

It doesn't take much to see how important Bitcoin is going to become once the core public facing interfaces are solidified, refined and reliable. Bitcoinica is not Bitcoin, and neither are any of the services that are built on it. Bitcoin is a protocol. Events like this are nothing more than a bump in the road, and a vanishingly small one at that.

Re:This story is completely overblown (1, Insightful)

Anonymous Coward | about 2 years ago | (#40120249)

You are delusional.

Re:This story is completely overblown (1)

Anonymous Coward | about 2 years ago | (#40120355)

I would encourage you not to look at this in terms of numerical multiples, but percentage of respective currency in circulation. $52.5 million US is a drop in the bucket in terms of the total dollars (euros, pounds, yuan, whatever) in circulation. By comparitive percentage, the $87k or so lost in this bitcoin theft is enormous. Generally, bitcoin is never going to be taken serious (sorry, but it's never going to be "important") due to it's pure technical nature which will eventually be exploited due to an as yet unknown vulnerability.

Re:This story is completely overblown (1)

Anonymous Coward | about 2 years ago | (#40120477)

That was a beautifully written shill post. I applaud you for your bravery.

Re:This story is completely overblown (1)

Ash-Fox (726320) | about 2 years ago | (#40120519)

To put some perspective on the Bitcoinica incidents, in 2008, the estimated UK bank fraud level was £52.5 million; that is 990.28441 times the amount of this Bitcoin theft

To put some perspective, you're protected by law with the above, not with Bitcoin. Any money stolen from individuals is certainly returned.

There are people on many sides who want Bitcoin to fail, and who will do anything to stop it from growing. The banks hate it, because it will disintermediate and replace their business. The Statists dont like it because it will defund their socialist dreams. The gold bugs loathe it because it is not gold. Keynesian journalists bristle at the fact that the money supply in Bitcoin is limited, and dream of seeing it destroyed.

I doubt the majority of people in the above industries even know what Bitcoin even is. I think you have misconceptions of grandeur, sir.

Bitcoin will continue to grow, and events like this will winnow out the weak services and strengthen the existing ones.

But why would you use Bitcoin instead of Solidcoin?

Re:This story is completely overblown (3, Insightful)

Jawnn (445279) | about 2 years ago | (#40120563)

The banks hate it, because it will disintermediate and replace their business.

No. It will not... ever. Your mistake is in assuming that what people will value, and how they will treat the things they value, is always based on reason. If history teaches us anything, it is that people are often far from reasonable. So no matter how much bitcoin has going for it, when viewed dispassionately, it is not shiny and tangible. The fact that the shiny things, and more importantly, the things that people build and do for each other are far more tangible, and that those things would steadily become worth fewer bitcoins per unit rather than more, is guaranteed to keep it nothing more than another geek fad.

Re:This story is completely overblown (0)

Anonymous Coward | about 2 years ago | (#40120577)

There are people on many sides who want Bitcoin to fail...

This is the same logic people use when they believe too much in one company and it's stock keeps dropping. It must be a conspiracy! NO, it's just that the market doesn't value whatever you are selling. Bitcoin has failed the "market" test. Or to put it in your language, "Market no wantie your thingies".

bitcoin bumblers (0)

Anonymous Coward | about 2 years ago | (#40120239)

I think I'll keep my riches in WoW gold, seems much safer.

Offsite backup! (0)

Anonymous Coward | about 2 years ago | (#40120299)

Fucking hell, it's not rocket surgery!

Seriously? Like really really seriously? It's NOT. THAT. HARD. Buy 7 drives for each day (or 14 if you're paranoid), label them for each day, run an mysqldump cron job daily (or have self control and do it yourself) and dump onto a drive and pull it out (feel free to back anything else up, I don't know, like accounting records maybe??). Anyway, once you're backed up, just pull the damn thing. I have seen people with my own bloody eyes (one person at one of the big 4 banks in Aus) who just umount the drive and NONONO, pull the fucking drive out you 2 bit hack.

Done, you have offsite backup. That wasn't so hard, was it?

Epic? (1)

American AC in Paris (230456) | about 2 years ago | (#40120321)

87k is not that great a sum of money. If you think a "failure of epic proportions" in the business world involves five figures, you've got a lot to learn about business.

Re:Epic? (0)

Anonymous Coward | about 2 years ago | (#40120449)

Since there is only about ten million BCs floating right now, $87,000 is actually .174% of the entire "currency" supply! LOL. The equivalent of that would be a hack at bank of america resulting in an $2,148,900,000 theft. So yea, a 2 billion dollar hack would be significant. You've got a lot to learn about business if you don't understand percentages and ratios.

Re:Epic? (0)

Anonymous Coward | about 2 years ago | (#40120591)

Failure of epic proportions is to not have backups of a fucking financial site. The rest is all about what percentage of the business got blown away, you've got a lot to learn about risk management and data security (without which you frankly have no place to speak about modern business).

No Backups?!?? (3, Insightful)

Hasai (131313) | about 2 years ago | (#40120429)

It isn't the amount, it's the sheer amateurishness of the operation and the subsequent loss of trust.

Banks, exchanges, and other monetary systems, including currencies themselves, can only function when there exists an implied trust that the system will continue to function, and do so reliably. A loss of that trust is what causes bank runs, hyperinflation, and economic collapses.

Bitcoin has destroyed that trust. They're toast.

Bitcoin isn't money (0)

Anonymous Coward | about 2 years ago | (#40120461)

It's Bitcoin. So, it's lost. Big deal.

strange no backup (0)

Anonymous Coward | about 2 years ago | (#40120521)

No back up I wonder why so, figure they did not want a way for government to have fuel for the courts. Private individual are not allowed to make up their own money after all. To bad for them, they will need to think this better next time if they want to be a bank or repository of sorts.

Having no backup database in 2012 is of course something they did on purpose since backing up is so easy with today technology.

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