Category Archives: Bitcoin

Some, however, are not buying this explanation.

"Don't believe Bitstamp. It's a matter of liquidity," Jeffrey Robinson, author "BitCon: The Naked Truth about Bitcoin" wrote to CNBC. "Who's next? It's as if Bitstamp realized they couldn't internalize the risk anymore so just decided, Let's suspend operations until everything settles down."

Others are in agreement that Bitstamp's issues may go well beyond security. A commentary in the Financial Times posited that the issues could lie in the company's financials becoming unhinged by the falling price, or the economics of mining taking their toll on the exchanges.

Read MoreMarc Andreessen: I still stand behind bitcoin

The price of bitcoin dropped into the $250-range on Sunday after trading for weeks in the mid $300s.

No matter what the cause of the service halt, Monday's news will be of key importance for the future of the cryptocurrency, according to "Fast Money" trader Brian Kelly.

"This is a critical moment for Bitcoin. As Adam Smith said, 'all money is a matter of confidence' and the reaction to this potential hack will either serve to undermine or bolster confidence," he wrote.

While Mt. Gox, the bitcoin exchange that fell apart in 2014, may have seen mismanagement, Bitstamp has a "highly capable venture capital team," according to Kelly.

Here's what Bitstamp CEO Nejc Kodri had to say over Twitter:

Cold storage basically means that the wallet numbers have been recorded off of a hackable server (anything from being written on a piece of paper to stored on a USB drive).

More here:
Major bitcoin exchange suspended

Updated below with more information from an emailed statement from Bitstamp.

Not even a year has passed since top bitcoin exchange Mt. Gox collapsed into a pit of burning money, blaming a hacking incident for a nearly half-billion dollar meltdown and bankruptcy. Now another major exchange may be putting its users through a small-scale replay of that crisis.

Early Monday, a UK- and Slovenia-based bitcoin exchange Bitstamp announced that it would be going offline while it investigated a security compromise of some portion of its stored currency that occurred over the weekend. In a statement to WIRED, the company said that less than 19,000 bitcoins were stolen in the attackabout $5.1 million dollarsand warned users to immediately stop making deposits to any addresses it issued before 4 a.m. ET Monday. Meanwhile, Bitstamp users money remains frozen in the companys accounts.

Bitstamp takes our security and soundness very seriously, reads a statement on the companys website. In an excess of caution, we are suspending service as we continue to investigate. We will return to service and amend our security measures as appropriate.

The company also tried to reassure users in its statement that theyre not facing a Gox-level debacle. Only the exchanges operational wallet was compromised, it says, a fraction of coins that are frequently bought and sold. Careful exchanges (and users) keep the majority of their bitcoins in cold storage, on computers without any connection to the Internet to prevent their theft. As a security precaution against compromises Bitstamp only maintains a small fraction of customer bitcoins in online systems, the companys statement reads. Bitstamp maintains more than enough offline reserves to cover the compromised bitcoins.

Bitstamps chief executive Nejc Kodri wroteon Twitter: My sincerest apologies to those who are affected by our service being temporary suspended. He continued, Thank you all for your patience. We are working diligently to restore service and hope to have an ETA later today.

In a followup email to WIRED Monday afternoon,Kodri added that the company is cooperatingwith law enforcement to get to the bottom of the hack, and is working to transfer a secure backup of the Bitstamp site onto a new safe environment and will be bringing this online in the coming days.

Bitstamp is far from Bitcoins biggest exchange; prior to its suspension it accounted for only about 6 percent of transactions according to bitcoin statistics site Bitcoin Charts. But it had become one of the longest-lived and reputable ways to buy and sell currency in bitcoins volatile economy. After Mt. Goxs bankruptcy, Bitstamp became a popular alternative to top exchanges BTC China, based in Chinas uncertain regulatory environment, and BTC-e, a mysterious operation run by unknown owners thought to be based in Bulgaria.

Were the backbone of the entire Bitcoin industry, Kodri told Forbes last year in an interview. The wallet services, ATM machines, mining companies all rely on us. The price of Bitcoin is the de facto price on Bitstamp. Were the go-to exchange.

Its temporary shutdown due to the theft of a still-unknown number of coins could rattle bitcoin at a bad time. On Monday morning bitcoins price hovered below $270, its lowest since 2013 and down from $375 just a month ago. If Bitstamp doesnt quickly emerge from its downtime and replace any lost coins, cryptocurrencys new year could be off to a unpleasant start.

Excerpt from:
Major Bitcoin Exchange Bitstamp Goes Offline After Possible Hack

Bitcoin the cryptocurrency has had a rough couple days, but Silicon Valley venture capitalist Marc Andreessen said Monday he is not worried.

The same day that Bitstampthe second-largest dollar-bitcoin exchangesuspended operations for what it said was a security issue, the Andreessen Horowitz co-founder took to Twitter to tout his continued belief in the technology.

