Security Breach Forces Bitcoin Bank Inputs.io To Halt Operations

New submitter BitVulture writes "The hardcore Bitcoin community is abuzz with news of the closure of Inputs.io, a supposedly secure online Bitcoin wallet, after an attack resulted in the loss of 4100 Bitcoins. A PGP-signed message at the home page of the now mostly non-operational site briefly explains the situation: 'Two hacks totalling about 4100 BTC have left Inputs.io unable to pay all user balances. The attacker compromised the hosting account through compromising email accounts (some very old, and without phone numbers attached, so it was easy to reset). The attacker was able to bypass 2FA due to a flaw on the server host side.' There's no word yet whether Inputs.io will eventually resume operations or whether the security breach will force the Bitcoin bank out of business."

Comments

So?

[bluefoxlucid]

It's computer fraud and abuse. It's not like they really robbed a bank.

Re:So?

[gl4ss]

It's computer fraud and abuse. It's not like they really robbed a bank.

which, amazingly enough, in mots of the west gets a lot more of jailtime for you even if you stole nothing of actual monetary tangible value....

though, again as usual, one needs to ask if they just took it themselves, their ex-employee took it or..

Re:So?

[QilessQi]

We seem to be fast approaching the point where computer-based theft will be the way you "really rob a bank".

It's not like today's banks have all got huge safes full of bags with dollar signs on them -- not in the U.S., anyway. Money is becoming increasingly virtual. A dollar bill doesn't actually represent value; it represents debt, an IOU. A bank doesn't need to keep one physical dollar bill on hand for every dollar in its bank accounts; it only needs a fraction, because you don't expect 100% of your customers to come in on the same day to cash out. And thanks to the Federal Reserve system, there aren't even physical assets (like gold bars) of equal value to all the Federal Reserve notes in circulation. It's a bizarre system that only works as long as debt keeps circulating (buying and selling) and accumulating (loans with interest).

Re:So?

[blue trane]

Credit existed long before the Federal Reserve. J. P. Morgan used created money to help out banks in the Panic of 1907. The Bank of England created money to get its country out of panics in the 1800s. The private banking system evolved the system that the Fed later put in place on a more equitable basis (loaning to all banks instead of only to those that Morgan had a personal affinity for, for example). Elasticity was necessary for the banking system to function. The Fed just made that elasticity more under the public's control, so that it could be used for the General Welfare instead of for Morgan's private profits.

Re:So?

[Opportunist]

Which IS also by now pretty much the only way you could possibly rob a bank.

Banks around here don't have big bullet-proof glasses between you and the teller anymore. Simply because there is no cash drawer anymore. The cash is inside a safe that doubles as the table you're sitting at and only if the teller withdraws some amount from an account that amount of money appears automagically from a slit in the table. The teller CANNOT even give you the money in the safe since he simply has no access whatsoever to it. And the computer doesn't let him withdraw anything if there is no signature that matches the one stored, so he can't even withdraw from some random account to give you money.

Seriously, if you're in for money, rob a gas station. You get way more than you could possibly get from a bank (unless you're willing to put in more effort than going in and yelling "hands up").

Re:So?

[bluefoxlucid]

Yes, and this is why I keep telling people America is fucked up and the FRS is ridiculous. We don't have "economic growth"; when our economy grows, it gets poorer. When one person pays their debts and gains assets, another person must necessarily go into debt--not just become less wealthy, but actively move toward negative wealth. Poverty here is, on the books, worse than poverty in some small regions in Africa: our poor people have less than a Ugandan who has to walk 9 miles for water, but we still eat expensive beef.

Re:So?

[Anonymous Coward]

Credit existed in fourth (and probably fifth) century BC Athens. It was also largely responsible for inflation then: the monetary system was metal-based, but even the ancients noticed that old inscriptions and laws mandated unreasonably low prices for sacrificial animals, while people in their own time were buying and selling real estate for amounts of credit that couldn't be physically transported in any reasonable way as cash and that might not have even been available in circulation. The Athenians didn't have a Federal Reserve or central bank, just a mint for the physical coins and some private bankers for the credit. That's all you need to get the "bizarre system" that keeps cropping up in history.

As a side note, that "bizarre system" almost always ends up with the poor holding physical currency and the rich using credit. Playing along with the system gets you more stuff, because you can buy more with big credit than you can with two obols (although you could at least rent a prostitute for that).

Re:So?

[Anonymous Coward]

Poverty here is, on the books, worse than poverty in some small regions in Africa: our poor people have less than a Ugandan who has to walk 9 miles for water, but we still eat expensive beef.

There's a point here, and you're missing it.

Re:So?

[BitZtream]

... Bank robberies of Bank of America and Suntrust seem to be relatively common around here, I hear about at least one a year, sometimes 2. They seem to be doing fine making off with sums as high as 10k in some recent cases so while I understand what you're saying, they doesn't seem to be the end of the bank robbers taking case from the tellers.

Re:So?

[jandrese]

no signature that matches the one stored

Do these banks somehow use a digital signature? Computer recognition of a written signature is still way too unreliable to use it as a primary means of access.

Re:So?

[Anonymous Coward]

During a course in criminal justice in college, the instructor actually stated exactly this, with a few reasons:

1: The cop on the beat sees someone with a computer in a coffee shop. They move on. Someone committing a bank robbery is obvious, and the street officer can intercept as the robbery is in progress.

2: Robberies are violent with tons of charges, from having a gun, to having a gun in a public area, to having a gun 10,000,000 feet from a school, to having a gun while committing a felony, etc. A CFAA violation is one charge.

3: Numbers are abstract. Someone threatened with a weapon is something jurors relate to on an emotional level. This means that the penalties will be a lot stiffer for bank robber who gets $500 versus a blackhat getting $50,000.

4: A good blackhat if caught can possibly get a job as a part of a plea bargain. A gangbanger shooting up a bank is likely going to face a life of McJobs and the revolving door of private prisons.

5: Physical security of banks is a lot higher than server rooms. In a bank, there is some security guy with some type of duty pistol. A server room has a HID lock on the door and maybe someone answering phones at a desk.

6: The economy has not hit bottom yet. Jobs are not returning in the US, and when they do, they are overseas due to the tax benefits (even in the US, H-1Bs and 1Bs are tax exempt.) This means that more people are forced to go the blackhat route. Think Breaking Bad, but in reality.

7: Companies view security has no ROI, making them an easy target for a dedicated intruder.

8: There are no penalties (lets be real, people forget about "ABC, inc. got hacked and all credit cards taken" in 30 seconds.) So, it is an open door.

9: You route stuff through a compromised box in China or another country, the investigation is over. Nothing can be done, period, about an intrusion.

10: There are plenty of tax havens to stash cash, and laundering these days is no problem at all for anyone who has a brain. All you have to do is start up a nightclub, and report completely packed earnings even if the place has nobody at the door... a couple years, and all income is now legit, and the clubowner will get good PR with a few donations to local charities.

So, all and all, it is actually amazing why businesses and banks are NOT hit harder.

Re:So?

[Opportunist]

Mostly the teller can override the system, but the amount of money you can get out of him without some additional means is ridiculous for the average bank holdup. It's more a matter of time vs. money where getting much money out of the safe takes a lot of time (also one of the reasons why it takes ridiculous amounts of time for "processing" the withdrawal, it's an artificial block that should ensure that you don't get more than a few hundred bucks out of it every minute).

Re:So?

[mark-t]

That's still a felony, afaik.

Re:So?

[gl4ss]

and well that's why pre ww2 stock crash was actually something causing massive panic and the crash of 21st century is something people barely notice...

because on the whole masses are not going hungry over it. on the whole they have more - more tools, bigger tv's... that's whats wonderful about modern day - even if you're technically poor* you got access to a wealth of information and entertainment - and even if you're supermegafuckingrich what you eat is pretty much the same as what the people earning 1/10000th of what you do eat. a chicken is a chicken and how much filet mignon are you going to eat anyhow and a club sandwich doesn't get better if costs 1000 bucks than if it costs 16 bucks(base price for decent club sandwich with fries in Helsinki, in random place in america I bet you can get the same for six bucks...).

what you can afford if you're supermegarich is hired help of course, but the middle upper class in the west has been losing that habit as well.

sure, if you're supermegafuckingrich you can afford more coke and hoe's but you can't get even those in the ratio your income would let you to believe. I mean, it would be funny if gates rented 10 000 hoes for a party but I just don't see it happening.

*) poor in the so called west. poor in some other parts of the world are pretty fucked still but they were as fucked or more fucked before the stock market crash too.

Re:So?

[postbigbang]

Dillinger lives. He drives a Tesla, and carries ultrabook instead of a machine gun.

Re:So?

[firex726]

For larger amounts ,many will actually require you notify them in advance.
Want $10,000 in actual cash at once? You need to call a day or two in advance so they can have a shipment made.

Re:So?

[cusco]

At least you won't have to worry about security, as you step out the door you'll probably be followed by more Federal, state, county and local cops of various flavors than would respond to a presidential assassination attempt. I've always wanted to do something like pay for a new car in cash rather than by check, just to see how many hoops there are and what the law enforcement response would be, but my wife always puts down my more entertaining ideas before I can actually carry them out.

Re:So?

[mlts]

I am going to propose that wealth really needs to be measured in energy. The more energy available, that can be converted into almost anything. Garbage can be "boiled" via thermal depolymerization into usable monomers, mine tailings can be processed and the toxic metals isolated. Even very inefficient processes like making hydrogen from water can be made useful. Of course, BitCoin mining requires a good amount of wattage, especially at this late date in the mining curve.

Re:So?

[cusco]

I think it must depend on where you are. When I went to the credit union and did a withdrawal fairly recently she had a drawer full of cash in front of her, and since it was a couple thousand dollars she filled out a form and took what was lacking from the next teller's drawer.

Re:So?

[mythosaz]

Go to the teller. Ask for cash. If they ask why, feel fee to give them the honest answer that you're buying a car at auction. Fill out the CTR. Leave with cash.

Nobody cares.

Re:So?

[Mr. Slippery]

even if you're technically poor* you got access to a wealth of information and entertainment

In the long run a society can't substitute circuses for bread, a roof over your head, and decent medical care. Food and housing insecurity does more to prompt riots than not getting another season of whatever TV show is tops in ratings now.

Re:So?

[TsuruchiBrian]

A gold bar doesn't represent anything of value either. It, like the dollar, is only valuable because we all agree it's valuable.

Re:So?

[TsuruchiBrian]

Wealth is more than just the number of dollars you ave in the bank. We absolutely have economic growth even with our debt. Look at all the stuff we have (e.g. cars, food, video games, televisions cell phones, roads, bridges, trains, airplanes, etc). And we have one more thing that Ugandans don't have: the ability to pay back most of the debt that allowed us to get all that stuff.

If you're definition of wealth means that Ugandans are more wealthy than Americans, then I want to be poor.

Re:So?

[TsuruchiBrian]

What about information? Knowing better ways of converting matter/energy states into other desirable states surely makes us more wealthy.

Re:So?

[bluefoxlucid]

There's an abusive twist of logic that shows that every American owes China about $120,000 right now; imagine if you were called on it.

We're facing a situation where our Government has essentially become the welfare family down the street who quit their job and keep filing for credit cards. This one was $21,000, the new one they're giving me $35,000, I'll do the 14 month interest-free balance transfer... ooh, this bank is offering me a card for $50,000... and so on. I know people who have credit cards with $120,000 limits and they make less than I was when I worked at K-Mart.

Essentially, the government only operates by taking on more and more debt, with no ability to control it. If the government defaults, it can't operate; so imagine the Government shutdown, plus they shut down food stamps and WIC--or print money to pay for welfare. If that stuff just shuts down, hundreds of millions (47% of the 300 million is about 1.4 hundreds of millions) will be starving on the streets--and the lack of income to shops from their purchases will lead to an economic crash, loss of jobs, further economic damage, etc. Almost everyone will be starving. If they print money, suddenly all your cash and your salary become worthless (pre-WW2 Germany style).

You're living in a fantasy. You have big screen TVs? So does the welfare family down the street. They had them when they cost $5000. Are they richer than you or just more deluded?

Re:So?

[bluefoxlucid]

The point is people are constantly fighting back against bitcoin regulation as a currency because Bitcoin isn't a bank. They also fight for Paypal to be regulated as a bank. Bitcoin isn't real money; nothing of value was lost.

Re:So?

[mark-t]

Bitcoin isn't real money, but it does have real value... and it's reasonable that changes in that value could be taxed, much like the increase in value of any stock that you may own.

Re:So?

[TsuruchiBrian]

Only about 30% of our debt is to foreign countries, the rest is internal debt.

Our per American is about $53K, and only about $4K of that is to china.

So my question to you is this...

Why is china giving us credit we can't ever hope to pay off? Are they stupid?

It's not like credit card companies make tons of money by giving tons of credit to people on welfare to big big TVs.

Re:So?

[QilessQi]

Excellent point. "Money" in all forms is merely a proxy for the power to obtain the goods or services we desire. It's just that (at a given time in a given society) some proxies are more universally acknowledged to have worth than others. If civilization were to collapse, an ounce of gold might be considered worthless compared to an ounce of food.

But there is common comfort in either, which is why some people probably long for a return to the days of the gold standard: both gold and food are tangible and can be possessed by anyone. Digital currency may be convenient, but it's abstract, requiring a reliable and secure computing infrastructure to make it function. Which brings us back to the article.

Re:So?

[bluefoxlucid]

They kind of do.

Look at interest schedules. You often find situations where 50% of the loan is interest; but most of the interest comes up front because it's accruing on a huge balance being slowly paid down. You have $200k in that loan, you make a $1000 payment that's $990 interest accrued over 1 month; you have $50k in that loan, you make a $1000 payment that's $250 interest accrued over 1 month. The balance starts coming down much, much faster--the amount of interest that one month is 25% of what it was on the first payment, but the amount of interest over that year's payments is much less than 25% of what the bank got for the first year because you're paying your loan balance down faster.

Credit card schedules where you make minimum payments take forever to pay off. In the process, you'll pay many times more than the balance on your card. The bank also gets to claim the balance as an asset and deduct that when you default--in some cases with high-dollar mortgages, the bank can bring in more than the loan and then claim a loss (i.e. if the amount of interest they accrue is less than the remaining balance, but the remaining balance is still more than the amount of interest they accrue, they will claim a loss even though they physically have more dollars now with your total made payments all together).

There are plenty of ways to loan out piles and piles of money, have people fail to pay it back, and walk off with sacks of cash. Credit card companies--banks, actually, since Visa just rakes fees and banks stamp VISA on their cards and let VISA supply the infrastructure--sure as hell do make the bulk of their money off those with poor credit. This is a documented and well-known fact: people with good credit just aren't profitable; people with bad credit are cash cows.

Re:So?

[bluefoxlucid]

And that's exactly what people have been fighting: Regulation of Bitcoin, taxing of Bitcoin, treating Bitcoin as a legal currency, subjecting Bitcoin to SEC rules, etc. They want it to be a Libertarian wet dream with no rules.

Re:So?

[TsuruchiBrian]

we have a reliable computing infrastructure for trading bitcoins dollars and gold. The security provided by bitcoin whatever it's shortcomings is more than the security provided by the dollar or gold (which is none). Banks and governments provided security to compensate for the lack of security inherent in these currencies, but they could do this for bitcoin as well.

Why would we want to fall back to a currency whose main benefit is that it will still work in a limited way if all the computers in the world stopped working, until/if that actually happens?

Re:So?

[TsuruchiBrian]

So you are saying that the welfare family who buys more luxury items than the responsible family next door actually *can* afford all those items, but they are unnecessarily and irresponsibly going into debt to get those items now rather than later?

