bitcoin hacked, 250k gone forever

[chad]

250k gone because ONE GUY fucked up a manual backup? LOL

http://www.pcworld.com/businesscenter/article/261894/bitcoin_exchange_loses_2500000_after_unencrypted_k eys_stolen.html (http://www.pcworld.com/businesscenter/article/261894/bitcoin_exchange_loses_2500000_after_unencrypted_k eys_stolen.html)

Hackers stole about US$250,000 from BitFloor, a BitCoin exchange, on Monday, and it does not have the money to reimburse account holders, according to the website's founder.
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BitCoins (https://en.bitcoin.it/wiki/FAQ#Could_miners_collude_to_give_themselves_money_ or_to_fundamentally_change_the_nature_of_Bitcoin.3 F) are an electronic currency that are generated as computers solve a changing mathematical problem. A BitCoin is essentially just a secret number, which is protected from unauthorized transfers by public key cryptography, that is associated with an 34-character alphanumeric "address" that a user holds.
BitFloor, based in New York City, allowed account holders to buy and sell BitCoins, exchange the currency for U.S. dollars and transfer the money using the ACH (Automated Clearing House) system.
The cryptography wrapped around BitCoins is designed to make it nearly impossible to derive the private keys needed to gain possession of the secret number. But in the case of BitFloor, hackers found the keys.
Roman Shtylman, BitFloor's founder, wrote on a forum (https://bitcointalk.org/index.php?topic=105818.0) that the hackers obtained an unencrypted backup of the keys, which were then used to transfer coins held by BitFloor. The backup "was made when I manually did an upgrade and was put in the unencrypted area on disk," he wrote.
"I realize the details of the failure and attack are interesting but I am currently focused on user accounts and exchange status going forward," he wrote.
BitFloor's reserve of BitCoins -- about 24,000 -- was wiped out. A BitCoin was worth about $10.46 as of Wednesday, according to Mt. Gox (https://mtgox.com/), another BitCoin exchange.
U.S. dollar accounts with BitFloor were not affected as well as records for accounts and trades, Shtylman wrote. BitFloor turned over around 64,000 BitCoins a month, worth some $717,000. It took a 0.3 percent commission from trades, amounting to around $2,100 in revenue for the site, Shtylman wrote.
"As a last resort, I will be forced to fully shut BitFloor down and initiate account repayment using current available funds," Shtylman wrote. "I still have all of the logs for accounts, trades, transfers. I know exactly how much each user currently has in their account for both USD and BTC [BitCoin]. No records were lost in this attack."
One user asked if BitFloor could secure some investor funds in order to pay back customers. "This would be a possibility if investors interested in helping continue operations show interest," Shtylman wrote. "It is certainly something I am thinking about."

[Dogman]

That is why I barely trust anything important to a digital format. One click of a mouse or keystroke and......POOF....it's gone!

[StreetsOfGold]

Computer digits are difficult to hold in your hand

[Twisted Titan]

Somebody stole fake money and can't replace it with real money.....the irony is not lost on me

[midnight rambler]

Somebody stole fake money and can't replace it with real money.....the irony is not lost on me

Oh, but it'll be so much better and safer when the banksters totally control the digital money and that's all there is. You know we can trust them, they've done a great job of managing things so far. God bless 'em.

[sirgonzo420]

Bitcoin wasn't hacked.

An exchange called Bitfloor was.

Bitcoin, as a protocol, is actually ridiculously secure, using cryptographic principles.

But if you don't hold it, you don't own it. As in, don't leave bitcoins or USD on an online exchange.... keep them in an encrypted wallet on your own system, or, even better, on a "paper wallet", or "brain wallet".


https://www.youtube.com/watch?v=Um63OQz3bjo

[JohnQPublic]

"If you don't back it up properly, you don't own it."

JQP

[Uncle Salty]

If you can't remember your password, you don't own it.

[Uncle Salty]

Shitcoin.

[Dogman]

"If you don't back it up properly, you don't own it."

