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Bitcoin Price Crashes After Exchange Admits Security Breach, Over $60 Million Stolen

Discussion in 'Digital Currencies' started by platinumdude, Aug 2, 2016.



  1. platinumdude

    platinumdude Gold Chaser Platinum Bling

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    http://www.zerohedge.com/news/2016-08-02/bitcoin-crashes-after-exchange-admits-security-breach

    Bitcoin prices are crashing on extremely heavy volume - down over 30% in the last 2 days - after Hong Kong-bassed Bitcoin exchange Bitfinex halted all trading after it discovered a security breach. As CryptoCoinsNews reports, the theft of 119,756 bitcoins has now been conclusively confirmed which makes it the largest theft in bitcoin’s space since MT Gox.

    Representatives from the exchange told CoinDesk engineers were seeking to uncover issues at press time, though the company had confirmed roughly 120,000 BTC (more than $60m) has been stolen via social media.

    Bitfinex statement:



    Today we discovered a security breach that requires us to halt all trading on Bitfinex, as well as halt all digital token deposits to and withdrawals from Bitfinex.



    We are investigating the breach to determine what happened, but we know that some of our users have had their bitcoins stolen. We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down and the maintenance page will be left up.



    The theft is being reported to—and we are co-operating with—law enforcement.



    As we account for individualized customer losses, we may need to settle open margin positions, associated financing, and/or collateral affected by the breach. Any settlements will be at the current market prices as of 18:00 UTC. We are taking this necessary accounting step to normalize account balances with the objective of resuming operations. We will look at various options to address customer losses later in the investigation. While we are halting all operations at this time, we can confirm that the breach was limited to bitcoin wallets; the other digital tokens traded on Bitfinex are unaffected.



    We will post updates as and when appropriate on our status page (Bitfinex.statuspage.io) and on the maintenance page. We are deeply concerned about this issue and we are committing every resource to try to resolve it. We ask for the community’s patience as we unravel the causes and consequences of this breach.

    The result appears to be braod-based selling across all major bitcoin exchanges...

    As CryptoCoinsNews adds, Bitfinex has, however, been experiencing numerous problems over the past few months, leading to an unexpected freezing of trading on at least two occasions, both of which caused a crash in bitcoin’s price by almost $100 in each instance.

    Bitfinex was also fined by CFTC $75,000 “for offering illegal off-exchange financed retail commodity transactions and failing to register as a futures commission merchant,” in early June, but Zane Tackett, Director of Community and Product Development at Bitfinex, strongly denied any connection between previous outages and CFTC’s fine.
     
  2. oldgaranddad

    oldgaranddad Gold Member Gold Chaser Site Supporter

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    As the old saying goes... "If you don't hold it you don't own it".

    $60 Million is what they are admitting to. The real number might have a few more zeros.
     
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  3. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    So long bitcoin.
    And please you bitcoin hucksters, knock it off with the bullshit about bitcoin being a safe investment.
    Be gone from GIM. Go find a bitcoin hucksters website to go to!
    Bitcoin is toast.
     
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  4. solarion

    solarion Gold Member Gold Chaser

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    Clearly you have no idea what you're talking about. The people that lost their bitcoin STUPIDLY sent them to an exchange in Hong Kong and left them there. That's like handing your gold bars over to some guy you've never met in Hong Kong to watch for you. No, you shouldn't be surprised when the guy in Hong Kong guarding your gold suddenly robs himself and tells you you're shit out of luck.

    Bitcoin wasn't hacked, bitcoin has never been hacked, bitcoin didn't break, and no bitcoin will not be going away just because someone stole some bitcoins from some stupid people. Sorry to disappoint you.
     
  5. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Bitcoin Worth $72M Was Stolen in Bitfinex Exchange Hack in Hong Kong
    August 3, 2016, 6:42 AM EDT

    [​IMG]
    Bitcoin's cryptographic algorithms allow people to move money around quickly and anonymously. Photograph by George Frey/Getty Images
    Bitcoin plunged just over 23% on Tuesday after news of the theft of 120,000 units broke.


    Nearly 120,000 units of digital currency bitcoin worth about US$72 million was stolen from the exchange platform Bitfinex in Hong Kong, rattling the global bitcoin community in the second-biggest security breach ever of such an exchange.

    Bitfinex is the world’s largest dollar-based exchange for bitcoin, and is known in the digital currency community for having deep liquidity in the U.S. dollar/bitcoin currency pair.

    Zane Tackett, Director of Community & Product Development for Bitfinex, told Reuters on Wednesday that 119,756 bitcoin had been stolen from users’ accounts and that the exchange had not yet decided how to address customer losses.

