Bitcoin Thefts Surge, DDoS Hackers Take Millions 305
CowboyRobot writes "In November, Denmark-based Bitcoin Internet Payment System suffered a DDoS attack. Unfortunately for users of the company's free online wallets for storing bitcoins, the DDoS attack was merely a smokescreen for a digital heist that quickly drained numerous wallets, netting the attackers a reported 1,295 bitcoins — worth nearly $1 million — and leaving wallet users with little chance that they'd ever see their money again. Given the potential spoils from a successful online heist, related attacks are becoming more common. But not all bitcoin heists have been executed via hack attacks or malware. For example, a China-based bitcoin exchange called GBL launched in May. Almost 1,000 people used the service to deposit bitcoins worth about $4.1 million. But the exchange was revealed to be an elaborate scam after whoever launched the site shut it down on October 26 and absconded with the funds. The warnings are all the same: 'Don't trust any online wallet', 'Find alternative storage solutions as soon as possible', and 'You don't have to keep your Bitcoins online with someone else. You can store your Bitcoins yourself, encrypted and offline.'"
Something I've been ruminating about all day (Score:4, Interesting)
Re:Something I've been ruminating about all day (Score:5, Interesting)
dreamworld (Score:2, Interesting)
in theory...
when I only need to pay my bills "in theory" then you might have made a productive statement...
I know **all about** how Bitcoin works, not just how you store it. I have a business that sells online and have considered accepting Bitcoin. I researched it through and through.
**that** combined with my other skills & the fact that I have common sense means that I'm a fool to accept Bitcoin at these exchange rates ***UNLESS I CAN SEE IT PLACED IN MY $$$ BANK ACCOUNT IN REAL TIME***
I typed that all bold b/c you irrational fanbois need to re-read it and think aobut it over and over b/c it is the core of what makes anything have value in this economy.
If a customer buys one of my products, WooCommerce (grumble...) can show me in real time the path of the money to my bank, then I can check my business bank account and see those $$dollars added to my bank account...then i can withraw that cash right at the ATM and buy ****anything****
Until bitcoin can do that it's just a game for hackers...
Re:Something I've been ruminating about all day (Score:4, Interesting)
> But each of those bitcoins can be subdivided into ten million pieces
100 million. Not that it makes a big difference right now.
https://en.bitcoin.it/wiki/Myths [bitcoin.it]
Re:Savings Accounts (Score:5, Interesting)
There are many other choices than "savings account" or "mattress". There are a wide variety of bond investments, bond ETFs and mutual funds, money market accounts, and so on. But you pay a lot for safety, and you also pay for the convenience of liquidity, trading in very small amounts, and retail convenience.
The Internet has nearly removed those last two concerns, however. If you educate yourself on the risks of bonds (both inflation and default risks), which is no harder than educating yourself about how bitcoin works, it's easy to match inflation with funds with daily liquidity, ability to move small amounts, and really quite small risk. But if you want that government backing against default risk, you're going to lose vs inflation - you have to pay for that insurance.
Re:The Real World (Score:4, Interesting)
I know because I don't know. What I mean is, the ammount of uncertainty in BTC is much, much higher than in dollars.
Really? I actually don't know that at all. In fact the value of USD could go haywire in a lot of ways, in case you hadn't noticed the price of metals like gold and platinum has skyrocketed, meaning a lot of other people think so too.
Just because the USD HAS been more stable, does not mean it has to continue to do so.
The **CORE** of that uncertainty is the number of BTC awarded per transaction mined.
Not sure I follow that statement, in a transaction you get a specific amount of BitC from someone else. When mining you get a specific amount of BitC per block. Where is the uncertainty in ether aspect? The only uncertainty is how much other currency someone is willing to give you for BitC. But as more people want and use it, the more the value will rise.
the number of BTC awarded to who finds the proper number/transaction is arbitrary.
Again, how is this arbitrary? I do mine (slowly) and it seems no arbitrary at all.
Mostly, yes (Score:5, Interesting)
As a small addendum to what rasmusbr has already said:
if the wallet file is lost or destroyed, the coins within it are effectively gone, correct?
The short answer is yes. The long answer is a little bit more complicated.
