back to article Canuck Bitcoin exchange gives up after security SNAFU

Canadian Bitcoin exchange Cavirtex, said to be the country's largest, will shut its doors after its two factor authentication credentials were probably compromised. The breach, spotted last Sunday, affected two factor secrets and hashed passwords stored in an older database and did not match log in details to identification …

  1. JayBizzle

    Will the threat of those trying to steal Bitcoins put the sword through Bitcoin? It's hard to consider trusting any of the Bitcoin exchanges given the well publiscised breaches and that would lower the value imo due to the risk factor

    Q for anyone: Is this ability to steal Bitcoin inherent in the design of it, the design of how it is "held" or the immaturity of the market?

    1. Lee D Silver badge

      The insecurity isn't in the design of Bitcoin. It's people passing their Bitcoin to a third-party wallet which holds it in trust and provides equivalent currency in, say, dollars or Euros. It's like giving your cash to a bank without a vault or security on the doors. The cash works just fine (or else the criminals wouldn't want it)... but if you're giving it to third-parties to hold who are unable to secure it and unable to have sufficient funds or insurance available to cover any potential loss, that's a risk.

      Your own Bitcoin wallet, that's forever and secure for as long as you keep it secure. Putting those coins into a foreign wallet is an act of trust in that third party and numerous incidents have proven this to be quite a bad idea.

      The places hosting these exchanges aren't secure, aren't audited properly, don't have intrusion detection, prevention, insurance against those kinds of intrusions (which would almost certainly demand security procedures and audits as a condition of insurance), etc. Banks are legally required to do that, and hold a certain amount of funds in trust in case of problems, and all sorts of other regulations. BitCoin exchanges don't, maybe the cash-side of their businesses but their BitCoin sides don't.

      And that's the problem. Bitcoin are valuable, but the risk is in the exchange for other things of value. As soon as you try to cash them out, you are in the hands of a third-party who has to take your Bitcoin and give you something tangible or cash in return.

  2. Anonymous Coward
    Anonymous Coward

    It depends.

    In my opinion a combination of all three. After all, it is all about end point security, and for the common man who likes to click on links in emails, it is far less secure than having your money in a regulated bank account.

    However, it seems to me like this Canadian company has done nothing wrong. No one lost anything, and they are certainly not the first bank/exchange to experience a break in. So they seem to be overly sensitive (nice), compared with their physical world counter parts who wouldn't dream of releasing a similar statement unless it was painfully obvious that something went wrong.

  3. Ole Juul

    Why?

    Is the exchange quitting because the problem cannot be fixed, or because they've just had enough?

  4. jake Silver badge

    And yet people will still drink the cool-aid.

    Unsecureable, untraceable, no real-world financial backing, and capable of evaporating any time someone (MtGOX comes to mind) decides to "leave the market" ... Yeah, I really want to put my hard-earned cash into that.

    1. Anonymous Coward
      Anonymous Coward

      Re: And yet people will still drink the cool-aid.

      "Unsecureable" < Untrue. "Untraceable" < It is more so than cash. "no real-world financial backing" < Neither is your cash.

      " and capable of evaporating any time someone (MtGOX comes to mind) decides to "leave the market"

      Your yankee dollars have lost 98% of their value since 1973.

      But then you already knew all that.

      "Yeah, I really want to put my hard-earned cash into that."

      You don't have any money. Probably because you shitpost on the internet all day.

  5. Blank Reg

    Well this is a first. A bitcoin exchange shutting down and NOT buggering off with all the funds.

    1. Anonymous Coward
      Anonymous Coward

      Yet ...

      as title.

  6. DCLXV

    Rather confounding is the lack of details regarding the BTC ATMs and POS systems that the company has been operating in Canada

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