Read MoreMajor bitcoin exchange suspended after price plunge

This is hardly the first time that Andreessen has expressed his belief in the future of bitcoin, but on Monday he specifically addressed criticism's about the cryptocurrency's potential use cases and its price volatility.

The price of bitcoin dropped into the $250-range on Sunday after trading for weeks in the mid-$300s. By Monday afternoon its value was about $269, depending on the exchange.

Below, find Andreessen's 26-tweet manifesto on the merits of the technology.

See the original post here:
Marc Andreessen's bitcoin tweetstorm

On January 6 of 2014, one Bitcoin (BTC) was valued at approximately $951 U.S, according to Coindesk - a height that the cryrtocurrency never again achieved over the course of the year. On December 29, BTC was valued at approximately $312 USD, down by $639 or 67 percent from its January 6 high. Yet despite the dramatic decline in value, there is still much reason for optimism in the Bitcoin world.

Even though the value of Bitcoin has declined over the course of 2014 and even though it has had its' share of troubles, the Bitcoin movement persists and will likely continue to survive for the foreseeable future.

On January 29, before the Mt.Gox collapse, venture capitalist and Internet browser pioneer Marc Andreessen explained why he was bullish about Bitcoin. For Andreessen, the opportunity is all about leveraging the power of distributed computing for transactions, without the need for a central authority. It's an opportunity, that has not changed over the course of 2014, even though the value of Bitcoin has. It's that opportunity that Andreessen sees in Bitcoin, to disrupt and re-invent the way transactions are performed that will keep Bitcoin relevant.

Markets move on supply and demand, just ask any oil trader. The price of crude oil has also fallen dramatically over course of 2014, from a high over $100 a barrel to settling in just above $50 in December.

The simple truth is that Bitcoin has value because there is demand and there is opportunity. While demand may grow or wane over any given period of time, it is clear that after a year of great challenge for Bitcoin, the opportunity remains for 2015 and beyond.

Sean Michael Kerner is a senior editor at InternetNews.com. Follow him on Twitter @TechJournalist.

Link:
Bitcoin in 2014: The Year Bitcoin Should Have Died (but didn't)

Some, however, are not buying this explanation.

"Don't believe Bitstamp. It's a matter of liquidity," Jeffrey Robinson, author "BitCon: The Naked Truth about Bitcoin" wrote to CNBC. "Who's next? It's as if Bitstamp realized they couldn't internalize the risk anymore so just decided, Let's suspend operations until everything settles down."

Others are in agreement that Bitstamp's issues may go well beyond security. A commentary in the Financial Times posited that the issues could lie in the company's financials becoming unhinged by the falling price, or the economics of mining taking their toll on the exchanges.

Read MoreMarc Andreessen: I still stand behind bitcoin

The price of bitcoin dropped into the $250-range on Sunday after trading for weeks in the mid $300s.

No matter what the cause of the service halt, Monday's news will be of key importance for the future of the cryptocurrency, according to "Fast Money" trader Brian Kelly.

"This is a critical moment for Bitcoin. As Adam Smith said, 'all money is a matter of confidence' and the reaction to this potential hack will either serve to undermine or bolster confidence," he wrote.

While Mt. Gox, the bitcoin exchange that fell apart in 2014, may have seen mismanagement, Bitstamp has a "highly capable venture capital team," according to Kelly.

Here's what Bitstamp CEO Nejc Kodri had to say over Twitter:

Cold storage basically means that the wallet numbers have been recorded off of a hackable server (anything from being written on a piece of paper to stored on a USB drive).

Continued here:
Exchange: Lost 'less than' $5.1M of bitcoin

Summary:The European bitcoin exchange suspends its service after it was hacked, ZDNet can confirm. Less than 19,000 bitcoins were stolen from an operational wallet.

Bitstamp prices plummeted after news of the breach broke (Screenshot: ZDNet)

European bitcoin exchange Bitstamp suspended trading Monday after one of its active, operational bitcoin storage wallets was "compromised" over the weekend.

In a statement on its site, Bitstamp warned users not to deposit any Bitcoin to previously issued addresses.

The popular bitcoin trading site, said to be the world's third busiest bitcoin exchange amounting for 6 percent of all bitcoin transactions, said that a "small fraction" of customer bitcoins are maintained in online systems, adding that any compromised bitcoins can be recovered from its "cold" offline storage reserve.

Co-founder and chief executive Nejc Kodric said in a tweet that the bulk of Bitstamp's bitcoin reserves are in cold storage, and are "completely safe."

The site continued in its statement that it will "return to service."

Late on Monday, Bitstamp confirmed in an emailed statement to ZDNet that "less than 19,000 bitcoins" were stolen from the company's operational wallet.

Kodric said the bitcoins held with Bitstamp prior to the temporary suspension of the company's service are "completely safe and will be honored in full."

The market value of 19,000 bitcoins represents roughly $5 million. (We reported this figure earlier, details of which can be found below.) There has been no other comment as of yet from Bitstamp or Kodric.

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Bitstamp exchange hacked, $5M worth of bitcoin stolen

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