Hackers Strip Flexcoin Almost Bare, Bitcoin Bank Closes

[PhantomEcho]

How is it that people investing in BitCoin are still using such insecure methods of storing their money?

Is the ease of being able to just jump online and access your wallet really worth the risk of having your entire investment get stolen? There are many ways to safely store a digital currency offline, with the trade-off being a slight delay in how quickly you can gain access to it.

BitCoin is an idea not so dissimilar from the many thousands of 'digital credit' type currencies that have been the mainstay of science fiction for years. It's almost like they took those futuristic-but-largely-undeveloped ideas and just ran with it, without ever giving consideration to how much effort needs to go into making sure your currency is stable and secure.

That makes me sad. Very, very sad.

I hope that a successful digital currency evolves out of the mess we've seen of these novelty monies, but at this point I'm beginning to fear that it may very well have set back the concept of universal digital currency considerably.

 

[cerebus23]

currencies should be backed by tangable wealth, or hell barter systems. all way better currencies than these invent value shell games, not just these crypto currencies but of these global government currencies.

it is has real value it cannot tank crumble be worhthless, back it in gold platnium dimaonds oil cotton, anything that has real value and keep a set fixed supply so it keeps value.

lacking that your debt grows too big your politicial situation becomes unstable, civil war, global economic collapse, market bubbles can tank your economy and collapse it utterly if the crisis is big enough.

 

[KDR_11k]

So they have a cryptographically secure currency but still get hacked way more than real banks, eh? Sounds like these people are learning the hard way why there are so many regulations placed on banks.

Captcha: history repeats itself

 

[Redlin5_v1legacy]

Digital money, always a risky business. I know if I were ever to run a business, I wouldn't do it with a currency that could be hacked away overnight while I was sleeping or something.

Kinda saw this one coming eventually.

 

[Terwo]

Not only did people lose a ton of their bitcoins; The value of said bitcoins is likely going to plummet and stay low for a considerable while because of this. Sad day for a cool concept

Btw, I have 0 knowledge on these things so take my ignorant opinion for what it is; a fool's thought.

 

[DjinnFor]

Sad for the people that lost their fake money, but then again Bitcoin is nothing but a clever ponzi scheme.

Except, by definition, it's not. Ponzi schemes involve taking money from Peter to Pay paul. Bitcoin involves investing in a cryptocurrency. They are two completely distinct things.

State owned currency are backed by the goods produced by that nation and their army.

Bitcoin is backed well by....... Wishful thinking

That's not what backing means. Backing involves a promise to exchange the currency for something else at a given rate. With sufficient reserves and minimal printing, one can keep the price of a currency from dropping below that rate.

The value of Bitcoin is "protected" by the trust you have in some obscure math designed by someone who is still anonymous, and who personally owns about 10% of all Bitcoins that will ever be possible.

Nope. Satoshi proposed the theoretical basis for the currency, he never participated much of the implementation Bitcoin. I find it fucking hilarious that you think you know which wallets are connected to him, because that means you know nothing at all about Bitcoin or how it works.

Some other early adopters hold an immense chunk of the theoretical maximum number of 21M as well, I believe the last guess was that up to 30% of all Bitcoins were "locked away" by unknown persons/groups/whatevers.

I guess I'm part of that group, since I had 2 bitcoin in sitting in a wallet for the past 2 years that can't be connected to me personally without breaking in to my house. Most early and middle adopters aren't there to speculate and trade, they hold onto the bitcoins and wait. It doesn't take a genius to figure this out, just go on bitcointalk.org where all the developers and adopters hang out and you'll see all of them talking about how they aren't here to day trade or speculate on the price.

We don't know who Satoshi is, and if it is even a person or a group, nor what their goals are (beyond getting insanely rich).

You're hilarious. We know exactly what his goals were: he wanted to know if it was theoretically possible to create a cryptographically secure, decentralized currency. Hence he produced the original paper and released it on the web, then left.

Or not, considering a hacker can rob all your coins. Say what you will about banks. When they get robbed, at least they are not robbing from the customers accounts.

Yeah, they're robbing from everybody, even people who aren't customers of those banks. I'm honestly glad to see customers get bitten in the ass for once. Bitcoin security is pretty damn easy, only the technologically incompetent put theirs in banks. The only real thing you need other people for is exchanges, and that's what places like Coinbase can do.

 

[thiosk]

Roofies is a cute analogy. Too bad it's also the date rape drug. Shingles is a painful illness. Maybe that should be roofer currency instead.

 

[PhantomEcho]

Sad for the people that lost their fake money, but then again Bitcoin is nothing but a clever ponzi scheme. Unless you're one of the earliest adopters, you'll not get rich from Bitcoin. Only whoever "Satoshi Nakamoto" is and a few others stand to make money from this scheme.

