Bitcoins worth $87,000 plundered in brazen server breach - Polidicks

[QUOTE]More than $87,000 worth of the virtual currency known as Bitcoin was stolen after online bandits penetrated servers belonging to Bitcoinica, prompting its operators to temporarily shutter the trading platform to contain the damage. Friday's theft came after hackers accessed Bitcoinica's production servers and depleted its online wallet of 18,547 BTC, as individual Bitcoin units are called, company officials said in a blog post published on Friday. It said the heist affected only a small fraction of Bitcoinica's overall bitcoin deposits and that all withdrawal requests will be honored once the platform reopens. It was at least the second time in 10 weeks Bitcoinica has been stung by a computer intrusion that has cost it dearly. In early March, a security lapse at cloud services provider Linode allowed hackers to make off with about $210,000 worth of bitcoin after they gained unauthorized access to bitcoin wallets stored by Bitcoinica and seven other customers. Last June, an anonymous person claimed to have lost $500,000 worth of bitcoin to online thieves, but the claims were never independently verified. "It is with much regret that we write to inform our users of a recent security breach at Bitcoinica," Friday's blog post stated. "The overwhelming majority of our bitcoin deposits were not stolen. The thief stole from us not you. All withdrawal requests will be honored." The post went on to warn that a database storing user names, e-mail addresses, and account histories was also accessed, and it also suggested cryptographically hashed passwords may also have been compromised. It advised customers who reused their Bitcoinica passwords on other sites to change them. Documents used to legally verify users' identities are stored on separate servers at a separate data center with a different encryption regimen. "Even full access to website database would not give the attacker access to this data," the post stated. "We will have more to say soon about the circumstances surrounding this attack and what we will do to handle it." Ars has sent e-mails sent to Bitcoinica CEO and lead developer Zhou Tong and other officials seeking comment for this article, but hadn't received a response by time of writing. According to comments Tong left in an online forum, hackers penetrated a webserver hosted by Rackspace after they managed to reset a password, most likely through an automated e-mail. Other participants in the discussion castigated Tong for not relying on two-factor authentication to manage the account. They also criticized Bitcoinica for storing such large amounts of liquid currency online, rather than keeping it offline and in an encrypted format. Tong didn't address the authentication issue, but he defended the decision to store such a large amount of currency online. "The sum of margin balance is the absolute minimum of funds we have to keep (so that we can honor every withdrawal request)," Tong explained. "Since the system is down at the moment, we don't have the knowledge of open positions. We're pretty sure that margin balance can be covered with our off-site reserves, but we are unable to determine value of unpaid unrealized profits and the unpaid swaps." Other participants complained that the theft of such a large amount of bitcoin threatened to devalue the currency. At time of writing, those fears appeared to be unfounded, with the value of a BTC remaining largely unchanged at about $4.94, according to current exchange rates. Bitcoin is a digital currency that's transferred through a peer-to-peer network, making it virtually impossible to trace those who use it. Strong cryptographic controls ensure that once bitcoins are spent they can't be taken back, although a recently published research paper reports limitations that allow the same bitcoins can be double spent. The March heist that hit Bitcoinica also affected several other trading platforms that have also lamented the necessity of storing large amounts of the currency in liquid form in "hot wallets" to automatically cover payout requests made by customers. Also hit in the earlier Linode breach was Gavin Andreson, the lead Bitcoin programmer, who lost about $25 worth of the currency. He told Ars at the time that he's working on an update to the Bitcoin framework that would largely prevent such thefts by requiring "multisignature transactions." Under such a system, wallets would contain only one of two private encryption keys needed to spend coins, with the other residing on a separate machine at a different location. Andreson didn't immediately respond to a request for comment on late Friday.[/QUOTE] [url=http://arstechnica.com/uncategorized/2012/05/bitcoins-worth-87000-plundered/]Source[/url]

great job :v:

Whenever I think too hard about crypto currency I get a little bit dizzy. [QUOTE=J!NX;35929295]this is why virtual money is kinda silly as an idea.[/QUOTE] guess what: almost every dollar on earth is 'virtual' if you use a credit card, well, that's silly too I guess

Yeah, google fractional reserve banking J!NX :P

J!NX, oh J!NX

Since bitcoins are anonymous, does it mean they're never getting them back?

[QUOTE=Sector 7;35929308]Whenever I think too hard about crypto currency I get a little bit dizzy. guess what: almost every dollar on earth is 'virtual' if you use a credit card, well, that's silly too I guess[/QUOTE] "Kinda" a silly idea and a CC is also kind of a more universally useful type of virtual money.

