Bitcoin, Used to Purchase Illegal Things, Has Been Illegally Stolen

Bitcoin, the world’s first decentralized, open source electronic currency, loved by nerds and ne’er-do-wells alike for its novel (and convenient) way of facilitating the purchasing of goods online has taken the plunge from virtual reality to, er, reality reality. Which is to say: what’s a currency if it isn’t getting robbed off someone somewhere?
The first (and largest) ever bitcoin theft allegedly took place on Sunday, according to a bitcoin.org forum post by a user named “allinvain”:

I feel like killing myself now. This get me so f’ing pissed off. If only the wallet file was encrypted on the HD. I do feel like this is my fault somehow for now moving that money to a separate non windows computer. I backed up my wallet.dat file religiously and encrypted it but that does not do me much good when someone or some trojan or something has direct access to my computer somehow.


The transaction sent belongs rightfully to this address: 1J18yk7D353z3gRVcdbS7PV5Q8h5w6oWWG


Block explorer is down so I cannot even see where the funds went.

Allinvain claims that he lost 25,000 BTC, which at the current exchange rate (in the last week it’s been fluctuating between $20 and $30 USD per bitcoin), is over $600,000.

Pictured above: Amazon.com circa 1998.

According to his profile on the forum, allinvain has been a bitcoin user in some capacity since 2010. Which would probably explain the abnormally large amount of coins he was sitting on.
There are two interesting things about the way bitcoins are traded, though. Things that don’t necessarily help allinvain identify the culprit, but do prove his bitcoins were—if not stolen— removed from his computer. Bitcoins are mostly traded anonymously, but they’re also traded publicly. As members of the bitcoin.org’s forum became involved in tracking down allinvain’s coins, they could watch on Block Explorer as the funds transferred from one anonymous account to another.
The anonymous nature of the bitcoin market makes it very hard to really get a good handle on what’s going on though, so not only is it hard to figure out who robs you, it’s even harder to prove that someone has even been robbed. By the fifth page of allinvain’s forum post many users were calling fraud.
“Yeah, I know he has over 800 posts. But “Allinvain”? The whole story reads like a very hip joke, or a deep cover sleeper troll. “Allinvain” -— get it," Bitcoin.org forum member “indemnified” posted.
Suspicion on the bitcoin market is always fairly high.
Another user, under the name spyjai posted My MTGOX account is compromised on Reddit this morning. And luckily, thanks to the wonders of Reddit, a higher-up at mtGOX—the major bitcoin exchange who actively posts in /r/bitcoin, seems to be tracking down the funds for spyjai.

Oh God, not Hackers, anything but Hackers.

The security risks for bitcoins aren’t tremendous, but like everything on your computer, they’re easily stolen if a hacker can get access to your hard drive. There’s a chance that news of the theft will drop the price of bitcoins, which recently recovered from a drop last weekend. One Daily Tech writer called it a “Digital Black Friday,” which is kind of an insane given the actual market for these things. But apparently other sites agree with this hyperbolic fundamental misunderstanding too. The drop was far more likely the decline linked to a weekend outage of the bitcoin-based black market, The Silkroad.
Either that, or the community over at Something Awful succeeded in trolling the market by creating a doubt storm on forums where they self-congratulate and deny responsibility.
The lesson here: Want a stable economy? Don’t want to deal with uncertainty, possible theft, or a market that ebbs and flows based on the whimsy of anonymous trolls? Then maybe hold off on doing large-scale bitcoin trading just yet. Plus, if you’re not buying drugs, weapons, soliciting teenagers for Skype sex. or paying Polish teenagers to knock websites out for you, there’s very little reason you’d need that much to begin with.