The world’s largest dollar-to-Bitcoin exchange has been hit with a massive hack, which has reportedly seen 119,756 coins — worth around $72 million at the time — stolen from customer wallets. It’s one of the biggest Bitcoin security breaches of all time, and a major blow to the currency’s bid to be taken seriously.
The coins were stolen from Bitfinex, a Hong Kong-based exchange that was well-regarded in the community. Executives of the company have confirmed the breach and that they’re working with police, but have not yet decided what will happen to customers’ money that was stolen.
The hack has sent Bbititcoin prices into freefall. One Bitcoin was trading at around $600 when news of the hack hit, and prices slumped to a low of $518 before recovering to $560, where it’s sitting now.
Security and volatility have long been two of the biggest drawbacks to Bitcoin. There’s no need for a central ‘bank’ with Bitcoin: you can keep the wallet containing your currency completely offline, without needing to have an account anywhere. But if you want to change your Bitcoin into fiat currency, you generally go through an exchange, and hundreds of thousands of people just keep coins in their exchange’s wallet out of convenience.
Of course, that makes the exchanges a rich target for hackers, and customers who have their coins stolen have little recourse. Regular bricks-and-mortar banks are insured by the government for heists, so short of the federal government collapsing, your checking account is safe. The same can’t be said for Bitcoin any more.
There’s a chance that the hackers will be caught, and the money recovered. Contrary to popular belief, Bitcoin is not untraceable or anonymous, and there’s a chance that the hackers can be tracked down. Even if they are, it’s a sad day for Bitcoin.