News BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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The discussion highlights significant security issues surrounding Bitcoin exchanges, particularly focusing on the infamous Mt. Gox, which suffered a major theft leading to its bankruptcy. The exchange's management ignored critical warnings about its software's security flaws, resulting in millions lost and a tarnished reputation for Bitcoin. Other exchanges like Flexcoin and Canadian Bitcoins also reported substantial losses due to hacks and social engineering attacks. The conversation underscores the ongoing risks associated with Bitcoin transactions and the need for improved security measures in the cryptocurrency space. Overall, these incidents illustrate the vulnerabilities within the Bitcoin ecosystem that can lead to significant financial losses for users.
  • #61
nsaspook said:
Bitcoin has been a total failure as an actual currency. Today it's only a store of wealth or an investment vehicle to be gambled with on Wall Street.

How could you possibility run a standard business using bitcoin as a currency with these types of monthly price changes.
https://bitcointicker.co/stamp/btc/usd/3Mth/
I agree,
nsaspook said:
Bitcoin has been a total failure as an actual currency. Today it's only a store of wealth or an investment vehicle to be gambled with on Wall Street.

How could you possibility run a standard business using bitcoin as a currency with these types of monthly price changes.
https://bitcointicker.co/stamp/btc/usd/3Mth/
I agree, although you have to remember it’s still a work in progress. And even though it’s pretty crappy in my opinion there are a bunch of international business that run using bitcoin. A lot of it is from transferring money overseas as it’s cheaper and quicker.
 
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  • #63
theb2 said:
Basically become new banks, to me this is irrelevant. What’s more relevant is the non inflationary world currency aspect.
If you look at the American dollar it’s only worth I think 2% of its initial worth. The ability to store your value into a currency that won’t depreciate is pretty revolutionary. Gold2.0
I'm not sure I want to go down this road, but I've never heard anyone suggest before that Bitcoin could be non-inflationary. Do you have a basis for believing that it could be? And why that matters/would be a positive thing?
 
  • #64
russ_watters said:
I'm not sure I want to go down this road, but I've never heard anyone suggest before that Bitcoin could be non-inflationary. Do you have a basis for believing that it could be? And why that matters/would be a positive thing?
In the white paper of bitcoin it says the currency has a set number of coins. It’s a cap, it’s going to take about another ten years to mine the rest of them. But it’s a fixed set of coins. No more will be printed and in that since it’s like gold. Although unlike gold we won’t be finding anymore bitcoin.
 
  • #65
Only 20 percent of total bitcoins remain to be mined so the number current in existence today should give us a good idea of how the system will work 10 years from now. People invest in Bitcoin because they think it will greatly increase in value over a regular currency. It wouldn't be wise to buy one pizza with Bitcoins today, when you can buy 10 pizzas next month. Who will make/pay a house loan using bitcoin today if you expect the value of one bitcoin to be $1,000,000 in 2028 instead of $9,000 today because of speculation.
 
  • #66
nsaspook said:
Only 20 percent of total bitcoins remain to be mined so the number current in existence today should give us a good idea of how the system will work 10 years from now. People invest in Bitcoin because they think it will greatly increase in value over a regular currency. It wouldn't be wise to buy one pizza with Bitcoins today, when you can buy 10 pizzas next month. Who will make/pay a house loan using bitcoin today if you expect the value of one bitcoin to be $1,000,000 in 2028 instead of $9,000 today because of speculation.
The number of bitcoins that are rewarded every mine is halved every 200000 blocks. Today days you only get about 12 btc when you are successfully at mining.

I mean you could buy pizza with bitcoin if your short bitcoin, as in you think bitcoin is overvalued.
 
  • #67
The need to even think about shorting bitcoin for a possible purchase is exactly what's wrong with it.
 
  • #68
nsaspook said:
The need to even think about shorting bitcoin for a possible purchase is exactly what's wrong with it.
Lol you must not like any form of currency
 
  • #69
theb2 said:
Lol you must not like any form of currency

I have plenty of investments but I don't keep money stuffed in a mattress hoping it will increase in value when I retire.
 
  • #70
nsaspook said:
I have plenty of investments but I don't keep money stuffed in a mattress hoping it will increase in value when I retire.
My point was you can short any currency
 
  • #71
theb2 said:
My point was you can short any currency

Sure and I can gamble in Vegas too. When these guys question bitcoin transactions you know you're in trouble.

http://allafrica.com/stories/201803010018.html
The Central Bank of Nigeria (CBN) has again cautioned Nigerians to be wary of investments in crypto currency as they are virtual currencies that are not legal tender in Nigeria.
nigerian-prince-now-twitter-hes-tokens-01.jpg
 

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  • #72
Borg said:
While it would be clear which transaction inserted it into the ledger, a person would still be guilty of distributing it.

