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Bitcoin bubble bursts yet again
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Bitcoin bubble bursts yet again
bb1 Sat Feb 15, 2014 12:11 pm
http://www.bbc.co.uk/news/technology-26187725
Silk Road 2 loses $2.7m in bitcoins in alleged hack
The anonymous online marketplace Silk Road 2 says it has been hacked resulting in the loss of all its customers' bitcoins.
An administrator for the site said hackers had manipulated computer code enabling them to withdraw $2.7m (£1.6m) worth of the virtual currency.
It follows similar attacks on two exchanges that trade in bitcoins earlier in the week.
Silk Road 2 is known for selling drugs and other illegal items.
The site is only accessible through Tor, a network that allows users to browse anonymously online. The virtual currency Bitcoin is often used in transactions as it also grants users a degree of anonymity.
The original Silk Road site was shut down by the FBI in 2013 but those behind it said they would start a new site and shortly afterwards Silk Road 2 appeared online.
Completely empty
In a statement posted on Silk Road 2 forums, the administrator of the site, known as Defcon, said: "We have been hacked."
"Nobody is in danger, no information has been leaked, and server access was never obtained by the attacker.
"Our initial investigations indicate that a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as "transaction malleability" to repeatedly withdraw coins from our system until it was completely empty," he said.
Transaction malleability involves someone changing the cryptographic code - known as a transaction hash - used to create an ID for the exchange of funds before it is recorded in the blockchain - a database of every transaction carried out in the currency.
This method can result in the system thinking a transaction has not been carried out when it has and therefore repeatedly paying out bitcoins.
The two exchanges hit by attacks earlier in the week, MtGox and Bitstamp, had suspended transactions to prevent it happening again.
Defcon admitted that Silk Road 2 should have done the same.
Run with gold
"I should have taken MtGox and Bitstamp's lead and disabled withdrawals as soon as the malleability issue was reported. I was slow to respond and too sceptical of the possible issue at hand," he said in the forum posting.
In an article for CoinDesk, a news site for digital currency, Danny Bradbury an expert on Silk Road, said that bitcoin-based sites should put "bitcoins under management in cold storage (ie stored offline) so that they could not be stolen by online attackers."
Defcon said that all its customers' bitcoins were being stored online because of planned relaunches of some of the site's features.
"In retrospect this was incredibly foolish, and I take full responsibility for this decision."
Despite Defcon denying that he had "run with the gold", several Silk Road 2 users questioned whether the operators of the site were involved or covering for people involved.
"Does that even sound plausible? Or does it make more sense that they were waiting for the right moment... so that they could retire comfortably," wrote aqualung.
"Imagine you run this site, you see a huge amount of money sitting right there, and you know that you can take all of it and easily blame it on a hacker," wrote cubensis.
The site said as a result of the attack it would no longer host "escrow wallets" - an account where bitcoins are held until goods ordered are delivered.
The chief executive of the company that runs the MtGox bitcoin exchange was confronted by an angry customer at the company's headquarters in Tokyo this week.
Kolin Buges, a bitcoin trader from London, said he had travelled to Japan as he was unhappy at MtGox's explanation for its recent problems on the site which prevented customers from making withdrawals.
He had 250 bitcoins, worth $155,000 in his MtGox account.
"I want to get my bitcoin back, or get MtGox to bring back public confidence that the company is solvent and people's money [is] safe," Mr Buges told the Wall Street Journal.
One bitcoin is currently trading for around $620, significantly lower than the $830 level it was at before news of the various attacks broke.
Silk Road 2 loses $2.7m in bitcoins in alleged hack
The anonymous online marketplace Silk Road 2 says it has been hacked resulting in the loss of all its customers' bitcoins.
An administrator for the site said hackers had manipulated computer code enabling them to withdraw $2.7m (£1.6m) worth of the virtual currency.
It follows similar attacks on two exchanges that trade in bitcoins earlier in the week.
Silk Road 2 is known for selling drugs and other illegal items.
The site is only accessible through Tor, a network that allows users to browse anonymously online. The virtual currency Bitcoin is often used in transactions as it also grants users a degree of anonymity.
The original Silk Road site was shut down by the FBI in 2013 but those behind it said they would start a new site and shortly afterwards Silk Road 2 appeared online.
Completely empty
In a statement posted on Silk Road 2 forums, the administrator of the site, known as Defcon, said: "We have been hacked."
"Nobody is in danger, no information has been leaked, and server access was never obtained by the attacker.
"Our initial investigations indicate that a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as "transaction malleability" to repeatedly withdraw coins from our system until it was completely empty," he said.
Transaction malleability involves someone changing the cryptographic code - known as a transaction hash - used to create an ID for the exchange of funds before it is recorded in the blockchain - a database of every transaction carried out in the currency.
This method can result in the system thinking a transaction has not been carried out when it has and therefore repeatedly paying out bitcoins.
The two exchanges hit by attacks earlier in the week, MtGox and Bitstamp, had suspended transactions to prevent it happening again.
