Bitcoin Sell Off Due To Hack

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It would seem a Bitcoin account was compromised leading to a complete shutdown of the system while the company tries to fix things. Yeah, I'm not too sure how well this "currency" is going to do in the long run.

The bitcoin will be back to around 17.5$/BTC after we rollback all trades that have happened after the huge Bitcoin sale that happened on June 20th near 3:00am (JST). One account with a lot of coins was compromised and whoever stole it (using a HK based IP to login) first sold all the coins in there, to buy those again just after, and then tried to withdraw the coins. The $1000/day withdraw limit was active for this account and the hacker could only get out with $1000 worth of coins.
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Since there is very little legitimate use for Bitcoin I predict that the service will be around, problems or not, for eternity to come.
 
yeah this is all a scam oh a hack so we must impose a 1000$ a day limit on you getting your money out... no government would give a crap its not a backed currency its all bullshens if you went into bitcoins you fail
 
It will be around as long as a user can (or has the perception they can) get real money for their virtual currency however they earn it.
 
Kind of amusing that a hack of a single user's account can destabilize the entire system.

So trades are getting rolled back? Huh. Won't this screw some people royally?
 
There are going to be hiccups just like any bank. Everything week we hear how this or that banks had been hacked. In this case the user was hacked, which could happen to anyone with any bank account if you keep your information locally. Perhaps having something such as File Vault would have prevented this.
 
The other BTC exchange site closed trading temporarily, but opened trading back up. BTC immediately dropped to $6 and promptly rebounded to $13 after that. Someone made a nice profit right there.
 
I really dont get this bitcoin thing. So you keep your pc on all the time using electricity and then you get what 50 bit coins a year and they are worth $1000 at the prices today.

Someone explain it to me.
 
There seems to be a lot of attempts to discredit or sink Bitcoin just as it truly came into prominence and use. Bitcoin has been good to quite a few people financially and markets that accept it have been expanding. I think the problem is that as of yet, the "Wallet" is basically a single plain-text file that many people keep on an internet connected PC with all their money within, against Bitcoin's suggestions. That is the issue with these hacks - they basically look for unsecured wallets, overall. Do what many do and keep your "savings" Wallet on a USB key, encrypted, and have a small "spending" wallet you transfer your earnings into for actual use.

Keep in mind that Bitcoin is actually MORE "open" than United States Federal Reserve Dollars. One is generated via an open source mathematical algorithm, another is printed by a private company (Yes, the Federal Reserve is a PRIVATE bank) whenever the hell they feel like it. The only true difference is that the latter has many, many men with guns backing the currency. Otherwise, they are the same as any "fiat" currency - only containing value because we ascribe value to it.

Bitcoin certainly isn't perfect, but the fact that transactions can be effectively anonymous in real world context but still be traced and the rollbacks can happen with relative ease is a testament to its benefit - after all, if a bank gets robbed you can't simply press a button and have all the bills involved instantly flagged as "bad", the closest thing you can do is deal with some serial numbers. "laundering" Bitcoin is much harder.

Be it Bitcoin or another implementation, I have every confidence that big financial industries are going to do everything in their power to squash them. When Linden (Second Life) Dollars started to be a worthy investment, finance quickly moved to try to control these transactions and lobbied from everything from making virtual income tax reportable to interstate/internet sales tax. Thankfully, at the time they didn't get all they wished but I'm worried that the way this nation is going, the future won't be so lucky. These people want to destroy whatever they can't control, which is a hallmark of corrupt worldwide finance and investment. Nobody ever thought that Bitcoin would replace USD, but its nice to have another option for anonymous internet transactions without the issues of say, PayPal deciding they didn't like you donating to WikiLeaks so they simply stopped the transaction.
 
Xaeos said:
There seems to be a lot of attempts to discredit or sink Bitcoin just as it truly came into prominence and use. Bitcoin has been good to quite a few people financially and markets that accept it have been expanding. I think the problem is that as of yet, the "Wallet" is basically a single plain-text file that many people keep on an internet connected PC with all their money within, against Bitcoin's suggestions. That is the issue with these hacks - they basically look for unsecured wallets, overall. Do what many do and keep your "savings" Wallet on a USB key, encrypted, and have a small "spending" wallet you transfer your earnings into for actual use.

