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Bitcoin Exchange BitFloor Says It Will Replace Stolen Coins

timothy posted about 2 years ago | from the fdic-never-replaces-bitcoins dept.

Bitcoin 117

angry tapir writes "Bitcoin exchanges generally don't seem to recover that easily after security breaches. However, BitFloor, which was hacked and had 24,000 Bitcoins stolen in early September, is coming back online, refunding account holders whose coins were stolen and implementing new security measures, including cold storage for private keys." The key word is "intends" — but I hope it happens as promised.

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117 comments

Refund how? (1, Insightful)

Anonymous Coward | about 2 years ago | (#41478047)

How can it do so? Are they going to void the old coins?

Re:Refund how? (2)

GameboyRMH (1153867) | about 2 years ago | (#41478063)

They'll have to generate/acquire new ones at their own expense, that's for sure.

Re:Refund how? (1, Insightful)

wiedzmin (1269816) | about 2 years ago | (#41478149)

Unless they were the ones who "stole" the old ones...

Re:Refund how? (-1)

Anonymous Coward | about 2 years ago | (#41479351)

You would be naive to think they weren't the ones who did this.

Re:Refund how? (5, Informative)

Wonko the Sane (25252) | about 2 years ago | (#41478177)

They are going to resume operation and earn money via trading fees. Assuming they get enough volume the profits will eventually be able to replay the depositors.

In other words they will try to earn their way out of insolvency.

Re:Refund how? (4, Interesting)

nedlohs (1335013) | about 2 years ago | (#41478389)

If they didn't contract to refund in such cases then they aren't insolvent since there is no obligation to repay. If they did then if the terms for repaying are long enough in the contract they probably aren't insolvent either (you are allowed to carry debt without that automatically making you insolvent). If they do have such a contract but the penalties for breaking it are small enough or allowed to be paid over a long enough term then the same thing applies as above - you are allowed to have debt.

So what information leads you to conclude they are insolvent?

Re:Refund how? (1)

Wonko the Sane (25252) | about 2 years ago | (#41478425)

I'm using the common definition.

They promised to secure client funds and lost them, and they lack assets they could sell to reimburse the loss. That's insolvency.

Re:Refund how? (2)

WolfWithoutAClause (162946) | about 2 years ago | (#41478695)

They're only insolvent at the point that debtors can legally demand the money and they're incapable of paying.

Re:Refund how? (1)

Anonymous Coward | about 2 years ago | (#41479439)

Under your common definition, signing a student loan instantly makes you insolvent.

Re:Refund how? (1)

Anonymous Coward | about 2 years ago | (#41480477)

Which would be true for most students.

Re:Refund how? (2)

gl4ss (559668) | about 2 years ago | (#41479063)

If they didn't contract to refund in such cases then they aren't insolvent since there is no obligation to repay. If they did then if the terms for repaying are long enough in the contract they probably aren't insolvent either (you are allowed to carry debt without that automatically making you insolvent). If they do have such a contract but the penalties for breaking it are small enough or allowed to be paid over a long enough term then the same thing applies as above - you are allowed to have debt.

So what information leads you to conclude they are insolvent?

they would be insolvent if someone asked for the money.
oh, and someone did ask and he didn't pay. they(him) are insolvent because by their own words they don't have the money to pay back.

last time some numbers were thrown about the normal profits for bitfloor would take many years to cover up the losses.

this article didn't cover if he paid back the real money people had sitting in the system either.. that was/is a big issue. when it hit he basically just froze everything.

Re:Refund how? (2)

nedlohs (1335013) | about 2 years ago | (#41481735)

Only if he has an agreement to pay them money. It's a bitcoin thing, that people would hand over their coins with no agreement for them to be returned doesn't seem that unlikely.

I can ask you for $50 billion, that doesn't make you insolvent. I could ask a bank to return the $5000 I put in a term deposit, if the term hasn't expired they can not pay me back without being insolvent.

As I said it all depends on the contracts in place.

Re:Refund how? (2)

Richy_T (111409) | about 2 years ago | (#41482275)

They left a large amount of bitcoins in an unencrypted wallet (to my understanding). What makes you think they'd have that level of sophistication in their contract?

Re:Refund how? (0)

Anonymous Coward | about 2 years ago | (#41478761)

They are going to resume operation and earn money via trading fees. Assuming they get enough volume the profits will eventually be able to replay the depositors.

In other words they will try to earn their way out of insolvency.

They will try to dilute teir way out of insolvency.

Re:Refund how? (0)

Anonymous Coward | about 2 years ago | (#41478207)

How was my post flamebait?

Re:Refund how? (1)

Anonymous Coward | about 2 years ago | (#41478567)

Because either:

a.) You're completely unaware that "voiding" bitcoins is impossible - they can not be destroyed or voided; only lost - and dare to post an opinion given such a monumental level of ignorance about the subject at hand., or

b.) You're quite aware that bitcoins cannot be "voided" (frankly, a difficult level of knowledge to avoid with even a cursory look at the subject), and are trying to get a rise out of those who like to keep their conversations more or less fact-based.