This example is quickly making less and less sense.

Re:So?

[mark-t]

There's no need to tax bitcoin or officially treat it like currency or any of that shit.

Bitcoins have value... if you own some bitcoins, it is reasonable to be taxed on the monetary value of however much the bitcoins you own have appreciated, just as you would be taxed on the value of any private stocks you might hold, which may just as untrackable by the government as bitcoin is.

Re:So?

[GPF(BSOD)]

Has anyone said buttcoin yet?

Re:So?

[QilessQi]

I didn't say we should. But a lot of other folks find gold more comforting, as irrational as it may seem. A number of American talk radio shows are interspersed with ads for buying gold coins in preparation for the impending collapse of the government and the US dollar. Those companies are largely predatory (that's another topic entirely) but clearly they're marketing to someone...

Re:So?

[luxifr]

It's computer fraud and abuse. It's not like they really robbed a bank.

which, amazingly enough, in mots of the west gets a lot more of jailtime for you even if you stole nothing of actual monetary tangible value....

though, again as usual, one needs to ask if they just took it themselves, their ex-employee took it or..

yeah, it's not like 4100 bitcoins are worth about 1.3 Million USD at the moment with a tendency to increase this value faster than anything else at the moment...

Re:So?

[bluefoxlucid]

On average, it kind of works that way.

It's making less sense because you're forgetting the concept of a "credit crunch". What do you think will happen to the economy if college students stop taking student loans?

Re:So?

[TsuruchiBrian]

A credit crunch is the reduction in availability of loans, not the reduction in willingness to borrow money. In a free market, less people borrowing money would mean a smaller supply of investment opportunities and more competition for the people that still want to borrow leading to lower interest rates. The lower interest rates might spur more borrowing, so the interest rate will actually just reach an equilibrium point based on the supply and demand for borrowers.

I don;t see what this has to do with anything.

Re:So?

[bluefoxlucid]

Uh.

Year 2000. $100M of loans borrowed. Incur interest, $110M needed in the money supply.

Year 2001. $110M of loans borrowed. Incur interest, $120M needed in the money supply.

Year 2002. 2000s pay off their $110M loans with money they made from 2001s buying crap. $120M of loans borrowed, $130M needed in money supply. 2001s have money from what 2002s buy.

Year 2003. People stop taking loans.

Year 2004. 2002s are ... unable to get money to pay their loans because the fucking money supply has deflated! (or: Ceased to inflate because nobody is taking new loans)

Notice how when you borrow $100, you need more than $100 to pay it off? That's why we need inflation for our economy to function. If loans slow down--if population growth slows, if people stop taking loans, if banks stop giving loans--you get a recession. A terrible recession can become a depression.

Christ, it's like you're not really an economist. Go back to whatever college you got your degree from and demand your money back.

Re:So?

[TsuruchiBrian]

Notice how when you borrow $100, you need more than $100 to pay it off? That's why we need inflation for our economy to function.

You're retarded. Even if there were no inflation at all or even deflation, you would need more than $100 to pay of a loan to compensate the lender for opportunity costs. The interest rate would just be lower than with an inflationary currency.

I didn't study economics in college. I got a degree in computer science, but I can use my brain to think. It's pretty obvious to me you don't know what the fuck you are talking about.

Re:So?

[Ash-Fox]

A gold bar doesn't represent anything of value either.

That is because it is value and not a representation.

Re:So?

[TsuruchiBrian]

I'm an alien, convince me why an atom with 79 protons is more valuable than most others. Convince me why it is worth destroying entire civilizations in order to stockpile this element into vaults. Do you need it to survive? Do you need it to procreate? What makes this substance so valuable?

Re:So?

[Ash-Fox]

I'm an alien, convince me why an atom with 79 protons is more valuable than most others. Convince me why it is worth destroying entire civilizations in order to stockpile this element into vaults. Do you need it to survive? Do you need it to procreate? What makes this substance so valuable?

I'm sorry, you don't have the necessary documentation to enter this country, we are deporting you.

Re:So?

[TsuruchiBrian]

If I'm an alien on earth that means I have access to technology far more advanced than a species whose farthest manned mission was to their own moon. I don't think any of these puny humans will be making me do anything I don't want to do. They're lucky I just want to learn about them rather than killing them all to turn their whole planet into a intergalactic space-golf resort.

Re:So?

[Ash-Fox]

If I'm an alien on earth that means I have access to technology far more advanced than a species whose farthest manned mission was to their own moon.

Or maybe you're really a gardener, only here due to your planet Melmac exploding because of a catastrophe involving a nuclear war and have nowhere else to go. We don't have an immigration agreement with Melmac and as such, you are subject to being deported by the Alien Task Force.

Re:So?

[bluefoxlucid]

You need more than $100 to pay off a $100 loan. There is $100 in the money supply. How do you provide more than $100?

The vast majority of the money supply in the US is non-existent. It's loaned into existence--it's owed money. If you stop loaning money, the money supply stops growing. This greatly decreases liquidity in the economy for the transfer of wealth.

The above illustration is for a mostly or completely loaned-into-existence economy: all money is actually owed to the bank, which primarily outputs money in the form of loans. If the bank makes a profit (as it must), it's bringing in more money than it's genuinely expending into the economy (i.e. to build new branches or pay tellers). That means, eventually, all money is owed to the bank. Unfortunately, with interest, that's more money than exists--unless perpetually more money is loaned into existence so that all that debt can be paid off.

This works even when you bring into the argument that the primary source of wealth is labor, and that you can work more to obtain more money: that money comes from somewhere, and its eventual source is a loan; and as the bank gets its loans paid back to it, the money supply shrinks and people simply can't pay you for labor (the liquidity argument stated above).

You can try to argue whatever vague shit like "That's ridiculous" and "You don't know what you're talking about" or even make some fancy technical counterpoints (several exist); but when you come straight down to the raw argument--that reducing the growth of the money supply by slowing down the amount of money put into the money supply by loans would cause an economic recession if not a depression or outright collapse--you're absolutely wrong. Shit, it's happened in the past decade: there was a collapse in demand for houses as the prices leveled off, which turned into a combination of defaults and fewer loans being handed out (which lead to more defaults because less money supply). Economists have been worried for several years that students will soon wise up and stop taking huge student loans, causing another drop in demand for credit and another severe economic recession.

It's a continuous theme in modern economics: people might stop $IRRESPONSIBLE_DEBT_BEHAVIOR but we've come to realize our economy will collapse if people stop taking out $50,000 in credit card debt and buying huge SUVs and getting second mortgages and $200,000 student loans.

Re:So?

[TsuruchiBrian]

You need more than $100 to pay off a $100 loan. There is $100 in the money supply. How do you provide more than $100?

Your question is how would it work if someone borrowed the entire supply of bitcoins and had to pay it back with interest?

It would work the same way as any other currency, in that it wouldn't actually work, and you'd have to provide the interest in some other currency or commodity.

Even if you did this in dollars, simply printing more dollars in order to pay the interest is basically like not paying the interest at all.

Inflation is not some tool designed to allow the payment of interest. Interest is supposed to represent a real transfer of wealth in exchange for assuming risk and opportunity cost. By loaning money, you are trying to increase your wealth not just break even with inflation.

I can tell you've been watching zeitgeist plus whatever anti-federal reserves conspiracy "documentaries" you've managed to find, but the arguments that are presented in these circles (and that you are repeating), valid or not, is not relevant to this discussion.

You made a claim that interest is necessary, and have simply recited a bunch of non-sequiturs to support that claim.

"People would not be able to pay the interest on their loans" is not a reason we need inflation. If this were true, we might as well simply eliminate inflation and interest and charge a tax on money sitting in vaults or something

Re:So?

[bluefoxlucid]

What is "Zeitgeist"? Time ghost? In any case I've not seen any such thing. Have you considered I might have a functional brain, rather than be jacked into Fox News or CNN or whatever anti-republicrat conspiracy machine stands philosophically opposed to the one you're jacked into? Come on man, I live under a rock; I read fantasy novels and don't watch TV news (I do, however, read The Onion, which is how I keep up on current events).

I've been running numbers in my head and working out economic theory, also looking at stuff like Keynesian Economics (severely flawed) and Austrian Economics (less flawed). There is actually no working economic system; they all eventually collapse, it's a matter of magnitude of collapse. Some will be a huge roller coaster ride; others will have good times and bad times, rather than great times and times of mass suicide and starvation. Some systems allow better for the concentration of wealth into the hands of the few who manage to keep it during economic collapse, while others make concentration of wealth harder and more readily facilitate dissemination of wealth during economic collapse.

You assume that "Y doesn't work without X" is the same statement as "X exists because Y". Gasoline engines do not work without gasoline, which could not have been invented without oil. Oil was not created by Jehovah for the purpose of running our gasoline engines; oil existed due to the events in the history of the earth, and facilitated gasoline and diesel engines. More importantly, are you honestly trying to argue that we could have usury in an economic system that doesn't experience inflation?

Re:So?

[TsuruchiBrian]

What is "Zeitgeist"? Time ghost?

So you can translate from german but you don't know what the term "zeitgeist" (which is also a term used in english) means? You could have just claimed not to have seen the movie without trying to prove you have never even heard of the term before. Even if you had never heard the term, you could have just looked it up.

Should I assume that you are not actually this dumb, and rather are just lying? But that would mean that you are lying in a way that makes you seem dumb, which is pretty dumb. So maybe you are that dumb.

Have you considered I might have a functional brain

I assume that of everyone when I first talk to them. I now have my doubts.

More importantly, are you honestly trying to argue that we could have usury in an economic system that doesn't experience inflation?

Yes, but I wasn't even trying to argue it. I was stating it as an obvious truth without any support because I didn't think it was required.

just because lending money for interest is allowed, doesn't mean that 100% of the economy is based on lending/borrowing.

This works even when you bring into the argument that the primary source of wealth is labor, and that you can work more to obtain more money: that money comes from somewhere, and its eventual source is a loan;

This is false. This assumes you can only work in exchange for an inflationary currency. Even if your paycheck came in dollars, you could immediately exchange your dollars for gold (a non-inflationary currency), and break the cycle, or you could just buy things with it (e.g. food, etc), or you could lend it to someone else (e.g. put it in a bank), or you could invest it (e.g. buying stock).

You call valuing a dollar today higher than a dollar tomorrow "usury", but it doesn't matter what you call it. It is what a rational person would do if you live in a universe where proper investing increases wealth faster than just working hard(e.g. the time used to build a shovel is saved many times over than digging every hole with your hands)

There is an exponential increase in wealth as time goes on, because wealth can be used to create more wealth, and the wealth needed just to survive is a smaller percentage of total wealth, so even more can be used for investing.

There is actually no working economic system; they all eventually collapse.

I could say all mathematical theories are eventually proven wrong. As ridiculous as this statement is, how long will it take to prove I am wrong? Luckily the burden of proof is on me.

Furthermore, you can leave a term like "collapse" vague, and when it turns out that some economic systems just adapt, you can claim that it collapsed and a new one took it's place, regardless of how minor or gradual the change is. Maybe to others the examples of previous economic systems that failed is good evidence that *all* economic systems fail, but this is a logical fallacy.

Re:So?

[bluefoxlucid]

So you can translate from german but you don't know what the term "zeitgeist" (which is also a term used in english) means? You could have just claimed not to have seen the movie without trying to prove you have never even heard of the term before. Even if you had never heard the term, you could have just looked it up.

Option 3: only hear it from idiots in political conversations, similar to the way stupid shit from Farenheit 911 was spouted around, so never bothered to care. Zeit and Geist are very commonly known words, by the way; it's like saying you know what "das ist gut" means in German. No shit. Everyone knows that.

More importantly, are you honestly trying to argue that we could have usury in an economic system that doesn't experience inflation?

Yes, but I wasn't even trying to argue it. I was stating it as an obvious truth without any support because I didn't think it was required.

It's an obvious truth that you can lend money and require more than 100% of the lent money to be paid back as a matter of course of economic activity and not run out of money if the money supply doesn't increase?

Is it also an obvious truth that you can perpetually fill glasses from a 1 gallon container of Iced Tea without ever making more tea?

This works even when you bring into the argument that the primary source of wealth is labor, and that you can work more to obtain more money: that money comes from somewhere, and its eventual source is a loan;

This is false. This assumes you can only work in exchange for an inflationary currency. Even if your paycheck came in dollars, you could immediately exchange your dollars for gold (a non-inflationary currency), and break the cycle, or you could just buy things with it (e.g. food, etc), or you could lend it to someone else (e.g. put it in a bank), or you could invest it (e.g. buying stock).

Okay, now I know you don't know what the hell you're doing. You're one of those people who thinks the Stock Market isn't a zero-sum game and that magic money comes out of it; I've had this argument too many times. The simple truth of the stock market is that money is exchanged around for goods (stock slips). If you get money out, someone else lost money: money is only moving around, not actually increasing.

You call valuing a dollar today higher than a dollar tomorrow "usury"

Usury is attaching interest to a loan. Technically it's attaching "unethical, illegal, or excessive" interest to a loan or just making loans on immoral terms or whatnot; the biggest historical use of the term is in Judaism, where Jewish law prohibits charging interest at all to Jews. It calls the practice "Usury", and states that it's moral in the eyes of God to charge interest to Gentiles but never to Jews.

It is what a rational person would do if you live in a universe where proper investing increases wealth faster than just working hard

Loans are an investment: they transfer wealth from one person to another.

There is actually no working economic system; they all eventually collapse.

I could say all mathematical theories are eventually proven wrong. As ridiculous as this statement is, how long will it take to prove I am wrong? Luckily the burden of proof is on me.

Furthermore, you can leave a term like "collapse" vague, and when it turns out that some economic systems just adapt, you can claim that it collapsed and a new one took it's place, regardless of how minor or gradual the change is. Maybe to others the examples of previous economic systems that failed is good evidence that *all* economic systems fail, but this is a logical fallacy.

All economic systems eventually reach a state of unsupportable inflation, excessive wealth concentration, or liqui

Re:So?

[TsuruchiBrian]

Zeit and Geist are very commonly known words

Yes they are, and they are very commonly used together to form a compound word "zeitgeist".

It's an obvious truth that you can lend money and require more than 100% of the lent money to be paid back as a matter of course of economic activity and not run out of money if the money supply doesn't increase?

Yes, for example, take any economic system that has no lending in it at all. Have one person borrow $10 to buy something and then pay the lender back $11 the next day. Did the money supply run out? No, because we didn't use 100% of the money for borrowing, which is *EXACTLY* what I said.

You're one of those people who thinks the Stock Market isn't a zero-sum game and that magic money comes out of it;

I don;t see how you could infer that from anything I've said. In fact I implied the exact opposite when I said that investment creates wealth, and used the stock market as an example of investing.

Loans are an investment: they transfer wealth from one person to another.

Yes, and if done properly, they create enough wealth so that the wealth transfer form the borrower to the lender is offset by the wealth for the borrower. For example when a student takes out a school loan, the goal is that the wealth of the knowledge the student gains is more valuable than the money spent on the loan. If it is not, then the student's loan was not a good decision.

Loans are an investment for the lender, and *can* be an investment for the borrower as well. The loan is a good investment for the lender if the borrower pays the money back, and it's a good investment for the borrower if whatever he bought with the money increases his income by a margin greater than the payments on the loan.

All economic systems eventually reach a state of unsupportable inflation, excessive wealth concentration, or liquidity failure.

Are you aware of the term falsifiability? Lets say hypothetically this was incorrect, what might be some hypothetical evidence to show that it is wrong?

Re:So?