Keep in mind that Bitcoin is actually MORE "open" than United States Federal Reserve Dollars. One is generated via an open source mathematical algorithm, another is printed by a private company (Yes, the Federal Reserve is a PRIVATE bank) whenever the hell they feel like it. The only true difference is that the latter has many, many men with guns backing the currency. Otherwise, they are the same as any "fiat" currency - only containing value because we ascribe value to it.

Bitcoin certainly isn't perfect, but the fact that transactions can be effectively anonymous in real world context but still be traced and the rollbacks can happen with relative ease is a testament to its benefit - after all, if a bank gets robbed you can't simply press a button and have all the bills involved instantly flagged as "bad", the closest thing you can do is deal with some serial numbers. "laundering" Bitcoin is much harder.

Be it Bitcoin or another implementation, I have every confidence that big financial industries are going to do everything in their power to squash them. When Linden (Second Life) Dollars started to be a worthy investment, finance quickly moved to try to control these transactions and lobbied from everything from making virtual income tax reportable to interstate/internet sales tax. Thankfully, at the time they didn't get all they wished but I'm worried that the way this nation is going, the future won't be so lucky. These people want to destroy whatever they can't control, which is a hallmark of corrupt worldwide finance and investment. Nobody ever thought that Bitcoin would replace USD, but its nice to have another option for anonymous internet transactions without the issues of say, PayPal deciding they didn't like you donating to WikiLeaks so they simply stopped the transaction.
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Thank you. It is early in their development, so there will be some arrows in the back for early adopters. However, there could be a strong future here.

If anyone thinks their FIAT currency is stable, well, we shall see how well that holds up here in the near future.
 
the weakness of the currency will be the standard human drive to hoard it, with a currency set to have a limited quantity, any mass hoarding will reduce its value. for bitcoin to continue to have use it needs to be traded regularly and often, or its value will decrease, especially since 21m units is not a lot as they gain more users each day.

dont doubt the value of bitcoin, with our own government taking notice and looking into ways to combat it, it has real value.

with its value not backed by anything (or anyone) means it has to be used constantly to maintain value. as we have seen in the past week or 2, small events upset the market for the currency greatly.

it needs to be widened in number of units and traded often to keep from stagnating. i think it will best used as a means to transfer currency internationally, rather then a tool for wealth building.
 
There's a lot of bitcoin ignorance floating around. There are perfectly legitimate reasons for using bitcoins, if not only to profit off their relatively new market.
Look into bitcoins if:

- You dislike the federal reserve or any centralized banks approach to money.
- You're interested in how a small market works and looks at the beginning stages. The market for bitcoins currently fluctuates like crazy, so it's definitely a little more exciting than most.
- You're bored. The entire history on bitcoins and why they exist should be interesting to any geek. It's an attempt of an answer to an age old problem.

and many more.. all of the information available at their wiki.
 
as I understand it the only reason bitcoin has gained any prominence is because of people making money from mining, once mining becomes unprofitable, which it will due to the nature of the way it is setup. it will fail... It's holding itself back. Nobody other than criminals and geeks are going to use bitcoin, because it is confusing, potentially unsafe, unbacked (and also entirely unnecessary for most people) and geeks will stop when they start making no money from their PCs.
The fact that criminals use it mean governments have the excuse to squash it.
Correct me if I'm wrong, I'd never heard of it until this morning.
 
Mining won't become unprofitable for everyone. If it gets to the point of it being unprofitable for most people, people will stop mining. Thus, the difficulty will come down again and you will be able to mine bitcoins more easily.

It may become unprofitable for people who have high electricity costs or other external factors, but if you don't pay anything for electricity and buy used hardware, due to the nature of the system you'll be in good shape.
 
matteos said:
as I understand it the only reason bitcoin has gained any prominence is because of people making money from mining, once mining becomes unprofitable, which it will due to the nature of the way it is setup. it will fail... It's holding itself back. Nobody other than criminals and geeks are going to use bitcoin, because it is confusing, potentially unsafe, unbacked (and also entirely unnecessary for most people) and geeks will stop when they start making no money from their PCs.
The fact that criminals use it mean governments have the excuse to squash it.
Correct me if I'm wrong, I'd never heard of it until this morning.
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this post is a good example of the dilemma bitcoin is in. Should it be some libertarian movement where we can finally get rid of the federal reserve and other private banks, as well as keeping government out of its nose in our private transactions, or a supplemental currency or one that replaces the dollar and eventually gets taxed and regulated.

