Daily Archives: January 6, 2015

Epicenter Bitcoin: Preston Byrne Sin Jones

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Bitcoin, which tumbled last year after an exchange that traded the virtual currency lost its holdings and collapsed, held up today after another market, Bitstamp, suspended trading because of a breach.

Prices for bitcoins rose 4 percent to almost $284 as of 4:45 p.m. in New York, according to the CoinDesk Bitcoin Price Index, which represents an average of bitcoin prices across leading global exchanges. That compares with an average daily move of about 3 percent during the previous 30 days.

Bitstamp, an online platform in Europe, said on its website today that its temporarily suspending services after losing fewer than 19,000 bitcoins in a breach of electronic wallets used for operations. The loss amounts to a small fraction of the platforms reserves, and bitcoins held by customers before yesterdays suspension are completely safe and will be honored in full, it said.

Bitcoin prices plunged by more than half last year amid cyber thefts, mounting competition and moves by governments to head off its potential use in criminal transactions. While Bitstamp is among several key exchanges, its dwarfed by bigger platforms, accounting for about 5 percent of dollar transactions in the past 30 days, according to Bitcoin Charts, which tracks the virtual currency.

Mt.Gox, once the worlds largest exchange for digital-currency transactions, went offline in Tokyo in February after losing 850,000 bitcoins, then valued at about $473 million. The company later found 200,000 in an old-format digital wallet.

To contact the reporter on this story: David Scheer in Seattle at dscheer@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net; Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson, David Scheer

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Bitcoins Price Unfazed After Bitstamp Exchange Reports Breach

One of the largest online bitcoin exchanges has temporarily suspended services after losing some 19,000 bitcoins ($5.1 million) in what the company said was a breach of its systems, reviving concerns about the security of the digital currency.

Slovenia-based Bitstamp, in a message on its site Tuesday, said some of its operational wallets were compromised on Jan. 4 and urged customers to no longer make deposits to previously issued bitcoin deposit addresses.

The alleged cyberattack comes less than a year after the collapse of Tokyo-based exchange Mt. Gox, which initially said hackers had stolen 800,000 bitcoins--200,000 of which were later recovered--worth almost $500 million at the time.

The alleged breach is stirring skeptics to argue that bitcoin remains too insecure for mainstream use. There were lots of claims made last year and in 2013 that bitcoin was faster and safer and cheaper, but what we are learning increasingly is that maybe it isnt safer, said Mark T. Williams, a Boston University professor and frequent bitcoin critic who has testified before a congressional hearing about the digital currency.

Launched in 2009, bitcoin is an electronic currency created on computers and traded among people who store it in digital wallets. Despite volatility in the bitcoin price, which has fallen 75% from a peak around $1,150 in early December 2013 to about $283 in recent trading, mainstream adoption of bitcoin has continued. In 2014, various businesses, including Microsoft Corp. MSFT, -1.46% and Dell Inc., announced they would accept it in payment for certain goods and services, often hedging the risk of holding the digital currency by quickly converting it into dollars.

An expanded version of this report appears at WSJ.com.

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The Wall Street Journal: Bitcoin exchange Bitstamp temporarily suspends services

Last year was not kind to Bitcoin. And 2015already looks as if it could be just as toughfor the digital currency:Bitcoin exchange Bitstamp went offline this week as it investigated a security breach;bitcoin pricesfell from about$320 at the beginning of the year to roughly $270 this week, according to industry site CoinDesk.

BitStamp, which isbased in Slovenia and Britain,iscurrently the third largest exchange by volume, according to Bitcoin Charts.

While details are scarce, a statement posted to the company's Web site says the companyhas "reason to believe" that one of its "operational wallets" -- a place connected to the Internet where some Bitcoins being processed by the services were stored -- was compromised on Jan. 4. The message also said that Bitstamp maintained "more than enough" offline reserves to cover the funds in the operation wallet.

But the incident harkens back to the collapse of Tokyo-based Mt. Gox, the once popular exchange that imploded spectacularly last spring. The company announced it was filing for bankruptcy in February, saying it had lostthe equivalent of nearly half a billion of bitcoins at the then-exchange rates. Just last week, Japanese authorities told a local newspaper that only a tiny fraction of the missing bitcoins could be attributed to hacking attacks from outside the company according to CoinDesk.

The Mt. Gox catastrophe was just one of many high profile incidents involving Bitcoin that helped drag down the price of the digital currency in 2014.Last January, Bitcoin prices pushed above $900 a pop -- but by the end of the year they hovered at a little more than a third of that price.

Bitcoinhas continued to struggle with its association with illicit online black markets and regulators efforts to regulate it.The Bitcoin Foundation, a non-profit formed to promote the cryptocurrencywhich counted Mt. Gox chief executive Mark Karpeles as a founding member, lost another founder to Bitcoin's black market ties: Former vice-chairman Charlie Shrem resigned after being arrested for supporting an illicit Bitcoin exchange for notorious digital black market Silk Road. (Shrem later pleaded guiltyto acount of aiding and abetting the operation of an unlicensed money transmitting business.)

What government regulationsapply to Bitcoin also remain murky -- although financial regulators in New York state are working on hammering out some requirements forBitcoin and other virtual currencies.The proposed ruleswould apply only to companies actually engaging in transmitting fundsfrom one place to another, and wouldn't apply to retailers simply accepting Bitcoin or private individuals who invest in the digital currency.

