Bitcoins can be stolen

Bitcoin-225Couple of reports from the world of the virtual currency Bitcoin indicate that it has become a hacker target. A BTC is worth about $5 at the moment; the thefts are in the 6-digit area in terms of dollars.

What do we have here? A real-world currency who holders are subject to extraordinary attacks? Or is it a virtual currency that is necessarily more vulnerable to security risks? Or, are the holders of Bitcoin small-scale operations with insufficient security? I can't tell; I don't know enough about security. I wonder how this hacker-theft rate compares to the theft rate for Chase's electronic dollar holdings.

The fact that the thieves have acquired a good with stable value - $5 a unit - indicates that Bitcoin is alive and healthy, though.

Comments on Bitcoins can be stolen:

Edmundedgar says:

Nothing extraordinary going on here - if you’ve got a lot of digital cash sitting on a public web server it’s obviously going to get stolen from time to time.

For most purposes you don’t need to leave that much cash lying around on the public internet, especially since you can now secure your money with multiple keys, one of which can be on a computer you disconnect from the internet. (Armory has a nice UI for this.)

The exchanges are a special case as they need to pay out a lot of money in real-time with no human intervention, but there’s plenty more these guys could have been doing to reduce the risk. Doubtless they’ll do more in the future, or get replaced by exchanges run by people who are better at this stuff.

Posted May 14, 2012 9:08:34 PM | link