Bitcoin, the virtual currency, which is described as mathematically elegant, finds success demanding . It has lured many including a billionaire entrepreneur to create a payment service internet company to an ex patriot American who writes a blog on it and provides a tracking of its movements on line with an update every ten minutes.
Now Bitcoin is in the news again today as another alarming theft has been reported. This time the Danish Internet Payment System site, Coindesk, states that 1,295 bitcoins have been hacked which is about $1 million.
Coindesk Chief executive Kris Hendriksen reports that the hackers may be from Russia or neighboring countries. It appears that they weakened the site by launching a catastrophic denial of service attack, which is when a server is bombarded with data until it collapses. The hackers stole the virtual currency amidst the confusion.
Mr. Hendriksen added: ‘Several consumer wallets have been compromised’. While the Bitcoin clients are contacted, BIPS (Bitcoin Payment Service) will temporarily close down the wallet site, the focus will shift to the real-time merchant processing business which does not require storing Bitcoins and invite risk of theft.
Currently Bitcoin is worth about $1,100 per coin and worth more than an ounce of gold for the first time for one coin transaction.
Bitcoin was created in 2009 by an anonymous, Satoshi Nakamoto, a person or persons, who have not appeared anywhere on the Internet since 2010. The inventor released a coding for the virtual currency in open-source form so that users called ‘miners’ can create their own bitcoins. These miners solve a complex algorithm to create a block of bitcoins, which is coded for production of a block every ten minutes.
There is a maximum of 21 million bitcoins set from Nakamoto of which about 11.5 million is determined to be in use on the internet websites for Bitcoin trading.
Since Bitcoin currency has appeared as the old “wild west” or gold rush days of California, the U.S. Homeland Security and Governmental Affairs Committee held a senate hearing on Nov 18 to listen to testimony from the Assistant Director of the Treasury and a FBI representative.
Private business investors such as Jeremy Allaire, chairman and CEO of Circle Internet Financial (a site which delivers digital currency as a payment tool), testified at the hearing ‘that it represents one of the most important technical and economic innovations of our time’ and considers it to be an advance in the ease of electronic payments and money transfers while lowering costs for business worldwide.
Richard Branson is accepting it for payment in space flight travel and political contributions may be made to a candidate’s campaign fund in the U.S. next year.
The Weizmann Science Institute researchers, Dorit Ron and Adi Shamir, admitted today that their report released last Saturday is wrong on their theory linking Satoshi Nakamoto and the online black market Silk Road, ‘Dread Pirate Robert,’ criminal activity of which the FBI has made an arrest and prosecution in process.
The person accused of sending the money to the Silk Road founder turned out to be Dustin Trammell, a tech-savvy libertarian in Austin, Texas. In actuality, he sent it to Mt. Gox, a Bitcoin exchange. Trammell said he’s communicated by email with the famous Satoshi, but that’s it.
Bitcoin has had a wild ride this past year but its traders provide methods of its use and reduction of risk due to the digital wallet which can be monitored and maintained without subject to theft.
Theorists discuss that Bitcoin may be a bubble soon like the Tulip trade of the 17th Century Amsterdam which bankrupted investors; or is a Black Swan on the horizon?