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BitFloor Joins List of Compromised BitCoin Exchanges

Unknown Lamer posted about 2 years ago | from the after-heist-six-bitcoin-becomes-a-real-boy dept.

Bitcoin 232

hypnosec writes "An attacker managed to access an unencrypted backup of wallet keys and steal 24,000 BTC (worth more than a quarter million USD), following which Bitcoin exchange Bitfloor has been shut down while the investigation of the theft is going on. The attack was carried out sometime last night. In a forum post, Shtylman pleads with Bitcoin users that BitFloor needs their help."

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232 comments

LOL (-1)

Anonymous Coward | about 2 years ago | (#41234233)

LOL

Aaaaaand It's Gone!!! (5, Funny)

eldavojohn (898314) | about 2 years ago | (#41234241)

BitFloor Operator: Good morning sir welcome to BitFloor how can I help you today?
Customer: Well, I had heard a lot about this new currency called BitCoin and I was hoping to transfer this $100 in my account to ...
BitFloor Operator: Oh I completely understand, sir, in today's economy one can't rely solely on the faulty fiat currencies backed by governments like the United States dollar AAAAAAND IT'S GONE! [southparkstudios.com] Please log out of this site sir, this is for customers with a positive balance in their accounts.
Customer: What?!
BitFloor Operator: It's gone, it's all gone, sir, our system's been compromised, you now have zero dollars in your account please log off or deposit more money, thank you!

Bitcoinica Operator: Good afternoon sir, welcome to Bitcoinica! How can I help you today?
Customer: Well, uh, I don't know how to, uh, say this but ... this is all anonymous, right?
Bitcoinica Operator: Oh completely sir, we don't have any logs or even backups for that matter!
Customer: Good, good, well, uh, you see I have this "sickness" and I need to transfer this $5,500 for this stuff from this silk road retailer and I ...
Bitcoinica Operator: Woah woah woah, that's more than enough information to get us started here. So let's see you now have $5,500 in BitCoin balance on your account and the wallet is being updated and written to our single hard drive on a Windows 98 computer connected to the internet with no firewall AAAAAAND IT'S GONE! Please leave this site sir, your account has no balance in it!
Customer: ??? Um, what?
Bitcoinica Operator: It's gone, it's all gone. All of it, something happened, we were hacked or that 8 year old spinning disk crashed or something but it's all gone, thank you sir, thank you for using Bitcoinica now please leave this site or put more money into your account.
Customer: But you don't understand ... I ... I've already received the "product" and they're GOING TO TAKE MY THUMBS if I don't get this money to them now.
Bitcoinica Operator: That's wonderful sir, we here at Bitcoinica like to keep our transactions anonymous so please stop relaying me identifying details of this account. Now you have a nice day, sir!

Re:Aaaaaand It's Gone!!! (5, Insightful)

Greyfox (87712) | about 2 years ago | (#41234577)

A lot of my friends had similar experiences with their 401K plans. Seems like it's just a matter of who you want to screw you out of your money. Even if you buy gold at the ridiculously inflated prices and get gold in your hands, someone's going to find out you have $50000 worth of gold under your mattresses and rob your house. That's why I'm here today pitching my revolutionary new "Canned Bean and Shotgun Shell" investment plan! These assets can only appreciate in value after the economy collapses and hockey-masked villains roam the land in go-carts! Just be sure to also have a can opener and a shotgun.

Re:Aaaaaand It's Gone!!! (1)

vlm (69642) | about 2 years ago | (#41234663)

These assets can only appreciate in value after the economy collapses

Toilet paper, aka the alpha plan. You can survive without ammo, without beans (I hate beans) but one way or another you're buying TP. And due to inflation prices only go up. So store as much guaranteed consumables as physically possible purchased as early as possible.

Even if you buy gold at the ridiculously inflated prices and get gold in your hands, someone's going to find out you have $50000 worth of gold under your mattresses and rob your house.

Unless its in the $9/month safe deposit box at the bank, or you bought GLD ETF aka "paper gold" which has all kinds of annoying income tax implications BTW.

Re:Aaaaaand It's Gone!!! (2)

History's Coming To (1059484) | about 2 years ago | (#41234847)

one way or another you're buying TP.

You've obviously not spent much time with the 50% of humanity who don't use it. Left hand, jug of water, attention to handwashing, job done, and more money to spend on frivolous stuff like your staple diet. Most of the world is already living the Zombie Plan lifestyle.

Re:Aaaaaand It's Gone!!! (2)

wonkey_monkey (2592601) | about 2 years ago | (#41235193)

Left hand, jug of water, attention to handwashing

It's the Roman wet-sponge-on-a-stick or nothing, for me.

Re:Aaaaaand It's Gone!!! (4, Insightful)

ColdWetDog (752185) | about 2 years ago | (#41234871)

Reminds me of a friend who was of a similar mind. He stored hundreds of rolls of toilet paper in a storage area cleverly located in the ceiling of his covered deck. Basically wasted space until he decided it would be a perfect place for that bulky but absolutely essential aspect of modern life.

His plan worked fine until a windstorm tore the roof off said deck and scattered the hundreds of rolls of toilet paper over a huge swath of scrub pine and chaparral downwind to the cabin. You know, it's damn hard to pick up hundreds of rolls of TP stuck in the brush. Would have made a great little picture on Google Earth, had it existed back then.

Moral of the story: Although TP is important to modern sensibilities, it's not something most people can safely store for extended periods of time. Leaves, OTOH just grow on trees although winter tends to be a bit harder concept to deal with.

Re:Aaaaaand It's Gone!!! (0)

Anonymous Coward | about 2 years ago | (#41235009)

You've clearly never gone camping in the winter. Winter is much easier to deal with; just grab a snowball. Cleaner than toilet paper.

