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back to article Bitcoin exchange shuts after heist

Bitcoin exchange Bitfloor has suspended its operations while it tries to figure out who pinched 24,000 units of the virtual currency by accessing an unencrypted backup and using information it contained to transfer 24,000 BTC to destinations unknown. In a post on the Bitcoin Forum, Bitfloor founder Roman Shtylman said he has …

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FAIL

Bitcoin is failing in way too many ways to take seriously anymore.

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Anonymous Coward

Was he running this from his bedroom?

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FAIL

Education has failed, not Bitcoin

Bitcoin is a currency, Bitfloor is an exchange. Bitcoin has never failed, Bitfloor failed. Think of it this way: if you leave your wallet on a park bench, someone might take your money. This is not a failure of the money.

See also: MF Global.

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Bronze badge

Bitcoin worked exactly as intended. Someone with access to the wallet keys was able to anonymously and purposefully transfer huge sums of money.

The fact that it was unauthorised (due to lack of security of the wallet) is the problem, not Bitcoin. It's like blaming "credit cards" because you left your card in a restaurant and someone fraudulently charged it.

Actually, I'm impressed that BitCoin hasn't had some trick, or significant security flaw, that made the whole thing collapse anyway. In terms of what it was designed to do, it certainly does it well.

The question is not "Do I trust BitCoin?" at the moment as "Do I trust 3rd parties to hold/trade my Bitcoins?"

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@ Lee

"Do I trust 3rd parties to hold/trade my Bitcoins?"

Well, if you don't (and going purely on the news I read on El Reg, I don't) then the currency is pretty much worthless, no matter how well it works in theory. Ergo, Bitcoin sounds like a failure to me.

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FAIL

Re: Education has failed, not Bitcoin

if you leave your wallet on a park bench, someone might take your money.

Someone actually walking by that park bench and spotting the wallet.

With BitCoins, everone knows where the park benches are, that there are wallets lying on them, and having to physically walk by and spot the wallet is no restriction. Which _is_ a fundamental difference between BitCoins and a wallet with physical money.

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Boffin

business requires estimated trust

The question is not "Do I trust BitCoin?" at the moment as "Do I trust 3rd parties to hold/trade my Bitcoins?"

Yeah sure. So by the same reckoning I should keep all my conventional money in a safe in my own strong room, never use a bank or building society or credit union for anything, never send any money through the post using a cheque or postal order, or over the Net, pay for nothing using plastic and personally stand guard over my stash with a sub-machine gun at all times ? And I'm expected to engage in the same kind of behaviour in the digital world with Bitcoin if I'm to be able to use these precious numbers securely ?

Don't think I'll bother. Bitcoins not accepted here.

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Anonymous Coward

Re: business requires estimated trust

@PyLETS, but if a bank loses my money, the bank (or should it have failed, the government) compensate me for the loss. If a third party loses my bitcoins, I've lost my bitcoins.

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Re: Bitcoin has never failed

I disagree. Remember back in 2011 when bot nets were discovered that could mine BitCoins? Do you really trust a currency that can be *created* by anyone with a decent video card? I don't.

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"Do I trust 3rd parties to hold/trade my Bitcoins?"

At the risk of stating the bleedin' obvious, a currency you can't trust third parties to hold/trade is about as much use a chocolate teaspoon in the Sahara on a sunny August bank holiday.

How many more 'mistakes were made' is it going to take before users of Libertarian NerdCash[tm] realise there's no such thing as an unhackable digital system?

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Facepalm

Re: Education has failed, not Bitcoin

Plenty of lack of comprehension here:

Bitcoin is an unhackable digital payment system, but 3rd parties may be hacked.

If you keep your bitcoin wallet secure then nobody can spend your coins. Knowing the serial number of the bank notes in my wallet doesn't let you spend the notes.

An absence of trustworthy 3rd parties is no hindrance to bitcoin because (like cash) it does not rely on 3rd parties. With bitcoin you can transfer money peer-to-peer across the internet, which is the whole point.

Bitcoin was designed to be created by people with powerful video cards. The fact they do it is not a surprise or a failure of the system.

Etc.

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Yeah, totally the same, because when I leave my credit card somewhere, I can't call the issuer and have the card revoked and charges challenged. I have no recourse with law enforcement. I can't do anything but wake up one day missing all my money.

Oh wait, no, that's just bitcoin.

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Stop

Re: Education has failed, not Bitcoin

I never said anything about stealing others' coins. The point is, if you can "print your own" Bitcoins, then inflation *will* be a problem. And it was, just last year.

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Re: Education has failed, not Bitcoin

Or rather, my initial post was complaining about that, but not my subsequent replies. </clarify>

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Re: Education has failed, not Bitcoin

Bitcoin was designed to be created, and for the creation to have a cost (the video card and electricity, for example). The algorithm which is used to create the coins ensures that the rate of creation is always falling and will drop to zero when there are about 21000000 bitcoins. Creating bitcoins is not a problem, oversight or source of inflation, it is the way it's designed. Bitcoin didn't significantly inflate last year, it suffered from a bursting bubble. The natural long-term state for bitcoin is deflation. What we usually call money is created every time a bank agrees to make a loan, so if inflation is your concern then bitcoin is the solution.