If hacker still has copy of the wallet.dat file, the coin could still be stolen (in theory the file can optionnally be encrypted. In practice we all know how good humans are at picking good passwords).
key pairs in a wallet can also be generated using passphrases (so called brain wallet).
in theory the owner is the only one to know the passphrases generating the key pair and thus the only one able to use the private key.
in practice, again, we all know how good humans are at that task
(and before you ask: yes someone has decided to make a keypair using xkcd's "correct horse battery staple" comic).
worst citizens are the web services. they use their own wallet to process coin. you sent an amount to them, and then they process on your behalf. (some even allow you to upload key pairs). You have to trust that they are honnest people. You have also to trust their security measures that their key don't get stolen.
So out of all the various "lost" coins, some are possibly going to re-appear due to poor password strategies, or due to less scrupulous online companie which will decide to re-purpose un-claimed bitcoin account, or outright scam people into giving them coins and then running away with them.
Re:Savings Accounts (Score:4, Interesting)
In the UK you can save with the government and cut out the middle man. The UK government owns a bank named the National Savings Bank (actually they own several banks, but this is the only one that offers savings accounts to regular people) which offers a middling interest rate and various long-term bonds. When you "invest" in the government's bank instead of it lending the money to somebody else like a regular bank it just spends it on government projects. The money to pay you back later comes from taxation. So in effect it allows the government to borrow from the ordinary consumer at a better rate than they'd get from a foreign bank, and it lets the consumer save with a 100% trustworthy bank.
Anyway, for long term savings the National Savings Bank will give you points over inflation. They will promise to track better than the rate of inflation in interest. They can do this because they are, after all, the government, if they can't make it worthwhile to borrow money at points over inflation they definitely shouldn't be borrowing from foreign banks! Of course "worthwhile" gets to be over a long view when you're a government. Money spent today ensuring a five year old is healthy and well educated pays off twenty, forty, sixty years down the line.
(You might say, what if the government can't pay it back? Maybe the tax base collapses, or the country is invaded or something. But in this case the country will default, EVERYBODY in the UK gets screwed if that happens, regardless of whether they use the government owned bank).
Re:Something I've been ruminating about all day (Score:3, Interesting)
That is true. However, it is not really a problem in the long run unless every last bitcoin is lost. You can divide bitcoin in infinity and trade with micro-bitcoins or pico-botcoins instead. So at first though this seems like an issue but I argue it isn't.
You can't divide it infinitely. The smallest unit ("satoshi") is 10^-8 bitcoins, so in total, there will only be 2.1*10^15 units of money. For reference, the total M1 money supply in the world is equivalent to about $25 trillion, or 2.5*10^15 dollar cents. If bitcoin becomes a major world currency and we assume a currency loss rate of couple of percent per year, it's gonna become a problem within couple of decades.
There could of course be a change in the protocol so that let's say any bitcoins not used in 50 years could be remined. But it's something that requires acceptance from majority of miners.
Re:Something I've been ruminating about all day (Score:4, Interesting)
The rate of production is laregely known and is not significantly affected* by changes in mining power.
The rate of loss is a trickier one, it is not possible for an analysist to tell the difference between a permanently bitcoins (one where all copies of the private key have been destroyed), temporally lost bitcoins (where the private key still exists and may be found but the owner has forgotten where it's stored or is having difficulty remembering the passphrase or whatever), and hoarded bitcoins (where the owner knows how to access the bitcoins but has decided not to do anything with them).
* Short term fluctuations can happen since the difficultry takes time to adjust.
Re:A limited number of Bitcoins (Score:5, Interesting)
You don't have any problem with that?
You talk about the Bitcoin marketplace as if it was some mature, regulated system. It's not. It's value is purely based on how loudly the proponents of Bitcoin are willing to clap. As soon as it can be traded for other currencies, other commodities, at a large scale, Bitcoin enthusiasts are in for a rude awakening.
Besides, I'll bet that there will be subsequent private currencies that will replace Bitcoin as the flavor of the week and then you'll see fluctuations that make the current 50% swings look like child's play.
So... you are actually insane, what is that like? (Score:5, Interesting)
You are talking of a single transaction shifting the market 5% and you call that small?
Real economic markets panic of fractions of a percent shift with billions in transactions.
If a real currency could suffer a 5% inflation with the selling of a single million, everyone would conclude that currency is totally non-viable.
Basically you are saying that if you own bitcoins, you could lose 5% anytime someone sells a single million of a currency supposedly worth billions. That is NOT a stable reliable currency.