Re:Aaaaaand It's Gone!!! (1)

OldeTimeGeek (725417) | about 2 years ago | (#41235171)

I once went on a tour of Wind Cave in South Carolina, which is unusually dry for a cave - so much so that they only allow in a few people at a time because they found that the water vapor in people's breaths affected the caves. In one of the caverns there were pallets filled with toilet paper, rations and other stuff that had clearly been there for some times. The guide said that the supplies were put there by the U.S. Government in the 1950's. The cave was deep enough and far enough away from population centers to provide shelter in case of atomic bomb attack and dry enough to allow paper goods and other perishables to be stored practically forever.

So, you see, it's all about *where* you store it...

Re:Aaaaaand It's Gone!!! (1)

FictionPimp (712802) | about 2 years ago | (#41235133)

I invest in ammo. Ammo is cheaper than gold, more useful that anything and is a limited resource so it's value will improve over time.

I can use ammo to 'buy' food, tp, water, more ammo, etc. And by buy I mean take by force by using said ammo.

Re:Aaaaaand It's Gone!!! (2)

Dexter Herbivore (1322345) | about 2 years ago | (#41235445)

A chemistry manual and an ammo press would be worth more in the long run.

The Difference (5, Insightful)

eldavojohn (898314) | about 2 years ago | (#41234907)

A lot of my friends had similar experiences with their 401K plans.

401k Operator: Hello there welcome to your 401k how can I help you today?
Customer: Well, I was calling about my Vanguard mutual funds that I had a diversified portfolio in but with the recent housing and financial crisis I ...
401k Operator: AAAAAAND IT'S GONE!
Customer: What? No, actually, I mean the worth is very low at this point -- not even a third of what it was before the crisis but I'm logged into your site right now and I still have the same number of stocks in this mutual fund.
401k Operator: There must be something wrong, sir, all of your money is supposed to be gone.
Customer: Well, I mean actually I was thinking about taking another $10,000 I have of liquid assets and investing in a post tax fund of these same stocks since they're so low right now.
401k Operator: Why on Earth would you do that? These are worthless and your money is all gone.
Customer: No, I mean, I haven't realized these losses yet, the number of shares is still the same and I'd like to buy more of them with some of my savings. I mean, if these things are truly worthless -- they represent huge cross sections of the biggest companies and industries in America. If these things are worthless, this $10,000 isn't going to be of any value to me anyway. Price anarchy will take hold and the economy will grind to a halt. The only people this is really bad for are those that are retiring between now and when/if the price rebounds.
401k Operator: Listen sir, if you're not going to let me say AAAAAAND IT'S GONE, I'm going to use your address here to find you and ...
Customer: Okay okay, jeez, um, oh, I just drank the last of my coffee and ... and ...
401k Operator: *long sigh* It's not the same. I need to be alone now, goodbye.

Re:Aaaaaand It's Gone!!! (0)

Anonymous Coward | about 2 years ago | (#41235275)

Don't forget your morphine, hatchet, hunting knife, and a box of matches. ...Matches...Always those !@#$ matches...

Another week Another ... (2, Insightful)

Dave Whiteside (2055370) | about 2 years ago | (#41234267)

post about bitcoin service being hacked ,
raspberry Pi's not being delivered

Re:Another week Another ... (1)

Aardpig (622459) | about 2 years ago | (#41234721)

Had my RPi for a month now... what you talkin bout, Willis?

Re:Another week Another ... (0)

Anonymous Coward | about 2 years ago | (#41234733)

post about bitcoin service being hacked

Seriously. It's like it's not even news anymore. It's more like just an accepted risk^H^H^H^Hinevitability of using Bitcoin.

But don't worry, by the time they've got the whole system secured, we'll be able to purchase things for 4.9e-57 Bitcoins, which makes it better than real money!

Not surprised ... (2, Interesting)

gstoddart (321705) | about 2 years ago | (#41234277)

I'm not really surprised by this. Someone had the idea to create a purely virtual currency, and someone else has found it to be an attractive target.

The fact that it is vulnerable to this kind of attack probably indicates there's some real flaws in how this currency is supposed to work -- or at least a few places where someone can get through the cracks.

I remember when I first started hearing about this, and thinking "gee, I hope they've thought through all of the security issues". It's like security in operating systems ... there's tons of things you could overlook which can let someone in, and until it starts happening, you likely haven't even thought of all of them.

I feel bad for anybody has lost their money on this, but I've been treating this like an experiment which has the potential to go really wrong. It's just so massively complex to try to design your own currency system that someone isn't going to try to exploit without going through a lot of growing pains.

Re:Not surprised ... (5, Insightful)

Anonymous Coward | about 2 years ago | (#41234301)

The actual Bitcoin protocol looks quite secure, it's just that every website using it seems to be run by the kind of people I wouldn't trust with a toaster oven.

For God's sake, the largest Bitcoin exchange is MTGox. That's the site formerly known as "Magic The Gathering Online Exchange".

Re:Not surprised ... (0, Flamebait)

Anonymous Coward | about 2 years ago | (#41234349)

"run by the kind of people I wouldn't trust with a toaster oven"

Joe Biden has a new career then does he?

Re:Not surprised ... (5, Insightful)

gstoddart (321705) | about 2 years ago | (#41234415)

The actual Bitcoin protocol looks quite secure, it's just that every website using it seems to be run by the kind of people I wouldn't trust with a toaster oven.

But, that's kind of the core of the problem.

In the real world, the banking and trading system is monitored by people with the power to enforce, have long histories and memories of what can go wrong, and is generally policed by governments cooperating.

But the internet equivalent makes it sound like a bunch of shady, back alley people doing financial transactions outside of the normal system.

So for me, there's simply no basis to trust "Bob's online brokerage and clearing house for virtual currency", or the entire BitCoin system.

Much like PayPal isn't a bank, but does many bank-like things -- it isn't regulated like a bank, and doesn't offer you the same legal protections. It's hard not to see this as more of the same -- but since the currency still has real world value, people will treat it as such. The tendency to lie, cheat and steal doesn't go away because it's virtual currency.

