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from the keep-your-private-keys-offline dept.
There's a new contender for the largest theft of cryptocurrency ever:
A Japanese cryptocurrency exchange announced the theft Friday of $400 million in digital currency. Some estimates put the loss at the Coincheck exchange at over $520 million.
The stolen assets were stored in the cryptocurrency NEM, one of hundreds of digital currencies created in recent years. Bitcoin, the most well-known cryptocurrency, dropped precipitously on news of the hack but has since regained much of its value.
The incident could be one of the largest single losses of cryptocurrency ever, rivaling only the 2014 hack of online exchange Mt. Gox. Reports at the time put Mt. Gox's losses at over $400 million.
Coincheck says 500 million digital coins were lost. According to Cointelgraph, hackers stole the private key protecting access to Coincheck's accounts.
Does it matter that it was a $400 million theft if the value is going to collapse anyway?
Meanwhile, a stock trading app called Robinhood plans to allow users to buy and sell Bitcoin and Ethereum without any transaction fees.
(Score: 1, Insightful) by Anonymous Coward on Sunday January 28 2018, @09:26AM (21 children)
From a financial perspective stolen crypto money is money that has its intrinsic value reduced to 0, immediately. For cryptos to become a serious alternative to government backed money the crypto community has to prevent these kinds of thefts to a minimum.
(Score: 2) by takyon on Sunday January 28 2018, @09:31AM (9 children)
Are you telling me nobody has ever sold or traded "stolen Bitcoins"?
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(Score: 2) by aristarchus on Sunday January 28 2018, @09:38AM (4 children)
No, takyon, he is telling you that no one should be able to. I know you are a fictional sub-atomic particle, but do try to be less dense, please?
(Score: 2) by takyon on Sunday January 28 2018, @09:44AM (3 children)
It would be nice if all paper money transactions were traceable too. Down with anonymity!
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 4, Funny) by aristarchus on Sunday January 28 2018, @09:52AM (1 child)
Block-chained to your actual identity? Yeah, so now we see where the entire basis for crypto-currency lies: Train-robbery like the James Gang, with gold instead of paper with numbers on it. Ref:Season One, Episode one, "Firefly". This food-stuff is molecularly tagged, so you can't sell it to any one but crazy ladies on moons who tried to kill you before. Or, possibly, khallow?
(Score: 0) by Anonymous Coward on Monday January 29 2018, @03:58PM
Are you saying khallow isn't a crazy lady on the moon that wants to kill us?
(Score: 2) by realDonaldTrump on Monday January 29 2018, @12:57AM
I guess you've never seen our American money, our beautiful Greenbacks. Every one has a VERY SPECIAL number, they call it a serial number. If our money ever gets stolen, very easy to trace that number. And GRAB, GRAB, GRAB that money. When President Lincoln invented Greenbacks, it was hard to trace. But he knew that the age of computer, the age of robot, would come. Very smart guy!
(Score: 2, Insightful) by Anonymous Coward on Sunday January 28 2018, @09:50AM (3 children)
Of course not. With trading intrinsic value is increased (if the traded value gets lower than purchase price, people have less incentive to sell as nobody wants to loose money), because money is stolen the purchase price is 0, so there is an incentive to sell at any price available (no loss in the first place). Of course, this is not the best strategy, but stolen coins can get too hot to hold (and of course the thieves want cold hard cash instead of cryptos).
My point is the exact opposite. Thieves most likely want to get rid of them asap and dump at any price, this reduces value stored previously that was build up by trading. The same point why "HODL" is a bad strategy for a coin to build up value and increases volatility.
(Score: 2) by takyon on Sunday January 28 2018, @09:57AM (2 children)
Thanks! That makes sense.
SODL
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(Score: 0) by Anonymous Coward on Sunday January 28 2018, @10:00AM (1 child)
More like "cryptocoins have to roll!"
(Score: 2) by FatPhil on Sunday January 28 2018, @03:17PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by JoeMerchant on Sunday January 28 2018, @02:32PM (5 children)
Um... no, stolen crypto money is money that has had its marketable value transferred to another owner against the previous owner's will - invalidating the central principle of crypto money: only you can spend your digital cash.
