An IT professional had a laptop with 7,500 Bitcoins stored on it. Bitcoin is a virtual currency, whose value fluctuates widely. Back in 2009, when he mined the Bitcoins, one Bitcoin was worth less than a penny. Some years later, the laptop was replaced, and stripped for parts, and the hard drive sat in a drawer somewhere. Sometime after that, the hard drive was thrown out. How much are those 7,500 Bitcoins worth today? Over $1,100 per Bitcoin (as of this writing). That’s over $8.25 million dollars. The story from the Naked Security blog at SOPHOS. (They assume $1000/Bitcoin.)
But he did not backup his data. So when he threw out the hard drive, he threw out the digital record of those Bitcoins. As a virtual currency, each Bitcoin is essentially just a series of zeros and ones stored on a computer. If you have those binary digits in your possession, you have the money. And if you lose the zeros and ones, then you lose the money. Throwing away a hard drive with Bitcoins on it is like throwing away cash. Because he had no backups.
Lesson one: backup all your data.
In other news, Bitcoin thefts, by way of hacking, have been on the rise. If a hacker can obtain the binary digits for a set of Bitcoins, then he can turn those Bitcoins into U.S. currency. The story at Information Week. Hacking used to be done mainly to steal information, or to cause damage to computers. Now it’s being done to steal virtual currency.
Lesson two: don’t use Bitcoins.
You might have heard of some investors who make money (illegally) by trying to manipulate the value of a stock on the stock market. There’s a new scam involving Bitcoin exchanges (where Bitcoins are traded for real money). The hackers use a denial-of-service attack on a Bitcoin exchange, driving the price down due to lack of availability of the exchange. Then they can buy the virtual currency at an artificially low price, and watch the price recover after then stop attacking the exchange. Bitcoin investors get cheated and the hackers get rich.
Lesson three: seriously, don’t use Bitcoins