    “The bitcoin was stolen from users’ segregated wallets,” he said.

    The company said it had reported the theft to law enforcement and was cooperating with top blockchain analytic companies to track the stolen coins.

    Last year, Bitfinex announced a tie-up with Palo Alto-based BitGo, which uses multiple-signature security to store user deposits online, allowing for faster withdrawals.

    “Our investigation has found no evidence of a breach to any BitGo servers,” BitGo said in a Tweet.

    “With users’ funds secured using multi-signature technology in partnership with BitGo, a lot more is at stake for the backbone of the bitcoin industry, with its stalwarts and prided tech under fire,” said Charles Hayter, chief executive and founder of digital currency website CryptoCompare.

    The security breach comes two months after Bitfinex was ordered to pay a $75,000 fine by the U.S. Commodity and Futures Trading Commission in part for offering illegal off-exchange financed commodity transactions in bitcoin and other digital currencies.




    Bitcoin Slump

    Tuesday’s breach triggered a slump in bitcoin prices and was reminiscent of events that led to the 2014 collapse of Tokyo-based exchange Mt Gox, which said it had lost about $500 million worth of customers’ Bitcoins in a hacking attack.

    Bitcoin plunged just over 23% on Tuesday after the news broke. On Wednesday it was up 1% at $545.20 on the BitStamp platform.

    Tackett added that the breach did not “expose any weaknesses in the security of a blockchain,” the technology that generates and processes bitcoin, a web-based “cryptocurrency” that can move across the globe anonymously without the need for a central authority.

    A bitcoin expert said the scandal highlighted the risks of companies using cryptography for their ledgers.

    “The more you rely on its benefits, the greater the potential for damage when keys are stolen. We still have some way to go to create highly secure but convenient systems,” said Singapore-based Antony Lewis.

    The volume of bitcoin stolen amounts to about 0.75% of all bitcoin in circulation.

    It is not yet clear whether the theft was an inside job or whether hackers were able to gain access to the system externally. On an online forum, Bitfinex’s Tackett said he was “nearly 100 percent certain” it was no one in the company.

    Bitfinex suspended trading on Tuesday after it discovered the breach. It said on its website that it was investigating and cooperating with the authorities.

    The security breach is the latest scandal to hit Hong Kong’s bitcoin market after MyCoin became embroiled in a scam last year that media estimated could have duped investors of up to $387 million. The bitcoin trading company closed after the scandal.

    The president of the Hong Kong Bitcoin Association said the only way to protect information is to disperse it in so many small pieces that the reward for hacking is too small.

    “For an attacker, the cost-benefit strategy is quite easy: How much is in the pot and how likely is it that I’m getting the pot?” said Leonhard Weese.

    http://fortune.com/2016/08/03/bitcoin-stolen-bitfinex-hack-hong-kong/
     
  6. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    you would need to explain that,

    for instance, it supposedly states that the bits were in their wallets, at a exchange

    where do people hold their electronic digits? in a wallet created on one of the purveyors correct?

    how do you prevent your 'wallet' from being emptied of its contents?

    knowing that there is no 'physical' wallet, that your bitcoin is stored somewhere by someone with a 'total' number of units applied to it?
     
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  7. southfork

    southfork Mother Lode Found Mother Lode

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    And does anyone cover this loss ? Are bitcoins insured or are the people fked, Im sticking to my mercury dime and dental gold
     
  8. birddog

    birddog Gold Member Gold Chaser

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    You can hold your own electronic wallet on your own computer but you need some tech savvy to install the software and then make sure you have back ups.

    Bitcoin isn't worth doing unless you take the time to build your own wallet and keep it close....
     
  9. oldgaranddad

    oldgaranddad Gold Member Gold Chaser Site Supporter

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    Hence the reason why it will never be a viable alternative to any currency or gold. Most of the world barely understands how to turn on a computer and use it for more than email and web browsing.
     
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  10. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    Here come the hucksters!
    OK hucksters, I just lost 30% of my money that is in my wallet, because some idiot lost 72 million who did not know how to lock up his 72 million wallet.
    There will always be computer illiterates owning bit coin, who mess up.
    But to the tune of millions of dollars?
    Sounds like a hack to me.
    And don't tell me I don't know what I am talking about!
     
    Last edited: Aug 3, 2016
  11. andial

    andial Sir Midas Member Site Supporter

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    You don't even know what a faucet is you people are so dumb!
     
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  12. Joe King

    Joe King Gold Member Gold Chaser

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    Already back up. From $518 only yesterday.

    When was the last time gold started recovering like this after a 25% drop only the day before?

