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Saturday, December 21, 2013

How To Steal Bitcoins In Three Easy Steps

Over the past several months, Bitcoins have soared in popularity, acceptance and price. Naturally, it was only a matter of time before Bitcoin crime followed. As reported here previously, earlier this month, the largest heist in the history of Bitcoin was pulled off when the illegal drug bazaar Sheep Marketplace was plundered, either by hackers or insiders, and about $100 million worth of the currency was stolen from customers.

That was only the most recent heist however: the reality is that Bitcoin theft has been around for years. In June of 2011, a user named Allinvain was the victim of what is arguably the first recorded major Bitcoin theft. As The Verge reports, "Allinvain awoke to find that a hacker had stolen about half a million dollars’ worth of bitcoins. “I feel like killing myself now,” he wrote at the time."

Outright robbery is not the only crime plaguing the new digital currency, as more sophisticated thefts have emerged including ponzi schemes:

The supposedly high-return investment fund Bitcoin Savings & Trust turned out to be a pyramid scheme, its owner charged with ripping off investors for $4.5 million in bitcoins. MyBitcoin, a “wallet” service that stored bitcoins like a bank account, disappeared with about $1 million worth of users’ bitcoins. Several of the most trusted and well-known Bitcoin companies, including the Mt. Gox and the now-defunct Bitcoinica exchanges, have also suffered high-profile thefts.

Victims of credit card theft can cancel a card or reverse fraudulent transactions, but Bitcoin is attractive to thieves because its transactions are irreversible. “Bitcoin is like cash,” says Nicolas Christin, an assistant research professor at Carnegie Mellon University who has done extensive analysis of Bitcoin. “The only way to get it back is by tracking you down and basically beating you up with a lead pipe.”

So it appears that despite the advent of the digital, hard physical objects - like lead pipes - still rule supreme.

But going back to Bitcoin is, where the vast majority still aren't exactly clear what the fiat currency alternative actually is, it’s difficult to understand exactly how digital theft works. What are you stealing, exactly? And once you’ve got it, what do you do with it?
 The Verge provides the explanation on how to steal Bitcoins in three easy steps:

Finish reading--> ZH