Hacked BitCoin Exchange Sued By Customers 361
judgecorp writes "Bitcoinica, an exchange for the BitCoin virtual currency, is being sued by former customers, after it was hacked. Thieves stole around $180,000 worth of BitCoins in two attacks. The site is now closed, and customers are suing to get their money back."
FDIC insured (Score:2, Insightful)
why would anyone willing to put their life saving in something that is not even FDIC insured?
Good luck with that! (Score:5, Insightful)
I wish them the best of luck, they will need it!
That is a problem a virtual currency not official backed by any government, bank, or mega-corp, and is not legally tied to any hard valued currency, fungible commodity, or hard product.
Maybe Bitcoinica will offer a store credit good for their own non-transferable virtual currency?
Scooped (Score:2, Insightful)
By every other tech site on the web days ago.
Re:It's the server that's not (Score:5, Insightful)
You know what the biggest current problem with bitcoins is? Scarcity. The current model has them scaling back logarithmically as the number of transactions increases. What this means is that every generation it becomes that much harder to mine bitcoins and thus that much more lucrative to steal them instead. Combine this with the new FPGA mining rigs and the lowered electricity cost to generate them as a result and what you have is a digital representation of modern financial society.
The lower-class, with ineffecient rigs unable to produce more bitcoins than it's costing them.
The middle-class, with rigs just good enough to break even.
The upper-class, with rigs that provide a net benefit in bitcoin mining compared to cost, thanks to efficiency and scale.
The black market-class, hacking the latter three, disadvantaging the lower two, and having the uppers pass the buck back down.
In that light, it makes an excellent sociology and economy experiment given how well it reflects the various groups involved in modern global society.
bet (Score:4, Insightful)
Who wants to bet that the SEC will stomp in and claim that bitcoins are an illegal security?
Re:Good luck with that! (Score:3, Insightful)
Its the value of the currency you are comparing gold to that is fluctuating wildly. Go compare the price of oil in gold, the price of other commodities in gold, etc. It is a stable store of value when compared to actual other valuable things.
Re:Good luck with that! (Score:3, Insightful)
Gold has no more intrinsic value than paper money. In the event of a total social and economic collapse, no one is going to trade you food, medicine, tools, land, weapons, or services for shiny metal.
If we avoid total meltdown over the next few years, the value of gold will fall just like it did after its peak in the early 80s.
Re:Good luck with that! (Score:4, Insightful)
Gold doesn't have any more intrinsic value than any other form of currency - from US Treasuries to Bitcoins. Just like everything else, it has value only because we think it does. Storing gold for an apocalypse of some sort doesn't make much sense - gold only protects you from a very specific kind of economic collapse (massive inflation). And even that is only worthwhile if enough of a modern economy remains in existence for there to be people willing to create things that do have intrinsic value (food, medicine, shelter, assorted luxuries, etc) in exchange for bits of shiny rocks that may or may not have any value tomorrow.
I personally think that stockpiling stuff out of paranoia of some sort of collapse is dumb, but if you're going to do it, at least stockpile stuff that will be useful in said collapse - non-perishable food, manufactured goods that are of direct value in a collapse situation, supplies and knowledge to help rebuild parts of society, etc.
Re:FDIC insured (Score:2, Insightful)
S&Ls were FDIC insured (actually FSLIC insured). And while the FDIC is a government corporation, it doesn't spend tax revenue, its funds come from premiums paid by member banks.
Bailouts happen when so many banks bust at once, it threatens to overload the FDIC's capacity to either refund people's deposits (which rarely needs to be done), or promptly fold the banks and sell their depositor's accounts to a receiver (much more common).
Re:Good luck with that! (Score:5, Insightful)
but not as many as the paper dollar which has lost 95% of its value since 1913.
Which is completely irrelevant. Dollars today aren't the same as dollars 99 years ago, and no one would expect them to be. This is why governments have things like social safety nets that they index to inflation (government pensions, health care etc.).
Remember, if you have debt, any debt, the devaluing currency has real benefits. And by the way government debts are your debts. So are your dollar denominated direct assets (cash, bank savings, but not stocks or mutual funds) worth *more* than the debt you owe through your government.
which they are steadily eroding in value
which as I say, is reducing the relative value of your debts too.
The way to preserve your savings is to own things that can draw income. Owning *some* gold isn't a bad plan, but just owning gold is stupid because if you didn't know, the US doesn't control world gold production, that would be china australia and south africa (and south africa and australia are particularly problematic because of their per capita production being able to wreck havoc on bigger countries).
Gold has all of the problems real money does, and a few others, which is why no one sane still uses it.
The value has remained almost constant. Suit == 1/3 ounce of gold.
Precisely as I showed, the buying power of one ounce of gold has been all over the place, from 1920-30 it tanked quite a lot, now it's worth almost 4x what it was 100 years ago, but 30 years ago you could have said the same thing, and 3 years later it dropped 3/4 of its value. That's what's wrong with it.
Oh and the price of a suit has changed over time too as labour has changed.
Re:slashdot is for discussion (Score:2, Insightful)