Bitcoin Payment Processor BIPS Attacked, Over $1M Stolen

http://www.coindesk.com/bitcoin-payment-processor-bips-attacked-1m-stolen/

by qwertzlcoatl • 13 years ago

60 61 13 years ago

coindesk.com

aw3c2• 13 years ago

Misleading. 1295 BTC were stolen, no USD.

jzwinck2• 13 years ago

Well thank goodness for that. At least this way there is no chance of recovery.

I enjoyed the bit at the end about a potential lawsuit to get the BTC back. Sounds awfully familiar to the legal posturing after some other BTC heists--none of which got anywhere AFAIK.

Do people still think the irrevocability of BTC transactions is a good thing?

executive• 13 years ago

yes. events like this encourage better security.

ogig2• 13 years ago

Do people still think the irrevocability of BTC transactions is a good thing?

Yes. Third parties will provide escrow/insurance services if there is demand for them. Transactions been irreversible "by default" is a core benefit of bitcoin and merchants may preffer that over chargebacks at 18€.

oleganza• 13 years ago

Gold, which was easier to track down and confiscate "back" was historically confiscated in much larger quantities by much tougher guys. This "insured" government debt-backed money that you have today is a result of having heavy money that is ultimately owned by someone who is bigger than you.

While Bitcoin is stolen from some exchanges from time to time, it's much more diffused and it's enormously harder to take bitcoins massively from population than gold.

By the way, these "insured" USDs that you have in your account are not owned by you. Try to cash out everything in paper. Or move anywhere at once without asking for permission. Or what would you do when they impose capital controls like in Cyprus or Argentina? Or when your % of total USDs in the economy is going down while Fed is printing more dollars? Or when some new taxation is applied retroactively? Or when some bureaucrat didn't see your tax return papers in time and your entire account is frozen during investigation?

Bitcoin reduces systemic risk like the one present in banking system and shifts the burden on individual users. You can still create a bank if you want, but that's totally optional and you have many other options as well. In the future people will develop hundreds really different devices, services and tricks to store your coins securely. Compare that with monopolised non-innovative heavily regulated banking.

As bitcoins are so cheap to store, security is asymmetrical: it's much harder to take, than to hide. Gold, or any physical commodity, are as hard to protect as to take from you. Hence, most brutal guys end up owning precious metals over the course of the history. Average Joe can only have as much gold as he can hide in his pants.

pallandt• 13 years ago

They seem to be currently worth more than $1 million USD though. Maybe the USD equivalent was chosen for the title because more people would be able to immediately relate to it as a value.

fat0wl6• 13 years ago

this is common linkbait tactic now. They take the current high trading value of BTC & multiply by the number of BTC involved to get some crazy-high-looking USD price. It's not money in hand, the reality of getting that money out of BTC can be pricey.

stpddts• 13 years ago

Can we get a break from all these Bitcoin posts please?

iamshs• 13 years ago

I agree, there are six posts about Bitcoin right now on top. On one hand it is community regulated matter, but on other hand 20% of top posts is too much.

bdcravens2• 13 years ago

When Steve Jobs passed, the entire home page was related articles.

waterlesscloud• 13 years ago

I just don't read posts I'm not interested in. I never feel compelled to complain that others are interested.

VMG2• 13 years ago

It's just a reflection of what is happening in the world. Like it or not, Bitcoin is a big deal now.

speeder• 13 years ago

I don't work with web dev, can't we get a break from all those ruby, mongo, go and JavaScript posts please?

ye2• 13 years ago

Why did you click on it?

Just ignore or downvote next time.

Bitcoin is a hot topic these days, tons of people are interested in what's going on.

MichaelApproved• 13 years ago

This isn't reddit. There's no downvote on stories for (most) users on HN.

bdcravens2• 13 years ago

I felt the same way about Aaron Swartz. Or Jobs after his death. Or commentary on Samsung v. Apple. Or random SF news. Or random NSA commentary.

M4v3R4• 13 years ago

Ugh. There are much better solutions than keeping user funds in the hot wallet (fully cold storage with manual withdrawals, multi-signature wallets), but many "reputable" businesses STILL uses them. I don't understand why. If you want to store your customers funds online, do it the right way, or don't do it at all.

dragontamer3• 13 years ago

You cannot automate a cold-wallet scheme.

Any automated website or tool will require a "hot wallet" of some kind. The more funds in the hot wallet, the longer the website / BTC Bank can go automatically.

Customers like having funds available to them immediately... among other things.

M4v3R4• 13 years ago

You cannot automate a cold-wallet scheme.

That's why I said that it would be manual. Actually, it could be semi-automatic - a script could generate all relevant transactions, and a human operator could simply confirm them few times a day by signing the transaction with his password protected private key.

