back to article Man says he lost $500,000 in virtual currency heist

Leaders of the open-source virtual currency project known as Bitcoin say they have no way to verify one user's claim that hundreds of thousands of dollars worth of digital coins were plucked from his computer earlier this week. Rumors of the heist have been swirling since Monday, when a Bitcoin user named Allinvain claimed 25, …

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  1. Charles Manning
    Flame

    So this bastard was a speculator!

    He bought a whole pile at 4c each and now they are supposedly worth $20.

    Shuffle along bankers, hedge fund dealers etc. Make way for one of your brethren,

    <--- Burn them all!

    1. Anonymous Coward
      Facepalm

      Bzzzt. Fail.

      So in your P2P utopia, speculators don't exist? Speculation doesn't exist?

      This magic nerd currency has abolished all acquisitive desires?

      That's brilliant, absolutely brilliant.

      Please leave your number in the reply Charles, I'll see if there's a open mic spot at my pub's next Comedy Night.

  2. Big-nosed Pengie

    Sorry

    No sympathy.

    Where's the Evil Bill icon gone?

  3. David Hicks

    Riiiiight

    And it's totally not a scheme for early adopters to hoard coins and cash out at the expense of later users... totally, yet this guy somehow has a hoard of 25,000 of them.... And if the market couldn't handle about 0.25% of the coin supply being put up for sale then the bitcoin 'economy' is clearly mostly made up of these hoarders.

    Also if there's no way to show or pursue theft then somebody also f*cked up the system design.

    1. mark 63 Silver badge
      Headmaster

      like cash

      "Also if there's no way to show or pursue theft then somebody also f*cked up the system design"

      Well no , thats the point. If you cant trace theft then you cant trace transactions.

      Like cash

      1. jonathanb Silver badge
        Headmaster

        not like cash

        If someone does a bank robbery or burgles your house, the police can get finger prints, look at cctv pictures and so on to catch the thief. The clear-up rate for these sorts of crimes may not be anywhere near 100%, but people do go to prison for it.

        1. Anonymous Coward
          Holmes

          like cash

          And here, the guy can have his computer forensically examined to see if a theft took place.

          If I walked into my local police station and said I'd just had £300,000 in pound coins stolen from my backpack, what do you think their response would be. I suspect the *best* I could hope for is having my statement taken.

      2. jnievele

        Almost but not completely unlike cash

        Cash is untraceable, but is harder to steal, especially in large amounts. You have to physically be where the cash is, and if it's a large amount you'll have to carry quite a lot of weight.

        1. Shakje

          So what you're saying is

          That you might store extra cash in a separate location, such as another room, or a bank, or maybe another computer that isn't externally connected when it doesn't need to be? It's his fault he had it on a PC that became compromised, it's probably his fault he was compromised, and it's his fault for storing capital in a currency he knew couldn't be traced if stolen. If he's got any brains he should be putting his efforts into working out how the cash left his PC.

        2. Tom 13

          Depends on the size of the bills.

          I could easily walk out with $300,000 in my backpack if I'm carrying bundles of $100 bills. On the other hand, carrying away $300,000 in gold, even at today's prices, will require a fair bit of work.

          1. Anomalous Cowturd
            Stop

            Let's work this out shall we...

            Current gold price, just over 1500 USD per Troy ounce.

            300,000 / 1500 = 200 Troy Oz = roughly 6.2Kg

            Shit, put it in a back-pack, and even me, with my dodgy ticker, could at least shuffle to my car with a million bucks worth...

            Now where have you put it exactly?

          2. Herby Silver badge

            Weight of gold and other things.

            "On the other hand, carrying away $300,000 in gold, even at today's prices, will require a fair bit of work."

            Not so fast...

            Today's quote of gold is: $1526 (and some change)

            So, $300,000 is 196.5 troy ounces.

            Troy ounces are 31.1 grams (plus a bit)

            A little math and this comes to 6,111g (or 6.111 kg). A bit more math and one gets 13.5 lb.

            In my book, this is a bit heaver than a laptop (probably an old one) in a backpack. In my book, not much "work"!!

            Of course if this were back in the 60's, when gold was $35/oz it would be a bit heaver! (40 stone heaver!!)

        3. Lance 3

          Cash is not harder to steal

          How is over 8 billion missing that US flew into Iraq? That is about 2.5 C130's full of money.

          So it isn't as impossible or as hard as you think it is.

      3. Stupidscript

        Less traceable than cash

        (paper) Cash has serial numbers. When it's stored in banks, those serial numbers are noted. If one notes the serial numbers on their own (paper) cash, then that becomes an element that could be used to trace the stolen product. Bitcoins are not like cash. They're more like your own private little language ... fascinating to build, fun to use with your friends, and absolutely ridiculous to anyone not included in the exercise.

        1. Anonymous Coward
          Anonymous Coward

          There's a lot of it about

          This is a bit like gold-farming in MMORPGs, and Second Life has a virtual currency which you can convert back into US Dollars. Though Linden Lab do say that all transactions can be traced and individual Linden Dollars have serial numbers--possible, but who knows? Linden Labs are also recruiting fraud specialists.

          Other virtual world operations seem to just price everything in US dollars

  4. Rob 5

    at the time he acquired the coins they probably were worth only $1000 or less

    So what? All kinds of things, tangible or intangible, increase or decrease in value over time. Loss is typically reckoned on the value at the time, not the value at some time in the past.