Question answered?

Re:Refund how? (0, Insightful)

Anonymous Coward | about 2 years ago | (#41478763)

Asking a question about something you don't know is flamebait? lolwut?

Also, due to bugs in bitcoin's certain blocks have been invalidated which is basically the same thing.

So, no, nothing in my post was flamebait. Just some butthurt mod who is a bitcoin fanboi.

Re:Refund how? (-1, Flamebait)

arkane1234 (457605) | about 2 years ago | (#41479453)

Don't be a faggot. Not knowing something does not equal flamebait.

Re:Refund how? (0)

Anonymous Coward | about 2 years ago | (#41478755)

I was pondering this. This is like a bank saying "a pile of money is missing. Let's just print a pile more!"

And unless I'm horribly mistaken, isn't just printing a pile more currency pretty much the exact reason why hyperinflation exists? I don't think they're stupid enough to just keep making more and hyperinflating it, but at the bare minimum, this is going to drop the exchange rate, which basically hurts everyone, even those that weren't stolen from.

Re:Refund how? (4, Informative)

brokenin2 (103006) | about 2 years ago | (#41480531)

No one can make any more bitcoins than the pre-defined scheduled amount, and no one can guarantee that they're able to make them for themselves.. It takes a lot of (computer) work, and a bit of luck.. You basically buy lottery tickets to winning newly created money by agreeing to do work to process transactions.. That's not exactly right, but it'll get you a lot closer to understanding the system than where you're clearly at..

Re:Refund how? (0)

csumpi (2258986) | about 2 years ago | (#41479665)

They make new ones.

pump and dump (3, Interesting)

Anonymous Coward | about 2 years ago | (#41478049)

"Yes, we plan on buying a large number of Buttcoins to replace the ones that 'external hackers' stole from our 'customers'."

[price goes up on exchanges]

['stolen' coins all sold for cash out of an anonymous account that's surely not controlled buy the guy running BitFloor]

[BitFloor never heard from again]

Taking money from the Buttcoin crowd must be the easiest thing in the world. It's like if you took normal currency speculators and then gave them all severe head injuries.

Re:pump and dump (1)

GameboyRMH (1153867) | about 2 years ago | (#41478103)

Mod parent Interesting...it's completely possible. Even if the owners checked that the individual coins they have don't match the ones they had before, with careful laundering it could still be pulled off.

Re:pump and dump (2)

ZeroSumHappiness (1710320) | about 2 years ago | (#41478323)

Wait, are the coins unique? Doesn't that defeat anonymity if you can track individual coins?

Re:pump and dump (3, Informative)

GameboyRMH (1153867) | about 2 years ago | (#41478355)

Yes, the anonymity lies in throwaway email addresses that have no association with your real name.

Re:pump and dump (2)

ToadProphet (1148333) | about 2 years ago | (#41479299)

What do email addresses have to do with bitcoins?

Re:pump and dump (4, Informative)

Wonko the Sane (25252) | about 2 years ago | (#41478369)

There are no discrete "coins". There are only addresses and balances.

Re:pump and dump (1)

Anonymous Coward | about 2 years ago | (#41478455)

Correct, and it's fairly trivial to launder the coins between hundreds of throwaway addresses; surely the people using them to buy drugs don't care if they get their coins from an address that might be linked to the BitFloor heist.

Re:pump and dump (2)

GameboyRMH (1153867) | about 2 years ago | (#41478529)

It's true that "Coins" are only a unit of measurement in the BitCoin system, but transactions can be tracked just the same:

https://bitcointalk.org/index.php?topic=241.0 [bitcointalk.org]

Re:pump and dump (-1)

Anonymous Coward | about 2 years ago | (#41478967)

There are no discrete "coins". There are only addresses and balances.

Ass pennies are not discrete either.

Re:pump and dump (1)

IamTheRealMike (537420) | about 2 years ago | (#41480185)

That's incorrect. The codebase uses the term "coin" to refer to a transaction output, ie a discrete unit of value that can be claimed by the holder of a private key. There can be multiple outputs/coins sent to the same address. Internally Bitcoin has almost no notion of balance - the balance you see in your wallet app is merely the sum of unspent outputs.

Re:pump and dump (1)

pla (258480) | about 2 years ago | (#41481917)

There are no discrete "coins". There are only addresses and balances.

You have that almost entirely backward. Bitcoin has no "balances" as they relate to an address; it has blocks (groups of 50BTC) that you can trace through a transaction history to determine the current owners of various subdivisions of that block.

You can think of it almost as if, to figure out how much money you have in the bank, you needed to check every dollar bill in circulation to see if you own a portion of it (though more accurately, you would only need to look at any new dollars printed to see if they mention a change in one you used to, or now, own).


Now, more charitably, you may have meant that no discrete "coins" exist in the sense that 1BTC doesn't actually refer to anything except in the context of "1/50th of block X". Don't, however, mistake that for meaning the 1.47BTC you receive today doesn't come complete with a full transaction history tracing it back through every owner it ever had, all the way back to the single address of the miner who "won" that block.