[jafac]

We have had a rash of "bang-bang" style bank robberies in my County, over the past 3-5 years. A couple of these serial robbers have been caught. Anyway, the reported average take is usually somewhere between $3000 - $8000 or so. In my opinion, that's no where near worth the risk. That's not even chump-change, and far more than that is stolen minute-by-minute by white-collar criminals.

Re:So?

[bluefoxlucid]

In fact I implied the exact opposite when I said that investment creates wealth, and used the stock market as an example of investing.

Investment in the stock market moves wealth; it does not create it. In our current system, investment in the stock market decreases wealth: broker's fees and taxes are taken from the movement of wealth in a system that doesn't actually create anything. The brokers supply the service of moving stocks around; but the act of moving stocks around doesn't produce any useful labor output. Even banks produce useful output: they facilitate business transactions, meaning you can mail a cheque or provide a debit payment rather than expending time and effort moving yourself singly across distance to transact business. Stock brokers mainly facilitate "I'm gonna get rich buyin' some stocks!", which has merit only as far as an entertaining and skill-based winnable game (see: Poker); stocks only provide economic benefit in the event of an IPO, where the public is given an opportunity to invest in a company--not necessarily put money in and expect more money out, but at the very least put money in because the company is doing something they think will benefit them (produce wealth in society).

For example when a student takes out a school loan, the goal is that the wealth of the knowledge the student gains is more valuable than the money spent on the loan. If it is not, then the student's loan was not a good decision.

Fair point. Opportunity value versus opportunity cost. It's mishandled today, and student loans are a terrible example for many reasons. Mortgages pre-FDR accomplished what you described because they were shorter-term; but post-FDR loans have been money sinks where the total cost of a home is ridiculously high.

Universal higher education--beyond basic math and science and technical skills (computers, etc.)--causes a situation in which students must speculate on the future of the job market, typically resulting in demand booms for certain vocational education (degrees) followed by flooding the market with people who mainly can't get jobs. Non-defaultable loans to facilitate this result in huge economic damage; government-funded "free education" tends to require government-mandated quotaing (restricts the economy) or run as a free-for-all with the same practical risks but the direct financial impact spread to the tax base. Typically the end result is a major increase in inequality between the rich and poor, with the less affluent winding up in dead-end careers and/or massive debt.

A lack of universal higher education creates an economic crisis: only rich kids can afford vocational education, so non-rich people are left behind. Unfortunately, businesses have trouble reaching their strategic goals: they can bid $250,000 for computer programmers and $400,000 for Photoshop experts, but they still won't find enough in the market to actually carry out business activities. Universal education creates a great supply of cheap skilled labor, not only reducing the per-seat cost but also allowing businesses to actually fill the number of seats they need. Sans this, businesses would have to ... wait for it... INVEST in raising educated, less-affluent applicants from a secondary (high school) or post-secondary continuing education (basic college math and science) level to a vocational level. In this scheme, the businesses take on the risk, aiming for a lower total cost per skilled laborer and a virtually limitless pool of skilled labor.

You compare the opportunity cost of a loan with the opportunity cost of businesses paying to train their own laborers. Investing with leveraged funds is very much more difficult than investing with direct funds, carrying higher risk and higher costs.

Are you aware of the term falsifiability? Lets say hypothetically this was incorrect, what might be some hypothetical evidence to show that it is wrong?

Re:So?

[TsuruchiBrian]

Investment in the stock market moves wealth; it does not create it. In our current system, investment in the stock market decreases wealth: broker's fees and taxes are taken from the movement of wealth in a system that doesn't actually create anything.

The owners of stock are the collective owners of a company. They vote on board members which decide things like who gets hired for high ranking positions in the company and how much they are paid, and ultimately what direction the company is going.

It's a very juvenile perspective that managers don;t actually do anything and that it is only physical labor that creates wealth. It is very easy to waste human effort and create 0 wealth or even negative wealth without proper planning.

You seem to think that IPOs are a good thing, but part of what makes stock in a company valuable is the ability to sell it. If there were no stock market, IPOs would not raise as much capitol.

Stock brokers mainly facilitate "I'm gonna get rich buyin' some stocks!", which has merit only as far as an entertaining and skill-based winnable game (see: Poker); stocks only provide economic benefit in the event of an IPO, where the public is given an opportunity to invest in a company--not necessarily put money in and expect more money out, but at the very least put money in because the company is doing something they think will benefit them (produce wealth in society).

You seem to be confusing day trading as the the entire stock market. The ability to buy and sell stocks creates liquidity of ownership. Without this, you will be more likely to have people who don't want to manage or own a company stuck doing this job.

Universal higher education--beyond basic math and science and technical skills (computers, etc.)--causes a situation in which students must speculate on the future of the job market, typically resulting in demand booms for certain vocational education (degrees) followed by flooding the market with people who mainly can't get jobs.

There is no crystal ball to tell us what skills will be in demand in the future. Our education system doesn;t create this burden for students. That burden is there by default. Even if education were completely publicly funded, this would only increase the liklihood of people choosing to learn a low demand skill. While their individual financial status won;t be as negatively effected by debt, this will result in higher taxes for the rest of society to pay for useless education.

Furthermore, I just used a student loan as an example of how loans *can* create wealth for everyone involved. I was not defending the American education system.

A teenager who cuts the neighbor's grass for $20 spends less than $20 on the gas and lawn mower, and is doing so to get money for purchase of other goods; he has/is a business, and supplies himself employment. As such, businesses bring in more money than they output--they concentrate wealth.

The teenager is not concentrating wealth. The teenager is converting his labor into the goods he wants (e.g. new clothes). This is no different than a farmer converting his labor to things he wants.

Money is just a tool for trading goods and services. You could ignore all the money that exchanges hands, and what you would see is a society with a bunch of people producing and consuming at different levels. They don't spend a lot of time figuring out whether the trades are fair or not, because money makes this calculation easy.

It is only natural that people work to enrich themselves; this comes always at the expense of depriving others of wealth.

It sounds like it is *you* who are arguing that everything is a zero-sum game.

Can we reach a situation where we can actually avoid all these failure modes perpetually?"

You claimed to already have the answer. You said *ALL* economic systems will eventually collapse.

Re:So?

[bluefoxlucid]

The owners of stock are the collective owners of a company. They vote on board members which decide things like who gets hired for high ranking positions in the company and how much they are paid, and ultimately what direction the company is going.

First off, nobody actually calls in voting rights. Second, I have had voting rights in 2 companies; I have held stock in 34. Common stock doesn't always convey voting rights. Third, common stock can be cancelled.

It's a very juvenile perspective that managers don;t actually do anything and that it is only physical labor that creates wealth. It is very easy to waste human effort and create 0 wealth or even negative wealth without proper planning.

Managers provide extremely important functions at all levels. Executive Management provides integration of various aspects of business with the business strategy, for example a CISO providing risk assessment and action as a top-level priority in the execution of the overall business plan rather than people at the bottom in IT crying that "OUR SECUR NETWURK R FUKED IT GUNNA GET HAXED" and nobody gives a shit. Middle managers provide a valuable communications channel down to functional managers, who determine what their functional areas require in terms of resources to perform operational duties and supply services to the rest of the business.

That said, businesses still concentrate wealth in the business and in the personal funds of managers. Similarly, having children is important for continuation of the species; but we are overpopulating the planet and destroying it and we need to scale that back a bit. When 7 billion becomes 185 billion on this one little rock, there won't be any continuation of the species.

You seem to think that IPOs are a good thing, but part of what makes stock in a company valuable is the ability to sell it. If there were no stock market, IPOs would not raise as much capitol.

I said IPOs are the only wealth-generating function of the stock market. There are other implications; ideally the stock market functions as a method of transferring partnership with a business, but in practice it doesn't. Part of this is because you don't trade preferred on the open market, and common can be sold without conveying voting rights. Common has historically carried unexercised voting rights; but these days I see a lot of non-voting shares.

You seem to be confusing day trading as the the entire stock market. The ability to buy and sell stocks creates liquidity of ownership. Without this, you will be more likely to have people who don't want to manage or own a company stuck doing this job.

This is a pile of nonsense. Non-public companies are bought and sold all the time.

There is no crystal ball to tell us what skills will be in demand in the future. Our education system doesn;t create this burden for students. That burden is there by default.

The burden is not there by default because by default vocational education is not accessible to the vast majority of the public. In ages past, in "the good old days", in times long forgotten, there was this thing called "Apprenticeship". We still have it in some places, but now you must have vocational education before apprenticeship. Prior, apprenticeship was the only form of vocational education. In this form, a guild or a business or a certain skilled tradesman would obtain vocational aid from an unskilled entrant laborer, transferring vocational skills upon them. In this way, the market demand for a skill creates a demand for the unskilled to take up such vocational apprenticeship, such that only so many as needed to aid those already in the profession will be taken up.

In other words, the history of vocational education has been that people got jobs relieving skilled tradesmen from performing low-skill labor, providing an immediate increase in labor ca

Re:So?

[TsuruchiBrian]

First off, nobody actually calls in voting rights. Second, I have had voting rights in 2 companies; I have held stock in 34. Common stock doesn't always convey voting rights. Third, common stock can be cancelled.

It's as if I say "The voters decide the winner in an election", and you say "Almost nobody actually votes", as if this is a rebuttal to my statement.

I said IPOs are the only wealth-generating function of the stock market. There are other implications; ideally the stock market functions as a method of transferring partnership with a business, but in practice it doesn't.

Using your logic I could say that IPOs don't generate any wealth either. They just tranfer wealth between the current owners of the company and the new shareholders.

You seem to be confusing day trading as the the entire stock market. The ability to buy and sell stocks creates liquidity of ownership. Without this, you will be more likely to have people who don't want to manage or own a company stuck doing this job.

This is a pile of nonsense. Non-public companies are bought and sold all the time.

Did I say that *no* public companies are ever sold? No I said that without a market, less companies will be sold. Reading comprehension...

The burden is not there by default because by default vocational education is not accessible to the vast majority of the public. In ages past, in "the good old days", in times long forgotten, there was this thing called "Apprenticeship"

So what stops a kid from deciding to spend 10 years learning blacksmithing right before this skill becomes useless in the face of industrialization?

You keep changing your story. You say this:

It is only natural that people work to enrich themselves; this comes always at the expense of depriving others of wealth.

and then you say

Wealth is created, wealth is transferred. If you create $10 of wealth but you derive $15 of wealth from others who you pass it on to--i.e. you farm wheat, you've created food--you've both increased the wealth in a system and deprived others of wealth.

In other words enrishing oneself does *NOT* *AWLAYS* come at the expense of depriving others of wealth!!!

I can't have a discussion with someone that doesn't know what the fuck they are trying to say, and constantly contradicting themselves.

You make these ridiculous "all" or "never" absolutist statements. You: "All bears are brown!" Me: "What about polar bears?", You:"All bears are brown *AND* sometimes they are white".

you go off on these crazy irrelevant tangents that have nothing to do with anything I have said

Why are you talking about sustainability of natural resources? Did I ever claim that we have unlimited resources?

You need to figure out what ever it is you want to say, and try to say it in a clear and concise way. They way you have a discussion, it's like trying to argue with a schizophrenic person. You're all over the place. It's like you are completely ignoring what I am saying and arguing against a different person.

I'm done.

Re:So?

[bluefoxlucid]

It's as if I say "The voters decide the winner in an election", and you say "Almost nobody actually votes", as if this is a rebuttal to my statement.

That's actually important here because people allegedly pay for the right to vote. It's also like saying you bought a car and pay for car insurance but you take public transportation and never drive: why did you buy a car? By contrast, being a citizen of the United States of America automatically means you can vote for free, without paying for it.

Secondly, you skipped the part about some stocks having no voting rights so what the fuck are you buying?

Using your logic I could say that IPOs don't generate any wealth either. They just tranfer wealth between the current owners of the company and the new shareholders.

The difference is people buy and sell stocks to trade money between individuals or groups attempting to capitalize on the undervalue/overvalue of those stocks. This doesn't encourage any other business activity. IPOs are businesses raising capital to engage in business activity: it funds research and development, production, expansion, and so on.

So what stops a kid from deciding to spend 10 years learning blacksmithing right before this skill becomes useless in the face of industrialization?

You don't understand risk, do you? Probability versus Severity. Risk is lower when either of these is lower. So what's the probability of an industrial revolution, versus the probability of an upsurge of labor in a market that disconnects the production of skilled labor from the demand driver?

Historically, college education at student discretion has produced repeated cycles of skilled labor scarcity followed by overabundance; whereas vocational education driven directly by employers has produced faster reaction to skilled labor scarcity, resulting in a reduction of severity--the demand doesn't build out of control because demand immediately causes production of skilled labor, and the supply doesn't build to excess because skilled labor supply is essentially directly commissioned by the consumer.

The historical factors show that the amount of risk in an employer-driven skilled labor system is lower. Importantly, though, the risk is on employers: you could be trying to train, at your expense, a retarded monkey. In the modern system, the risk is higher *and* it's mainly offset onto students, so employers don't have to suffer direct risk; it's debatable if the system puts more risk overall on employers as well, since they can be subject to a supply shortage of skilled labor at any time. On the other hand, their risk management plan may include "train some people to be programmers if there aren't enough programmers and they all want $200k", so they effectively have a mitigation plan that allows them to reap the benefits without facing consequences.

If you create $10 of wealth but you derive $15 of wealth from others who you pass it on to--i.e. you farm wheat, you've created food--you've both increased the wealth in a system and deprived others of wealth.

In other words enrishing oneself does *NOT* *AWLAYS* come at the expense of depriving others of wealth!!!

Uh, I said that people try to "profit" by creating something worth less than what they sell it for--that they transfer to you a thing worth something like $10 but make you pay $15 for it, so you are less wealthy and they are more wealthy. And you use this as an example of not depriving others of wealth? Are you going to use contracting HIV in Africa as an example of having sex without getting an STD next?

Let's break it down: "you create $10 of wealth"--you have a thing worth essentially 10 dollars. "You derive $15 of wealth from others who you pass it on to"--you sell it for 15 dollars. The person who receives it is, essentially, 5 dollars less wealthy. They are deprived of 5 dollars of wealth.

To this you say:

In other words enrishing oneself does *NOT* *AWLAYS* come at the expense of depriving others of wealth!!!

Is English not your first language?

Can nobody design a secure Bitcoin wallet?

[Anonymous Coward]

Lets hope Bitcoin Dark Wallet can do it right.

Dark Wallet is a project of unSYSTEM and Defense Distributed that starts with simple premises: Bitcoin as a web technology and privacy by default.

For worst or better

[JcMorin]

This is for worst or better, online wallet that CONTAINS your private key can be hacked like inputs.io. That's why it's recommended to use wallet like blockchain.info where you hold the private key so they can't spent bitcoin for you. In some case where they must hold the key for you (exchange service for instance) most of their coin should be in cold storage / not allocate to direct individual. In another news, Bitcoin value is at all time high over $300.

Re:Can nobody design a secure Bitcoin wallet?

[FriendlyLurker]

Great intro video... 31,306USD Raised of $50,000 Goal...

So simple...

[DogDude]

I'm so glad that Bitcoin is such a simple solution to the complexity of cash!

Re:So simple...

[nurb432]

Except that was never its intent.

Re:So simple...

[Anonymous Coward]

Then it is an unqualified success. Between the hackers after your money and the government tagging anyone who uses Bitcoin as a probable criminal, I'd never touch the shit.

Re:So simple...

[Anonymous Coward]

I'm so glad that medicine is such a simple solution to the complexity of dying!

The point of bitcoin isn't to simplify existing systems, but to improve them.

Re:So simple...

[Anonymous Coward]

I'm so glad that Bitcoin is such a simple solution to the complexity of cash!