All in all, as Quartz noted in December, the fallout from these sort of high profile headaches helped make Bitcoin among the worst possible investments in 2014. However, there were other bright points for those in the industry: Outside investments in Bitcoin-related technology and services and merchant acceptance of the payment methodall rose during the year.

But for Bitcoin to really take off, it needs to become more popular with users, not just investors. While Bitcoin-backers continue to try to get the public engaged with the digital currency by sponsoring things like college football bowl games, the number oftransactions per day -- currently about 80,000, according to Blockchain.info ---suggests it hasn't quite caught on yet.

Andrea Peterson covers technology policy for The Washington Post, with an emphasis on cybersecurity, consumer privacy, transparency, surveillance and open government.

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Bitcoin had a terrible 2014. And 2015 isnt looking too hot either.

LONDON (CNNMoney)

Cyber thieves have run off with about 19,000 bitcoin ($5.2 million) from Bitstamp accounts. The company said it has suspended services after some digital wallets were compromised on Jan 4.

Bitstamp told customers not to make any deposits as it works with authorities to find the culprits.

The firm said the breach accounts for only a fraction of its total reserves, with most held in secure offline storage systems. All balances held prior to the suspension would be repaid in full, it said.

It's not the first time Bitstamp has been the victim of cyber crime. Last February, the Slovenia-based company halted withdrawals after hackers overwhelmed its servers in a denial-of-service attack.

Related: Sony breaks silence after "malacious" hack

Bitcoin has lost some of its shine over the past year. The virtual currency is trading at about $275. That's well off peaks reached in late 2013 -- when prices topped $1,000. Its value has tumbled and exchanges have been beset with glitches and hacks.

Mt. Gox, once the world's largest bitcoin trading platform, was struck by what was essentially a massive bank robbery in 2014. When the exchange discovered it was under attack, it stopped investors from pulling their money out. Nearly $400 million was lost forever.

Bitcoin was created in 2009 and allows users to buy merchandise anonymously. Last month Microsoft (MSFT, Tech30) joined a growing number of companies that accept bitcoins as payment, including PayPal and a scattering of restaurants and car services.

But the digital currency remains controversial since it is not government-issued and isn't practical for day-to-day use.

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Hackers steal $5 million in bitcoin attack

LONDON (CNNMoney)

Cyber thieves have run off with about 19,000 bitcoin ($5.2 million) from Bitstamp accounts. The company said it has suspended services after some digital wallets were compromised on Jan 4.

Bitstamp told customers not to make any deposits as it works with authorities to find the culprits.

The firm said the breach accounts for only a fraction of its total reserves, with most held in secure offline storage systems. All balances held prior to the suspension would be repaid in full, it said.

It's not the first time Bitstamp has been the victim of cyber crime. Last February, the Slovenia-based company halted withdrawals after hackers overwhelmed its servers in a denial-of-service attack.

Related: Sony breaks silence after "malacious" hack

Bitcoin has lost some of its shine over the past year. The virtual currency is trading at about $275. That's well off peaks reached in late 2013 -- when prices topped $1,000. Its value has tumbled and exchanges have been beset with glitches and hacks.

Mt. Gox, once the world's largest bitcoin trading platform, was struck by what was essentially a massive bank robbery in 2014. When the exchange discovered it was under attack, it stopped investors from pulling their money out. Nearly $400 million was lost forever.

Bitcoin was created in 2009 and allows users to buy merchandise anonymously. Last month Microsoft (MSFT, Tech30) joined a growing number of companies that accept bitcoins as payment, including PayPal and a scattering of restaurants and car services.

But the digital currency remains controversial since it is not government-issued and isn't practical for day-to-day use.

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Hackers steal $5M from bitcoin exchange

Canadian Bitcoin exchange Vault of Satoshi is shutting down next month in the latest bad news to hit the cryptocurrency.

The operators of the exchange said they are focusing on another business project that began six months ago, one that is not related to cryptocurrency.

Run by Global CryptoCurrency Solutions, the Brantford, Ontario-based exchange is no longer accepting new deposits and will close Feb. 5.

Wed like to reassure the community that it has absolutely nothing to do with insolvency, stolen funds, or any other unfortunate scenario, the operators wrote in a post. Our decision stems from opportunities presented by a new business that has forced us to reexamine our priorities.

The company did not immediately respond to a request for more information. Its cofounder Michael Curry is also behind TurboFlix, a Web service that allows Canadians to watch Netflix content available in other countries.

Vault of Satoshi launched in October 2013 and describes itself as the first full proof-of-reserve exchange in the industry.

Its closure comes as European Bitcoin exchange Bitstamp said in a post that some of its operational wallets were compromised Jan. 4, leading to a loss of less than 19,000 bitcoins, which is roughly US$5.1 million.

The bulk of our bitcoin are in cold storage, and remain completely safe, Bitstamp co-founder Nejc Kodric wrote in a Twitter message.

The exchange, launched in August 2011, had tried to reassure customers that their coins are safe after a breach over the weekend forced it to suspend operations on Monday.

Bitstamp added that it is investigating the matter and communicating with law enforcement officials.

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Canadian exchange to shut as Bitcoin bad news continues