Customers like having funds available to them immediately... among other things.

Either security or convenience. This service was aimed for merchants, which are used to get their funds from payment processors much slower than in a matter of hours.

Also, that's only one of the solutions that I mentioned. Second one, which is convenient and more secure at the same time, is using multisignature wallets.

maaku4• 13 years ago

You cannot automate a cold-wallet scheme.

Yes, you can. You can have the hot wallet only deal with multi-signature outputs, and have these approved by separately locked down servers running behind TOR, for example, using out-of-band mechanisms for approving transactions.

michaelt2• 13 years ago

Given the choice between being hacked, losing your reputation and millions of dollars; or having someone on call 24/7 to move USB sticks across an air gap; I'd choose the latter.

I've seen fast food joints and parking lots with 24/7 attendants, it can't possibly cost more than $100,000 a year.

ori_b• 13 years ago

I'm not a bitcoin expert, so I may end up off base, but...

The US government seemed surprisingly warm to bitcoin in the senate hearing. I suspect that if governments end up getting involved in bitcoin, each merchant will require some form of ID for each wallet that they interact with. This will mean that tracking down crimes like this will be fairly easy, since there's a record of each transaction. Trace down the chain, find the people involved, and if an anonymous wallet shows up, you investigate the people that it transferred to or from.

Sure, it erodes privacy, but bitcoin has the potential to make things much easier for law enforcement (and anyone else interested in money transfers) by causing registration of endpoints, giving very strong leads to investigators.

GigabyteCoin• 13 years ago

If the US government decides to take this approach, I am sure that a few of these guys will do the exact opposite: http://en.wikipedia.org/wiki/Tax_haven#Examples

dublinben• 13 years ago

Jurisdictions like that have been increasingly disappearing. If regulators in major countries make it illegal to exchange BTC anonymously, it will significantly hamper its adoption.

dmix• 13 years ago

ID'ing hasn't stopped stolen guns from being used by criminals, I highly doubt it will stop hackers from being able to use Bitcoin. Harder maybe. But there will be thousands of markets that exist outside of USA regulation (or black markets within the USA). Especially by the time the USA would be capable of implementing some sort of ID system.

There is also factoring in the complexity added to associating any form of ID to a particular coin, if CoinJoin or similar trustless anonymizing mixing services reach widespread adoption.

This is all assuming Bitcoin continues it's mainstream course.

cryptocoin• 13 years ago

If you are new to bitcoin-related sites, you might find this story legitimate. But anyone that reads the article will see there is a basic flaw: DDoS attacks do not give access to the server, they just make the service inaccessible. If you read past (paid) articles about this very same service, you will see claims about how secure the system is, and how expert everyone that developed it is. The same was claimed by inputs.io, I'm sure you have read about that story earlier.

The thing is, if you want to use bitcoin, you cannot trust third parties to hold your coins for you. If you want to support bitcoin in your business, you cannot trust other sites to handle the payment for you. Yes, it is not convenient. But you have everything available to handle this yourself and, yes, you will need someone competent to do that for you if you are not into it. Bitcoin is not meant for the average user or the unaware merchant and it might never be, people need to start accepting this fact.

clarkmoody2• 13 years ago

I know it makes for a better headline to say $1M stolen, but unless actual USD was taken in the theft, I wish these headlines would say "X BTC stolen, valued at $Y."

But then again, the headline made it to the front page and got me to comment...

peteretep• 13 years ago

Why do you wish that? Every news source on the planet localizes currency amounts to their audience. Are you actually making some weird political point about BTC value, or are you surprised that a news source is localizing currency values?

clarkmoody2• 13 years ago

1) When large amount of BTC are stolen or moved, the fiat value would be far less if the coins were sold on the open exchange.

2) The article title becomes immediately obsolete due to exchange rate fluctuations. On the day of the theft for instance, the BTC/USD rate was hugely volatile, fluctuating between $522 and $788.

We could go dig up the old Bitcoin Forum posts about people losing 25k coins and mark-to-market those losses for more sensational headlines. Or we could simply post the BTC amount in the headline along with present fiat value.

fat0wl6• 13 years ago

hah i suggested this a few posts ago & people got pissed.

https://news.ycombinator.com/item?id=6783710

granted, i don't present these things very tactfully

Vitaly• 13 years ago

Whale Communications, before they were purchased by Microsoft, had a hardware solution where a shared HDD disk was used to physically switch it between 2 different hosts to enable file sharing in a shared directory. would be almost perfect to secure the hot wallet of a BT service. MS seem to discontinued the product. I wander if something like this still exists from another vendor?

Bitcoin Payment Processor BIPS Attacked, Over $1M Stolen

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