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All questions of its own merits aside, how is Bitcoin still worth anything at all after so many hacks? Isn't a large part of value the security to know that you

by ebg13 7y ago

All questions of its own merits aside, how is Bitcoin still worth anything at all after so many hacks? Isn't a large part of value the security to know that you'll actually be able to realize it?

repomies68 7y ago
Well the thief didn't touch any other cryptocurrencies that were on binance. What do you think is more valuable, a currency that thief wants a lot or one that they don't want?
0x54D5 7y ago
Bitcoin itself wasn't hacked. They stole the keys from a server most likely. I don't think it's possible to harden a modern OS against some potential hacker on the internet. Especially when we know that 0-days are sold and traded. So the idea of putting $41m worth of Bitcoin in a single wallet is frankly frighting to me. We saw what happens with pwn2own. Now scale that up a few million USDs.
- repomies68 7y ago
  Well if 7000 stolen from hot wallet is something like 2% of assets and rest is in cold storage, then the risk is manageable. However I agree that 7000 BTC is a lot even if you are running a huge exchange.
dylkil 7y ago
These hacks are only possible becuase of poor security on centralized exchanges. With p2p trading you dont have this problem. Theres a common saying in bitcoin communities - "Not your keys, not your coins". Never leave bitcoin on an exchange with a third party. In this case though binance will have to reimburse their customers.
DJBunnies 7y ago
Bitcoin was not hacked. A 3rd party holding users' keys was hacked. Bitcoin still has value because it has characteristics that nothing else does.
magashna 7y ago
you're blaming the currency for the bank's lax security. It's like denouncing USD for wire fraud
- Proven 7y ago
  Or gun makers for gun crime
fgkramer 7y ago
How are dollars worth anything after all the bank robberies across the years? :)
- gimmeThaBeet 7y ago
  uh, insurance?
  - __s 7y ago
    How are dollars worth anything after all the extortion of insurance?
  - fgkramer 7y ago
    I was just using a simple analogy to explain that currency != exchangers
- jcranmer 7y ago
  This one heist of bitcoins is more than the total sum of money stolen from US banks in 2011. (Source: https://www.fbi.gov/stats-services/publications/bank-crime-statistics-2011/bank-crime-statistics-2011 https://www.fbi.gov/stats-services/publications/bank-crime-s...). It looks especially bad because about 20% of the stolen money from bank robberies is recovered, instead of lost for good; I don't know how much of Bitcoin heists are repatriated, but I suspect the percentage is much closer to 0%.
  - alcio 7y ago
    Swift lost at least $85M in 2016, and that was only 1 partial attack. Had it went fully through, hundreds of millions would have been robbed.
  - ShorsHammer 7y ago
    $1 billion Euro was stolen by a single gang from ATM's last year. https://www.europol.europa.eu/newsroom/news/mastermind-behind-eur-1-billion-cyber-bank-robbery-arrested-in-spain https://www.europol.europa.eu/newsroom/news/mastermind-behin... $1 Billion stolen from a Bangladeshi Bank https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery MoneyTaker operated silently for years without being caught stealing millions from US and Russian banks. https://www.reuters.com/article/us-cyber-banks-atm/hackers-hit-u-s-russian-banks-in-atm-robbery-scam-report-idUSKBN1E51SZ https://www.reuters.com/article/us-cyber-banks-atm/hackers-h... Conflating physical bank heists made by desperate people and sophisticated cybercrime is disingenuous.
Crosseye_Jack 7y ago
Its not the underlining security of bitcoins block chain that keeps getting hacked but the exchanges that do. (though there have been a couple of cases where things messed up for example https://en.bitcoin.it/wiki/Value_overflow_incident https://en.bitcoin.it/wiki/Value_overflow_incident ) Think of it a bit like this. Treat Bitcoin like the Dollar and the Exchanges like banks. The underlying value of the dollar isn't so badly effected because bank robberies happen. Instead of Storing your money in your own personal vault, people are storing their money in the banks vault(s) because it allows for more convenient usage of your funds. Instead of having to unlock your own safe, deposit what you took out your own vault into a bank and then drive to the store to do your shopping and pay on your card, you can go right to the store as you already have your funds in the bank (Bit of a shit anagogy as this would be more fitting if the store didn't accept cash, only plastic). To get a quicker exchange of bitcoin to other coins / cash and back again (and have lower fee's), people are storing their coins in the exchanges wallets instead of their own. Instead of breaking into thousands of peoples homes and breaking into everyone's vault in turn, Hackers are targeting the exchanges as its a single place storing large amounts. EDIT: Tweak a few bits of wording. I'm blaming the lack of coffee :-P