🌻🌻 [google.com]
(Score: 2) by hemocyanin on Sunday January 28 2018, @07:31PM (4 children)
As a person who never got into cryptocurrency, here is what I don't get about stealing bitcoins -- as I understand it, the blockchain is supposed to record every transaction, so if a thief transfers the coin after it is stolen, or the transfer is itself the theft, then that transaction should be recorded and all future users should know the coin was stolen. I get that a pseudonym can be used for identity, but eventually, if you want anything of value out of the coin you are going to have to engage in behavior that risks revealing who you are when the thief exchanges it for goods or services.
(Score: 2) by JoeMerchant on Sunday January 28 2018, @10:04PM
Uh, yeah, I tried debating that point ~8-10 years ago and was roundly shouted out of the room by people who wanted to astroturf the perception that it is a securely anonymous system (Silk Road vendors and their like, I would guess), and for ~7 years most people seemed to believe the astroturfers. Only lately, when the Wall Street analysts have really started to dig in, have I seen this "it can't ever be truly anonymous, because traceability is a core design component" logic come up to a level where average users are starting to believe it.
🌻🌻 [google.com]
(Score: 2) by All Your Lawn Are Belong To Us on Monday January 29 2018, @02:16PM (2 children)
I believe it is just as possible to launder crypto, similar to but with slightly different methods than cash. As a person who has just barely gotten into cryptocurrency for fun, but not as an investor and not as a purchaser of goods, I think the breakdown of the system would lie like this:
1) Stolen amount is transferred to a particular wallet.
2) Amounts from that stolen wallet are shell-game transferred into different accounts, perhaps with multiple leaps. (Transfer 1 to wallet X, Transfer 2 to wallet Y1 and Y2, Transfer 3 to wallet Z... Z1... Z2.... Z3).
Those different subsidiary wallets are either :
3) Funneled into exchanges in countries with loose banking (the governments turn a blind eye, or regulators aren't very interested,) and then exchanged for cash/gold/whatever and cashed out under fictitious (or stolen) identities. OR
3) Goods and services are indeed purchased with them, again to a fictitiously created identity. Wallet Z3, by the way, has been used dozens upon dozens of times for all sorts of transfer activity. So if traced back to owner Z3 at address A (and for that kind of money you can do all sorts of 1 month rentals of places that are empty and abandoned), but Z3 still has plausible deniability that he got the bitcoin from Y2 for selling Y2 his ________, and my account also has A1/B1/C3 transactions. Prove that it wasn't in good faith, copper!
3) From the exchange rule above, the thief is well connected in that jurisdiction such that you can forget about getting him by anything less than extraordinary rendition.
I know from my experience that I did have to provide a copy of my ID card and a photo of my face (IIRC) to open a trading account at Coinbase. But all it would take is a photocopy of a driver's license (you don't even have to "steal" it permanently - probably better that way). And you're already dealing with criminals - I'm sure they would go through less effort than I would to launder it because connections.
This is the positive ethical side of why groups like FINCEN want to have all these stupid and chilling rules about monitoring all financial activity. Unless they can trace every step of a process they will get lost in the middlemen.
At any rate, this is also proof of something very fundamental to working with cryptocurrency: You NEVER leave a negotiable amount in a trading account of exchange. Get it, shift it to a paper wallet, then reshift from paper back into the exchange when you're ready to cash out. Count the fees you'll pay as necessary costs of doing business in crypto, for the sake of security. That is, if you're doing anything but day trading it.... and anybody day (or second) trading had better be prepared to kiss the whole amount away in an instant for reasons other than hacking. Exchanges AIN'T banks, generally, and are always risky.
This sig for rent.
(Score: 2) by hemocyanin on Wednesday January 31 2018, @06:13AM (1 child)
It seems to me that since all transactions are recorded, a coin could be reported stolen via some method [insert magic that makes it reliable and accurate] and thus marked. Could not future transactions be checked against the stolen list and thereby aborted? This would render stolen coins worthless until returned to the last valid owner.
(Score: 2) by All Your Lawn Are Belong To Us on Wednesday January 31 2018, @03:41PM
Interesting. Is it technically possible to tag things this way? A system could probably be designed that way. (Or "disputed" coin, perhaps). One would record a ledger entry this way.... the technical challenge being, what is the balance of the respective owner(s) while the dispute is ongoing? Do you take the balance away from the wallet so it can't be retransferred? Or are the next transfers out of that wallet to that amount marked as disputed and the new receiver carries the risk / or do you not permit any balance transfers from an account that is disputed?