    Otherwise insurers would be able to get away with "Well, your coin collection might have been worth thousands at the time it was stolen, but when minted it was only worth one pound, 16 shillings and a groat."

    I hold no brief for the bankers who created the current mess, but this smacks of the folks behind bitcoin wanting to have things both ways.

  5. Yet Another Anonymous coward Silver badge

    Hardly bitcoins' fault

    If I had money disapear from my account I wouldn't expect the Bank of England to be able to trace it - but the online wallet company he used should have been able to.

    Probably not very smart to have kept it all in one bank - but tell that to a few local councils who thought Iceland was safe.

    So what if he speculated? The money was worth what it could be exchanged for. Arguing it's worth only what he paid for it is like the BSA claims that software piracy costs billions - because every kid that pirated Photoshop would have otherwise paid retail for it.

    1. DrXym Silver badge

      Not the system's fault, perhaps the client's

      I don't think much of Bitcoin the system but in this case it's more likely Bitcoin the client's issue.

      If the Bitcoin client's wallet is just sitting there on disk with no password protection then its a serious fault of the software. If the path of the wallet is predictable e.g. %APPDATA%/Bitcoin/wallet.dat then its a serious fault of the software. APPDATA could change depending on user id but if you know the guy you're targetting you could throw in some guesses based on first / lastname combinations.

      And both these things are true. Someone could use a web exploit to lift the file and initiate a transfer from from their own PC. It doesn't even need a trojan although that is possible too.

      This sort of thing was fairly predictable. The Bitcoin source code has some very pretty shoddy code in it and this is one serious example. The software could be hardened in a number of transparent ways, the most obvious being to randomize the path to the wallet, e.g. %APPDATA%/bitcoin/iuoiruw128z/wallet.dat. That immediately prevents browser upload attacks.

      Secondly Bitcoin should implement something akin to receivables and savings wallets. Incoming transactions go into a plaintext receivables until the user enters their savings password. At which point they move from the plaintext file into the encrypted file. The wallet closes after a timeout period, e.g. 5 minutes. So if someone lifts a wallet it'll be encrypted and therefore worthless.

      I'm sure it could be improved further than that, e.g. multiple savings wallets. But the basics are simply broken at the moment. Given all the brouhaha about how secure the system is you have to wonder what other problems are lurking within it.

      1. Alan Firminger

        My long held belief

        Digital money without the confirmation of a bank authorized payment trail will be forever vulnerable. All possible protections can be beaten by patient trojans. The gains for a thief, who has the comfort and security of working from home, are immense.

        At the turn of the century there was a hype over the coming digital wallet. It crashed. The encryption cannot be kept secret. The coded transfer can be synthesized. And with a hot soldering iron a kid in his bedroom can become a multimillionaire.

        The problem is its digital. Just as we can indefinitely make exact copies of our images so we, or others, can with money. Cash in a safe is analogue, it can never be exactly copied. Certainly cash can be adequately forged, so its total design and production is a race to stay ahead.

        I don't understand why the banks who have their billions as magnetic orientations cannot create money. The proof of this is the failure of BCCI, an international bank that was totally crooked.

        1. jonathanb Silver badge

          Re: bank deposits

          "Money" is a liability on a bank's balance sheet, so for that reason it is not in their interest to create it. The asset is the loans they hand out to people, and they are only assets to the extent they can have it paid back to them.

          The likes of Maddof and Stanford created money in the way you describe, and look what happened to them.

          1. Flybert

            take accounting 101 please

            ""Money" is a liability on a bank's balance sheet, so for that reason it is not in their interest to create it."

            sorry, but a basic tenant, though sometimes not easily understood .. is:

            Assets + Liabilities = Capital

            In the case of loans, typically today, the bank borrows from a larger bank and this is a liability that is capital, and it is then loaned as a security note that is indeed an asset .. whether it gets paid or not, or whether that security's value raises or lowers determines profit-capital gain or loss, but it is still an asset

            any not "money" the bank holds is a (capital ) asset, not a liability

        2. copsewood
          Boffin

          who creates money, bank or borrower ?

          "I don't understand why the banks who have their billions as magnetic orientations cannot create money. "

          More than 97% or so of money comes into existence based upon a believable contract by a borrower to pay it back to a lender, e.g. when you go out and buy something using a cheque overdraft or credit card, or buy a house with a mortgage. 3% or so is notes and coins, and even notes have a promise to pay in coins written on them.

          Given that it is the borrowers promise which is the transferrable IOU I think it's clearer to think of the borrower as the issuer. A proportion of bank charges and interest exist to cover bank losses when the promise to repay isn't kept. Various monetary reformers insist it is the banks which create the money out of nothing in this deal, but where they are wrong is that what they call "nothing" is in fact a commitment to repay by other parties (which makes the indebted parties the monetary issuers not the banks). The concept of commitment backed money drives the conventional economy for the most part, and also works in LETS.

          1. Bronek Kozicki Silver badge
            Thumb Up

            @copsewood

            nice explanation. It is also worth noting that bitcoin is not money but asset (e.g. comparable to plain piece of silver, but not to actual coin) since there is no issuer. Which means no authority to defer to when things go wrong, as happened here.

        3. Anomalous Cowturd

          Re: My long held belief.

          Aaahh, magnetic orientations...

          Reminded me of a school trip to Medway college on a coach, with the rest of my classmates, to oohh and aahh at their 64Kb ferrite core memory box, the size of a small fridge. Circa 1975/6.

