12:52pm

Thu June 16, 2011
Planet Money

Some Just Stole $500,000 In Bitcoins

On Monday morning, a user called allinvain posted a message to a bitcoin forum. It began:

Hi everyone. I am totally devastated today. I just woke up to see a very large chunk of my bitcoin balance gone ...

Apparently, someone had hacked into the guy's computer and stolen 25,000 bitcoins. (Here's more on bitcoins.) At current exchange rates, that's about $500,000.

Bitcoin is decentralized — there's no company or nonprofit that runs it. But Ars Technica spoke with Gavin Andresen, a developer who has contributed to the bitcoin project.

Andresen said that it would be difficult to confirm the authenticity of the report. ... "[I]f someone wanted to claim they lost a bunch of bitcoins, they could claim that any transaction on the network belonged to them."

Still, the kind of attack described in the post is certainly possible. Andresen says he always emphasizes that Bitcoin is an experiment, and not (yet) for the faint of heart. "Unfortunately, this is an expensive test case for the guy who lost the Bitcoins," he said.

Andresen says that in the long term, bitcoin will figure out a technical fix that makes this kind of thing unlikely.

For now, bitcoin users worried about getting ripped off can store their bitcoins with wallet service companies. But, as Ars Technica points out, a key selling point of bitcoin is that it allows people to buy and sell stuff without going through intermediaries. So storing your bitcoins with a third party sort of defeats the point.

More Crime: Listen to the Tuesday Podcast, "Inside The Credit Card Black Market"

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.