Hackers Threaten Bitcoin Dream

June 20, 2011Sectorby EW News Desk Team


The Bitcoin movement suffered two major setbacks in a week – with two hacking incidents threatening to derail what Michael Suede of Libertarian News has described as “the most important creation in the history of men” 

Related: Bitcoins: The Politics of A Virtual Currency

The first incident happened on June 15, 2011 when a Bitcoin user named Allinvain had 25,000 Bitcoins stolen from his digital wallet – estimated to be worth nearly half a million dollars.

“First thing that I noticed is that my slush’s pool account got hacked into and someone changed the payout address to this:


I then changed the password and proceeded to run some antivirus and anti malware scans. Some stuff was found, but they were all cleaned up and they were all in my windows user profile temp dir which I deleted all the temp files. God I can’t even type properly. Sorry folks I’m a bit emotional now.

I then left another virus scanner running and went to sleep. When I woke up I check my bitcoin wallet. I leave the client running to help the network, and I notice -25,000 (and a transaction fee) gone,” said Allinvain, on the Bitcoin forum.

Three days later, the world’s largest Bitcoin marketplace, Mt. Gox, became the next victim for hackers who managed to crash the currency from a notional value of over US$17 to less than a single cent.

According to Paul Hale of Thinq.co.uk,  “the infiltrator - who was using a Hong Kong-based IP address - cleaned out one big account and flogged its contents, buying them back directly after he'd effectively crashed the currency… Unfortunately for the rogue trader there was a $1000 per day withdrawal limit on the account so s/he could only get out with $1000 worth of coins.”

The two incidents have once again called into question the feasibility of a digital currency. Although Mt. Gox insisted in a statement that “no account was compromised, and nothing was lost”, the two incidents have managed to highlight the inherent flaw of not having a central, regulatory body that is able to govern and also protect its users.

Read the full articles at Gather and Geekosystem

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