    BTC.png
     
  13. Joe King

    Joe King Gold Member Gold Chaser

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    IMHO, rapid rises and falls in something as new as BTC should be expected.

    How often have we seen people new to the game come on here and lament having went all-in on Au or Ag when the price was much higher?
    ...and Au/Ag is as old as the hills, literally. You'd think people would understand it a lil' better by now.

    Well, you get the same thing but to a larger degree with BTC. Many people are always lookin' for the next hot thing. They see a spike in Ag? Run to the station in order to "get on board" as the proverbial train pulls away from the platform only to end up disappointed that the next stop was only two blocks away.
    Or worse, they soon discover the train was only maneuvering in preparation of turning around!
    Then they dump it because it went down and complain how they got bamboozled by anyone and everyone but themselves.


    Same thing, but to a larger degree, happens with something like BTC. There's a larger percentage of what you might call "wet behind the ear" so-called "investors" in BTC than in Au/Ag. So a lot of them might be even quicker to bail at the first hint of bad news. Ie: as soon as any bad news hits, they're first reaction is to drop it like a hot potato.

    That's my opinion of at least a good part of the reason why we see such volatility whenever controversial things happen to BTC.
    Lot's of $ piling both into and out of something new.

    Edited to add: ....and I am amazed that the Duck hasn't Qwaked! up about this yet. Our resident duck seems to be MIA.
     
  14. solarion

    solarion Gold Member Gold Chaser

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    It's actually quite simple. Bitcoin exists as a sequence of numbers called a private key file(wallet.dat). This is all that really matters and it is a single easily encrypted and backed up file. The bitcoins stored within each wallet are linked to these key files and the owner of that key file ultimately controls the bitcoin in that wallet.

    To keep your own bitcoin safe you simply place them in your own wallet on your own computer, encrypt the wallet, and backup the key file.

    The people that are robbed do not do this, but instead send their bitcoin to someone else's wallet that someone else controls the keys to. This is like storing your gold stack in some unknown guy's safe because you're too stupid, too lazy, or too cheap to get your own safe. The only significant difference between this and sending your gold horde overseas to someone you've never met for "safe keeping" is that bitcoin is far easier to transmit across the planet than gold. It's completely brain dead retarted behavior, but people line up to do it anyway then whine and cry when they're predictably looted by those with bad intentions.
     
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  15. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    Honest question?
    How can one transfer wealth to bitcoin account without going though a goddamn fee ridden bank?

    What metals dealers also deal in bitcoin?
     
  16. Joe King

    Joe King Gold Member Gold Chaser

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    Location:
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    No bank is required.

    Here's one way. https://localbitcoins.com/

    I Bought Bitcoin In Person And Here’s What Happened
    When I went out to buy Bitcoin in person, I asked my husband to come along for safety. A savvy source urged me to bring pepper spray, too. Others encouraged me not to go at all.

    But sitting face to face with Richard Weston, I felt silly about all my precautions. A middle-aged man with a good haircut, a wedding band and a nice watch, his picture could have been next to “trustworthy” in the dictionary. We met outside a trendy restaurant in downtown DC like we were preparing to transact the world’s most yuppie drug deal.

    There are several other ways to obtain Bitcoin, such trading for it over the Internet through an exchange. But right now, face-to-face Bitcoin transactions are the fastest way to obtain the currency. There’s no two-week waiting period for your bank account to connect and verify, as there are with Bitcoin exchanges like Coinbase or Mt. Gox.

    I found Weston on LocalBitcoins, a Finnish company that connects Bitcoin buyers and sellers around the globe. With buyers in 190 countries and 3,317 cities, it’s the widest reaching peer-to-peer Bitcoin exchange. There are 100+ active sellers in Washington, DC alone. Richard had a “reputation score” of a perfect 100, which certainly endeared me to him.


     
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  17. xhomerx10

    xhomerx10 Silver Member Silver Miner Site Supporter

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    JMBullion accepts bitcoin

    edit: you get the 4% discount as when you pay with cheque or bank transfer
     
  18. xhomerx10

    xhomerx10 Silver Member Silver Miner Site Supporter

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    You can get insurance if you go through BitGo for their multi-signature wallet. The fee is 1% per annum and protection for up to $250k worth of Bitcoin.
     
  19. Scald

    Scald Tungsten collector Silver Miner

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    Provident Metals accepts Bitcoin with a reduced fee from PayPal or CC, slightly more than check or wire.
     
  20. solarion

    solarion Gold Member Gold Chaser

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    As mentioned localbitcoins. Two other options are bitcoin ATMs and libertyX.