For God's sake, the largest Bitcoin exchange is MTGox. That's the site formerly known as "Magic The Gathering Online Exchange".

LOL, like I said, "Bob's online brokerage" ... why should I trust them? They're completely unregulated, outside of the normal banking system, and not really accountable to anybody. What could possibly go wrong?

I view this as being pretty close to walking up to someone running a lemon-aid stand who claims to be a bank, and depositing a bunch of money. When the guy with the lemon-aid stand proves to have little or no security, or is completely dishonest ... well, good luck getting your money back.

Re:Not surprised ... (4, Insightful)

Richard_at_work (517087) | about 2 years ago | (#41234569)

If PayPal isn't regulated like a bank in your country, then thats a failing of your country - in the UK, PayPal is regulated by the Financial Services Authority, and is registered as a bank within the European Economic Area.

Re:Not surprised ... (2, Insightful)

jareth-0205 (525594) | about 2 years ago | (#41234703)

Except... it isn't anymore, since 2007 it's been a Luxemborg bank outside UK regulation.

http://tamebay.com/2007/05/paypal-becomes-a-bank-no-longer-under-fsa.html [tamebay.com]

Re:Not surprised ... (4, Informative)

Richard_at_work (517087) | about 2 years ago | (#41234867)

Except that article is incorrect - because its registered within the European Economic Area, it is still FSA registered and falls under the FSAs regulatory umbrella.

PayPal (Europe) Sarl et Cie SCA is registered with the FSA under the registration number 226056.

The fact that it moved to Luxembourg doesn't change the fact that it is regulated within the UK.

Re:Not surprised ... (2, Funny)

Anonymous Coward | about 2 years ago | (#41234885)

bug tag changed from WORKSFORME to WONTFIX

Re:Not surprised ... (0)

Anonymous Coward | about 2 years ago | (#41234643)

PayPal has a banking license in Luxembourg. I'm not sure how this affects their non-Luxembourg entities though. I know that my PayPal account is administered by their Singapore office which specifically communicates not being a bank.

Re:Not surprised ... (1)

vlm (69642) | about 2 years ago | (#41234737)

In the real world, the banking and trading system is monitored by people with the power to enforce, have long histories and memories of what can go wrong, and is generally policed by governments cooperating.

But the internet equivalent makes it sound like a bunch of shady, back alley people doing financial transactions outside of the normal system.

The mistake is thinking that because the "real" economy needs a "bank" or a "exchange" then a virtual one just naturally of course without thinking needs to replicate the real world.

Kind of like shopping at Barnes and Noble means I wait in line and the teenage cashier takes forever to give me change while she checks her SMS and FB on her smartphone, therefore "naturally" amazon should try to replicate those parts of the experience using "3d virtual reality" or something idiotic like that.

I'm not seeing the point of keeping $$$$$$ worth of BTC in some goofballs BTC "psuedo-exchange" or "psuedo-bank". And I'm not some noob talking out of ignorance, I mined BTC in software back when the difficulty level was a small two digit number (aka a very long time ago in BTC land).

Re:Not surprised ... (0)

Anonymous Coward | about 2 years ago | (#41234957)

People might want to exchange their Bitcoin for goods and services. You know, the task that humanity invented currency to do. However, much of the general goods-and-services-providing public are not aware of (or have no trust in) Bitcoin. So people holding Bitcoin will want to exchange it for a real currency. (I'm defining "real currency" here as "a currency readily exchangeable for beer". You may substitute in your own definition at will, but don't pretend that you don't know why I'm making a distinction between Bitcoin and real currencies.)

Eventually, it gets easier to just keep the majority of your Bitcoin balance in an exchange, especially if you frequently need to convert it into dollars because you just sold some "goods" for Bitcoin and need to pay your supplier of "goods", who generally prefers cash dollars. Or if you need to buy Bitcoin with dollars so that you can make an untraceable purchase of recreational "goods" over the Internet. You may well not have a whole lot of Bitcoins at any one time in the exchange, because you keep the majority of your net worth in real currency (or, if you've got a serious "goods" problem, maybe your net worth is insignificant) but the exchange will have many such accounts so when it gets compromised the total loss is quite significant.

Re:Not surprised ... (1)

fustakrakich (1673220) | about 2 years ago | (#41235027)

I view this as being pretty close to walking up to someone running a lemon-aid stand who claims to be a bank...

I doubt that we need to be concerned about some lemonade stand [abc2news.com] .. To bad the authorities don't have the same desire to protect us from the banks. Bitcoin just needs to become too big to fail.

Re:Not surprised ... (1)

Hatta (162192) | about 2 years ago | (#41235141)

LOL, like I said, "Bob's online brokerage" ... why should I trust them? They're completely unregulated, outside of the normal banking system, and not really accountable to anybody. What could possibly go wrong?

Did you forget what happened in 2008? The normal banking system is completely unaccountable to anybody.

Insurance (1)

sourcerror (1718066) | about 2 years ago | (#41235441)

With the normal banking system your account is insured to about $40k-80k depending on laws of the country you live in.

Inexperienced exchange providers (5, Insightful)

martok (7123) | about 2 years ago | (#41234391)

This is not the fault of the currency. It is a fault of the exchange provider and the users of the currency really need to be careful in who they put their trust.
I'm sorry but noone without a great deal of development experience should be writing a Bitcoin exchange or any other type of financial exchange exposed to the internet. The attackers got hold of the unencrypted wallet? Why would an exchange wallet ever be unencrypted? Why is there a single wallet in the first place? Why not have seperate wallets per user account encrypted with their own passphrase such that the site operator doesn't even have access? Maybe a master password override to decrypt but never stored online etc.
Why is the wallet stored on the webserver in the first place? Why aren't funds transfered to offline storage on a regular basis? I could go on.

Re:Inexperienced exchange providers (3, Insightful)

gstoddart (321705) | about 2 years ago | (#41234599)

This is not the fault of the currency. It is a fault of the exchange provider and the users of the currency really need to be careful in who they put their trust.