          How times have changed...

  6. mafoo
    Trollface

    Conversion rate

    the conversion rate of power consumed to bitcoin worth is still pretty terrible.

    1. Michael Wojcik Silver badge

      value/power

      "the conversion rate of power consumed to bitcoin worth is still pretty terrible"

      True, the Bitcoin "mining" value/power ratio is pretty lousy, in relation to many other activities.

      However, from a purely economic perspective, that ratio is even worse for a lot of other computer-based activities, such as playing games, watching video, ranting in online forums [1], Everyone's Favorite Example [2], and so on.

      We justify those activities, economically, by recognizing intangible (or at least difficult to calculate) benefits, typically psychological and social ones. That is, we assume that people need to be entertained, to participate in their culture, and so forth; and so expending some resources to those ends are justified.

      What can someone do with Bitcoins they've mined? They can hoard them for speculative purposes - that's basically gambling, a form of entertainment. They may be able to spend them, typically on other entertainment products [3].

      So ultimately the resources spent on Bitcoin mining are mostly an entertainment expense, and probably on the whole similar to other such expenses. Yes, generating hashes keeps that CPU pegged, but many of those machines would probably be running other non-productive software if they weren't trying to find Bitcoin blocks.

      [1] OK, that one sometimes produces some value, in terms of education, etc.

      [2] Porn.

      [3] Notably illegal drugs, if media reports are to be believed.

  7. Arctic fox
    Flame

    Why is my sympathy limited?

    Possibly because this kind of system is beloved of those who consider all taxation as iniquitous, something that infringes on their "liberty". These freedom-lovers frequently do not understand the difference between "liberty" and "taking liberties". I have zero sympathy for tax-evaders.

    1. Anonymous Coward
      FAIL

      Wow.

      I've read the article and I cant see anywhere where it says he is anything other than a law abiding, tax paying, citizen who has been robbed (allegedly).

      But wait a minute, he has some money in "bitcoins" that must make him an evil tax-evader because everybody who has money in "bitcoins" or any other virtual currency is an evil tax-evader.

      1. Lamont Cranston

        I thought that

        "everybody who has money in bitcoins" were all in the drug trade?

        Whatever, Bitcoin looks like a pyramid scheme, and more fool anyone who gets involved with it.

      2. Dave Bell

        It's all taxable.

        The problem is how and when. These transactions, where they involve real goods, could be dealt with in the same way as a barter deal. Otherwise, the tax liability usually comes at the time of conversion to real money

        Watching for the real money is easiest for the taxman.

  8. Heff
    Facepalm

    guy's a dipshit

    you pay your bank fees, your visa card rates etc not just because they want to turn a buck (and employ people, too)* but also for insurance. you pay your 8-25% interest so that when some nobjocket honks off with your card and buys a bunch of rolexs in harrods and flogs em on ebay you can hop on the phone and not have to pay for it. likewise your bank covers you for bank robberies and things like the FDIC cover you for bank failure.

    so sure, stick all your money in bitcoins**, just take out insurance on that investment, otherwise, like this dude, its just digital money under the mattress as opposed to the papery stuff, and you've nobody to blame but yourself when it goes for a walk.

    *yeah, yeah. big evil credit giants, holding the little man down. I get it. money under your mattress employs zero people and doesnt work in the marketplace.

    **if its decentralized, how does that even work? one big hard drive failure could have wiped out his "stash" too, right? If there's a system for transfers, then there's a transfer log. this makes my head ache.

  9. Anonymous Coward
    FAIL

    Dimwit.

    Basically it's like keeping a load of cash in your house - if burglars steal it or your house goes up in flames it's probably gone.

    1. jnievele

      Not really

      It would be quite a pile of cash they'd have to carry, and they would have to physically come to your house.

      No, this is more like having your wallet stolen by a pickpocket (Hell, it's even called a Wallet!) - it's just that no sane person would carry half a million around in their trousers.

      Bitcoin is a micropayment system, it's not safe to have huge amounts of money in your virtual wallet.

      1. Tom 13

        If you are keeping $300,000 at your house

        you are keeping it in small bills which will be easy to carry.

        And yes, I know EXACTLY how big a pile of $300,000 in cash (mostly $20 bills) is, because I'm the poor sod who once had to walk into a bank carrying a box with half that amount in it to make a deposit. Not something I planned to do, and not something I plan on ever doing again, but it isn't as large as you think it is. Although I will grant the looks on their faces was almost worth it. And I was told it would take them the whole day to count it, even though we'd done so in less than 3 hours.

  10. Paul 87

    Odd

    This story sounds exactly like something created to undermine the idea of bitcoins and happens just days after they're publised for the first time.

    1. copsewood
      Boffin

      bitcoins around for longer than a few days

      I posted my views about Bitcoin in November: http://lwn.net/Comments/415118/ . However, the fact that this bubble has taken a few months to get as big as it now is doesn't mean it won't burst, and as far as I'm concerned, the sooner it bursts the better, because that means less attention will be taken from ethically based and sustainable monetary alternatives.

      People who earned credits on my local LETS 18 years ago can still spend these with the 60 active participants today if they want what is on offer.

