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Bitcoin Heist: $5 Million

Written by Gary North on January 6, 2015

Bitcoins are now around $276 each. The rout continues.

Now there is this bad news.

Bitcoin exchange Bitstamp has frozen accounts and transactions while it investigates a breach.

Hackers have stolen more than $5 million in virtual currency from Bitstamp, a major bitcoin exchange, forcing the company to freeze user accounts, suspend trades and block deposits.

The Slovenia-based company said Monday that fraudsters made off with 19,000 bitcoins a day prior. It was not immediately clear who was responsible for the theft or how it happened.

Bitstamp CEO Nejc Kodrič has said that his company will assume liability for all bitcoins lost prior to its warning today about the hacking. In a tweet today, he tried to reassure his customers, saying:

Bitstamp has previously said that it tries to keep up to 90% of its funds on hard drives, known in bitcoin jargon as “cold storage,” that are off the grid and therefore harder to hack into. This attack appears to have targeted the remaining 10-15% of cryptocurrency that is stored on servers in a data center.

Such storage, or what’s called a “hot wallet,” is more convenient because bitcoin owners can make transactions smoother and more quickly. But, being connected to the internet, it is also more vulnerable to theft.

Slovenia?  Americans trusted their money to computers nerds in Slovenia?

The bloom is off Bitcoin’s rose. Soon, only the thorns will remain.

This is a plaything of computer nerds. Computer nerds don’t have much money. Now they have less.

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