But, that's the problem.

In the real world, banks are regulated, covered under some oversight, and insured.

If this parallel banking system doesn't have any of these controls, then there's simply no way you can trust the system as a whole.

So, me, I'll stick to having my money backed by real banks, with an actual transaction processing backed by major players, and which all of the players understand the risks and their own liability.

Trusting the internet with my money is like trusting a crackhead to guard my house. What you're describing is that any idiot can come along and try to get into the game. No thanks.

This may not be a specific issue with the currency, but the entire "banking" ecosystem around it sounds like something I'd fundamentally have zero trust in.

Re:Inexperienced exchange providers (1)

shentino (1139071) | about 2 years ago | (#41234939)

Money isn't safe, period.

If you hide it under your mattress, someone can break into your house and rob you.
If you put it in the bank, the bank can fail and take your deposits with it...or the feds can simply accuse you of being a druggie or terrorist and flat out seize it.
If you put it in bitcoins, someone can hack your wallet out from under your nose.

Face it, there is no way to keep money safe in this world except to spend it.

Best defense to being robbed is, sadly, not to have anything worth stealing in the first place. If you have something someone else wants and they're big and bad enough to take it from you, they will, and there's usually not a damn thing you can do about it.

Re:Inexperienced exchange providers (1)

gstoddart (321705) | about 2 years ago | (#41235041)

Face it, there is no way to keep money safe in this world except to spend it.

Maybe not absolutely 100% safe, sure.

But treating random internet sites as if they're proper banks with all of the built in safeguards isn't really a step in the right direction.

As the poster I replied to said, this is about who you trust in the exchange. In this case, it sounds like there's no reason to actually put any trust in them.

In this case, I'd have to say the "real" banking system is far more trustworthy. Some guy who knocked up a web site and thinks he's an "exchange"? Well, that's just asking for troubles.

Re:Inexperienced exchange providers (0)

Anonymous Coward | about 2 years ago | (#41234605)

Sure it is. The unregulated nature is what allows these exchanges to set up with lax security and incur no liability for loss. "But officer he stole my virtual monopoly money! Do something!!!"

Re:Not surprised ... (1)

Atzanteol (99067) | about 2 years ago | (#41234749)

Does an uneducated whelp have to be the first to post in all of these? BitCoin isn't insecure - the site holding them was. FFS. MUST we cover this in EVERY article posted here???

Re:Not surprised ... (2)

Desler (1608317) | about 2 years ago | (#41234829)

And what does it matter if bitcoin itself is secure when the places that allow you to extract any value for your play money have joke level security? That's like saying that credit cards aren't insecure it's just the payment processors. It's a farcical excuse.

Re:Not surprised ... (1)

YttriumOxide (837412) | about 2 years ago | (#41235117)

And what does it matter if bitcoin itself is secure when the places that allow you to extract any value for your play money have joke level security?

Depends on what you mean by "value"... I keep my bitcoins in my personal wallet, never on an exchange. I use exchanges to BUY bitcoins, but never store any there. I also never sell bitcoins for Euro/Dollars/etc - I simply spend them. So for me, the "extracting value" is the spending of them on things I wish to have*

* (yes, feel free to read that as "buy drugs on Silk Road"... that IS my main use of them)

Re:Not surprised ... (1)

gstoddart (321705) | about 2 years ago | (#41235157)

Does an uneducated whelp have to be the first to post in all of these? BitCoin isn't insecure - the site holding them was.

Ergo, the whole landscape in which BitCoin operates is insecure. Ergo, BitCoin is essentially insecure.

Sure, the BitCoin itself might be theoretically safe. But if untrusted sites can get into the game, the whole damned thing becomes a joke. Because, clearly this awesome security you're so excited about doesn't work worth a fucking damn when it comes down to it.

Or are you somehow putting forward the idea that something secure passed around in horribly insecure ways somehow still remains as secure? Because I don't follow the logic. The whole system is only as strong as its weakest link, and it sounds like it's pretty damned easy to put in weak links.

This isn't a "real" banking system. It's something else. And, as a result and given the number of these virtual heists ... I wouldn't put my money into BitCoin because I don't see a basis for trust, and I'm betting you've not sunk your life savings into it either.

So, big deal, they didn't break the cryptography used in BitCoin -- they just went around it and made it irrelevant.

Re:Not surprised ... (1)

gl4ss (559668) | about 2 years ago | (#41234785)

uhh.. it's not so much about securing the money itself - that it can be stolen demonstrates that it's pretty secure in concept - in what's it' supposed to be anyways. it's supposed to work like "online cash".

" It's like security in operating systems ... there's tons of things you could overlook which can let someone in, and until it starts happening, you likely haven't even thought of all of them." well, hacking these exchanges is more like security in operating systems because that's how these exchanges get hacked.

Re:Not surprised ... (-1)

Anonymous Coward | about 2 years ago | (#41234857)

> The fact that it is vulnerable to this kind of attack probably indicates
> there's some real flaws in how this currency is supposed to work

No.

No, really, no.

How can people not understand the difference between "security of the protocol" and "security of the services adopting the protocol"? Do you realize that ALL the "attacks to Bitcoin" happened so far have NOTHING to do with the protocol? They involve either:

1) dumb users doing something dumb and then complaining that "Bitcoin is not secure" (I am looking at you, average 14yo kid scammed by pirate40)

2) dumb users not backupping their wallet and suffering hardware failure/theft/loss or not keeping a separate offline wallet for bulk deposit being hacked, losing their money and then complaining that "Bitcoin is not secure" instead of admitting that they have been too lazy

3) large Bitcoin operators advertising themselves as "totally secure" and then having their systems hacked (or pretending to be so), leaving their customers in the s**t (and they deserve it, since you must be a moron to keep 10k worth of BTCs into an online wallet of a service provider who doesn't offer you an insurance, instead of having them stored into YOUR hardware)

Srsly people, what do you expect?

