Feeds

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

Digital coins: As discreet as cash – and just as more vulnerable

Reducing security risks from open source software

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 25,000 Bitcoins, technically valued at close to $500,000, had mysteriously been transferred to an unknown user's account. Allinvain speculated the thieves made off with the windfall after using malware to compromise his Windows-based computer.

"I just woke up to see a very large chunk of my bitcoin balance gone," the user wrote. "I feel like killing myself now."

More than 300 posts later, it's still not clear if the claims are part of an elaborate hoax. Because Bitcoin is built on a peer-to-peer foundation that completely bypasses any sort of centralized database, it's impossible for even the architects of the digital currency to verify if a theft took place.

"Bitcoins technical details are complex cryptography and there's no way for us (as developers) to figure whether there was a real theft or not," Nils Schneider, one of the project backers, wrote in an email to The Register.

Still, the claims highlight the darker side of a completely decentralized digital currency that's built from the ground up to be as anonymous as cash. Long considered the Holy Grail of futurist libertarians because it can't be traced by marketers or governments, the system has no mechanism to trace the types of digital heists that are becoming a common occurrence these days.

One can say many of the same things about cash, but there are a few caveats: It's typically not possible to store hundreds of thousands of dollars in a "wallet," digital or otherwise, and traditional wallets aren't protected by anything like the Windows operating system, which is notoriously susceptible to online criminals. Cash also can't be stolen remotely by someone who's physically located half-way around the world from the victim.

What's more, cash stored in bank accounts or paid using credit cards is often protected by guarantees from government agencies, such as the Federal Deposit Insurance Corporation, or card issuers, such as Visa. Those, of course, are the same boogeymen virtual cash-loving libertarians want to bypass in the first place.

Over the past few months, the exchange rate for Bitcoins has skyrocketed, reaching as high as $29 and hovering in the $18 to $19 range more recently. But Schneider said it's not realistic to value Allinvain's claimed loss at $500,000 because of another potential dark side in the virtual cash system.

"The market just couldn't handle the sale of 25,000 BTC at once," he explained. The true value of the loss "would be more like $300,000 and cause the price to drop to around $10. Also, at the time he acquired the coins they probably were worth only $1000 or less. So the loss is in terms of USD is more a theoretical value. It's not like he put $300,000+ into bitcoins and lost them." ®

Mobile application security vulnerability report

More from The Register

next story
LibreSSL RNG bug fix: What's all the forking fuss about, ask devs
Blow to bit-spitter 'tis but a flesh wound, claim team
Microsoft: You NEED bad passwords and should re-use them a lot
Dirty QWERTY a perfect P@ssword1 for garbage websites
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
NUDE SNAPS AGENCY: NSA bods love 'showing off your saucy selfies'
Swapping other people's sexts is a fringe benefit, says Snowden
L33t haxxors compete to p0wn popular home routers
EFF-endorsed SOHOpelessly Broken challenge will air routers' dirty zero day laundry
Own a Cisco modem or wireless gateway? It might be owned by someone else, too
Remote code exec in HTTP server hands kit to bad guys
British data cops: We need greater powers and more money
You want data butt kicking, we need bigger boots - ICO
Crooks fling banking Trojan at Japanese smut site fans
Wait - they're doing online banking with an unpatched Windows PC?
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Mobile application security vulnerability report
The alarming realities regarding the sheer number of applications vulnerable to attack, and the most common and easily addressable vulnerability errors.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.