Bitcoin value crashes after exchange compromised

[madfranks]

I knew something like this would happen, which is why I never had any faith in this digital fiat "currency".

http://www.finextra.com/News/Fullstory.aspx?newsitemid=22676


The value of Bitcoin fell from $17.5 to pennies within minutes on MT. Gox, which quickly suspended trading and issued a statement. (https://support.mtgox.com/entries/20208066-huge-bitcoin-sell-off-due-to-a-compromised-account-rollback)
The company says a single account with a lot of coins in it was compromised by someone using a Hong Kong-based IP to login. The perpetrator sold all the currency and then immediately bought it all back and then attempted to withdraw it, although the account had a $1000 a day withdrawal limit so the thief could not get it all.
Later, MT. Gox confirmed that a compromised computer led to its database being pulled, exposing the usernames, e-mail addresses and hashed passwords for thousands of users.
It is now advising people to change their passwords if they are "simple" and predicting the exchange will be back up and running by 02.00 GMT.
According to ars technica, the currency crash is specific to MT. Gox, with another exchange, Tradehill, experiencing a far less severe drop in the value of coins.
The MT. Gox meltdown comes in the wake of a warning last week from security outfit Symantic that Bitcoin has been targeted by crooks that have developed a Trojan designed to locate users' wallet.dat file and email it to the attacker.
In a blog (http://www.symantec.com/connect/blogs/all-your-bitcoins-are-ours), the company's Stephen Dohertyv advises users: "If you use Bitcoins, you have the option to encrypt your wallet and we recommend that you choose a strong password for this in the event that an attacker is attempting to brute-force your wallet open."
Although it has been running for around two years, Bitcoin has begun attracting attention in recent months as its value and popularity rise. It has also come under scrutiny from US senators worried it is being used to anonymously buy illegal drugs online.

[JJ.G0ldD0t]

The perpetrator sold all the currency and then immediately bought it all back and then attempted to withdraw it, although the account had a $1000 a day withdrawal limit so the thief could not get it all.

Someone's been studying the Rothschild model.

Yeah I heard they got hacked- Buddy of mine emailed me this weekend saying he just got into it and a day later THIS happened.

He said he shouldda stuck to silver.

I agree.

[Shami-Amourae]

I'm in IRC with now with MagicalTux (Mt Gox).

Mt Gox is one guy, it's this French guy named Mark Karpeles, and he lives in Japan. He recently hired a Canadian guy it's all run by these two guys out of Japan. Basically the Canadian dude is there since people can understand his English without Marks ridiculously French accent. I can understand what they are going through since I had something similar happen with my business/database in 2007, it almost killed us but we recovered and won a lot of trust back (I deal with the same volume of customers, just far less money.)

The problem that really happened is that MagicalTux started the first exchange for Bitcoin, and he did it thinking it would be something small and no big deal. Then it grew to millions and millions of dollars literally overnight and he's been struggling to keep up with the insane amount of growth, and that was his downfall.

To many people are jumping onto the bandwagon and screaming "YES!! BITCOIN IS DEAD!" and "I TOLD YOU SO!". They don't know what they are talking about, because an exchange failed, not Bitcoin. The value of Bitcoin didn't crash. The exchange got hacked. All the other exchanges were relatively stable and nothing really changed, only with Mt Gox so all these news stories about it crashing are completely false and frankly bullshit (it's call disinfo.) Unless everyone using Bitcoins magically loses faith in it tomorrow, Bitcoin isn't over, though it's definitely taken a nice raping imagewise which is sad since Mt Gox is the one who basically helped build that image too.

One of the good things about all this is Mt Gox wont bottleneck the Bitcoin market w/ 90% of the trades (which is a good thing.) How bad this turns out depends on how long it takes for Mt Gox to recover. People have a lot of money and Bitcoins in their Mt Gox account and those are all frozen.

