Security Breach Forces Bitcoin Bank Inputs.io To Halt Operations 285
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."
Re:HAHAHAHA (Score:2, Informative)
Holy shit, 4100? Is that ALL the bitcoins!?!? XD
No, but it is about $1.23M at current exchange rates.
Re:So? (Score:5, Informative)
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? (Score:2, Informative)
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:Is my reasoning sound? (Score:4, Informative)
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)