Bitcoin thefts soar
By Dan Bloom, From Daily Mail UK
Bitcoin thefts soar as online criminals target easy payday after currency’s value quadruples in the space of three weeks
More than $2m stolen from Danish, Polish, Czech and Australian sites
Man who makes real-life coins also halts orders amid ‘regulatory issues’
Virtual currency was worth more than gold for the first time yesterday
Once seen widely as a currency attracting criminals, its reputation is now soaring – not to mention its price.
But users have reported several alarming recent thefts of Bitcoin, the digital currency taking the world by storm.
Invented in 2009, the global currency’s anonymity and lack of control from any government makes it ideal for digital entrepreneurs, but also a prime target for hackers.
In the most recent attack hackers stole 1,295 bitcoins worth more than $1 million from one of the world’s biggest sites, the Coindesk news site reported.
The criminals attacked the servers of the Denmark-based Bitcoin Internet Payment System (BIPS), wiping its data.
They weakened the site by launching a catastrophic denial of service attack – where a server is bombarded with data until it collapses – before stealing the virtual currency.
Chief executive Kris Henriksen said the attackers may have been from Russia and neighbouring countries, Coindesk reported.
He wrote on the Bitcoin Forum: ‘Please be advised that attacks are not isolated to us and if you are storing larger amounts of coins with any third party you may want to find alternative storage solutions as soon as possible.’
A statement on the firm’s website said: ‘BIPS has been a target of a coordinated attack and subsequent security breached. Several consumer wallets have been compromised and BIPS will be contacting the affected users.
‘As a consequence BIPS will temporarily close down the wallet initiative to focus on real-time merchant processing business which does not include storing of Bitcoins.
‘BIPS will consider to reintroduce the wallet initiative with a re-architected security model.’
Angry users of the currency took to forums to protest at the loss of their money, including an anonymous user who lost 90 bitcoins (about $100,000).
The user said people who were affected should file a class-action lawsuit.
He admitted Bitcoin was the ‘wild west’ of currency but said: ‘I think it’s reasonable, fair, and legal for the affected individuals to get together and try to negotiate as a group for some kind of compensation.’
Meanwhile Czech website bitcash.cz had its entire balance stolen – which last month was estimated at about $100,000.
A statement on the firm’s website said: ‘On November 11, in the evening, there was a security breach on our server.
‘The unknown attacker managed to convert the entire… balances in users’ wallets.’
It also comes after Australian site TradeFortress claimed $1.3 million of Bitcoin were stolen three weeks ago – just as the currency’s value began soaring.
Several sites which have fallen victim to the hackers, including TradeFortress, have been forced to deny accusations of an ‘inside job’.
Such was the case with the Polish website Bidextreme, which put a long statement on its website last week.
It said: ‘It is understood that in this situation you expect a detailed explanation, but we cannot make public information such as what data has been lost, what has been recovered, at what stage the proceedings [are] because it will harm the investigation.
‘Your speculation, allusions and often accusations directly, not having the slightest basis in reality and posted on the forum are very hurtful, bring chaos and anxiety, as well as damage [our] image.’
We understand your bitterness, but please refrain from drawing conclusions and issuing extrajudicial [action] until the end of proceedings.’
Global: Nara Sushi, a restaurant in San Francisco, has begun accepting Bitcoin despite the controversy
Meanwhile in a separate issue, an entrepreneur who makes physical bitcoins – Mike Caldwell, from Salt Lake City, Utah – suspended all new orders on Thursday over unspecified ‘regulatory issues’.
A statement on his blog said: ‘For the time being, I have suspended accepting new orders, pending resolution of some concerns I have as to regulatory issues.
‘I am anticipating a possibility of having to prequalify buyers, and am holding off taking orders until I know for sure.’
PHOTO:
Security breach: Kris Henriksen, chief executive of the Danish Bitcoin Internet Payment System, said his site suffered a catastrophic hacking attack. He added: ‘Several consumer wallets have been compromised’
Soaring: The value of Bitcoin in dollars has more than quadrupled in November. Source: CoinDesk Price Index
Vulnerable: Real-world bitcoins pictured in April. Hackers have attacked sites hosting the digital currency
WORTH MORE THAN GOLD: THE RISING STAR OF VIRTUAL MONEY
Suddenly the world is fascinated with Bitcoin – which has soared in value since the start of November.