Defcon admitted that Silk Road 2 should have done the same.
Run with gold
"I should have taken MtGox and Bitstamp's lead and disabled withdrawals as soon as the malleability issue was reported. I was slow to respond and too sceptical of the possible issue at hand," he said in the forum posting.
In an article for CoinDesk, a news site for digital currency, Danny Bradbury an expert on Silk Road, said that bitcoin-based sites should put "bitcoins under management in cold storage (ie stored offline) so that they could not be stolen by online attackers."
Defcon said that all its customers' bitcoins were being stored online because of planned relaunches of some of the site's features.
"In retrospect this was incredibly foolish, and I take full responsibility for this decision."
Despite Defcon denying that he had "run with the gold", several Silk Road 2 users questioned whether the operators of the site were involved or covering for people involved.
"Does that even sound plausible? Or does it make more sense that they were waiting for the right moment... so that they could retire comfortably," wrote aqualung.
"Imagine you run this site, you see a huge amount of money sitting right there, and you know that you can take all of it and easily blame it on a hacker," wrote cubensis.
The site said as a result of the attack it would no longer host "escrow wallets" - an account where bitcoins are held until goods ordered are delivered.
The chief executive of the company that runs the MtGox bitcoin exchange was confronted by an angry customer at the company's headquarters in Tokyo this week.
Kolin Buges, a bitcoin trader from London, said he had travelled to Japan as he was unhappy at MtGox's explanation for its recent problems on the site which prevented customers from making withdrawals.
He had 250 bitcoins, worth $155,000 in his MtGox account.
"I want to get my bitcoin back, or get MtGox to bring back public confidence that the company is solvent and people's money [is] safe," Mr Buges told the Wall Street Journal.
One bitcoin is currently trading for around $620, significantly lower than the $830 level it was at before news of the various attacks broke.
bb1- Slayer of scums
- Location : watcher on the wall
Join date : 2011-06-24
Re: Bitcoin bubble bursts yet again
bb1 Sat Feb 15, 2014 12:15 pm
And for all those asking, WTF is a bitcoin? from the same link:
How Bitcoin works
Bitcoin is often referred to as a new kind of currency.
But it may be best to think of its units being virtual tokens rather than physical coins or notes.
However, like all currencies its value is determined by how much people are willing to exchange it for.
To process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.
For each problem solved, one block of bitcoins is processed. In addition the miner is rewarded with new bitcoins.
This provides an incentive for people to provide computer processing power to solve the problems.
To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of about 3,600 new bitcoins a day.
To receive a bitcoin a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual post-box to and from which the bitcoins are sent.
Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction.
These addresses are in turn stored in Bitcoin wallets which are used to manage savings.
They operate like privately run bank accounts - with the proviso that if the data is lost, so are the bitcoins owned.
So there you have it. If you're stupid enough to turn your computer over to God knows who, for God knows what purpose, you get paid in Imaginary Money.
Some are even dumb enough to exchange Real Money for Imaginary Money named after cute Japanese dogs.
It's a 21st century version of tulip bulbs, or South Sea bubbles.
How Bitcoin works
Bitcoin is often referred to as a new kind of currency.
But it may be best to think of its units being virtual tokens rather than physical coins or notes.
However, like all currencies its value is determined by how much people are willing to exchange it for.
To process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.
For each problem solved, one block of bitcoins is processed. In addition the miner is rewarded with new bitcoins.
This provides an incentive for people to provide computer processing power to solve the problems.
To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of about 3,600 new bitcoins a day.
To receive a bitcoin a user must have a Bitcoin address - a string of 27-34 letters and numbers - which acts as a kind of virtual post-box to and from which the bitcoins are sent.
Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction.
These addresses are in turn stored in Bitcoin wallets which are used to manage savings.
They operate like privately run bank accounts - with the proviso that if the data is lost, so are the bitcoins owned.
So there you have it. If you're stupid enough to turn your computer over to God knows who, for God knows what purpose, you get paid in Imaginary Money.
Some are even dumb enough to exchange Real Money for Imaginary Money named after cute Japanese dogs.
It's a 21st century version of tulip bulbs, or South Sea bubbles.
bb1- Slayer of scums
- Location : watcher on the wall
Join date : 2011-06-24
Pedro Silva- Slayer of scums
- Join date : 2011-06-26
Re: Bitcoin bubble bursts yet again
bb1 Sat Feb 15, 2014 12:32 pm
The whole thing with this 'virtual currency' is wierd, Pedro. What's even wierder is that a lot of people who should know better are being caught up in the scam.
bb1- Slayer of scums
- Location : watcher on the wall
Join date : 2011-06-24
Pedro Silva- Slayer of scums
- Join date : 2011-06-26
Re: Bitcoin bubble bursts yet again
bb1 Tue Feb 25, 2014 11:08 am
http://news.sky.com/story/1216846/bitcoin-turmoil-after-mt-gox-exchange-theft
Bitcoin Turmoil After Mt Gox Exchange 'Theft'
The virtual currency's value plummets after hundreds of thousands of Bitcoins are apparently stolen in a cyber attack
The Bitcoin exchange industry has moved to reassure holders of the virtual currency amid reports 6% of Bitcoins in circulation, worth roughly $375m (£225m), have been stolen.
