What's in Your Bitcoin Wallet? Millions Lost to Hacks, Fraud
NEW YORK (MainStreet) What's in your wallet? Perhaps nothing. That's what happens when you don't have FDIC insurance: you're just plain out of luck. A recent spate of hacks is plaguing bitcoin exchanges and draining the digital wallets of users of the crypto currency. Bitcash.cz, a bitcoin exchange in the Czech Republic, is the latest to report a breach, saying "unknown perpetrators" attacked the service Monday.
"The nightmare became reality," a notice on the website says. The value of the theft and the number of users impacted has not yet been reported.
Meanwhile, users of another bitcoin wallet, Inputs.io, suffered two hacks at the end of October that drained a total of 4,100 bitcoins from the service. Prevailing exchange rates for bitcoins at the time of the attacks would bring the total of that breach to well over $1 million.
The Internet-based, decentralized currency has recently traded to record highs nearing $400, fueled in part by high demand in China. Bitcoin wallets hold the value of the digital currency for access by consumers.
"Two hacks totaling about 4,100 BTC have left Inputs.io unable to pay all user balances," a notice on the exchange's website said. "The attacker compromised the hosting account through compromising email accounts (some very old, and without phone numbers attached, so it was easy to reset). The attacker was able to bypass [two-factor authentication] due to a flaw on the server host side."
On its website, Inputs.io had claimed to be "the most secure wallet ever created."
"I know this doesn't mean much, but I'm sorry, and saying that I'm very sad that this happened is an understatement," the statement continued. "I don't recommend storing any bitcoins accessible on computers connected to the Internet."
Bitcoin holders should worry not only about exchange hacks, but the trustworthiness of the exchanges themselves. The Want China Times reports Chinese-based bitcoin trading platform GBL suddenly shut down October 26, bilking some 1,000 users of over $4 million.
--Written by Hal M. Bundrick for MainStreet