It is currently worth about $1,100 per coin and yesterday one coin was worth more than an ounce of gold for the first time, it’s claimed.
And it is hitting ‘real life’, with a cash machine in Vancouver, Canada, and a sushi restaurant in San Francisco dispensing and accepting the currency.
The virtual money – whose value is determined by no government, instead by a peer-to-peer network of mainly anonymous users – was invented by Satoshi Nakamoto in 2009.
But that is not his real name – he, too, was anonymous.
The inventor released the coding for his currency in open-source form, and users can now create their own bitcoins.
It happens through a process called mining, which forces computers to solve algorithms so complex that the amount of power they take up limits how much currency can flood the market.
Its value works just like any undefinable commodity, with the same potential pitfalls.
In one of the most famous price bubbles, tulips took on enormous value in 17th Century Amsterdam with lovers of the flowers remortgaging their houses – before the price suddenly collapsed.
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IT worker throws out hard drive, loses $7.5 million Bitcoin fortune
By Alexander Smith, NBC News contributor From World Nnews ABC
An IT worker says he threw out a computer hard drive without realizing it contained $7.5 million worth of the digital currency Bitcoin, and now it’s buried in a vast landfill site in Wales.
The device is now buried somewhere in a vast landfill site near the home of owner James Howells — who only realized his mistake when it was too late.
“It is soul destroying to be honest,” Howells told NBC News on Thursday. “I haven’t had much sleep over the past few days. Every second of the day I am thinking about what could have been.”
Howells, whose ordeal was first reported by the Guardian, worked out the hard drive would have been taken to a local landfill site and visited the dump to speak to the manager.
But the hopelessness of his task became clear when he was was told that finding he disk would take weeks even with a team of a dozen people and backhoes.
“I had originally thought about raising money to hunt for the drive, but it was more an off-the-cuff idea. I know it’s gone,” he said.
Howells posted an image of the landfill site on Twitter.
The hard drive is so valuable because it contains the key to 7,500 bitcoins, a currency which exists only in the digital world.
The currency was created in 2009 and has recently skyrocketed in value — hitting $1,000 per unit on Wednesday — having enjoyed a surge in interest by the media and financial sector.
Howells, from Newport, in South Wales, created his 7,500 bitcoins in 2009, when the new currency was only known in niche circles and of little value.
“It was just after the financial crash and when I found out about Bitcoin it seemed to me to be the perfect alternative,” he said. “I knew it was going to be huge.”
The 28-year-old “mined” the currency by running a computer program on his Dell laptop for almost a week, eventually having to turn it off because his girlfriend complained the fans in the machine were getting too hot and noisy at night.
Howells said he was forced to take the hard drive out of the laptop in 2010 when he poured a soft drink over the keyboard, and over the next three years it remained forgotten in his desk drawer.
He does not know exactly when he threw it away, but said it was at some point this summer.
In the meantime. Bitcoin’s popularity had exploded into the mainstream.
Norwegian investor Kristoffer Koch made about $800,000 when he bought $27 worth of bitcoins and forgot about them. And before it was closed by the FBI in October the illegal online marketplace Silk Road used Bitcoin to trade goods including drugs and weapons.
It was further pushed into the mainstream when Richard Branson announced this week that people would be able to pay for Virgin Galactic space flights using the currency. The first Bitcoin ATM machine opened in Vancouver, Canada, last month.
Howells only realized what he had done last Friday.
“I started hearing all these stories about people making money from Bitcoin, and basically the penny just dropped and I remembered the bitcoins on the hard drive I had thrown away,” he said. “I have turned my house upside down looking for it, but I know deep down I threw it away.”
However, he refused to be too downbeat about the episode, and is now concentrating on the next opportunity the internet might bring.
“I am not about to jump off a bridge or anything,” he said. “There’s always going to be another opportunity.”
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