$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

[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

[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

[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]

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.

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...

[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...

[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...

[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...

[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...

[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...

[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...

[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...

[arth1]

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

So perfect

[Anonymous Coward]

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

Allinvain?

[Relyx]

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

The name says it

[biodata]

It is clearly a hoax.

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...

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?

I had it even worse

[Anonymous Coward]

I lost $750,000 in Beenz.

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...

I suggest

[maroberts]

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

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.

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...

[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:Who cares

[gilleain]

Maybe I give people too much credit...

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

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: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.

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: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:"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: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.

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: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: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: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:It's a oax

[Dragonslicer]

Nobody could be stupid enough to...

Any sentence beginning this way is automatically incorrect.

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.

[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: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.

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: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.

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.

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

[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: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: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:$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.

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.

And

[interkin3tic]

And nothing of value was lost.

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: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: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: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.

Someone has to say this...

[h1q]

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

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.

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:"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"

[OnePumpChump]

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

Comment removed

[account_deleted]

Comment removed based on user account deletion

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: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

[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

[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

[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...