By the way, do you expect large banks not suffering similar attacks? Their servers' security is sure stronger than the tipical "homebrew Bitcoin service" out there, but I'm pretty sure (and some friends working in the bank sector confirm, I for myself work into crypto security and applications) that they also get hacked once in a while, maybe far often than what we think.

The difference? Nobody comes to know it.

Large banks fit into "global networks", where they can afford to share the losses caused by these attacks. Customers have a sort of "shadow insurance" (and they pay for it, mainly through bank fees), such that they don't lose money if their bank does. On one hand this is good for the customer, but on the other hand this makes the "real" financial situation opaque (and this contributes to disasters like the recent subprime mess in the USA), the transparency of the Bitcoin infrastructure makes impossible to hide such attacks.

You have to understand that Bitcoin is "young", the services operating out there are no dissimilar to the first banks in the Far West, where miners used to deposit their gold. If one of those banks was targeted by an armed robbery, the customers lost everything. The difference with Bitcoin are: 1) it's harder to trace the thieves 2) it's easier to keep your money safe from the thieves (if you want it).

Don't use Bitcoins if you don't know what you are doing and stop ranting that "it's just a big scam".

Re:Not surprised ... (4, Insightful)

Desler (1608317) | about 2 years ago | (#41234915)

Because the difference is meaningless to the users of it? If all the places that you can use to exchange bitcoin are insecure it really doesn't make a difference whether or not the protocol is secure. If bitcoin is only secure as long as you don't use an exchange then it becomes worthless as a currency for... exchanging money.

Re:Not surprised ... (2)

jythie (914043) | about 2 years ago | (#41235439)

I suspect these sites that think of themselves as the banks of the future are slowly discovering how difficult being a bank is.. and customers are discovering just what being FDIC backed means.

News flash (1)

Dexter Herbivore (1322345) | about 2 years ago | (#41235475)

Untraceable currency is untraceable! Bitcoins are cash, but your wallet may be laying out on the street with notes hanging out, is it a surprise that some of them get stolen?

Why ever use Bitcoin in the first place? (0)

Gothmolly (148874) | about 2 years ago | (#41234287)

What need did it fill that was not satisfied by other online payment systems?

Re:Why ever use Bitcoin in the first place? (0, Insightful)

Anonymous Coward | about 2 years ago | (#41234327)

You haven't heard of SilkRoad have you?

Re:Why ever use Bitcoin in the first place? (0)

Anonymous Coward | about 2 years ago | (#41234695)

I haven't actually, what is it?

Re:Why ever use Bitcoin in the first place? (2, Informative)

nogginthenog (582552) | about 2 years ago | (#41234335)

Buying drugs & stolen goods over the internet. Donating to Wikileaks. That's about it really..

Re:Why ever use Bitcoin in the first place? (-1)

Anonymous Coward | about 2 years ago | (#41234385)

Buying drugs & stolen goods over the internet. Donating to Wikileaks. That's about it really..

You forgot kiddie pr0n from the silky smooth road.

Re:Why ever use Bitcoin in the first place? (0)

Anonymous Coward | about 2 years ago | (#41235077)

Also, stealing money. Pretty sure that is the biggest sector of the bitcoin economy.

Re:Why ever use Bitcoin in the first place? (1, Interesting)

Anonymous Coward | about 2 years ago | (#41234377)

Hello. Welcome to the 2010s. The "other online payment systems" are not just service providers anymore, they are also Boy Scouts, and a Neighborhood Watch. They take it upon themselves to determine who you can give money to, and to who you can not. Wikileaks is just one such example. There are also many outside of the US that are somehow considered to be in violation of US laws that of course don't apply to them.

Therefore we need the equivalent of cash.

Re:Why ever use Bitcoin in the first place? (4, Interesting)

localman57 (1340533) | about 2 years ago | (#41234561)

People in places that Americans frequently view as backward and primative have had this figured out for a long time [wikipedia.org]

Obviously, there's lots of ways things could go wrong, but I'd give them my money before I'd put it in a bitcoin exchange...

Re:Why ever use Bitcoin in the first place? (2)

Infernal Device (865066) | about 2 years ago | (#41235119)

Hawala works because it occurs inside a cultural and religious system that has strong penalties for not following thru. Bitcoin exchanges don't work because it's mainly run by a bunch of people who are completely against any oversight. They expect their word and their technical expertise to be the bond, without an ovarching cultural/religious framework to validate it.

Enron would have been very different if the perpetrators could have lost appendages for their malfeasance.

Re:Why ever use Bitcoin in the first place? (5, Insightful)

Sarten-X (1102295) | about 2 years ago | (#41234567)

It filled the need for an anti-corporate moral superiority.

BitCoin was developed from the start to screw over large companies, who invariably require a trail of some kind for significant transactions. It's promoted as the digital equivalent of cash, and just like cash, the only way to trust a transaction is when you implicitly trust the other party. That kind of trust is only feasible for a small business dealing with a small client base, where the natural urge for social behavior still trumps the natural human urge for antisocial greed.

Sure, maybe BitCoin could eventually work... but it'll first evolve a traceable "BitCoin Certificate" that will be exchangeable for BitCoins at a particular place, and those certificates will have a booming economy grow around their trade, because they're easier to secure than actual BitCoins. Then certificates will be created for BitCoins that don't actually exist, but they'll be paired with certificates for BitCoin debt, and BitCoins will be loaned. Eventually, the BitCoins will just be a meaningless wallet locked away on a server, and the certificates will be the real money, and the demand for certificates will fluctuate in relation to the actual value of the BitCoins. Then someone will gripe about how these certificates are no longer fixed to the BitCoin standard, and they're traceable, and we should make a new currency to solve the problems, that's not controlled by Big BitCoin...