Too early to start a digital currency service like this IMO. We need to wait for better security technology.

[QUOTE=AceOfDivine;35929400]Since bitcoins are anonymous, does it mean they're never getting them back?[/QUOTE] Unless Bitcoinica has some sort of insurance policy then yes, it's permanently gone.

[QUOTE=AceOfDivine;35929400]Since bitcoins are anonymous, does it mean they're never getting them back?[/QUOTE] Yes. Bitcoins are anonymous and they cant be traced. As soon as the money left their account it was gone for good.

thats actually worth a shitload

[QUOTE=TheChantzGuy;35929707]thats actually worth a shitload[/QUOTE] yeah like $87000 or something yeah

I thought that bitcoin fad died out when people who bought dedicated "mining rigs" pushed the mining difficulty up too high? Well, I'm sure it'd be easy to trace the money. Not much you can buy with $87,000 in bitcoins except drugs and more bitcoins.

[QUOTE=W00tbeer1;35929516]Too early to start a digital currency service like this IMO. We need to wait for better security technology.[/QUOTE] Considering that quantum computers are only some decades away, security problems will be a thing of the past, because it will break every single code faster than the speed of light...

[QUOTE=W00tbeer1;35929516]Too early to start a digital currency service like this IMO. We need to wait for better security technology.[/QUOTE] Hackers will always be step ahead of security, because you can only defend against something you already know. Being a real hacker isn't about using something people already know about, but finding new paths and new routes, and that will always happen. There is nothing like absolutely secure system.

[QUOTE=SPESSMEHREN;35929773]I thought that bitcoin fad died out when people who bought dedicated "mining rigs" pushed the mining difficulty up too high? Well, I'm sure it'd be easy to trace the money. Not much you can buy with $87,000 in bitcoins except drugs and more bitcoins.[/QUOTE]It's not like you need to spend it all in one go. And there are quite a few services that sell stuff other than drugs.

[QUOTE=AceOfDivine;35929794]It's not like you need to spend it all in one go. And there are quite a few services that sell stuff other than drugs.[/QUOTE] like what?

[QUOTE=Beafman;35929779]Considering that quantum computers are only some decades away, security problems will be a thing of the past, because it will break every single code faster than the speed of light...[/QUOTE] Yeah well, I expect they'll find a way, even still.

[QUOTE=SPESSMEHREN;35929773]I thought that bitcoin fad died out when people who bought dedicated "mining rigs" pushed the mining difficulty up too high? Well, I'm sure it'd be easy to trace the money. Not much you can buy with $87,000 in bitcoins except drugs and more bitcoins.[/QUOTE] I'm sure they could trade for USD over a years time quite easily.

[QUOTE=SPESSMEHREN;35929813]like what?[/QUOTE] I know there is or at least was a service that sold steam games. Another one that sold hardware and some server hosting services. Probably there are more but I don't use bitcoins so I don't look for them.

Woah, bitcoins are actually still a thing?

[QUOTE=AceOfDivine;35929890]I know there is or at least was a service that sold steam games. Another one that sold hardware and some server hosting services. Probably there are more but I don't use bitcoins so I don't look for them.[/QUOTE] You could easily get the first thing and probably the second and third with hats, which seem to be more effective than bitcoins.

[QUOTE=AceOfDivine;35929890]I know there is or at least was a service that sold steam games. Another one that sold hardware and some server hosting services. Probably there are more but I don't use bitcoins so I don't look for them.[/QUOTE] There's also a firearms dealer that accepted bitcoin in the US.

All these breaches involving BitCoins really says something.

[QUOTE]Bitcoins worth $87,000[/QUOTE] This is incorrect. The worth of a bitcoin on the free market is null.

[QUOTE=Xenocidebot;35930200]This is incorrect. The worth of a bitcoin on the free market is null.[/QUOTE] So is most other currencies. Since they only exist in digital form on a bunch of computers. The money on your credit card? Well it's only worth something as long as other places accepts it. If they don't, well sucks to be you. Same with bitcoins, a group of people and companies accepts it as a currency, and therefor it's worth something.

Think of all the drugs you can buy with that.

Any huge pile of money is at risk of getting stolen.

what i could do with 87k in bitcoins

[QUOTE=stupid10er;35930611]what i could do with 87k in bitcoins[/QUOTE] 87k worth of bithookers 87k worth of bitcoke