Bitcoin bank closes after high-tech heist

Mar 4 2014, 7:28pm CST | by

SAN FRANCISCO (AP) — A bank specializing in bitcoins says it has closed after computer hackers robbed its digital currency.

The closure of the Flexcoin bank comes just a week after the collapse of Mt. Gox, a major bitcoin exchange.

Mt. Gox also linked its demise to an electronic heist.

The twin failures of Mt. Gox and Flexcoin will likely raise more doubts about bitcoin's ability to establish itself as an alternative currency.

Hackers stole 896 bitcoins from Flexcoin's online vault, or "hot wallet," according to a notice on Flexcoin's website Tuesday. That translates into a loss of about $600,000, based on bitcoin's current trading value.

Unlike banks dealing in government-backed currencies, Flexcoin's losses aren't covered by deposit insurance. The Alberta, Canada, bank says it can't recover from the setback.

Bitcoins that Flexcoin kept offline, or in "cold storage," remain secure, according to the bank. Although Flexcoin didn't provide details, bitcoins stored this way are often documented on paper certificates or on a hard drive that's not connected to the Internet.

The Mt. Gox collapse represents a far bigger blow to bitcoin's credibility. That downfall wiped about 750,000 bitcoins, or about 6 percent of the currency's total circulation. Mt. Gox, which is based in Japan, has filed for bankruptcy protections while it sifts through its financial mess.

But the timing of Flexcoin's collapse could make it more difficult to foster trust in bitcoin.

Supporters are touting the five-year-old currency as a way to lower transaction fees by cutting out banks and payment processors that collect billions of dollars annually by serving as financial middlemen. Skeptics, including government leaders around the world, deride bitcoins as a currency suitable only for speculators.

Source: AP Business

 
 
 

<a href="/latest_stories/all/all/31" rel="author">Associated Press</a>
The Associated Press (AP) is one of the largest and most trusted sources of independent newsgathering, supplying a steady stream of news to its members, international subscribers and commercial customers.

 

blog comments powered by Disqus

Latest stories

Facebook M is a Hybrid Personal Digital Assistant inside Messenger
Facebook M is a Hybrid Personal Digital Assistant inside Messenger
M relies on artificial intelligence and human assistance.
 
 
iPhone Users get 30 Day Free Samsung Galaxy Trial
iPhone Users get 30 Day Free Samsung Galaxy Trial
Samsung tries everything to get new customers. Now iPhone user can test a new Galaxy smartphone 30 days for free.
 
 
Microsoft released 3rd Windows 10 Updates with KB 3081438
Microsoft released 3rd Windows 10 Updates with KB 3081438
Microsoft's release schedule for Windows 10 updates is fast paced. The company released three updates within 2 weeks.
 
 
New Skinny Jeans for Women Charges and Hides iPhone
New Skinny Jeans for Women Charges and Hides iPhone
Joe's Jeans offers a Jeans for female mobile warriors. Meet the Joe's Jeans #Hello.