Re:Why ever use Bitcoin in the first place? (1)

IAmR007 (2539972) | about 2 years ago | (#41235323)

Bitcoins != Bitcoin wallets. The breakage wasn't with bitcoin, but people deciding to store PRIVATE KEYS online. There's a big difference between a protocol being broken and people being stupid with private keys.

About time. (0)

Hazel Bergeron (2015538) | about 2 years ago | (#41234297)

It's better that the stupid bitcoin experiment dies now than when average people with something to lose are duped into the scam.

If it's not well regulated, open and the result of mutually beneficial agreement then expect someone smarter than you to take it from you: this rule applies to money, commerce and war.

Re:About time. (1)

Kjella (173770) | about 2 years ago | (#41234549)

If it's not well regulated, open and the result of mutually beneficial agreement then expect someone smarter than you to take it from you: this rule applies to money, commerce and war.

Seems to me bitcoin is of mutual benefit - there are people who want to pay with bitcoins and people who want to be paid with bitcoins. That there are a lot of other people who'd like to rob us blind doesn't change that, any more than burglars and bank robbers and shoplifters do in the real world. It's just back to the days of the wild wild west when the sheriff was nowhere to be found and you have to protect your own assets.

Re:About time. (1)

Hazel Bergeron (2015538) | about 2 years ago | (#41234753)

And we moved on from that because a lot of people got robbed blind or shot, and few big endeavours were worth the risk so education and infrastructure was poor.

Re:About time. (1)

Hillgiant (916436) | about 2 years ago | (#41234563)

If it's not well regulated, open and the result of mutually beneficial agreement then expect someone smarter than you to take it from you: this rule applies to money, commerce and war.

I thought the whole point of war was such that at least one party was going to conclude that the agreement was not to their benefit.

Re:About time. (1)

Hazel Bergeron (2015538) | about 2 years ago | (#41234731)

Unless you want war to continue, you must be prepared to enter into a mutually beneficial agreement of well-regulated, open terms.

And if you really want war to continue but just fancy catching your breath (or winning an election), make sure you leave out one of those ingredients.

Re:About time. (1)

HornWumpus (783565) | about 2 years ago | (#41235099)

War will continue in any case you dreamer. The only thing that stops it is weapons so destructive that nobody wins. Even there it just stops total war, proxy wars get worse if anything.

Re:About time. (0)

Anonymous Coward | about 2 years ago | (#41234601)

Or just start using even basic security measures, no, no your right just stop altogether, it's stupid. its a scam. Not like like the dollar gets printed everytime the US doesn't want to pay the full value of its foreign debt, no (oh how they bitch about nations that pin to the dollar stopping than trick from working) and investments in say facebook, they do well, better the stupid share and currency experiments die now than when average people... oh wait, every area of the financial system is designed to part the average person from everything that they possess by the time they die. Your dreaming if you think its anything else. Regulation isn't what you think it is, even when it's well regulated you can expect even people dimmer than you to take 'it' away from you, and even if they don't get you they bypass you and get it directly from your government.

Re:About time. (1)

HornWumpus (783565) | about 2 years ago | (#41235165)

WTF?

Printing money is an aggressive act towards any nation that pinned its currency to yours. We cause inflation in China when we print dollars. This forces them to move the pin. This is how economic war is fought.

The pin is a simpleminded economic measure devised by engineers that run China. Their metric is industrial utilization. Their target is 100%. Their tool is the exchange rate. The downside is becoming more obvious every day.

It will be totally dysfunctional soon. Look for arbitrage opportunities.

Re:About time. (2)

localman57 (1340533) | about 2 years ago | (#41234633)

It's better that the stupid bitcoin experiment dies now than when average people with something to lose are duped into the scam.

If it's not well regulated, open and the result of mutually beneficial agreement then expect someone smarter than you to take it from you: this rule applies to money, commerce and war.

By that argument, we should probably also ban hedge funds, ponzi schemes, derivatives trading, that entire 31 multi-level marketing thing, PayPal, Secured Debt Obligations, Beanie Babies, Exchange Traded Funds, house-flipping, Thomas Kinkade paintings, and investment in what China calls a stock market. Wait. What?

Re:About time. (1)

Hazel Bergeron (2015538) | about 2 years ago | (#41234697)

Excellent.

Re:About time. (1)

RoknrolZombie (2504888) | about 2 years ago | (#41235225)

Why does everyone seem to assume that "regulation" or even "good regulation" means a damn thing? Is nobody looking at the rest of the worlds' economic situation? Now, I'll grant you that novice code monkeys shouldn't be building the equivalent of a bank - but seriously, the only real difference between this and a "real" bank is that it doesn't have Federal backing. Anonymity will go straight out the window as soon as they do (thereby eliminating one of the bigger benefits of BC), so what are you left with? The same fucking thing we're left with in the "real world": Trust someone with your money because nobody takes "cash" anymore and hope like hell that they don't fuck it up. If they do fuck up, then you hope that they'll be willing to make it "right". Dumping Bitcoin isn't the answer - resolving the problems with Bitcoin is.

i think these places steal their own bitcoins (2, Interesting)

Anonymous Coward | about 2 years ago | (#41234305)

Easy way to make money, set up a bitcoin exchange, run it long enough to get a couple 100 grand of bitcoins then steal them all from yourself, since bitcoin is untraceable there's really no way to get caught.

Re:i think these places steal their own bitcoins (1)

alphax45 (675119) | about 2 years ago | (#41234467)

That wouldn't surprise me at all. Good scam if you think about it!

Re:i think these places steal their own bitcoins (1)

gl4ss (559668) | about 2 years ago | (#41235151)

That wouldn't surprise me at all. Good scam if you think about it!

in this case the money that disappeared was roughly 140 weeks profits of the exchange. that's quite a lot.

Re:i think these places steal their own bitcoins (0)

Anonymous Coward | about 2 years ago | (#41234617)

The funny thing is that it is always exchanges getting "hacked", never retailers. And why is that? Because the first thing anyone does when they get a bitcoin is try to convert it to a fiat currency... Says a lot about the viability of this "currency", doesn't it?