I kind'a like the way you've put this.

BitCoin is definitely a currency, but it isn't the kind of currency that one can simply take out of their pocket and hand to someone. Treating it the same as one would treat an I.O.U fails to address the real problem, which is that it's lack of a physical presence limits the number of ways in which you can safely store it.

With a large, national bank there are billions upon billions of dollars to be spent on ensuring their internet-based security systems don't get hacked. They spend more than some small nations on ensuring the safety of their clients, and there are protocols in place (both those enacted by the bank and those enacted by federal law) to limit the amount of damage that can be done should a bank be robbed or fail.

Does this do anything to ensure that the economy won't be destroyed? Of course not, not when the banks themselves behave badly and violate their own rules, but at the very least they EXIST and serve as some sort of guideline by which the banks must operate. They also provide a measure of reassurance to the people putting their money into the HANDS of these banks, in the form of insurance.

If my bank gets robbed... even if the dollar bills I took there the night before and deposited into my account are stolen... I am not going to lose my money. My bank is responsible for covering those losses, and they in turn are insured against such thefts so as to prevent one robbery from closing their doors forever.

To go back to your talk of 'roofies', this would be akin to someone going to John's house and stealing the pad of paper he uses to write his I.O.U's. Nothing has happened to ME, except that John will have to get a new pad of paper and maybe start locking his door at night.

With BitCoins, it's more like someone walking up behind me and bashing my head in with a shovel, then running off with the I.O.U. and burying it somewhere in his yard before going off to steal John's pad of paper. Even if, by chance, you could identify who stole it... you could spend a lifetime digging and never have that I.O.U. turn up. Meanwhile, John's got no more paper to write them with, and the sudden fear of having people break into his house for a lousy pad of paper has turned him off of the idea of dealing in I.O.U's anymore.

All of this, and we haven't even gotten to the part where people start writing up COUNTERFEIT I.O.U's with the stolen paper.

The reason so many view a digital currency as an INVESTMENT rather than a form of money, is because keeping it in your hand and offering it up to people in exchange for things comes with excessive risks not entirely unlike the theft of my I.O.U. It's much easier and safer to simply soak up a few BitCoins and sit on them securely while their value rises and falls, waiting for a good time to trade them back for more than you got them.

Where it fails as a currency, it actually performs moderately as an investment/speculative interest. Or at least it did, before this latest rash of rather curiously-timed thefts and attacks riddled user-confidence with bullet holes.

If the security systems improve, then maybe you'll start seeing people looking at it more seriously as a currency.

Otherwise, confidence will continue to plummet and you'll see it slowly fade away into obscurity.

 

[renegade7]

Surprise! This is why banks are regulated: to prevent you from losing all of your money.

You take away those regulations, you take away the safeguards.

 

[tangoprime]

This just reinforces my theory that bitcoins are a massive scam developed by some ex-EVE Online players who were bored with scamming/stealing money that could only be used to by internet spaceships and spaceship accessories.

 

[Mangod]

Unrelated to the robbery itself (thought it's still sad that people got robbed), but I have a question; how can a single Bitcoin be worth $691?

 

[SinisterGehe]

I am quite sure someone advertised Bitcoin/cryptocurrency being "safer" than normal bank money transaction.
Tho if I feel unsafe about my bank I have the legal right to withdraw my money in cash and the bank has to find a way to get that money even at 17:59 on friday. (Unless I withdraw more than 10.000 that is when authorities have to know - tax thing). And if the bank loses my money I know who to hold accountable and know who is legally responsible. And all of the records will never disappear, tax records are almost eternal.

I don't buy in to this "unregulated free currency" idea. Money is only worth as much as the strongest authority is willing to back it. And if there is no authority then what guarantees it's value? And who is the authority behind making sure the currency functions and is kept secure? (I know it is crypted supposed to make it safe, but thats the same thing as unique ID# on bills, there are not 2 same ID#s)

There are so many loopholes behind currency that is unregulated and based on the idea of freedom.

Also I don't care about the "not being tracked by the government" bullshit. I have nothing to hide, I don't do anything illegal with my money. I pay my taxes - I have nothing to hide, I trust my government (Finland), I know my rights and their limitations.

I feel sorry for everyone who had a lot of money tied to this, but at the end of the day, you kinda knew to what you were getting in to. And don't put all of your eggs in to one basket. Even I got Euros and Dollars + 2 banks.

 

[SinisterGehe]

Unrelatd to the robbery itself (thought it's still sad that people got robbed), but I have a question; how can a single Bitcoin be worth $691?

