Bitcoin Exchange BitFloor Says It Will Replace Stolen Coins

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

Comments

pump and dump

[Anonymous Coward]

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

[price goes up on exchanges]

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

[BitFloor never heard from again]

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

Re:pump and dump

[GameboyRMH]

ButtCoin victim spotted.

Re:pump and dump

[GameboyRMH]

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

Re:pump and dump

[Wonko the Sane]

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

Re:pump and dump

[scorp1us]

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

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

Re:pump and dump

[firewrought]

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

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

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

This whole digital currency thing

[kiriath]

Gives me the willies...

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

Re:refund from where?

[Wonko the Sane]

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

And...

[Anonymous Coward]

Nothing of value was gained.

Re:Refund how?

[Wonko the Sane]

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

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

Re:Trust excanges? Nope.

[GameboyRMH]

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

But how?

[scorp1us]

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

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

Re:Refund how?

[nedlohs]

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

So what information leads you to conclude they are insolvent?

Re:Refund how?

[brokenin2]

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