A risky currency? Alleged $500,000 Bitcoin heist raises questions

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Elledan

[H]ard|DCer of the Month - April 2010
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Bitcoin, the decentralized virtual currency whose value has skyrocketed in recent weeks, faced a key test Monday as a veteran user reported that Bitcoins worth hundreds of thousands of dollars had been stolen from his computer.

Ars Technica was unable to independently verify the user's story, and he did not respond to our request for an interview. But whether the story is true or not, it highlights a major disadvantage of the currency's much-touted lack of intermediaries. Bypassing middlemen frees users from government meddling and bank fees. But it also deprives them of the benefits those intermediaries provide, including protection against theft and fraud.
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http://arstechnica.com/tech-policy/...ncy-500000-bitcoin-heist-raises-questions.ars

Regardless of the truth of this story, it does indeed pin-point some of the weaknesses in the system, such as that of the requirement of unbeatable encryption, and the inability to track payments after they have occurred. There's also no way to reverse a payment, or practically investigate a theft. The idea of having no intermediaries is cute, but comes with a big host of issues.

I think it's a good moment to sit down and take a good hard look at this whole BitCoin thing :)
 
No riskier than leaving your US Dollars in a bank evidently!

A Maine construction company had its account taken over by crooks through no fault of the bank. The crooks then drained $500k from the victim's account. Victim sues bank for not stopping the transfers. Judge sides with bank.
http://hardforum.com/showthread.php?t=1614292
http://www.bankinfosecurity.com/articles.php?art_id=3705
At issue for PATCO is whether banks should be held responsible when commercial accounts, like PATCO's, are drained because of fraudulent ACH and wire transfers approved by the bank. How much security should banks and credit unions reasonably be required to apply to the commercial accounts they manage? "Obviously, the major issue is the banks are saying this is the depositors' problem," Patterson says, "but the folks that are losing money through ACH fraud don't have enough sophistication to stop this."
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You let your accounts be compromised, it's no one's fault but your own, whatever the currency or holding institution apparently.
 
As its been discussed before, people need to encrypt their wallets, especially if it contains more than they are comfortable losing. I don't know why the program doesn't have this built in yet, probably because more people would forget their passwords and lose their money.
 
I like how people think its the currencies fault this moron was using a WORK computer facing the web to store all of his personal bitcoins. Do any of you people use your work computer for online banking? No? Because you're not a moron? Do any of you leave $500,000 in cash on your work desk when you go home and wonder why the night janitor didn't come to work the next day? Also, not a moron?
 
Hrm, i'd suggest with any substantial amount of money to open a second wallet and transfer the money to it. Close and encrypt it and you are good.
 
Monkey God said:
I like how people think its the currencies fault this moron was using a WORK computer facing the web to store all of his personal bitcoins. Do any of you people use your work computer for online banking? No? Because you're not a moron? Do any of you leave $500,000 in cash on your work desk when you go home and wonder why the night janitor didn't come to work the next day? Also, not a moron?
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What this case does show is that there is an additional investment you have to make in protecting your BitCoins. Whereas a bank would take care of this for you, now you are the one responsible for it all. It's as if creditcards and all forms of electronic payments got abolished and we're all suddenly paying with cash. Definitely achievable, but everything but practical. Who is going to have to prevent you from getting robbed? You, and you alone. You have to get that safe, you have to make sure you use it consistently and if you get robbed anyway, you're screwed and there's no recourse.

Actually with cash you could call the cops. With BitCoins you're even more screwed as the whole payment system is untraceable, as part of its design.

Not that say that I'm against BitCoins, it definitely is an interesting system, but until it matures some more, I wouldn't be investing my time and money in it. Others are more than welcome to do so for me to figure out the bugs in the design, of course :)
 
Elledan said:
What this case does show is that there is an additional investment you have to make in protecting your BitCoins. Whereas a bank would take care of this for you, now you are the one responsible for it all. It's as if creditcards and all forms of electronic payments got abolished and we're all suddenly paying with cash. Definitely achievable, but everything but practical. Who is going to have to prevent you from getting robbed? You, and you alone. You have to get that safe, you have to make sure you use it consistently and if you get robbed anyway, you're screwed and there's no recourse.

Actually with cash you could call the cops. With BitCoins you're even more screwed as the whole payment system is untraceable, as part of its design.

Not that say that I'm against BitCoins, it definitely is an interesting system, but until it matures some more, I wouldn't be investing my time and money in it. Others are more than welcome to do so for me to figure out the bugs in the design, of course :)
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Did you read post #2 in this thread?
 
Elledan said:
What this case does show is that there is an additional investment you have to make in protecting your BitCoins. Whereas a bank would take care of this for you, now you are the one responsible for it all. It's as if creditcards and all forms of electronic payments got abolished and we're all suddenly paying with cash. Definitely achievable, but everything but practical. Who is going to have to prevent you from getting robbed? You, and you alone. You have to get that safe, you have to make sure you use it consistently and if you get robbed anyway, you're screwed and there's no recourse.
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Yes, you need some common sense to protect your bitcoins, just like if you do online banking on your PC.

Actually with cash you could call the cops. With BitCoins you're even more screwed as the whole payment system is untraceable, as part of its design.
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Yes, you can call the cops, but if you leave cash laying around and someone steals it, the chance of recovery is low. Dont leave it lying around.

Not that say that I'm against BitCoins, it definitely is an interesting system, but until it matures some more, I wouldn't be investing my time and money in it. Others are more than welcome to do so for me to figure out the bugs in the design, of course :)
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What bug? You can't design around peoples lack of security and common sense.
 