Vin, bitcoin is like cash, so compare it with cash. If you want to compare it with a credit card then you need to imagine what it would be like if a credit card issuer extended credit in bitcoins. Would it necessarily be any different to a sterling-based credit card?

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Re: Education has failed, not Bitcoin

If this is true then please excuse my ignorance. I was under the impression (mainly because the term "mine" was used instead of "create") that people had created bitcoins without going through official channels, i.e. not respecting the controlled nature of bc generation.

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Re: Education has failed, not Bitcoin

In a way Bitcoin has failed.

There have been several (at least three to my knowledge) instances where thefts of Bitcoins have resulted in liquidity issues. All currencies have in their favour is the trust of the people who use them. If users cannot keep their Bitcoins safely or trust third parties to convert them to real money at any time and at a fair and predictable rate, they won't use them.

It is far from unlikely that the entire Bitcoins edifice will collapse with no-one trusting or wanting them.

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Orv

Inflation isn't likely to be an issue

...at least not for the reason you state.

The algorithm is designed so each new coin takes more and more processing power to create, so the rate of inflation should be controlled to a fairly low level. (This means the people who got in on the ground floor, when the coins were "cheap" to create, made out handsomely. Rather clever, really; the person who designed it designed it to give himself and his friends an automatic head start in wealth. Not *quite* a pyramid scheme, but it sorta looks like one if you squint just right.)

That doesn't mean it can't collapse relative to other currencies, of course, as it appears to have done.

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Re: Inflation isn't likely to be an issue

The guy who invented bitcoin will make a packet if it's a success. The guy who founded paypal probably made a packet. The guy who founded Beanz would have made a packet if it was successful. Problem?

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FAIL

Big suprise

When the founder can't write a grammatically correct sentence, why trust any other aspect of the operation?

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Trollface

Re: Big suprise

You may want to invest in a spelling book yourself, fellow citizen.

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Meh

Re: Big suprise

The poster is not asking to be trusted with the creation of an entire currency. I don't believe he should be helf to the same standards, any more than you must be a columnist for The Economist to discuss politics.

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Coat

I wonder who indeed...

Just a guess, perhaps Shtylman's in a country with no extradition treaty with the States.

“I still have all of the logs for accounts, trades, transfers. I know exactly how much each user currently has in their account for both USD and BTC. No records were lost in this attack.”

I'm sure he knows exactly the amounts, so did all the other bankers, virtual or not, didn't stop them running off with a bucket load of (our) money...

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Anonymous Coward

Good way to shut down an "underground unregulated" currency

Just continue to hack the different exchanges each month and totally kill any credibility bitcoins had.

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Meh

Re: Good way to shut down an "underground unregulated" currency

it's also a good way to selectively apply evolutionary pressure to make the system more resilient.

if you're a pioneer, you always have the most to lose and the biggest chance of losing.

eventually it'll work, but it'll take a while a lots of lost money....just depends on whether people want to keep pushing money into the system whether it fails or not.

I suppose private users of bitcoin are going to be ok, but well, if you leave your money in somebody elses hands, you really should know whether they are insured and have the capability to cover losses.

somebody perhaps should sue the guy, that might help :)

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HMB
Bronze badge

Re: Good way to shut down an "underground unregulated" currency

"Good way to shut down an "underground unregulated" currency"

Is it? Have you done this before then?

You have a hypothesis, nothing more.

There are plenty of things off with Bitcoin, having unsigned demon software and installers is one of the big things in my book, but whatever your personal feelings, keep in mind that Bitcoin is a speculative market and kind of difficult to predict.

It's been "dead" before, it keeps coming back.

Bitcoin is a zombie currency ;)

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Re: Good way to shut down an "underground unregulated" currency

The underground nature of it is rather overstated. Very few places accept bitcoins directly, and the moment you convert it to some other currency, you're in a regulated market.

To me it seems like it's an "underground currency" in about the same way Beanie Babies were in the 90s. Something that briefly had a significant value because people thought they could buy in cheap and then profit as the market went up.

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Trollface

"The bad news is that 24,000 Bitcoins is about 248,000 real world US dollars."

The good news is that the exchange rate is very quickly dropping - soon 24,000 bitcoins won't be worth anything! Nothing to worry about, see?

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FAIL

Re: "The bad news is that 24,000 Bitcoins is about 248,000 real world US dollars."

There's no excuse for being so wrong. Just look at a chart and you'll see it's been in an uptrend for almost a year. It's only been higher for about 3 months in its history, and most of that was an obvious bubble. Do you not have the internet where you live?

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Re: "The bad news is that 24,000 Bitcoins is about 248,000 real world US dollars."

I think the point being made here was: "If bitcoin is so insecure (which it obviously is), then, very shortly, it won't be worth squat!"

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WTF?