      Ripple http://ripple-project.org/ is another very interesting concept, equally suited to transacting LETS credits and supermarket points as it is for paying in Pounds, Dollars and Euros, if the routing, concurrency and privacy problems are solvable. At the moment these technical problems appear difficult and intriguing, but I'm not aware of any fundamental reason why they should not be sufficiently solvable. Ripple also has the natural advantage of the IOU basis and all of the credit clearing being based upon existing trust and business relationships, and all transactions being traceable (at a pinch e.g. in the event of alleged fraud) through referral handovers within existing relationship chains, so the whole concept seems inherently reliable.

    2. Anonymous Coward
      Holmes

      Tin foil hat time

      The only thing undermining Bitcoin is the crappiness of the concept itself.

      Monetician, heal thy self.

  11. adnim Silver badge
    Joke

    Virtual money?

    Virtual loss

    Virtual sorrow

    1. adnim Silver badge
      WTF?

      Down voted lol

      seems some people have a virtual sense of humour.

  12. Anonymous Coward
    Anonymous Coward

    Title

    Bitcoins can shit off and not come back until they're called Galactic Credits.

  13. Jamie Davis
    Black Helicopters

    I'm not one for conspiracy theories but....

    A highly publicised, non-verifiable jab at the embryonic bitcoin system on the back of a climate of recent hacking? You can't help but feel it would be in the interest of a lot of banks/governments. Even a hedge against the value of bitcoins would profit off the back of this.

    Also. 4 cents now worth $20 a pop for something that has no intrinsic value? Why don't they just use virtual tulip bulbs and drop the pretense?

  14. dylan 4

    so apart from money laundering,

    and Ponzi schemes, can anyone name a practical use for bitcoins? Are they any more than just the ostrich farm or tulip of a new generation?

    1. Marvin the Martian

      Neal Stephenson would say so.

      Cryptonomicon readers might have a clue.

      But clearly the most practical application is contraband trade and tax evasion.

  15. Benedict

    "I feel like killing myself now."

    what a drama queen.

  16. cdilla

    dyr

    It's an increasing trend with El Reg comment mongers to type with wild and inaccurate abandon before doing even the most cursory of investigation in to the subject matter.

    There are one or two, well, OK, just one, El Reg hack of which that criticism can be leveled too.

    1. Marvin the Martian

      You wouldn't?! What are you: can't think ahead, liar, or toff?

      So you have $500k lying around that you wouldn't blink an eye over when suddenly disappeared?

      Me, $5k would already hurt for months, taking a safety net away.

      1. Bilgepipe

        Yeah but

        He didn't have $500K laying around, he had a chunk of data claiming to be worth $500K when it apparently wasn't.

        It's kind of like whining because your Elite commander lost cr500K.

        1. Automatic jack

          Fiat

          You could just as easily say he had a wad of paper claiming to be worth $500K

          One good thing about bitcoin is that it may cause people to consider the worth of fiat currency.

  17. Anonymous Coward
    Anonymous Coward

    I can't see why they can't confirm or deny the theft

    There has to be SOME trace ability other wise it's too dodgy to get upset about.

    Honestly if it has none then this is a system used purely to break the law...otherwise why would you use it considering the risks to your money? The only thing I could think of is that you want to hide what you are buying online....Like drugs or REALLY dodgy porn...

    I bet 50p this guy turns out to have illicit pictures of young children on his machine.

    1. copsewood
      Mushroom

      What is truth ?

      In Bitcoin world, as in the world of the Roman Governer of Palestine who asked that question of an alleged usurper, truth is what the powers that be claim it to be. In Bitcoin world the powers that be are those who can vote what truth is considered by the network to be, because they have more processing power than all the other players combined. Validating the next transaction block in Bitcoin is a matter of consensus, where a given number of CPU cycles == 1 vote. So it follows that in Bitcoin consensus is what BOFHs who can run programs through corporate clouds at the cost of their employers electricity bills, and Botnet herders who have more computers under their control than anyone else all at other people's expense, get to decide what the valid next block is going to be.

    2. Adrian Challinor
      Coat

      You are missing the point

      The whole basis of Bitcoin is that it is virtual, untraceable and unattributable. There is deliberately no trace. Its not a flaw, its a design axiom.

      It not like cash, or credit cards or PayPal. Its more like barer bonds - the person with the bond has tottal title to it. If you had a bond that you bought for 10,000 and it became worth 500,000, would you keep it in full view on the table next to your open front door? Probably not. You might pt it in a safe deposit box, because that way you can keep it but still not declare it for tax. Thieves can still break in, but its harder to do.

      The point here is that no-one can prove he did have the money in the first place, and no-one can show who has it now (assuming it has been stolen). That is what untraceable means.

      For anyone else who does not understand this, as has been said previously, go read Cryptonomicon.

      Mines the one with the barer bonds in the pocket.

      1. Anomalous Cowturd
        Joke

        Barer bonds?

        Get 'em off then!

  18. Anonymous Coward
    WTF?

    Yeah I lost 20bn in vCoins and my dog...

    Yeah I lost 20bn in vCoins and my dog... <sob>

  19. Anonymous Coward
    FAIL

    I see the problem

    "Allinvain speculated the thieves made off with the windfall after using malware to compromise his Windows-based computer."

    Technically savvy enough to get involved with BitCoin, but not savvy enough to run a secure OS, or apply all the sticky-plasters that are required to make Windows less sieve-like.

    Speculator or enthusiastic miner, I don't really care. Blaming BitCoin (or anyone) for one's own negligence and ineptitude is a bit rich.