But aside from that, here's why it won't work in most public cryptos: Cryptocurrency has NO true central authority once the system is rolling - it only has the collectivity of the miners. So who allows a dispute to be "valid"? Can I just say, "Hey, I never got my stuff! Freeze those coins!" Literally nobody exists to judge the validity of such a claim, let alone rule on it. The proposal I had above for reversing a huge theft requires concurrency of enough of the blockchain creators (the miners) to all agree that a particular transaction is invalid. Last I heard, for Bitcoin, there were about 10,000 mining entities. A lot of those entities are collectives, maybe with a central dictator for any single entity but maybe not. Even without considering that, you're asking 5,001 people/groups to come to agreement that one single transaction should be changed. Will you do that for $500 million? Yeah, maybe. Will you do it for $100, EVERY time someone screams? Doubtful. But that's the ONLY method to reverse a transaction.
And since cryptocurrency has something of a Libertarian bent, you're going to get a whole lot of those 10,000 saying, "too bad, so sad, thanks for playing." The system is designed with criteria in mind that every actor - the miners, the purchasers/transferrers, the exchanges, all of them have no reason to trust each other. Their validity comes from sharing agreement on the record of all previous transactions. And acknowledging a certain transaction is bad requires trust. (Not just emotionally, but the actual process of accepting that things should be different because X). They all only collectively agree on what is good, by the cementing of the blockchain with future blocks that incorporate all previous ones. It is a sort of technological Tower of Babel... and asking them to dismantle and reassemble the last X floors takes a tremendous effort. This decentralization is baked into the very core of what cryptocurrency is and why it is different from other systems.
In private cryptos, where there is one agency at work who IS a central authority figure - yes.... that's possible. In fact, it would be interesting to find out from the big-bank (and other big business) players inventing their own cryptosystems what they do with such a thing. Because a bank must be able to admit it is wrong and reverse transactions.
This sig for rent.
(Score: 2) by FatPhil on Sunday January 28 2018, @03:14PM (3 children)
It's the ultimate fiat - it's even fiat without any actual fiat!
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 5, Interesting) by JoeMerchant on Sunday January 28 2018, @03:54PM (1 child)
Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi would have wept tears of joy at the beauty of it:
No central owner / top of the pyramid to villify and convict.
All "potential victims" are willfully buying into something that clearly advertises no intrinsic value.
Once "in" the only way "out" for investors of cash or effort is to find another investor to exchange cash for "secret" numbers in a computer.
Unlimited inventory, sure the "algorithm" drives a sense of scarcity that inflates the perceived value, but the whole scheme can be "warehoused" on a tiny little disc drive.
Open source, others are freely copying the scheme, diluting attention and making enforcement of any yet-to-be conceived regulations more challenging.
🌻🌻 [google.com]
(Score: 2) by realDonaldTrump on Monday January 29 2018, @12:40AM
They call it distributed. Our Federal Reserve System is distributed too. Little Rocket Man nukes San Francisco, nukes Los Angeles, nukes Chicago, nukes New York City, it's no problem for our Federal Reserve. Because that leaves 8 banks. Beautiful system!!!!
(Score: 3, Interesting) by All Your Lawn Are Belong To Us on Monday January 29 2018, @02:35PM
Depends on your definition of fiat, and whether it requires a government. I'd rather think of it as the purest form of pure fiat - something intrinsically useless that neverthess holds value as a medium of exchange.
And it's not from "any" perspective it has zero intrinsic value. From the perspective of finance, intrinsic value is a present discounted realization of future value. With crypto, I think someone is insane to believe they can predict future value of it... but people do try. From a physical medium perspective, do you think the intrinsic worth of the paper of your dollar bills has anything to do with its value? Does your bank balance carry an intrinsic value different from crypto, and if so why or why not? Or perhaps it is more accurate to say that from the perspective you're advancing, every fiat currency on earth therefore has an intrinsic value of 0.
This sig for rent.
(Score: 1) by tftp on Sunday January 28 2018, @10:45PM
Even if you guarantee that the stolen coins will not be accepted by the system - though I haven't heard of such mechanism, as it can be used to rob people of their holdings - they will be gladly accepted by the place from which they had been stolen. At a fee that will be much smaller, but delivered in a briefcase full of cash.
Alternatively, all the stolen coins are sent to a mixer - a dozen times.