It was an organization which managed your bitcoins for you. Not unlike the organizations which manage your dollars for you, known as banks. As soon as you bring your dollars to a bank, you no longer consider them cash. In the same way, once you bring your bitcoins to such an "online wallet", they lose any similarity with cash. You've essentially gotten a bank account, with all the complexities and risks coming with a bank account.

Re:So simple...

[Anonymous Coward]

And yet that's what every proponent of Bitcoin (including the paid shills that edit this site) has tried to convince us of from the very beginning -- that Bitcoin could supplant real currency. Now that the whole plan is crashing down in flames those same proponents have no defence other than "Bitcoin was never meant for that purpose." Funny how your perspective changes when you find out your "sacred cow" is more like "a big steaming pile of bullshit."

That's what you get for buying into an easy-money scheme. No sympathy for the devil and all that.

Re: So simple...

[Anonymous Coward]

With none of the benefits of a traditional bank.

Re:So simple...

[Anonymous Coward]

as opposed to the muggers, bankers and government after your other currency

Re:So simple...

[Anonymous Coward]

To be fair, the easy-money scheme works if you're at the top of the pyramid.

Or if you can trick people into depositing their money into your shady online "bank".

Re:So simple...

[Anonymous Coward]

Given the public transaction log, about the only one of those that has a possibility of not affecting bitcoin is bankers, but, as you can see, this story is about...incompetent bankers.

Re:So simple...

[Anonymous Coward]

Now that the whole plan is crashing down in flames

Got any evidence of that?

If you think bitcoin might crash some day, or think it's a bad idea, just say so. But you look like either a liar or an idiot, any time you say it has happened or is happening. That is simply objectively false. At a bare minimum, bitcoin is an overwhelming success .. so far. The future is the thing that is still debatable.

Re:So simple...

[IamTheRealMike]

And the dumb thing is, the whole point of Bitcoin is you don't need a bank. So why aren't these people using a local wallet like MultiBit?

Re:So simple...

[Anonymous Coward]

The point of bitcoin isn't to simplify existing systems, but to improve them.

No, not even that. The point of Bitcoin is to cut out the middleman. That wouldn't be an improvement if the middleman weren't an incredibly greedy, irresponsible asshole.

Re:So simple...

[Anonymous Coward]

Except that was never its intent.

Then you'd better come up with a useful intent, one that isn't "make a few hyper-libertarian whackjobs feel warm and fuzzy", or the other 97% of the world isn't going to give a shit, and thus comes the failure of your precious "currency-that-isn't-a-currency-that-isn't-spendable-except-when-it-is" or whatever other hasty contradictory bullshit rationalizations the community came up with THIS week when someone asked what the point of it is.

Re:So simple...

[sexconker]

I'm so glad that Bitcoin is such a simple solution to the complexity of cash!

There is exactly one rule to securing Bitcoin wallets - treat your wallet like cash.

Would you hand your cash over to some internet website to hold for you?
Would you hand your cash over to some internet website to hold for you if they claim to be a "bank"?
Would you hand your cash over to some internet website to hold for you if they actually are a regulated bank and deposits were FDIC insured?

Would you leave your change laying out in the open on your desk(top computer)?
Would you leave a few dollars laying out in the open on your desk(top computer)?
Would you leave hundreds or thousands of dollars laying out in the open on your desk(top computer)?

Would you put large amounts of cash in a safe(ly encrypted wallet)?
Would you put very large amounts of cash in a safe(ly encrypted wallet) held by a regulated bank / insurance agency, and get contracts signed to cover your ass?

It's not hard, kids. Don't hand over you Bitcoins to anyone unless you have legal recourse if they fuck up. Encrypt your wallets.

Re:So simple...

[Goaway]

Encrypt your wallets.

Nowhere near enough defence. Once your computer is compromised, that is not going to stop it, when it can just keylog you or hook into the memory of the running bitcoin client.

Re:So simple...

[Agent ME]

Now that the whole plan is crashing down in flames

What? Did you read the article, or even its summary? A site named inputs.io which used bitcoins was hacked. Bitcoin itself wasn't hacked. Your post is like complaining the US dollar is going up in flames because a bank robbery happened somewhere.

Re:So simple...

[TsuruchiBrian]

You can buy physical bitcoins if you want something simpler, just like you can get physical dollars if you don't want to deal with complexity of virtual dollars. Or if you want something even simpler you can go back to bartering, or just farming your own food.

Re:So simple...

[hurfy]

I don't get it either.

If you are getting rid of the middlemen then what is this Inputs.io ?
One is still required if one wishes to buy something other than a handful of items with a price in bitcoins, right?

What it looks like is you have eliminated is the responsibility of the middlemen. Sounds more like a bankers wet dream than a snub.

Re:So simple...

[sexconker]

Encrypt your wallets.

Nowhere near enough defence. Once your computer is compromised, that is not going to stop it, when it can just keylog you or hook into the memory of the running bitcoin client.

Your box getting owned is an end game scenario with or without Bitcoin.
It's equivalent to your safe being cracked. If you feel your safe isn't secure enough, use multiple safes hidden around (multiple wallets in USB drives or on PCs not connected to the internet). If you feel that isn't secure enough, contract your security out to a bank or insurance company that provides secure storage of assets.

The single rule holds true - treat your wallet like cash.

Re:So simple...

[david_thornley]

If somebody robs my bank, it doesn't affect me. If the bank crashes, I'm out money until I get it back from FDIC. My savings are pretty safe.

If I stash bitcoins in something similar to a bank, not only are they vulnerable to an insider grab-and-run operation, but the bank can be hacked into insolvency, and I take the losses.

Re:So simple...

[Goaway]

The single rule holds true - treat your wallet like cash.

Well, quite. But there are safer ways to store regular cash than having it as cash in your home. For bitcoin, not so much.

Re:So simple...

[Burz]

...your "sacred cow" is more like "a big steaming pile of bullshit."

Hey, at least the cow was there at some point.

Re:So simple...

[sexconker]

The single rule holds true - treat your wallet like cash.

Well, quite. But there are safer ways to store regular cash than having it as cash in your home. For bitcoin, not so much.

You can get a bank or insurance firm to securely store just about anything, including digital files, and you can get insurance to cover it.
You can secure your Bitcoins as well as you can secure cash.

Re:So simple...

[AK Marc]

Insurance companies did not, and many still do not, consider the information contained on your computer as "tangible property." http://www.investopedia.com/financial-edge/0312/why-digital-insurance-is-important.aspx

I found references that insurances companies are beginning to cover the loss of data, but I didn't find any that would offer a secured storage. You can put them on USB and put that in a safe deposit box, but that's not securing a digital file, that's securing a physical item that contains data.

If you don't provide a link to a service that provides the service you claim exists, I'll have to assume you are lying because you really like arguing, and the truth is irrelevant to a good argument.

Re:So simple...

[JesseMcDonald]

You can buy physical bitcoins if you want something simpler, just like you can get physical dollars if you don't want to deal with complexity of virtual dollars.

There is no such thing as a "physical" bitcoin; that's just marketing-speak. The objects marketed as "physical bitcoins" are nothing but storage devices for private keys, fundamentally no different than a piece of paper or a USB stick, apart from a (theoretically) tamper-evident seal. You have to trust that whoever applied the seal handled the private key properly and didn't retain a copy, since anyone with a copy of the key can instantly render your "physical bitcoin" worthless.

Physical dollars correspond to virtual bitcoins. The equivalent of virtual dollars would be something like inputs.io, where rather than holding bitcoins yourself (with exclusive access to the private keys) you only have an account with someone who holds them for you, with all the potential for error and fraud which that implies.

In this case inputs.io appears to have done something extraordinarily stupid in keeping all their customer's bitcoins online, where attackers can get at them, instead of leaving the majority in offline "cold storage". Past attacks have shown why this is a bad idea, but it seems some people never learn.

Re:So simple...

[TsuruchiBrian]

Physical dollars are no different than virtual dollars, and you have to trust that it is not counterfeit. I said it was simpler not better. It is certainly simpler to have trust than to be diligent about security.

Re:So simple...

[JesseMcDonald]

Physical dollars are no different than virtual dollars, and you have to trust that it is not counterfeit.

Physical dollars are very different from virtual dollars. One is a physical object, the other is an entry in an accounting system saying that a bank owes you a dollar. In the same way, you hold real bitcoins if you know the private key matching an entry in the blockchain, which is different from an entry in input.io's computers saying that they owe you a bitcoin.

(Good) counterfeit dollars, on the other hand, really are no different from non-counterfeit dollars. Sometimes they're even made with the same materials and equipment. The difference is all in whether whoever made the dollars had authorization to do so, not in the dollars themselves.

Re:So simple...

[TsuruchiBrian]

The piece of paper that the dollar is printed on is real. The dollar itself is more than the paper it's printed on similar to how a bitcoin is more than just the electrons used to store it in a computer. The electrons are real physical particles, but a bitcoin is virtual.

(Good) counterfeit dollars, on the other hand, really are no different from non-counterfeit dollars. Sometimes they're even made with the same materials and equipment. The difference is all in whether whoever made the dollars had authorization to do so, not in the dollars themselves.

The fact that we consider unapproved dollars to be counterfeit even when they are basically identical is evidence that dollars are not physical. There is no such thing as counterfeit gold that is identical to real gold. If you find a way to make gold (e.g. alchemy), your gold is just as valid as any other gold.

Re:So simple...

[Ash-Fox]

If you think bitcoin might crash some day

The Bitcoin application has already crashed for me. It sent an error report to Microsoft!

Re:So simple...

[Ash-Fox]

Because MultiBit isn't online, so you can't access it from 'anywhere'.

Re:So simple...

[Ash-Fox]

Your box getting owned is an end game scenario with or without Bitcoin.

Even the most sophisticated compromised attacks on the 'client side' don't work against bank sites that use multi-factor authentication to get anything done.

Re:So simple...

[sexconker]

Insurance companies did not, and many still do not, consider the information contained on your computer as "tangible property." http://www.investopedia.com/financial-edge/0312/why-digital-insurance-is-important.aspx

I found references that insurances companies are beginning to cover the loss of data, but I didn't find any that would offer a secured storage. You can put them on USB and put that in a safe deposit box, but that's not securing a digital file, that's securing a physical item that contains data.

If you don't provide a link to a service that provides the service you claim exists, I'll have to assume you are lying because you really like arguing, and the truth is irrelevant to a good argument.

Fuck right on off you shitless moron.
Contact a bank, law firm, or insurance company. Tell them you have digital files you wish to secure and you have money you wish to pay them in exchange for them doing so.
All you would need to do is have the insurer create their own wallet and secure it, then transfer your funds to it through the Bitcoin network. DONE. They can store it physically or digitally, it doesn't fucking matter. Draw up a contract. Get it done. It's not fucking hard.
Just because it's not on the fucking menu at Geico.com doesn't mean it's not an option.
You can insure your fucking stuffed guinea pig collection from acid attacks if you ask through Lloyd's of London. Nothing is off menu unless you're s brainless plebe who doesn't know how the world works.

Re:So simple...

[AK Marc]

Ah yes. You are wrong, you admit you are wrong, and you are being abusive such that you hope nobody will respond. Call Allstate or State Farm or Geico and ask them to secure 1GB of old family photos. Tell us what the price is. Then call a data storage service and ask the price to archive 1 1GB flash drive in a secure physical lockdown for 7 years. Insurance companies can do *anything* so long as you give them an infinite amount of money and indenmify them against loss. Doesn't mean they know how to handle the data, or that it'll be there when you ask for it, but that if they do break it, they'll pay you cash for your loss. That's not very secure, but that's what you are paying for.

You made it sound like it was a trivial service any insurance company would do. Then you narrowed it down to one and only one that you think might do it, if you were to offer them enough money. That's like saying "ah, you can insure your ankles at your insurance company." That's a lie. Yes, you might be able to insure an ankle at a specialist insurance company (for ballet dancers and professional athletes), but it isn't a common policy and most people wouldn't be able to get (or afford) such an insurance.

" a flaw on the server "

[nurb432]

Might want to make that more clear in story, it almost reads like an anti-bitcoin FUD thing.

So a 'bank' had their servers breached and money stolen... *yawn*.

Re:" a flaw on the server "

[Anonymous Coward]

Yeah, it'll be fine, the depositors will be made whole when the FDIC insurance pays out.

Oh, wait, this is buttcoin and we don't have any statist garbage like "deposit insurance", so the customers are in fact screwed.

Re:" a flaw on the server "

[Anonymous Coward]

Meh. It's fine - the market will fix it.

Re:" a flaw on the server "

[Anonymous Coward]

Is there any evidence that the people running the service didn't just take the money and run?

I mean, what was really stopping them from doing that? Once you get to a point where a rational analysis of the situation would tell you that emptying all the deposits into your own account will net you more profit than the total expected future "legitimate" earnings of the "bank", why wouldn't you do it? It's not like the cops are going to investigate a Bitcoin transfer.

Re:" a flaw on the server "

[Anonymous Coward]

This is what happened. This story reads exactly like the ponzi scheme websites from the early 2000's, when they would close up shop and run after collecting millions in people's life savings. 4daily, studiotraffic, ect. al.

The site owners almost feel a little bit guilty and the excuses are to cover that small bit of guilt in the back of their mind. If you met these 'bank' owners in real life you'd never trust them with your money. This kind of greed will ultimately be the undoing of bitcoin and most other currencies like this.

Re:" a flaw on the server "

[fastest fascist]

Yes, they're screwed. They trusted a third party with their coins, which is simply a bad idea. Now, deposit insurance is great for bank accounts, as most people don't really have any other choice than to give a bank their money to hold for them. That's not true with Bitcoin. You can be your own "bank", and it is, in fact much safer than using a third party as one. Rule of thumb: do not use web wallets. If you must use one, only store small amounts for short periods of time there.

Re:" a flaw on the server "

[ArsenneLupin]

...this is buttcoin...

Reminds me of that old "do you want that sausage sliced or whole?" joke...

Re:" a flaw on the server "

[Goaway]

In fact, it just did!

Re:" a flaw on the server "

[TsuruchiBrian]

Deposit insurance isn't a property of currency, it's a property of a bank. There is no reason that a government couldn't decide to insure bitcoin deposits, even if they don't currently.

HAHAHAHA

[GameboyRMH]

Holy shit, 4100? Is that ALL the bitcoins!?!? XD

Re:HAHAHAHA

[kajsocc]

Holy shit, 4100? Is that ALL the bitcoins!?!? XD

No, but it is about $1.23M at current exchange rates.

Re:HAHAHAHA

[JcMorin]

4100 stolen, not sure how many they had. The current total number of bitcoin in circulation almost 1.2 millions each at about $ 300 piece. number of bitcoin in circulation price chart

Re:HAHAHAHA

[camperdave]

Holy shit, 4100? Is that ALL the bitcoins!?!? XD

That's roughly 1.2 million dollars, my friend, at current exchange rates. And incidentally, there are aproximately 12 million bitcoins.

Re:HAHAHAHA

[ArcadeMan]

That can only mean one thing. Aliens hacked inputs.io!

Re:HAHAHAHA

[Anonymous Coward]

That's roughly 1.2 million dollars, my friend, at current exchange rates.

Assuming you can find anyone with 1.2 million on-hand who will willingly fork over the cash in exchange for nerdcoins. I got some bad news for ya.

exact

[JcMorin]

Unlike traditional bank, you can trace the money stolen where it goes but unable to get it back. Bitcoin have no way to force a transaction except if everyone would update their software to approve a transaction without the valid cryptographic signature something unlikely to happen considering the thousands of instance running.

