Netizen Robbed of Nearly Half A Million Dollars in Virtual 'Bitcoins'

By Tracey E. Schelmetic June 15, 2011

Nothing like waking up in the morning and find out you've lost nearly half a million Bitcoins through theft.

Wait, what? Bitcoins?

A little background first: A Bitcoin is a form of digital currency created in 2009 by open-source developer Satoshi Nakamoto. (The term “Bitcoin” also refers to the open source software designed by Nakamoto to make use of the currency, and to the peer-to-peer network that was created by running the software.) Bitcoins (sometimes abbreviated as BTC) can be saved on a personal computer in the form of a “wallet file” or kept with a third party “wallet service” (like a digital bank for Bitcoins). They can be exchanged over the Internet to anyone with a Bitcoin address.

Because Bitcoins have no central authority or issuer and require no global exchanging, it would be difficult for any government or market to manipulate them (unlike real currency), which is where inflation comes in in real-life currencies.

So who uses them? Bitcoins are accepted for some online services, Web-based work for hire, tangible goods, and charitable donations, though no major retailers currently accept them.

But today, there is news of the very first major Bitcoin theft. A Bitcoin user with the Web handle “Allinvain” has reportedly become a victim of the theft of about $450,000 worth of the digital currency, reported Yahoo News.

Allinvain started his computer on Monday morning to find that his Bitcoin wallet file had been stolen by cyberthieves, along with over 25,000 Bitcoins (which translates to about $467,000 by current exchange rates with the U.S. dollar.) It was “cash” he was saving to open, ironically, a Bitcoin business, said Yahoo News.

Now the downside of Bitcoins: since they exist solely in cyberspace, there is less of a “paper trail” to help track them down. Many Bitcoin users are attempting to help Allinvain track down the virtual robber or robbers by examining the log files used to launder the Bitcoins, but it's not very likely they will succeed.

“The completely anonymous nature of the Bitcoin system means that users are protected from identity theft, but are also nearly untouchable when it comes to punishment for misdeeds,” said Yahoo News.

In other words, Allinvain may find his efforts to be...well...all in vain.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.

Tracey Schelmetic is a contributing editor for TechZone360. To read more of Tracey's articles, please visit her columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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