$500,000 Worth of Bitcoins Stolen

olsmeister writes "A Bitcoin user allegedly has had $500,000 worth of Bitcoins stolen from him. A hacker supposedly gained access to the user's home computer and managed to get the user's wallet.dat file, which contained the cryptographic keys that allowed him to drain the user's balance."

Comments

Anonymous payments

[cgeys]

No worries! Police has to investigate a robbery of $500,000.. oh wait, anonymous payments were good now?

Re:Anonymous payments

[Anonymous Coward]

Bitcoins are not anonymous.

Re:Anonymous payments

[Skarecrow77]

True. Sort of. The victim should know exactly what the recipient address of those ill gotten gains are.

Technically, if I understand the way that bitcoin confidence works, half the damn bitcoin network should know about the details of the transfer.

The problem of course is figuring out who the hell the address belongs to. That is the hard part.

As I understand the technology, each and every one of those bitcoins now contain their transaction history, so -in theory- they could be "flagged as stolen", IF there were a central authority that took care of that thing, but of course there isn't as that's the point of bitcoin, no central authority.

I honestly confused if bitcoin technology is for this though. Technically, this isn't all that different from the victim leaving his front door open, and a robber coming in to steal $500,000 worth of jewelry or the like. If your home gets broken in to, you can't blame the jewelry itself for being stolen, that's what thieves -do-, steal stuff. This thief just happened to break in to his computer instead of his house. So therefore you may not want to store $500,000 of bitcoin on your own home pc just like you probably don't want to store $500,000 of jewelry in your dresser drawer. Maybe you keep a few pieces at home, and keep the rest in your safety deposit box?

I know that bitcoin technology provides for cloud-based "banks" of a sort. If they have been implemented yet, I do not know.

Re:Anonymous payments

[Skarecrow77]

That should read: "I am honestly confused if bitcoin technology is to blame for this though". Need more caffeine.

Re:Anonymous payments

[EdZ]

Part of BitCoin is that ever transaction is followable to it's original creation (i.e. the batch of 50 bitcoins created when a block is created). While it may not be possible to tie the account holder to his key, it should be trivial to track the 'stolen' bitcoins through each transaction they are used in, as all transaction logs are public by design. Harder would be to tell whether the intermediaries in each transaction are dummy accounts involved in an attempt to 'launder' the bitcoins (even though they're uniquely identifiable), or innocent people not realising the bitcoins they are trading are stolen. Then there's the issue of fractional bitcoin trades.
Finally, as it's impossible to 'reverse' a bitcoin transaction, the only way to recover the stolen coins would be via a court order to force the recipient to return them. The best that can be done otherwise is to host a blacklist that lists stolen coins, that all clients would agree to refuse transactions containing. This would be massively open to abuse so probably unworkable.

Re:Anonymous payments

[DanTheManMS]

A better analogy would be leaving the front door closed but unlocked (like having a firewall on your computer), but otherwise pretty much, yeah. You shouldn't have $500k worth of jewelry and $100 bills sitting in a known location in your house, and likewise it's pretty stupid to have $500k worth of BTC in an unencrypted, insecure wallet.dat file.

It's relatively easy to make a new wallet unknown to anybody, copy the first address made by this fresh wallet, send that address most of your coins, then encrypt your "savings" wallet and delete the unencrypted copy. Heck, put the encrypted "savings" wallet on some USB keys and a few CDs/DVDs and put them in a safety deposit box if you want to. You can continue sending payments to that address as much as you want.

Re:Anonymous payments

[jafiwam]

Technically, if I understand the way that bitcoin confidence works, half the damn bitcoin network should know about the details of the transfer.

Which is also probably why the thief knew where to go. It's a security hole.

Not that the user should have known this, but dontcha think if there was $500k involved that a little curiosity on how it works and how to encrypt it better (put the .dat file in TrueCrypt container and make copies)? Hell, I think carefully before putting an extra $100 in my pocket for the week, and hide all my stuff in my car so it looks empty. $500k? I'd have an armed guard and an air-gap. Even at small probabilities of getting robbed, with a lot to lose it's worthwhile to be a little cautious.

Re:Anonymous payments

[Skarecrow77]

Heck, put the encrypted "savings" wallet on some USB keys and a few CDs/DVDs and put them in a safety deposit box if you want to. You can continue sending payments to that address as much as you want.

That's fuckin brilliant.

If I had more than 0.1 BTC I'd do the same. hah.

Re:Anonymous payments

[marcansoft]

You can't track the money specifically, though. You can see what accounts it was sent to, but any money coming out of those accounts becomes suspect. There is no connection between the money coming into an account and the money coming out of an account. If the thief does his laundering right, eventually the money will fan out to accounts that also process legitimate transactions and you'll lose track of where it went. Once the money reaches an account that already has a balance, it becomes indistinguishable from the rest of that balance.

Of course, if all the thief does is break up the money into hundreds of different single-purpose accounts only to send it all to the same place in the end, then yes, you can reconstruct the transaction graph and track him down.

Re:Anonymous payments

[PetiePooo]

We all know what address those coins went to, and if allinvain kept a copy of his wallet.dat, he/she could publish it and, by examining coins we receive, we'd all be able to identify them if we were to receive them in the future.

This is analogous to keeping a list of the serial numbers of the 5000 $100 bills you kept on your bedroom_dresser.dat when some masked gunman broke through your door to steal them. We'd be able to recognize the burgler's mask, and identify the bills by serial if we saw them again. But they're gone baby gone!

Are we responsible for checking the serial number of each dollar we receive against a blacklist to see if it got stolen from someone in the past? I don't remember signing that agreement...

It's an expensive lesson for allinvain to learn, but he/she simply should have protected his/her wallet.dat better. When you're connected to the internet, you're <100ms from every creep out there.

Re:Anonymous payments

[DrXym]

Well not in this case if thieves attempt to cash out with $500,000 of real money and the entire Bitcoin economy slumps. Of course it would be interesting to see that in action since it will act as a dress rehearsal for when the real slump comes.

Re:Anonymous payments

[SanityInAnarchy]

The victim should know exactly what the recipient address of those ill gotten gains are.

Assuming there's a single address.

Technically, if I understand the way that bitcoin confidence works, half the damn bitcoin network should know about the details of the transfer.

Sure.

But there's two problems here: First, addresses are trivial to create, and generally you create a new one per transaction. So it could've gone to dozens of accounts.

Second, you can't prove the person who claims to be robbed didn't transfer the money to another account they own (like the "savings" account I describe below), and even if you could track the account they went to, it's much harder to figure out who actually owns that account. And maybe they've already spent them -- in which case, you have similar problems again; did they actually buy this, or simply transfer the money to another account they own?

I know that bitcoin technology provides for cloud-based "banks" of a sort. If they have been implemented yet, I do not know.

I think the main idea of those is for people who don't want to install the software and manage it themselves. I don't think they give you any additional security. If anything, they reduce your security, since an attacker can either steal your username and password (with or without breaking into your machine) or attack the online bank in pretty much any way (including being the online bank).

By contrast, if you run your own security, you have options. If I had a significant amount of Bitcoins, I'd create a second wallet and keep it encrypted and probably offline, and use it as a "savings" account. I could trivially generate a few hundred accounts, then put the wallet on a flash drive or two, and then not need to plug it in until I need to withdraw, since I can send coins to it without it being on my or any machine.

Of course, you have to be equally careful to actually make backups, since if your wallet.dat is on a drive which fails, or even if there's just a bad sector in the middle of it, your money is just as gone as if someone stole it. I'd like to think that this sort of thing would be incentive for people to finally start giving a fuck about security. Unfortunately, it looks like it's instead going to be a disincentive for people to adopt Bitcoin.

Re:Anonymous payments

[SanityInAnarchy]

Or, better, if you care about anonymity, pre-generate a few hundred (or thousand) addresses for your "savings" wallet, so that each time you send money to it, you send it to a different address.

Re:Anonymous payments

[SanityInAnarchy]

In the case of Anonymous, if they actually are anonymous, there's no particular reason you couldn't have any member deny responsibility while (falsely) claiming to speak for the entire collective.

And no, it's really not, BItcoin actually is reasonably anonymous. Everyone can see transactions, but that doesn't give them terribly useful information if you're doing it right and generating a new address per-transaction, which is trivial to do.

Re:Anonymous payments

[DaveV1.0]

Of course, if all the thief does is break up the money into hundreds of different single-purpose accounts only to send it all to the same place in the end, then yes, you can reconstruct the transaction graph and track him down.

Assuming he doesn't use an anonymous email account and doesn't convert the bitcoins into physical items, say drugs or other property, that can shipped to an anonymous drop address, picked up, and then be sold for real money which can no longer be tracked.

Re:Anonymous payments

[SanityInAnarchy]

Technically, if I understand the way that bitcoin confidence works, half the damn bitcoin network should know about the details of the transfer.

Which is also probably why the thief knew where to go. It's a security hole.

Ok, parent was already wrong, and you are more wrong.

First, yes, they knew which account it went to, but without sniffing the traffic of the entire Bitcoin network, it's much harder to know which machine it went to. It seems unlikely that the Bitcoin network itself is vulnerable that someone could send an attack to a Bitcoin address without at least getting an IP address out of it first.

Maybe if you were a neighboring peer, you could notice a lot of transactions coming from one particular peer, but you still don't know if those transactions originated from that peer, and it also doesn't help you, since transactions originate from the sending peer (for obvious reasons), and are broadcast to pretty much the entire network. So even if you could track where a transaction originated from by sniffing traffic, that doesn't tell you where it went -- it could, in fact, be anywhere in the entire network, or in an account which is physically disconnected, or even in an account which doesn't exist (user mis-pasted the destination address).

To get anywhere close, you'd have to be able to sniff pretty much all of the originating peer's traffic, including other channels like web and IRC where the transaction was probably negotiated. Even that doesn't help you much, since you now have the problem of tracking a website, forum user, or IRC user back to the actual IP address where the coins are kept.

Now, all of this stuff is possible, certainly, but none of it really has much to do with Bitcoin being anonymous or not. At least, it provides no new problems over traditional banking, and is actually somewhat safer. If I could somehow sniff your communication with your bank (though admittedly, Bitcoin IRC and forums aren't always encrypted, and are more often TORed), I could drain your account whether you're the sender or receiver, and I wouldn't need to break your machine if I could somehow intercept your credentials (MITM). Banks can use SSL, but you could also refuse to trade Bitcoins over any forum which doesn't.

So, TL;DR: There's no way that the entire Bitcoin network knowing about a transaction (or about every transaction) is going to lead to knowing which physical machine to attack.

Not that the user should have known this, but dontcha think if there was $500k involved that a little curiosity on how it works and how to encrypt it better (put the .dat file in TrueCrypt container and make copies)?

Um. Yes. And yes, the user absolutely should've known that. WTF were they doing putting $500k in Bitcoin if they didn't? It's certainly enough to afford some extra hardware so you can do air-gaps.

I mean, I don't know what sort of precautions I should take before carrying $500k around in my pocket (or in a briefcase), but I'd bloody well find out before I did so.

Re:Anonymous payments

[NevarMore]

I'd have an armed guard and an air-gap.

Always make sure you're better armed and trained than your guard. They're only human and are corruptible.

Re:Anonymous payments

[julesh]

Always make sure you're better armed and trained than your guard. They're only human and are corruptible.

You can have however much armament and training as you want, if somebody you're working with unexpectedly pulls a gun on you, there's nothing you can do about it.

That said, you presumably have copies of their identity documents in a safety deposit box somewhere, and $500K won't last long on the run. Maintaining a fake identtity is expensive.

Re:Anonymous payments

[superwiz]

The payments were anonymous. The hacking probably not so much.

Re:Anonymous payments

[Jeremiah Cornelius]

HI my name is Leon Trotsky. You may know me from such films as "Dr. Zhivago", "Bad Day at Black Rock", "Y Tu Mama Tambien" and "The Iceman Cometh"..

I just dropped in to say the parent is right. Your bodyguard doesn't even need a gun!

Re:Anonymous payments

[makomk]

The trouble is that it appears the attacker deliberately made it hard to follow the trail by moving their takings into newly-created accounts at a rate of about a move per minute, splitting them into numerous smaller pieces as they went. It's also likely that they've been fed through at least one bitcoin-randomization service by this point, and there's no way of telling which incoming payments to those correspond to which outgoing payments.

Re:Anonymous payments

[Nursie]

You know, when I read about people setting up bitcoin laundries, and the forum responses about how great all that was, I did start to think "there's a reason money laundering is illegal IRL isn't there?"

Re:Anonymous payments

[AmiMoJo]

What happens if you forget the password, or for that matter just delete a wallet.dat file? There is a fixed amount of currency in the BitCoin system but it would appear you are taking money out of it. Does it get replenished somehow? How would it know the difference between money that was destroyed and money merely stored for a long time?

Re:Anonymous payments

[AmiMoJo]

Just go on emule and search for wallet.dat. Works pretty well with outlook.pst or you can simply trawl *.doc looking for valuable info.

Re:Anonymous payments

[s73v3r]

The problem of course is figuring out who the hell the address belongs to. That is the hard part.

Isn't that kinda like the problem the **AA has with piracy on BitTorrent? They can find an address, but they can't necessarily match that address with an actual person.

Not that a tiny detail like that has stopped them...

Re:Anonymous payments

[DanTheManMS]

There is no difference, and the money is indeed lost forever. Technically the coins are never destroyed, but nobody has the private keys corresponding to them anymore so no one can claim them.

Re:Anonymous payments

[Smallpond]

*sigh* Is this from the same source of doubletalk, whatever-definition-suits-my-pet-cause-today bullshit that brags about how Anonymous has no leaders, yet someone still magically appears to deny responsibility whenever someone gets caught?

Once you know someone's name they are no longer Anonymous!

QED

Re:Anonymous payments

[DamnStupidElf]

This guy was a miner, so it is not inconceivable to just watch the p2p network with enough nodes and see which IP address is actually contributing the new blocks from his mining client. Once you have an IP address, look for vulnerabilities on the host machine. If you can't get miners to connect directly to you, just start hacking other bitcoin peers until you find a node that a high-ouput miner is attached to. You could probably do timing analysis to figure out which peers are "closer" to miners by timing when new blocks become available from them.

Re:Anonymous payments

[SanityInAnarchy]

That's just it, though -- you now have to break through a large number of peers to find a miner, and to be sure you've found one. This is something a botnet might be able to do, but then, if a botnet controls a significant portion of the Bitcoin network, there are bigger problems.

Re:Anonymous payments

[MagusSlurpy]

I'd have an armed guard and an air-gap.

Always make sure you're better armed and trained than your guard. They're only human and are corruptible.

Pfft. I'll just fit mine with heart plugs.

Re:Anonymous payments

[RockDoctor]

you probably don't want to store $500,000 of jewelry in your dresser drawer. Maybe you keep a few pieces at home, and keep the rest in your safety deposit box?

Now here's a first : poetry being cited in a Slashdot discussion. Well, it's a first for me, at least.

There is a poem whose author I forget but with a title "Warming her pearls", about the vicarious pleasure a servant gets from the task of "warming" her mistress' pearl jewellery by wearing it through the day. Sentimental claptrap, of course, but the point of at least some jewellery is the sensual pleasure of wearing it, seeing it, touching it. Whether or not you owni it is fairly unimportant.

In that context, you may just as well not own the stuff, if you have to keep it in your safety deposit box.

I have a fairly substantial collection of fossils and minerals and rocks - some of which I have made into jewellery, some more of which I could make into jewellery. Their point is to sit in my "treasure chest" as my wife calls it, and to be there when I want to take it out and experienced when I want to. Putting them into the bank would ... well, I might just as well put them back in the ground.

(Incidentally, I remember making that "treasure chest" with my Dad when I was about 4 or 5 ; same importance. If push came to shove and the house were on fire, I might just empty the rocks out of the box and save that, because many of the rocks wouldn't be particularly bothered by a fire.)

(Second incidental : an acquaintance once reported his house roof collapsing because of the amount of rocks in the attic. This news was met in the circle with comments about how he should have strengthend his roof appropriately. Not collecting samples was not considered a rational response.) Poem : http://www.everypoet.org/pffa/showthread.php?t=3939

Allinvain

[Hatta]

So she collected those bitcoins all in vain?

Brilliant...

[FritzTheCat1030]

What type of MORON keeps a balance of $500,000 in BTC?

Re:Brilliant...

[Anonymous Coward]

What type of MORON keeps a balance of $500,000 in BTC?

What type of MORON keeps a balance of more than $0 in BTC?

Re:Brilliant...

[gilleain]

What type of MORON keeps a balance of $500,000 in BTC?

What type of MORON keeps a balance of more than $0 in BTC?

What type of GENIUS keeps a balance of LESS than $0 in BTC?

Re:Brilliant...

[igreaterthanu]

There are nowhere near $500,000 worth of asks on any of the BitCoin exchanges, selling anywhere near that amount would cause BitCoin's value to drop very quickly.

However I agree that it isn't the best idea to store $500,000 worth of BTC in one BitCoin account.

Re:Brilliant...

[Gideon Wells]

He was an early adopter. When bitcoin value exploded what was little more than $20 worth of digital money exploded to $500,000. Effectively, he was exactly the type of person many expressed concerns about bring the real people who would benefit from bitcoins.

Re:Brilliant...

[creat3d]

What type of PERSON keeps any balance of BTC?

Re:Brilliant...

[Duradin]

You wouldn't happen to work for Goldline, would you?

Re:Brilliant...

[elucido]

He was an early adopter. When bitcoin value exploded what was little more than $20 worth of digital money exploded to $500,000. Effectively, he was exactly the type of person many expressed concerns about bring the real people who would benefit from bitcoins.

He made $500,000 off Bitcoin? I'm skeptical.

Re:Brilliant...

[KDR_11k]

The value of BCs is tied to the supply and demand, it may be equal to work units but the value of those units to the market can fluctuate as well.

What is the guaranteed value of a bit coin? The demand for a gold standard is because gold is a tangible guaranteed value with specific properties, you know that your cash can always be redeemed for gold if nothing else and that gold can likely be traded for something that is useful. How does that work with bitcoins?

What if the demand for bitcoins as a "great deflational currency" leads to the creation of bitcoin clone currencies that are practically identical but have their own pool to create more coins in circulation?

Re:Brilliant...

[MightyYar]

I just sink all of my money into bubbles!

Hoarding is not the same as investing.

Re:Brilliant...

[KDR_11k]

Well, he didn't, it got stolen before he could cash out.

Re:Brilliant...

[wvmarle]

And doesn't keep a backup of the wallet?

Joking aside, please correct me if I'm wrong below, but this is my understanding of some of the principles behind bitcoins. I have tried to read the faq and the wikipedia page but I'm not expert enough on cryptography and so to actually understand much of what they're talking about. Yet I'm interested in the idea of having a digital currency around, which is what bitcoin could be.

There are now apparently two copies of a whole lot of bitcoins around (one on the victim's computer, one on the thief's computer). Stealing in computer terms after all means "making an unauthorised copy". The original data is normally still there, no reason to believe that's different here.

Now what if the original owner would spend them all, before the thief gets to? For example by swapping them for a same number of bitcoins with another user? Then the coins get "spent" before the thief gets to. And the copy the thief has, would according to bitcoin techniques preventing the double spending of a same coin be rendered useless. The thief could of course do the same as well, taking full ownership of the coins. And as transactions are untraceable (according to bitcoin's design) doing so would allow the thief to safely launder the loot.

When a bitcoin is spent, it gets a cryptographic hash added to it that is related to the sender and the recipient. And thanks to those hashes one way or another the recipient can tell that the sender is genuine and hasn't spent the coin already, and thus accept it.

Now this prevention technique as I understand has to trickle down the whole bitcoin network - nodes have to tell each other that a coin has been spent, and which hashes have been added (how they deal with the necessarily enormous amount of data involved - especially if bitcoin would be really successful and used a lot - is beyond me. Because one way or another when a coin is presented to a recipient, the recipient must know the latest transactions of that coin before they can accept it, and to not have to wait for hours to search a decentralised network where many nodes may be offline at any moment they must have that information stored locally. On top of that, bitcoins themselves grow with every transaction they go through as yet another hash is added). That leaves time for the thief to do exactly the same: exchange for an equivalent number of bitcoin with another user. Such an exchange can presumably done really fast as all it requires is some hashing, and hash functions are fast. The network's "memory" however takes longer to build up, as nodes have to inform each other, and that simply takes time.

So now the fun starts. There are now two sets of the same bitcoin around, but with different transaction signatures, as they have been used twice from different origins. And there is no central authority (as per bitcoin's design) to keep track of it all.

So: how to tell which one is the genuine one? And which one is the stolen one?

What about if the same wallet is given to another user, and the same trick is done as described above is done? How to decide which of the two competing copies is the real one?

Re:Brilliant...

[Lord Ender]

For all we know, he's been selling his bitcoins as fast as the market will bear without crumbling...

Re:Brilliant...

[ginbot462]

What kind of ANIMAL shits on your RUG?

Re:Brilliant...

[slim]

But if you sell your Bitcoin to a nerd for real money, and then spend that real money, you've bridged the gap between the "real world" and wherever it is that Bitcoin has value. Tada!

Re:Brilliant...

[Lumpy]

A PONY!

Re:Brilliant...

[Yvanhoe]

Early adopter miner. He never spent money on that except for the electricity paid, of course. He had 25,000 BTCs, three months ago, this was worth ~ $20,000, which is enough to start getting worried, sure. But it reached the current heights very quickly, and you can't sell such an amount without damaging the prices.

The moron thing to do is not to keep 500,000$ in BTCs, it is to store them on an insecure computer. Consider it like having 500,000$ in cash, and as a publicly known fact. Normally you would take some minimum steps to have some security around that.

