A thief may leave traces that are undetectable now but could be uncovered in the future, inspiring a retroactive investigation. However, Bitcoin forensics is getting better and better as programmers figure out new ways to extract information from the blockchain. This tracking technique isn’t very helpful for the time being, since the thief’s identity is still unknown. You, the thief, can now spend those bitcoins whenever you want, as long as the owner doesn’t move them first. Just copy the database of private keys and you can gain control of the bitcoins at all those addresses. It seems these attacks are often carried out by insiders who don’t have to do much hacking at all. The most lucrative attacks are carried out on online services that store the private keys for a large number of users, as Sheep Marketplace did. For the average user there are no good options right now to securely store cryptocurrencies.” “Unfortunately, this is not an option for most people. “I recommend creating physical paper wallets using an Arch Linux boot which has never been online,” says Marak Squires, an early Bitcoin adopter who is developing a secure Bitcoin bank. You may choose to store your key, or keys if you have multiple addresses, in a number of places including a paper printout, a metal coin, a hard drive, an online service, or a tattoo on your body.Īll methods can be protected with various levels of security, but all methods are vulnerable to theft since the robbery simply depends on gaining access to the string. The private key looks like a long string of numbers and letters. If you own Bitcoin, what you actually own is the private cryptographic key to unlock a specific address. The virtual currency is nothing more than a public ledger system, called the blockchain, that keeps track of an ever-expanding list of addresses, and how many units of bitcoin are at those addresses. What are you stealing, exactly? And once you’ve got it, what do you do with it? “The only way to get it back is by tracking you down and basically beating you up with a lead pipe.”īut like all things Bitcoin, it’s difficult to understand exactly how digital theft works. “Bitcoin is like cash,” says Nicolas Christin, an assistant research professor at Carnegie Mellon University who has done extensive analysis of Bitcoin. Victims of credit card theft can cancel a card or reverse fraudulent transactions, but Bitcoin is attractive to thieves because its transactions are irreversible. Gox and the now-defunct Bitcoinica exchanges, have also suffered high-profile thefts.
Several of the most trusted and well-known Bitcoin companies, including the Mt. MyBitcoin, a “wallet” service that stored bitcoins like a bank account, disappeared with about $1 million worth of users’ bitcoins. 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. There have been dozens of Bitcoin thefts since then. “I feel like killing myself now,” he wrote at the time. Allinvain awoke to find that a hacker had stolen about half a million dollars’ worth of bitcoins. In June of 2011, a user named Allinvain was the victim of what is arguably the first recorded major Bitcoin theft. 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.īitcoin heists are actually not uncommon. Earlier this month, someone pulled off the largest heist in the history of Bitcoin, the virtual currency that approximates cash on the internet.