JQP Sort of the same! ;D


http://www.youtube.com/watch?v=jrLbY4-Q99A

[mamboni]

I am a bitcoin moron. But I would like to understand this. A few questions:

1. How was valuation of a bitcoin in dollars arrived at?
2. Can my PC mine for bitcoins in the background, 24/7? If so, how many bitcoins might I find with an I-5 CPU doing nothing but bitcoin mining?
3. If everyone's PC can mine bitcoins, is there a danger of bitcoin inflation?

[sirgonzo420]

I am a bitcoin moron. But I would like to understand this. A few questions:

1. How was valuation of a bitcoin in dollars arrived at?
2. Can my PC mine for bitcoins in the background, 24/7? If so, how many bitcoins might I find with an I-5 CPU doing nothing but bitcoin mining?
3. If everyone's PC can mine bitcoins, is there a danger of bitcoin inflation?

1) The free market - the laws of supply and demand. Supply of bitcoins is limited to 21 million ever. Bitcoins "started" at about $0.001 each when the protocol first came out. Then they got as high as $30 and now are around $10.

2) Not anymore, too many people are doing it with much more efficient equipment that is designed for it.

3) Nope. See 1.

[mamboni]

1) The free market - the laws of supply and demand. Supply of bitcoins is limited to 21 million ever. Bitcoins "started" at about $0.001 each when the protocol first came out. Then they got as high as $30 and now are around $10.

2) Not anymore, too many people are doing it with much more efficient equipment that is designed for it.

3) Nope. See 1.

So bitcoin seems more like a security or stock than a currency. Bitcoin company capitalization = bitcoin price X 21 million?

What is the 21 million limit, prime numbers?

[sirgonzo420]

So bitcoin seems more like a security or stock than a currency. Bitcoin company capitalization = bitcoin price X 21 million?

What is the 21 million limit, prime numbers?

from https://en.bitcoin.it/wiki/Controlled_Currency_Supply


Bitcoins are created each time a user discovers a new block (https://en.bitcoin.it/wiki/Block). The rate of block creation is approximately constant over time: 6 per hour. The number of Bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 4 years. The result is that the number of Bitcoins in existence will never exceed 21 million[1] (https://en.bitcoin.it/wiki/Controlled_Currency_Supply#cite_note-0). This algorithm was chosen because it approximates the rate at which commodities like gold are mined. Users who use their computers to perform calculations to try and discover a block are thus called Miners (https://en.bitcoin.it/wiki/Mining).
https://en.bitcoin.it/w/images/en/thumb/e/e3/Total_bitcoins_over_time_graph.png/740px-Total_bitcoins_over_time_graph.png


Kinda, sorta, but I don't like to use the word "security" for regulatory reasons.

Actually, bitcoins don't really exist, but what does exist is a ledger by which cryptographic keys are used to confirm and transfer ownership of said imaginary bitcoins.

The technical details are just that... technical. Here is a link to the original whitepaper written by the anonymous creator of Bitcoin (it's a short read): http://bitcoin.org/bitcoin.pdf

It is worth noting that the blockchain is the ledger of all bitcoin transactions, and it is public - anonymity comes from skilled use of the software, etc, but it is possible to track transactions if you can tie an identity to a random looking bitcoin address.

[Shami-Amourae]

For the record I sold my all Bitcoins last month. Why? Since I had a 50% gain after a little over 2 weeks of trading and knew there was a price collapse coming. I was right and made out like a bandit.

You guys knock this shit, while I keep profiting off of it and buying more Gold/Silver with the profits. It's the only real 24 hour market that isn't rigged. Technicals and charts matter and it's easy shit to play.

[LuckyStrike]

For the record I sold my all Bitcoins last month. Why? Since I had a 50% gain after a little over 2 weeks of trading and knew there was a price collapse coming. I was right and made out like a bandit.

You guys knock this shit, while I keep profiting off of it and buying more Gold/Silver with the profits. It's the only real 24 hour market that isn't rigged. Technicals and charts matter and it's easy shit to play.

Go on........

[LuckyStrike]

Surely at GSUS, I'm not the only one who thinks this is the banking cartel who has set out to destroy bitcoin? I mean this is the most viable alternative I have seen to FRN's in quite some time, other than sites like Gold Money etc. They can't appreciate that.