Re:exact

[bobbied]

This is the thing about BitCoin I never understood. The proponents of BitCoin claim that it was untraceable, but all transactions are traceable by looking at who spent the coin and who owns it now, at least by their public key. This information is included in the data blob that IS the coin and lots of people have to observe the transaction before it becomes valid. You may not know who's key is who's, but you certainly can trace ownership of the BitCoin.

So, you may not know who owns a single coin, but though simple observation of transactions and a bit of foot work you can easily piece together who's who and who's spending their coins on what. It becomes a data mining operation with a bit of detective work to trace where folks are converting traditional currency into and out of BitCoin. Which is totally different than trading say dollars in currency. You *might* be able to trace currency transactions though things like DNA traces left on the bills or serial numbers (if you know them), but if somebody passes a briefcase of money around, there will be no way to trace each transaction that might have taken place.

Re:exact

[Anonymous Coward]

Looks like you understand just fine. Fanboys of any ilk are inclined to say any stupid thing if it justifies their fanboy status. If you want to understand something, it's best to get as close to the source as you can and see for yourself how it works.

Re:exact

[Anonymous Coward]

I can answer this one. Proponents will say whatever supports their position. In this case, as you argue, the position is baseless. Fortunately for BitCoin this is not the only thing going for it. It is unfortunate that proponents pick this one to proclaim so loudly.

Re:exact

[MightyYar]

It certainly isn't inherently untraceable, but it is trivial to launder. Wallets are anonymous and unlimited.

Re:exact

[dj245]

It certainly isn't inherently untraceable, but it is trivial to launder. Wallets are anonymous and unlimited.

Is laundering effective if the entire record of all transactions is public information? At best, it would provide plausible deniability only.

Re:exact

[bobbied]

True, but eventually to get your money out of the Maytag you will have to convert it to another currency so you can buy something. All law enforcement has to do is catch you converting your BitCoin or associate your wallet(s) with you and they can trace everything.

The problem with money laundering is always the same. You have illegal assets that you either have to hide by not spending (and where's the fun in that) or make them look like legitimate assets so you can use them. BitCoin doesn't make this conversion any easier than laundering that briefcase of $20's and you add that every transaction you do is forever documented in the block-chain of the coins and I would see this as *very* risky. If law enforcement ever ties you to a wallet, they can go back and find every transaction you ever made using that wallet. Which is totally not true if they catch you with a briefcase of real money.

Re:exact

[Anonymous Coward]

Could you explain how you will trace a mined bitcoin produced on TOR?

Anonymous bitcoins are more difficult and less plentiful, but they are available to those in need.

Re:exact

[Anonymous Coward]

Well, you could take a bunch of bitcoins, convert them to cash, and then convert the cash back to coins.
Now the only one who can link you, is the exchange. Which is a pretty weak point admittedly.

Re:exact

[MightyYar]

It is when you can create a wallet, use it for the transaction, and then destroy the wallet. You launder the money in the same way people do today with dollars - set up a sham business and use patsies. "Earn money from home!" When my step mother smoked, she bought cigarettes from Ukraine. Each carton came from a different return address. Yes the transaction record is there in the bitcoins that you used, but who cares? The trail stops at some woman in Oklahoma who was paid to convert bitcoins to cash and then deposit the cash to some Nigerian bank account.

Re:exact

[ArbitraryName]

The proponents of BitCoin claim that it was untraceable

I don't know what "Bitcoin proponent" told you that, but you could have just checked the Bitcoin FAQ to see that not only is that not an actual claim anyone knowledgeable about the project is making, but that they remind you of the exact opposite.

Re:exact

[TsuruchiBrian]

How do you show that someone owns a bitcoin wallet? Anyone could own a bitcoin wallet if they know the private key. How do you prove a person is the only person who knows a particular number?

The laundered bitcoins are not on one guilty person's computer, they are on everyone's computer. The knowledge of the private key is hard to prove if you take the right precautions.

Of course a country that tolerates convicting people with slim evidence are free to punish whoever they want, but those countries usually punish mostly poor minorities anyway.

Re:exact

[Anonymous Coward]

It is when you can create a wallet, use it for the transaction, and then destroy the wallet. You launder the money in the same way people do today with dollars - set up a sham business and use patsies. "Earn money from home!" When my step mother smoked, she bought cigarettes from Ukraine. Each carton came from a different return address. Yes the transaction record is there in the bitcoins that you used, but who cares? The trail stops at some woman in Oklahoma who was paid to convert bitcoins to cash and then deposit the cash to some Nigerian bank account.

If you have to convert your bitcoins to dollars to launder them than why would you bother with the F-ing bitcoins when dollars are more widely accepted (and apparently more easily laundered)?

Re:exact

[bobbied]

As I point out, eventually you are going to have to trade your currency for something. This is always where the risks are for laundering money, because it is the transaction that makes the illicit look legal. With cash, you just walk up and hand over the bills. There is no record of where all that cash came from and while it might be flagged as suspicious, there is no way to trace the money. But if you get caught paying in BitCoin, or redeeming your BitCoin for cash, then you just handed law enforcement a total record of every transaction in and out of your wallet.

Folks are getting bent out of shape over NSA monitoring cell phone metadata, yet BitCoin publicly publishes the equivalent data in the data blocks that come with the coins. All the stuff that the NSA can do by sifting though this call data can be done by sifting though the BitCoin data blocks. So once you catch one bad guy, you now have the means to go back and find out *every* wallet he had transactions with. Chances are, many of those will be bad guys too. Catch enough bad guys using BitCoin and you can go back and discover what was going on using basic data mining techniques and start making associations to people you didn't know where involved.

So sure, authorities may not know NOW who is who, but if they keep snooping long enough they might find out. And when they find out, the whole network will be at risk of discovery.

Re:exact

[TsuruchiBrian]

Whats the difference between giving a guy $300 in an alley for some drugs, or using a phone to transfer 1 bitcoin from a wallet to another wallet right before a guy in an alley verifies that this wallet received a bitcoin and gives you some drugs?

Re:exact

[Anonymous Coward]

the fact that the bitcoin transfer may take as long as an hour to clear?

Re:exact

[bobbied]

The transaction is *forever* recorded in the data block of the BitCoin, while the $300 in cash is untraceable for the most part.

Re:exact

[TsuruchiBrian]

My point was that you don't have to make the illicit look legal, because the government can't stop your transactions, similar to the way that the government can't stop a cash transaction. In many ways it's better than laundering money, because you can't have your accounts frozen when/if you are found out. Anonimity is good, but it's good because it allows you to keep doing whatever you want to do. Bitcoin allows you to do what you want to do even without anonymity *and* it provides a higher degree of anonymity than regular bank accounts, though probably not as much anonymity as cash.

Re:exact

[MightyYar]

You have to admit that it is an easy way to move money around. No mailing of currency required.

Re:exact

[Ash-Fox]

How do you show that someone owns a bitcoin wallet?

Packet inspection offers a good lead.

Re:exact

[TsuruchiBrian]

why would it? Anybody can propagate a transaction. Just because you sent a packet doesn't mean that you are the person who knows the private key required to sign the transaction. Lots of people help propagate transactions into the blockchain. You only know which wallets the transactions are between, just because you see a transaction coming from a particular computer, it doesn't mean that computer was the originator of the transaction. this computer could just be propagating the transaction.

Re:exact

[Ash-Fox]

why would it?

It would reveal that something Bitcoin related is being operated at that address.

Lots of people help propagate transactions into the blockchain.

Which tend to be people whom have Bitcoin wallets.

Re:exact

[TsuruchiBrian]

How do you show that someone owns a *particular* bitcoin wallet?

Which tend to be people whom have Bitcoin wallets.

Sort of like people who wear hoodies tend to be criminals?

Re:exact

[Ash-Fox]

How do you show that someone owns a *particular* bitcoin wallet?

Detective work. I said this was a lead, not full evidence.

Sort of like people who wear hoodies tend to be criminals?

No, those are chavs.

Re:exact

[OdinOdin_]

Agree and understand. But you can create as many private keys as you like, you do not have to maintain a single identity.

Other users sending money can send fragments of the total value to different identities.

Great

[benjfowler]

So now I need a PhD in computer security to use Bitcoin without getting robbed?

In security, complexity is a smell.

Re:Great

[lxs]

No you need to keep your wallet encrypted on your own computer with a backup in a strongbox off site and remember to never entrust your valuables to random clowns on the internet.

Re:Great

[Anonymous Coward]

With real money, though, I can just deposit it at a bank, and it's far more convenient and secure than keeping federal reserve notes in a fireproof safe in my closet.

And if someone robs the bank, there's insurance to pay out the money and the FBI to go find the robbers. They're even pretty good at it.

Re:Great

[BitZtream]

No, I'll just keep cash and a real bank instead.

All the advantages of bitcoin, none of the disadvantages.

Of course, I also live in the real world and not fantasy land.

Re:Great

[fastest fascist]

You can send money across the globe almost instantly, with low fees and no-one to stop you from donating to your favourite politically unpopular charity using cash or a real bank?

Re:Great

[Immerman]

"Real" money? Just FYI *all* money exists only as a social fiction. Even gold coins have value only because as a society we agree that it does.

"Real" banks on the other hand - the kind that carry insurance in case of theft, that's another thing. Still only as secure as the organization backing it, but better. Your biggest worry there is probably that someone with an axe to grind will trump up some charges to get your assets frozen. I can't see why anyone would trust their money to some random person that hung a "Bank" sign outside their (virtual) door. Especially with bitcoin, which unlike cash doesn't exist except as notations on a massively distributed ledger. Bitcoin in your personal wallet is probably safer than any other kind of currency, it's more like having it in an unbreachable safe deposit box accessible from anywhere - provided you keep your key secure your money can't be burnt, shredded, stolen, or frozen.

Re:Great

[Immerman]

>All the advantages of bitcoin, none of the disadvantages.

Really? Your bank offers free international money transfers? Immunity to asset freezing and seizure? Guaranteed irreversible deposits? Who are they, I want an account!

Bitcoin has it's issues, but the biggest seem to be associated with the self-named "banks" that deal in it, and there's no particular reason you have to deal with them at all - if you can keep your wallet secure and backed up then your money is safer than in any bank. It's strength on the other hand are sometimes less immediately obvious, and one of the really big ones is its total independence from geography. Care to guess at just how much money is made by banks every day just for facilitating money transfers?

Re:Great

[Anonymous Coward]

"Real" money? Just FYI *all* money exists only as a social fiction.

"Real money" is any token readily exchangeable for beer. This definition has been more or less constant since at least the Hammurabi administration. Where I live, the U. S. Dollar fits this definition and Bitcoin doesn't.

And while we're at it, your personal computer is as "unbreachable" as swiss cheese. Consider that consumer-level banking exists because the general public likes to have someone else handle secure money storage and is willing to pay for this service. If your crypto-anarchist currency is incompatible with this widely-demanded service, as it appears to be, that's a bug. It remains a bug even when you claim that it's the best feature.

Re:Great

[Sloppy]

But what else is there? ;-)

It was people smelling the underlying complexity (and security vulnerabilities) of grain sacks, gold bars, paper-dollars, bank-dollars, credit cards, Paypal, etc that led to the succession of those things, with Bitcoin being the latest solution-to-it-all.

Every one of Bitcoin's ancestors had failures, and due to grass-is-always-greener psychology, the most recent ones (dollars and financial server institutions) are naturally viewed as the "worst" (because their failures, unlike grain bags' failures, are part of people's real experiences and memories) so Bitcoin has gone full circle (not exactly, but it's kind of commodity-like) and tends to have security models similar to commodity-money's models. Thus it's having similar failures ("I lost my wallet" == "I forgot where I buried the gold" ; "someone 'hacked' my wallet and transfered my funds out" == "I dug up my gold, and the chest was empty" ; "The online wallet service closed and they, rather than me, is who actually had the key" == "The guy, whom I asked to hold my gold, disappeared").

Maybe some day, governments will use force or sneakiness or "social weight" to make a new chain policy more popular than today's policy, and there will be a Bitcoin fork, which presents a model more like 20th century banking. Then the security complaints will be "my account got frozen" or "I'm leaking wealth due to government-created inflation" or even "the price of everything in BTC changed because of immensely complicated market and government forces that I can't begin to understand, where my currency on the surface appears to be as strong as it was in 2106, but somehow here in 2109 I'm poorer." And then we'll repeat the cycle again.

We'll repeat it again, because money wasn't actually the problem. Real life was the problem, and life is complicated. Life is full of intelligent adversaries (sometimes posing as friends, sometimes not), bumbling fools with too much power, bad luck, freak accidents, etc, and nobody can ever get rid of all that stuff.

Re:Great

[Sloppy]

Heh, "financial server institutions." My fingers insist that root just always has to end in "-er."

Re:Great

[Anonymous Coward]

Bitcoin transfers are neither free nor instantaneous.

And "all transactions are irreversible" is a bad thing. If transactions could be reversed, this story wouldn't exist, would it? People who buy things like the ability to chargeback when the seller rips them off or some hacker steals their credit card number.

As for asset seizure, they seized Ulbright's wallet but good, didn't they?

Re:Great

[cusco]

And if your house burns down and takes your computer with the wallet? I can cash in fragments of burned bank notes for new ones, but I think that might be a problem with Bitcoins.,

Re:Great

[cusco]

Yes. My in-laws in Peru have ATM cards for our accounts, we've even had them buy property for us. Costs an extra $1.50 for the international ATM charge.

Re:Great

[Goaway]

Nope, nowhere near secure enough. If your computer gets compromised it does not matter if your wallet is encrypted.

Re:Great

[ArbitraryName]

You don't keep offsite backups of your important files? That's not really a Bitcoin specific problem.

Re:Great

[Immerman]

Who said anything about instantaneous? As for free, perhaps the reduction in mining payoffs has changed things, but I'm betting that getting a transaction into the block chain is still far cheaper than the 5-10% that's not uncommon for international bank transfers.

And yes, irreversibility has it's own problems, but also has advantages - it's not unknown for customers to rip off sellers by reversing charges after they have the product. And I guarantee you'll never see a Nigerian "I'll send you a million bitcoins you mail me back 90%" scam.

Okay, so I should have said *involuntary* asset seizure. If you hand over the keys yourself all bets are of course off. Granted that's unlikely to be an issue unless you're a criminal or dissident.

Re:Great

[G-forze]

Because having your money in the bank makes them so much more secure so much more secure.

Re:Great

[Immerman]

And while we're at it, your personal computer is as "unbreachable" as swiss cheese. Consider that consumer-level banking exists because the general public likes to have someone else handle secure money storage and is willing to pay for this service.

But what is the service being provided? If someone can steal my wallet credentials from my PC they can presumably just as easily steal my "bank account" credentials and steal my bitcoins that way.

Secure Online Wallet

[lxs]

Pick any two.

Re:Secure Online Wallet

[blahbooboo]

Pick any two what? I think you need to list 3 things for us to pick two from.,..

Re:Secure Online Wallet

[museumpeace]

i'd pick Secure and Wallet and screw Online...air gap for me.

Re:Secure Online Wallet

[jtmach]

Pick any two, from the following; Secure Online Wallet

Re:Secure Online Wallet

[Anonymous Coward]

Secure is one, online is one. You can have a secure wallet, or an online wallet. But not both.

Re:Secure Online Wallet

[Anonymous Coward]

I thought at first you might need to go grab some coffee and read his post again.
Then, I read some of your previous posts to verify.
Turns out, you're just an idiot.

Re:Secure Online Wallet

[cpicon92]

Okay... I pick Secure Online!

Re:Secure Online Wallet

[Anonymous Coward]

Security, Onlinearity, Walletness.