I much prefer it to be a political movement than an economic one.
 
I think everyone should note that Mt Gox is doing a wonderful job of handling the situation. They are keeping the users updated and being as proactive as possible in containing the security breach, moreso than any other company I've seen. They've even notified Google to reverify all gmail accounts associated with the breach. Yes, Mt. Gox should have had better security to begin with, but at least they're handling this in a professional manner.

kumquat said:
Kind of amusing that a hack of a single user's account can destabilize the entire system.

So trades are getting rolled back? Huh. Won't this screw some people royally?
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Some people who thought they got lucky and rich will be disappointed. And some pepole who lost a ton of money will get it back.

Personally, I think that's fair. It is generally accepted among financial markets that when the rules of the game are breached, trades don't count. NYSE rolled back some trades last year due to a computer glitch. I know when you invest in something you are taking a risk, but you expect to take the risk specified in the rules. Hacking and technology issues change those rules and are not what you agreed to when you made the investment.

So sorry to the guys who temporarily thought they were rich, but no, you haven't been "robbed." A system malfunction made you think you won the lottery when you actually didn't. You haven't lost any money, but some people did, so shut up and let them roll it back. Complaining about the rollback is like waking up one day to see that your bank has accidentally transfered $100,000 from someone else's account into yours, then demanding that you get the keep the money.

matteos said:
I really dont get this bitcoin thing. So you keep your pc on all the time using electricity and then you get what 50 bit coins a year and they are worth $1000 at the prices today.

Someone explain it to me.
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By "mining" bitcoins your computing power is running the Bitcoin network and keeping it secure. For doing that you get compensation. Early adopters get more compensation, so as to encourage mass adoption of the currency.

Xaeos said:
There seems to be a lot of attempts to discredit or sink Bitcoin just as it truly came into prominence and use. Bitcoin has been good to quite a few people financially and markets that accept it have been expanding. I think the problem is that as of yet, the "Wallet" is basically a single plain-text file that many people keep on an internet connected PC with all their money within, against Bitcoin's suggestions. That is the issue with these hacks - they basically look for unsecured wallets, overall. Do what many do and keep your "savings" Wallet on a USB key, encrypted, and have a small "spending" wallet you transfer your earnings into for actual use.
Click to expand...

I agree that anonymity is where bitcoin will always have a purpose. However, it is doomed to failure as a primary currency as it's creators have hard-coded a deflationary spiral into the system. Why they did this I have no idea. They should have at least kept a linear rate of expansion going indefinitely, to replace lost coins. As it is now, the money supply will eventually begin to decrease.

It still might be a good investment right now, though. Especially with so much volatility
 
Steve said:
It would seem a Bitcoin account was compromised leading to a complete shutdown of the system while the company tries to fix things. Yeah, I'm not too sure how well this "currency" is going to do in the long run.
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Uh what?

The "currency" was never shut down. What are you talking about? Bitcoin cannot be shut down as it is a peer to peer network (that's one of the points)

The only thing that was shut down is one of the trading websites where people exchange bitcoins for cash and vice versa. It has nothing to do with the bitcoin "system," as you put it.
 
Bitcoin is adaptive to every one of the conditions people have listed. If people stop mining, the difficulty to find them decreases and attracts people back into it. It will take a LONG time to find the rest of them. It will not fail once the mining stops for MANY reasons, all listed on the wiki.
 
computerpro3 said:
Mining won't become unprofitable for everyone. If it gets to the point of it being unprofitable for most people, people will stop mining. Thus, the difficulty will come down again and you will be able to mine bitcoins more easily.

It may become unprofitable for people who have high electricity costs or other external factors, but if you don't pay anything for electricity and buy used hardware, due to the nature of the system you'll be in good shape.
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But if it takes off with anything close to the popularity it would need to have a chance of replacing current systems (like paypal) then it will have hundreds of thousands more miners than it does currently... due to what you have outlined above it could remain profitable for some, but the profit margins would get squeezed so they are razer thin.

The other problem that I see is that this currency has a limit, 21 million, which is tiny therefore the value will only go up. If you have bitcoins why would you trade in them when their value is only likely to rise? You hold on to them and speculate, hoping the value will continue to rise. Bitcoins aren't a currency then, they are an asset, an asset undergoing a massive bubble that will eventually burst.