- ckastner 7y ago
  > The underlying value of the dollar isn't so badly effected because bank robberies happen Since you and a number of other sibling comments have raised this point: This comparison is poor. There are tens of thousands (probably even hundreds of thousands) of banks worldwide, each of which hold only a literally trivial fraction of their assets in (robbable) cash. That's why bank robberies don't matter. In contrast to that, a substantial fraction of total Bitcoin transactions are handled by just a handful of exchanges, each of which have a substantial amount of their assets in hackable digital form. Bank of America has $2.34 trillion dollars in assets. If they had that in robbable cash, in one place, then it's safe to say bank robberies would matter. Edit: My number of banks worldwide is way off as I was thinking in terms of banking licenses, whereas for bank robberies, it's the physical branches that should be counted. In that case, there are about 80.000 banks in the U.S. alone.
  - 7y ago
sschueller 7y ago
How is the USD still worth anything with the incredible amount that has been printed? The fed chair himself said we can just print more money if we need it. [2] No other country can do that without going into hyperinflation. "$12 billion in U.S. currency was transported from the Federal Reserve to Baghdad in April 2003 and June 2004, where it was dispensed by the Coalition Provisional Authority. A Vanity Fair magazine report concluded that of this sum, "at least $9 billion has gone missing"" [1] $12 Billion in cash!! [1] https://en.wikipedia.org/wiki/Allegations_of_misappropriations_related_to_the_Iraq_War https://en.wikipedia.org/wiki/Allegations_of_misappropriatio... [2] https://www.youtube.com/watch?v=q6vi528gseA https://www.youtube.com/watch?v=q6vi528gseA
- SilasX 7y ago
  Upvoting because that incident is interesting, but this is false: >No other country can do that without going into hyperinflation. Other CBs have significant enough credibility or special situations where they can print comparable money without setting off hyperinflation. Definitely Japan's and probably Europe's.
- Dirlewanger 7y ago
  It's still worth something because the federal government says it's worth something. That's what a fiat currency is.
  - ceejayoz 7y ago
    That's not at all how it works. Zimbabwe and Venezuela's federal governments claimed their currencies were worth something until they were blue in the face. It's worth something because the people using it feel it's worth something, and that's true for non-fiat currencies as well. Bitcoin and gold are non-fiat, but still heavily depend on demand to determine their value.
- ceejayoz 7y ago
  > No other country can do that without going into hyperinflation. That's simply false. https://en.wikipedia.org/wiki/Quantitative_easing#After_2007 https://en.wikipedia.org/wiki/Quantitative_easing#After_2007 Japan, Switzerland, Sweden, the UK, the Eurozone... The EU injected €2.4 trillion in this fashion over a four year period. (https://www.independent.co.uk/news/business/news/ecb-money-printing-european-central-bank-end-date-a8398576.html https://www.independent.co.uk/news/business/news/ecb-money-p...) $12B is nothing.
alcio 7y ago
How is the USD worth anything after some many bank robberies? Bitcoin itself worked as expected, and the fact that no one can easily reverse transactions is one of the features described in the original whitepaper: "Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers"
- simiones 7y ago
  > How is the USD worth anything after some many bank robberies? Well, because in bank robberies, it is the bank losing money, not the customers - this is exactly what bitcoin is missing.
  - lawn 7y ago
    No, it is in fact the exchanges that are losing money. In this case the customer funds are insured and they will not lose any funds. > this is exactly what bitcoin is missing What you mean to say is this is what many cryptocurrency exchanges are often missing, which I agree with.
    - ForHackernews 7y ago
      They're not really insured: the exchange has claimed they have a self insurance fund (they call it 'SAFU') that they will draw on to make their customers whole. We'll see if that happens.
dractori 7y ago
A small number of people control a huge percentage of the market and have a vested interest in prices always going up.

by ebg13 7y ago

All questions of its own merits aside, how is Bitcoin still worth anything at all after so many hacks? Isn't a large part of value the security to know that you'll actually be able to realize it?

repomies68 7y ago

Well the thief didn't touch any other cryptocurrencies that were on binance. What do you think is more valuable, a currency that thief wants a lot or one that they don't want?