  20. nederlander
    Thumb Up

    Why I use Bitcoin

    I am not against paying taxes, I'm proud to pay tax because I realise that tax isn't me giving my money away, but everyone pooling our money to spend on things we all need.

    I use Bitcoin because I'm a saver and I don't appreciate every central bank devaluing my savings by printing money. I don't want the value of my hard earned cash to be at the mercy of the broken system where stability depends on continuous exponential economic growth.

    1. This post has been deleted by its author

    2. DrXym Silver badge

      Mining is an interesting security case

      Miners need to run mining software to mine coins (since the CPU bitcoin client is very slow at mining) and they also need to throw their bitcoin client open as an RPC server so the miner can get work to do.

      The security issue here is obvious. Miners are motivated to seek out the fastest mining software to maximize their take. It wouldn't be hard to convince some users to download and run a trojan based upon its claims of speed.

      The trojan could even legitimately mine for a while to ensure good word of mouth but then go into robbery mode and transfer the lot somewhere else. This isn't hard for it to do since It has full access to the bitcoin app via RPC (and as can be seen here the commands it can call is extensive. https://en.bitcoin.it/wiki/Original_Bitcoin_client/API_Calls_list). It doesn't even need to bother with RPC if the wallet is local and could just lift it, but the RPC probably guarantees it the best chance of escaping firewalls and so on.

    3. Arctic fox
      Happy

      Re "I can see the problem"

      I am not sure that I agree with your suggestion that there is some kind of contradiction between his involvement in BitCoin and his falling for some kind of social engineering scam that led to his computer being infected. Very many soc-eng scams try to persuade that you are going to get "rich, rich, rich!" and schemes like BitCoin try to persuade you that you are going to get......."rich etc". In other words, falling for a social engineering scam directed against your pc and falling for a (ponzi, or do I mean poncy? )scheme like BitCoin has certain similarities. IE. "A fool and his pc and/or money are soon parted".

    4. David Hicks

      That devaluing has a purpose

      The purpose being to keep money flowing. If money never devalues then people hoard it.

      And so you get what we had here (before the theft), people hoarding masses and masses of bitcoins, but the actual volume of the bitcoin economy being so low and so unstable that this one guy could have caused the value to plummet by selling up. And he didn't even have that huge a treasure trove.

      I hope you haven't sunk too much 'IRL' cash into the scheme, but if you have then... well good luck I guess. You're going to need it.

    5. DrXym Silver badge

      If devaluation is your concern

      Don't you get it? Bitcoin is inherently unsafe and unregulated. It could collapse tomorrow and you could be left with nothing.

      It's only an investment in the way that pyramid schemes are investments - early adopters hype the scheme to the heavens, promising untold wealth and then cash out before the scheme collapses. It's the majority who are stuck in the scheme at the end who discover the reality that it was a scam all along.

      If you're so paranoid about deflation go buy some land, gold or something tangible.

    6. jnievele

      Yes and no

      He's got himself to blame for his actual loss, but Bitcoin is undermining the trust into their system with comments like "He really just lost the amount he spent in Bitcoins, he just lost 1000$"

      If you change Euros into Dollars, the Dollar rises like mad (Well, this IS hypothetical), and you end up with 10 times the original amount of money - but it gets stolen before you convert it back, you'd be a bit pissed off if the police said "You only lost the money you originally exchanged into Dollars, no worries", wouldn't you?

      If Bitcoin is money, it ALWAYS has its current worth (hence the name "Currency"), not the worth it had when you got it in exchange for something else.

    7. jnievele

      Devalued

      Congrats... Bitcoin just devalued your money.

      With his Statement Mr. Schneider made clear that whatever money you put into Bitcoin should be considered lost - if you can convert it back to real currency, lucky for you, but you're not supposed to expect anything from Bitcoin.

      Your hard-earned cash is at the mercy of Bitcoin and whatever exchanges will be left by the time you want to get your money back. If Bitcoin just comes out and says "Hey, it was a nice test, but we'll just shut down everything now" you'll end up having lost all your money with nobody to appeal to.

      1. Bronek Kozicki Silver badge

        RE: Yes and no

        Your comparison to EUR/USD echange is wrong. USD has buying power *and* central bank, bitcoins have neither. It's more like collecting same rare mineral. Not very useful in itself, but you can change it to actual money on special exchange.

    8. Anonymous Coward
      Windows

      Icons Icons Icons

      ← "his Windows-based computer."

    9. Gerald
      Thumb Down

      No, it isn't you giving your money away

      It's money being extracted from you by force. I'm glad you're happy about paying. I'm sure if you didn't have to pay it, you'd be just as happy to pay it, too. They have places to do that. They're called charities. And they don't ask you to pay at the point of a gun.

    10. Mme.Mynkoff
      Happy

      @nederlander

      "I'm proud to pay tax because I realise that tax isn't me giving my money away, but everyone pooling our money to spend on things we all need."

      We need more useful idio^H^H^H^H taxpayers like you.

    11. Anonymous Coward
      Anonymous Coward

      Play a Garth Brooks record backwards.

      Although I will confess I forget if it is the dog or the spouse who comes back first, so it might be more trouble than it's worth.

    12. Bronek Kozicki Silver badge

      RE: Why I use Bitcoin

      You fail to understand that money is no longer a piece of metal with some value attached to it. It has social purpose which, due to lack of trusted intermediaries, central agency itd. bitcoin will be never able to fulfil.