Re:pump and dump (1)

petermgreen (876956) | about 2 years ago | (#41483213)

it has blocks (groups of 50BTC)

A block is not a "group of 50 BTC", a block is essentially a transaction in a ledger (the blockchain) which updates which accounts (addresses) hold what balances. By working through that ledger you can (and need to) determine the balance that each address has. Participants check blocks for validity so a miner can't generate blocks that don't follow the rules. As a carrot to encourage mining those who generate a block are allowed to award themselves a reward. Currently this reward is 50 BTC

It is possible for blocks to be removed from the blockchain by creating a paralell block chain and "outrunning" the existing branch but to do so you need more hashing power than the rest of the network put together.

Don't, however, mistake that for meaning the 1.47BTC you receive today doesn't come complete with a full transaction history tracing it back through every owner it ever had, all the way back to the single address of the miner who "won" that block.

AIUI you can trace the history of transactions but it's more of a tree than a line. You can't say "this bitcoin came from those found in block X".

Re:pump and dump (4, Interesting)

scorp1us (235526) | about 2 years ago | (#41478659)

Anonymity was never a feature of Bitcoin, though first reports made claims to that. It is regarded currently and properly as pseudo-anonymous. Your bitcoin wallet maintains a ledger of every transaction ever made. So you can see money moving between people, unlike a stock exchange or bank. Scratch that, it's not a matter of can, it is a matter of having to see every transaction.

Where they "anonymity" lies us unlike a bank, you can create an account (address) out of thin air. You can control any number of accounts in your wallet, and move money between them. So no one can tell what addresses are in your wallet and who (person) controls however many bitcoins. Two people having 10 btc might divide it up differently - 1 person has all 10btc in one address, the other has 10 addresses all with one. You don't know who controls what. The only way to find out is to get enough wallets with enough addresses in them that you can start identifying people for past transactions, but you can always invent a new address so you can't ever "watch" anyone. It is just like - until recently - moving money between swiss bank accounts.

Re:pump and dump (5, Funny)

firewrought (36952) | about 2 years ago | (#41479589)

You can control any number of accounts in your wallet, and move money between them. So no one can tell what addresses are in your wallet and who (person) controls however many bitcoins. Two people having 10 btc might divide it up differently - 1 person has all 10btc in one address, the other has 10 addresses all with one. You don't know who controls what. The only way to find out is to get enough wallets with enough addresses in them that you can start identifying people for past transactions, but you can always invent a new address so you can't ever "watch" anyone.

But your honor, it couldn't possibly have been MY client who purchased those drugs. As you can see here, he clearly transferred $160 from his account <dude@hendrixfans.net> to some nefarious third party <cantcatchme@mailinator.com>, who by COMPLETE COINCIDENCE purchased $160 worth of drugs from about 30 seconds later. We have NO IDEA who this mysterious cantcatchme is, other than being a beneficent of my client's quirky tendency to email unsolicited funds to random strangers just to brighten their day.

Why NO, I don't think it's the LEAST bit suspicious that this is the 23rd week in a row that this exact sequence of transactions has occurred between these exact same participants. What can I say? My client is a generous man. Like the other day when he spontaneously sent $200 to <bogusacct@mailinator.com>. Perhaps foolishly generous, as Mr. bogusacct promptly sent that money to <cashier@pokerboss.net>, but can one convict a man for carrying virtue to excess? I say no!

Re:pump and dump (1)

oracleofbargth (16602) | about 2 years ago | (#41479849)

This post should either be modded Funny or Insightful, but I can't quite decide which...

Re:pump and dump (1)

scorp1us (235526) | about 2 years ago | (#41479865)

No, bitcoin addresses are not email addresses. They are hashes.

Re:pump and dump (1)

SleazyRidr (1563649) | about 2 years ago | (#41480833)

Well, sure if you want to track enough bitcoin transfers you probably can and they probably will for the large-enough scale crime. For the small timers though, you can create a separate dummy account for each day of the month and make it too much hassle for them to waste their time on you.

Re:pump and dump (1)

firewrought (36952) | about 2 years ago | (#41481285)

Well, sure if you want to track enough bitcoin transfers you probably can and they probably will for the large-enough scale crime. For the small timers though, you can create a separate dummy account for each day of the month and make it too much hassle for them to waste their time on you.

It's an arms race for sure. At first, being a small-timer and being just a little more sophisticated than other small-timers will probably be sufficient, but once they start to develop tools to track down the large-timers, those same tools can be turned on the small-timers as well. On balance, I feel this race will favor the prosecution in the long run, as long as they can explain the data analytics to juries. Or it would if the money-laundering underground was dumb enough to stay on a platform that provides the level of traceability that bitcoin does.

Re:pump and dump (1)

pla (258480) | about 2 years ago | (#41482159)

Why NO, I don't think it's the LEAST bit suspicious that this is the 23rd week in a row that this exact sequence of transactions has occurred between these exact same participants.

Though funny, you of course see the flaw in this part of your reasoning?