Re:i think these places steal their own bitcoins (1)

localman57 (1340533) | about 2 years ago | (#41234699)

The funny thing is that it is always exchanges getting "hacked", never retailers. And why is that? Because the first thing anyone does when they get a bitcoin is try to convert it to a fiat currency... Says a lot about the viability of this "currency", doesn't it?

Not really, because for this conversion to happen, there has to be another person willing to take the bitcoins in exchange for fiat currency. This of the essence of currency. If you keep them forever once you get them, then they're a collectable, not a currency.

Re:i think these places steal their own bitcoins (0)

Anonymous Coward | about 2 years ago | (#41234803)

If you keep them forever once you get them, then they're a collectable, not a currency.

Same AC that you responded to. This brings up the most fundamental flaw in bitcoin. You are rewarded for keeping them forever, since there is an upper limit to the amount of bitcoins that exist. As the creation of bitcoins slows down, every one created prior to that new iteration becomes worth more. Therefore, why would you ever spend it? Look at the guy that spent 10k bitcoins (or something like that) for a pizza. Think he feels like a dumbass since now that pizza has a nominal worth of $100k? More realistically, you could probably assume $50k since it appears you have a 50% chance of losing any coins you try to convert, but my point still stands.

For your other point, "there has to be another person willing to take the bitcoins in exchange for fiat currency", you're right. There is. And that person is probably a scammer or, more charitably, a grifter. Except for the legit businesses selling drugs and child porn. Oh, slim jims and burritos (VERY MISLEADING), too.

Re:i think these places steal their own bitcoins (1)

Anonymous Coward | about 2 years ago | (#41234935)

This is why deflationary currency policies like the gold standard are terrible. If you can make a profit simply by hording cash under your mattress then why would anyone 1) invest and take on risk when they are guaranteed sure returns for nothing or 2) buy anything since it will always be cheaper tomorrow?

This is why any modern economy NEEDS a certainly level of inflation. As the economy grows the money supply needs to expand to match the growth otherwise you get deflation which then kills the growth.

The gold nuts are living in a synthetic fantasy of 18th century economics textbooks and History Channel documentaries about the Wiemar Republic.

Re:i think these places steal their own bitcoins (1)

Wonko the Sane (25252) | about 2 years ago | (#41234905)

A lot of people are starting to suspect the recent hackers to be mythical. The basic security precautions needed to prevent this kind of thing have been well-known since last year.

Useless (0)

puddingebola (2036796) | about 2 years ago | (#41234387)

So I go to the 7-11 with my smartphone with all 250K worth of bitcoins to get some coffee and a newspaper and the clerk says that will be $2.48 and I hold up my smartphone and he says what's that and I say that's $250 million worth of bitcoins and he says do you want to trade the phone for the paper and coffee and I say no, I want you to use NFC to deduct $2.76 from my magical bitcoins and he says, Sorry dude, I don't have the other half of the encryption key... Just use paper money dude.

Re:Useless (1)

localman57 (1340533) | about 2 years ago | (#41234719)

Tell that to people in Zimbabwe where that newspaper and coffee will run you an entire wheelbarrow full of money. Or at least it did a year or so ago. The US media kind of lost interest in it a while ago, so I don't know what's going on now.

Re:Useless (1)

Desler (1608317) | about 2 years ago | (#41234947)

They've long since re-denominated their money.

Re:Useless (1)

puddingebola (2036796) | about 2 years ago | (#41234993)

So they can use Silver dude. There's always a barter economy. In seriousness, wasn't this caused in some small part due to Robert Mugabe's land reform policies? Or is the hyperinflation it's own animal altogether. Or maybe the west is trying to 86 a socialist.

Re:Useless (0)

Anonymous Coward | about 2 years ago | (#41235063)

Zimbabwe abandoned their dollar and now everyone there does business in USD or Euros or whatever.

It's not that big a deal for a small country to use a foreign currency for everything; Ecuador has been doing it for years.

Re:Useless (1)

HornWumpus (783565) | about 2 years ago | (#41235203)

Zimbabwe is using US dollars for all exchanges except those with the government. The people made this change.

I expect when you owe the government money you ether just don't pay or you convert your dollars to toilet paper and run from the bank to the government office before it loses too much value.

You need help alright (3, Interesting)

wbr1 (2538558) | about 2 years ago | (#41234397)

Why the fuck was your backup of keys stored umencrypred? It costs only a vew cpu cycles.
This smacks of an inside job, which given the nature of bitcoin, is far to easy.
Set up exchange, collect keys, lose keys in 'compromise', profit. No ???? Needed.

Better known (0)

Anonymous Coward | about 2 years ago | (#41234445)

as the exit strategy for a con.

OK, I really don't get BitCoin... (2, Insightful)

nweaver (113078) | about 2 years ago | (#41234461)

Its not anonymous, but pseudonomous. Its actually the opposite of anonymous, as EVERY transaction is recorded in public.

It can't scale.

The major use beyond geek things is buying drugs (Silk Road etc). Heck, even illegal arms sales weren't profitable in BitCoin land!

The believers seem to have a huge amount of "goldbug variation", obsessing about a fixed currency supply.

Hardly any exchange or similar service has remained unhacked.

And 5% of ALL bitcoins ended up in a 6 month, blatenly obvious pyramid scheme run by an anonymous individual named PIRATE!!!!

The only saving grace is bitcoin is remarkably small: with only ~10M bitcoins in existence, the delusionary notional value is small.

Re:OK, I really don't get BitCoin... (0)

Anonymous Coward | about 2 years ago | (#41234533)

It's the perfect combination for people that dont understand economics or crypto.

Re:OK, I really don't get BitCoin... (0)

Anonymous Coward | about 2 years ago | (#41234969)

Financial institutions will be all over this next week...