Re:Secure Online Wallet

[museumpeace]

Unfortunately for the average consumer, in fact virtually all consumers, the present scheme for credit card online purchases, e.g. Amazon, is trying to tell you that you can have all 3. What percent of consumers have to take a loss before either they or their card provider's insurance co. pulls the plug on this bizarre bazaar?

Re:Secure Online Wallet

[Opportunist]

Ok. Secure online.

Provide it if you can.

Re:Secure Online Wallet

[eric31415927]

Pick any two.

I'm afraid it's pick any one.

Re:Secure Online Wallet

[Anonymous Coward]

http://www.ahmad-web.com/

Re:Secure Online Wallet

[mrchaotica]

Look at the post's title.

It's not correct though, since not all "pick twos" are valid (e.g. "Secure Online")...

Re:Secure Online Wallet

[Anonymous Coward]

Secure online, please!

Re:Secure Online Wallet

[Anonymous Coward]

Sure they are. He/she is suggesting that you can have things that are secure and online, as long as they are not wallets.

Re:Secure Online Wallet

[LordLimecat]

Things can be done securely online, but he was making a joke and everyone here fails for ruining it.

Re:Secure Online Wallet

[Anonymous Coward]

I think 'Secure Online' here does not include Wallet. Therefore 'secure'.

Virtual Currency

[Anonymous Coward]

Let's call the real cops who are paid by real taxes to investigate the theft of tax-avoiding digtal currency!

Re: Virtual Currency

[UnknownSoldier]

And digital WoW gold is tax avoiding too? Pull your head out of your arse. The government has NO valid jurisdiction over arbitrary digital currencies.

Re: Virtual Currency

[Opportunist]

Then I guess they also have no business prosecuting the theft thereof?

Re: Virtual Currency

[Sockatume]

WoW gold is ultimately money in Blizzard's bank accounts, which are indeed taxed.

Re: Virtual Currency

[Anonymous Coward]

I hope they don't spend the resources to prosecute people who steal each other's WOW gold.

Re: Virtual Currency

[kajsocc]

This isn't true. WoW gold has no value from an accounting perspective. Blizzard does not put it on their balance sheets or cash flows, they are not required to track or report it, and they have absolute authority to create or destroy it at any time. They also (try to) crack down on anyone trading it for real money. Unless you're speaking in a very very abstract sense, it is not money in any bank account, and it is certainly not taxed. Yet.

Re: Virtual Currency

[BitZtream]

Uhm, actually, it does, beyond any doubt.

Not sure what silly fantasy you live in, but currency used in the realm is most certainly a concern of the realm, and its written into law.

Re: Virtual Currency

[Sockatume]

It's ultimately the product of people's computer time in WoW, which is a service provided by Blizzard through their paid-for and taxed-up business. If you're buying it with real cash, you pay for it through some perfectly ordinary, fully-taxed transaction. It's not a medium of barter outside of WoW so it strikes me that you're essentially trading some nominal portion of Blizzard's net worth.

Basically it's no more legally problematic than those vouchers towns put out that can only be spent at local businesses, or Mickey dollars. Although if I've missed something I'd like to know about it.

Re: Virtual Currency

[Opportunist]

Probably not. If you can't tax it, why bother?

Re: Virtual Currency

[Anonymous Coward]

It's supposed to be taxed when you trade it for cash.

Re: Virtual Currency

[kajsocc]

But you aren't supposed to trade it for cash. We're talking about WoW gold here, not Diablo 3 currency. And even if we were talking about Diablo 3, the point is that if you make an income in virtual currency which has no legitimate real-world ties, it does not count as an income for tax purposes. It's just video game currency. Of course, I can only speak for the US laws; other jurisdictions may actually try to tax income in a virtual currency which requires the use of shady 3rd-party sites to obtain a fair-market value, I don't know.

Re: Virtual Currency

[kajsocc]

it strikes me that you're essentially trading some nominal portion of Blizzard's net worth.

In an abstract sense, I wouldn't argue with this, though it's hard to say exactly how much. Even to get a price for the currency is difficult due to the lack of an open, fair market; your best approximation would be shady 3rd-party sites, whose prices vary considerably and are likely inflated due to the risk of being banned.

I'm only speaking from a legal/tax/accounting perspective. When Blizzard issues new currency or processes transactions, they aren't required to report them or collect tax on them. When an adventurer scores a big bundle of loot, it doesn't count as a real-world income for tax purposes. etc.

Re: Virtual Currency

[jonbryce]

If Blizzard are obliged to provide goods or services in exchange for the WoW gold, then it will be on their balance sheet as a liability.

Re: Virtual Currency

[kajsocc]

True, but they aren't. Moreover, the currency and all virtual property is wholly owned by them. See the EULA. It wouldn't make much sense from a business perspective to accept WoW gold in exchange for real-world goods or services; they'd be giving away something of tangible value to get something they already own. That said, such an offer might be a part of a larger strategy, e.g. to keep players enjoying the game by providing another way to get certain rare items or cosmetic effects for which Blizzard would otherwise charge real money.

Re: Virtual Currency

[ArbitraryName]

Basically it's no more legally problematic than those vouchers towns put out that can only be spent at local businesses

Those are not legally problematic, but they are taxable.

Luckily there are control instances

[Anonymous Coward]

to freeze the accounts and get at least some of the money back.

Oh, wait. There aren't. How's that anarchy tasting?

NOTHING OF VALUE LOST !!

[Anonymous Coward]

Just bits !! Imagination !! Hand waving !! Suckers !!

Re:NOTHING OF VALUE LOST !!

[Opportunist]

That's what I said when the stock exchange hit rock bottom a few years ago, but boy did that handwaving create a shitstorm!

Bitcoin is it just a scheme?

[blahbooboo]

Having watched this bitcoin project/program/scheme (whatever) unfold the last couple years it seems like a money making fraud scheme. I still don't fully understand how it works, it's extremely confusing to actually try to use the "currency", why someone can just say a bitcoin is worth X dollars, and you can create money by "mining" for it with a graphics card. It feels like something created by criminal entities which will eventually collapse or found to be fraudulent....

Re:Bitcoin is it just a scheme?

[Anonymous Coward]

How appropriate your handle is blah boo boo then. Try start here, or stick to your default currency until BTC moves out of the early adopter phase and all these teething problems are either worked out, or the whole thing re-invents itself. One thing is certain: Crypto currency in one form or another is here to stay...

Re:Bitcoin is it just a scheme?

[Opportunist]

Hey, if there was a country behind it we'd call it currency despite being pretty much the same system, where someone says one blubber is worth x dollars and you can create some by ... well, by creating some.

Re:Bitcoin is it just a scheme?

[rotaryexpress]

Mining bitcoins takes real equipment and energy, not so dissimilar from mining gold. What makes gold worth money? Because we (as a global community) all got together and said "Gold is worth $X". Is it really worth $X? Yes, because that's what someone will pay for it.

What is a dollar worth? That value changes all the time, it is in reference to something else (gold, other currency, real material goods). The dollar is something that is made up that we all agree has value. Bitcoin is something made up that we all agree has value.

The big difference between gold, dollars and Bitcoin is this:
-Dollars can be printed at will by the government, so is theoretically infinite.
-Gold you have to dig out of the ground, so is finite, but we don't know how much is really out there.
-Bitcoin needs to be "mined", so it is finite (mathematically limited). We know the total quantity and how fast it will get mined.

Re:Bitcoin is it just a scheme?

[neilo_1701D]

why someone can just say a bitcoin is worth X dollars

Because it is a commodity, and the market price of a commodity is determined by the intersection of the supply and demand curves for that commodity. So, you **can** say that a bitcoin is worth $X. Now go find someone willing to either buy or sell at that price.

you can create money by "mining" for it with a graphics card

Well, you can go cut down a tree, make a table and sell it. Same thing, from an economics point of view.

It feels like something created by criminal entities which will eventually collapse or found to be fraudulent

Given the murky history of the creation of bitcoins, I can see how you might think this. However, let's suppose that it's true: Bitcoins are the product of criminal entities. What's the payoff? Bitcoins only have value because there is a market for them. It doesn't take much to create a run on the market and drive the price through the floor. Then again, there was the "Bitcoin Bubble" earlier this year; have enough bubbles and you can generate real money. It's worth reading up on Bitcoins, if only to see that it's the digital equivilent of Tulip mania. Try https://medium.com/money-banking/2b5ef79482cb for a nice overview of the bubble, or Wikipedia.

Re:Bitcoin is it just a scheme?

[myowntrueself]

When you 'mine' a bitcoin have you actually produced something of tangible value other than an electronic token which a group of people have agreed to exchange goods and services for?

ie does the process of 'mining' bitcoins actually generate some kind of useful computational result? Something thats useful in genomics, or crypto or whatever, outside of just 'more bitcoins'.

Re:Bitcoin is it just a scheme?

[Anonymous Coward]

Thanks for sharing.

Dumbass.

Re:Bitcoin is it just a scheme?

[Sockatume]

Yes, mining performs the cryptographic operations that the entire Bitcoin transaction network depends upon.

Re:Bitcoin is it just a scheme?

[jythie]

At this point it is closer to futures or commodities, its value is derived from what traders are willing to pay each other for them with a certain percentage of people exchanging them for goods and services instead.

The 'mining' sounds stranger then it really is. There are an end number of bitcoins that will exist, but instead of having a central system that hands them out (like when the fed increases the money supply), there is a set of mathmatical problems that produce valid coins when being solved. It is kinda gimcky but has the same net effect, increasing the supply over time to hopefully match the ecosystem.

Re:Bitcoin is it just a scheme?

[lxs]

"Why someone can just say a bitcoin is worth X dollars"

That's how it works. Everyone buying and selling has a different value for X in mind and when trades take place these values converge to a real number, a number that has been rising rapidly lately.

Re:Bitcoin is it just a scheme?

[jythie]

No, it does not produce anything useful, it is just a mechanism to throttle the increase in supply.

If I recall correctly, and maybe someone can describe this better, there is another area for growth that comes out of the math behind handling transactions. So having a machine sit and help wrangle the chains, which is critical for bitcoin working, can also produce new coins, which is computationally useful (at least within the ecosystem).

Re:Bitcoin is it just a scheme?

[fastest fascist]

No-one can say what a bitcoin is worth. All they can say is what it's been traded for. As for why "miners" get money, that serves a dual purpose.

Bitcoin is a solution to the problem of creating digital cash without a central authority to prevent double spending. "Miners" act as notaries. When Alice sends Bob some BTC, "miners" witness this and if they manage to create a new block on the blockchain, they note this transaction down in the distributed ledger. Without this ledger, Alice could simply send the BTC she sent Bob to Charlie, but since the notaries have noted Alice's transaction with Bob, Alice can't scam Charlie or Bob by double spending.

This is a service "miners" provide, and they are paid for it. Finding a block, and therefore being able to note down the transactions a miner has seen into the blockchain is a computationally expensive task. It has to be to make it unattractive to try to falsify the record. Currently the majority of the reward for these notaries comes from the new coins created with each block. This is the second purpose of mining - creating the Bitcoin money base in a manner that distributes the coins to many people over time. As you probably know, the amount of new coins being created will taper off over time, and transaction fees are expected to pay the notaries enough to bother with it. If they do not, fewer people will bother with using their electricity on "mining" and it will get correspondingly easier to find a new block until things even out.

Re:Bitcoin is it just a scheme?

[jonbryce]

If there was a country behind it, you could use it to pay your taxes, and that is what gives it its value.

Re:Bitcoin is it just a scheme?

[Opportunist]

The very fact that I have to pay taxes with and for it lowers its value to me.

Re:Bitcoin is it just a scheme?

[ledow]

Please tell me the dollar value of, say, a sword from Warcraft. Or a Steam Trading Card. Or a TF2 item.

It's EXACTLY the same - a virtual item gains "value" from the amount others are willing to pay for it. Enough people like that makes a market, and the item a commodity.

Hell, we deal in "frozen concentrated orange juice futures" in the "real" world of stock markets, I see no reason that Bitcoin is any different.

There can only ever be X amount of BitCoin. Like there are only one thousand "foil" cards in a trading set in the world, or whatever, or only 5 golden tickets in your Wonka Bars. Scarcity and demand create a value that far exceeds what you might be personally willing to pay.

And like everything else in real life or virtual, you can make money using Bitcoin without ever using it as a currency. I put £20 into Bitcoin a few months ago. At one point it was worth £15. Now it's worth £30. If you know how to play that market, you can make money without ever buying a single "real" product with the currency.

I bought some Humble Bundles with the "interest" that accrued through me doing absolutely-bugger-all. I don't "mine", and CPU mining is dead now as the Bitcoin protocol ensures that supply and demand balance by making Bitcoins "rarer" and harder to find as time goes on, so that whole side of it is practically irrelevant to the casual user.

Sure, you can scam people on it. Sure, you can lose money. But you can also use it like any other commodity. My Steam Wallet has ZERO value outside of Steam. My TF2 items are given to me for free (I don't buy them). But at some point I am able to carefully watch prices, track various commodities, come out with a "virtual" profit that I can them use to buy free games. Since the Steam Trading Card Beta began, I've had about £50 worth of free games on my single, 10-year-old Steam account, just by leaving games running in the background and then trading the cards / items I got from that. (Hell, I made £10 in Halloween items in TF2 alone this year, now I know what I'm doing and what websites to trade various things on).

People who instantly leap on the "it's a scam" line are liable to get scammed in real life - because they just don't understand that it's nothing more than legal trade in commodity (admittedly there's illegal trade as well, same as everything else from stolen WoW accounts to cloned virtual items, etc.) and is subject to the exact same "rules" as your real money.

It can collapse. It can collapse because of fraud. So did the Zimbabwean currency, if you remember. I think I'd rather have had my money in BitCoin than Zimbabwe any day. But that's just the same as everything else involving money - a balance of risk versus reward on a simple numbers game.

Re:Bitcoin is it just a scheme?

[jonbryce]

Most countries tax income earned in bitcoin in exactly the same way as they tax income earned in their own currency or any other country's currency.

Re:Bitcoin is it just a scheme?

[Agent ME]

why someone can just say a bitcoin is worth X dollars

Anyone is allowed to offer to buy bitcoins from you at a price they choose. That's normal free market bartering.

it's extremely confusing to actually try to use the "currency"

Have you ever used any bitcoin wallet software? It's pretty simple once you know that bitcoins are stored in addresses, and you can have as many addresses as you want. (Though it is sometimes a bit hard to find an exchange you can actually buy bitcoins from.)

and you can create money by "mining" for it with a graphics card

Bitcoin mining is the process of creating proof-of-work statements that verify the transaction history of the Bitcoin network. As a reward for this work, and as a way of accomplishing the initial minting as fairly as possible in a decentralized system, mining creates new bitcoins for the miner.

It feels like something created by criminal entities which will eventually collapse or found to be fraudulent

The whole system is open source and well-reviewed. I don't think it makes much of a difference who it originally came from.

Re:Bitcoin is it just a scheme?

[Goaway]

"Depends on" in the sense that if you didn't make people do pointless busywork the scheme wouldn't work, yes.

Doesn't mean you have actually done anything of actual value, though. Mining work is basically completely pointless.

Re:Bitcoin is it just a scheme?

[ultranova]

"Depends on" in the sense that if you didn't make people do pointless busywork the scheme wouldn't work, yes.

Doesn't mean you have actually done anything of actual value, though. Mining work is basically completely pointless.

Counting votes is pointless busywork without which the scheme - democracy - couldn't work. We could avoid it completely by simply obeying whoever happens to have the biggest club. But that has other problems which, at least in some people's minds, justify the extra expenditure required for a somewhat decentralized power structure, rather than one that's completely controlled by a single entity.