Keep noted that hackers are going after the exchanges, not the Bitcoin network (it's still been proven to be solid.) Also the value of Bitcoin hasn't moved much actually since most trades were with Mt Gox. Demand to buy is far higher than the demand to sell. Want proof? Look yourself:
https://www.virwox.com/cached/BTC_SLL-depth-en_GB-700x400.png
Note: This image is LIVE

Who the hell knows what's going to happen now. All of this is uncharted waters and there's nothing you can historically refer to (despite what people think.) The Bitcoin community lacks serious professionalism at this point. It's just a bunch of nerds in their 20s and 30s. That's it. That's the whole market too.

[Horn]

What's interesting to note is Hong Kong is now used as a bastion & pirate field of freedom.

A title once held by the U.S.

[osoab]

I'm in IRC with now with MagicalTux (Mt Gox).

Who the hell knows what's going to happen now. All of this is uncharted waters and there's nothing you can historically refer to (despite what people think.) The Bitcoin community lacks serious professionalism at this point. It's just a bunch of nerds in their 20s and 30s. That's it. That's the whole market too.

Couldn't resist.


http://www.youtube.com/watch?v=gZEdDMQZaCU

[Shami-Amourae]

What's interesting to note is Hong Kong is now used as a bastion & pirate field of freedom.

A title once held by the U.S.

That's probably just a proxy. Anyone can do that shit.

[Horn]

That's probably just a proxy. Anyone can do that shit.

Anyone with a Chinese proxy.

[Ponce]

I don't know how that cointhingy works and I really don't care........ "If you don't hold it, you don't own it"... Ponce

My saying always works for me and will keep on working.......after all, who besides yourselves can you trust?

[joboo]

There's going to be all kinds of dumb people who don't understand computers getting the money from their fool soon parted.

The entire premise is based on security through high level encryption...hello...beuller, follow the lead...encrypt, and isolate your data, and don't use weak passwords....i.e. use the lock on your safe, not a piece of scotch tape or string.

All kinds of paypal, ebay, facebook, gmail, hotmail, yahoo, msn, accounts got hacked when they first started....how are they doing now?

[Shami-Amourae]

Well I think this is the technology of the future. It's an idea whose time has come. The real question is will the first incarnation be successful? Will Bitcoin be like Friendster? We may see a ByteyBoopCoin as the Facebook of this technology. That's what all this crap rides on.

Bitcoins two main problems:
1.) Too much traffic is centered in one exchange (which this hack will remedy really quickly with the new major player being TradeHill.com literally overnight.)
2.) It's a giant new paradigm that very few people truly comprehend or understand - yet. I think Stefan Molyneux puts it best @9:34

http://www.youtube.com/watch?v=GkxvCttvSo4

[Ponce]

LIke in any other kind of a bank........don't keep in it more than what you can afford to loose.

[vacuum]

I don't see a problem with what happened...the system will be hardened because of it. Those using bitcoins as a currency aren't putting themselves at much risk at all, either before or after this event, as long as they just changed dollars into bitcoins then bitcoins into stuff. The process would ideally take 15 minutes - thats 15 minutes of risk.

For those who like to gamble, now might be a good time to buy.

[madfranks]

I don't know how that cointhingy works and I really don't care........ "If you don't hold it, you don't own it"... Ponce

My saying always works for me and will keep on working.......after all, who besides yourselves can you trust?

I agree Ponce, and notwithstanding all the support for bitcoin, something just smells fishy about it to me, and I don't trust it. Gold and silver coins in my hand I can trust, because they don't depend on anything or anyone to retain their value. Specie money will always trump fiat currency, be it paper or digital.

[Horn]

I wonder what the odds are?

If put on a USB device, would Bitcoins could be safer from irradiation & corruption then all the world's Gold put in the hands of Goldfinger.:cool:

[vacuum]

If put on a USB device, would Bitcoins could be safer from irradiation & corruption then all the world's Gold put in the hands of Goldfinger.:cool:
The servers and infrastructure must also be in working order.

[Buddha]

Take your chances, I myself am a gambling man. I will stock up after this shit + I have a half way decent amount. WTF do you think my fucking family tells me when I told them to buy silver and it goes down to 35, let me say it again DOWN to 35, after ive been saying since 12 to buy the shit.

Get some imagination in your fucking heads.

[Olmstein]

RIP, Nerd dollar.