Re:Brilliant...

[DrXym]

The problems here are threefold in the normal bitcoin client:

1. The wallet in bitcoin is not encrypted. It's plaintext.
2. The wallet is stored in a predictable location, %APPDATA%/bitcoin/wallet.dat
3. There is nothing tying the wallet to a particular machine (e.g. encryption).

As such all one would need to do is steal the wallet, either through a trojan or possibly even a browser exploit (which guessed the APPDATA path by trying someone's likely login id) and that is that. Their copy of the wallet can initiate the transaction as readily as the original.

Frankly this is shoddy security and makes you think what else is not right about Bitcoin. At the very least the wallet should consist of a plain text receivables tray and an encrypted savings tray(s). When money is received it sits in receivables until the user types the password and the money moves over to the encrypted portion. Stealing the file only exposes what is in the receivables which hopefully isn't much for most people. But also the path name to the wallet should be randomized (like in a Firefox profile) and some other measures could be employed to strengthen the software such as second level security about all send operations.

Bitcoin also runs in an RPC server mode for people running Bitcoin miners. The server hands out work to the miners and they report back. Unfortunately the RPC also contains handy APIs that let the miner transfer arbitrary chunks of money even when it runs on a separate machine. I wonder if this theft is just small potatoes to what could happen. How hard would it be to con people to try out a new bitcoin miner? Maybe it would even play nice for a fixed period of time (for word of mouth to spread) before switching to robbery mode.

These sorts of things are not a surprise either. Anyone who has looked at the code could tell in an instant how bad it is in places.

Re:Brilliant...

[gabebear]

through time honored tradition like gold.

You can drop the anti-American rhetoric. Roman's never used a fiat money system(their coins were made of silver/gold) and almost no government uses the gold standard whether they have a real army or not. Large scale fiat currency has only been used for ~50 years. Gold only has value in the real world is for making certain goods, it's value is grossly inflated(that it's near the price of platinum is absurd).

Re:Brilliant...

[arth1]

I have only ONE word for you. I recommend that you look it up:

Tulips

Re:Brilliant...

[EastCoastSurfer]

He didn't make anything until he could sell the BTC. Saying something is worth $500k and selling it for $500k are very different things. Every kid used to learn this lesson with baseball cards :)

Re:Brilliant...

[secretcurse]

If by "cash" you mean American federal reserve notes, you certainly cannot redeem them for gold. You could trade the cash for gold if someone were willing, but you can't empty all of your accounts and go up to Fort Knox demanding your gold anymore.

Re:Brilliant...

[anyGould]

The problems here are threefold in the normal bitcoin client:

1. The wallet in bitcoin is not encrypted. It's plaintext.
2. The wallet is stored in a predictable location, %APPDATA%/bitcoin/wallet.dat
3. There is nothing tying the wallet to a particular machine (e.g. encryption).

As such all one would need to do is steal the wallet, either through a trojan or possibly even a browser exploit (which guessed the APPDATA path by trying someone's likely login id) and that is that. Their copy of the wallet can initiate the transaction as readily as the original.

Well, let's compare these problems with the US Dollar:

1. The wallet in Dollars is not encrypted, but plaintext. (If you have physical access to a wallet, you can easily count how much money is in it.)
2. Wallets are stored in predicable locations (pants pockets, purses, on top of the dresser).
3. There is nothing tying a particular wallet to a particular user.

As such all one would need to do is steal the wallet (pickpockets through the ages can tell you how), and you've also removed the owner's copy of the wallet as well.

All these problems can be mitigated, in both cases. (Physical cash can be stored in safes or banks; BitCoins can be stored on offline media.) One isn't specifically less secure than the other at this point.

To my mind, this isn't a story about "OMG BitCoins can be stolen". This is a story about "OMG someone thought BitCoins were worth stealing".

Re:Brilliant...

[ginbot462]

Ok, that made me chuckle ;) Now, where's my caucasian...

Re:Brilliant...

[slim]

What if the demand for bitcoins as a "great deflational currency" leads to the creation of bitcoin clone currencies that are practically identical but have their own pool to create more coins in circulation?

... then there will be another currency, with its own market value. It won't be easily confused with Bitcoin, any more than a Dollar is easily confused with a Yen.

The two currencies' values will each be dictated by how people perceive and use them.

Re:Brilliant...

[DrXym]

Tu quoque arguments appear to be very common when the subject of Bitcoin comes up.

Re:Brilliant...

[Nethemas the Great]

these guys?

Re:Brilliant...

[superwiz]

Probably someone who got them for a few hundred dollars just a year ago.

Re:Brilliant...

[TheCarp]

Someone who A) has the money to risk and B) is less risk averse than you?

Investing heavily in anything always looks stupid to anyone who doesn't think its worth it. If everyone agreed on what was a good idea, then wouldn't we all be investing in the same things all the time?

So the real answer is C) Anyone who has the money and believes bitcoin value will rise.

I have been holding a nonzero bitcoin balance since december and, I am pretty happy with that decision so far.

But by all means, keep your money in whatever form you feel best for you, unless you intend to use perishable goods like fruit as a long term value store, I wont call you an idiot for it.

Re:Brilliant...

[frinkster]

through time honored tradition like gold.

You can drop the anti-American rhetoric. Roman's never used a fiat money system(their coins were made of silver/gold) and almost no government uses the gold standard whether they have a real army or not. Large scale fiat currency has only been used for ~50 years. Gold only has value in the real world is for making certain goods, it's value is grossly inflated(that it's near the price of platinum is absurd).

Roman currency was essentially fiat currency. The coin value was always higher than the value of the metal content, and as time went on the precious metal content dropped to the point where there was almost none at all in the coins.

The value was declared by fiat, just like now. The idea that current money has no intrinsic value is laughable. The bullion value of a US nickel is higher than 5 cents

Re:Brilliant...

[superwiz]

The "coins" themselves are (just as all other money) just information. This particular information is not stored on your computer. It's stored in the network. What's stored on your computer is the private key which allows you to validate that you are the owner of a particular account which owns these coins. It doesn't matter if 2 computers know the private key. Once the private key is known to a hacker he can use the account in the same way that you can.

Re:Brilliant...

[memnock]

How can bitcoins be valued in $ if they're not tied to $? If you mined 500 bitcoins and they could buy a laptop now, but then they kept "going north" (relative to what?), would the vendor really sell you the same laptop for 400 bitcoins next month? Obviously, I don't know the whole bitcoin story, just what I glean from all the stories it keeps getting on /.

Re:Brilliant...

[Chapter80]

You started being incorrect in the third paragraph.

The thief transferred the Bitcoins out of the user's account and into his or her own. At that point, it was too late for "allinvain" to do anything.

But to answer your other question.. what if two people spend Bitcoins at approximately the same time? Well, the "network" spreads the transactions pretty quickly. So the spending would have to be near instantaneous to be confusing to the network. Even a 2 second head start will likely have one transaction HIGHLY favored over the other. None the less, the network can hold two transactions, temporarily, that are in conflict.

And then the miner who solves the next puzzle is the tie-breaker. No miner will have two conflicting transactions. Each miner would reject the 2nd conflicting transaction, and, although different miners may consider different transactions as the "first" one, there will likely be one transaction that is highly favored over the other, and that's the one that is likely to be honored.

It's the same concept as if you have $100 in your checking account, and you mail two $100 checks to two different people. Who wins? Most likely (but not always) the one who receives your check first. Most likely (but not always) the one who cashes it first. And the bank will make an arbitrary decision if they both come in at approximately the same time.

The difference is, with a check you won't know for days. And even after a week, the bankers/government can come and reverse the transaction later. With Bitcoin, you will know within 10 minutes with some degree of certainty, and within an hour with almost absolute certainty.

Re:Brilliant...

[Tawnos]

http://en.wikipedia.org/wiki/Bitcoin#Block-chain_and_confirmations

There is no "genuine" versus "stolen". After the thief steals the coins (signs them away to his own hashes), the network would propogate that information and would not allow the original person to sign/sell the coins.

Re:Brilliant...

[geekoid]

anti-America rhetoric is fine, when it's actually factual.

" like the Romans used to do and like the Americans are doing now, "
That is factually wrong,

"or through time honored tradition like gold."
many, if not most, currency for history has not been gold.

Gold is a horrible system that create a lot of economic instability; which is why we don't use it. Well, we do, but it's really complex.

Re:Brilliant...

[slim]

How can bitcoins be valued in $ if they're not tied to $? If you mined 500 bitcoins and they could buy a laptop now, but then they kept "going north" (relative to what?), would the vendor really sell you the same laptop for 400 bitcoins next month?

Try substituting British Pound or Euro or Yen for Bitcoin. If you had £400 and it could by a laptop now, but the pound gained value relative to the dollar, then yes, the (American) vendor would really sell you the same laptop for £350 next month. Anyone who buys stuff internationally experiences this.

If I had £1M stolen from me in some comical manner, it might get reported in US newspapers as "A British man lost £1M ($1.6M) in a comical manner" -- next month it might be a different dollar value.

Similarly, how can gasoline, or corn, or any commodity be valued in $ if it's not tied to $? It's valued according to what people are prepared to pay for it.

Re:Brilliant...

[makomk]

To my mind, this isn't a story about "OMG BitCoins can be stolen". This is a story about "OMG someone thought BitCoins were worth stealing".

Rumour has it LulzSec may have been involved, in which case it's probably more a case of "OMG people will freak out if we steal BitCoins"

Re:Brilliant...

[lpp]

Rarely does someone carry significant sums of money in their wallet, where by "significant" I mean in relation to their total net worth. If I had to guess, $500k was probably a very significant amount in this case by the same definition. So the risk is typically smaller in the general use case.

No one walks into a store to buy a wallet with the expectation that their money will be particularly secure inside of it. On the other hand, while some here are clearly not surprised about the lack of security surrounding BTC ownership, when you visit the websites promoting BTC usage, there's no mention of whether one's BTC information is particularly secure or not. In fact, one is given the impression (implied, not stated) that BTC is actually pretty secure by default.

Furthermore, several people have outlined steps one can take (or that could be undertaken by an app by default) to make BTC sums more secure on your system, but they aren't exactly common knowledge. And even if they are common knowledge on a website like this, again I would point to the promotional websites that exist for BTC usage which are seemingly trying to attract the interest of the average purchaser out there who, I guarantee, does not typically know about the security methods being espoused here. Yet every single one of them is aware of how to put their money in a bank where it is "safe".

So even if you take for granted that BitCoins are more secure than physical dollars, for the average consumer that BTC promoters are trying to promote to, they have no clue how to secure their BitCoins effectively. For them, conventional currencies are still superior in that regard.

If you're going to consider BTC security, and desire to have BitCoins widely accepted, you have to consider it from a practical viewpoint, assuming your user knows very little about the technology involved.

Re:Brilliant...

[operagost]

No, it's not. The cost of minting a nickel is more than five cents. The same goes for the penny. That being said, is a piece of paper with Washington's picture on it worth $1 in "bullion"? It's nice that coins have some intrinsic value, but coinage consists of only a small fraction of all US currency.

Re:Brilliant...

[Jonathan]

If dozens of Japanese started coming up with alternative physical currencies that looked just like Yen, they certainly *would* confuse people. Similarly, if people start coming up with ByteCoin, BitBuck, CoinBit, etc, they certainly *would* cause confusion with BitCoin. The difference is while the Japanese government would take a dim view of the former and intervene, nobody can prevent the latter.

Re:Brilliant...

[operagost]

What was ill-gotten about his gains? He ran the client and mined the coins. As far as I can tell, he followed the rules.

Re:Brilliant...

[wvmarle]

And then the miner who solves the next puzzle is the tie-breaker. No miner will have two conflicting transactions. Each miner would reject the 2nd conflicting transaction, and, although different miners may consider different transactions as the "first" one, there will likely be one transaction that is highly favored over the other, and that's the one that is likely to be honored.

This sounds contradictory.

One miner endorses one transaction, another miner endorses another: doesn't sound like resolving the problem.

And you mention about seconds to propagate through the network - as long as bitcoin's network remains as small and insignificant as it is now, that may work. But if it were to replace the transaction volume now done on credit cards then having to propagate every single transaction to every single node in the entire network would well DDOS the Internet? Doesn't sound like it scales well.

It's the same concept as if you have $100 in your checking account, and you mail two $100 checks to two different people. Who wins? Most likely (but not always) the one who receives your check first. Most likely (but not always) the one who cashes it first. And the bank will make an arbitrary decision if they both come in at approximately the same time.

Absolutely not the same as bitcoin doesn't have a central authority. That's the whole point of bitcoin, and that's where I see all this kind of problems arise. No-one to make the call which of the transactions stands, and which one not. It also seems to work exclusively on-line, yet another restriction.

Bitcoin is something that is very hard to understand how it works, and there are contradictions already in the replies I get to my questions. That says enough to me. What people don't understand, they don't use. Bank notes are easy to understand: you hand them out, they change ownership.

Digital stuff not so much. You can always make copies, and the original doesn't disappear. When you give say an mp3 music file to someone, you actually give a copy, unlike a physical CD. You still retain the copy. You can e-mail a document to someone, you still have your own copy. Etc.

Now bitcoin comes around, something digital that works like something physical as in you can give a bitcoin away and then it's really gone. That's contradictory in a way, and this kind of issues will really hold back the use of bitcoins. Oh and then the silly thing of having an absolute limit... that means guaranteed deflation... so better hold on those bitcoins, don't spend them, because tomorrow they're worth more. Not good for an economy.

Re:Brilliant...

[slim]

They might cause confusion, but you wouldn't be able to spend them interchangeably, because the BitCoin network simply wouldn't acknowledge the non-Bitcoin wallets. You can create a new currency called "ByteCoin". You can't consider ByteCoins to be counterfeit BitCoins, analogous to making coins that look like Yen.

I suppose the closest analogy might be that Canadian Dollars have the same name as US Dollars.

Indeed there *is* a parallel Bitcoin network called TestNet, which is used for testing. Its coins are considered worthless, I guess simply by common consent (I don't know whether there are other precautions taken to make TestNet coins worthless).

Re:Brilliant...

[icebraining]

At the very least the wallet should consist of a plain text receivables tray and an encrypted savings tray(s). When money is received it sits in receivables until the user types the password and the money moves over to the encrypted portion.

You don't need any of that - you can receive without using your private key, you don't even need to have your PC online. The wallet is only necessary to use the keys.

If you want, you can create two wallets, one for regular use and a "savings" wallet, and keep the savings wallet encrypted on a drive on a vault. Then you can transfer what you want from the normal wallet to the savings wallet without ever needing to access the encrypted file.

Re:Brilliant...

[Dunbal]

Factually wrong? The pax romana was all about making friends, was it? And there is no pax americana happening right now, which China being told what to do with their yuan (by the way - they don't have to listen anymore), etc. The G8/G20 meetings, which are always held behind closed doors, are where the US goes to be told what to do by the rest of the world, is it? Have you even asked yourself why NATO is bombing the crap out of Libya but not Yemen or Syria? It has nothing to do with Kaddafi being very vocal about dropping the US dollar and asking for his oil to be paid for in gold, right?

Gold is a horrible system that create a lot of economic instability; which is why we don't use it. Well, we do, but it's really complex.

Too complex for you to understand, apparently. Economic instability is the hallmark of every economy - based on gold or otherwise. It's something that comes with humans, corruption and greed, not something inherent in the means of exchange. However it's a lot harder to create gold out of thin air than paper currency where all you need to do is add more zeroes.

You seem to fail to understand what is happening in the world around you. I hope you have useful skills, because the "Arab spring" (which has nothing to do with Arabs and everything to do with unequal distribution of wealth and corrupt government) will be coming to a civilized country near you soon. As soon as Bernanke is done destroying the dollar, in fact. This stuff happens. Albania. Argentina. Greece. Wait. The "Osama effect" is holding back crude for now, but when the world realizes that the US is still hell-bent on a foreign policy of "war without end while recklessly spending at home" financed by the rest of the world, the dollar will resume its plunge.

Re:Brilliant...

[Yunzil]

a good diversification and investment right next to brick of gold.

You misspelled "canine fecal matter". HTH.

Re:Brilliant...

[Synn]

All these problems can be mitigated, in both cases. (Physical cash can be stored in safes or banks; BitCoins can be stored on offline media.) One isn't specifically less secure than the other at this point.

There's a big security difference. I can store my money in a bank and use debit/credit cards. I'm legally protected when someone steals my credentials and spends my money without my authorization.

Re:Brilliant...

[TangoMargarine]

value of BitCoin is increasing from day 0

Technically, null to a number isn't an increase.

Re:Brilliant...

[zeroshade]

I don't see how "early adopter making money off his early investment" equates to ill gotten gains.

Re:Brilliant...

[hesaigo999ca]

After reading your post, I would never, ever, EVER do business with Bitcoin, or anyone using bitcoin, the sheer stupidity of it is appalling.
I am not sure how anyone gets into these schemes...but all in all, it shows how little people really do research in things these days...especially something
that is supposed to be considered recognized legal tender of sorts.

Re:Brilliant...

[Nursie]

The rules of a pyramid scheme, yes!

Re:Brilliant...

[operagost]

If running a BC client constitutes being part of a pyramid scheme, then Social Security is also a pyramid scheme.

Re:Brilliant...

[ColdWetDog]

Romans did indeed use a fiat currency system. Several Roman emperors (go look it up) cut the amount of silver in various coins over time. I'm not sure where 'large scale' starts - seems it would be relative to time and place, but Rome was a pretty big deal at one time.

Re:Brilliant...

[s73v3r]

Since when is any commodity hugely backed by speculators, currency or not, been a worthwhile place to keep wealth in? Once the bubble hits, and there will be one, those that invested in BTC and gold will be hit hard. And there will be much wailing and gnashing of teeth.

Re:Brilliant...

[houghi]

He used to have it under his mattress and everybody said that was a bad idea. So He put his money in shares and lost a lot. Then he put it in a bank and lost a lot now this.

Would have been better to keep it under his mattress.

Re:Brilliant...

[s73v3r]

Investing heavily in anything always looks stupid to anyone who doesn't think its worth it.

Or to anyone with a lick of common sense. First rule of investing is to not keep all your eggs in one basket.

Re:Brilliant...

[DrXym]

The problem is not transactions pending while you are offline, it's transactions as they're stored in your wallet when you receive them. It's plaintext (a plain Berkley DB), it's discoverable, it's not protected. Someone just has to take a copy of that wallet and they're good to go. That's just terrible design and I'm suggesting a manner in which the app could be made more secure by default.

I realise you could probably manually screw around with it in various ways to secure money but it really shouldn't be like that in the first place. The mantra should be secure by default.

Re:Brilliant...

[petermgreen]

One miner endorses one transaction, another miner endorses another: doesn't sound like resolving the problem.

At the core of bitcoin is the blockchain which is basically a ledger of all transactions so far. Miners constantly try to add blocks to the blockchain but the system is set up so they usually fail (and it is designed to crank up the chance of failure as the total mining power increases). Roughly every 10 minutes a miner somewhere succeeds and a new block is added to the blockchain.

It is possible for the blockchain to branch but unless an attacker has a huge ammount of hashing power (more than the rest of the network put together) and/or the ability to hugely disrupt network communication those branches will be short lived.

Re:Brilliant...

[Nursie]

Strange then, that I've lost count of the times I've heard that Social Security is a pyramid scheme from the very same types of people who seem to think bitcoin is a great idea.

Re:Brilliant...

[anyGould]

Tu quoque arguments appear to be very common when the subject of Bitcoin comes up.

Only because it's the appropriate rebuttal. There's plenty of legitimate reasons to dislike or distrust Bitcoin - why focus on the ones that are a common issue for every physical or digital object in existence?

Might as well claim that bikes aren't usable because one was stolen, so you'll stick with your skateboard instead.

Disclosure: I find the concept of bitcoins interesting (mostly in the "digital money that doesn't require me to give my life story" way), but don't own any myself.

Re:Brilliant...

[thehodapp]

I wouldn't say ill-gotten. Bitcoin is another form of investment, even if it is kind of stupid. He took his risk even though it doesn't seem like it was that much, and was duly rewarded (and then screwed). Accusing him of being a fraudster is completely unfair. Do you make fun of rich investors who spend enormous amounts of money on small startups? They are different kinds of investments, but an investment is an investment no matter what the kind, and this just seems to be an unfortunate loss he couldn't have predicted.

Re:Brilliant...

[gabebear]

Sometimes I wonder why I even bother. What was that quote? "The gods themselves struggle in vain against fools"? Something like that.

Oh, sorry, I didn't realize I was talking to a god... but, you are still wrong.

Re:Brilliant...

[sabt-pestnu]

> why focus on the ones that are a common issue for every physical or digital object in existence?

Perhaps because there ARE things you can do to enhance security, that aren't currently being done? You get bonus points if the security steps are different but analogous.

Re:Brilliant...

[Ambvai]

Specifically: http://en.wikipedia.org/wiki/Tulip_mania

"By 1635, a sale of 40 bulbs for 100,000 florins (also known as Dutch guilders) was recorded. By way of comparison, a ton of butter cost around 100 florins, a skilled laborer might earn 150 florins a year, and "eight fat swine" cost 240 florins."

Re:Brilliant...

[gabebear]

Devalued currency isn't the same as fiat currency, it's still pegged to a certain amount of gold/silver.

Re:Brilliant...

[Jeff DeMaagd]

I don't know if it's smart or dumb. However, I have seen enough stories on bitcoin, so I've now done what I can to block bitcoin stories from my feed.

Re:Brilliant...

[DrXym]

It's not an appropriate rebuttal at all. It's a lame "I know you are but what am I" non response. I made some points about the security of a software application so evading those and changing the subject to real life wallets is ridiculous.