  21. Dick Pountain
    Facepalm

    Yet more online Poker

    This isn't a "currency" at all, just another type of financial gambling. Only the state is big enough to guarantee a currency, which is why the libertarians are headed for a life of disappointment.

    1. Anonymous Coward
      Anonymous Coward

      Really?

      > Only the state is big enough to guarantee a currency,

      There are so many currencies that have failed over the years it would take to long to list them.

      Perhaps you mean the dollar, pound and euro? Well there are no guarantees with any of them. National borrowing in all 3 currencies is way out of control and at some point the price (inflation, lots of it) will have to be paid. Or in the euro's case it might devolve back into national currencies for some of the countries involved.

      Those who use a virtual currency are perhaps hoping that because it is independent of the dollar/pound/euro it will not be affected by any one currencies inflation.

      Now, if I had the money to do it, I would spread it out over multiple currencies and perhaps even keep some (but not a lot) in virtual currencies.

      1. jonathanb Silver badge

        Yes really

        Yes, financial regulation sometimes fails, but that doesn't mean you fix the problem by having no regulation at all. The regulations are there for a good reason, and most of the time they do work.

    2. copsewood
      Boffin

      Other monetary guarantors

      "Only the state is big enough to guarantee a currency".

      That depends upon your value of guarantee. My IOUs currently circulate within my local LETSystem , acceptable currently within a group of about 60 active participants. They are worth my help giving people lifts, the odd few hours carrying out various tasks or providing advice, second hand goods, home made jam etc. I've purchased and earned a few thousand pounds worth of similar goods and services over the last 10 years or so. It was never setup with the intention of anyone considering it a means of savings, (as opposed to exchange) but the fact remains that LETS credits earned when we started 18 years ago are still spendable with those actively participating today.

      The state does have an advantage which we don't in the sense the state guarantees to accept it's own issued money as payment of taxes.

    3. Mme.Mynkoff

      +1 Mr Pountain

      Bitcoin will be a pseudocurrency (like Air Miles, Tesco Clubcard Points and Green Shield Stamps) when it's redeemable against something useful, and people who use it have a reasonable guarantee against devaluation and theft.

      You don't need the state to do that. Unfortunately, the numpties who think Bitcoin can bring down the fractional reserve banking system (cont'd p94) can't see how to get from Here to There.

  22. Anonymous Coward
    Anonymous Coward

    You can tell...

    Which idiots have fallen for this Ponzi.

    Anything negative is a setup etc.

    I honestly doubt this is fake. If I had bitcoins (which I do not) I would sell now. Before the rush.

    Bet the people behind it are passing them around

  23. brain_flakes
    WTF?

    Aren't bitcoins inherently traceable?

    I thought that, due to the requirement that all transactions must be logged to prevent someone spending the same bitcoins twice, that bitcoins were inherently traceable? And if the thief hasn't spent them yet he could transfer them first thus saving some or all of his hoard...

  24. This post has been deleted by its author

    1. TeeCee Gold badge
      Coat

      Re: iCoin

      Er, shouldn't that be coined the idea......?

  25. Anonymous Coward
    Unhappy

    Weird interaction between real/virtual worlds developing

    My lad (was) into "Runescape" in a big way. He eventually decided to use a (to me) dodgy 3rd party (runescape-gold.com) where you *pay* then in £s, and they transfer so much "gold" to your characters inventory.

    Because he has to learn for himself, I let him buy £30 worth. Went through with Paypal. All seemed well. He got the "gold" was happy as Larry ... next day - all his inventory had gone. I have no idea exactly how, but did note that Jagex T&Cs forbid buying gold this way, so you could hardly complain to them.

    Wasn't there a court case recently where somebody sued for something in 2nd Life ?

  26. Anonymous Coward
    Anonymous Coward

    419

    If someone sent me an email about "investing" in virtual cash I would be looking for the dodgy grammar and the connection to Nigeria..

    Bernie Madoff would be proud.

  27. Anonymous Coward
    FAIL

    Like securing your bike with string...

    "using malware to compromise his Windows-based computer"

    HA HA!

  28. Anonymous Coward
    Meh

    Oh noes!

    These guys have my virtual sympathy.

  29. Anonymous Coward
    Happy

    Ironic

    ...that his name was "Allinvain". Has a nice ring to it, don't you think?

  30. nederlander
    Meh

    Why so angry?

    "Don't you get it? Bitcoin is inherently unsafe and unregulated. It could collapse tomorrow and you could be left with nothing. "

    No regulation is better than bad regulation. The fiat monetary system is possibly the greatest failing of the human race, and the bungled attempts at regulation would be laughable if they weren't so harrowing.

    There is nothing inherently unsafe about Bitcoin, like any type of cash, its important to store it securely.

    As for collapse, my analysis is that in the long run, Bitcoin is probably less likely to collapse than any other currency. For now though I have not spent what I cannot afford to lose.

    1. DrXym Silver badge

      Wut?

      "No regulation is better than bad regulation. The fiat monetary system is possibly the greatest failing of the human race, and the bungled attempts at regulation would be laughable if they weren't so harrowing."

      No it isn't. Regulation stops you from being fleeced, it gives you protections from dodgy banks and lenders who would exploit you, it is borne from painful financial collapses in the past.

      And you still haven't addressed why bitcoin (which is also fiat btw) a safe investment as opposed to buying land or something else which is tangible.

