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$500,000 Worth of Bitcoins Stolen 622

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

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  • Anonymous payments (Score:3, Insightful)

    by cgeys (2240696) on Thursday June 16, 2011 @08:53AM (#36461514)
    No worries! Police has to investigate a robbery of $500,000.. oh wait, anonymous payments were good now?
  • Brilliant... (Score:5, Insightful)

    by FritzTheCat1030 (758024) on Thursday June 16, 2011 @08:55AM (#36461534)
    What type of MORON keeps a balance of $500,000 in BTC?
  • Who cares (Score:1, Insightful)

    by sakdoctor (1087155) on Thursday June 16, 2011 @08:56AM (#36461550) Homepage

    Keep hyping that ponzi scheme.

  • Allinvain? (Score:5, Insightful)

    by Relyx (52619) on Thursday June 16, 2011 @08:56AM (#36461552)

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

  • Re:Who cares (Score:5, Insightful)

    by nitehawk214 (222219) on Thursday June 16, 2011 @09:02AM (#36461594)

    Keep hyping that ponzi scheme.

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

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

    Maybe I give people too much credit...

  • by Skarecrow77 (1714214) on Thursday June 16, 2011 @09:04AM (#36461616)

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

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

  • by Attack DAWWG (997171) on Thursday June 16, 2011 @09:07AM (#36461658)

    TFA says:

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

    The Wikipedia article [wikipedia.org] says:

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

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

  • "the end" (Score:1, Insightful)

    by rarel (697734) on Thursday June 16, 2011 @09:10AM (#36461676) Homepage
    Between the now completely humourless polls and the numerous slashvertisements for Drupal and now Bitcoin, it's now clear that /. has become just another corporate shill machine. Even the Ask Slashdot crowds aren't even trying anymore ("How can I get rid of undesired email?"... no, REALLY? wtf...)

    Sorry, I can't take it anymore.

    I'll miss you.

  • Whoops (Score:4, Insightful)

    by Attack DAWWG (997171) on Thursday June 16, 2011 @09:10AM (#36461678)

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

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

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

  • Re:Who cares (Score:2, Insightful)

    by Anonymous Coward on Thursday June 16, 2011 @09:10AM (#36461680)

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

  • by eldavojohn (898314) * <eldavojohn@nOspAM.gmail.com> on Thursday June 16, 2011 @09:12AM (#36461702) Journal

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

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

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

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

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

  • by next_ghost (1868792) on Thursday June 16, 2011 @09:21AM (#36461816)

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

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

  • by DanTheManMS (1039636) on Thursday June 16, 2011 @09:22AM (#36461834)
    A better analogy would be leaving the front door closed but unlocked (like having a firewall on your computer), but otherwise pretty much, yeah. You shouldn't have $500k worth of jewelry and $100 bills sitting in a known location in your house, and likewise it's pretty stupid to have $500k worth of BTC in an unencrypted, insecure wallet.dat file.

    It's relatively easy to make a new wallet unknown to anybody, copy the first address made by this fresh wallet, send that address most of your coins, then encrypt your "savings" wallet and delete the unencrypted copy. Heck, put the encrypted "savings" wallet on some USB keys and a few CDs/DVDs and put them in a safety deposit box if you want to. You can continue sending payments to that address as much as you want.
  • Re:"the end" (Score:4, Insightful)

    by Bogtha (906264) on Thursday June 16, 2011 @09:22AM (#36461838)

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

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

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

  • Re:"the end" (Score:4, Insightful)

    by ledow (319597) on Thursday June 16, 2011 @09:26AM (#36461872) Homepage

    There was no security breach in terms of Bitcoin.

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

    Basically: Pillock.

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

  • by Thud457 (234763) on Thursday June 16, 2011 @09:29AM (#36461894) Homepage Journal

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

    Much like most libertarians. /rimshot

  • Re:It's a oax (Score:5, Insightful)

    by Dragonslicer (991472) on Thursday June 16, 2011 @09:45AM (#36462112)

    Nobody could be stupid enough to...

    Any sentence beginning this way is automatically incorrect.

  • by edremy (36408) on Thursday June 16, 2011 @09:52AM (#36462188) Journal
    It's not obvious to a lot of people- folks think objects have value. Listen to any gold bug discuss the intrinsic value of gold, as if it has some inherent value beyond what people will pay you for it. Or, if you'd prefer, all the people who can't sell their house because they can't get what they paid for it and it's "Worth more"

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

  • Re:Brilliant... (Score:5, Insightful)

    by KDR_11k (778916) on Thursday June 16, 2011 @09:52AM (#36462190)

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

  • by slim (1652) <john.hartnup@net> on Thursday June 16, 2011 @10:12AM (#36462428) Homepage

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

    So are dollars.

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

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

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

  • And (Score:5, Insightful)

    by interkin3tic (1469267) on Thursday June 16, 2011 @10:13AM (#36462454)
    And nothing of value was lost.
  • by SanityInAnarchy (655584) <ninja@slaphack.com> on Thursday June 16, 2011 @10:17AM (#36462516) Journal

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

    Assuming there's a single address.

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

    Sure.

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

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

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

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

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

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

  • by timholman (71886) on Thursday June 16, 2011 @10:31AM (#36462682)

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

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

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

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

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

  • by westlake (615356) on Thursday June 16, 2011 @10:31AM (#36462698)

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

    What happens when your keychain is lost or stolen?

  • bullshit (Score:5, Insightful)

    by xded (1046894) on Thursday June 16, 2011 @10:46AM (#36462912)
    Timeline of events:
    1. [June 13, 2011, 08:47:05 pm] allinvain post on bitcoin forums
    2. [2011-06-13 21:13:49 GMT] LulzSec upload of Bethesda torrent on TPB, donation account in text is 176LRX4WRWD5LWDMbhr94ptb2MW9varCZP
    3. [Jun 15, 2011 1:59 PM] PCWorld story linked in TFS published
    4. [Jun 15th, 2011] Bethesda Lulz text upload to pastebin, donation account is 1KPTdMb6p7H3YCwsyFqrEmKGmsHqe1Q3jg

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

  • by Savantissimo (893682) on Thursday June 16, 2011 @03:19PM (#36466952) Journal

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

APL is a write-only language. I can write programs in APL, but I can't read any of them. -- Roy Keir

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