Re:Brilliant...

[gabebear]

It would be neat to calculate the intrinsic value of US currency... anyone have any idea how to tell what bills/coins are circulating. I do know that pennies minted before 1982 were made of solid copper and are worth more than a penny in scrap copper today(now they are copper plated zinc).

Re:Brilliant...

[osu-neko]

...gold is a tangible guaranteed value...

Nope. This is no more true than it is for silver, oil, or any other commodity. There are no guarantees for the value of any commodity, and there's nothing magic about gold vs. anything else in this regard.

Re:Brilliant...

[osu-neko]

Well, he didn't, it got stolen before he could cash out.

Nor, in fact, would he be able to cash out at that price point. Attempting to sell that much BTC would collapse the price.

Re:Brilliant...

[Threni]

Unfortunate loss of $20 of pretend money. Boo hoo.

Anyone who takes zero steps to protect $500,000 of real money doesn't deserve it.

Re:Brilliant...

[osu-neko]

There are now apparently two copies of a whole lot of bitcoins around (one on the victim's computer, one on the thief's computer). Stealing in computer terms after all means "making an unauthorised copy". The original data is normally still there, no reason to believe that's different here.

This is fundamentally incorrect. What was on the victim's computer was the data needed to move bitcoins around, and this is what was copied. As for the "bitcoins themselves", they essentially exist in the cloud, as data distributed across hundreds of different computers. The theft of a file from the victim's computer did not duplicate or even steal any bitcoins at all. The bitcoins were only stolen when the hacker used the info from the victim's wallet to transfers the bitcoins to his or her own account. The bitcoins are now in the hacker's account. There are no duplicated coins at all, and never were.

Re:Brilliant...

[anyGould]

Except we're not discussing software application, but money. So a comparison of two methods of storing "currency" (BitCoin wallets vs. USD wallets) is valid.

There's no mention in the article that the BitCoin application was the vulnerable point in the hack, so the merits of the application are irrelevant to the merits of BitCoin.

Saying "BitCoin isn't secure" isn't much of an argument, either (I could go Wiki around to find the proper Latin). Question is, "is it more secure than other means of holding currency (particularly digitally)?". And I haven't seen any particular reason why a BitCoin would be more vulnerable to theft than say, your credit card information.

Re:Brilliant...

[icebraining]

Meh, I don't know. The most the program could do is encrypt the wallet with a passphrase, but that's almost useless against an offline attack - for $500k, you can afford a few years of GPU time to crack it.

Encrypting it with a key file is useless if the user keeps the key on the machine, and if (s)he doesn't, then (s)he might as well copy the wallet instead.

Re:Brilliant...

[Archwyrm]

The same type of person that has a balance on ten different credit cards.

Re:Brilliant...

[arth1]

That puts the total worth of the US Senate at 3000 florins.
Sounds about right.

Re:Brilliant...

[wvmarle]

It doesn't matter if 2 computers know the private key. Once the private key is known to a hacker he can use the account in the same way that you can.

You contradict yourself here. If it doesn't matter that two computers know the private key, then it doesn't matter if a hacker knows it either, as a hacker is in my eyes equivalent to a second computer.

Re:Brilliant...

[wvmarle]

Thanks. A rare bit of understandable information that doesn't raise more questions.

Reading discussions about bitcoin usually results in me being more confused as many repliers give contradicting information - contradicting other posters, or even themselves in the same post.

And that alone blocks me (and probably many other people) from having any interest to actually adopt it.

Re:Brilliant...

[tftp]

If running a BC client constitutes being part of a pyramid scheme, then Social Security is also a pyramid scheme.

Social Security is a pyramid scheme. However Bitcoin is a bubble scheme. Both are bad - either for your wallet or for your freedom :-) Though bubbles don't have to be based upon a crime. The recent housing bubble in the USA was based largely in greed.

Re:Brilliant...

[whiteboy86]

That was just a sarcastic rant about Bitcoin, just to flip the opinion. Obviously the speculative value probably fluctuates widely.

Re:Brilliant...

[superwiz]

It doesn't matter because multiple copies of the private key don't replicate the bitcoins. It just means that both computers (or a computer and a hacker) have access to the same account. Having two keys to a house doesn't replicate a house. But if one of those keys was a duplicate made by a robber, he can steal its content.

Re:Brilliant...

[DrXym]

No, I was specifically hilighting flaws in an implementation of software. Changing the subject with some lame parody concerning some random other thing doesn't make the problems go away. It is a non response.

As for whether the vulns were responsible for the attack, at some level yes they absolutely were. If the wallet is plain text then someone can lift a copy of it and do what they like with it. That is the fundamental issue here. The actual attack may have involved a driveby or a trojan or a badly configured network share but none of it short of full rooting of the PC & keylogging would have succeeded if the file was protected. It demonstrates a naivety of implementation which makes one think what other flaws are lurking there. If this were some esoteric client it wouldn't matter, but it's THE bitcoin client. It's used by the majority of users meaning they are all vulnerable.

Re:Brilliant...

[DrXym]

Passphrase implies a password of any length. And if I had $500k in a wallet you'd be damned sure I'd choose a strong password which would reasonably withstand attacks for longer than mattered.

Even a file based key would have some use. Bitcoin could generate a randomly named keyfile, next to the wallet. In the absence of a passphrase it encrypts with that. The random name would prevent drivebys from guessing the path for the key meaning they'd have to root the box to get it. If the user did passphrase protect their wallet, the passphrase hash could be xored with the key effectively supersalting it so even a weak password like "abc" would be uncrackable unless the attacker could also lay their hands on the .key file.

Re:Brilliant...

[yabloko]

It's easier to conceive of BitCoin as a system of bank accounts, where your balance is saved on your machine and on peer machines in the network. The "coins" (.dat file) on your machine gives you the right to reduce your balance (ie spend money) but making a copy of that file doesn't mean there are two sets of coins floating around, because the balance is still only in one account. All you have is two people with the rights to spend the money. In this case the thief transferred the money out of the victim's account into his own account. It was a Windows machine, connected to the network, unencrypted, his friends knew he had lots of bitcoins, he kept it all in one single account...there are many layers of user error here. PLUS the ever present possibility that he's a troll keen to push the price down.

Re:Brilliant...

[amn108]

Only dumb people refute something that is clear to anyone with half a brain functioning.

The parent provided a valid comparison of the weaknesses outlined by grandparent that are present in both BitCoin and U.S. dollar. For people who are so fond of car analogies, you fail to grasp the importance of the comparison - that at least the outlined weaknesses have nothing to do with BitCoin itself. The comparison hits the nail on the head!

If a person is wise-ass enough to have mined 500K of U.S. dollar worth of coins, then I find it appalling how they didn't think of encrypting their wallet file. I bet they didn't use CPU alone but rather a rig of expensive GPUs and optimized mining software. They are careless for not leaving the wallet on the table like that. Of all people, tinkerers and hackers ought to know how at times trivial it is to get into another system. And if the person didn't mine the 500K themselves, then the point is moot. You don't walk with 500K in cash in city suburbs - and let's face it, Internet is one large suburb. In fact it's worse - someone is constantly knocking on your door, throwing stones at your windows, calls your phones, and leaves cryptic messages to your gardener if you have one. That's an appropriate analogy of life on the Internet.

It is not BitCoins job to encrypt the wallet - the responsibility lies on a more generic level. There are plenty of files that ought to be protected from somebody already inside the system - documents and other original files like emails, IP drafts; wallets etc - all these ought to be either protected by the operating system itself or its agent(s).

Re:Brilliant...

[TheCarp]

Um yah duh.

Did I say that I dumped my life savings into bitcoin? Did it sound like I was saying "mortgage your house to buy bitcoins now!"

Investing always involves risk. However, different people have different tolerances to risk. Some people can afford to be more aggressive than others. Some are stupid to invest $100, others can lose 5k and not care.

So perfect

[Anonymous Coward]

The guy's handle is 'allinvain'. You couldn't make this stuff up.

Who cares

[sakdoctor]

Keep hyping that ponzi scheme.

Re:Who cares

[nitehawk214]

Keep hyping that ponzi scheme.

Now you need to give the editors some credit here. If they were financially invested in pumping Bitcoins up, this article certainly would not help.

I mean people wouldn't imagine this is good publicity for Bitcoin, would they? Unless someone would go under the logic of, "Wow, people have so much of these things, I should get in on this game." I would like to think the reasoning here is. "Wow, digital property on a computer is so easy to steal."

Maybe I give people too much credit...

Re:Who cares

[gilleain]

Maybe I give people too much credit...

So long as that credit is not in Bitcoin, it's probably okay.

Re:Who cares

[Anonymous Coward]

I don't understand why people call Bitcoin a ponzi scheme, but fail to do so for the Federal Reserve Note.

Re:Who cares

[creat3d]

I don't understand why people call Bitcoin a ponzi scheme, but fail to do so for the Federal Reserve Note.

Because they're not desensitized to Bitcoin yet.

Re:Who cares

[iONiUM]

Any publicity is good publicity. Don't rule out invested interest, yet. There's been way too many articles..

Re:Who cares

[Hijacked Public]

There is money to be made on both sides of just about any financial fluctuation.

And although I'm sure the staff here happily accepts paid stories, it would suprise me that they were sharp enough to manipulate the bitcoin market in this way. If you can't sell geek news, then you can't sell servers, then you can't sell generic software, then you can't sell Sourceforge, then you can't sell "The Online Network for the Global Geek Community"....what else are you going to do?

Re:Who cares

[Kenja]

It has to do with the US dollar being backed by the US GNP and Bitcoin being backed by the equivalent of pink elephants.

Re:Who cares

[DamienRBlack]

Well, then, bitcoins are backed by the BNP.

Re:Who cares

[sgt scrub]

No. It is backed by gold reserves. Once upon a time it was backed by gold and silver reserves.

Re:Who cares

[ginbot462]

Unless you don't like them, then pay in bitcoins. /aside: I noticed Randall of xkcd fame took down his bitcoin link. His reasoning is sound and succinct. /aside on aside: But, it only takes a handful of (or one really large) bad apples to fuck over the other adopters.

Re:Who cares

[ginbot462]

I read that as "bitches are backed by the BNP". I wish I could say I don't live in that country, but I am afraid I do :(.

Re:Who cares

[brusk]

Not really. It's mainly backed by the expectation that the US will honor its debts in the future, and will be able to do so because the US economy is productive enough to provide the resources to do that. Precious metal (and foreign currency) reserves are relatively minor in the big picture.

Re:Who cares

[sedmonds]

US currency is not backed by gold reserves, and hasn't been in any meaningful sense since the 70s. It's backed by a common belief that the currency in and of itself has value.

Re:Who cares

[DaveV1.0]

Look at how many of the comments are blaming the victim and not anything involving Bitcoin, then tell me again this is bad for Bitcoin.

Re:Who cares

[1s44c]

Why risk using a currency that has no acceptance for a transaction when I can just click on a PayPal button?

Because paypal are dodgy as hell. You must have heard some of the stories. Bitcoin has about the same protection at a lower chance of being robbed. Combined with an ebay like feedback system bitcoin makes perfect sense.

Also paypal have high fees.

Re:Who cares

[anyGould]

And if you want to see how quickly the US currency becomes devalued, simply encourage your congresscritter to vote against raising the dept limit.

Re:Who cares

[Timmmm]

Yeah and it mostly has value because in the US the government says "You *WILL* accept this currency.". Bitcoin doesn't have that.

Re:Who cares

[compro01]

The BitCoin software has no protection against multiple people mining the same coin, even though the chances are low of this happening. This means that potentially you are wasting your time making new coins, especially if someone mines a bunch offline.

The protection against this is that you can't have two people receive the same coin. Someone will get the subsidy, the other one won't. This is why there is a 120 block maturation period for the block subsidy.

Furthermore, you CAN'T mine offline, at least not for longer than 10 minutes or so. An integral part of the block header is the hash of the previous block in the chain. If you're offline, you have no way of getting that, and thus are not going to get anything done.

Re:Who cares

[hedwards]

Because the USD is the only guaranteed way to be able to pay for your debts in the US. It's also the only form of payment accepted by the IRS for the purposes of paying your taxes.

Re:Who cares

[julesh]

Maybe you can, but I can't (all my legal relations happen in the UK, where US bank notes are not legal tender). Yet, I'd still call US notes money. Why not, therefore, bitcoin? As long as it's freely exchangeable, it seems to me to meet the definition.

Re:Who cares

[GPLHost-Thomas]

It is also backed by the fact you can pay your taxes with it.

Re:Who cares

[drinkypoo]

If it proves that people want Bitcoins enough to steal them then it's good for bitcoin.

Re:Who cares

[makomk]

Precisely. There just isn't enough actual trade going on involving BitCoins or things you can buy with them to justify the current price; it all seems to be based around speculation.

Re:Who cares

[slim]

Now you need to give the editors some credit here. If they were financially invested in pumping Bitcoins up, this article certainly would not help.

*Obviously* the editors are now short-selling Bitcoins. Do keep up!

Re:Who cares

[feepness]

It's mainly backed by the expectation that the US will honor its debts in the future, and will be able to do so because the US economy is productive enough to provide the resources to do that

Perhaps we should stop growing our debt dramatically faster than our GDP if that is our intent.

Re:Who cares

[zeroshade]

BitCoin is completely anonymous until the point at which you want to convert it to something like USD. At that point, the only reason why it's no longer Anonymous is because the payment of USD is able to be tracked. The only information attached to any bitcoin is a cryptographically secure hash, there is nothing that links any individual person to any individual hash.

Re:Who cares

[DamnStupidElf]

Well, good news, now it's *less* of a ponzi scheme because ~2% of the money got randomly redistributed!

Re:Who cares

[tompaulco]

Quite simple: Neither can be called a Ponzi scheme because neither involves paying back early investors money using the resource of new investors money.

Re:Who cares

[NoOneInParticular]

In my country the USD is just a piece of paper, roughly worth 70 cents today. It tends to fluctuate. It is not legal tender, but people will accept it if it's all you've got. Not the tax office though, for them, I have to first translate it to real money. I think most of USD's value is speculative.

Re:Who cares

[hedwards]

Yes, but even in Canada or China for that matter you can still make use of it. In Canada that use would typically be to trade it in for Canadian currency and a lot of business in China is done in USD. Ultimately, anywhere you use money to buy things, the USD is a much more useful thing to have than bitcoins.

Re:Who cares

[ian_from_brisbane]

I noticed Randall of xkcd fame took down his bitcoin link. His reasoning is sound and succinct.

What was his reasoning?

Since his address has already been published, people can keep sending him donations whether he likes it or not, and there's nothing he can do to stop them.

Allinvain?

[Relyx]

The victim's name was "allinvain"... Rather fitting, don't you think? Or maybe the story was made up.

Re:Allinvain?

[DamienRBlack]

His name was "allinvain", and the story sound fishy to me, but he was a member of the forum for about a years and had hundreds of posts. I don't think the name was chosen because he was just waiting a whole year before dropping his masterpiece troll.

Re:Allinvain?

[Tasha26]

Two of its anagrams are VANILLA and VILLAIN...

Re:Allinvain?

[Bobke]

He took on that nickname after the fact, obviously.
On irc, this nickname was first seen 2 days ago.

The name says it

[biodata]

It is clearly a hoax.

And nothing of value was lost.

[Anonymous Coward]

Worth $500,000 to a small group of nerds.

...and fuck all to everyone else.

Re:And nothing of value was lost.

[MBGMorden]

Not familiar with economics are you? Anything of value to *anyone else* is of some value to a good business man. Do you think the major stockholders in McDonalds actually eat that crap?

Re:And nothing of value was lost.

[KDR_11k]

Some value, yes, but not necessarily 100% of the value that others attribute to it. You have to add in risks. How likely is it that you'd be able to convert those bit coins into USD at full value? How difficult would it be to find enough buyers for that stuff? How likely are currency fluctuations (on both sides) while you hold the coins? Is it possible that too many people will lose interest in bitcoins and the value collapses?

Re:And nothing of value was lost.

[GPLHost-Thomas]

What you just wrote is also valid for any other type of good or currency. This might well happen with the USD if it continues on the slippery slopes it is right now. Have you ever considered that in one year, the amount of USD just *doubled*? What if the amount of debt + interest of it is already bigger than the principal, which might already well be the case?

Re:And nothing of value was lost.

[osu-neko]

Some value, yes, but not necessarily 100% of the value that others attribute to it.

Correct. It's only worth 100% of the value that the buyer attributes to it. Everyone else is just blowing hot air...

I'd imagine reporting it to police went like...

[Sneeze1066]

Victim - "I've had the my wallet stolen officer"
Officer - "Okay can you describe the wallet to me?"
Victim - "It was about 58KB and ended in .DAT"
Officer - "Errrrr......so was it leather?"

Re:I'd imagine reporting it to police went like...

[PenquinCoder]

Officer - Listen here meow, we don't have time to be playing these games...

Re:I'd imagine reporting it to police went like...

[deadhammer]

Officer (cont'd): ...Now, give me your license and registration. Chicken fucker! Bgawk!

Re:I'd imagine reporting it to police went like...

[ginbot462]

Good thing he didn't point his wallet file at the officer.

Sounds phony?

[Bogtha]

I read the original forum thread yesterday. It didn't sound authentic, it sounded a little "off". It sounded like it was semi-scripted, the voice was all wrong. Did anybody else get that impression?

Re:Sounds phony?

[creat3d]

The "allinvain" handle is the icing on the cake. I don't buy this.

Re:Sounds phony?

[HappyClown]

OK how about I sell them to you half price, $250k?

Re:Sounds phony?

[creat3d]

That sounds secure! Do you have any bridges left in stock?

Re:Sounds phony?

[Bucky24]

Could you post a link to the original forum thread? It doesn't seem to be linked in TFA.

Re:Sounds phony?

[osu-neko]

I read the original forum thread yesterday. It didn't sound authentic, it sounded a little "off". It sounded like it was semi-scripted, the voice was all wrong. Did anybody else get that impression?

You mean kinda like your post sounds like someone who is doesn't think logically, but just kinda "feels" their way through life using their gut and no actual thought beyond assessing the relative amount of that "truthiness" feeling everything has?

Re:Sounds phony?

[Bogtha]

Original forum discussion here.

What the hell is a bitcoin?

[pro151]

Seriously. What are they and what are they used for? Do they cost money to buy? I am old and ignorant of some of this stuff. :O)

Re:What the hell is a bitcoin?

[pro151]

Never mind. Looked it up. Idiots.

Re:What the hell is a bitcoin?

[Skarecrow77]

Check the FAQ on the website. it's too long to explain here.

The short and dirty version is "If you asked a bunch of libertarians to design a digital currency, this is what you'd get". Which isn't a wholely bad idea of course, but obviously has some issues that need to be worked out.

Re:What the hell is a bitcoin?

[Thud457]

The short and dirty version is "If you asked a bunch of libertarians to design a digital currency, this is what you'd get". Which isn't a wholely bad idea of course, but obviously has some issues that need to be worked out.

Much like most libertarians. /rimshot

Re:What the hell is a bitcoin?

[larry bagina]

If a bunch of libertarians designed it, it would be backed by gold, not GPU cycles.

Re:What the hell is a bitcoin?

[mcvos]

Rumour has it it also attracts drug traders and money launderers.

Re:What the hell is a bitcoin?

[Skarecrow77]

Which is itself silly in the first place anyway, because aside from a money sink in jewelry, and some uses in electronics and space vehicles, Gold isn't all that valuable. I don't understand why libertarians (and society in general) hold it in such high esteem.

Its main draws seem to be:
1. it's pretty.
2. it doesn't react with much so it tends to stay pretty.
3. other people say it's always been valuable so I guess I'll agree with them that it's always going to be.

It's one of those self-fulfilling economic cycles. People keep investing it it because they think it's worth something, and because the demand for it is so high, it -is- worth something... as long as people keep demanding it. etc. I have a feeling that if the societal collapse that the fringe are always predicting is "just a year away!" ever happened, you'd find that the value of gold would plummet to bupkis compared to say, the value of a tank of gasoline or a loaf of bread, cause you know.. you can actually do something with those.

Philosophically, I really don't see the difference between gold and bitcoins other than gold has a much better PR agent. Oh sure gold is tangible, but in today's digital society, how much of value is something that you'll never be able to hold in your hands? A whole lot actually. "Value" all comes down, in the end, to how many and how much people want something.

Re:What the hell is a bitcoin?

[KDR_11k]

1. it's pretty.
2. it doesn't react with much so it tends to stay pretty.
3. other people say it's always been valuable so I guess I'll agree with them that it's always going to be.

4. It can be used to impress the other sex and get you laid.

Re:What the hell is a bitcoin?

[timholman]

The short and dirty version is "If you asked a bunch of libertarians to design a digital currency, this is what you'd get".

I'd amend that to "If you asked a bunch of libertarians who wanted to put the world's economies back on the gold standard ...". Because really, when you think about it, that's what bitcoin is supposed to be - digital gold.

Consider the parallels to gold coinage: a finite worldwide supply, "mining" becomes more difficult as time goes by, and the amount of money in circulation can be reduced by coins being hidden or lost, but never artificially increased. Furthermore, the statements you'll hear from the BTC crowd are exactly like the statements from the gold money crowd - bitcoins will herald in a new era of economic prosperity, bitcoins cannot be manipulated by governments creating more of them, etc. In effect, you've got a community of speculators who are trying to make their own "gold", and get rich by doing it, provided they can make the rest of us buy into the idea. (The historical failure of gold-backed currency in modern economies seems to completely escape all of them.)