[Golden]

Surely at GSUS, I'm not the only one who thinks this is the banking cartel who has set out to destroy bitcoin? I mean this is the most viable alternative I have seen to FRN's in quite some time, other than sites like Gold Money etc. They can't appreciate that.

You can't be serious?

[Skirnir_]

Surely at GSUS, I'm not the only one who thinks this is the banking cartel who has set out to destroy bitcoin? I mean this is the most viable alternative I have seen to FRN's in quite some time, other than sites like Gold Money etc. They can't appreciate that.

I suspected it was vulnerable from the start and once the incentive arose (i.e. the bitcoin price went up), people would try plundering it.

Bitcoins are not money as per Aristotle's criteria, I would never accept them in a transaction.

[LuckyStrike]

I suspected it was vulnerable from the start and once the incentive arose (i.e. the bitcoin price went up), people would try plundering it.

Bitcoins are not money as per Aristotle's criteria, I would never accept them in a transaction.

Ideally I wouldn't accept them either, but I'd take them over a jews fiat any day.

[Golden]

Ideally I wouldn't accept them either, but I'd take them over a jews fiat any day.

Good luck!

[Shami-Amourae]

Surely at GSUS, I'm not the only one who thinks this is the banking cartel who has set out to destroy bitcoin? I mean this is the most viable alternative I have seen to FRN's in quite some time, other than sites like Gold Money etc. They can't appreciate that.

They do everything they can to stop Bitcoin (the bankers and government.) I mainly think they work on negative press, hacking exchanges, online wallets, and encourage chargeback scams (where Bitcoins are sold for Dollars, then the Dollars are charged back.) The funny things is they can't do much to stop it like Bit-Torrent. Peer-2-Peer technology is very powerful. It can seriously destroy the entire centralized banking/government systems if it keeps growing. The more they try to attack it the quicker it grows. Just wait till there's a P2P Internet and they can't track you or block Internet websites. This technology is made by good people who believe in Liberty.


Now about the Bitcoin prices I would prefer a more stable price but there's a lot off pumping and dumping. There's a lot of newbie young investors who don't understand the concept that you DO NOT buy when markets are going straight up. Only young people really understand this technology pretty much, so you have rookie "investors". That's a perfect setup for pump and dumps. I support the technology, but it needs a more widespread and educated populace to become more stable and credible. I think it's a great idea, whose time hasn't come yet. Since of that, you might as well take advantage of it.

Even if you think its a bad store of wealth (it is a bad one in my view) you should learn how it works and be able to dump a lot of money into it. One day you may need to flee the country, and this is a great way to smuggle money outside of the banking system. There's a lot of possibilities on it. My business for instance uses a virtual currency which is hooked up to Bitcoin. So it's really easy just to buy Bitcoins in virtual currency and have less reported income, if you catch my drift (because I'd normally sell the virtual currency for Dollars.)

It's outside the banking system. This shit is dangerous to TPTB!

[LuckyStrike]

Good luck!

I don't really have a dog in this fight dude, but if it comes down to it I'd rather have anything on this planet than a jew promise, and that's all I'm saying.

[LuckyStrike]

Even if you think its a bad store of wealth (it is a bad one in my view) you should learn how it works and be able to dump a lot of money into it. One day you may need to flee the country, and this is a great way to smuggle money outside of the banking system. There's a lot of possibilities on it. My business for instance uses a virtual currency which is hooked up to Bitcoin. So it's really easy just to buy Bitcoins in virtual currency and have less reported income, if you catch my drift. It's outside the banking system. This shit is dangerous to TPTB!

Cogs in my head are turning ;)

Thanks for the info

[sirgonzo420]

I have been a little loathe to seriously bring up bitcoin here, because it is still experimental, and it's easy to dismiss as "non-existent" compared to the tangibility of our beloved metals.

But in a nutshell... it is internet gold, (not like e-gold though) that you hold yourself with no fees and no middleman and no one can stop your transactions or freeze your accounts. You can even create a deterministic wallet that is based on a passphrase (or pass-sentence... hopefully with high entropy to cryptographically protect the keys).

Here's a thought... I could convert goods/metal/FRNs to bitcoins, then send the bitcoins to a certain address that corresponds with a private key that is created from a passphrase that exists only in my head. I can travel the world with millions "in my head", then, in a destination country, run a bitcoin client, and recover the private key from my passphrase when I want to spend the coins.