Re:Bitcoin is it just a scheme?

[ArbitraryName]

When you 'mine' a bitcoin have you actually produced something of tangible value

The miners are the people who do the computational work to verify transactions. Without miners the system could not process any transactions. So, yes. They provide a necessary service within the context of Bitcoin.

Re:Bitcoin is it just a scheme?

[Goaway]

Not at all comparable. Counting votes is gathering actual information. The mining work isn't.

Re:Bitcoin is it just a scheme?

[myowntrueself]

But the process of bit coin creation doesn't produce anything that can actually be used outside the bitcoin system? Unlike, say, mining gold (gold having numerous practical uses).

Re:Bitcoin is it just a scheme?

[myowntrueself]

And mining, eg, gold doesn't just produce something only useable as currency. So mining gold isn't combarable either. The only thing I can think of thats comparable is... a ponzi or pyramid scheme.

Re:Bitcoin is it just a scheme?

[Anonymous Coward]

Most countries tax income earned in bitcoin in exactly the same way as they tax income earned in their own currency or any other country's currency.

What about gains made selling your 2009 purchased bitcoins in 2013?
Do countries tax this windfall?

Re:Bitcoin is it just a scheme?

[jonbryce]

That would be taxed as a Capital Gain in the UK, and most countries have similar rules. In most cases it will be the same as selling shares at a profit. If you bought Apple shares at $90 each in 2009 and sold them today for somewhere in the region of $500 ($512.49 as I type this), would you pay tax?

Re:Bitcoin is it just a scheme?

[Goaway]

Well, I won't go that far. There is a valid technical reason why miners have to do nonsense work. But that doesn't really make that work itself meaningful. It is literally a waste of time of energy, because that is what it is designed to be, because the whole system would collapse if you could do it too quickly, so you have to force people to waste time.

Re:Bitcoin is it just a scheme?

[myowntrueself]

Well, I won't go that far. There is a valid technical reason why miners have to do nonsense work. But that doesn't really make that work itself meaningful. It is literally a waste of time of energy, because that is what it is designed to be, because the whole system would collapse if you could do it too quickly, so you have to force people to waste time.

Yeah I get that. But it would be nice if it also actually produced some useful work like crypto, genomics, protein folding etc. as a byproduct. Plenty of gold gets used in industry. Just think about those awesome gold hifi cables (oh.. wait).

Good. A hard lesson.

[stevegee58]

Never, never, never trust your Bitcoin wallet to a third party, no matter how trusted.
Keep your wallet safe by maintaining personal, physical possession of it and adhering to safe network practices.

"Bank"

[Dan East]

I think it is a misuse of the word "bank" using it to describe these websites.

Re:"Bank"

[Opportunist]

Damn right. I don't see them getting any bailouts any time soon.

To paraphrase Don Vito Corleone

[TheloniousToady]

"A hacker with his computer can steal more than a hundred men with guns."

Telephone number?

[Joining Yet Again]

So, for security, you had to provide a telephone number? Ahahahahaha.

Bitcoin makes everything about currency handling harder for the average person.

It doesn't provide anonymity - that could be facilitated by a central bitcoin exchange server, which may or may not be logging everyone's activity (intentionally or otherwise). But then you might as well use any traditional money laundering method.

The only interesting thing with Bitcoin is that there's a limit to the amount of bitcoins. But just as a govenrment mandate detached the dollar from gold, a government mandate could change relevant representations+algorithms to allow the government to produce more bitcoins at will. And, just as everyone accepted who accepted US dollars accepted the former change, they'd accept the latter change too.

Bitcoins are a tool for speculators, drug dealers, and criminals.

Re:Telephone number?

[Anonymous Coward]

How, exactly, is a QR code harder than hoping you didn't forget your chip and pin card in a machine, and remembering yet another shitty 4-digit pin?

Which currency isn't used as a tool for speculators, drug dealers, and criminals? Just wondering, since you come off so arrogant you should know.

Re:Telephone number?

[Joining Yet Again]

Which currency isn't used as a tool for speculators, drug dealers, and criminals?

Exactly. We don't need another one.

Re:Telephone number?

[Agent ME]

So, for security, you had to provide a telephone number? Ahahahahaha.

Bitcoin makes everything about currency handling harder for the average person.

That's not a feature of Bitcoin.

The only interesting thing with Bitcoin is that there's a limit to the amount of bitcoins. But just as a govenrment mandate detached the dollar from gold, a government mandate could change relevant representations+algorithms to allow the government to produce more bitcoins at will. And, just as everyone accepted who accepted US dollars accepted the former change, they'd accept the latter change too.

Bitcoin is an open source project, used by many to get away from centralized controls like that. Many people would stop using it, or work on making the proper version more anonymous rather than switch to some specific government's fork of Bitcoin.

Re:Telephone number?

[Joining Yet Again]

So, like any other nascent currency.

1. Grows until enough of the people are using it;
2. Gets regulated by the people, through the government;
3. The usual suspects don't like joining in, and keep their wealth in other forms.

Bitcoin has no features except that anti-money laundering laws aren't applied to it yet, as they are with mainstream currencies.

motives?

[museumpeace]

It does not sound like Nation State Attacker was at work here.
The attack was not so sophisticated that the infosec boys were left scratching their heads as to how the breach was made. In fact, for a so-called vault, Inputs.io leaving up the access to old accounts that skirt 2FA seems sloppy.
And, certainly, having 4100 BTC to spend for your porn and drugs would be motivation to some who are capable of such an attack.

But I assume central banks and gov'ts with propped up currencies don't want to see Bitcoin really take off. Just breaking everyone's trust in BTC is a win for them.

Re:motives?

[devman]

Could have been an inside job. Collect $1.2 million in BTC from "depositors". Take all the money and run. Blame it on hackers. Profit. No one is going to investigate, there are no consequences, there is nothing to audit, and no way to seize back the funds even if some legal action were taken.

Re:motives?

[tibman]

There are consequences to inputs.io. People with bitcoins probably all panicked and pulled their coins out. That is why it is very unlikely to be an inside job.

Re:motives?

[devman]

You seemed to have missed the point. I was proposing that the insider in a hypothetical inside job doesn't care that inputs.io crashes and burns because they just made off with 4100 BTC. As the summary mentions some people could not "panic and pull their coins out" as there were no coins to pull out.

To be clear, I'm not saying that this is what happened, merely floating it as a possibility, given the nature of BTC it wouldn't be hard to pull off.

Re:motives?

[tibman]

When you said no one would investigate, it made me think that you were saying the company would not investigate because they were the criminals. If you are saying that is not the case, then i think there would be an investigation by the company.

You are certainly right that it could have been an inside job though. They'd have to be afraid of an internal audit though.

Re:motives?

[Anonymous Coward]

There are consequences to inputs.io. People with bitcoins probably all panicked and pulled their coins out. That is why it is very unlikely to be an inside job.

How could they pull their coins out if inputs.io was doing an inside job? No withdrawals would actually be sent. This is absolutely the work of a site admin scammer imho.

Re:motives?

[tibman]

Sounds like it might be a scam: http://www.reddit.com/r/Bitcoin/comments/1q2law/inputsio_hacked_and_shutdown_4100_btc_stolen/

Re:motives?

[TheloniousToady]

Exactly. The lack of an audit trail that many user deem to be a feature is an even more important feature for inept or dishonest bankers.

Which reminds me: the new Bitcoin version of "It's a Wonderful Life" is due out this Christmas:

George Bailey: [yelling at Uncle Billy] Where's that money, you silly stupid old fool? Where's that money? Do you realize what this means? It means bankruptcy and scandal and prison! That's what it means!

What?... It was just Bitcoins?... And it was Potter's Bitcoins? Hey, that's swell Uncle Billy, real swell! Look, no sweat. Let's go have a little "eggnog" at Martini's.

Re:motives?

[Anonymous Coward]

That argues against an inside job only if inputs.io cost more than $1.2 million to build up to its state just before everybody pulled their coins out.

Not anonymous, not untraceable, not limited

[Anonymous Coward]

So, for security, you had to provide a telephone number? Ahahahahaha.

Yep. So much for "anonymous" and "untraceable."

...It doesn't provide anonymity - that could be facilitated by a central bitcoin exchange server, which may or may not be logging everyone's activity (intentionally or otherwise)....

Yep. It is not designed to be anonymous-- all transactions are reported. You can trust that they are not being recorded, and you can take steps to hide your identity-- but this is up to you.

The only interesting thing with Bitcoin is that there's a limit to the amount of bitcoins. But just as a govenrment mandate detached the dollar from gold, a government mandate could change relevant representations+algorithms to allow the government to produce more bitcoins at will. And, just as everyone accepted who accepted US dollars accepted the former change, they'd accept the latter change too.

Exactly. A part of the value of bitcoin lies in your trust that they don't decide to increase the number of bitcoins.

Eventually, of course, if bitcoin is to remain viable they will have to increase the number-- we have lived in a world of inflation for so long that we have forgotten that deflation is what happens when you have a fixed amount of specie. Deflation is just as bad as inflation, and the ultimate result of deflation is that it forces people to turn to other forms of currency.

Re:Not anonymous, not untraceable, not limited

[Anonymous Coward]

The transactions are recorded in the blockchain as a matter of design.

Re:Not anonymous, not untraceable, not limited

[Anonymous Coward]

[...]we have lived in a world of inflation for so long that we have forgotten that deflation is what happens when you have a fixed amount of specie. Deflation is just as bad as inflation, and the ultimate result of deflation is that it forces people to turn to other forms of currency.

Keep telling yourself that. Your lovely government loves how well you've been trained. Good boy.

third party risk

[Anonymous Coward]

Bitcoin was designed to eliminate third party risk. The risk of the government/bank freezing assets arbitrarily. The risk of the government seizing additional "TAX" money. The risk of spying on your transactions. The risk of the government debasing the currency. etc etc etc

If you are using bitcoin in a manner that exposes you to significant and avoidable third party risk...ie. online wallets with no backup...then their is no one to blame but yourself.

In this case the risk was created from control gaps of a "fourth party" provider. The bitcoin.io's third party host was weak on several fronts.

Re:third party risk

[Olathe]

Bitcoin can't be designed to eliminate any risk at all. There are security holes in all computers. Offline wallets are vulnerable to theft. All transactions are recorded somewhat permanently for anyone, including the government, who can and probably is permanently recording all of them. The way bitcoin works is changeable in just about any way by a vote of the miners, a large proportion of whom can be pressured legally, because the big mining operations are publicly known.

Not only that, but it's designed in such a way that it's very, very difficult to secure properly. This is why people use third parties who presumably know how to handle the security.

Re:third party risk

[Anonymous Coward]

I didn't say it was designed to eliminate all risk its designed to eliminate exposure to THIRD PARTY RISK(only if you choose to). If your offline wallet is hacked or physically stolen that's a failure on the individual to adequately secure it. All transactions being recorded is a feature not a risk. That's integrity and non-repudiation rolled into one.

As far as building evolution and changes into bitcoin this is a feature and legally pressuring every miner seems like a gross misunderstanding of how mining happens and who is mining globally. If half miners stop mining, nothing changes the other half that remain still have to agree on the change. Ultimately though existence of other cryptographic currencies is a hedge against this, if bitcoin gets soured somehow buy governments every will jump ship to an alt coin.

Wallets are very easy to secure, take it offline and don't tell anyone about it. done and done. But we all know Americans can't even be bothered to memorize an atm pin longer than 4 digits.

Re:third party risk

[Olathe]

I didn't mean that you said it eliminated all risks. I meant that there wasn't even one risk that was eliminated (though perhaps some were reduced). Unless you're building your own computers from components that you manufactured, you're making your own operating system, you're making your own bitcoin software, and so on, you are taking on third party risk that cannot be eliminated because you're accepting and using security-critical components developed by third parties. Unless you are literally generating your key by pencil-and-paper calculation (which is not the normal way of doing things by the design of bitcoin because it raises the risks of insufficient randomness and human error), your offline wallet's key was almost surely on a computer and an operating system that might have been compromised while the key was present or the system might not have deleted it.

All transactions being recorded may be a feature, but it still greatly reduces the strength of your argument about spying, particularly when statistical analyses are used.

It may happen that if bitcoin changes due to legal pressure, people will move to other currencies, but there are a lot of reasons not to assume that's a sure thing. Bitcoin will already have been established and working which will reduce the drive to switch, the risk of such a thing happening again will dampen enthusiasm, the newly-explicit lack of legal legitimacy (which hampered bitcoin growth) will hamper growth, and there's a high chance that alternatives will be permanently stuck with just about only enthusiasts as users.

This is why I only use FDIC-insured bitcoin banks

[Anonymous Coward]

...

Tired of bashing Bitcoin, yet?

[mathimus1863]

Yeah, I know it's the "fad" to bash Bitcoin. But it's disappointing, because Bitcoin represents everything that us nerds reading slashdot should like: It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics. Most of us here dig that stuff.

Get over the hype and take Bitcoin for what it really is: a fascinating experiment that has, so far, withstood the amazing barrage of publicity, hacking attempts, legal uncertainties, and remains valuable for reasons completely contrary to everyone that says it's worthless. It may become worthless one day, but consider the possibility that Bitcoin is disproving all your wildly oversimplified assumptions about what makes something valuable. It is completely different than anything else we know, and there's plenty of reasons to believe that it could succeed as much as it could fail.

Why does gold have value? Nothing is backing gold. Yet it has value, mainly because of its properties: scarcity, fungibility, density, beauty, etc. Bitcoin is really quite similar but with some different properties. Ease of transfer over the internet, fungibility, scarcity, storage efficiency, near-anonymity and built-in escrow. I don't think it's any more ludicrous for Bitcoin to have value than it is for gold to have value. And in the end, when I want to sell WoW weapons, buy webserver space, or play a few games of poker online, why would I use credit cards or paypal, which all require me to remember log-in creditials, give away personal information to be [improperly] protected by a third-party and/or pay a bunch of fees. There's plenty of value in being able to pay people across the world, instantaneously, without sacrificing your privacy, and without paying any fees. Why is that not valuable?

Re:Tired of bashing Bitcoin, yet?

[DogDude]

But it's disappointing, because Bitcoin represents everything that us nerds reading slashdot should like: It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics. Most of us here dig that stuff.

Speak for yourself. One of the founding principles of geekdom that I learned from geeks much older and much smarter and much wiser than me, and that I still believe wholeheartedly in is: KISS (Keep It Simple, Stupid). Bitcoin fails KISS, spectacularly.

Bitcoin is a laughably complex solution that's looking for a problem. It's a Rube Goldberg contraption. It's much more complex than any other payment system, it's value as a currency is wildly unstable, it's prone to all sorts of technical and security problems, and it's insanely un-private.

The whole thing is a load of garbage or a brilliant performance art piece, depending on how you look at it.

Re:Tired of bashing Bitcoin, yet?

[Anonymous Coward]

We tear apart healthcare.gov when it fails; why shouldn't we rag on bitcoin when it fails? Or are we only supposed to attack things when they come from the evil government?

Re:Tired of bashing Bitcoin, yet?

[Sockatume]

You're joking, surely? For all that's wrong with it, it's as elegant as a decentralised digital transactions system could be. The issue is rather whether decentralised digital transactions systems, much less ones that also act as a novel unit of trade, are a good idea.

Re:Tired of bashing Bitcoin, yet?

[mathimus1863]

"Bitcoin is a laughably complex solution that's looking for a problem."

If you tell me how you could move $10 million anywhere in the world, in 10 minutes, without third-parties, without fees, and without risk of reversal...then you just answered your own criticism.

Re:Tired of bashing Bitcoin, yet?