0x54D5 7y ago

Bitcoin itself wasn't hacked. They stole the keys from a server most likely. I don't think it's possible to harden a modern OS against some potential hacker on the internet. Especially when we know that 0-days are sold and traded. So the idea of putting $41m worth of Bitcoin in a single wallet is frankly frighting to me. We saw what happens with pwn2own. Now scale that up a few million USDs.

repomies68 7y ago
Well if 7000 stolen from hot wallet is something like 2% of assets and rest is in cold storage, then the risk is manageable. However I agree that 7000 BTC is a lot even if you are running a huge exchange.

dylkil 7y ago

These hacks are only possible becuase of poor security on centralized exchanges. With p2p trading you dont have this problem. Theres a common saying in bitcoin communities - "Not your keys, not your coins". Never leave bitcoin on an exchange with a third party. In this case though binance will have to reimburse their customers.

DJBunnies 7y ago

Bitcoin was not hacked. A 3rd party holding users' keys was hacked. Bitcoin still has value because it has characteristics that nothing else does.

magashna 7y ago

you're blaming the currency for the bank's lax security. It's like denouncing USD for wire fraud

Proven 7y ago
Or gun makers for gun crime

fgkramer 7y ago

How are dollars worth anything after all the bank robberies across the years? :)

gimmeThaBeet 7y ago
uh, insurance?
- __s 7y ago
  How are dollars worth anything after all the extortion of insurance?
- fgkramer 7y ago
  I was just using a simple analogy to explain that currency != exchangers
jcranmer 7y ago
This one heist of bitcoins is more than the total sum of money stolen from US banks in 2011. (Source: https://www.fbi.gov/stats-services/publications/bank-crime-statistics-2011/bank-crime-statistics-2011 https://www.fbi.gov/stats-services/publications/bank-crime-s...). It looks especially bad because about 20% of the stolen money from bank robberies is recovered, instead of lost for good; I don't know how much of Bitcoin heists are repatriated, but I suspect the percentage is much closer to 0%.
- alcio 7y ago
  Swift lost at least $85M in 2016, and that was only 1 partial attack. Had it went fully through, hundreds of millions would have been robbed.
- ShorsHammer 7y ago
  $1 billion Euro was stolen by a single gang from ATM's last year. https://www.europol.europa.eu/newsroom/news/mastermind-behind-eur-1-billion-cyber-bank-robbery-arrested-in-spain https://www.europol.europa.eu/newsroom/news/mastermind-behin... $1 Billion stolen from a Bangladeshi Bank https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery MoneyTaker operated silently for years without being caught stealing millions from US and Russian banks. https://www.reuters.com/article/us-cyber-banks-atm/hackers-hit-u-s-russian-banks-in-atm-robbery-scam-report-idUSKBN1E51SZ https://www.reuters.com/article/us-cyber-banks-atm/hackers-h... Conflating physical bank heists made by desperate people and sophisticated cybercrime is disingenuous.

Crosseye_Jack 7y ago

Its not the underlining security of bitcoins block chain that keeps getting hacked but the exchanges that do. (though there have been a couple of cases where things messed up for example https://en.bitcoin.it/wiki/Value_overflow_incident https://en.bitcoin.it/wiki/Value_overflow_incident ) Think of it a bit like this. Treat Bitcoin like the Dollar and the Exchanges like banks. The underlying value of the dollar isn't so badly effected because bank robberies happen. Instead of Storing your money in your own personal vault, people are storing their money in the banks vault(s) because it allows for more convenient usage of your funds. Instead of having to unlock your own safe, deposit what you took out your own vault into a bank and then drive to the store to do your shopping and pay on your card, you can go right to the store as you already have your funds in the bank (Bit of a shit anagogy as this would be more fitting if the store didn't accept cash, only plastic). To get a quicker exchange of bitcoin to other coins / cash and back again (and have lower fee's), people are storing their coins in the exchanges wallets instead of their own. Instead of breaking into thousands of peoples homes and breaking into everyone's vault in turn, Hackers are targeting the exchanges as its a single place storing large amounts. EDIT: Tweak a few bits of wording. I'm blaming the lack of coffee :-P