I'm no economist, but it doesn't sound like a stable currency.
 
There's no practical limit on bitcoins. It's divisible by 8 decimal places, which means that there is several quadrillion possible of the smallest unit.
 
bigpimpatl said:
isn't that why the creators made bitcoins divisible by 8 digits?
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computerpro3 said:
There's no practical limit on bitcoins. It's divisible by 8 decimal places, which means that there is several quadrillion possible of the smallest unit.
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That doesn't help. You stil have the problem that the value of bitcoins will always increase, and something that always increases in value does not make a good currency.
 
Xaeos said:
Keep in mind that Bitcoin is actually MORE "open" than United States Federal Reserve Dollars. One is generated via an open source mathematical algorithm, another is printed by a private company (Yes, the Federal Reserve is a PRIVATE bank) whenever the hell they feel like it. The only true difference is that the latter has many, many men with guns backing the currency.
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Openess doesn't matter if a currency lacks backing.

Men with guns doesn't matter either and really is just the beginning of some emotional argument you were going to engage in.

Inflation aside the U.S. currency is guaranteed by the government whereas there is no such guarantee for Bitcoin. Your deposit into an actual bank is, at least in the U.S., guaranteed to be safe by the FDIC (up to 150k I believe or maybe 250k), no such guarantee in Bitcoin.
 
HOCP4ME said:
That doesn't help. You stil have the problem that the value of bitcoins will always increase, and something that always increases in value does not make a good currency.
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Gold and silver made for a fine currency for thousands of years.
 
computerpro3 said:
There's no practical limit on bitcoins. It's divisible by 8 decimal places, which means that there is several quadrillion possible of the smallest unit.
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It sounds like a mix between a pyramid scheme and an asset bubble.

As an ideological replacement to the Fed I don't see it as anything better, why would we adopt a currency that will make its early proponents super wealthy? I don't see the difference, the fed just prints more money. Whereas bitcoin is infinitely divisible. But we are basically still just rewarding private citizens or entities who are creating the money supply.

The dollar has dropped in value in 100 years by some 90% due to inflation (printing of the money supply)

bitcoin seems to have the opposite problem. Its value only increases, this is not conducive to trade. And it couldn't be something like Gold, something that rich people put their money into because its safe, it's still a fiat currency. I see logically that there will be a giant crash where the people who have the most try and get out while the prices are good and they can make a lot of real money.
 
i forsee the fs/ft forum getting flooded with 58xx series cards in the near future
 
Thuleman said:
Openess doesn't matter if a currency lacks backing.

Men with guns doesn't matter either and really is just the beginning of some emotional argument you were going to engage in.

Inflation aside the U.S. currency is guaranteed by the government whereas there is no such guarantee for Bitcoin. Your deposit into an actual bank is, at least in the U.S., guaranteed to be safe by the FDIC (up to 150k I believe or maybe 250k), no such guarantee in Bitcoin.
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Really. And look at the volatility. I don't think it works well in place of standard barter and trade either let alone a replacement for standard currency. At least with barter and trade, the items have an intrinsic value that's tangible to the parties based upon a stable currency. IE: I can easily tell approximately how much my laptop is worth against the desktop I'm trading for.....say $1500 against the desktops $1000. I trade for the desktop and $500 cash.
Try it in Bitcoin. The general Joe doesn't have a good grasp of the theory, let alone an "exchange rate", but lets say he gets the numbers right. He thinks he'll trade them in for cash in a couple of days, and buy stuff at the mall....oops....They tanked, and he's now got enough for a happy meal, and a movie rental.
The whole thing is like a bad investment fund.
 
pgwalsh said:
There are going to be hiccups just like any bank. Everything week we hear how this or that banks had been hacked. In this case the user was hacked, which could happen to anyone with any bank account if you keep your information locally. Perhaps having something such as File Vault would have prevented this.
Click to expand...

Link to any bank getting hacked resulting in US currency deflating by damn near infinity? :rolleyes:

I do not understand the crazed support for such a ludicrous system, whose primary use is seemingly to trade it for US currency or buy drugs.
 