"I got my mind on my money and my money on my mind" as the old negro spiritual goes.

Bitcoins can be converted directly into gold and silver and vice verse, no FRN middleman.
People WANT bitcoin. They will steal and scam and extort to get them. You don't hear about many thefts of things that aren't valuable or aren't capable of transferring value.

I love gold and silver, but I can't transport them across the planet without taking them myself or trusting someone, and it certainly would not be within an hour... but bitcoin is different... I can send it virtually instantly anywhere in the world... there are services now that allow you to send them to cell phones and email addresses, although those systems rely on third-parties, and thus, trust.

You can't send value in the form of gold across the world without trust and you can't do it instantly, and of course, it could be seized.

You can't send value in the form of USD/FRN across the world without the same problems as with gold or without using the banking cartel as a middleman, who then decides when and if to process your transactions, and who can freeze funds and charge-back transactions on a whim.

Bitcoin puts you in the driver's seat in regards to transferring value instantly over the internet, without counterparty risk in the form of middlemen.

Bitcoins have risen from $0.001 to $30, to $10 currently, and the supply is mathematically limited to 21 million bitcoins total (they are currently divisible by 8 decimal places, which allows for a great deal of "units").

A couple years ago someone bought two pizzas for 10,000 BTC (which was a fair price at the time based on exchange value). As of RIGHT NOW, valued in USD at today's BTC exchange rate, that guy paid $107,500.00 for two pizzas.

[Golden]

www.youtube.com/watch?v=eb0xHN1Dq7M
www.youtube.com/watch?v=eb0xHN1Dq7M
Published on Aug 27, 2012 by BitcoinDeutschland
Dr. Münzmacher, a Bitcoin expert from Germany, and his sidekick, Herrmann the Robot, explain the new digital currency Bitcoin with German accuracy.

(C) 2012 by Bitcoin Deutschland GmbH http://www.bitcoin.de

A Bitfilm production http://www.bitfilm.com
Written & directed by Aaron Koenig
Art & animation by Vijayaraj D
Music & sound design by Claus Quidde


If Bitcoin's encryption was broken, most of our financial institutions would likewise be in trouble, since they rely on it for secure data storage. The issue with Bitcoin is liquidity (cartels making it hard to convert fiat into Bitcoin) & how to resolve disputes in legal grey areas (like this hacking). I would expect all of this to improve as the benefits of this kind of currency outweigh the risks, especially in areas with less stable currencies, with underdeveloped banking/credit systems. It's a potential leapfrog technology.

[Golden]

Understanding Bitcoin Security - Trace Mayer interviewed by VisionVictory

www.youtube.com/watch?v=OtN9YUvh_XM
www.youtube.com/watch?v=OtN9YUvh_XM
Published on Sep 15, 2012 by VictoryIndependence
Our Sponsor: http://BrazilResources.com
Our Site: http://FutureMoneyTrends.com

To learn more about bitcoins: http://FreeBitcoinGuide.com

[joboo]

How to set up a secure offline savings wallet Jump to: navigation (https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet#mw-head), search (https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet#p-search)


Contents


1 Why set up an offline savings wallet? (https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet#Why_ set_up_an_offline_savings_wallet.3F)
2 How to deposit funds (https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet#How_ to_deposit_funds)
3 How to retrieve funds (https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet#How_ to_retrieve_funds)
4 Notes (https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet#Note s)