In case you don't - Each of those transactions would come from, and go to, an entirely different address. You wouldn't even see them as distinct 160BTC transfers; rather, you would just see a scattered collection adding up to 160BTC that "someone" (presumably the previous owner, but not guaranteed due to the existence of "physical" wallets) signed as belonging to the new owner.

Or to put that another way - Even if you bust the seller, and get his entire history of addresses to trace through the blockchain... You still have no way to tell that buyer-A equals buyer-B. That gets a bit less certain for the reverse (since the seller could stupidly have kept using the same address over and over, instead of making a throwaway one each time), but assuming him as not a complete idiot, the same flaw applies - Despite knowing every account to which the buyer has ever sent Bitcoins, you can't tell they all belong to the same seller.


The whole issue of anonymity as it relates to Bitcoin confuses most people. As a good way to look at it, coins have an identity and complete history, but their owners do not, existing solely as a single address at a single point in time (or allowing for a few sloppy assumptions, exist for two points in time).

Re:pump and dump (2)

firewrought (36952) | about 2 years ago | (#41483409)

Even if you bust the seller, and get his entire history of addresses to trace through the blockchain... You still have no way to tell that buyer-A equals buyer-B.

My hypothetical defendant was using a particular gambit that my hypothetical prosecutor saw thru. You now suggest a more sophisticated gambit to use, but there are ways of seeing thru it too. Like I said in another post, it's an arms race. Law enforcement will discover gambits and devise strategies for detecting the tell-tell patterns they leave in bitcoin transaction histories. The obvious gambits (fake intermediaries, scatter/gather, pool/split, currency conversion, etc.) will be countered quickly once law enforcement gets serious (though some aspects may have to wait for legislation and/or regulatory crackdowns on the exchanges). Some gambiteers will succeed, others will be caught.

I think you are seriously underestimating the white hats here: JUST working with bitcoin transaction history one can apply all sorts of graph analysis, forensic accounting, etc., much of it automated. THEN think about all the externalities that can be investigated: your phone records, your browsing history, a GPS tracker on your car, your FaceBook page, etc. THEN think about the laws that will be passed to give law enforcement more visibility into bitcoin exchanges. THEN think about what unknown technical attacks might be used to augment the transaction history (one wild idea: if the government ran a lot of their own P2P nodes, perhaps they could record the timing and IP addresses of block confirmations and infer something about the geographic origin of the buyer?). THEN think about all the other tactics that can be used that apply to ALL drug busts and money-laundering crackdowns (like informants and stakeouts).

Of course, the criminal underground has tactics too. And both sides have limitations of costs, time, manpower, and natural interest. My point is that it gets complex quickly, and police aren't limited to knowing what an algorithm can know. Transaction histories--even that between the pseudo-anonymous nodes in the big bitcoin graph--will be a powerful investigative tool.

Re:pump and dump (2)

JesseMcDonald (536341) | about 2 years ago | (#41480039)

Right, Bitcoin is pseudonymous, not anonymous, and even then you have to put some thought and effort into keeping your addresses independent, or the connections will be uncovered by some fairly basic traffic analysis. There are "mixing services" to deal with the latter issue, but use of one is somewhat suspicious in itself.

If you want fully anonymous transfers you need something more like an Open Transactions [github.com] server running in cash-only mode. This is a federated contract-based derivative system, as opposed to a peer-to-peer base currency like Bitcoin, so you do have to trust the issuer to adhere to the contract. However, that does open up a number of interesting possibilities, including contract tokens in fixed denominations which can be transferred untraceably between users. Due to the use of blind signatures, the server cannot connect the tokens being deposited with the account they were withdrawn from, or the client making the withdrawal, and the fixed denominations make traffic analysis much more difficult.

NOTE: Open Transactions is still in early development, and is considered experimental software—more so than Bitcoin—though most of the principles involved have been well-known for some time and employed successfully in other digital cash systems. Do not reply on it for anything mission-critical at this time.

Re:pump and dump (1)

scorp1us (235526) | about 2 years ago | (#41480085)

How is this different from bitcoin contracts? https://en.bitcoin.it/wiki/Contracts [bitcoin.it]

Re:pump and dump (1)

nazsco (695026) | about 2 years ago | (#41482023)

site got /.ed while mentioned in a buried 1pt comment... nice.

Re:pump and dump (2)

JesseMcDonald (536341) | about 2 years ago | (#41483305)

How is this [Open Transactions] different from bitcoin contracts? https://en.bitcoin.it/wiki/Contracts [bitcoin.it]

I'm not quite sure where to start. They're completely different concepts. Bitcoin contracts, like the assurance contract or an escrow contract, are ways to use the Bitcoin protocol to create transactions which are only valid under certain conditions—when enough money has been collected from a variety of different inputs, or when two of three stakeholders (payer, payee, arbiter) sign off on a transfer, etc. All the data about the transfer is public, integrated into the block chain, and traceable to particular pseudonyms (public keys). Keeping track of how many bitcoins are associated with each key requires a complete record of the history dating back to the first block (gigabytes and growing).