However, there is a very big difference between BTC and gold. While it is true that you cannot create more BTC, anyone (or any government) can certainly create a competing digital currency that has as much "value" as bitcoins. Who is to say that a bitcoin has more or less value than any other cryptographically-signed digital coinage? Nothing more than public opinion, and that can be manipulated.

Ultimately, I expect the BTC standard to fail, and when it does, you'll hear exactly the same claims of government / commercial manipulation / sabotage that you hear from believers in gold currency. In that respect, there will be no difference in BTC and gold at all.

Re:What the hell is a bitcoin?

[Lumpy]

The last time I talked to a bunch of libertarians, they were more of a legalize pot mindset...

So their currency would be nice fatties, 10 jamacan fatties equal to 1 california fattie... 2 blunts to a fatty, and 4 roaches to a blunt.

Re:What the hell is a bitcoin?

[volante55]

I would argue that gold will *never* lose its intrinsic value. Why? Well firstly consider that we DO need currency. It is totally impractical to go around bartering and trading for all transactions. I can't walk into a convenience store and trade a sack of potatoes for a chocolate bar, nor do I want to. Would my employer pay me with a pile of grain? How do I keep long term savings if it's perishable goods? How would online payments work? The fact that we need currency is obvious. So given that we need currency, there will always be one or more currencies that can represent purchasing power in a durable, practical, trusted form. Fiat currencies are only backed by the trust of the central bank who controls the money supply, and history shows that fiat currencies always collapse. It's always too tempting for central banks to print their way out of problems which destroys the currency. Whilst they are the most practical and convenient method of currency, they are a still B-grade form of money. So then we are left with things like Gold, Silver, or Bitcoins which cannot be created by a central authority, and are durable enough to be a long term store of wealth. Bitcoins use a "proof of work" system to control the supply via difficult computations. Well, Gold has a superior proof of work - it is created during the explosion of a supernova. It's not going to be easy for someone to go out and explode a star to get more. Bitcoins could easily be replaced by a new bitcoin network or an alternative implementation, but Gold can only be replaced by another element (eg. Silver) and there are limited elements available and pretty much all of them are not suitable as currency for different reasons (gasses - no, liquids - no, flammable or reactive - no, radioactive - no) then you filter out the non-rare and super-rare ones and you're only left with a few choices (Gold, Silver, Rhodium, Palladium) So gold will always keep its place - not necessarily as a day-to-day transaction currency, but it will always be the ultimate store of wealth because it stands the test of time as one of the few true currencies. Just look at history to see that gold has been the world's money since the beginning of human civilisation, and for a good reason!

Re:What the hell is a bitcoin?

[migloo]

What the hell is a dollar?

Re:What the hell is a bitcoin?

[zzsmirkzz]

4. It's also pretty resilient. Doesn't diminish, rust, or tarnish. Can be buried at the bottom of the ocean for 100's or 1000's of years and be recovered in all of its original glory. It hasn't been the standard for treasure/trading for the majority of human civilization for nothing you know.

Re:What the hell is a bitcoin?

[GPLHost-Thomas]

What is this Internet thing where there's only porn and child porn? Let's block all sites, just in case.

Re:What the hell is a bitcoin?

[modecx]

More like:

1) It's relatively rare, and even in the nuclear age, you can't easily make more of it. (making it stable as a currency)

Aside from the industrial uses you listed, this is what makes it valuable. Now, if you want to talk about stupidly valuated products--let's talk diamonds. The value of diamonds usually eclipses that of more rare, and in my opinion, more beautiful stones such as opal, ruby, sapphire and emerald due to an industry created around artificial rarity.

Re:What the hell is a bitcoin?

[interkin3tic]

4. It can be used to impress the other sex and get you laid.

Which explains the interest in bitcoins rather than gold among libertarians here on slashdot...

Re:What the hell is a bitcoin?

[roman_mir]

"If you asked a bunch of libertarians to design a digital currency, this is what you'd get"

- I don't know about 'a bunch of libertarians', but if you asked this one to design digital currency, he'd tell you to go to hell.

Money needs to be able to act as a STORE of value as well as unit of account and medium of exchange.

Store of value cannot be a digital abstract, which depends on some specific implementation of a digital computer to be useful.

Re:What the hell is a bitcoin?

[sznupi]

BTC kinda looks like a fairly reliable and convenient method of ranking botnets, of certifying their capacity; almost like it was meant for this by botnet herders, so they can (really) monetize their "assets" so much smoothly.

Which I guess also wouldn't be far from new age libertines, and/or the kinds of people who held gold and want again this random (but theirs) ore to be a bechmark of economies.

Re:What the hell is a bitcoin?

[Skarecrow77]

How would you define the word "value"?

Isn't value simply supply vs demand?

there are plenty of things that are rare, but not valuable because few people want them.

there are plenty of things that are in great demand, but the supply is abundant.

It is only the intersection of the low supply with high demand that creates value, the first of which Bitcoin has already planned for, the latter of which is pretty much up to public sentiment and the success of any given PR campaign.

As I said elsewhere in these comments section, the gold standard that many seem to trumpet as the solution to all woes is just as silly as anything else. The only two things about gold that makes it suitable as a currency are that 1. the material itself would make a good currency due to it's material stability and low reactiveness, and 2. people agree that it's worth something.

The latter is exactly what I've already specified above, the former is simply a matter of design. Gold is a currency standard simply because of the available metals, if you were to pick one that has be best combination of what we'd want to see in our currency, gold best fits the bill. We (as in human society) essentially chose gold to be worth something just because gold makes the best coins, not because gold itself is all that useful to society... it isn't. You can use it to plate electronic contacts so they don't oxidize, and you can... make pretty stuff out of it. That's about it. If you can design a digital currency that can't be forged, can't be artifically created, and doesn't easily degrade, you've essentially created digital Gold.

You can't use bitcoins to plate video card contacts, nor can you make a set of earings out of them, but aside from that, as a place to store wealth, they're every bit as legit as a currency as precious metals because that was the idea, all it takes is people to agree that they are worthwhile, which is how pretty much any currency works.

Re:What the hell is a bitcoin?

[Coren22]

Did you make a gold dildo or something? I can't imagine that would be comfortable...

Re:What the hell is a bitcoin?

[roman_mir]

How would you define the word "value"?

- at the minimum the actual storage medium itself must not decay over time, must be accessible regardless of the sophistication of the technologies that the holder possesses.

While gold has these properties, any digital abstract, which relies on some obscure mechanisms of retrieving the data, which is supposedly the currency does not. Even when we talk about Visa - the credit card company. If you fill your account with them with some money and then they disappear, go bankrupt, you lost the money you had with them, and they are in a much better position to still be worth tomorrow than anything like bitcoin.

It is only the intersection of the low supply with high demand that creates value, the first of which Bitcoin has already planned for, the latter of which is pretty much up to public sentiment and the success of any given PR campaign.

- I don't care if there is 1 single bitcoin available, it does not do anything for me. I still see it as worthless and not money (just like I see any government issued fiat as well). To me all fiat and all contrived contraptions that I cannot physically take and place into my vault and retrieve it at a later time and split it into small pieces to exchange for things I need is not money.

Gold is money because it passed a very long test of time, that's all I need to know - it's something that held its value relative to all sorts of products and services and commodities, while fiat, for example, was dying a terrible and not very slow death.

Gold is a currency standard simply because of the available metals, if you were to pick one that has be best combination of what we'd want to see in our currency, gold best fits the bill. We (as in human society) essentially chose gold to be worth something just because gold makes the best coins, not because gold itself is all that useful to society... it isn't. You can use it to plate electronic contacts so they don't oxidize, and you can.

- that's EXACTLY what I am looking in money.

It must stay uncorrupted, be easily reclaimed from any other use, have VERY VERY VERY FEW other uses, not be an industrial material basically, otherwise it makes no sense to sell you a product, filled with the stuff, while trying to make you part with the same stuff to pay for the product. Jewelry use is fine, as jewelry itself is money (women take real money, they aren't dumb).

If you can design a digital currency that can't be forged, can't be artifically created, and doesn't easily degrade, you've essentially created digital Gold.

- no you have not. You can't pass your digital gold to me, if I do not have the technology to take it or use it or keep it, or if I am skeptical about my ability to retrieve the valuable inside data from the medium at some later date, etc.

Unless the digital information you are passing to me is an account number in a real bank, where I can go and open the safety deposit box and retrieve physical gold from it, I am not interested.

but aside from that, as a place to store wealth, they're every bit as legit as a currency as precious metals because that was the idea, all it takes is people to agree that they are worthwhile, which is how pretty much any currency works.

- with gold it's easy. People SEE it, they can do the acid test, they can use the ultrasound test, they can weigh the gold on scales and they know what they are holding.

With your idea of money (digital abstract on some electronic contraption) - you won't get me to accept it as money, and that's where we digress completely. I just don't accept it as money and so it fails to be money.

Re:What the hell is a bitcoin?

[Skarecrow77]

Since we're probably not going to convince each other of much, just simply circle the same points over and over again, I'll let them go.

I am curious though what you think of the future of purchasing goods, which more and more seems to be going digital. You can find things online cheaper, more readily available, and with far greater selection than local stores almost no matter what it is you are looking to purchase or where it is that you live.

Some things can only be purchased online. I recently purchased a guitar online that isn't sold in any showroom. The company that sells them imports them directly from the factory in Korea, and then resells them via website and ebay. These are very highly rated guitars, and for the money there may not be a better choice... but I'm virtually required to interact with these people via digital currency, in this case the digital version of dollars.

Given your druthers and a gold based standard, you obviously aren't too likely to be mailing these people hunks of gold and waiting for them to mail you back your product. First that's an incredible theft risk, second the world moves faster than that. The world isn't what it was even 15 years ago, and digital currency is becoming required to be a part of the human race (at varying rates of acceptance, depending on where you live of course). you can't even buy food on some flights with cash any more. this isn't even to mention that I'm pretty sure that there isn't anywhere near enough gold on the planet for everybody to have their own share of it.

what is your plan for this? digital currency backed up by gold? in that I can exchange my UGC (universal gold credits) for a hunk of metal at any given time? please explain how that would differ in day-to-day use (or even in the long run) from something like bitcoin?

Re:What the hell is a bitcoin?

[roman_mir]

gold backed note, gold backed credit card, gold backed bank account.

How is it different from bitcoin? What am I going to get from a bank if I bring them 10 bitcoins? 2 fives? 10 ones? (btw., the same argument holds true against any fiat that's not backed by anything and is printed by some 'national' bank at the whim of the politicians.)

Re:What the hell is a bitcoin?

[Joey Vegetables]

Gold has a LONG track record as being an acceptable store of value. Bitcoins do not.

Re:What the hell is a bitcoin?

[Skarecrow77]

In that situation, where you are using gold-backed paper, gold-backed credit, etc. you have now defeated all the benefits that gold has as a metal suitable for coinage, because you are not using the metal itself as coinage, only the representation of it.

you must admit that on a day-to-day basis, this is no different than a hypothetically accepted bitcoin, or even dollars. wait wait, before you respond, I am aware of the difference between a backed currency and a fiat currency, I'm simply stating that the usage of the two would not differ. you'd interact with the world and purchase your goods in pretty much the same way.

assuming that we keep a fairly steady amount of gold and the world's population continues to do what it is regrettably doing and growing all over the place, we will reach a point where if you did decide to cash in your your gold-backed notes, your entire life savings can be exchanged for a quarter oz of gold or something a long those lines. what would you do with it? you can't take it down to the local supermarket and shave off the tiniest sliver of it to try and pay for your grocery bill. no obviously you're going to want the paper/plastic/digital representation of it to get any work done. it becomes completely symbolic because you're never going to actually use the metal version of your gold-backed economy.

which, I ask again, how is that different from something like bitcoin? sure with a gold-backed standard you -could- exchange it for metal, but you almost certainly never would unless you believe in some impending doom about to hit the earth, in which case I stand my my earlier statement that in the post-apocalyptic world, gold won't be very useful for a good long while. short of that, the digital and note-based representation of a static amount of tangible wealth is far more useful than the actual wealth... and all things considered, the disproportional benefit to the very earliest adopters aside, that's pretty much the same thing as bitcoin... a fairly static representation of limited static wealth.

TL;DR version is: You would never really want to exchange your digital gold-backed currency for real gold because it would actually hinder your life, so the fact that the gold exists has zero bearing on your life, and that short of mad max events, there is no tangible difference in real everyday life between a gold-backed digital credit and a digital currency approximating the rarity of gold such as bitcoin, so long as society has agreed to accept the bitcoin or something like it as currency.

Re:What the hell is a bitcoin?

[k8to]

Yeah, it has that problem.

But it also has the problem of being almost purpose-built to enable fraud, combined with the assumption that the system will be designed with perfect security, since it was explicitly designed to oeprate without oversight.

What could ever go wrong?

Re:What the hell is a bitcoin?

[osu-neko]

If a bunch of libertarians designed it, it would be backed by gold, not GPU cycles.

That's a bit unfair. Not all libertarians are idiots.

Re:What the hell is a bitcoin?

[osu-neko]

4. It can be used to impress the other sex and get you laid.

For that, it's actually less useful than more liquid assets like fiat currency...

Re:What the hell is a bitcoin?

[osu-neko]

This also overlooks the fact that there is not, in fact, a small finite supply of gold. Technically all material things in the universe are finite, but it fails on the "small" part, and anyone still invested in gold is going to have their net worth devastated by the time asteroid mining becomes common. Granted, this is not an issue anyone alive today probably has to worry about...

Re:What the hell is a bitcoin?

[roman_mir]

TL;DR version is: You would never really want to exchange your digital gold-backed currency for real gold because it would actually hinder your life, so the fact that the gold exists has zero bearing on your life,

- I hold physical stuff. I can't shave off the bitcoins at all, but with gold the abstract is backed by the physical stuff, which has the benefit of being used as money by people throughout the human history without any government enforcing that as a law.

As to the problem of rarity - there is plenty of that stuff to last for thousands more years (as if I care what happens in 1000 years from today!) and in time they'll solve their problems in their own way, and while it's possible they use some electronic version of money, somebody, somewhere, will want physical possession of it, be it gold or any other commodity. And again, this is where electronic data fails miserably - there is nothing to hold.

Re:What the hell is a bitcoin?

[lidocaineus]

Kind of amazing how badly you don't get it. But given your history I suppose this is par for the course.

Re:What the hell is a bitcoin?

[sznupi]

Some personal stalker of mine? Cute / sweet (even if quaint; too bad one which doesn't get what a collation is, NVM with "kinda" or "wouldn't be")

I had it even worse

[Anonymous Coward]

I lost $750,000 in Beenz.

Re:I had it even worse

[ginbot462]

Oh yea, I had a million in Pogs! I invested it all Birdemic: Shock and Terror.

This is a hoax

[Anonymous Coward]

Bitcoin and SA goons are currently in a pissing contest over who adds the least amount of value to the internet.

Cue space pirate cowboys

[Dishwasha]

Think of bitcoin like being out on the outer rim. Always keep a gun at your hip and always be prepared to get jacked.

Re:Cue space pirate cowboys

[Aladrin]

Actually, that's pretty accurate. Since it isn't a state-sanctioned currency, it doesn't really have any precedence in law, just like other virtual currencies. There really are thieves and conmen (aka hackers and phishers) trying to get your bitcoins.

It is very much Wild West/Outer Rim/etc.

This is not news!

[DanTheManMS]

Come on Slashdot, I love Bitcoin and all, but enough already with the blatant advertisements! Is there anything other than allegations here? Even if it did happen, is there anyone who actually expects the police to be able to do anything about this?

Re:This is not news!

[DanTheManMS]

It's still publicity, and it's still based on facts that might have never happened. I'll admit my use of the word "advertisement" was probably wrong, but it's certainly not news.

Re:This is not news!

[osu-neko]

Come on Slashdot, I love Bitcoin and all, but enough already with the blatant advertisements! Is there anything other than allegations here? Even if it did happen, is there anyone who actually expects the police to be able to do anything about this?

How is a story that makes bitcoins look bad an advertisement? And since when do the police have to do something in order for a story to be news? Do you honestly believe the police are doing something about all the other stories on /.? Out of curiousity, what do you think the police are doing about Microsoft releasing an SDK for Kinect?

I suggest

[maroberts]

..he look in the folder called 'Recycle Bin'

Eh...

[fuzzyfuzzyfungus]

If team bitcoin wants to succeed a necessary(but not sufficient) measure will be the development and reasonably easy and inexpensive availability of a suitable keystore peripheral.

For PKI purposes, the use of specialized storage modules has(at least for very high value keys in setups run by the competent) been going on for years. For bitcoin, you'd need something somewhat similar; but cheaper, easier to use, and better adapted for transaction purposes.

Any desktop OS (and most home/casual server computers and backup schemes or lack thereof) Just Isn't Suitable for the storage of data that are worth much of anything. Even if the hackers don't get you(and for ~$500,000 a mere absence of remote holes attackable with off-the-shelf toolkits won't necessarily save you, that is getting well into personal-attention-from-one-or-more-competent-operators territory...) an HDD crash, corrupted backup, house fire, etc. might.

At a minimum, you really want your keystore to be a separate, small footprint, device that accepts bitcoin payments, and can listen to requests to issue payments; but allows the user to review the requested payment(size and target) on an independent display and confirm/deny it on an independent keypad.

Unfortunately, bitcoin's rather clever cryptographic architecture just isn't as secure as the math suggests so long as the private keys are being stored in pitifully insecure ways. On a large scale, we've seen goofy crap like MMORPG logins being stolen automatically by assorted malware. If bitcoins achieve some measure of popularity and value, it won't be long before wallet.dats are being cleaned out in the same way, with especially high-net-worth targets being attacked personally.

Re:Eh...

[PhilHibbs]

From what little I know, the bitcoin system is decentralised and based on network consensus. Does that mean that bitcoin clients need to be online all the time in order to keep up to date on what's happening, and does that mean that your wallet.dat needs to be accessible to the client all the time? If so, storing it on a USB stick isn't going to work. Sounds like the network consensus model requires this element of vulnerability, in a similar way that a modern jet fighter can only manoeuvre because it is aerodynamically unstable.

Re:Eh...

[igreaterthanu]

Does that mean that bitcoin clients need to be online all the time in order to keep up to date on what's happening

No, they can download the past transaction data when they go online next.

does that mean that your wallet.dat needs to be accessible to the client all the time?

No, the wallet.dat file stores private keys and is only necessary when sending BitCoins.

Re:Eh...

[PhilHibbs]

Hm, he should have read this:

https://en.bitcoin.it/wiki/Securing_your_wallet

"A good practice is to keep at least two wallets, one as a "current account" for everyday transactions and one as a "savings account" where you store the majority of your Bitcoins.

The "savings account" wallet should be backed up in encrypted form only and all plaintext copies of this wallet should be erased. In case someone gains unauthorised access to your computer (either by physically stealing it or by exploiting a system vulnerability via the internet), they will only be able to spend the coins in your "current account" wallet. "

Re:Eh...

[Culture20]

And all transfers from your savings account wallet to your spending wallet should be done on an offline computer so that your savings account wallet is never on a computer connected to the internet, otherwise you risk a digital intruder keylogging your passphrase to decrypt the savings account wallet, or just copying it while you have it decrypted or copying the unencrypted file from bits on the drive (where you erased it, but didn't shred it because you probably use a journaling filesystem).

Re:Eh...

[GPLHost-Thomas]

What you are asking for is called ... PGP (or GPG if you like it more this way). There's projects like http://www.fsij.org/gnuk/ that could help using an external device to store the key, and have only 3 trials before the cryptographic key is erased. Like many pointed out, technology is out there, you just need to use it...

Re:Eh...

[PhilHibbs]

Does that work? Can a transaction be carried out in private and only notified to the network by one party?

Re:Eh...

[Culture20]

If it doesn't work, there's no truly secure way to store your wallet files.

Re:Eh...

[PhilHibbs]

Thinking about it, I suppose there's no reason that the notification has to come from any specific computer, so long as the crypto key matches that client's public key.

Re:Eh...

[Bucky24]

If the key is erased, doesn't that mean that someone could just do the three tries and make the $500,000 in bitcoins become unusable, rather than stealing it? Yes, there's less of a motive, but someone who's upset at the bitcoin owner (for example, because they've put encryption on their wallet) and who has access to the machine could do this.

Re:Eh...

[GPLHost-Thomas]

Exactly the same way, someone can burn someone-else bank notes... It makes no difference. The money is removed from the market, and overall, this deflates the currency (and make someone unhappy in the process).

Re:Eh...

[Bucky24]

And that's why we tend to put our bank notes in safe places. Places where it can't be destroyed. Using PGP with an erasable key is like putting your money in a safe deposit box that incinerates the contents when the incorrect code is entered three times.

Re:Eh...

[osu-neko]

And since encrypted files can have their password lost, end up deleted, etc., it means that, over time, the number of bitcoins in circulation will actually decrease as more and more are lost (unlike gold, which has an ever increasing supply in circulation, despite occasional losses).

Got to be a fake

[Quato]

Why would you keep that type of cash in bitcoin? Anyone with half a brain would at least put that kind of money in a savings account to get interest. I think it's a hoax.
The only reason I can think of is if you are running a business and want to dodge taxes. It'd also be a good way to hide money from say, selling drugs.
On a side note, I believe it is still illegal to make your own currency in the US. I don't see the government spending too many man hours solving this. If the claim is real, I think that person will never see that cash again.

Re:Got to be a fake

[fuzzyfuzzyfungus]

Given that the attacker, unless a total putz, probably covered his tracks at least reasonably well, and given that the victim is nobody in particular, I also would be surprised to see much effort put into the case.

That said, while I doubt that the feds have much interest in bitcoins qua currency, it is hardly the case that "hackers stealing data that possess value based more or less on people's belief that they do" isn't something you can interest the feds in. It would be a fun test case, for instance, to see if bitcoin secret keys could qualify as "Trade Secrets", in which case stealing them would be fairly serious business, state and federal.

