Bitcoin market crashes - drops below $0.01 per bitcoin due to hack

[ShareShiz]

Bitcoin market crashes - drops below $0.01 per bitcoin due to hack
By Steve Donaghy

Bitcoin, the digital currency that some people have called "dangerous", has just had a major setback today thanks to a significant data breach.

The main Bitcoin exchange, Mt. Gox, has suffered a major database breach which caused one account in particular to be completely compromised and have its funds stolen. The real implication of this was the effect it had on the Bitcoin market - this video shows the market in real time dropping to values below 1 cent in a matter of minutes as people frantically try to remove their funds. Due to the significance of this hack, the entire Bitcoin market is being reset. This is what Mt. Gox had to say -

"The bitcoin will be back to around 17.5$/BTC after we rollback all trades that have happened after the huge Bitcoin sale that happened on June 20th near 3:00am (JST).

One account with a lot of coins was compromised and whoever stole it (using a HK based IP to login) first sold all the coins in there, to buy those again just after, and then tried to withdraw the coins. The $1000/day withdraw limit was active for this account and the hacker could only get out with $1000 worth of coins.

Apart from this no account was compromised, and nothing was lost. Due to the large impact this had on the Bitcoin market, we will rollback every trade which happened since the big sale, and ensure this account is secure before opening access again.

UPDATE REGARDING LEAKED ACCOUNT INFORMATIONS

We will address this issue too and prevent logins from each users. Leaked information includes username, email and hashed password, which does not allow anyone to get to the actual password, should it be complex enough. If you used a simple password you will not be able to login on Mt.Gox until you change your password to something more secure. If you used the same password on different places, it is recommended to change it as soon as possible.

SERVICE RETURN

Service will not be back before June 20th 11:00am (JST, 02:00am GMT). This may be delayed depending on what is found during the investigation."

Additionally, an email is being sent out to all Mt. Gox users informing them of their passwords being reset -

"Our database has been compromised, including your email. We are working on a
quick resolution and to begin with, your password has been disabled as a
security measure (and you will need to reset it to login again on Mt.Gox).

If you were using the same password on Mt.Gox and other places (email, etc),
you should change this password as soon as possible."

This could well be a significant setback for the digital currency, which was previous seen as a secure, anonymous way to manage funds. Will people still trust the service after this? Only time will tell. Once the market comes back online in a few hours, don't be surprised if the currency drops in value once more. Once again, as with any hack of this nature, if you used the service then it is highly recommended that you dump whatever password you used and never use it again.

Source

ShareShiz Reviewed by ShareShiz on 19th Jun 2011. Bitcoin market crashes - drops below $0.01 per bitcoin due to hack Bitcoin market crashes - drops below $0.01 per bitcoin due to hack By Steve Donaghy Source Rating: 5

[Lifetalk]

The concept is great, but it has no real backing. Bitcoins will be dead in the near future.