    ...as far as metal dealers that accept bitcoin, your options are numerous and growing. As mentioned JM Bullion accepets bitcoin. Also provident accepts not only bitcoin, but litecoin and dogecoin. Veldt accepts bitcoin. Apparently after years of railing against bitcoin even peter Schiff caved:

    http://schiffgold.com/key-gold-news/euro-pacific-precious-metals-now-accepts-bitcoin/
     
  21. Usury

    Usury Gold Chaser Platinum Bling

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    But can you really use coins held on your own wallet on your own PC to complete that transaction?
     
  22. solarion

    solarion Gold Member Gold Chaser

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    Of course. It takes only a few seconds and the transaction fees are pennies.

    The entire point here is to eliminate the necessity for banks entirely. Yes, that means some stupid people will get swindled(there are no chargebacks or do-overs), but for those with a lick of common sense, those that treat bitcoin like cash or gold bullion there's very little risk involved. Keep your cash in your own money clip, your gold in your own safe, and your bitcoin in your own encrypted wallet. It's really not all that complicated. Don't give your property to someone else to safeguard. It ain't rocketry science.
     
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  23. Usury

    Usury Gold Chaser Platinum Bling

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    And how does that work? I have to upload the keychain file? What if it contains more coins than I intend to spend?
     
  24. solarion

    solarion Gold Member Gold Chaser

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    No, you'd never ever send anyone your .dat file for any reason whatsoever...unless you want them to have all of your bitcoin. Sending someone your un-encrypted wallet.dat file would be the bitcoin equivalent of snail mailing them your physical wallet full of FRNs.

    You simply type in the address you want to pay, the amount you wish to pay, and press "send". Anything not authorized to be spent will simply remain in your wallet.

    This is of course a web wallet transaction on a portable device, but it illustrates how easily bitcoin payments are conducted.



    On a desktop and a full bitcoin node(maximum security) you simply see a link from a payment processor such as bitpay. When you click said link it brings up your local bitcoin client, enters the payment address, and amount. The user simply confirms the data and presses send. If your wallet is properly encrypted then you need a lengthy string of characters as a final safeguard to permit the transmission of bitcoin.

    The only way I can conceive of to steal bitcoins from end users remotely in this situation would involve malware infections/key loggers. These are obviously the kinds of things that also lead to identity theft and must be protected against whether you're maintaining a bitcoin node on your desktop or no.

    When we see these centralized exchanges being hacked and robbed, we're simply seeing stupid people being liberated of their money by someone hacking A WEBSITE or shady exchange operators robbing themselves to make off with money that others have foolishly given them to hold on their behalf. This is no different than the US .gov stealing Germany's gold. Well, Germany was foolish to give their gold to the US gumbymint to hold.
     
    Last edited: Aug 3, 2016
  25. Usury

    Usury Gold Chaser Platinum Bling

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    What if the wallet software is not secure or is hacked?
     
  26. Usury

    Usury Gold Chaser Platinum Bling

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    They won't be able to hack my physical wallet.
     
  27. Joe King

    Joe King Gold Member Gold Chaser

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    Maybe not hacked, but your wallet can still be stolen. Or lost.
     
  28. solarion

    solarion Gold Member Gold Chaser

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    I realize this stuff is difficult for non-computer savvy people to understand, but hacking isn't some magical power that allows people to remotely steal what isn't connected to a computer network. If you properly secure your bitcoin they're not vulnerable. There's no way to remotely "hack" an offline paper wallet, an optical disc locked in a safe, or even a thumb drive locked in your desk drawer. It's simply not possible. Even if someone physically removes the disc or the thumb drive with your wallet.dat file on it, it will be worthless to them if you've properly encrypted it. ...and of course while they're spending the next 20 years brute forcing your 165 character passcode you've long since moved the bitcoins to a new wallet.

    Stupid people get looted every day. Some stupid people were looted yesterday in Hong Kong. They were looted because they trusted someone else to secure their wealth and that someone else(bitfinex) was either careless(no cold wallet) or robbed themselves. The blame for the theft lies with the thief(for stealing), the exchange(for negligence), and with the exchange users that stupidly sent their property to someone else to secure.
     
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  29. Usury

    Usury Gold Chaser Platinum Bling

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    Well clearly it has to connect to the network to transmit the payment, so your theory is bunk. Especially considering all the examples of hacks that have occurred. And I'd consider myself VERY computer savvy. I'm also not stupid enough to believe anything digital is ever 100% secure.
     
  30. platinumdude

    platinumdude Gold Chaser Platinum Bling

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    Looks like the discount price is over.
     
  31. Usury

    Usury Gold Chaser Platinum Bling

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    And a thief can't steal your PC holding a digital wallet? Oh that's right.....you lose.
     