Elledan said:
Not that say that I'm against BitCoins, it definitely is an interesting system, but until it matures some more, I wouldn't be investing my time and money in it. Others are more than welcome to do so for me to figure out the bugs in the design, of course :)
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actually the people who took the chance while it was maturing are the ones reaping huge benefits now, and as for bugs...? Monkey God covered this already, "people", and their lack of personal security and common sense, are pretty much the only bugs in this system...
 
Well at least with cash if someone wants to steal it from me, they have to get past some gun fire.
 
At least my paper cant be sucked through teh intertubes without me knowing.
 
Untitledone said:
At least my paper cant be sucked through teh intertubes without me knowing.
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my guess is that you have more in your bank accounts than you ever carry on your person at any given time, who would want your "pocket change" when they could suck all teh moniez from your accounts through teh intertubez...?
 
People that believe their money can't become worthless are living in a state of delusion....
 
I iz having fun trollin teh bitcoins. So easy to set them ablaze.
 
Untitledone said:
At least my paper cant be sucked through teh intertubes without me knowing.
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Physically it can be seized easily by $GOV if you try to move it outside of your home. Forfeiture sucks.

Its value can be and is constantly sucked through the ether without you knowing.
What day did you wake up to find that the money supply had been inflated almost 33% overnight?
 
I guess I must accept that bitcoins are the ultimate currency, and must convert all my assets to them because they are the best currency ever developed.
 
Untitledone said:
I guess I must accept that bitcoins are the ultimate currency, and must convert all my assets to them because they are the best currency ever developed.
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How do you feel the purchasing power of bitcoin will fare over time?

What role do you see it playing in global society?
 
Untitledone said:
I guess I must accept that bitcoins are the ultimate currency, and must convert all my assets to them because they are the best currency ever developed.
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ah, and we finally get to the crux of the typical bitcoin hatery, either it is "the best currency ever developed" or "the economic seed of all that is evil in the world", there is of course no middle ground to be seen anywhere...lol

do tell...
 
wol-va-rine said:
shhhh...

she's still looking...
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wow you must be new to the DC area, so FTFY

LightningCrash said:
How do you feel the purchasing power of bitcoin will fare over time?

What role do you see it playing in global society?
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1) I feel that it will tank because there is less backing it than the US gov.

2) I see it playing jack shit in the global society, it serves a small purpose now for people to get rich quick, but I don't see it growing/maturing too much.
 
wol-va-rine said:
ah, and we finally get to the crux of the typical bitcoin hatery, either it is "the best currency ever developed" or "the economic seed of all that is evil in the world", there is of course no middle ground to be seen anywhere...lol

do tell...
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Well you see, there is a middle ground, and I do accept bitcoins as useful currency. However even in this thread, bitcoin supporters make bitcoin out to be an epic currency. The other side the argument from bitcoin supporters is that the USD is a horrible worthless currency. It has its ups and downs just like any currency, but in the long run it has been here and used for over 200 years. My local store is more likely to take USD than bitcoins for payment for goods and services. The only reason bitcoins have not had major problems yet is because it is a new currecy, and hasnt had any major hurdles to overcome.

As for the topic of money being safe in a bank, it relatively is. I had my credit card info compomised by amazon and experienced $600 in fradulent purchases. Within 2 days of filing a formal complaint my bank had my money back in my account without having to deal with amazon, or even try to find who did it.

As to the government seizing my cash as soon as I walk out the door... They better have a damn good reason or I am going to sue the shit out of them, and maybe get to retire at a young age when I win. If the government wanted to take your bitcoins away, they could. However seeing as it is such a small economy right now, I dont believe they will regulate it anytime soon.
 
LightningCrash said:
How do you feel the purchasing power of bitcoin will fare over time?

What role do you see it playing in global society?
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1.) Overall I believe that it will stay, and have value. However I dont believe it will become a large economy. Like linden dollars, WoW gold, and any other electronic currency. You can use it to get real items, but dont expect your local store to accept it. You will still have to trade it for USD to use it for anything not online.

2.) I think it could allow easier trade for individuals between in other countries to trade goods and services on a small scale. However as soon as it becomes large enough it will be taxed, and regulated. You cant live in the internet. You will have a physical address in a physical location within the borders of some country. They will want their tax money, and import duties etc... As long as the bitcoin economy stays small I do not believe that it will have many problems with governments.
 
Untitledone said:
1.) Overall I believe that it will stay, and have value. However I dont believe it will become a large economy. Like linden dollars, WoW gold, and any other electronic currency. You can use it to get real items, but dont expect your local store to accept it. You will still have to trade it for USD to use it for anything not online.
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I ordered a birthday cake yesterday and the store took Bitcoins.

full sheet 7BTC

picked it up today.
 
wol-va-rine said:
have you seen the cake...? neither have I, but I doubt it was a run of the mill cake (or at least it better not have been) lol...
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Last I saw, 1btc=~10 usd ...so give or take 70 for a cake.....it better be fucking awsome
 
wol-va-rine said:
so you're saying it better be an ice cream cake...?

THOSE are awesome...I will fight anyone who says otherwise...
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a $120 ice cream cake better be dam good, especially since here in FL i couldnt buy one w/o a dam cooler in the car.

and no, i mean it better be made by Hans Nadler
 
wish I had some photos of this stupid cake. looked like something on cake boss.

but it was pretty tasty.
 
W.Feather said:
Last I saw, 1btc=~10 usd ...so give or take 70 for a cake.....it better be fucking awsome
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Perhaps we should consider what other specialty goods bitcoin is often used to pay for. Perhaps this is a "special cake". I'd love to order some "special brownies" with my bitcoins!
 
Kueller said:
Perhaps we should consider what other specialty goods bitcoin is often used to pay for. Perhaps this is a "special cake". I'd love to order some "special brownies" with my bitcoins!
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FWIW walmart was 75USD for a pretty poorly decorated full sheet cake
 
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