Re: "The bad news is that 24,000 Bitcoins is about 248,000 real world US dollars."

Given that bitcoin is secure (this is not a story about bitcoin being unsecure, it's a story about a bank robbery) and the comment didn't mention security, I think you should consider the remark about the exchange rate to be a remark about the exchange rate.

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Correct me if I am wrong, please

24,000 Bitcoins were stolen. As soon as they get used, the Bitcoin markets will know and the culprits caught; no? I thought one of things about Bitcoin is that the transaction were signed by both parties and part of the system was for the various "miners" to verify those transactions.

So why no just sit tight and wait for the stolen Bitcoins to be used? Odds are that the first usage is either by the thief, or someone in receipt of stolen property.

I don't use Bitcoin, but from my (limited) understanding it seems to me like there would be a way to recover this loss.

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IT Angle

Re: Correct me if I am wrong, please

I thought that the whole point was that each bitcoin has a unique ID. So if you know what the IDs of the stolen coins are, then you could:

1. Trace them whenever they are used.

2. "Lock them down".

3. Take them out of circulation/revert the trades.

No?

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Re: Correct me if I am wrong, please

Exactly. And each user has an ID too. So you could ask someone why they used coin 1234 after it was known to be stolen. But maybe I misunderstand.

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Trollface

Re: Correct me if I am wrong, please

"I am a nigerian prince and my father has left me a USB pen with $250,000 of bitcoin on it, but it does not show a drive letter in windows.

I will accept bids of up to $50,000 cash to allow the fixings of this USB pen, to be doubled from the relieved funds when the USB pen is fixed"

Perhaps...

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Coat

Re: Correct me if I am wrong, please

@STEVEN RAITH

IT WOULD'VE BEEN MORE CONVINCING IN UPPERCASE.

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Boffin

Re: Correct me if I am wrong, please

You are not entirely wrong, and I've heard at least one of the exchanges has been known to freeze accounts and investigate when they think someone is using stolen bitcoins.

But the trouble is, because Bitcoin is P2P, there is no central authority to issue some kind of blacklist of "bad coins" that everybody will recognize. And there certainly isn't any way to issue replacement clean BTC for the rightful owner.

It's somewhat like cash if you think about it. Suppose a bank is robbed and they know exactly what the serial numbers are on all the stolen bills. Other banks can be alerted to be on the look out for that money, and I suppose they probably do that in some cases. But there's no practical way to implement a completely ban on spending those bills at the local 7-Eleven or whatever.

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WTF?

I thought the whole point of bitcoins was that they were untraceable and no records were kept?

Now they're saying he's checked the records and they can trace the thief.

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He was acting as a bank/exchange, keeping other people's bitcoins for them, and needed to have records of who owned how many. If you keep your own bitcoins then nobody has any record of it.

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WTF?

Bitcoin

.... I just dont get it

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Re: Bitcoin

It's a bit mysertious to me but if you wanted to pay for stuff online that might be illegal or you don't wnat to be found out then the untraceability is going to be handy. So presumably it's for porn, pills and the Paranoid.

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Re: Bitcoin

but then surely theres an "audit trail" from the point you put your CC details in to buy the Bitcoins ?

Or am I missing the point ? (which is more than possible!)

Sounds a little gay to me.

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Re: Bitcoin

"if you wanted to pay for stuff online that might be illegal or you don't wnat to be found out then the untraceability is going to be handy"

Well, apart from the small fact that the trades are completely traceable due to the signing that goes on.

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Re: Bitcoin

Buying Bitcoins is not illegal. Selling them might be (under the EU e-money directive). There are legal uses for them, such as admiring them on your computer screen or donating them to charity.

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Re: Bitcoin

"Sounds a little gay to me" - you mean like Gareth Thomas or Elton John?

I'm sure you're not using "gay" to mean bad or rubbish - that would make you a complete arsehole.

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Re: Bitcoin

You have been downvoted for objecting to bigotry :-(.

Shame on you commentards.

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Coat

Re: Bitcoin

It's the new fiat currency for techno-libertarians who profess to not trust fiat currencies.

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Coat

New Job

Another ex-member of the RBS IT Team surfaces with a new job.

Sorry, used that joke before, getting my coat now

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Anonymous Coward

Weird

Funny, first time I learned about Bitcoins, I felt something in my water that told me to steer clear.

It's the same feeling I had back in 1988, when I was looking to buy a house with a friend, having just graduated, and having endowment mortgages shoved down our throats. After hearing how they worked, we both (independently) decided they sounded a bit dodgy, and to - guess what - steer clear.

I have always wondered exactly *how* "missold" the people who claim they were, actually were. If 2 22 year old newbies could smell a rat, then surely anyone older, or more experienced should have too ?

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Anonymous Coward

Re: Weird

But of course, my dear fellow, everone knows these Dutch tulip bulbs are worth a fortune. Just last week they were only worth a couple of hundred guineas each and now they're selling for twice that. Oh drat, my servant mistook half a dozen of them for onions. I thought that soup tasted a bit odd and now I have the most terrible indisposition.

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