Re:Got to be a fake

[DanTheManMS]

It's likely that he got the majority of those coins when they were worth much less. The $500k figure would be from using today's market price of ~$20/BTC, while even a mere 6 months ago they were less than $1 apiece. It was also much easier to "mine" them at that point in time.

Re:Got to be a fake

[rudy_wayne]

On a side note, I believe it is still illegal to make your own currency in the US. I don't see the government spending too many man hours solving this. If the claim is real, I think that person will never see that cash again.

As far as I can tell, the person didn't actually lose any real money. They lost BitCoins, which if they were converted into real money would allegedly be worth $500,000. In reality, the only thing that was actually "lost" was the time and energy used to "create" the BitCoins.

Re:Got to be a fake

[elucido]

Given that the attacker, unless a total putz, probably covered his tracks at least reasonably well, and given that the victim is nobody in particular, I also would be surprised to see much effort put into the case.

That said, while I doubt that the feds have much interest in bitcoins qua currency, it is hardly the case that "hackers stealing data that possess value based more or less on people's belief that they do" isn't something you can interest the feds in. It would be a fun test case, for instance, to see if bitcoin secret keys could qualify as "Trade Secrets", in which case stealing them would be fairly serious business, state and federal.

When you are talking $500,000 the hackers could be anybody. They could be people with the kind of knowledge to pull any hack off.

Re:Got to be a fake

[mcvos]

Why would you keep that type of cash in bitcoin? Anyone with half a brain would at least put that kind of money in a savings account to get interest.

Bank interest is laughable compared to the speed with which the Bitcoin bubble is inflating (or should I say deflating?) at the moment. I believe a Bitcoin was worth $7 around the time of the last Bitcoin story here (a few weeks ago), and if this story is to be believed, then it's now $20 per Bitcoin. If you like to gamble on pyramid schemes, this is a pretty good return on investment.

Re:Got to be a fake

[brusk]

Actually, wouldn't you have a tax issue regardless of whether you were running a business or not? If I had $20 in bitcoins that turned into $500,000, wouldn't that be $499,980 in taxable capital gains?

Re:Got to be a fake

[Golden_Rider]

Why would you keep that type of cash in bitcoin? Anyone with half a brain would at least put that kind of money in a savings account to get interest. I think it's a hoax.

I guess one major problem with that would be to find somebody actually willing to GIVE you that amount of $ for your bitcoins. That's the problem with bitcoins, like a "real" currency it has the value which people would exchange it for, but it is a bad currency because most people WON'T give you anything for it. So all people can do right now is sit on their pile of bitcoins, shouting "this would be worth $200k - if somebody would actually give me that amount of $ for it".

Re:Got to be a fake

[Culture20]

the only thing that was actually "lost" was the time and energy used to "create" the BitCoins.

Which represents no work for real creation of goods or services (the intended reason for money to be seen as valuable). I lost the saved game files for Halo on my PC; that's about how much those BitCoins were worth, and the saved games actually involved human interaction in their creation!

Re:Got to be a fake

[Fnord666]

I guess one major problem with that would be to find somebody actually willing to GIVE you that amount of $ for your bitcoins. That's the problem with bitcoins, like a "real" currency it has the value which people would exchange it for, but it is a bad currency because most people WON'T give you anything for it. So all people can do right now is sit on their pile of bitcoins, shouting "this would be worth $200k - if somebody would actually give me that amount of $ for it".

Or do something like claim it was stolen and then file an insurance claim...

Re:Got to be a fake

[DriedClexler]

Why would you keep that type of cash in bitcoin? Anyone with half a brain would at least put that kind of money in a savings account to get interest.

Yeah, I know! In a savings account, you could get one -- perhaps two -- tenths of a percent per year!

(Though you could get reasonable returns if you had it invested in a balanced, income-generating mutual fund, so fair enough.)

Re:Got to be a fake

[91degrees]

Isn't that the same with everything? Gold is valuable because it takes time and energy to extract from the ground. Manufactured goods are valuable because they take time and energy to make.

Re:Got to be a fake

[91degrees]

Why would you keep that type of cash in bitcoin?

Because if he bought them more than a few weeks ago they'd have gained a lot of value and could conceivably gain more.

Re:Got to be a fake

[tompaulco]

Why would you keep that type of cash in bitcoin? Anyone with half a brain would at least put that kind of money in a savings account to get interest.
Interest on that kind of money is still only a couple of percent a year in our current economy. I believe the holder of this money expects that bitcoin will appreciate by more than 1% annually against the dollar and so that is why they are holding it in bitcoin.
This is really the same thing as foreign exchange trading. If people think the dollar is going to fall against the yen, then they will be yen, and hold it until they decide it is better to hold dollars again.

Re:Got to be a fake

[osu-neko]

It wasn't worth nearly that much last month...

Inaccuracy in the article

[Attack DAWWG]

TFA says:

BitCoin is a form of fiat currency, meaning it only has value because people believe it has purchasing power.

The Wikipedia article says:

Fiat money is money that has value only because of government regulation or law.

That seems more in accordance with reality. As weak as the dollar has been lately, it would be very difficult for it to lose all or most of its value overnight, unless there was a major world catastrophe, because it is backed by the U.S. government. But (and someone correct me if I'm wrong) Bitcoin could crash any time because its value is given to it entirely by (gullible) people's beliefs. Heck, even stocks are backed by something, a company's performance, and those can crash overnight too.

Re:Inaccuracy in the article

[Skarecrow77]

Depends on what's going on in said country.

US currency lost half its theoretical purchasing power in one day in (I believe) 1938 when the US government re-assigned the dollar-to-gold exchange ratio to be nearly half what it was before... which was of course was sort of a thumbed noise at the populace at that point anyway as they had outlawed private gold ownership 6 months beforehand (no, really. look it up. private gold ownership didn't come back until the 1970s).

Then of course you've got 1930s Germany where the government's confidence problems combined with rapid currency printing to produce inflation so bad that a literal wheelbarrow full of cash wasn't enough to buy a loaf of bread.

Re:Inaccuracy in the article

[Kjella]

They're not really that mutually exclusive, fiat money is only representations of value unlike coins of precious metals. If anyone could print dollar bills, the value would be almost zero. However, that is not enough or the Zimbabwean dollar (2008) or the Papiermark (1920s Germany) wouldn't collapse. Sure there are taxes but that use case is marginal, in any collapsed economy you could get enough "junk money" to pay those with a few US dollars.

As weak as the dollar has been lately, it would be very difficult for it to lose all or most of its value overnight

Practically impossible, because there's a huge domestic market with wages in dollars, stores in dollars, loans in dollars, people that will continue to need dollars no matter if it collapses on the international market. Speculators can forego the USD completely and trade in euro or yen or huan or gold or whatever, but most people can't.

That's the essence of what's wrong with Bitcoin, there's no sand in the machinery so to speak. There's nothing to give the short time assurance - like between when you get your paycheck and pay your bills - that the currency will be remotely stable. Without that nobody but speculators will use it, and they'll only be speculating against each other which is a zero-sum game.

Re:Inaccuracy in the article

[TheSync]

US currency lost half its theoretical purchasing power in one day in (I believe) 1938 when the US government re-assigned the dollar-to-gold exchange ratio to be nearly half what it was before... which was of course was sort of a thumbed noise at the populace at that point anyway as they had outlawed private gold ownership 6 months beforehand

The background is that from 1928-1933, the Federal Reserve allowed the value of the dollar to rise steadily (aka deflation). At first it was to "pop the stock asset bubble" and to avoid loss of gold reserves to France, but then even after the stock market crash, there was a conscious decision not to devalue the dollar because of the large number of "gold clauses" in private contracts that required payment in dollars equivalent to an amount of gold.

The feeling of President Hoover was that too many people had mortgages with gold clauses and they would become much more deeply indebted as they would be paid in devalued dollars at work but have to pay back in gold equivalents. Thus he opposed devaluation.

But FDR decided that the federal government had the power to change all US contracts to ban "gold clauses", and pushed the gold clause ban through the Congress in 1933. Then he devalued the dollar, and also prohibited private gold ownership to lock down the gold flows and to avoid an underground gold economy that would sink the devalued dollar economy.

Countries that went off the gold standard earlier (such as Britain and Scandinavian countries in 1931, or Spain that never went back to the gold standard after leaving it during WWI) ended up with far less economic devastation during the Great Depression than the US.

I personally think FDR did a lot of stupid things during the Great Depression, but I have to admit that finding an acceptable way to devalue the dollar was the right thing to do. A mild recovery started in 1933, and probably the economy would have recovered fully during the late 1930's if FDR did not push through his other New Deal policies.

Re:Inaccuracy in the article

[blueg3]

The claim "has value only" on Wikipedia is a little inaccurate. There are a lot of reasons that a particular fiat currency has more or less value that are only indirectly because of law. However, a fiat currency ultimately has legitimacy as a currency and is made worthwhile by law. (A common way this is done, as in the US, is that it is the currency with which you can pay debts and taxes.)

In contract, a private currency is not given legitimacy by law. It may be given legitimacy through some other means (such as backing in another currency), or it may be granted no legitimacy at all (like Bitcoins) and have value solely based on its buying power.

Really, what is currently granting Bitcoin any value at all is that it is fairly easily convertible into US Dollars.

Re:Inaccuracy in the article

[glodime]

I see your Wikipedia article quote and raise a quote from merriam-webster.

money (as paper currency) not convertible into coin or specie of equivalent value

and a quote from N. Gregory Mankiw as cited in your Wikipedia article.

Fiat money, such as paper dollars, is money without intrinsic value: It would be worthless if it were not used as money.

Re:Inaccuracy in the article

[pseudorand]

> because it is backed by the U.S. government

The U.S. government has no such power to give the dollar value.

The dollar has value because there's a lot of people who owe money in dollars and a lot of demand for the labor those people can provide and the stuff those people have and could sell.

For example, I owe about $200k on my house. I have to pay that amount to my bank over time and I have to pay it in dollars. I'll do a lot of systems administration and programming for you if you give me some dollars so I can pay my bank and keep my house. The dollar has value because I am (and millions of others are) willing to do something in exchange for dollars. And this isn't likely to change because I owe dollar-valued debt. Even if I could all of the sudden buy my food and gas and clothes in some other currency, I'd still have to exchange that currency for dollars to pay my mortgage.

The dollar could devalued in two ways:
1) If the government printed loads of dollars, gave them to some unsavory Wall Street character to took a senator golfing one time, and then that jerk wrote me a check for $200K to code him up a website, I'd pay off my house and then be more than willing to do systems administrating and programming for bitcoins (assuming I could by other stuff I needed with those in bitcoins). If that happened on a large scale, inflation would devalue the real purchasing power of the dollar.

2) If all of the sudden no one needed programming and systems administration and I could no longer get work, I'd end up having to default on my mortgage. The bank shareholders (who all have houses and therefore don't need mine) would then try to sell my house, but because no one else had any work either, no one would be able to pay them the $200k I didn't pay and they would end up loosing all the money they lent me, despite having the house itself as collateral.

#2 really an complete economic collapse rather than a devaluation of the dollar. It's impossible because we all need food and energy an shelter to live, so there will always be demand for something. And America produces food and energy and weapons and entertainment and all sorts of stuff heavily in demand around the world. So whoever is producing the American goods and services heavily in demand would be willing to pay the bank something for my house, so the total economic collapse scenario is simply impossible without some event that severely reduces the world population (and with it the demand the drives the economy).

Now you might ask why the bank wouldn't trade my house for bitcoins (or perhaps Yuan) instead of dollars. It's because the bank's shareholders really want to exchange my house for food and energy and entertainment and weapons. And who produces those things? Americans, of course. Americans who need dollars to pay their own mortgages. And the bank known this. They'll demand dollars from someone for my house because that's what the people producing the things they want will demand from them.

So what about #1. As luck would have it, between the Federal Reserve and the U.S. Treasury, we've printed (or made promises to print) trillions of dollars in the last few years. But the banks and corporations who got it are sitting on it. As it turns out, they don't want a website, or at least they're not willing to pass all that money along to me to code one up for them. Eventually all that money could erode our economy, but that all depends on what happens for it. It they had me code up a website at a price that allowed me to just pay off my mortgage, and it turned out no one wanted to use that website, then I'd have a house but the cost of insurance and utilities would dwarf my former mortgage payment due to inflation. If instead they had me build a website that did something really useful (and if we also used all that money to fix roads and invent cheap, efficient electric cars and clean fuel and cheap ways to cure cancer), Id still pay off my house, but we wouldn't see inflation. My electric bill wouldn't go up because

Re:Inaccuracy in the article

[osu-neko]

...it would be very difficult for it to lose all or most of its value overnight, unless there was a major world catastrophe, because it is backed by the U.S. government.

What does "back by the US government" mean in this context?

The US dollar is backed by the goods and services people will give you for one. This is based entirely on their belief that it has value. If people decide it has no value, there ain't a damn thing the US government can do about it.

"the end"

[rarel]

Between the now completely humourless polls and the numerous slashvertisements for Drupal and now Bitcoin, it's now clear that /. has become just another corporate shill machine. Even the Ask Slashdot crowds aren't even trying anymore ("How can I get rid of undesired email?"... no, REALLY? wtf...)

Sorry, I can't take it anymore.

I'll miss you.

Re:"the end"

[Bogtha]

the numerous slashvertisements for Drupal and now Bitcoin, it's now clear that /. has become just another corporate shill machine

How on earth is pointing out a major security breach "shilling" for BitCoin?

Next up: Articles about Sony's security breaches are secretly paid for by Sony!

Re:"the end"

[Skarecrow77]

I'm hoping it's the company that owns that new chinese supercomputer built out of GPUs that is secretly mining for bitcoins?

Re:"the end"

[ledow]

There was no security breach in terms of Bitcoin.

Some idiot had his computer open to abuse and lost private data that correlates to money (and the 000,000$ figure is nothing but guesswork - he didn't "invest" that amount of money in Bitcoin only to lose it - that's what he *estimates* his stuff was worth if he had tried to sell it and all he "spent" was various amount of CPU cycles amounting nowhere close to that figure). Basically, he has his "credit card" number stolen. That's not a breach of the system, just a breach of his inadequate security procedures surrounding something he considered to have a value of several years earnings.

Basically: Pillock.

Having said that, I have to agree with the OP. In the last year, I've come closer to never returning to this site again than I ever have in the past. I don't even know why I have it on my "always open" list of sites, probably force-of-habit more than actual interest.

Re:"the end"

[tixxit]

I've actually noticed a huge amount of articles on Slashdot for bitcoin. However, not a single one of my nerd friends or I have ever discussed it nor read about it in any other news source. Either I've just completely missed a Big Thing, or /. is giving undue front-page time to bitcoin.

Re:"the end"

[Lord Ender]

You seem to be confusing bitcoin with egold. Bitcoin is an open source project, not a corporation.

Re:"the end"

[hackstraw]

If its any consolation, the website still sucks. WTF is up with not being able to click on the web browser window without it doing some kind of repositioning or folding things up and down? WTF is up with phantom comments with no score being floated to the top? Where have the useful comments gone? It seems as though the moderation system is broken. Why is hijacking a thread the "way to do it?" Where did the login to post a comment go? As far as web design goes, slashdot has become the worst of all popular sites that I visit. I can't think of a close second.

Re:"the end"

[metrometro]

In what way is Drupal corporate? Seriously, explain it to me. Because it seems pretty FLOSS and community supported to me.

Re:"the end"

[Squiggle]

There is another possibility: that bitcoins could become a very big thing; that right now might be some of the critical challenges/successes and other news sources are missing the story. The existence of a decentralized electronic currency that works well and is accepted as payment in as many places as a credit card would drastically change the world economy. Bitcoin may fail and disappear, but even in that case it is worth watching so we can learn from its failures.

In any case, many of my other news sources are talking bitcoin, so it certainly isn't just slashdot.

Re:"the end"

[HBI]

Amen to this. This site seriously blows nowadays.

Re:"the end"

[OnePumpChump]

It highlights the assertion that there is actually value to BitCoins, thus possibly making them look appealing.

How many Bitcoins can I get for my Flooz?

Re:"the end"

[OnePumpChump]

It is secretly supported by pharmaceutical manufacturers in order to support sales of migraine medication.

Re:"the end"

[artor3]

Since you apparently need it explained... You're supposed to think "that would never happen to me, I'd secure my things." You're left with the impression that bitcoin's legit, and the "security breach" doesn't affect your thinking.

Re:"the end"

[makomk]

Bitcoin seems to be a big thing in parts of the geek community - it's not just Slashdot that has a lot of references to it. (I've even kinda encountered it at a virtual club in Second Life I frequent, of all places!)

Re:"the end"

[slim]

Can you "secretly" mine for Bitcoins?

Surely every mined bitcoin has to appear on the network.

I suppose you could obfuscate it by spreading your mined coins across many wallets.

Re:"the end"

[SleazyRidr]

It makes Bitcoin sound edgy and exciting.

Re:"the end"

[Skarecrow77]

not secret as in "nobody can tell it is doing it", but secret as in "its stated function is something else, but here is what they really want it for".

was making a reference to several sarcastic comments on the news article talking about the supercomputer from a few days ago.

Re:"the end"

[Lunix Nutcase]

How many Bitcoins can I get for my Flooz?

That depends. How many beenz can I get for that flooz?

Re:"the end"

[Lunix Nutcase]

He's referring to all the shill reviews of Drupal books from Packt Publishing.

Re:"the end"

[Lunix Nutcase]

And what's sad is that after they spent all that time making an even shittier version of the website they still couldn't implement Unicode support.

Re:"the end"

[Cro Magnon]

Yes, it does. But I like my money boring.

Re:"the end"

[Gryle]

Odd, this is the only story about Bitcoin I've ever seen on Slashdot. Must be something in the user preferences.

Re:"the end"

[osu-neko]

I've actually noticed a huge amount of articles on Slashdot for bitcoin. However, not a single one of my nerd friends or I have ever discussed it nor read about it in any other news source. Either I've just completely missed a Big Thing, or /. is giving undue front-page time to bitcoin.

An alternate explanation would be that you and your friends are not, in fact, the center of the universe.

Whoops

[Attack DAWWG]

Whoops--I meant to quote a bit more of TFA:

Like most major worldwide money systems, BitCoin is a form of fiat currency, meaning it only has value because people believe it has purchasing power.

That's the important part. Bitcoin is not like most major worldwide money systems.

Re:Whoops

[Dragonslicer]

The similarity is that they have no intrinsic value, but only have value because people will take your currency in exchange for real goods and services. The difference, of course, is that typical currencies have their value backed by a government, which is (usually) a stable organization that has the legal authority and, if necessary, the force of arms to guarantee the currency. BitCoin, on the other hand, has nothing backing it besides the word of some people that you've never met.

Re:Whoops

[superwiz]

That's not what "fiat" means. "Fiat" means by the virtue of having been ordered by an authority. It does NOT mean through a commonly accepted practice. Since no legal authority decreed bitcoin to be the only currency in which exchanges can be made, bitcoin is (by definition) not a fiat currency. I don't care what Wikipedia says. I am not about to go editing an article on a topic that is so controversial that getting it right would mean wrestling with egos of all the fanbois and all the hatebois.

Re:Whoops

[Attack DAWWG]

That's exactly what I was saying. Wikipedia did not say that Bitcoin is a fiat currency. I was quoting TFA, which said that, and I was pointing out that TFA was wrong. My (separate) Wikipedia quote above said pretty much what you are saying.

Re:Whoops

[Americium]

Bitcoin is also has a finite limit of bitcoins ever produced, and grows at a rate than is less than linear.

Real currency and gold reserves are growing exponentially, along with the supply of goods and services, which keeps prices flat.

People tend to overlook this major flaw which makes the currency unpractical to ever use as deflation would be extremely high and hoarding would be a huge problem. Inflation discourages hoarding, which is a reason to use fiat currency.

Re:Whoops

[roman_mir]

BitCoin is a form of fiat currency

- nope. Fiat means 'by decree', it's a way for a government to dictate what currency is, BitCoin is not dictated by a government.

Re:Whoops

[glodime]

See my previous comment. "Fiat money" has several definitions.

Re:Whoops

[superwiz]

Oh, but bitcons do have intrinsic (albeit esoteric) value. They are created by producing a solution to a computationally-intensive problem.

Re:Whoops

[glodime]

You'll have to explain that a bit further. From my perspective, there is no intrinsic value to a string of 0's and 1's that are difficult to guess.

Re:Whoops

[osu-neko]

The difference, of course, is that typical currencies have their value backed by a government...

If that was what backed up government issued currency, it would be worthless. It's backed up by the goods and services you can buy with it.

...which is (usually) a stable organization that has the legal authority and, if necessary, the force of arms to guarantee the currency.

The value of a currency cannot be backed up by force of arms. Now, if the government will sell you guns for your currency, that would, in fact, back up its value, but I know of no government that backs up its currency with firearms. ("The bearer of this note is entitled to one AK-47." XD)

Re:Whoops

[jeek]

Explain that to Verisign.

Re:Whoops

[superwiz]

The bitcoin network becomes a distributed repository of all these solutions. Since sha1 had been used and is still occasionally used, cracking it has a utility. Having an accessible repository in which such solutions can be looked up is, at least, of theoretical value. It doesn't mean much to those who don't care to crack sha1. But if cracking it has value to some people, then it produces value for them. The fact that it's represented with 0's and 1's is hardly important. All (ok, virtually all) information in the modern world is ultimately represented with 0's and 1's.