[Anonymous Coward]

Then tell us how to "move $10 million anywhere in the world, in 10 minutes, without third-parties, without fees, and without risk of reversal" with Bitcoin.

I'll be nice and allow you to pick any "$" of your choice, but please start and end with the same one. No fair starting with 10 million USD and ending up with 10 million COP.

Re:Tired of bashing Bitcoin, yet?

[Agent ME]

It's much more complex than any other payment system

That partly has to do with it being a decentralized cryptocurrency. Without central authorities or trusted servers, it takes quite a bit more to force everyone in the network to work together and agree on the state of the system. (And as digital currency systems can go, it is still pretty far from the most complex. Look up older partially anonymous Chaumian currencies.)

it's value as a currency is wildly unstable

Because it's not widely used yet. You can't peg the value of a decentralized currency to a centralized one. Its value works just by supply and demand, and as demand fluctuates wildly, so will its value.

it's prone to all sorts of technical and security problems

The article is about a specific vulnerable site that got hacked, not the bitcoin system or software itself.

Re:Tired of bashing Bitcoin, yet?

[Agent ME]

Bitcoin didn't fail. Some site named "inputs.io" did.

Re:Tired of bashing Bitcoin, yet?

[GrievousMistake]

I disagree. The "proof of work" busywork is wasteful and makes it hard to prove any real security. The Bitcoin protocol scales poorly and consumes disproportionate resources.

I am sure it is possible to do both the ledger and the currency distribution more elegantly than Bitcoin does.

For instance, a IOU system like Ripple could facilitate a Hawala-like transaction network without the meaningless weapons race caused by allocating new coins proportionally to hashing power.

Or zero-knowledge protocols could be used to vastly enhance the anonymity of transactions.

Bitcoin is an interesting proof of concept, but "as elegant as a decentralised digital transactions system could be" is overselling it by far.

Re:Good. A hard lesson.

[ArcadeMan]

When I shutdown my laptop I store it in a safe to protect my bitcoins.

Re:Good. A hard lesson.

[Anonymous Coward]

Never, never, never trust Bitcoin.

FTFY

Why this strange fixation on physical currency?

[sirwired]

Well, I agree with you on one point: Robbing a bank by walking into the lobby of your local branch is very romantic, but it's a horrible and dangerous way to steal money, and has lousy returns. I'd say we've long past the point where that was the best way to rob a bank. (I'd say owning or running a bank is probably the best way to rob it...)

A bank doesn't need to keep ANY dollar bills on hand for dollars in their bank accounts; only branch banks need physical currency at all. There are plenty of non-branch banks out there that don't have any physical currency; what would they need it for? The Fed does not require any bank, even Federal Reserve members, to hold any particular portion of their assets in currency (although I do think Federal Reserve members do need to let their account holders withdraw their deposits as cash at any point; it's how the Fed actually distributes cash out into the economy.)

A dollar bill doesn't represent "debt"; it represents one dollar's worth of the world's total supply of dollars/dollar-denominated assets. In that sense, it's little different from a share of stock. Some of those dollar-denominated assets are debts, some are coins in my pocket, some are bits on my bank's hard disks, some consist of stacks of $100's in a cave in some benighted 3rd-world kleptocracy. If the supply of dollars increases faster than dollar-denominated assets, we have inflation, if the reverse happens, we have deflation.

You may of course choose to blame the Federal Reserve for whatever you like, but the Fed did not create fractional reserve banking or fiat currency, nor did they originate the idea of moving money around through a method other sacks of cash.

And even if we still had the gold standard, why would we tie the amount of gold on-hand to physical currency? Virtual currency is easier and safer to store, manage, and move. An electronic dollar is no different from a $1 bill in my pocket.

BTW, yes, credit is the backbone of every modern economy in the world; this is hardly new... it's been the case for centuries. Modern capitalism would be utterly impossible without it.

Re:Why this strange fixation on physical currency?

[QilessQi]

Sorry; I must have missed the part where I blamed the Fed for anything, or even said that they created fractional reserve banking, or said that we should be on the gold standard. Let me re-read my comment. Hmmm... nope, still not seeing it. I just said:

We seem to be fast approaching the point where computer-based theft will be the way you "really rob a bank".

And then explained why. You may object to the word "bizarre", but fractional reserve banking is pretty surprising to most people who think that banks keep sacks of cash on hand.

Re:Why this strange fixation on physical currency?

[sirwired]

"And thanks to the Federal Reserve system, there aren't even physical assets (like gold bars) of equal value to all the Federal Reserve notes in circulation. It's a bizarre system that only works as long as debt keeps circulating (buying and selling) and accumulating (loans with interest)."

It sure sounds to me like you are blaming the Federal Reserve for the gold standard being gone. And then following it with a statement about "bizarre" fractional reserve banking sure read to me like you are blaming the Fed for that too.

If you meant to point out the ignorance of those that neglected to pay attention to Civics class in high school, where they went over all things like the Federal Reserve and fractional reserve banking, you could have phrased it differently.

Re:Why this strange fixation on physical currency?

[QilessQi]

I understand your misunderstanding of my phrasing, then. :-) Many American high schools do not (or, at least at one point, did not) teach fractional reserve banking or have a "Civics" class that would have covered it. The school I went to absorbed all that information in their "history" curriculum, which covered government and court cases but barely touched on economics. Quite a few Americans I have spoken to are surprised by this aspect of their own economic system.

Piggy bank for your virtual coins

[Anonymous Coward]

It doesn't give you interest or loans but I think it's called bank in a more general sense. Isn't a piggy bank where you keep your coins?

Re:Good. A hard lesson.

[Anonymous Coward]

Never, never, never trust *snip* Bitcoin.

Good point! Lesson learned!

Is my reasoning sound?

[Bram Stolk]

I've been analyzing bitcoin lately, and have come up with the following reasoning:

As the coins are limited to 21M coins, you can, at this date, purchase 1/21Mth part of all the coins in the world for $300,-
Even if you put the odds of bitcoin supplanting US dollar very slim (1:1000), the only rational choice is to buy bitcoin.
If in 2030 the world uses bitcoins, you end up owning a sizeable portion (1/21M) of the entire money supply of the world's default currency.
How is this not a good deal? Heck, even at 1:1000000 odds of bitcoin supplanting US dollar would still make sense at $300,- per coin.

Where is fault in my logic? It seems too easy.

Re:Is my reasoning sound?

[Anonymous Coward]

And if hairs from Steve Jobs' head were to supplant the US dollar, you'd be a fool not to buy them at thousands a dollar a piece. You'd be a fool not to buy any of the innumerous altcoins people create every week.

An internet pyramid scam for nerds is not going to supplant the US dollar, not even one times in a thousand. Even if something absolutely catastrophic happened to the US economy, just about any other real-world currency, followed by several better thought-out cryptographic cash systems would be better choices than Bitcoin.

Re:Is my reasoning sound?

[JoelKatz]

If everyone agreed with this reasoning, the price would already be higher. The fact that the price is where it now shows that other people assess the probability of Bitcoin taking over a substantial fraction of the world economy *much* lower than you do. If you still think you're right and everyone else is wrong, then buy Bitcoins.

Re:Is my reasoning sound?

[Anonymous Coward]

I've been analyzing bitcoin lately, and have come up with the following reasoning:

As the coins are limited to 21M coins, you can, at this date, purchase 1/21Mth part of all the coins in the world for $300,-
Even if you put the odds of bitcoin supplanting US dollar very slim (1:1000), the only rational choice is to buy bitcoin.
If in 2030 the world uses bitcoins, you end up owning a sizeable portion (1/21M) of the entire money supply of the world's default currency.
How is this not a good deal? Heck, even at 1:1000000 odds of bitcoin supplanting US dollar would still make sense at $300,- per coin.

Where is fault in my logic? It seems too easy.

You messed dup when you assumed the probability of bitcoin becoming the worlds primary trade currency was higher than 0.

Re:Is my reasoning sound?

[Anonymous Coward]

Your first mistake is to confuse rare with valuable.

My nose hairs are rare, valuable? Not so much.

Re:Is my reasoning sound?

[Anonymous Coward]

It's a St Petersburg lottery. The price of entry seems low, and the expected value is incredible. But hmm, wait a minute, there is an enormously high probability that you'll get nothing whatsoever. That doesn't sound so good.

Don't buy tickets for a St Petersburg lottery. Don't buy bitcoin unless you already know which sucker you'll unload it on.

Re:Is my reasoning sound?

[Anonymous Coward]

The value of owning 1/21M of the entire money supply depends entirely on the price level of the goods and services you can buy with that money.

Right now, someone might trade you an iPad for 1 bitcoin. Maybe in 2030 that bitcoin gets you a gallon of milk.

Re:Is my reasoning sound?

[Bram Stolk]

The value of owning 1/21M of the entire money supply depends entirely on the price level of the goods and services you can buy with that money.

Right now, someone might trade you an iPad for 1 bitcoin. Maybe in 2030 that bitcoin gets you a gallon of milk.

That does not make sense: it would mean that the worlds money supply in 2030 would be enough for just 21M gallons of milk and nothing more.
Bitcoins are set up for hyperdeflation, not inflation.

Wikipedia calls this 'its deflationary bias'. (http://en.wikipedia.org/wiki/Bitcoin#Economics)

Re:Is my reasoning sound?

[Anonymous Coward]

The 21M bitcoins are just the "base" money supply. I assume in this future world order we are not prohibiting the formation of banks or the ability to get credit. Once credit becomes available, and the issuing notes become "almost as good as" the bitcoins that back them, then the total amount of "money" in circulation may be much, much more than the 21M bitcoins and will probably mirror growth in the real economy.

Inasmuch as credit is desireable and banks serve a purpose (and even a "central bank" may serve a purpose), you might see all of these institutions rise up naturally around this new currency, and the fixed 21M won't matter much at all.

Re:Is my reasoning sound?

[Bram Stolk]

The 21M bitcoins are just the "base" money supply. I assume in this future world order we are not prohibiting the formation of banks or the ability to get credit. Once credit becomes available, and the issuing notes become "almost as good as" the bitcoins that back them, then the total amount of "money" in circulation may be much, much more than the 21M bitcoins and will probably mirror growth in the real economy.

Inasmuch as credit is desireable and banks serve a purpose (and even a "central bank" may serve a purpose), you might see all of these institutions rise up naturally around this new currency, and the fixed 21M won't matter much at all.

You make a good point, which I had not considered.
Still, the 21M limit will still matter I think.
It *used* to be that banks had a strict minimum reserve for deposits.
Even with the 'money multiplier effect' the bitcoin will be a scarce resource for the banks, assuming that governments will still dictate a minimum deposit reserve. It's unlikely the minimum reserve will be scrapped altogether, as it would make banks too vulnerable.
http://en.wikipedia.org/wiki/Money_creation

Re:Is my reasoning sound?

[Anonymous Coward]

It would be a fascinating experiment, to be sure. However, as you've indicated yourself, it is hard to see how it could take place without government oversight. One of the main points of bitcoin, as I understood it, was to release money from the tyranny of government. I can only imagine what would happen if banks were *not* held to a certain discipline in money creation. Where do bitcoin advocates think this discipline will come from? Bank failures due to overeager money creation will only reduce confidence in the bitcoin currency, and make for a bumpy ride.

My line of reasoning is such: credit is necessary for the functioning of the modern world. A world dominated by Bitcoin will still have credit. Credit without regulation would be disastrous. Banks cannot be expected to self-regulate properly. A regulatory agency would be in charge. This regulatory agency would then have control over the amount of money in existence. And then we are right back to square one, in terms of the government's involvement in money.

Re:Is my reasoning sound?

[Bram Stolk]

... If you still think you're right and everyone else is wrong, then buy Bitcoins.

I'm glad I did.
My $300 coin is now worth $660, in just 11 days.
Tulip mania? Perhaps. But just maybe, with a chance ever so slight, it is something that's here to stay.
If it does, I'm insured against it, and will not have to buy my bitcoin for a million dollars.

Re:Is my reasoning sound?

[Bram Stolk]

My line of reasoning is such: credit is necessary for the functioning of the modern world. A world dominated by Bitcoin will still have credit. Credit without regulation would be disastrous. Banks cannot be expected to self-regulate properly. A regulatory agency would be in charge. This regulatory agency would then have control over the amount of money in existence. And then we are right back to square one, in terms of the government's involvement in money.

Good point.
There does seem to be some catch22 here.

Still: how did the economy of the 19th century work though?
Bank notes were still linked to gold that was in the bank's vault.
They seemed to make it work.
As a matter of fact: US economy did extremely well in 1800s, where pretty much every year, there was deflation instead of inflation.
Most years, you would get more for your dollar than previous year.
Translate that to the hypothetical 2030 economy where the gold is replaced with bitcoins, would it not be able to function?

Re:Good. A hard lesson.

[cusco]

And never let your hard drive crash, or your removable drive go through the washer.

Daylight robbery

[gmuslera]

As far i know, you can see the history of each bitcoin in the blockchain, each wallet that have and had it, each transaction that it had been involved into. If those bitcoins where moved to a particular wallet, any participant in the bitcoin network can see to which wallet it went it all, and what that person did after that. Maybe the name of that person is not known yet, but the people that will receive some of those bitcoins in exchange of something may have a hint on who they are or where they are living.

Unless, of course, the private key got erased instead of copied, or used to transfer them to somewhere else. Then the bitcoins will vanish in practice, but won't be a robbery in that case.

A bank going out of business? Sign me up!

[trout007]

This is great. Usually when a bank loses everything the taxpayers are forced to bail them out. The customers actually losing is a breath of fresh air.

logo.png

[raymorris]

Secure and online: http://a.fsdn.com/sd/logo_w_l.png

Re:logo.png

[Opportunist]

You really expect me to follow a random link to a page where even the link itself doesn't look like the epitome of trustworthiness on a security topic? Really?

Just like an anonymous proxy

[Anonymous Coward]

It might seem hard to understand why an entity like Inputs.io exists when one of the strengths of Bitcoin is its decentralized structure. But anyone who knows a bit about how fraud is prevented and how Bitcoin is spent easily sees its major flaw as virtual money. Every Bitcoin is basically marked money that you can trace from the moment it's created or "mined". By depositing their Bitcoins with Inputs, users of the service can mix their Bitcoins together such that the Bitcoins deposited are different from the Bitcoins withdrawn. The 1 BTC withdrawn by user Ann might, for example, be part of the 2 BTC deposited by Bob, who when decides to withdraw might draw his 2 BTC against the pooled Bitcoins of one or several other users.

i have some bitcoins in inputs.io

[Anonymous Coward]

i only have 0.0006 bitcoins in my wallet from faucets. i like the interface inputs.io. shame it got hacked though.

Re:Good. A hard lesson.

[Agent ME]

Not trusting bitcoins to web wallets doesn't mean you can't make encrypted backups.

What is the appeal of an online wallet?

[Anonymous Coward]

"Online wallet" seems like the equivalent of asking a homeless man to watch a shopping cart full of alcohol for you. What is the point? Genuinely curious because I bounce BTC through several exchanges, a wallet on my PC, and a paypal style service for cashing them out for USD. I don't see what value an online wallet would provide to help me with my use cases.

How to profit

[tygt]

Not that this is what's going on, of course, but this came to mind:

1. open bitcoin "bank"
2. get lots of deposits
3. "get hacked" and close up shop

There is no step four, the profit's in step three.

Re:Good. A hard lesson.

[stevegee58]

To the usual nattering nabobs of negativism, I suppose you haven't heard of multiple encrypted backups?

lol. If ./ didn't use a CDN

[raymorris]

That made me chuckle. Can I mod down my own GP comment?

My comment would have made a lot more sense if the URL was Slashdot.org/logo.png