Re:OK, I really don't get BitCoin... (0)

Anonymous Coward | about 2 years ago | (#41234557)

Bitcoin indeed seems to attract the same sort of nutters that gold standard advocacy does.

Anyone who advocates a fixed supply currency where massive deflation is inevitable needs to have their head checked.

Re:OK, I really don't get BitCoin... (3, Funny)

localman57 (1340533) | about 2 years ago | (#41234741)

Bitcoin indeed seems to attract the same sort of nutters that gold standard advocacy does.

Anyone who advocates a fixed supply currency where massive deflation is inevitable needs to have their head checked.

They go to this one doctor from Texas for the exam. According to him, they're thinking perfectly rationally.

Re:OK, I really don't get BitCoin... (0)

Anonymous Coward | about 2 years ago | (#41234811)

The only saving grace is bitcoin is remarkably small: with only ~10M bitcoins in existence, the delusionary notional value is small.

It doesn't even have THAT saving grace. With the True Believers(tm) also bragging about how you can subdivide Bitcoins down when the supply is inevitably fucked up, what you've actually got are ~10T one-millionth Bitcoins in existence. Or worse.

Re:OK, I really don't get BitCoin... (2, Interesting)

Anonymous Coward | about 2 years ago | (#41234927)

The title of your post is spot on: you really don't get it.

The amount of black money in the EU is well over 1000 billion euro. Try to picture that much money. Now imagine the corrupt Chinese official who was caught stacking piles of money inside his walls at home because he didn't know how to spend it. Understand that the communist party in China has over 70 million members, many of them an official of some sort. Now think about all the other corrupt places in the world.

I think you get the idea. There's a ton of people who want to do business outside of official channels. Occasionally losing some money in an exchange that gets hacked is better than having your money rot inside a wall.

Re:OK, I really don't get BitCoin... (1)

GuldKalle (1065310) | about 2 years ago | (#41234955)

Why can't it scale? There are about 10T microBTC in existence.
And having a lot of money ending up in a pyramid scheme is hardly the fault of the currency.

I'll stick with gold, silver, and dollars (1)

cpu6502 (1960974) | about 2 years ago | (#41234539)

I've been following this bitcoin phenom for awhile, wondering what it was all about and if it really could replace "normal" currency. All these recent thefts makes me say "no." At least with dollars the private central bank only steals your money ~5% per year (via supply inflation & dollar devaluation) rather than all at once. And also it's insured from losses (FDIC).

Re:I'll stick with gold, silver, and dollars (1)

cpu6502 (1960974) | about 2 years ago | (#41234653)

Also find it UNassuring that he tries to dive-away from taking responsibility (typical of how large corporations act; inveigle, evade, and dodge).

QUOTE USER: "unencrypted backup?"

CEO/manager/whatever: "Yes. It was made when I manually did an upgrade and was put in the unencrypted area on disk. I realize the details of the failure and attack are interesting, but I am currently focused on user accounts and exchange status going forward."

No.
Precisely HOW you fucked up is the most interesting bit of the sotry. You weasly-mouthed osn of a bitch! You COPIED UNECRYPTED KEYS on your drive. You stupid fuck.

But no.
Instead he tries to pretend that it doesn't matter that he fucked up and lost people's labor (represented by money). He should be in a holding cell right next to Bernie Madoff for his incompetence. A shorter timespan of course since the crime is smaller, but still he deserves to be punished, instead of pretendign he didnntohign wrong. Typical megacorp managerial ass.

Re:I'll stick with gold, silver, and dollars (1)

Desler (1608317) | about 2 years ago | (#41234755)

Why should he be in a cell? He lost some virtual play money and nothing of actual value.

Wow (0)

Anonymous Coward | about 2 years ago | (#41234565)

A lot of negative comments coming from the people here. Considering your governments (by 'your' I'm assuming you are from the US or UK) determination to stamp all over your rights, rob you blind and give what you have to the banksters I'm surprised there is not a little more support for bitcon on /.

I wouldn't use Bitcon as a store of value but as a means of exchange it is great. Just remember that at some point what you do with your money will be deemed to be either subversive or illegal (donate to wikileaks et al?) and you will be on the receiving end of the boot.

History is filled with people sleepwalking into these traps.

Re:Wow (1)

Desler (1608317) | about 2 years ago | (#41234711)

Yeah it's great as a means of exchange... for the people who are stealing bitcoins. The exchanges all seem to have a joke level of security.

Why all the Schadenfreude? (0)

Anonymous Coward | about 2 years ago | (#41234671)

I wonder why people see these Bitcoin sites being hacked as a counter argument to Bitcoin. Do they assume that cash is not being stolen or that credit card fraud does not exist, just because such stories don't make it to /.?

Re:Why all the Schadenfreude? (0)

Anonymous Coward | about 2 years ago | (#41234723)

Because bitcoin is a pure pump and dump scam. The faster it dies the better.

Re:Why all the Schadenfreude? (2)

Desler (1608317) | about 2 years ago | (#41234781)

Maybe because when you are the victim of credit card fraud that you don't assume the liability and instead that is the card issuer's problem? Or if someone robs you of your cash that they will face criminal charges? On the other hand, the people losing virtual play money assume no liability and will face no prosecution.

HEY! (1)

arisvega (1414195) | about 2 years ago | (#41235401)

That was MY scoop! [slashdot.org] How will I claim mod points now to fight the Trolls?

Would anyone be surprised? (1, Interesting)

erroneus (253617) | about 2 years ago | (#41235405)

I have heard from a source I cannot disclose that these attacks *might be* government sponsored.

The notion here is that if governments actively attempted to outlaw, ban or block the use of this alternative currency, people would backlash and buckle down even tighter. (You can see how well the "war on terror" and the "war on drugs" has been working out.) Making this currency illegal will only create more criminals.

Instead, it has been said that there is an extremely active initiative to discredit the risk and reliability of the currency.

Personally, I am not sure whether this will work or not, but the purpose and the methods seem reasonable.

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