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My old physics teacher always said: "It's the dumb criminals who get caught; you never catch the smart ones." He was a really smart guy, and he did live a nice lifestyle, hmmm...
Anyway, so IOTA. As with any digital currency, you need some random information - a passphrase typically - that is used when you create your wallet. In the case of IOTA, which is supposed to be IOT friendly, this means a string of 81 random characters, the generation of which could be pretty easily automated.
That's great, and the OSS world being full of helpful people, someone wrote a handy generator, put the code for all to see on GitHub, and put their generator onto a website where you could easily make use of it. Nice.
Actually, diabolical. The code on the website really was identical to the code on GitHub, except for one tiny, almost insignificant change: at some point, the owner swapped out the random seed to a value that he knew. Not even constant - that would have been too obvious - but known nonetheless.
And for many months, many people used his friendly little service. Until January 19th, when he emptied their IOTA wallets, erased his presence from the Interwebs, and quietly disappeared. $4 million or so richer.
This one won't be caught.
tl;dr for anyone who doesn't get it: The point of having a secret password, secret passphrase, or secret key is that it's secret. Which means that you don't have it generated for you by a public web service.
(Score: 5, Informative) by requerdanos on Thursday February 01 2018, @03:41AM (7 children)
Um. Not rocket science.
Step 1. Convert IOTA to Bitcoin or Litecoin (something easily exchangeable for traditional currency). This can be done at sites like bitfinex [bitfinex.com].
Step 2. Sell your Bitcoins/Litecoins. They are easily exchangeable for, for example, US Dollars. This can be done at sites like Coinbase [coinbase.com], Kraken [kraken.com], Bitstamp [bitstamp.net], or Poloniex [poloniex.com].
Step 3. Whatever you want to do with the money. Maybe buy some of what the "play money"-thinking people are smoking; it must be good.
(Score: 2, Touché) by Anonymous Coward on Thursday February 01 2018, @04:09AM (3 children)
If there exists a person who will for some reason hand you real money for play money - it still is play money.
(Score: 1, Insightful) by Anonymous Coward on Thursday February 01 2018, @04:48AM (1 child)
if a large, monopolizing force goes around threatening to kill you if you don't use its play money, is it still play money?
(Score: 2) by aristarchus on Thursday February 01 2018, @05:53AM
NO ONE EXpects! The violent imposition of a fiat currency! Those who do expect it, um, . . . come in again. I am now very curious about who bradley12+1's teacher was. Kevin Spacey?
(Score: 2) by requerdanos on Thursday February 01 2018, @05:28PM
If pretty much anyone will exchange you some widely-recognized money you call "real money" for the stuff you call "play money," then it's all as real as money gets and you are an idiot.
Things like IOTA, Bitcoin, and the US Dollar are inherently worthless and only have value because people esteem them to have value. Because they are divisible and transferrable, and people esteem them to have value, they are by definition money.
If your "money" is only useful as a token counter when playing a board game, or in teaching money theory to children, then it is "play money." As soon as a market appears to pay you for that money, it's not play money anymore, even if you personally don't approve of same.
(Score: 2) by bradley13 on Thursday February 01 2018, @06:58AM (1 child)
Exactly. There are plenty of services that will transform one digital currency into another [shapeshift.io]. I've used shapeshift.io - it's fast, painless, simple, and doesn't even require a login. He probably ought to take a detour through Monero, or a mixer service, along the way. After that, any exchange will turn his digital currency into cash.
His biggest worry should probably be the ordinary tax authorities, if he gets greedy or impatient. Living suddenly beyond your means, or having your bank accounts suddenly bulging for no apparent reason - the authorities watch for exactly this kind of stuff, so patience is called for.
Everyone is somebody else's weirdo.
(Score: 2) by MrGuy on Thursday February 01 2018, @05:15PM
Sure. But the related question is what the exchange rate is, and how stable it is.
Let's say I want to convert $50,000,000 US into Yen. I can do that - there are many markets which offer those exchanges, and the exchange rate is stable because my transaction is (relatively speaking) small compared to the rate of exchange of dollars to yen - there are many, many people who want to exchange these two things.
Now consider if I want to convert $50,000,000 worth of Armenian Dram into Yen. Sure, there are still marketplaces out there that will do the exchange, but not nearly as many. And there's not a huge demand out there for people wanting to "buy in" to Armenian Dram who currently have Yen. If I try to sell that much, I'll likely crash the market - my supply exceeds the demand at the current price, so the price will have to fall (likely significantly) for me to sell this off. Or, I'll have to sell this off over a CONSIDERABLE period of time.
Basically, the fact that two things CAN be exchanged is important, but the liquidity of the instruments will determine how quickly or effectively you can make the exchange.
Your example of shapeshift is relevant - it's one of the bigger cryptocurrency exchanges. And, notably, they don't have a market for Iota - they can exchange about 50 different cryptocurrency flavors, but not that one. The smaller the market you have to go to, the smaller the pool of potential counterparties wanting to buy what you're selling with something you want, and the lower price you'll have to accept to move it.
According to coinmarketcap [coinmarketcap.com], the TOTAL volume of transactions in Iota in a 24 hour period is about $80 million worth. That's compared to $8.5 BILLION worth of bitcoin. Iota isn't a high-demand currency. And that's before you factor in the potential that this story makes people way about Iota, further reducing demand (Iota's value is down about 17% in the last 24 hours - again, per coinmarketcap).
None of this is to say that the thief can't extract some value that they can (eventually) exchange into real money (almost certainly by buying more desirable cryptocurrencies like bitcoin, using a mixer to hide the tracks, and then "cashing out"). But it's very unlikely the amount they eventually get out will be close to the $4 million "value" of the Iota that was originally stolen.
(Score: 2) by All Your Lawn Are Belong To Us on Thursday February 01 2018, @08:42PM
The real question being once this news broke, what happened to IOTA's coin price? Prices are down 21% so far in trading today.
Assuming the coin's already been traded off, the real loser is the exchange(s) who accepted the deal only to find their quote price 20% down from then.
Also, if it was the sum total of all Iota coins existing (the market cap was $6.4 million earlier today and is currently around $4.9 million. So the story is a little unclear to me if this was actually every Iota coin in existence or just a huge chunk of it,) then whoever got it all in exchange either has total control on the current supply or a market-making block of it.
This sig for rent.