Re:Whoops

[superwiz]

By the way, and I am afraid this will inspire the traditional "scarcity has no inherent value" debate, verifyably scarce fungible commodity has value as an enumeration token. As the current descent into inflationary policies shows, varifyable scarcity of exchange tokens which are not based on a physical commodity is actually quite difficult to achieve.

Re:Whoops

[glodime]

I don't see how a distributed repository of all the solutions has value. Particularly, how an individual with a small number of those solutions get money for their knowledge (assuming bitcoins are no longer used as money). I'm not familiar enough with bitcoin to know if yours is an accurate description.

LulzSec Connection

[Polonious]

At http://forum.bitcoin.org/index.php?topic=16457.0 the victim allinvain stated that, "a very large chunk of my bitcoin balance gone to the following address: 1KPTdMb6p7H3YCwsyFqrEmKGmsHqe1Q3jg" That just happens to be the same address for donations to LulzSec on some of their ASCII banners.... http://pastebin.com/88nGp508

Re:LulzSec Connection

[gl4ss]

so his money went to phone-ddossing the feds? how is he going to explain that to the feds?

Re:LulzSec Connection

[galaad2]

that pastebin link is a FAKE, the lulzsec donation address has been changed to the one involved in the heist, the perpetrators are trying to cover their tracks and you fell for it.

The real lulzsec donation address is another one, according to https://thepiratebay.org/torrent/6467131/Bethesda_internal_data

the torrent description makes it clear: 176LRX4WRWD5LWDMbhr94ptb2MW9varCZP

Re:LulzSec Connection

[Jonboy X]

I think you just hit the nail on the head! Either...

1) Someone in LulzSec stole this dude's wallet
2) Someone in LulzSec fabricated the whole story (most likely, IMO)
3) The thief stole the BC and "donated" it to LulzSec in a bizarro Robin Hood-esque gesture
4) The pastebin is fake or something

Re:LulzSec Connection

[biodata]

5) Someone wants to spread Lulz-linked FUD

Re:LulzSec Connection

[Polonious]

Well at least some of the money (0.31337BTC) went to the LulzSec: http://blockexplorer.com/tx/2a09f8ca584dd60beff72e3b09337c4886653eecdc915e9e7d4588ecca127504#i1155235 There's a connection, but I agree it's pretty tenuous. There's never been much in the LulzSec address either. They wouldn't be dumb enough to dump anything substantial there. If that was my account I'd immediately send out any donations to that address to traceable bitcoin addresses (a la "please donate to my blog") to frustrate the authorities looking for them.

Re:LulzSec Connection

[zeroshade]

It's amusing when you realize that both addresses could be lulzsec donation addresses unless you can say with certainty that the first address belongs to someone else....

Market liquidity?

[torako]

Would it even be possible to sell the coins for $500000? Is the market at a given time big enough to actually fulfil such a sell order?

Re:Market liquidity?

[nedlohs]

It's two days volume, so not without pushing the price down a fair chunk.

Re:Market liquidity?

[Chapter80]

It's two days volume, so not without pushing the price down a fair chunk.

No, the past 30 day's volume on the largest exchange (Mt. Gox) is $24 M. So $500K spread out over a week wouldn't be much of a blip at all. $500K spread over a month would be an extra 2% volume.

I think the thieves have a bigger challenge: How to get it out. The money is very well tracked in the Block Chain. They'd be wise to launder it thoroughly first. And every act of laundering can be tracked. So they need to do it via Tor.

They have quite a challenge on their hands.

Re:Market liquidity?

[nedlohs]

OK, 1 day's volume then.

Sure you could sell it over a month or two, but that isn't the same as doing it i none go, which is what "Is the market at a given time big enough to actually fulfil such a sell order" means.

"And nothing of value was lost"

[erroneus]

Bitcoin is unofficial currency. In many respects, it is essentially the same as WoW money. We have seen cases and claims of theft and other issues surrounding the use, abuse and exchange of World of Warcraft items, assets and cash for real world money. Law enforcement has, in those cases, abstained from much if any intervention in those matters. At the moment, I suspect that Bitcoin is viewed as similar. This may change but at the moment, I'm thinking that this $500,000 burglary will not be recognized as a loss of value.

Re:"And nothing of value was lost"

[RivenAleem]

No, I honestly believe that WoW gold has a more _real_ value than Bitcoins, and I'm not even .

Re:"And nothing of value was lost"

[slim]

I think that might be a feature -- to some people -- rather than a bug. The libertarians and crypto-anarchists wanted a currency that wasn't controlled by a government. As such, would they really want the law-enforcement arm of that government to step in and investigate theft of that currency?

It's endlessly fascinating to me, I have to admit. The minute the law regards bitcoins as having value, is the moment they expect people to pay tax on bitcoin income. Presumably that tax will be payable in national currency...

Re:"And nothing of value was lost"

[blueg3]

It pains me to admit that Bitcoins are more legitimate. While if someone steals your WoW gold, you have *some* recourse, it's much harder and more expensive to convert between WoW gold and USD than it is to convert between Bitcoins and USD.

Re:"And nothing of value was lost"

[arglebargle_xiv]

I'm thinking that this $500,000 burglary will not be recognized as a loss of value.

Exactly. So someone stole $500K of someone else's Monopoly money. Giant who-cares.

My Thought Was Similar But Different

[eldavojohn]

If the thief were to cash-out he or she would net just about $500,000 at current BitCoin-US Dollar exchange rates.

What type of moron would hand over $500,000 for BitCoins?

I mean, I understand that you can probably get small transactions honored through some super shady site but ... does anyone really think that they're going to one day be able to take that big bank of BTC and get half a million in cash for it from someone?

Aside from the lack of verification of this report I have to wonder if that whole premise of "being worth $500,000" is flawed. Those coins are only worth what someone will pay for them -- maybe some products online you could buy with them. But I highly doubt the market is that robust (yet). And I doubt it will ever reach that level.

I don't doubt that there are early farmers out there sitting on hundreds of thousands of dollars in BTC just enjoying the hilarious deflation that is taking place. What I doubt is that anybody will ever be able to redeem those for what the "market" says they're worth.

Re:My Thought Was Similar But Different

[next_ghost]

Those coins are only worth what someone will pay for them -- maybe some products online you could buy with them.

Thank you, Captain Obvious. That's pretty much the definition of money.

Re:My Thought Was Similar But Different

[MBGMorden]

BitCoins are closer to baseball cards than money right now.

Baseball cards have individual value that varies depending on what card you're talking about. Condition plays a major role in the determination of that value, and in general the value lies in the item itself.

Bitcoins have none of that. In every facet imaginable, they are a currency. They have no intrinsic value outside of being able to exchange them for something else.

Re:My Thought Was Similar But Different

[Sprouticus]

I would guess the value is based upon what the person PAID for them, not their current worth. Which is pretty damn volitile right now if I understand things correctly.

Re:My Thought Was Similar But Different

[ncmusic]

Really baseball cards as currency? They don't have any value other than what someone wants to pay for them, like pretty much everything else.

Re:My Thought Was Similar But Different

[edremy]

It's not obvious to a lot of people- folks think objects have value. Listen to any gold bug discuss the intrinsic value of gold, as if it has some inherent value beyond what people will pay you for it. Or, if you'd prefer, all the people who can't sell their house because they can't get what they paid for it and it's "Worth more"

Lots of people assume that various objects (including paper or virtual money) have value outside of what you can get in exchange.

Re:My Thought Was Similar But Different

[DamienRBlack]

About $2 million is traded at mt gox every day. And it is always going up. You could get $500,000 in about a week without effecting prices much. No problem.

Re:My Thought Was Similar But Different

[MBGMorden]

My whole post about describing how baseball cards are NOT currency. Read closer next time . . . .

Re:My Thought Was Similar But Different

[Anonymous Coward]

I mean, I understand that you can probably get small transactions honored through some super shady site but ... does anyone really think that they're going to one day be able to take that big bank of BTC and get half a million in cash for it from someone?

You should stop calling people morons when you're clearly the fucking retarded idiot here. People ARE paying money for bitcoins. I'm pretty sure he could've sold it over time. They're traded for ~$19 right now, you could make a hefty sum and don't worry, there are plenty of buyers.

Re:My Thought Was Similar But Different

[cdrudge]

No. Their value is what someone would pay you for them, not what you paid for it. A standard $30k car that you bought 10 years ago isn't worth $30k anymore because no one would pay you $30k for it. A stock that you bought at $20 that has dropped to $10 will only get you $10 if you traded it.

Re:My Thought Was Similar But Different

[L4t3r4lu5]

Not really. Money in most contexts refers to fiat currency, i.e. tokens of value prescribed by law, typically by it being the only method of paying taxes. Bitcoin is a medium of exchange, or itself a commodity traded in barter. It is not money.

Re:My Thought Was Similar But Different

[Lumpy]

Like real world FAKE currencies...

Real currencies like the Gold eagle coins that are real coins made from real gold have a value outside of currency. you can turn them into jewelery, melt them down, etc....

IF your currency is not based on Gold/Silver/Baby Bald Eagles/Dodo Eggs then it's a FAKE currency.

Re:My Thought Was Similar But Different

[Lumpy]

Really?

I bought a $30,000 car 3 years ago and right now I can get $60,000 from it. It's a GM prototype from the Heritage center that was sold off when GM went bust. The market for these rare cars has rebounded like a monster...

Re:My Thought Was Similar But Different

[LordNicholas]

Listen to any gold bug discuss the intrinsic value of gold, as if it has some inherent value beyond what people will pay you for it.

Intrinsic value- I do not think it means what you think it means. If no one will pay me money (jewels, food, ammunition) for gold, it is still useful to me. I can make conductive wiring, heat sinks, and pretty decorations out of it. I can use it to treat some forms of cancer. This is in contrast to something like a dollar bill or a Euro note- if no one will pay me for it, I can use it for... toilet paper? Bedding? I do remember hearing stories about people burning Marks for fuel in the Weimar Republic days.

Re:My Thought Was Similar But Different

[EastCoastSurfer]

That's why the person you responded to said "standard" car. Of course if you're buying rare collectible items that is a completely different scenario.

Re:My Thought Was Similar But Different

[hedwards]

The coins will have to be laundered anyways, so smurphing them isn't likely to be a problem. Whoever it was that cracked the security and stole them has a buyer or method of trading them. I wouldn't be surprised if the cracker wasn't themselves in with organized crime and doing it for a commission.

Re:My Thought Was Similar But Different

[whoever57]

Real currencies like the Gold eagle coins that are real coins made from real gold have a value outside of currency. you can turn them into jewelery, melt them down, etc....

The problem with your statement is that that gold has little intrinsic value. It is not a terribly useful metal (it has uses, but a lot of gold is used for purely decorative purposes). It has been estimated that 19% of all gold that has been mined is in reserves. Plenty more has been used to make objects that have no utility and hence their value is determined by the value of the gold (do you see the circular nature of the value of gold now?). If you melt down a gold coin, you have what exactly? Just gold -- you can think of this as an "unmanufacturing" process, in which a product is turned back into its raw ingredients. In essence, gold's value today is determined in the same way as a fiat currency -- people believe it has value. But if governments sold off their reserves, its value would plummet.

Re:My Thought Was Similar But Different

[Vegemeister]

Yet the value of a gold coin as a currency far exceeds the utility of the constituent gold. Just as the value of a dollar bill as a currency far exceeds the value of the paper it's printed on.

Re:My Thought Was Similar But Different

[TheCarp]

You do have a point. However, I think your point needs one thing here... the current exchange price of a bitcoin is about $19. Yes I fully expect I can get $19 for a bitcoin. I have done it, I have cashed out the money, I was quite happy.

The real issue that you are getting at but not saying explicitly is the depth of that price. Look at the depth charts and you will see... yes you can sell a few btc for $19...but the more you want to sell, the lower into the bids you have to go to get them sold.

Now you COULD put up an ask at 19 and just let it sit there until it is filled, but, all you will be doing is essentially capping the sales side of the market and forcing everyone who wants to sell to come under you, and drive down the price.

All this is a little hard to quantify since mtgox has a trading API so we have to assume that there are automated trading bots out there, capable of responding to the market in real time. As such, the depth charts are misleading since they can't account for the orders that have not been placed yet, but will be placed in response to such moves.

Re:My Thought Was Similar But Different

[Mister Whirly]

Unless someone actually pays you $60,000 for it, you are simply speculating at the value. I also would not consider a rare prototype a "standard" car either.

Re:My Thought Was Similar But Different

[bluefoxlucid]

You have five hundred thousand dollars in BTC. Goldman Sachs it. Sell some, buy back at a higher price--from yourself!--then sell at higher, buy at higher, sell at higher ... buy some from the market, some from you; then sell back to the market, buy about half your own stock, let others catch up ... your actual money bobbles up and down, so does you BTC ... sink yourself, get down to $400,000 by loss, but with the same BTC, except now those BTC are worth $7.5M, and start selling like crazy at the new inflated price. GMS did it, so can you.

Re:My Thought Was Similar But Different

[operagost]

"Laundered"? Let me check my dictionary. That reminds me of that time we tried to steal fractions of a cent and I misplaced the decimal point. I always get little details like that wrong.

Re:My Thought Was Similar But Different

[psm321]

What if it's based on paper that you can make origami with or burn as fuel?

Re:My Thought Was Similar But Different

[ImprovOmega]

That's all money is, a commodity traded in barter. We collectively agree that it's worth something and carry on as if it is. Same thing with bitcoin. Many fiat currencies in the past have failed the mass delusion test, no one would accept them because they didn't believe in them. All they were good for was paying your taxes. Essentially "money" is whatever people decide is money. No matter what, people have to accept it for it to be useful.

Re:My Thought Was Similar But Different

[operagost]

The problem with your statement is that that gold has little intrinsic value. It is not a terribly useful metal (it has uses, but a lot of gold is used for purely decorative purposes).

Why do I keep hearing this? You only forgot to mention, "you can't eat gold"! Gold has MANY uses, especially in electronics. It is a noble metal, which is a very special property. And a decorative purpose is still a purpose. Claiming that gives something no intrinsic value means that many "decorative" items have no intrinsic value. People want decorative items.

Re:My Thought Was Similar But Different

[DerekLyons]

Those coins are only worth what someone will pay for them -- maybe some products online you could buy with them.

Thank you, Captain Obvious. That's pretty much the definition of money.

Well, no. Money is only valuable in terms of the goods and services people are willing to exchange for it. Bitcoins are (currently) valuable only in the terms of money people are willing to exchange to for them. The difference is roughly as subtle as hitting a brick wall at 50MPH.
 
Or to put it another way; Bitcoins currently resemble comic books or stock certificates more than they do money - they're carriers of value (within the system) rather than having value (within the system) in and of themselves. (Note: I did not say inherent value, that's a different theoretical kettle of fish.) You can't exchange them directly for goods and services, but must exchange them for conventional money first.

Re:My Thought Was Similar But Different

[smelch]

Well a house really could be worth more than what somebody will purchase it for. For example it might be worth the utility of shelter and good memories. The person who owns something also can give it worth, they don't need to buy it, they need to keep it. It is "worth more [to them than the offer price]". Gold, on the other hand, has almost no value unless you really like the way it looks, or plan to plate some connectors or build a heat shield or something. The people with a bunch of gold in a vault somewhere are just counting on the fact that somebody else will be suckered out of their items that have utility in exchange for it (probably via another currency).

Re:My Thought Was Similar But Different

[zeroshade]

You can't exchange them directly for goods and services, but must exchange them for conventional money first

Actually, you can exchange them directly for some goods and services as there are more and more organizations and companies online beginning to accept them. Thus, since you can exchange them directly for goods and services, according to your definition, bitcoins are just another currency to be exchanged to and from. No different than exchanging USD for EUR.

Re:My Thought Was Similar But Different

[zeroshade]

Which means that it's current worth is $60,000 if you can get someone to pay that much for it, not the $30,000 that you paid for it.

Re:My Thought Was Similar But Different

[next_ghost]

Or to put it another way; Bitcoins currently resemble comic books or stock certificates more than they do money - they're carriers of value (within the system) rather than having value (within the system) in and of themselves. (Note: I did not say inherent value, that's a different theoretical kettle of fish.) You can't exchange them directly for goods and services, but must exchange them for conventional money first.

Which is also true of any national currency when you leave the area where this currency is officially accepted.

Re:My Thought Was Similar But Different

[s73v3r]

Gold does have an intrinsic value: That of its abilities as a conductor. This, however, is in no way, shape, or form tied to the speculative value it has now.

Re:My Thought Was Similar But Different

[s73v3r]

Very few services, and even fewer ones that are on the level.

Re:My Thought Was Similar But Different

[ToasterMonkey]

About $2 million is traded at mt gox every day. And it is always going up. You could get $500,000 in about a week without effecting prices much. No problem.

This whole system SCREAMS money laundering.

Why would you invest in this "currency" as opposed to any other fiat currency on earth backed by a central bank? ... because it's digital??1! Money laundering.

Re:My Thought Was Similar But Different

[NoOneInParticular]

The intrinsic value of a dollar note used as toilet paper w.r.t. the value printed on it quite possibly exceeds the intrinsic value of gold w.r.t. its current value on the market.

Re:My Thought Was Similar But Different

[daedae]

So let's get this straight:

Baseball cards have a varying value depending on what somebody is willing to pay for them, but they are otherwise not backed up by anything, which is why they are not useful as currency.

Bitcoins have a fixed value based on what somebody is willing to pay for them, but they are not otherwise backed up by anything, which is why they are useful for a currency.

That looks to me like what you said, except phrased in a way that shows it makes no sense.

Alternately, Bitcoins are useful as currency because they are an intrinsically valueless concept that some people are inexplicably willing to accept them as payment, based on the idea that somebody will let me buy real money with Bitcoins. Therefore, if I say I will take baseball cards as payment, based on the idea that somebody will later buy those baseball cards from me for real money, they are also useful as currency.

Re:My Thought Was Similar But Different

[Gubbeson]

Yes, because it's digital. It's like all these patents that go method and apparatus for laundering money... ON THE INTERNET!!!one!

Re:My Thought Was Similar But Different

[MBGMorden]

No, baseball cards have a value that is reliant on their value is it relates to the object itself. A baseball card is worth something for what it is. Of course it's worth whatever people will pay for it - that's true not only for baseball cards but every other item for sale in any market, be it baseball cards, corn, wheat, or frozen concentrated orange juice.

Bitcoins have no intrinsic value to the item itself. It derives its worth not for what it *IS*, but by what you can exchange it for. It's still reliant on what people feel its worth, but the same thing is true for almost every other currency, including the US dollar. We've been off the gold-standard for ages. Money itself is only is worth as much faith as people put into it - hence inflation and fluctuating currency values vs other national currencies.

You can likely exchange either for goods and services, but again, that's true regardless of what we're talking about. I can likely find someone that would trade a boat for my car. That doesn't mean that cars are a currency though. Currencies have value explicitly and exclusively tied to their ability exchange them for something else.

Re:My Thought Was Similar But Different

[Smallpond]

For me to accept Bitcoins from you as payment only requires that I believe that someone else will accept them as payment from me. There is no requirement that they be exchangeable for "real" money ever.

For the record, that's how "real" money works also.

Re:My Thought Was Similar But Different

[Smallpond]

Gold does have an intrinsic value: That of its abilities as a conductor. This, however, is in no way, shape, or form tied to the speculative value it has now.

If that were true, then people would not be using gold plated connectors. They could spend less money on some cheaper alternative - like using larger connectors to reduce resistance. The fact that gold IS being purchased to plate connectors means that it is not being priced above its real value.

Re:My Thought Was Similar But Different

[Savantissimo]

You say that like it's a bad thing. I'm not into Bitcoins, but I don't think any government should be a party to every transaction I make. "Mony laundering" is just an elastic propaganda term for any kind of financial privacy.

Re:My Thought Was Similar But Different

[jfengel]

The fact that gold IS being purchased to plate connectors means that it is not being priced above its real value.

Not necessarily. Gold-plated connectors are substantially overrated. It's valuable in that it does not corrode, but plain copper doesn't corrode all that fast, either. Gold on cables is much like gold jewelry, applied to make people feel good rather than serve a function. Gold could evaporate and we'd get along on copper connectors without anybody noticing in the overwhelming majority of cases.

Another factor: the amount of gold used in connectors is infinitesimal. I'm not a manufacturing engineer, but I suspect it ends up costing them more to put it on the connectors than the value of the gold input. The premium paid is vastly higher than the zillionth of a gram of gold, on a false perception that it's a better cable.

Re:My Thought Was Similar But Different

[osu-neko]

A good point. However, gold bugs often assume gold has some value that, say, copper or oil don't, when in fact oil has a great deal more intrinsic value, and copper is at least in the ballpark with gold. They have more intrinsic value than a dollar bill, although less practical value for most purposes as the dollar bill is more quickly/easily convertible for any use, rather than just wiring, etc.

Re:My Thought Was Similar But Different

[osu-neko]

Really. Not sure why your example, which proves the person you're responding to's point even further, would invoke a "Really?" It's yet another example of something that is now worth a different amount than its purchase price.

Re:My Thought Was Similar But Different

[osu-neko]

Eh, maybe. A week might be pushing it if you don't want to devalue the market too much. A quarter of the entire market daily volume is a lot to unload, even over a week, without having a significant impact on prices. If I was looking to cash out that much, I wouldn't seriously consider doing it by more than one or two percent of daily volume per day...

Re:My Thought Was Similar But Different

[Smallpond]

Gold is speced in commercial and military connectors not based on beliefs like yours, but on field results. Connectors with gold plated over tin-nickel sustain more cycles and last longer in the field than alternatives. Plain copper would be useless because copper oxide is not a conductor. (its actually a semiconductor, but that's another story). Tin-nickel plating of brass or bronze contacts is used on connectors that have a lower rating than gold but the resistance increases with corrosion and repeated plug/unplug cycles. Take a look at the connectors on your cell phone. Think they are just spending the money based on looks?