Contracts in Open Transactions can be anything; they're basically human-readable text with semantic tags for computer parsing, identified by a cryptographic hash. Generally for currency contracts they would take the form of an agreement to pay a certain amount of BTC, USD, or some other commodity on demand. You could also have bond contracts, shares in a company, etc. A triple-entry accounting system ensures that all you need to prove who owns what is the receipt for the last transaction, signed by payer (authorizing payment and approving new balance), payee (accepting payment and approving new balance), and issuer (confirming sufficient payer funds and approving changes in balances). Payer and payee get different receipts from the issuer, of course, since they don't need to see each other's balances.

The system supports direct transfers (payer communicates with server), cheques (payer signs transfer and designates payee, payee submits transfer to the server), invoices ("negative cheques", requests for payment), and vouchers (like cashier's checks). All these forms of transfer leave a record of some sort.[1] OT also supports "cash", where you create a random token, "blind" it so that the server can't see the value, and have the server sign it (for a cost). You can then give that token to someone else, and they can deposit it with the server for credit in their own account. Once deposited, the server can see the value of the token to prevent double-spending, but can't connect the deposit with the previous withdrawal since didn't see the actual value until it was deposited. The token could have come from any previous withdrawal in that denomination (within a set time; the tokens do expire, and need to be periodically renewed).

OT also supports "smart contracts", which are programs which govern transfers. Assets can be transferred into the contract, and the program decides what happens to them after that. They can be used for implementing escrow and assurance contracts, enforcing company by-laws, or any number of other arrangements.

Because you only need to keep the most recent receipt, Open Transactions does not require anyone to store the complete history of every account, which implies much lower disk, RAM, and network requirements, and more effective pseudoanonymity compared to the Bitcoin block chain, even without dealing in cash tokens. In cash-only mode, given a reasonable amount of background noise to hide in, even the issuing server would have a hard time connecting payers with payees. Transfers are also instant, without the wait for confirmations required for Bitcoin. The downside, of course, is the requirement to trust the issuer.

[1] Vouchers need not record the payee if the voucher is open-ended (no designated payee) and the server supports converting the voucher directly into cash tokens without an account. It may also be possible to mask the payer by converting a cash deposit directly into a voucher. Either way, at least one side has to use cash to avoid associating both payer and payee with the voucher. The voucher could also be traded directly, but that exposes the recipient to considerable risk of double-spending.

Re:pump and dump (0)

Anonymous Coward | about 2 years ago | (#41479465)

Pretty lousy scam - the price has gone down since the announcement.

Re:pump and dump (0)

Anonymous Coward | about 2 years ago | (#41478239)

"Yes, we plan on buying a large number of Buttcoins [...]"

Oh, come now. Surely you could've somehow crowbarred the words "gay", "lame", or "retarded" in there, right? I mean, given how obviously strongly you feel about the subject, I don't know why you held back.

Yes, seriously, I stopped paying attention to the post exactly at that point. What, are we back in middle school now?

Re:pump and dump (3, Funny)

GameboyRMH (1153867) | about 2 years ago | (#41478317)

ButtCoin victim spotted.

Re:pump and dump (0)

Anonymous Coward | about 2 years ago | (#41478553)

Your ass really hurts, don't it. :)

Re:pump and dump (0)

Anonymous Coward | about 2 years ago | (#41478771)

just been ButtCoined :)

Re:pump and dump (0)

Anonymous Coward | about 2 years ago | (#41479149)

You cannot print new coins, thus replacing the coins is effectively the same as replacing stolen gold bars.

Re:pump and dump (1)

Anonymous Coward | about 2 years ago | (#41479269)

...when nobody can verify that the bank didn't steal the gold bars themselves in the first place, and there's no legal or practical recourse if they don't replace them.

Gaze upon anarchocapitalism, ye mighty, and despair.

Re:pump and dump (1)

almostinsane (770051) | about 2 years ago | (#41479895)

Buttcoins - buy high, sell low. And their motto - F you - got mine!

refund from where? (0)

Anonymous Coward | about 2 years ago | (#41478077)

Out of whose pocket come these bitcoins? Or are they just changing user's balance thus diluting the currency?

Re:refund from where? (3, Insightful)

Wonko the Sane (25252) | about 2 years ago | (#41478133)

They can't dilute the currency. They only way they can replace the coins is to earn them via business profits.

Re:refund from where? (1)

jonbryce (703250) | about 2 years ago | (#41478609)

They could credit people's accounts with bitcoins that aren't backed by actual real bitcoins and hope that not everyone tries to withdraw at the same time, much like how real world banks do things.

Re:refund from where? (0)

Anonymous Coward | about 2 years ago | (#41478745)

Real banks are insured by the FDIC just in case the depositors try and do that.

Re:refund from where? (1)

Anonymous Coward | about 2 years ago | (#41478827)

One of the nice features of bitcoins is that they preclude the unlimited creation of credit that is not backed by real assets.

Re:refund from where? (0)

Anonymous Coward | about 2 years ago | (#41478905)

And what assets are buttcoins backed by?

Re:refund from where? (0)

Anonymous Coward | about 2 years ago | (#41479737)

no those are asscoins

Re:refund from where? (1)

almostinsane (770051) | about 2 years ago | (#41483135)

What is the difference?

