As somebody who has been closely watching NFC for years, I find this side of the Bitcoin business interesting.<p>People moan that NFC has been "just around the corner" for the best part of a decade, and some even think that it has missed its opportunity (it hasn't, btw), because it has taken so long to bring to market. This is largely because of the in-built security, and the demands it places on participants' business models.<p>These Bitcoin exchanges and other service providers, on the other hand, seem to have been put together with great haste. They seem to have little-to-no oversight, a high risk profile, untested systems, not much institutional experience -- and there's no safety net for customers.<p>It illustrates why the "old" financial services industry is so cautious when it comes to electronic money. "Move fast and break things" may work for all sorts of businesses, but it's not a good mantra if you're handling money.
Their ironic last tweet before shutting down: <a href="https://twitter.com/flexcoin/status/438355933777756160" rel="nofollow">https://twitter.com/flexcoin/status/438355933777756160</a>
Nice of them to link to their terms of service. The relevant section being:<p>"We have taken every precaution to defend your bitcoins from hackers and/or intruders. However, Flexcoin Inc is not responsible for insuring any bitcoins stored in the Flexcoin system. You are entering into this agreement with Flexcoin Inc. You agree to not hold Flexcoin Inc, or Flexcoin Inc's stakeholders, or Flexcoin Inc's shareholders liable for any lost bitcoins."
Bitcoin seems way too prone to being stolen or exploited for me to ever take it seriously. I dont have the same problems with exchanging real money, investing real money, and withdrawing real money.
This doesn't happen with regular cash because banks usually take this loss and pass it onto their customers as fees. The exchanges that have closed operate too unintelligently to be able to survive an attack. Almost 900 bitcoins in hot storage? That's almost 500,000 dollars being left in the open. It's like a bank keeping 500,000 dollars in a vault with no lock, no security, and no laws... With p2p coins, hot storage should be just enough for the day's operations and no more. Overdrew for the day? Make the customers wait, it's worth it for the safety.
One thing I don't get is... why is everyone storing their bitcoins in someone else's house? Why not store them yourself? To own bitcoins is to own a cryptographic private key. Why is everyone trusting someone else with the ownership of these keys?
What I find interesting is that BTC market does not care about Flexcoin shutting down - prices continue to soar to USD 700 after the MtGox induced drop to ~ USD 500.<p>For me this actually shows promise of real market stabillity in the long run. Image what would happen if a real bank failed in a normal country. Or image what would happen to USD if the largest world bank would fail (destroying 12% of worldwide supply of USD) and nobody would bail them out? Would the drop be worse than 10-20%?
I'm more and more convinced the only safe way to keep your bitcoins is on your own computer. I have 1 BTC, and it's currently hanging out in my hard drive, with a wallet backup on another hard drive. I suddenly feel much safer.
I was wondering when people would start to realise how easy a target all these sites that store BTC would be. I mean, I trust the banks with my money because they are legally liable for it. Some random website, where you can't audit the code and there's no real legal process for recovery of assets? Yeah that's a great system.<p>The whole point of state-backed currency is to provide stability and make it so there's money you can trust - not some wild west cross-your-fingers system. Yes, countries have failed (e.g. hyperinflation), but at least there are extremely powerful institutions in place who's remit is to prevent that at all cost.
If you have money to piss away then buy some Bitcoins. I'm waiting for an awesome inforgraphic on the amount on money stolen and the likelihood of your bitcoins being stolen.
So here is what I've learned in dealing with crypto: most of this stuff is NOT written by security experts, the level of code out there is not expertly developed. Lots of this stuff is written by patching together random stuff, or hastily built. This won't be the last robbery story we see for a while. If btc wants to be taken seriously they need to create security standards.
These are very young companies, working with a good that has huge price volatility, resulting in them holding vast amounts of wealth. Ignoring the social, political, and economic debates around bitcoin, these companies have enormous risk and are high profile targets, and have varying ability to protect themselves. All this leads to uncertainty.<p>So then why don't these Bitcoin companies embrace ridiculous amounts of information disclosure and transparency?<p>Don't tell me you "take every precaution." Detail what precautions you are taking. Name an external pentesting firm that tests your infrastructure quarterly. Post their findings a few months after you have address the issues. Open Source everything that you can. Offer bug bounties paid in BTC for security issues discovered. Discuss, in detail, your hot/cold wallet storage setup. Do offensive analysis to determine the most likely attack scenarios, and publish them, along with the layer defense you have put in place to mitigate the risk.
Why haven't the major bitcoin banks/exchanges banded together and made a set of standards, akin to PCI-DSS to define security standards and implementations for these services? You would think that everyone would do it after MtGox sank. This is starting to leave bad joke territory and I hope it doesn't happen to Coinbase.
Guardian has an article on this as well:
<a href="http://www.theguardian.com/technology/2014/mar/04/bitcoin-bank-flexcoin-closes-after-hack-attack" rel="nofollow">http://www.theguardian.com/technology/2014/mar/04/bitcoin-ba...</a>
Bitcoin is money. The vast knowledge of handling money is within the financial industry. The Bitcoin crowd do not trust the financial industry, they fight them man. The Bitcoin crowd pays to learn the hard way. News at 11.
And another one bites the dust (due to hacking.)
These bitcoin businesses are budding and then thudding far too often.<p>'We got hacked by ourselves, thank you for contributing to the magnitude of our initial private offering.'
What I don't understand is why can't the bitcoins can not be seized and returned. If the feds can seize bitcoins obtained illegally through drugs why can't they seize bitcoins obtained illegally through stealing?