Katalysis said:
I do not understand the crazed support for such a ludicrous system, whose primary use is seemingly to trade it for US currency or buy drugs.
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Bitcoins is a bubble market that will ultimately benefit a few people who got in early and fuck up the ass everyone else involved. Similar to the Internet bubble, the housing market bubble, the upcoming commodities bubble. Any currency that 99.999% of the population will not take is payment is bound to fail. Someone else has mentioned it, but we've been here before: [ame="http://en.wikipedia.org/wiki/Flooz"]Flooz.com - Wikipedia, the free encyclopedia@@AMEPARAM@@/wiki/File:Flooz.jpg" class="image"><img alt="" src="http://upload.wikimedia.org/wikipedia/en/3/37/Flooz.jpg"@@AMEPARAM@@en/3/37/Flooz.jpg[/ame]
 
Darn, difficulty is still increasing for Bitcoin, which means new machines are still doing added to that network. :mad:
 
computerpro3 said:
There's no practical limit on bitcoins. It's divisible by 8 decimal places, which means that there is several quadrillion possible of the smallest unit.
Click to expand...
The real problem I see is the following scenario

1: the bitcoin economy grows, as it grows the value of bitcoins goes up by orders of magnitude
2: the rising value of bitcoin encourages people to hoard, this pushes up the value of the bitcoins even further.
3: One of the large hoarders cashes out suddenly (say due to a desperate need for cash or due to the bitcoins being inherited by someone who then has to pay inheritance tax on them) causing a massive dip in the value of bitcoins.
4: People take large losses and lose confidence in bitcoin driving the price down further which drives further loss of confidence.
 
weuntouchable said:
Bitcoins is a bubble market that will ultimately benefit a few people who got in early and fuck up the ass everyone else involved. Similar to the Internet bubble, the housing market bubble, the upcoming commodities bubble. Any currency that 99.999% of the population will not take is payment is bound to fail. Someone else has mentioned it, but we've been here before: Flooz.com - Wikipedia, the free encyclopedia
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Yup.
 
looks like one of those pyramid scams. in digital form,lol, anyway, the only thing I see why people will use it, because its free, you are practically anonymous to anyone, decentralized, open source, and geeky ;)
 
matteos said:
The dollar has dropped in value in 100 years by some 90% due to inflation (printing of the money supply)
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Over 100 years that's not too bad. 2-3% inflation per year isn't really noticeable except from a historical point of view. Yes, I realize it's been higher than that in the past...we don't want to go there.

At least an inflationary currency tends to remain liquid and keep moving, as a currency should. The only use people should have for currency is to exchange it for other investments. Currency itself should not be an investment. Right now that's what Bitcoin is, and its creators have specifically programmed it to be deflationary, which means it will remain an investment until it crashes.
 
I will admit, though, that it's amazing how something like Bitcoin is technically possible. It's kind of scary to think about how we could one day end up completely dependent on distributed computing systems that no individual has a significant amount of control over. When our kids ask why do we do it this way, the answer would be simply that we have always done it this way, and we can't stop now.

Would this be better for society than a centralized government? To be honest I don't really know. It's amazing that we have the technology to make it happen, though, and to think there are concentrated efforts going on right now like Bitcoin to make it happen. Insane.
 
killdrith said:
There's a lot of bitcoin ignorance floating around. There are perfectly legitimate reasons for using bitcoins, if not only to profit off their relatively new market.
Look into bitcoins if:

- You dislike the federal reserve or any centralized banks approach to money.
- You're interested in how a small market works and looks at the beginning stages. The market for bitcoins currently fluctuates like crazy, so it's definitely a little more exciting than most.
- You're bored. The entire history on bitcoins and why they exist should be interesting to any geek. It's an attempt of an answer to an age old problem.

and many more.. all of the information available at their wiki.
Click to expand...

No one would give a fuck about bitcoins if they couldn't be converted to good old federal reserve greenbacks. Not to say bitcoining is a bad thing but bitcoins will probably never have value as a currency in and of themselves.

As long as they are easily converted to physical currencies there will be much interest in them.
 
don't forget about the tax man.

once your conversion of bit coins to real world currency gets the attention of the government, imagine the HUUUGGGGEEE amount of back taxes you will be forced to repay, in real world currency.

never think that you can amass huge profits without anyone else bating an eyelid.

it's going to come, sooner or later. even if it's 10 years later.
 
What exactly does mining DO? Thats one thing i am unclear on here. Its like folding with no clear reason for all the wasted power.

Is all that computing power actually going to something?

The way i see it is its a form of currency backed by absolutely nothing made out of thin air that can simply be pulled at any time.
 
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