The once-mighty Mt Gox exchange has reportedly suffered a cyber attack, with an apparent internal document suggesting more than 740,000 Bitcoins are missing from the exchange.
The Mt Gox website is currently offline with trading suspended and withdrawals have been frozen.
Mt Gox, which is based in Tokyo, has not commented on the claims, but its chief, Mark Karpeles, quit the board of the Bitcoin Foundation - an advocate for the virtual currency - on the eve of the shutdown.
Six other Bitcoin exchanges have released a joint statement distancing themselves from Mt Gox - insisting it should not be considered a reflection of the value of Bitcoin or the digital currency industry.
It said: "This tragic violation of the trust of users of Mt Gox was the result of one company's actions.
"As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.
"Mt Gox has confirmed its issues in private discussions with other members of the Bitcoin community.
"There are hundreds of trustworthy and responsible companies involved in Bitcoin.
"These companies will continue to build the future of money by making Bitcoin more secure and easy to use for consumers and merchants."
The signatories - Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle - released their statement two days after the reported cyber attack on Mt Gox.
Bitcoin's value - which has fluctuated wildly in recent times - fell more than 20% to just above $410 as reports emerged about the scale of the problems at Mt Gox.
Whoever would have seen that coming? The whole bitcoin saga is proof positive of just how stupid and gullible sections of the human race can be.
Bitcoin Turmoil After Mt Gox Exchange 'Theft'
The virtual currency's value plummets after hundreds of thousands of Bitcoins are apparently stolen in a cyber attack
The Bitcoin exchange industry has moved to reassure holders of the virtual currency amid reports 6% of Bitcoins in circulation, worth roughly $375m (£225m), have been stolen.
The once-mighty Mt Gox exchange has reportedly suffered a cyber attack, with an apparent internal document suggesting more than 740,000 Bitcoins are missing from the exchange.
The Mt Gox website is currently offline with trading suspended and withdrawals have been frozen.
Mt Gox, which is based in Tokyo, has not commented on the claims, but its chief, Mark Karpeles, quit the board of the Bitcoin Foundation - an advocate for the virtual currency - on the eve of the shutdown.
Six other Bitcoin exchanges have released a joint statement distancing themselves from Mt Gox - insisting it should not be considered a reflection of the value of Bitcoin or the digital currency industry.
It said: "This tragic violation of the trust of users of Mt Gox was the result of one company's actions.
"As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.
"Mt Gox has confirmed its issues in private discussions with other members of the Bitcoin community.
"There are hundreds of trustworthy and responsible companies involved in Bitcoin.
"These companies will continue to build the future of money by making Bitcoin more secure and easy to use for consumers and merchants."
The signatories - Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle - released their statement two days after the reported cyber attack on Mt Gox.
Bitcoin's value - which has fluctuated wildly in recent times - fell more than 20% to just above $410 as reports emerged about the scale of the problems at Mt Gox.
Whoever would have seen that coming? The whole bitcoin saga is proof positive of just how stupid and gullible sections of the human race can be.
bb1- Slayer of scums
- Location : watcher on the wall
Join date : 2011-06-24
Re: Bitcoin bubble bursts yet again
lily Tue Feb 25, 2014 1:37 pm
Personally, I always preferred the gold standard.
lily- Slayer of scums
- Join date : 2011-06-24
Re: Bitcoin bubble bursts yet again
bb1 Tue Feb 25, 2014 1:57 pm
I am fascinated by the bitcoin saga, Lily. I am astonished at the stupidity of the people buying into it.
And yes, who wouldn't prefer a gold bar to a bitcoin?
And yes, who wouldn't prefer a gold bar to a bitcoin?
bb1- Slayer of scums
- Location : watcher on the wall
Join date : 2011-06-24
Re: Bitcoin bubble bursts yet again
lily Tue Feb 25, 2014 2:07 pm
Well, there are those who prefer these newfangled ways of doing things. I mean, it's progress and everything's cool innit?
lily- Slayer of scums
- Join date : 2011-06-24
Re: Bitcoin bubble bursts yet again
bb1 Tue Feb 25, 2014 2:12 pm
What possible reason could there be not to trust a fellow-Truthseeker that wants to stick it to The Man and promises untold wealth in return for your money and access to your computer?
What could possibly go wrong?
What could possibly go wrong?
bb1- Slayer of scums
- Location : watcher on the wall
Join date : 2011-06-24
Re: Bitcoin bubble bursts yet again
lily Tue Feb 25, 2014 2:18 pm
Nothing. Who doesn't benefit from a good clearing out?
lily- Slayer of scums
- Join date : 2011-06-24
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