Why set up an offline savings wallet? Modern operating systems are getting more and more complex. The flip side of all this complexity is that they generally have a large attack surface (http://en.wikipedia.org/wiki/Attack_surface) and constantly leak information without the user’s knowledge or consent. No matter how many precautions you take, your wallets will never be 100% safe on a computer that is connected to the internet.
Because bitcoins are stored directly on your computer and because they are real money, the motivation for sophisticated and targeted attacks against your system is higher than in the pre-bitcoin era, when only large organizations normally had to worry about such attacks.
This guide will instruct you on how to create an offline wallet, a wallet that never even touches the internet in its plaintext form. This security measure is also referred to as being an air gap. For all practical purposes, this wallet is safe from all online threats, such as viruses and hackers. It is however still exposed to offline threats, such as hardware keyloggers (http://en.wikipedia.org/wiki/Hardware_keylogger), extortion, or people looking over your shoulder. A best practice is to keep the majority of your bitcoins in the offline wallet and only to use the online wallet for everyday expenses/earnings.
The below procedure may seem tedious, but remember that security almost always comes at the cost of convenience. When you deposit money at a bank, you let them worry about security. Bitcoins, however, are stored on your computer and that means you are fully responsible for securing them. The bitcoin ecosystem is still very young and unfortunately no user friendly tools for creating highly secure wallets have been developed yet (though some members of the Bitcoin community are working hard at this (http://forum.bitcoin.org/?topic=7357.0)).
How to deposit funds

Set up a Wuala (http://www.wuala.com/en/bitcoin) account, or other cloud backup service of your choice.
Create a strong and unique password offline (manually). This password should be at least 20 characters long; it should contain numbers, upper and lower case letters, and symbols. It should be as random as possible, ie it should look something like this: Zr%8qL03&cvwS9@05AatdP71. Never use this password elsewhere.
Do not forget this password. Recite it several times a day. It is easy to overestimate your ability to remember a password several months in the future. To be on the safe side, write it down and store the piece of paper in a safety deposit box.
Download Bitcoin Linux binary (http://www.bitcoin.org/) and save it on a USB drive.
Shut down your computer, and boot Ubuntu (http://www.ubuntu.com/) (or Linux distribution of you choice) from a liveCD (http://www.ubuntu.com/download/ubuntu/download). This will not affect your current operating system.
Disconnect machine from the internet. Unplug any network cables and disable wireless. Verify that wireless is disabled in the icon on the upper right corner (Ubuntu). Double check that machine is disconnected by opening the web browser.
Run bitcoin while disconnected to the internet. The client will show 0 connections and 0 blocks, but it will still generate a wallet.dat file and a bitcoin address.
Encrypt your wallet using the strong and unique password from step 2 above. (Bitcoin Client > Settings > Encrypt wallet)
Copy wallet.dat (found in hidden folder .bitcoin in your home directory) to USB drive.
Save bitcoin address to a text file and copy it to USB drive.
Shut down system and turn off computer. Before switching your computer on again, remove all power sources for about 1 minute. Physically remove battery from laptop.
Backup encrypted wallet.dat file in several places:

Send it to your 5 best friends by email attachment and ask them to save it for you.
Save it on your Wuala account created in step 1.
Save it on several USB drives and CDs and store them in different geographic locations.


Send bitcoins to the address saved on the USB drive. Double check in the block explorer (https://en.bitcoin.it/wiki/Bitcoin_Block_Explorer) that they have been sent.

How to retrieve funds

Boot from Ubuntu liveCD, as in step 5 above.
Insert USB drive.
Run bitcoin client and close it again.
Replace wallet.dat in ~/.bitcoin directory with wallet.dat from USB drive.
Connect to the internet.
Restart bitcoin client.
Wait for blocks to download (optional).
Send bitcoins.

Notes

This procedure is only secure if you perform steps 1-13 in this exact order.



Perform one or two trial runs of the above procedure with a few bitcents, and make sure that you know how to successfully retrieve them, before making a bulk transfer.



Every time you retrieve bitcoins from your savings wallet, create a fresh savings wallet by repeating the above procedure, and send all your remaining savings balance there.



There is more than one way to do it. Similar procedures have been suggested on the forums here (http://forum.bitcoin.org/index.php?topic=17240.0) and here (http://forum.bitcoin.org/?topic=5194.0).



Beware that even savings wallets have limited lifetimes. New, backwards incompatible versions of bitcoin might come out in future, AES (http://en.wikipedia.org/wiki/Advanced_Encryption_Standard) might be broken, bit rot (http://en.wikipedia.org/wiki/Bit_rot) might destroy your wallets, etc. Update to fresh savings wallets every couple of years, or as needed.



See How to import private keys (https://en.bitcoin.it/wiki/How_to_import_private_keys) for an alternative way of retrieve your coins.


https://en.bitcoin.it/wiki/How_to_set_up_a_secure_offline_savings_wallet