  32. platinumdude

    platinumdude Gold Chaser Platinum Bling

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    I think paying in cash or even a credit card is much easer.
     
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  33. solarion

    solarion Gold Member Gold Chaser

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    I don't have a "theory" I've actually used bitcoin for years. No, I've never had any security breaches.

    Yes, while you have to connect to the network for a few seconds to transmit your payment, you do not have to make your keys available to be hacked. I've been reading your posts for years bud, I know you're not stupid, but on this particular subject you plainly have zero actual experience and are just regurgitating what you've "heard".

    Get tired of saying it, but bitcoin has NEVER EVER EVER been hacked. The hacks you hear about are WEBSITES being hacked and money being stolen...usually by the owner/operator of the site themselves. That was certainly true in the case of the largest bitcoin heist in history. An easy way to avoid being among those that are looted is to simply not send your bitcoin to someone else to hold on to. One would think on this of all sites people would apply a tiny speck of critical thought and not be so easily swayed by brain dead fear porn that doesn't hold up to the slightest scrutiny, but sadly that doesn't seem to be the case.
     
    Last edited: Aug 3, 2016
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  34. solarion

    solarion Gold Member Gold Chaser

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    Cash is irrelevant as transmitting cash anywhere is a process. Sending cash western union is expensive and burdensome...it can't compete with bitcoin at all in terms of speed or low cost.

    As to credit cards, I personally find them far more troublesome & expensive than using bitcoin. If you're a good doobie and never have an outstanding balance from one month to the next a credit card can be fine, though I personally find credit/debit cards to be morally objectionable and refuse to use them. I'd like banks to DIE and bitcoin allows me to withdraw from the banking system to a greater extent and still shop online. YMMV.
     
  35. SilverCity

    SilverCity Gold Member Gold Chaser

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    We get power bumps here all the time especially during summer rain/lightning storms. Can't imagine a grid down situation for any length of time...like during a civil war when Hillary/Obama gets elected president.

    Bitcoin only lost 72 million? Heck, I lost more than that buying silver at 49 dollars...well it felt like it anyway. j/k

    Oh, and I am computer savvy, too. JM allows me an eCheck. Just as convenient as a bitcoin as far as I am concerned.

    BTW, I am following a five-year ex-pat guy and his wife down in Ecuador on Youtube. They have power and water outages regularly and sometimes as long as 12 hours (so far). Three electrical and two water in their first week in Salinas. Internet service is very slow and spotty and wifi not available where they live. I'll bet they don't own any bitcoins. A word to the wise for future ex-pats.

    SC
     
    Last edited: Aug 3, 2016
  36. solarion

    solarion Gold Member Gold Chaser

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    Bitcoin didn't lose anything, it isn't a company. It has no CEO to fire and won't be hiring a PR firm to educate people about how the algorithm actually works. An exchange based in Hong Kong had 119,756 bitcoins stolen because they stopped using cold wallets last year and instead opted for an incredibly STUPID 2 key hot wallet system. Spokesfools for the exchange claim that they had withdrawal limits in place to prevent such a theft, but that the unknown hacker simultaneously disabled these safeguards as well. The whole thing totally reeks of inside job, but time will tell.

    As ever, people who trust others to safeguard their valuables remain stupid and naive.
     
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  37. Joe King

    Joe King Gold Member Gold Chaser

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    So what's your point? That because something can be stolen, we can't have anything?
    If your argument is that BTC is bad because your PC can be stolen, then you better not use cash or buy PM's or do anything where your you might hold something of value. Because any of that might get stolen too.
    ...but even if someone steals your PC does not mean they'll get to spend your BTC. Your wallet is password protected.
     
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  38. the_shootist

    the_shootist I self identify as a black '69 Camaro Midas Member Site Supporter

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    ^^THIS^^ is a very good point!
     
  39. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    I thank those who went to the trouble to explain in detail what and how bitcoin may be used. When my PM holdings make me rich, I may have to use it.
    As a data designer, data architect, and data security specialist, I am somewhat sceptical (cause I seen it all), but I may stick my toe in the water to try it out.
     
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  40. Joe King

    Joe King Gold Member Gold Chaser

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    The way I see it, what could it hurt to have a toe in the water? If it does ever go sky high, you would hate to have missed out, and if it doesn't, you won't have lost much. No one is saying to go "all-in" on it.
    ...and I must say that you have certainly come a long ways, just in this thread. That's a good thing.

    From....
    To.....
    BTW, back up 13%
    When's the last time Au/Ag started recovering like that, just a few short days after a 25% drop?
    Price from this morning.
    BTC.png
     

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