If you believe the gold used in connectors is that tiny, please inform the folks who make a living recovering it from e-waste. They must be living in a dream.

Re:My Thought Was Similar But Different

[jfengel]

Monster Cables are neither military nor space. They're just expensive. I didn't say it had no use; I said that the vast majority of uses were sold to audio- and other-philes who don't know what they're getting.

I don't know about the connectors on your cell phone. Mine are made of copper.

And the people making a living recovering the gold in those connectors from e-waste are in third-world countries.

Re:My Thought Was Similar But Different

[Kalriath]

Except that real money has laws enforcing its acceptance as exchange for goods. Not so for Bitcoins.

Re:My Thought Was Similar But Different

[shutdown -p now]

The point is that intrinsic value of gold is still way, way below its current market value, not at all different from how intrinsic value of paper money relates to their market value. Yes, in absolute terms gold is, generally, more useful (it depends on the circumstances, of course). But it has no relation to the practicality of the gold standard.

Re:My Thought Was Similar But Different

[AmiMoJo]

Objects that are useful to you do have intrinsic value. Food is obvious but gold is also used in the medical equipment that helped save my life when my appendix went wrong. People would not live as long as they do without it. Houses also have intrinsic value in that they provide shelter and go a long way towards protecting your stuff from others who might take it.

Re:My Thought Was Similar But Different

[s73v3r]

Yeah, no. That's just a "free-market aplogists" way of looking at it. The fact of the matter is, the speculative value of gold right now is in no way, shape or form connected to its abilities as a conductor, and is only being driven up by fear mongers and speculators, waiting for the bubble to burst.

Re:My Thought Was Similar But Different

[AlienIntelligence]

Listen to any gold bug discuss the intrinsic value of gold, as if it has some inherent value beyond what people will pay you for it. Or, if you'd prefer, all the people who can't sell their house because they can't get what they paid for it and it's "Worth more"

Considering EVERY single country on the planet
has some holdings in gold... I believe inherent value
defers to what people will pay you for it.

IN FACT... as I am liquidating my gold holdings
[yes I know I'm probably losing money as we aren't
near peak], I have a few items... where their value,
their "INTRINSIC VALUE" is way less than the fact
that they are solid gold.

Prime example, this lighter... can't find anyone to
buy it... because it's gold value is higher than the
intrinsic value of it being a lighter.
https://lh3.googleusercontent.com/-7fN_y9Jib-Y/TXkuulIDmqI/AAAAAAAABeU/y8sTvikRj8Y/s1600/1947+Ronson+Lighter+Banker.jpg

Get it?

And it is in NO WAY NEAR the valuation basis of
real estate. That's just a stupid ass analogy man.

-AI

Re:My Thought Was Similar But Different

[AlienIntelligence]

About $2 million is traded at mt gox every day. And it is always going up. You could get $500,000 in about a week without effecting prices much. No problem.

I think the ratio to avoid problems (affecting the value) would
tend more to 1/1000 rather than 1/28.

40 weeks... and at the same time, you might make more by
not causing the market to sag. Thus, less effect.

A big push into the system over a week would cause the last
coins you trade to possibly be worth less over the course of
the week. Especially with people "waiting for a dump" which
would possibly cause a panic dump.

Smooth it out over a half year, 3/4 of a year... people will forget.

-AI

Re:My Thought Was Similar But Different

[AlienIntelligence]

GMS did it, so can you.

Ahh, good point, but lets study liquidity.

http://en.wikipedia.org/wiki/Market_liquidity

The pool GMS was playing in... Lake Baikal.
The pool bitcoin junk pushers are playing in, Lake Elsinore.

I'm sure you could do it... but they would be
shallow dives. Try it with Google Spreadsheets,
run some numbers thru it. It would be painfully
slow.

One thing though I should address here, that I
didn't in my other post. The ability to easily automate
would make the glacial pace (that's a good pun)
not that bad.

-AI

What law says it's illegal?

[elucido]

It very well might be illegal in the US but what law makes it illegal?

Re:What law says it's illegal?

[AndrewNeo]

Here's a list! http://www.ncsl.org/default.aspx?tabid=13494 (References to law in each state) The wallet file would be considered property, I think.

Re:What law says it's illegal?

[AndrewNeo]

Whoops, wrong illegal thing. That'll teach me not to read the GP.

traded some magic beans for it...

[Thud457]

That's why I keep all my money if Flooz, it's much safer!

Re:traded some magic beans for it...

[seanbruckman]

Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor.

ShutUpShutUpShutUpShutUp

[Rogerborg]

The value of WOW gold -or Elbonian Dingbats - is more relevant to the vast majority of humanity, or even the subsection that infests Slashdot.

QUICK! What's the exchange rate of WOW gold to Elbonian Dingbats! I must know!

Re:ShutUpShutUpShutUpShutUp

[VGPowerlord]

The value of WOW gold -or Elbonian Dingbats - is more relevant to the vast majority of humanity, or even the subsection that infests Slashdot.

QUICK! What's the exchange rate of WOW gold to Elbonian Dingbats! I must know!

42 WoW gold per Elbonian Dingbat.

Unless it's an Elbonian Vampire Dingbat, in which case, it's worth far more WoW gold because they're rarer.

It's a oax

[elucido]

not a hoax, an oax. Meaning some idiot made it up to pull down the value of Bitcoin.

Nobody could be stupid enough to not protect the dat file or where ever $500,000 is stored. You ought to protect your file as you'd protect your money.

Re:It's a oax

[Hazel Bergeron]

You ought to protect your file as you'd protect your money...

...in a spread of FDIC/FSCS/etc.-insured banks.

</bitcoin>

Re:It's a oax

[mcvos]

Various people on the Bitcoin forums have seen that money move around and end up at one of the exchanges. Of course it could still be fraud: maybe transferred the bitcoins to another account of himself, sells his bitcoins on an exchange, and claims they were stolen. It can't be verified or disproven until somehow people manage to link bitcoin accounts to real people, and that's supposed to be impossible.

Re:It's a oax

[Dragonslicer]

Nobody could be stupid enough to...

Any sentence beginning this way is automatically incorrect.

Re:It's a oax

[elucido]

Nobody could be stupid enough to...

Any sentence beginning this way is automatically incorrect.

Anybody couldn't be smart enough to withhold solecism and pedantry.

Re:It's a oax

[Dragon_Hilord]

Just to possibly point out a rather severe flaw, the mainline client doesn't have any kind of real "protection". No password, no "thumbdrive == key" setup, nothing. It's quite feasible.

Re:It's a oax

[Mister Transistor]

Whoosh...

The comment was about human nature, not grammatical structure.

Read again.

Re:maybe I'm not understanding bitcoin but

[Lunix Nutcase]

If it was just stolen, can't the owner take a backup copy and immediately convert them all to real cash?

How exactly is he going to immediately convert it all to cash when there aren't enough askers for that much bitcoin? Despite claims of how much all this bitcoin is worth if no one is going to pay the exchange it is nothing but worthless bits.

The culprit

[Anonymous Coward]

The culprit is described as wearing a red shirt, white gloves, blue overalls and a bushy mustache.

Honor Among Thieves

[krgallagher]

Whatever happened to honor among thieves...err I mean dopers...err black marketeers?

STOP POSTING BITCOIN STORIES

[Anonymous Coward]

Bitcoin is used by drug addicts and drug dealers to buy narcotics.

Bitcoin stories are largely pushed onto the media by the Bitcoin inventors just to get more exposure.

It's a tool for supporting crime, nothing more. Slashdot is posting too many Bitcoin stories. Just stop it already.

Re:STOP POSTING BITCOIN STORIES

[slim]

Bitcoin is used by drug addicts and drug dealers to buy narcotics.

So are dollars.

Now, you could have slipped in the word "exclusively", and you'd have had a point, but a point that was factually incorrect.

You could have slipped in the word "primarily", and you'd have had an uncorroborated claim to back up.

Even if it *is* primarily used for criminal purposes, Bitcoin is *fascinating*, and geeky. So it belongs here.

Re:STOP POSTING BITCOIN STORIES

[Beelzebud]

It's not even for drug dealers! Drug dealers want MONEY for their drugs. This is only for the people at the top of the pyramid. You go somewhere trying to buy drugs with bitcoins and you're going to get stabbed.

Re:STOP POSTING BITCOIN STORIES

[lwsimon]

Except for, you know, the sites that sell drugs in exchange for BTC. Like Silk Road, though I wouldn't trust it now that it has seen media attention. There are others.

Re:STOP POSTING BITCOIN STORIES

[Beelzebud]

Yeah good luck buying drugs on a website with bitcoins... People have gone retarded...

Re:STOP POSTING BITCOIN STORIES

[Omnifarious]

People have had luck buying drugs on a website with bitcoins, and written about the experience.

Re:STOP POSTING BITCOIN STORIES

[lwsimon]

It's very easy to do. It's also fairly easy to do anonymously, and there are ways of shipping drugs securely as well.

Re:STOP POSTING BITCOIN STORIES

[luther349]

relly i see people selling pcs and other goods and even trading them for usd.

Re:STOP POSTING BITCOIN STORIES

[osu-neko]

It's not even for drug dealers! Drug dealers want MONEY for their drugs. This is only for the people at the top of the pyramid. You go somewhere trying to buy drugs with bitcoins and you're going to get stabbed.

To be fair, I've known a lot of people involved with drugs over the years, and none of them have ever been stabbed. Drug dealers generally only stab other dealers. Stabbing customers or even potential customers is not good for business...

Re:STOP POSTING BITCOIN STORIES

[osu-neko]

If you're not interested in a story, don't click on it.

Websites judge the popularity and desire for news or articles on a particular subject based on how many people click on it. If enough people ignore stories about a topic, it'll drop off the radar.

On sites with forums, the amount of forum posts generated by an article serves as further measure for it's popularity. Indeed, for sites that thrive on discussions, a post in the discussion counts much more than simply a click on and reading of the article. So if you really want to see a particular topic covered a lot more, come in and post in the discussion of that topic!

Note: it doesn't really matter what you post. Positive or negative, as long as it's generating discussion, it's considered good and encouragement to post more on the topic.

Congrats. With your post above, you have helped ensure more bitcoin stories on /.

Fake

[Anonymous Coward]

This is probably setup to make Bitcoin look bad since the US government wants to ban it.

Re:Fake

[luther349]

the us goverment only whants to ban it becouse its a compeating currency and they passed laws along time ago shutting out the free market on currency. its a controle thing if my some act of god bitcoin was to dommanate the currency world the us govmt would lose controle of the money taxes etc. and they hate not being able to tax something to death.

Re:maybe I'm not understanding bitcoin but

[Skarecrow77]

If I understand the technology, if he were to try to sell bitcoins from a backup .dat, the bitcoin network would reject the transaction as fraudulent saying that he no longer owned the coins he is trying to transfer.

The immediate transfer would go through, and over the next 10 minutes both parties would recieve thousands of "I don't agree that this transfer is valid, invalidate it" messages from other nodes on the bitcoin p2p network.

I don't believe it ...

[garry_g]

a) who would want to collect half a million $ worth of experimental currency that can't really be used widely?
b) why would you want to keep that much money as a virtual currency?
c) why would you want to keep that wallet accessible on your PC and not on some external, removable media, or at the very least under tight lock e.g. via encrypted file?

and finally,

d) if it really did happen, he deserved losing it for being and idiot, see points a-c ...

Re:I don't believe it ...

[Anonymous Coward]

The bitcoins are real, you can look up the block chain. It wasn't worth $.5m back when he mined most of it last year. Whether the story is real is, of course, debatable.

Re:I don't believe it ...

[Megane]

a) an OCD hoarder type?
b) it was apparently only worth $25k six months ago, and you couldn't sell it all for it's current value anyhow
c) stupids gonna stupid

Re:I don't believe it ...

[slim]

Why would you want to hoard it? you ask.

Why would you want to hoard stocks and shares?

Historically, the value of Bitcoins has climbed. If it was "worth" $500K today, it might be worth $600K in a couple of years' time.

The right time to sell, and whether it's a bubble waiting to burst -- these are classic questions investors have to face.

Re:I don't believe it ...

[blueg3]

a) who would want to collect half a million $ worth of experimental currency that can't really be used widely?

IIRC, he mined it, so it was essentially free.

b) why would you want to keep that much money as a virtual currency?

Hopefully, because he hadn't sold it yet. If I'd mined that many bitcoins, I'd have sold at least by the time it bubbled up to ~30 $/BTC.

c) why would you want to keep that wallet accessible on your PC and not on some external, removable media, or at the very least under tight lock e.g. via encrypted file?

The eternal hope most people have that security breaches only ever happen to other, stupider people.

Re:I don't believe it ...

[gox]

b) why would you want to keep that much money as a virtual currency?

Hopefully, because he hadn't sold it yet. If I'd mined that many bitcoins, I'd have sold at least by the time it bubbled up to ~30 $/BTC.

You can never be sure when to sell... It's a different kind of wisdom. I would say that I would have sold @ 30$ if I hadn't been there and hadn't decided not to... :-)

LOL

[Pope]

What, your untraceable bubble-led crypto currency is at the mercy of stupid users? Colour me shocked.

Re:LOL

[Shados]

Indeed. When it comes to electronic money (hell, any money...I use paper money as little as possible), I WANT it to be traceable to me. I want it to be possible for a third party with the right certifications to be able to tell me where it went.

I just had to transfer an absurdly large amount of cash from an account in one country to another account in another country. If that transaction wasn't traceable, and I made a mistake in the transfer, I'd be screwed. I don't just want to know "It went from account A to account B". I want to be able to confirm it went from "John Doe who has an account in country A at bank X with address Z, to Jane Doe who has an acount in country B at bank Y with address ABC", and i want the institution to be able to confirm that.

Otherwise its just like paper money, and if someone breaks your window and steals it from under your bed...well, tough.

PICS!

[Kiaser Zohsay]

... or it didn't happen.

So store the wallets in the cloud

[elucido]

And allow the bit coin users to access them from the cloud to make transactions. Have the bit coin users generate their own keypair to protect their wallet, and have them protect that themselves as the entire security of their bitcoins will be determined by how they protect it. Generally speaking if they can't follow best practices it's their own fault.+

Re:So store the wallets in the cloud

[GPLHost-Thomas]

And then someone will use "123456" as passphrase (I didn't take that one randomly, this really IS the most used password), or have a trojan with a key-logger, get both key and passphrase stolen, and your back to square one. No, the current system is perfect: you have a file, and you are responsible for it. Nothing prevents you to use a cloud-based backup system with a keypaired encryption to store your wallet.dat, if you like it this way!

Re:So store the wallets in the cloud

[osu-neko]

Please tell me that was a joke... XD

...and to protect the private key for that, they can store that in the cloud, and protect it with another private key, which they can also store in the cloud if they protect it with another private key...

Time for hardware security.

[rawler]

I've long longed for a USB hardware device containing a small crypto-processor, a public/private keypair, and a button. Given a standardized interface (as standardized as USB block-devices) it would make a perfect key-solution to keep in my physical keychain to identify myself in all kinds of circumstances.

  * Need to sign a bitcoin-transaction? Let the software queue a request and press the button.
  * Need to identify yourself on the web? Again, let the site send a challenge, the browser forward it to the key, and press the button. (Possibly already possible through SSL?)

As an extension, the key could hold two keys of different "level". A common key, not requiring the button to identify me to less-sensitive services, and a button-locked key for more important purposes.

For online banking, extend the key with a small display to show exactly what you're signing, and you get rid of all the manual transactions.

Is there at least something less-standardized for this?

Re:Time for hardware security.

[xMrFishx]

Something similar to a Yubikey then? There are a few guys around here who use one, but not myself currently.

Re:Time for hardware security.

[westlake]

I've long longed for a USB hardware device containing a small crypto-processor, a public/private keypair, and a button. Given a standardized interface (as standardized as USB block-devices) it would make a perfect key-solution to keep in my physical keychain to identify myself in all kinds of circumstances.

What happens when your keychain is lost or stolen?

Re:Time for hardware security.

[drinkypoo]

What you want is an iButton. It can be used to store a crypto key, and the device itself can be secured both cryptographically and physically. I would assume that with enough effort you could get the die out of an iButton but the device is designed to prevent this, providing physical tamper security; Crypto iButtons have a crypto processor built in. Then there's Java iButtons, which include a little bitty processor and which run tiny little Java applets. They have already come and gone (ISTR you could actually buy them at one time, and not just get them at one JavaOne conference) but they seem handy. There is actually a monetary iButton but I didn't read any of the datasheets.

poop on having a button though, you just touch the button to the terminal.

Re:Time for hardware security.

[Nkwe]

Or maybe use a smartcard. A smart card contains a processor and some non-volatile memory. There are lots of use cases for these, but basically you load you private key on the card and let the card do any sort of crypto processing that requires protection. Note that the private key never leaves the card (and cannot be read from the card) if you are using it correctly.

Re:Time for hardware security.

[rawler]

Sorry, I missed the obvious need for a pincode/passphrase-type entry in the really sensitive extended version. Preferably physical, although perhaps entered on the machine can be good enough for most purposes. (If the same person installs spyware and has physical access to your key, you probably have other trust problems as well.) Of course it doesn't protect from high-tech million-dollar scanning equipment that can read keys from the chip anyways, but well, a person with that kind of money have other ways to get to you.

For the low-sensitivity applications, the chance of physically loosing the key easily beats 1) same password at all sites (one site with weak protection and you're screwed) or 2) all passwords stored locally for remembering (spyware targeting credentials and you're screwed).

Of course, the public key cryptography that this requires is also still unclear with respect to quantum computing. There are weaknesses, but it easily beats passwords.

Re:Time for hardware security.

[rawler]

Smartcards doesn't come with a button for approving signatures. You're still quite vulnerable to spyware with them, any software running with your credentials on the machine can access the smartcard and make signatures.

Besides, the point about standardization is missed since few machines have the physical hardware interface-slots in them, so I can't bring my identity with me. A standardized USB interface could work with only software driver updates to any existing machine.

Re:Time for hardware security.

[DamnStupidElf]

"LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION Dear crypto-processor USB device, please sign the following transaction: 'I transfer all my money to hacker@hacker.com' thanks LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION LEGITIMATE TRANSACTION" -- trojaned/virus-infected e-payment executable on your windows box.

Are you really going to scroll through a tiny display every time looking for hidden things that you're signing?

Re:Time for hardware security.

[rawler]

Noop. But I can ensure that when I DO important errands like banking, that the amount and target account is correct and not tampered with.

For example, my bank now are expecitng me to use a manual crypto-device and are taking good care to explain that a login-signature should always start with a 9, confirming sum transfered should always be confirmed by signing the amount to transfer (which may not be an 8-digit number starting with 9), and approving a new account, the number to sign is the new account number.

It's never hard to fool users that don't care, but there should at least be ways to make caring about security as easy as possible.

Re:Time for hardware security.

[DamnStupidElf]

I suppose it depends on how well designed your hardware crypto-device is. Does it parse the message it is signing and extract the relevant information to display? Or does it accept a "display" field from the bank and sign whatever message comes with it? And if you can only see the amount signed but not the destination account it would be open to a MITM attack on your computer/browser, preferably during a high-value transaction. Does the crypto-device verify a transaction against a list of authorized accounts stored in the device or is it the banking site doing that verification? Still, it is a heck of a lot better than most banking sites.

Re:Time for hardware security.

[KaiLoi]

Have you seen "YubiKey" : http://www.yubico.com/yubikey I use this for pretty much all my authentication now. (where posible) You can either let it auth off their servers or if you don't trust them (I don;'t) you can generate your own auth server for your key or even local auth or flat password. It's pretty cool and you could use it to generate a auth key for the applications you list. But yea.. it's the way to go. No wallet access without me pushing the button on my yubikey.

Re:$500,000 in bit coin is almost ....

[Anonymous Coward]

............... $500,000 in bit coin is worth almost 500,000, yes five hundred thousand, repeat five hundred thousand US Dollars..

bitcoin botnet

[curado]

So somebody can do a botnet wide search for all wallet.dat files and be a bitcoin trillionaire?

Still Trying....

[mlauzon]

I've installed Bitcoin on my desktop PC, however, I am still trying to figure out how to go about mining for Bitcoins, can someone point me in the right direction?

Re:Still Trying....

[DamienRBlack]

You can't mine directly in the client anymore. Check bitcoin.org's mining section. You need specialized software, and because the difficulty is so high nowadays you will have to join an online mining pool which will combine your efforts with other's.

Re:Still Trying....

[lwsimon]

You *can* mine, it just takes - on average - like 3 years to generate a block. As that difficulty is increasing with time faster than time is passing, you'll effectively never mine a block with the client. Nothing stops you from trying though.

Oh /.

[Anonymous Coward]

This thread was on Reddit 2 days ago. Here's the link: http://www.reddit.com/r/geek/comments/hzrcc/bitcoin_user_loses_25k_bitcoins_when_his_machine/

To summarise:
  * it could've never been $500k, that's purely theoretical. In practise it would be worth far less.
  * "allinvain" is a true idiot. He was keeping the coins on his main computer which had a virus on it. He was browsing the web and IRCing with it. He found the trojan the night before, had seen that his payout address was changed to another and then to fix this he "changed it back" and went to sleep. He then "moved [his wallet] to a Ubuntu linux vmware install. On the same machine."
  * It's probably a hoax

Re:Oh /.

[houghi]

This thread was on Reddit 2 days ago.

Please give the editors some time to do their job and do some real editing.
Otherwise you would see a lot of double postings and links to sites that are pure advertising instead of the original article.