Re:refund from where? (0)

Anonymous Coward | about 2 years ago | (#41483373)

Buttcoins are backed by your future labor obligations, just like the dollar.

Re:refund from where? (1)

timeOday (582209) | about 2 years ago | (#41479319)

Like any business, he could take a loan from a bank to jumpstart the process. Actually I think that would enhance is credibility as a bitcoin exchange, since at least then he would have a tie to the real economy - the one enforced by judges and police and the IRS.

Re:refund from where? (2)

gl4ss (559668) | about 2 years ago | (#41478169)

Out of whose pocket come these bitcoins? Or are they just changing user's balance thus diluting the currency?

that would be extremely interesting to know, since apparently the theft is way beyond his own means of paying capability. also it's to note that he initially sat on peoples real money too.

the actual article says though that he _intends_ to pay back.

This whole digital currency thing (5, Insightful)

kiriath (2670145) | about 2 years ago | (#41478097)

Gives me the willies...

Of course it's not much different than paper currency I suppose, it's all make-believe anyway.

Re:This whole digital currency thing (0)

Anonymous Coward | about 2 years ago | (#41478723)

Gives me the willies...

Of course it's not much different than paper currency I suppose, it's all make-believe anyway.

Please mod parent insightful, not funny.

Re:This whole digital currency thing (1)

Guru80 (1579277) | about 2 years ago | (#41478749)

Modded funny or not, it's the damn truth.

Re:This whole digital currency thing (0)

Anonymous Coward | about 2 years ago | (#41479227)

Wait a minute ...

We know which bitcoins were stolen and the first hop out.

Bitcoins retain their history.

Shouldn't we be able to make them unsaleable and restore the originals?

Re:This whole digital currency thing (1)

Ash-Fox (726320) | about 2 years ago | (#41480603)

Shouldn't we be able to make them unsaleable

What bitcoin authority would do that and have the governance to determine when bitcoins are 'bad'?Are you proposing Bitcoin add a regulatory body?

restore the originals?

What bitcoin authority could do that?

Re:This whole digital currency thing (0)

Anonymous Coward | about 2 years ago | (#41483311)

> What bitcoin authority would do that and have the governance to determine when bitcoins are 'bad'?Are you proposing Bitcoin add a regulatory body?

I am proposing broadcast the news and see who believes.

> What bitcoin authority could do that [restore originals]?

Database restore.

Re:This whole digital currency thing (1)

brokenin2 (103006) | about 2 years ago | (#41480925)

Only if you like your currency easy to manipulate. Bitcoin was designed to make it nearly impossible to do this sort (or any sort) of manipulation. In order to do what you're proposing, you'd literally need to get thousands or tens of thousands of people to all agree to game the system and modify their software to allow that to happen. Then they'd either need to process invalid transactions (unsigned transactions for those accounts) essentially creating a corrupt transaction database with a broken trust chain, or roll back the entire block chain and invalidate all the transactions that have happened since then. The transactions since the theft include all balance transfers/payments from one individual to another and 50 bitcoins awarded every 10 minutes (or so) since the time of the theft.. 50 * 6 * 24 * (20 days) or 144,000 bitcoins stolen from valid, winners of their bitcoin bounty for processing transactions.... so that you can return 24,500 bitcoins to an exchange to perform a refund.. Now, I don't know if it's actually been 20 days, and I'm not going to look it up, but I think I'm being generously conservative, especially considering the amount of time it would take organize such a feat magnifies the problem..

Bitcoin it the largest distributed computing project in the world. That distributed computing project has the single minded goal of locking down transactions safely with cryptography. It will be *very* difficult to force someone else's will upon the distributed network..

Re:This whole digital currency thing (0)

Anonymous Coward | about 2 years ago | (#41480987)

I believe in the guns that are behind every dollar.

Re:This whole digital currency thing (1)

Richy_T (111409) | about 2 years ago | (#41482385)

But can you believe in the dollars that are behind those guns? (c.f. sequestration)

And... (5, Funny)

Anonymous Coward | about 2 years ago | (#41478139)

Nothing of value was gained.

Hugely inefficient (-1, Troll)

Anonymous Coward | about 2 years ago | (#41478157)

If you're going to steal something, you should probably try to steal something that you can actually trade for goods and/or services.

I checked out some marketplaces for bitcoin. Yeah, they're still useless.

Re:Hugely inefficient (0)

SilentStaid (1474575) | about 2 years ago | (#41478853)

I oft wonder why posts about BitCoin get marked negatively so fast. While the above post is nothing but opinion - what makes that opinion any less valid than if I said, "BitCoin is a great, anonymous way to spend money on illicit substances."

Grow up, slashmods. People can have dissenting opinions.

Re:Hugely inefficient (0)

Anonymous Coward | about 2 years ago | (#41479609)

Anonymous until you have to engage in a real world transation. I can't snort a line of bitcocain. Bitwhore won't suck my bitdick.

