Computer compromise leads to theft of bitcoins valued at $500,000 USD • Hacker News Board

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#21

Post by brk » Tue, Jun 14, 2011, 2:45 PM UTC

BigZaphod wrote: post #8

StavrosK wrote: post #2

The worst part of this is how irreversible it is. With a bank you might be able to get it back, with cash nobody can just siphon the actual paper money remotely, but with bitcoin you're out of luck.

Nobody would keep $500,000 in cash sitting around their house, but that's essentially what this guy did.

Completely untrue.

I've witnessed stacks of cash far in excess of that.

However, when it is done, there is usually a fair bit of armament around the cash, and the kinds of people that keep that sort of cash on hand are also not the sort you want to commit an amateur robbery against.

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#22

Post by StavrosK » Tue, Jun 14, 2011, 2:48 PM UTC

mootothemax wrote: post #10

StavrosK wrote: post #2

The worst part of this is how irreversible it is. With a bank you might be able to get it back, with cash nobody can just siphon the actual paper money remotely, but with bitcoin you're out of luck.

With a bank you might be able to get it back I'm not sure that's true. As I mentioned in another comment, the CHAPS payment system doesn't allow transactions to be reversed, and the other major system in the UK, Faster Payments, I believe has a 24 window for banks to request a reversal, usually in case they transmit something by mistake. Honestly, I think we place too much faith in banks sometimes.

Probably... At least it would be more traceable, though...

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#23

Post by ubernostrum » Tue, Jun 14, 2011, 2:48 PM UTC

mootothemax wrote: post #6

imjustatechguy wrote: post #3

Earlier quoted context omitted.

Traceability in the real world banking institutions has its advantages. As a business owner I've once had a mistaken transactions that resulted in erroneous withdrawal of +10,000 from business bank account. A phone call to the bank and a bit of investigation fixed things and I don't think the bank was out any money either, it was just a wrong account number issue. With bitcoin, things are not at all reversible. Also…

With bitcoin, things are not at all reversible. True of plenty of payment methods, e.g. CHAPS in the UK: Unlike other forms of payment such as cheques, CHAPS payments are irrevocable http://www.ukpayments.org.uk/payment_options/chaps/

I think a better word is "traceable". Presumably with CHAPS one can find out who the money went to, and other mechanisms can come into play to get it back.

Bitcoin, though, is supposed to herald the awesome future of totally anonymous, totally untraceable transactions in which once your money's gone, you're fucked.

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#24

Post by chopsueyar » Tue, Jun 14, 2011, 2:49 PM UTC

imjustatechguy wrote: post #3

StavrosK wrote: post #2

The worst part of this is how irreversible it is. With a bank you might be able to get it back, with cash nobody can just siphon the actual paper money remotely, but with bitcoin you're out of luck.

Traceability in the real world banking institutions has its advantages. As a business owner I've once had a mistaken transactions that resulted in erroneous withdrawal of +10,000 from business bank account. A phone call to the bank and a bit of investigation fixed things and I don't think the bank was out any money either, it was just a wrong account number issue. With bitcoin, things are not at all reversible. Also…

There are major federal investments in anti-money laundering systems that monitor bank transactions

That worked really well for Wachovia...

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-d...

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#25

Post by roel_v » Tue, Jun 14, 2011, 2:49 PM UTC

mrvc wrote: post #15

It's not really $500,000 though is it? As soon as you exchange a small amount of that into dollars you crash the exchange and the value drops significantly. I'd estimate it at about $30,000 worth.

Can you elaborate on how to came to the discount factor you used?

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#26

Post by astrodust » Tue, Jun 14, 2011, 2:49 PM UTC

ansy wrote: post #11

I'm a BitCoin skeptic with the best of them. But this is breathtaking. That's one thing about bitcoins. There's no FDIC or SIPC watching your back. It's the wild west with train robberies and stage coach heists in all.

The thing I find more dangerous than that is anyone with your wallet.dat file can go and do whatever with your account.

There really should be additional checks. Having to sign your transfer requests and allow people to impose a voluntary delay on their transactions to allow time for cancellation would help significantly.

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#27

Post by chopsueyar » Tue, Jun 14, 2011, 2:50 PM UTC

pavel_lishin wrote: post #9

Valued by who? Hasn't this been fluctuating like crazy lately?

No. One exchange one day.

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#28

Post by cakeface » Tue, Jun 14, 2011, 2:53 PM UTC

BigZaphod wrote: post #8

StavrosK wrote: post #2

The worst part of this is how irreversible it is. With a bank you might be able to get it back, with cash nobody can just siphon the actual paper money remotely, but with bitcoin you're out of luck.

Nobody would keep $500,000 in cash sitting around their house, but that's essentially what this guy did.

It seems like secure servers where you can store / access your bitcoins could be a good product.

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#29

Post by chopsueyar » Tue, Jun 14, 2011, 2:53 PM UTC

StavrosK wrote: post #2

The worst part of this is how irreversible it is. With a bank you might be able to get it back, with cash nobody can just siphon the actual paper money remotely, but with bitcoin you're out of luck.

Nope.

http://www.wired.com/threatlevel/2011/06/bank-ach-theft/

Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD

#30

Post by byrneseyeview » Tue, Jun 14, 2011, 2:56 PM UTC

ansy wrote: post #11

I'm a BitCoin skeptic with the best of them. But this is breathtaking. That's one thing about bitcoins. There's no FDIC or SIPC watching your back. It's the wild west with train robberies and stage coach heists in all.

It's interesting to consider why that is. I could start a BitCoin deposit insurance company, for example: you'd pay me X% of your balance each month, and I'd make you whole in the event of fraud.

Of course, I'd want all sorts of regulations on how you set this up; I might sell you some kind of extra-secure system for managing your balance, for example. At that point, the market would basically be putting a price on BitCoin security.

Obviously, my deposit insurance scheme could go broke, if I price it wrong. That's theoretically a risk with SIPC. It's not a risk with the FDIC, since that is ultimately backed by the government's ability to print an unlimited amount of money.

So it might make more sense to say that deposit insurance is a feature of unstable currencies: if anyone's dollar-denominated debt can be 100% guaranteed by the government, then the value of everyone's dollar-denominated assets will face an inflation tax to pay for this guarantee.