Can Bitcoin come back from hacking losses, exchange meltdowns?

“How are you going to steal Bitcoins? Who are you going to rob? You’d have to steal them from the entire Bitcoin community because every transaction is verified by the entire community – it just can’t happen.”

Well, it did. Mt Gox, the world’s largest Bitcoin exchange, and also likely the world’s worst run Bitcoin exchange, lost 750,000 of the world’s supply of the currency when hackers allegedly slipped in and emptied the vault.

Flexcoin, an Alberta-based exchange, albeit a much smaller one, also found out that its vault was technically empty, when hackers allegedly exploited a gap in the time delay between processing a sale and the balance update process, allowing them to overdraw an account thousands of times before the system could stop the transactions.

These were not the first successful hacks of the Bitcoin system, or even the first hacks of Mt Gox for that matter, but they were sufficiently huge as to bring down entire exchanges and leave Bitcoin investors high and dry.

Which has led to a bit of a public relations disaster for Bitcoin.

There’s plenty to like about a non-regulated, non-controlled system that allows people to make online payments with no fees attached. In the retail world, the 3% or so that a credit card company or Paypal charge to process a transaction is a fairly major piece of margin for the seller, who may only be making an 8% margin in the first place.

But security of ones funds is a necessity for the system to work. In order for Bitcoin to work, lots of people need to hold it, trade with it, and accept it. It’s a tall order for companies and individuals to trust a brand new currency at the best of times, but if I can’t be sure my money will still be there tomorrow, I’m going to be much less likely to trust the system with my hard-earned.

Read More: www.mining.com/web/can-bitcoin-come-back-from-hacking-losses-exchange-meltdowns/