Because that is as much as the highest bidder is willing to pay for the string of numbers that make it.
The same way as any other currency has it value (Including coffee beans and other things that are traded as stocks) the amount that the highest bidder is willing to pay.

The math and technology behind the string itself is another matter and is not really that simple. even if it is open source.

 

[Raesvelg]

Unrelatd to the robbery itself (thought it's still sad that people got robbed), but I have a question; how can a single Bitcoin be worth $691?

Think of Bitcoin less as a currency, and more as a commodity, like stocks, or gold. Currency values relative to other currencies are relatively stable, unless one of the issuing governments gets into serious economic trouble elects to print excessive amounts of currency to pay its bills.

Commodities are worth whatever people are willing to pay for them. Bitcoin is effectively an extremely volatile commodity, with major price swings over very short periods. A lot of the price ups and downs are actually driven by that aspect of it: there are many people who see it in the news, and view it as a way to make money quickly, much like similarly volatile stocks. And much like their counterparts in the stock market, a lot of those people are getting burned.

 

[Mangod]

Unrelatd to the robbery itself (thought it's still sad that people got robbed), but I have a question; how can a single Bitcoin be worth $691?

Think of Bitcoin less as a currency, and more as a commodity, like stocks, or gold. Currency values relative to other currencies are relatively stable, unless one of the issuing governments gets into serious economic trouble elects to print excessive amounts of currency to pay its bills.

Commodities are worth whatever people are willing to pay for them. Bitcoin is effectively an extremely volatile commodity, with major price swings over very short periods. A lot of the price ups and downs are actually driven by that aspect of it: there are many people who see it in the news, and view it as a way to make money quickly, much like similarly volatile stocks. And much like their counterparts in the stock market, a lot of those people are getting burned.

Sooo... in other words, using Bitcoin is a little like walking into a store and paying for your groceries with a Jace, the Mind Sculptor [http://gatherer.wizards.com/pages/Card/Details.aspx?multiverseid=195297] card. That... makes both more AND less sense than I thought it would.

 

[medv4380]

"The hacker discovered that if you place several withdrawals all in practically the same instant, they will get processed at more or less the same time," says a Poloniex representative. "This will result in a negative balance, but valid insertions into the database, which then get picked up by the withdrawal daemon."

And people wonder why there are so many fees, and it can take a couple of days when they try to do the exact same thing with a real bank. In the real banking system everyone involved doesn't want to get taken. From the two banks involved in a transfer to the central bank to the two individuals trying to exchange money for goods. No one wants to loose their shirt in the transaction.

It's not that transaction couldn't be done same day, or even same minute. The problem has always been the faster the system works the easier it is to exploit.

Lets take a real bank as an example. Lets say the someone did the exact same thing to a real bank. At the end of the night the bank has to do a balancing audit before they can officially post those transactions. This "trick" would have caused the bank to fail in it's basic audit and would have never transferred any of the funds between the accounts. All the involved transaction would be put on hold. Real transaction would be processed and balanced. And a criminal investigation would have begun before the night was out to figure out what caused the problem.

'coiners then try to get my sympathy for the poor defenseless businesses who have all these "charge backs". That's what charge back insurance is for, and I have no sympathy for businesses that are run out of residential bank accounts that have no charge back insurance. That's also why we have the FDIC and deposit insurance. Because accidents happen.

It's like driving a car without insurance. I don't care if it was the other drivers "fault". It's your fault for driving without insurance. Because of stupid arrogant drivers I also have to have uninsured motorist insurance to guard against that as well.

 

[Owyn_Merrilin]

What I don't get about this is, why is there this much money in bitcoins stored online? I was looking into getting started with Bitcoin mining a while back (I figured if nothing else I could support my Humble Bundle habit that way), and one of the first things I saw was "create an offline wallet and store it on a flash drive, do not keep your bitcoins on something connected to the internet."

Seems like pretty basic advice, to me.

 

[faefrost]

It's a damn shame, but let's face it: with a digital currency just getting it's first bank, there are gonna be bank robbers, especially since there's a lot less risk in an attempt to rob a digital bank then a physical one since you don't have to actually BE at the bank

that is until the FBI knocks at your door


while im not convinced of this whole bitcoin idea, i say people shouldnt fret that much over this, is the begining of a new kind of tecnology or rather concept, flaws and exploits are to be expected and theres plenty of reasons to believe things will get better, instead of worse

For breaking what laws exactly? Notice how Japanese authorities have been more than a little bit reluctant to do much involving the Mt GoX "hacking". As far as the governments and the Laws are concerned Bitcoins are not money. So its a minor hacking or maybe a civil matter between parties. Otherwise it is like calling the FBI because somebody stole all of your WoW gold.