That seems to sort of be the point. This appears to be a way to deliver illegal data in a way that the recipient has plausible deniability.
 
  • #73
russ_watters said:
I've never heard anyone suggest before that Bitcoin could be non-inflationary.

The argument as presented in #54 was shown incorrect in #57. The new argument (#54+#58) is apparently that Bitcoin can't depreciate, but it's value can go down. I don't know how to argue with that.

The fixed money supply of Bitcoin, or gold, or the giant stones of Yap are deflationary. As economies grow, if the money supply remains fixed, the value of each unit of money has to grow as well - i.e. the price of goods denominated in that currency must fall.
 
  • #74
Vanadium 50 said:
That seems to sort of be the point. This appears to be a way to deliver illegal data in a way that the recipient has plausible deniability.
Which is even worse than I was thinking. I guess that they will have to change their name to BitPorn.
 
  • #75
256bits said:
The thing I find weird about all these electronic money systems such as Bitcoin and others start ups who want to make a buck, is that while hyperbolizing it as the way of the future cashless society, the value is still referenced to the old clunky central banking system.

The old central banking system uses mostly electronic money. However, its electronic money is created by a complex process which includes decisions by committees about interest rates and decisions by individual loan officers about specific business ventures. Perhaps the inertia in this complex process accounts for the superior stability of traditional electronic money.

Superficially, the electronic currency of central banks seems less vulnerable to electronic theft than cryptocurrencies. If this is true, why?

Are traditional banks more skilled at computer security than cryptocurrency banks? Is it harder to transfer traditional electronic assets anonymously? Are the records of who owns traditional electronic assets more robust? - e.g. multiple independent copies - the banks computer records, its printed records, the depositors records.
 
  • #76
Student loans aren’t just for buying textbooks, No. 2 pencils, and apples for bribing teachers anymore. According to a recent survey, as many as one in five college kids may be using their student loans to cash in on the cryptocurrency craze.
...
The Student Loan Report surveyed 1,000 current college students with student loan debt about whether they were asked whether they used their student loan money to invest in cryptocurrencies like Bitcoin and found that 21.2% of them have Sallie Mae to thank for their cryptocurrency investment.
https://www.fastcompany.com/40549479/students-are-using-their-loan-money-to-buy-cryptocurrency-study
 
  • #77
Stephen Tashi said:
the electronic currency of central banks seems less vulnerable to electronic theft than cryptocurrencies. If this is true, why?

Regulation, perhaps?
 
  • #78
Vanadium 50 said:
Regulation, perhaps?

That's what I really don't understand about the attraction of Bitcoin other than being a get rich scheme in countries with a stable national currency. There already is digital currency and most of us use it everyday. A dollar in an electronic bank account is worth the same as a dollar bill and that electronic balance is backed by government deposit insurance up to a limit of at least $250,000 in the US. Bitcoin is unlikely to ever have a major role in the economy beyond the minor role of being a vehicle for money laundering, tax evasion and the like.
 
  • #79
Stephen Tashi said:
The old central banking system uses mostly electronic money. However, its electronic money is created by a complex process which includes decisions by committees about interest rates and decisions by individual loan officers about specific business ventures. Perhaps the inertia in this complex process accounts for the superior stability of traditional electronic money.
Well, the main thing is that the money of the US is backed by the faith and credit of the US government. So the stability of the money comes from the stability of the US economy. Cryptocurrency is backed by the fickle whims of its userbase and fickle whims are unstable.
Superficially, the electronic currency of central banks seems less vulnerable to electronic theft than cryptocurrencies. If this is true, why?

Are traditional banks more skilled at computer security than cryptocurrency banks?
Yes. Because any criminal/idiot can set up a cryptocurrency bank. And many do.
Is it harder to transfer traditional electronic assets anonymously? Are the records of who owns traditional electronic assets more robust?
Yes. This is why one of cryptocurrency's main strengths is also a big weakness.
 
  • #80
Stephen Tashi said:
Perhaps the inertia in this complex process accounts for the superior stability of traditional electronic money.
The explanation may be simpler: much deeper and more liquid markets. There are tens of trillions of dollars and euros in the world; it would take an enormous number of people selling dollars for euros in very large amounts to move the dollar/euro exchange rate by even a few percentage points. The bitcoin float is much smaller, so even a small change in demand can lead to huge price swings.
 
