recommended reading

A BitCoin heist and the upside of government regulation

Flickr user zcopley

Last night's Bitcoin heist of $250,000 (or so) worth of the virtual currency shows that this world isn't quite ready for an online alternative to dollar bills because the promises of deregulation aren't worth the safety hazards. What happened at BitFloor was the equivalent of an online bank robbery, but without the FDIC protection that regular banks with regular money have. Specifically, BitFloor had 24,000 BTC -- an equivalent of $250,000 at the time, according to this site -- taken from a compromised server, as BitFloor founder Roman Shtylman abashedly admits on this Bitcoin forum. The incident has forced him to suspend the site. But more concerning than all of that is that Shtylman might not have the funds to pay back those stolen coins. "As a last resort, I will be forced to fully shut BitFloor down and initiate account repayment using current available funds," Shtylman wrote, saying he would consider looking to investor funds to get all the money back if those "current available funds" didn't cover it -- something that would never happen to a customer if this same thing happened at a regular regulated real-world bank.

Bitcoin's biggest draw is that it operates outside of government institutions, completely deregulated and self-monitored, but that autonomy also removes some of the safety nets the government provides. Let's compare this to a standard bank robbery, which still happen frequently enough to show up on Google News. (For a comparison with more parity, online thievery has happened, too. Just not as often as the IRL stick-ups.) In either case, the bank is held responsible for the lost funds, but as these FDIC regulations show, the customer is not.

Read more at The Atlantic Wire

Threatwatch Alert

Stolen laptop

3.7M Hong Kong Voters' Personal Data Stolen

See threatwatch report


Close [ x ] More from Nextgov

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • It’s Time for the Federal Government to Embrace Wireless and Mobility

    The United States has turned a corner on the adoption of mobile phones, tablets and other smart devices, outpacing traditional desktop and laptop sales by a wide margin. This issue brief discusses the state of wireless and mobility in federal government and outlines why now is the time to embrace these technologies in government.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • A New Security Architecture for Federal Networks

    Federal government networks are under constant attack, and the number of those attacks is increasing. This issue brief discusses today's threats and a new model for the future.

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Software-Defined Networking

    So many demands are being placed on federal information technology networks, which must handle vast amounts of data, accommodate voice and video, and cope with a multitude of highly connected devices while keeping government information secure from cyber threats. This issue brief discusses the state of SDN in the federal government and the path forward.

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.


When you download a report, your information may be shared with the underwriters of that document.