Trust excanges? Nope. (2)

magic maverick (2615475) | about 2 years ago | (#41478227)

I don't know why anyone would trust exchanges or online wallets. At this time they aren't really regulated, and surely don't have insurance. It's too much of a risk. Instead, keep all your bitcoins in a wallet (an encypted one of course) on your own computer. And make sure you have a backup, 'cause backups are important.

If you are really paranoid, you have an offline wallet that is only on a USB stick or similar, and keep just a few coins in your 'online' (on your computer) wallet. But never keep any more than what you need to pay off in a real online account. Sort of like Paypal, you only keep the minimum in there (or not use Paypal at all, 'cause they are slimey bastards).

Re:Trust excanges? Nope. (3, Insightful)

GameboyRMH (1153867) | about 2 years ago | (#41478255)

Or better yet just avoid keeping your money in Bitcoins since the value of them could crash hard at any time as has happened numerous times in the past.

Re:Trust excanges? Nope. (1)

magic maverick (2615475) | about 2 years ago | (#41482071)

That's like saying avoid keeping your money in Euros, USD or Yen, since the value of them could crash hard at any time, as has happened in the past. It may not happen as much for these government issued currencies. After all, the markets are much bigger, and the governments tend not to like it if their currencies collapse too much. (Not that it helped a large number of countries in the past, including Zimbabwe, Germany, Armenia and other former USSR states, a number of South American states, and many others.)

Personally I use Bitcoints as a labor store. I might do some work for people, get paid in Bitcoin. Conveniently, I can then turn around and donate that money to a charity of my choice. E.g. I gave some to the EFF when they still accepted them (and was disappointed with what they did with them), and I've given some to the FSF 1PC9aZC4hNX2rmmrt7uHTfYAS3hRbph4UN. I can also keep those Bitcoins and pay someone else to do something for me if I want.

I refuse to use Paypal, and the alternatives either don't work around the world, or are otherwise problematic. Bitcoin just works for all the purposes I want it for.

Re:Trust excanges? Nope. (0)

Anonymous Coward | about 2 years ago | (#41483293)

This is all very nice but doesn't address GP's primary concern that many people would prefer low-volatility wealth on an expected long-term down-trend to high-volatility wealth on an expected long-term strong up-trend.

Re:Trust excanges? Nope. (1)

RicktheBrick (588466) | about 2 years ago | (#41478539)

I do not know much about bitcoins but I do know about the someone said they hacked into Romney tax returns. They wanted to be paid in bitcoins. So is bitcoins going to make it easier to kidnap people? The people must have thought that they could get a million dollars without being caught. It would be much easier than having a pick up place for a million dollars in cash since the serial numbers to that money could be scanned into a computer. So that cash would have to be sold to someone for a discount since that person would have to keep that money for a significant number of years before trying to use it. I do not like being able to send money to someone without knowing the name of that person. Of course Romney could have sent the money and the people could have still released the returns because I do not see anyway the hackers could have guaranteed it.

Re:Trust excanges? Nope. (2)

GameboyRMH (1153867) | about 2 years ago | (#41478675)

If there were no BitCoins and physical money had to be used, the hackers could have set up a "dead man's switch" system that would release the info if the hackers didn't intervene and told this to Romney. That way setting a trap would be self-defeating. Send in an anonymously-contacted intermediary with a wire to do the physical collection for a cut.

You can't really do this with a kidnapping though so maybe it could make kidnapping easier...

Re:Trust excanges? Nope. (2)

timeOday (582209) | about 2 years ago | (#41479295)

The answer is yes. The reason we don't have government-backed digital cash is because currency that is not inherently traceable makes it harder to regulate trade, and some trade is illegal. Same reason they stopped making large-denomination paper currency - it's most useful to dictators and drug dealers. And also for under-the-table (or "underground economy") business that would be otherwise be legal except it can't be regulated and taxed. And before you start, no, I'm not saying cash or digital cash should be outlawed. But it certainly raises some tough issues.

But how? (4, Insightful)

scorp1us (235526) | about 2 years ago | (#41478329)

It's not like *real* money that you can just print out of thin air.

You've got to come up with that some how, and at $10 (so I don't need a calculator) that's $240,000 you've got to come up with. That's a lot of mining or fees at $0.10 each. That's hard to make up with low volume of trades.

Re:But how? (0)

Anonymous Coward | about 2 years ago | (#41478435)

Nah, just wait till another regular and inevitable bitcoin crashes happen, then buy them up at a song.

Re:But how? (1)

scorp1us (235526) | about 2 years ago | (#41478471)

Not like an exchange can arrange that, can they? ;-)

penis bird huggable pillows for sale! (-1)

Anonymous Coward | about 2 years ago | (#41478651)

you fly back to school now starling...

fly fly fly
fly fly fly
fly fly fly

penis bird

Man (1)

TheSpoom (715771) | about 2 years ago | (#41478671)

We need to fix this security issue. It's almost like we need a deposit insurance corporation, even a federal one, so we can ensure our bitcoins aren't stolen... *rolls eyes*

You guys keep doing the early adopter thing, and let me know when your "currency" gets to its inevitable state of being a clone of the existing currency system.