      "There is nothing inherently unsafe about Bitcoin, like any type of cash, its important to store it securely."

      Yes there is. Maybe you haven't been paying attention but some guy just got hosed by a theft. If the thieves decided to cash-in that money then everyone else's investment will slump because sellers will outstrip buyers and the price will collapse. If there are no buyers and only sellers then bitcoins are virtually worthless. And that will be just a taster of what happens when the entire sysem collapses and EVERYONE wants out.

      "As for collapse, my analysis is that in the long run, Bitcoin is probably less likely to collapse than any other currency. For now though I have not spent what I cannot afford to lose."

      Well your analysis appears to be clouded by some peculiar libertarian notions. Even buying gold / silver in the current speculative bubble is probably a sounder bet. Or perhaps you should even invest in some tulip bulbs. I hear they are a surefire investment too.

      1. Arctic fox
        Happy

        @DrXym Re "Wut"

        I am quoting your post in full - it deserves it big time!

        ""No regulation is better than bad regulation. The fiat monetary system is possibly the greatest failing of the human race, and the bungled attempts at regulation would be laughable if they weren't so harrowing."

        No it isn't. Regulation stops you from being fleeced, it gives you protections from dodgy banks and lenders who would exploit you, it is borne from painful financial collapses in the past.

        And you still haven't addressed why bitcoin (which is also fiat btw) a safe investment as opposed to buying land or something else which is tangible.

        "There is nothing inherently unsafe about Bitcoin, like any type of cash, its important to store it securely."

        Yes there is. Maybe you haven't been paying attention but some guy just got hosed by a theft. If the thieves decided to cash-in that money then everyone else's investment will slump because sellers will outstrip buyers and the price will collapse. If there are no buyers and only sellers then bitcoins are virtually worthless. And that will be just a taster of what happens when the entire sysem collapses and EVERYONE wants out.

        "As for collapse, my analysis is that in the long run, Bitcoin is probably less likely to collapse than any other currency. For now though I have not spent what I cannot afford to lose."

        Well your analysis appears to be clouded by some peculiar libertarian notions. Even buying gold / silver in the current speculative bubble is probably a sounder bet. Or perhaps you should even invest in some tulip bulbs. I hear they are a surefire investment too."

        I could not have expressed it better!

        :)

        AF

      2. Tom 13

        Gold and Silver aren't in a speculative bubble.

        They are in Fear mode. People are buying both because they fear the coming collapse of the existing fiat currencies. Whether or not they eventually decline is dependent entirely on removing that fear. Even then it is arguable that they will be worth more than they are today. Only reason I'm not investing in them is that I'm maxed out on the debt front and working to pay that down.

  31. Cthulhu
    Boffin

    It's all in the name

    Allinvain = A Villian

    Nuff said.

    1. jnievele

      Or...

      Allinvain = All in vain...

  32. Yet Another Anonymous coward Silver badge

    An explanation

    For an interesting technical explanation of how and why it works - it's worth listening to the omegaTau podcast http://omegataupodcast.net/2011/03/59-bitcoin-a-digital-decentralized-currency/

  33. Banker
    Megaphone

    No Centralised database, not a currency.......

    I've read many a claim on this subject, some stating Bitcoin is a currency, others bonds, ponzi scheme, scam etc.

    As my posting name suggests, I know a thing or two about how money works. Let me confirm that every true currency, traded electronically, will be manage by a centralised system, usually accessed through their RTGS, Real Time Gross Settlement system, usually run by the countries/currencies central bank (Bank of England for Sterling, ECB for Euro, Fed for US Dollars etc). This way, we know how much there is, and crucially, where it is.

    Cash is different matter.

    Bitcoin is not currency, banks are not going to buy it are they? Mugs game with a few lucky winners at the end, a punt at best.

    And besides all this boring rubbish, the name "Allinvain" just seems a bit comically suspect eh?

    1. Anonymous Coward
      Childcatcher

      Real Cash

      For me, the value of a currency breaks down when there is no meaning to the phrase 'I promise to bear the bearer on demand...", and you contemplate the system of fractional reserve banking.

      At that point, suddenly it doesn't matter whether there is a state behind a given currency or not... all currency seems to be a monstrous fraud by a bank of one kind or another.

      I'm not a banker, but I know a thing or two about bankers. Like Icesave. Northern Rock. RBS. Lehman. Goldman Sachs. Barings...

      How much of my money do you want me to give you to compensate for the failure of your entire industry to self regulate?

      Bankers, pfft.

    2. Anonymous Coward
      FAIL

      re: I know a thing or two

      I expect a lot of *ankers thought that who are now out of a job, or dependent on bailouts.

  34. Tom Reg

    Bitcoins are good

    The problem with 'real' money is that the banks wants 6% of each transaction (visa, cash withdraw, bank charges X 2 for both transaction sides). As they get greedier, the internet routes around them.

    1. david wilson

      @Tom Reg

      >>"The problem with 'real' money is that the banks wants 6% of each transaction (visa, cash withdraw, bank charges X 2 for both transaction sides)."

      My bank doesn't charge me anything for withdrawing cash, paying in cash or cheques, or sending or receiving electronic transfers.

      They might charge me for some of those things if I was a regular business, with business-style turnover, but since a regular business seems fairly unlikely to piss about with things like bitcoins, that's a pretty moot point.

  35. Mage Silver badge

    Avoid

    Sounds to me that however altruistic the founders are, the premise of the idea is misbegotten and it will turn into a Ponzi scheme.