  • #81
https://www.cnbc.com/2018/01/30/cryptocurrency-and-taxes-what-you-need-to-know.html
Bitcoin had its coming-out party in 2017. With all the excitement and opportunities around cryptcurrency, it might be easy to forget about crypto taxation. Almost every bitcoin or other "altcoin" transaction — mining, spending, trading, exchanging, air drops, etc. — will likely be a taxable event for U.S. tax purposes.
A Reddit user who was "surprised" to learn he owed the IRS roughly $50,000 from his crypto-trading profits - money that he had not set aside when he cashed out his bitcoins at the height of the boom - complained in a viral post that crypto trading "ruined his life."

The alleged trader, who uses the screenname Thoway, explained that he bought eight bitcoins for $7,200 in January 2017 then cashed them out in December for about $120,000. Here's the catch: his altcoin investments quickly sunk, eating away most of his bitcoin profits. But unbeknownst to him, by selling his bitcoin, Thoway had inadvertently triggered a "taxable event".
https://www.zerohedge.com/news/2018...-irs-50k-i-dont-have-because-i-traded-cryptos

He "ruined his life", not Bitcoin.
 
  • #82
nsaspook said:
He "ruined his life", not Bitcoin.
By investing in cryptocurrency!
 
  • #83
I don't even understand why "this ruined his life".

He bought 8 BTC at $7200 each, then sold them at $15000 each. OK, he made $62,400, so if that were the end of the story, he owes around $15,600 in taxes.

He then bought $120,000 in another cryptocurrency, which for the purpose of this exercise, let's assume lost half its value. So if he were to sell the new cryptocurrency, he would have $60,000 in capital losses to offset the capital gains, so he would owe taxes on $2400, or about $600. He would also have $60,000 in cash from the sale. So he started with $57,600 and ended up a year later with $59,400 after taxes: an after-tax yield of 3.1%.
 
  • #84
Vanadium 50 said:
I don't even understand why "this ruined his life"...
Obviously you only pay taxes on profits, so in order to pay taxes you have to have profited. His reaction to his net good fortune is called "whining".
 
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  • #86
Poor guy - needed to create an offsetting capital loss in same tax year ? Shoulda saved that windfall for a rainy day like April 15th..
 
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  • #87
russ_watters said:
Obviously you only pay taxes on profits, so in order to pay taxes you have to have profited. His reaction to his net good fortune is called "whining".

I think you're right. His problem is that he made some money, didn't want to pay taxes on it, and still doesn't. The only real connection to Bitcoin is that he probably figured he could get away with it because, well, because Bitcoin.
 
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  • #88
I looked into this a little more. Mr. Thoway made an even bigger profit: the BTC he bought were at $900, or $7200 total. When he made his profit, he took the money he should have used to pay taxes on it to invest in other cryptocurrencies, and lost the money.

This is a sad story, but it's entirely Mr. Thoway's fault. Had he paid a CPA or read the tax code himself, he would have known to sell the falling cryptocurrencies in 2017 so he could offset the capital gains. Furthermore, there's really no Bitcoin aspect to this, other than that happened to be where he made his money. The same story could be said had it been real estate, or fine art, or frozen concentrated orange juice futures.
 
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  • #89
https://www.technologyreview.com/s/...r-sleuths-who-track-cryptocurrency-criminals/
Robinson won’t name his clients, but a quick search on USAspending.gov reveals that they include the US Drug Enforcement Administration, the Internal Revenue Service, the FBI, and Immigration and Customs. Chainalysis works with those and more, including financial regulators like the SEC. Chainalysis also says that Europol and more than half the police forces in Europe are using its software.

The US Treasury’s interest in the blockchain reflects the fact that crypto-crime isn’t limited to coin heists and black markets. It’s also about fraud and tax evasion. “This is going to be an interesting tax year,” says Jeffrey Robinson. “It’s the first time in the US where they’re cracking down on Bitcoin exchanges for tax purposes.”
 
  • #90
https://www.bloomberg.com/news/arti...g-vix-alarm-says-tether-used-to-boost-bitcoin
Tether, one of the most-traded cryptocurrencies, shows a pattern of being spent on Bitcoin at pivotal moments, helping to drive the world’s first digital asset to a record price in December, according to research by a University of Texas professor known for flagging suspicious activity in the VIX benchmark.
“Tether seems to be used both to stabilize and manipulate Bitcoin prices,” finance professor John Griffin and co-author Amin Shams wrote in a paper released Wednesday. Outside spokesmen for Tether and related cryptoexchange Bitfinex didn’t immediately respond to messages seeking comment.

http://www.businessinsider.com/bitc...r-alleges-bitfinex-tether-manipulation-2018-6
Bitfinex CEO JL van der Velde said in an emailed statement: "Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of Bitcoin or any other coin/token on Bitfinex."