ckastner 7y ago
> The underlying value of the dollar isn't so badly effected because bank robberies happen Since you and a number of other sibling comments have raised this point: This comparison is poor. There are tens of thousands (probably even hundreds of thousands) of banks worldwide, each of which hold only a literally trivial fraction of their assets in (robbable) cash. That's why bank robberies don't matter. In contrast to that, a substantial fraction of total Bitcoin transactions are handled by just a handful of exchanges, each of which have a substantial amount of their assets in hackable digital form. Bank of America has $2.34 trillion dollars in assets. If they had that in robbable cash, in one place, then it's safe to say bank robberies would matter. Edit: My number of banks worldwide is way off as I was thinking in terms of banking licenses, whereas for bank robberies, it's the physical branches that should be counted. In that case, there are about 80.000 banks in the U.S. alone.
- 7y ago

sschueller 7y ago

How is the USD still worth anything with the incredible amount that has been printed? The fed chair himself said we can just print more money if we need it. [2] No other country can do that without going into hyperinflation. "$12 billion in U.S. currency was transported from the Federal Reserve to Baghdad in April 2003 and June 2004, where it was dispensed by the Coalition Provisional Authority. A Vanity Fair magazine report concluded that of this sum, "at least $9 billion has gone missing"" [1] $12 Billion in cash!! [1] https://en.wikipedia.org/wiki/Allegations_of_misappropriations_related_to_the_Iraq_War https://en.wikipedia.org/wiki/Allegations_of_misappropriatio... [2] https://www.youtube.com/watch?v=q6vi528gseA https://www.youtube.com/watch?v=q6vi528gseA

SilasX 7y ago
Upvoting because that incident is interesting, but this is false: >No other country can do that without going into hyperinflation. Other CBs have significant enough credibility or special situations where they can print comparable money without setting off hyperinflation. Definitely Japan's and probably Europe's.
Dirlewanger 7y ago
It's still worth something because the federal government says it's worth something. That's what a fiat currency is.
- ceejayoz 7y ago
  That's not at all how it works. Zimbabwe and Venezuela's federal governments claimed their currencies were worth something until they were blue in the face. It's worth something because the people using it feel it's worth something, and that's true for non-fiat currencies as well. Bitcoin and gold are non-fiat, but still heavily depend on demand to determine their value.
ceejayoz 7y ago
> No other country can do that without going into hyperinflation. That's simply false. https://en.wikipedia.org/wiki/Quantitative_easing#After_2007 https://en.wikipedia.org/wiki/Quantitative_easing#After_2007 Japan, Switzerland, Sweden, the UK, the Eurozone... The EU injected €2.4 trillion in this fashion over a four year period. (https://www.independent.co.uk/news/business/news/ecb-money-printing-european-central-bank-end-date-a8398576.html https://www.independent.co.uk/news/business/news/ecb-money-p...) $12B is nothing.

alcio 7y ago

How is the USD worth anything after some many bank robberies? Bitcoin itself worked as expected, and the fact that no one can easily reverse transactions is one of the features described in the original whitepaper: "Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers"

simiones 7y ago
> How is the USD worth anything after some many bank robberies? Well, because in bank robberies, it is the bank losing money, not the customers - this is exactly what bitcoin is missing.
- lawn 7y ago
  No, it is in fact the exchanges that are losing money. In this case the customer funds are insured and they will not lose any funds. > this is exactly what bitcoin is missing What you mean to say is this is what many cryptocurrency exchanges are often missing, which I agree with.
  - ForHackernews 7y ago
    They're not really insured: the exchange has claimed they have a self insurance fund (they call it 'SAFU') that they will draw on to make their customers whole. We'll see if that happens.

dractori 7y ago

A small number of people control a huge percentage of the market and have a vested interest in prices always going up.