    Those that get out early will profit.

  36. b166er

    Wallet

    store your Bitcoins in a cloud-mirrored TrueCrypt volume and unmount unless making a transaction?

  37. sisk Silver badge
    Facepalm

    Wow

    A guy gets ripped off and all a bunch of you have to say is that he's an idiot for having Bitcoins. That's pretty pathetic. It is not the victim's fault. Nor is it Bitcoin's. The system does exactly what it is meant to. The merits and flaws of an untrackable currency are beside the point. Too many of you are playing the 'blame the victim' game. Do you blame the victims of identity theft when a trojan lifts enough personal details from their computer for someone to get a credit card? I would hope not. This is the same thing.

    1. Anonymous Coward
      Anonymous Coward

      Indeed

      "Do you blame the victims of identity theft when a trojan lifts enough personal details from their computer for someone to get a credit card? I would hope not. This is the same thing."

      The same thing, with a notable exception.

      As has been mentioned, the attractiveness of the system is that there are no fees to pay, greedy bankers to finance and so on. However, that is also the flaw.

      Recently I was unlucky enough to have my details stolen, £200 near enough went from my account without my say so. If this had been bitcoin, it looks like that would have been the last I saw of it. As it was, I phoned my bank who immediately cancelled my card and issued a new one, began an investigation in to the fraudulent transaction, and credited my account with £200 right there, pending the outcome. They found in my favour, so I kept the money.

      As with everything, there is opportunity and there is risk. If you take the opportunity bitcon, sorry, bitcoin represents, you must accept the risk of dealing in untraceable money. I choose to not take that opportunity, however I have much lower risk. He chose to take the opportunity, unfortunately, he is now the victim of the inherent increased risk.

  38. b166er
    Facepalm

    What?

    'Regulation stops you from being fleeced, it gives you protections from dodgy banks and lenders who would exploit you, it is borne from painful financial collapses in the past'

    Sorry, but what faraway planet are you from? Surely you meant: 'Regulation that should stop you from being fleeced, to give you protection from dodgy banks and lenders who exploit you, this being learnt from the current painful financial collapses"

    1. DrXym Silver badge

      I live on this planet

      I don't recall losing my savings once during any financial crisis in my lifetime. Perhaps that is because I don't invest in ostrich eggs or some other harebrained get rich quick scheme. Perhaps it also has to do with the fact that banks are regulated which curbs their worst excesses and provides a measure of financial safety if they do come crashing down. When Northern Rock came crashing down, the government stepped in with a savings guarantee and nationalised the bank to stabilize it. Without regulation no such measures would have happened it might have had a domino effect on other banks. The fact of the matter is Bitcoin is a blackhole.

      If and when it collapses or is legislated out of meaningful existence you know who will save your ass? Nobody. Your money will be toast. Or rather it will be in the pockets of speculators who got out before the pyramid collapsed.

  39. Anonymous Coward
    Anonymous Coward

    I'll just leave this here...

    http://blockexplorer.com/address/1KPTdMb6p7H3YCwsyFqrEmKGmsHqe1Q3jg

  40. Yet Another Anonymous coward Silver badge

    @I live on this planet

    And presumably you also live in a country with a nice stable government with a willingness and the borrowing ability to bail out banks.

    If you had your money in Iranian Rials with the Shah's head on them, Rhodesian pounds, or Zimbabwean dollars you might not have been so lucky.

    Even the Reichmark, backed by all the power of the National Socailist Government didn't do too well.

  41. Anonymous Coward
    Go

    Can i claim as a "loss" on my taxes

    That is the real question...

    Dear IRS (USA) -- as you know, it was a real bad year in the bitcoins world, no gains - capitol, virtual or refund wise....?

  42. BlindWanderer
    FAIL

    Security

    If I had a cool half mil' sitting around I would invest a little money in protecting it. Like maybe encrypt it and store it on a flash drive disconnected from my computer.

  43. henchan
    Thumb Up

    use it don't lose it

    Whether or not the theft actually took place - and I am sceptical - this story is good news for the burgeoning currency, whose inherent strength is its ability to facilitate trade. Not really as a vehicle of asset speculation.

    As a result of hearing this, more people may be reluctant to hold large quantities and may be apt to spend or trade the coin rather than holding out for appreciation. For a deflationary currency like Bitcoin, such behaviour could be just what the doctor ordered.

    1. DrXym Silver badge

      Or

      They might attempt to cashin before the thieves do and devalue the entire currency.

  44. Herby Silver badge

    Protection?

    ... "protected by anything like the Windows operating system"

    No, sorry, I don't think so. More like wide open and vulnerable like the windows operating system

  45. Anonymous Coward
    Anonymous Coward

    Is that a wad of cash in your pocket or are you just vigorously speculating?

    Personally if I found the contents of my coat pocket gaining hundreds of thousands of pounds in value I would start moving at least some of it into a safe but I guess Allinvain doesn't see things that way.

    Still, if he knew someone who would've bought the things then I feel bad for him for losing them. I'm not a monster, unlike some people it seems.

  46. JC 2
    FAIL

    A Fool And His Money...

    There's a reason why *real* money exists... if we want to talk about the virtues of Bitcoin, let's then proceed to talk about the virtues of Monopoly game money. After all, it would seem infinitely more valuable in this case with so few people trying to steal it using malware.

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