You don't want that to happen, now do you?

Re:maybe I'm not understanding bitcoin but

[angel'o'sphere]

That is exactly what I would do if I was the original owner.
Transfer the bitcounts to a new "account". As long as the thief has not done that with every coin/hash/account he can likely rescue a huge part of it.
However the bitcoin network needs some "report" theft option, but I guess that could easily be abused.

Crypto

[AlfaMike]

If I had $500,000 worth of bitcoins I would definitly encrypt the wallet file and create a new one for regular use. And yeah the BitCoin stories are getting out of hand. Time to move on Slashdot.

I'm reading it went to Lulz Security

[elucido]

I'm reading that some how the money was given to them via a donation, at least thats what is being hinted at on the forums.

Whether or not he sent it to them himself and wants to deny it, or if he was hacked and they stole it, if they have it then it's safe to say it's lost forever.

Re:I'm reading it went to Lulz Security

[1s44c]

I'm reading that some how the money was given to them via a donation, at least thats what is being hinted at on the forums.

Whether or not he sent it to them himself and wants to deny it, or if he was hacked and they stole it, if they have it then it's safe to say it's lost forever.

0.33734 bitcoins went to lulzsec. It was a token donation.

To put it simply

[__aasehi2499]

.And nothing of value was lost.

Re:$500,000 in bit coin is almost ....

[DamienRBlack]

You've got that backward. The exchange rate is 1 bitcoin = $19.51. $500,000 worth of bitcoins is about 20,000 bitcoins.

Massive transfers

[alphatel]

This would explain the laundering activity that has been going on the past 24 hours. The equivalent of the entire market of bitcoins has been transferred to hundreds of accounts in 50k+ increments. Only 6.5m BTC in existence, over 8m BTC in transfer activity. If any of that starts selling, it will collapse the market down to nickels and dimes.

Re:Massive transfers

[ginbot462]

>> If any of that starts selling, it will collapse the market down to nickels and dimes.
If they did it for the LuLz, maybe that's the point.

Re:Massive transfers

[lwsimon]

I hope so. Last week, I sold off my holdings of 100 Bitcoins. If the thief sells off 500k BTC and crashes the market, I'll go take my USD2,400 that I've made from speculation and put it right back in.

And I'll encrypt the damn wallet.

Re:Massive transfers

[monkeythug]

If any of that starts selling, it will collapse the market down to nickels and dimes.

If it does, that'll be my cue to buy $100 worth and hope the price climbs back up again. And since I probably won't be the only one, it probably will.

Re:Massive transfers

[Anonymous Coward]

If any of that starts selling, it will collapse the market down to nickels and dimes.

You mean theoretical nickels and dimes.

Bitcoin is nothing more than MMO currency. It is worth something, it just not worth anything to those who don't play the game. In essence, Bitcoin is just a really boring ARG.

Re:Massive transfers

[scotjam]

That would be an interesting way for a single party to take down bitcoin - not through a technical issue / via the peer-to-peer infrastructure, but rather by creating a run on the currency by stealing a large chunk (from compromised miners' computers) and selling it on the open market. This is a threat that will always be there, and it will mean that things that are sold for bitcoin will likely always be priced in dollars (or some other benchmark currency) to sidestep the volatility of a market that can be cornered so easily by a single party.

Re:$500,000 in bit coin is almost ....

[Dan Dankleton]

You guys both fail at maths and R-ing TFA. 25,000 bitcoins were stolen. And at the exchange rate of about $20 to 1BTC, that gives... $500,000.

Sheesh, nerds today are rubbish.

And

[interkin3tic]

And nothing of value was lost.

Re:$500,000 in bit coin is almost ....

[interkin3tic]

Also, I'm not sure why Slashdotters hate bitcoin so much.

I think it may have something to do with the NEAR CONSTANT stream of slashvertising someone seems to be doing for the bitcoin economy.

It's kind of like how I didn't start off hating my coworker's kid, but hearing endless chatter about the kid's activities (which were mainly pooping) for a month, I vowed to wait 18 years, and then punch the not-a-baby-anymore in the gut. It's not that the kid or bitcoin did anything bad, it's that they've done nothing noteworthy and yet I keep hearing about them.

Re:maybe I'm not understanding bitcoin but

[KDR_11k]

Apparently the thief already did it, wouldn't surprise me if that's how he noticed it.

Hoax

[bigredradio]

This looks like a [hoax]. I can tell from some of the [words] and from seeing quite a few [hoaxes] in my time.

Re:maybe I'm not understanding bitcoin but

[Skarecrow77]

Once again, assuming I understand the technology correctly:

I don't think the original owner could do that, because as far as the network is concerned, the original theft was a valid transfer because it originated from the user's valid wallet file to a valid recipient address. The network believes that what was done was done properly, even though it was done in an improper fashion by someone who broke in to do the transfer.

The entire network relies on everybody agreeing on what has previously gone on.

Therefore, if the original owner used a backup copy to try and re-transfer the backed-up bitcoins to a new address, the network would reject it as an illegal transfer because the network doesn't believe that he has the valid right to transfer those bitcoins anymore. I'm pretty sure that the individual bitcoin clients are at the mercy of the network-at-large, and if he tries to send coins to another address he owns, the network is going to claim he doesn't have the right to do so and the transaction will be invalidated.

The best analogy I can think of is a hacker logging in to a server with a stolen username and password. The hacker does not have rightful posession of the username and password, but the server doesn't know that. the server only knows that the authentication challenge was responded to with legitimate information, so the server has to assume that the hacker is who he says he is. likewise, the bitcoin network saw the $500,000 transfer (whatever that is in BTC) as valid by all authentication protocol, so it can only assume that it was legit and act as such in all future transactions using the affected bitcoins.

Re:$500,000 in bit coin is almost ....

[SirCyn]

I thought R-ing TFA disqualified you from commenting on /.

Re:$500,000 in bit coin is almost ....

[Anonymous Coward]

How does this get modded up as informative? Sarcastic or funny maybe (although It's not really that clever).

Whether you like to admit it or not, Bitcoins can be traded for real money. And right now they can be traded for plenty of it. I started mining a month ago, and not only have I cashed out and covered the cost of my hardware and electricity, I've turned an $600 net profit - yes, a real $600 USD that is sitting in my checking account. I wasn't even an early adopter. I just did a little 4th grade arithmetic comparing the mining income to the cost of a Radeon 5850, and I acted on those results.

But you know what - You're right, Bitcoins are worth nothing. Mining is not profitable. Don't do it.

Re:That's what he gets for trusting the closed sou

[Anonymous Coward]

And he would've still been hacked if he was running Linux, because NO ONE EVER FUCKING READS THE CODE.

Stupid GNUtards.

Re:$500,000 in bit coin is almost ....

[DrXym]

However I don't believe the "real"* value of a bitcoin is at the current exchange rate, it's probably closer to $12. I think the bitcoin market has been in a bubble for the past few weeks. A story such as this might help to bring down the price, long enough for an investor to buy, and whatever forces are driving the bubble would (possibly) continue and the value would go up again.

Here is a graph of a boom and bust cycle (full article here). Here is a graph of Bitcoin exchange rates. Anyone with common sense should be hugely alarmed by the bubble which is forming or the likely outcome that will follow on from it.

Someone has to say this...

[h1q]

People here are posting for karma arguing that BitCoins are worthless?

Re:Someone has to say this...

[hedwards]

As long as idiots don't recognize that Bitcoins are worthless and we don't have any way of profiting by that, it's the logical thing to do.

Re:maybe I'm not understanding bitcoin but

[angel'o'sphere]

I don't think the original owner could do that, because as far as the network is concerned, the original theft was a valid transfer because it originated from the user's valid wallet file to a valid recipient address. The network believes that what was done was done properly, even though it was done in an improper fashion by someone who broke in to do the transfer.

Oh, I assumed the theft had stolen the file (as ind download it somewhere) and deleted the owners file.
If he indeed used the owners PC to transfer the moeny ...

The network actually works as you describe ...

bullshit

[xded]

Timeline of events:

1. [June 13, 2011, 08:47:05 pm] allinvain post on bitcoin forums
2. [2011-06-13 21:13:49 GMT] LulzSec upload of Bethesda torrent on TPB, donation account in text is 176LRX4WRWD5LWDMbhr94ptb2MW9varCZP
3. [Jun 15, 2011 1:59 PM] PCWorld story linked in TFS published
4. [Jun 15th, 2011] Bethesda Lulz text upload to pastebin, donation account is 1KPTdMb6p7H3YCwsyFqrEmKGmsHqe1Q3jg

While I didn't check timezones/hours on some timestamps, I think it's still fairly reasonable to call this bullshit. Please check your sources next time.

Re:bullshit

[k8to]

alluded.

That is the word that you want. Eluded means to avoid or hide.

Obviously.

[SanityInAnarchy]

It's supposed to be super safer, I don't get it?

Clearly you don't. And apparently, the guy who was robbed had the same problem.

The additional "safety" is in other areas -- there's no central, controlling authority, so no one can arbitrarily increase or decrease the supply of Bitcoins, whereas with fiat currency, people absolutely can do that. This is a good thing and a bad thing -- it's a bad thing in that there's no central authority which can attempt to fix the market when things go south, but it's a good thing in that said central authority can't mismanage things, or deliberately manipulate the market for their own game.

It's also anonymous, which is "safe" for other reasons.

But none of this implies your wallet is automagically safe, if you don't take steps to protect yourself. You can make your money safer than with other currencies, but this takes some effort -- the obvious solution would be to create a second "savings" wallet, generate a few thousand addresses for it, then store the actual wallet.dat (with all the private keys) encrypted and in a few thumb drives (or CDs, etc) in a safety deposit box, say. You can send money to savings without retrieving it, but you can only send money from savings by going and retrieving those drives.

Of course, you can go a step further -- you could do all that and also maintain an airgap, so you create the transaction to "withdraw" and sign it on a machine with the "savings" account, then transfer it by sneakernet to your Internet-connected machine.

And you can also take real money and leave it in big stacks on your kitchen table, with your front door unlocked, and then wonder why you were robbed, since you assume dollars are supposed to be "safer" than Bitcoins.

Re:Obviously.

[pixelpusher220]

so no one can arbitrarily increase or decrease the supply of Bitcoins

I thought it was possible to create your own BitCoins? 'Possible' but hard on the order of it taking multiple years of computing time given the number of entities in the system.

Re:Obviously.

[pixelpusher220]

So with enough processing power someone *could* grab all the nodes for a 4 year period.

As I said 'possible' but 'hard'.

Re:Obviously.

[SanityInAnarchy]

That's not "arbitrary" in the same sense as a fiat currency. That's "arbitrary" in the sense that, if it were gold, I could "arbitrarily" decide to dig up the entire landscape looking for ore.

What's more, the more computing power that's added to the system, the better, because it's that much harder for any one entity to seize over 50% of the computing resources and start to game the network.

Re:Obviously.

[SanityInAnarchy]

Nope. The difficulty also goes up every two weeks or so in order to keep the rate constant. You'd have to have a ridiculous amount more power than the entire other network for a given two weeks, and you still wouldn't necessarily get all of it, you'd just increase your probability of getting all of it.

Re:Obviously.

[pixelpusher220]

You'd have to have a ridiculous amount more power than the entire other network for a given two weeks

Unless of course you botnet all the machines in, say, China to do this for you...

As I said 'possible' but 'hard'.

How is the difficulty increased arbitrarily for a distributed system?

Re:Obviously.

[SanityInAnarchy]

Unless of course you botnet all the machines in, say, China to do this for you...

This would be a fun calculation to run, but I'm not convinced it would actually work out in the end. For one, how many computers in China have a decent video card capable of being used for this? If you do CPU mining, you need about 150 good CPUs to match a single video card, and there are people who build massive mining operations, putting at least two or three video cards per machine and as many machines as they can support with the amount of electricity they have.

Bitcoin is currently estimated to be the world's most powerful supercomputer. If you could do it that way, it seems like it would really have to be all the machines in China.

And again, you're still not likely to get all of it. You'll get enough to cause a lot of damage, and if you control more than 50% of the computing resources in the network, you're a much bigger threat than just mining extra coins. But your claim of "enough" processing power... I think if a p2p system is only vulnerable to being gamed when all of the computers in the most populous country in the world are brought to bear against it is a pretty damned resilient system.

It also seems like with that amount of power, there would have to be other things you could attack which would be much more interesting and lucrative.

How is the difficulty increased arbitrarily for a distributed system?

It's increased according to preset "rules", in the same way most things are enforced in a distributed system. That is, each node will, after two weeks, look at the past two weeks and calculate what the new difficulty should be. They'll calculate it according to the same algorithm -- probably something stupidly simple, like what the rate of block generation is and what it should be -- and they'll come up with the same number.

After that, each node will reject new blocks which aren't sufficiently "difficult", which means that anyone who wants to continue to use the old difficulty level effectively needs to fork the network -- or, maybe, control a majority of the machines.

I'm not entirely sure this is how it works, but it seems like an obvious implementation.

What is the Bitcoin to Quatloo exchange rate?

[drsmack1]

I'm having trouble understanding the amount of value involved - I mean, who uses *dollars* anymore?!?

I've been 100% invested in Quatloos for years and I'm not looking back!

Comment removed

[account_deleted]

Comment removed based on user account deletion

The US Dollar is *not* backed by the US GNP

[Colin Smith]

It is backed by the US military.

The US dollar is the world reserve currency, about 60% of all international transactions involve US dollars. This means that the rest of the world has to purchase dollars.

Oil specifically is a commodity which almost all have to import, and the House of Saud in particular have (for some reason) insisted in the use of US dollars for oil transactions, this means therefore that oil backs the dollar, and it is military force which encourages and maintains the use of the dollar in oil transactions.

Didn't you wonder why most the 9/11 hijackers were Saudi? World started making some sense now?

$500,000 huh?

[Adam Appel]

Yeah, I would have put it in the freezer or under my bed on a zip drive. Sheesh, some people don't know how to handle money.

Still an ad. Again and again.

[Jiro]

Yes, it's an actual PC World article, but it still serves as an ad. I don't know whether the article was written by a shill, or whether PC World got duped, or whether the submitter is being the shill, or whether there's just an overeager fan somewhere in the chain, but this article has the same effect as an ad. What makes it an ad is not the statement that $500000 was stolen, but the implication that it could be worth $500000 in the first place. The story is selling the idea that Bitcoin is real and that when someone steals it that's as meaningful as someone actually stealing real money. So in the guise of reporting a theft of Bitcoins, it's pushing Bitcoins.

Consider how anyone would behave if it was really worth $500000. If you suddenly got $500000 in cash tomorrow, would you put it all into Bitcoins? Of course not. You'd bank it, maybe invest some, and only put a small portion into Bitcoins. Then logically, if your Bitcoins suddenly became worth $500000, you'd take *out* as cash the amount that you'd leave out if it started as cash in the first place. The fact that he had $500000 of Bitcoins in the first place and didn't convert into $490000 of cash and $10000 of Bitcoins shows that it wasn't ever really worth $500000.

Re:But

[julesh]

Who said it was safe? The idea was to emulate real cash as closely as possible, and one of the consequences of this is that it is possible to steal it.

Re:$500,000 in bit coin is almost ....

[Culture20]

$500,000 in bit coins is $500,000 in yens

No, $500,000 in yens is $500,000 in US Dollars.
$500,000 in bit coins is $500,000 in Confederate Dollars, or $500,000 in nothings. Anyone who is foolish enough to accept the bitcoins will soon find out they spent $500,000 on something no one else will accept.

Re:That's what he gets for trusting the closed sou

[artor3]

Consider the fact that he did not spin his own processor. Consider the fact that he did not design and build his own car. Consider the fact that he did not review the drawings for his home to ensure stability.

Unless you are capable of singlehandedly rebuilding civilization, you should live in a cave and eat only berries!

So buy a bunch of bitcoins then.

[Anonymous Coward]

Drop a grand. Expect to get burnt. Call it a learning experience. Call it R and D. But you will be on the forefront of this new TYPE of currency.

Sure there are a lot of flaws. The thing does have a whiff on Ponzi and Scam. But would you rather have an IMF issued world currency? The way thinks look, both the US dollar and the Euro will collapse, What is going to replace it? Another centrally administered, fiat currency? Taxable, Trackable and Inflatable? The goofs that brought you the Anglo/American Debt Crisis in charge of a world currency? Yikes. That is not a solution.

So the 'mining' process that puts the currency into existence is bogus. So the e-wallet go stolen. So what? Learning curves. Bugs.

Bitcoin is merely Version 1.0 of a decentralized, anonymous currency.

Stop you whining and naysaying. P2P is good. PGP is good. Bittorrent is good. But a decentralized currency? Why suddenly all the whining and naysaying? Where's the Slashdot Spirit? One would almost suspect the shills. And they are scared of something.

Put on your thinking caps and solve these problems.

Re:So buy a bunch of bitcoins then.

[Raenex]

Drop a grand. Expect to get burnt.

You're not going to solve any problems by "dropping a grand" on a bogus solution. All you're going to do is line somebody else's pocket.

Since we know what the problems are already (the mining and deflation, leading to a pyramid scheme with eventual collapse), come up with a version that doesn't suck.

Zorkmids!

[DragonHawk]

Zorkmids.

IOW, this story is as much about Windows malware

[Burz]

as it is about some bitcoin user.

Keeping that much money in one uninsured account, on one system, on WINDOWS! is sheer stupidity and he deserves to be ripped off.

Re:Still an ad. Again and again.

[ron_ivi]

Perhaps he got in early and either mined bitcoins while they were easy, or bought some while they were cheap.

Perhaps his $1000 investment went up to $500K ; and (like many in the dotcom bubble did with .com stocks) let the money ride rather than cashing some out.

I'll give you 5 billion bigsexyjoe nickels to stop

[bigsexyjoe]

... the bitcoin stories.

User error

[Ptolom]

While this is bad for bitcoin's reputation, storing $500,000's worth in an unencrypted wallet is incredibly foolhardy. It is fairly simple to run two wallets, one encrypted for savings, and one unencrypted with only a small number of coins in it.

Re:User error

[ErikZ]

You can run two wallets???

Probably

[ThatsNotPudding]

was the Federal Reserve.

Re:That's what he gets for trusting the closed sou

[Nursie]

Hi there.

Some of us do.

Some of us don't like the default behaviour of some things, or find bugs, or just want to understand things, so we read the code. Can't claim to have read even 1% of the code for my machine, but I have looked at parts of it.

Am I the only one

[ThatsNotPudding]

who read this as:

If you asked a bunch of librarians to design a digital currency...

canadian tire scrip

[slew]

Actually Bitcoin is probably closer to tire scrip than baseball cards...

Re:Still an ad. Again and again.

[Jiro]

It's advertising "Bitcoins are just like real money."

Reading comprehension

[Attack DAWWG]

Please re-read the posts you are replying to. TFA was saying that Bitcoin is a form of flat currency, and I was saying that that is incorrect, for pretty much the same reason you just listed. Your post is redundant.

Dumb model...

[HockeyPuck]

While you could say "he should have $better_security_measures...." Unlike every bank/checking account I've ever owned, I don't think his PC or whatever you use to secure your bitcoins is FDIC insured.

What's that old expression by Thomas Tusser...

"A fool and his money are soon parted"

Secure for who?

[TiggertheMad]

No one walks into a store to buy a wallet with the expectation that their money will be particularly secure inside of it. On the other hand, while some here are clearly not surprised about the lack of security surrounding BTC ownership, when you visit the websites promoting BTC usage, there's no mention of whether one's BTC information is particularly secure or not. In fact, one is given the impression (implied, not stated) that BTC is actually pretty secure by default.

BTC is secure, but it is secure in the sense that the us money supply is secure (in theory), as opposed to specific dollars in your possession being secure if you have them locked in a safe and under guard. In the realm of the physical, this sort of differentiation is fairly obvious, since nobody will think the anti-counterfeiting features of a $1 bill will keeping a mugger from stealing it from you.

The confusion of course, is that people looking into BTC discover pages and pages of writings about how clever BTC is and how it has crazy awesome cryptography to protect it. The cryptography is to protect the money, not the user. It actually reminds me of the same sort of confusion that people have about circuit breakers and GFI outlets in houses.

pssh

[treywilliams]

officer someone stole my pixels!

Re:Still an ad. Again and again.

[Jiro]

Bill Gates has enough money that even the small portion that is liquid is plenty of money for all the things most people use money for.

But you're right, I oversimplified a little bit. The fact that someone doesn't convert their "money" to real money doesn't prove that it's not valuable. It could just not be very liquid, like most of Bill Gates' wealth. But while it doesn't prove it, it's still one of the warning signs. If I claimed my wristwatch was worth a half a million dollars, and I'm an ordinary guy who could really, really, use having half a million dollars in the bank, the first question by any doubter would be "why don't you sell it? After all, you could use the money." If I don't, it may be that I'm still waiting on the call from the wristwatch broker before I can sell it. Or I'm just a fool with no financial sense to realize he should sell it. But the more likely reason is that I'm just BSing.

And if a banker designed a currency?

[Colin Smith]

Everyone would be up to their eyeballs in debt.

Money from mouse clicks

[gottabeme]

My understanding, from listening to an in-depth episode of This American Life, is that the dollar is basically completely decoupled from gold. The Fed can literally create more money with a few mouse clicks (not paper money, but real bank balances).

Re:Still an ad. Again and again.

[E 99]

Your post doesn't make any sense. allinvain was an earlier adopter of bitcoin and a miner who was making 50 bitcoins a day in the early days. He had 25,000 bitcoins stolen. It is a fact that before the theft bitcoins were exchangeable at close to $20. His stash was worth far less as little as a month or two ago. There is nothing unusual about his behavior considering the circumstances.