Re:Man (2, Interesting)

Anonymous Coward | about 2 years ago | (#41479881)

RTFA and you'll see that Roman took full responsibility for a huge security mistake that should never have occurred. How many banking executives at Goldman Sachs, Lehman Brothers, Chase, BofA, CitiBank or Wells Fargo have done anything like that? There are many ways to properly secure a bitcoin exchange, but even the biggest (Mt. Gox) was hacked last year, and the community learned a great deal from that experience. Gox did NOT go out of business and in fact, the exchange rate of BTC has skyrocketed from $2.30 the day of the worst crash to $12.46 today. Clearly, there are plenty of people who still have confidence in the market and the Bitcoin project. Poorly managed exchanges like Bitcoinica failed to implement proper security measures and crashed miserably. I'll give Roman credit for addressing the problem directly at the London Bitcoin conference and promising to return all deposits to his customers, but I'm not sure I would use his services until he fulfills that promise. He must have enough patient investors to absorb the loss (and to be fair, $240,000 isn't all that much money in the business world), so I won't count him out just yet.

Perhaps some exchanges DO need deposit insurance, but that kind of service won't come from the financial industry. Bitcoin is a rebellion AGAINST that industry; the project needs to mature a bit more so that such a mechanism can be developed, just like new merchant tools are coming out every month or so (e.g., http://bitpay.com). I'm an early adopter because my faith in the current financial system has been completely destroyed, and I'm excited to see geeks taking ownership of the problem and developing an amazing new cryptographically secure structure to address the issue. Bitcoin will never be a clone of the existing currency system because it is an evolutionary step beyond the corrupt and badly broken system that has failed us.

Re:Man (1)

Ash-Fox (726320) | about 2 years ago | (#41480525)

RTFA and you'll see that Roman took full responsibility for a huge security mistake that should never have occurred. How many banking executives at Goldman Sachs, Lehman Brothers, Chase, BofA, CitiBank or Wells Fargo have done anything like that?

What huge security mistakes did those banking executives do again?

Re:Man (0)

Anonymous Coward | about 2 years ago | (#41480583)

They put huge amounts of money into asset-backed securities that ended up being worthless.

Re:Man (1)

Ash-Fox (726320) | about 2 years ago | (#41481143)

They put huge amounts of money into asset-backed securities that ended up being worthless.

That's a different sort of security all together, please stay on topic.

Re:Man (1)

nazsco (695026) | about 2 years ago | (#41482259)

As someone who worked for firms working on bank security, i call tell you they remain silent about 100% of their electronic breaches and cover the money in silence. The reasoning is that lower accounts are their milking cow now, and news of some measly 200,000 robbed by electronic means (they lose more than that per day), while insignificant to the bank, would draw away those lesser accounts to whom 200,000 is a fortune. and draw away too many of the lesser accounts and the bank starts to be in real problem.

besides those in-the-dark screw ups, you also have the public ones. more recently bank of america showing other peoples each other account instead of their own and such.

Key word (0)

Anonymous Coward | about 2 years ago | (#41478777)

If the key word really is "intends," then you should probably actually mention that word in your summary.

The key word is "intends" (0)

Anonymous Coward | about 2 years ago | (#41479069)

That word is not anywhere else in the summery...

Is it just me... (1)

CyberSnyder (8122) | about 2 years ago | (#41479341)

...or am I the only one picturing Mario jumping up, hitting a block and then collecting the coins that shower down?

Re:Is it just me... (1)

neo-mkrey (948389) | about 2 years ago | (#41480265)

Nope, it's not just you.

Re:Is it just me... (0)

Anonymous Coward | about 2 years ago | (#41481739)

No, you're not the only one because that was kind of the way bitcoins were created when the project first launched. You just know that Satoshi had a sense of humor, and probably played Mario as much as the rest of us. Just like an 8-bit video game, anyone could make bitcoins with simple CPU-solo mining back in 2009-2010. And, just like a video game, the difficulty levels built into the system's algorithm have increased to such an extent that miners now have to join pools of hundreds of other miners to find new blocks using expensive high-end GPU gaming cards. Solo mining is impossible, so nowdays when a block is found, the 50 bitcoins generated are divided up among all the miners in the pool. Many miners are lucky to generate 0.5 to 1.0 BTC in any given 24 hour period in this fashion, and as long as they are worth more than $5 each, the practice can be profitable. In a few months, though, the difficulty level will increase again and the payout will be reduced to 25 bitcoins per block, so even a fancy ATI Radeon 6830 graphics card won't be up to the task and anyone wanting to continue mining will have to invest in FPGA or ASIC hardware to justify the investment. Fortunately, the market has responded and there are several specialised hardware vendors who are building custom mining equipment (http://butterflylabs.com, https://www.btcfpga.com, etc.) to help users adapt to the new environment.

Keyword not in summary? (1)

GrowlyGuts (1075897) | about 2 years ago | (#41481049)

Looks like we do need them to point out the keyword here since it was not included in the summary at all... Makes one wonder how "key" the word can be.
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