mail & guardian account login - fuqua school of businesscharvey/media/2014/mg_march_7_2… ·...
TRANSCRIPT
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 1/10
To enjoy the full Mail & Guardian online experience: please upgrade your browser
Mail & Guardian Account Login
email: password: login
forgot password?
create a new account
Travel
JobsPropertyTenders
Dating
Login / Register
News
Opinion
Business
Arts & Culture
Education
Sci-TechMultimediaSpecial Reports
In The Paperzapiro
Partners
amaBhungane
M&G EventsM&G Women
News DayThought Leader
Voices of Africa
Business
Labour
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 2/10
EconomyMining
EnergyAfrica
Companies
Search Search
Business
$480m Bitcoin cyberheist makes history
07 Mar 2014 00:00 Guardian Reporter
Tweet 3
Share 2
Bitcoin's reputation as a viable currency has been dealt a blow, with its biggest exchange filing for bankruptcy in thewake of a digital robbery.
Angry investors have been seeking answers for what happened to their holdings of cash and
bitcoins on the unregulated Tokyo-based exchange. (AFP)
Bitcoin's faltering reputation as a viable currency has been dealt a severe blow, with its biggest exchange filing for
bankruptcy in the wake of an apparent $480-million digital robbery.
3Recommend
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 3/10
Tokyo-based MtGox blamed "a weakness in our system" for its collapse, which an expert said could go down in history
as one of the world's biggest heists, if it is confirmed that the platform was hacked.
The contrite chief executive of MtGox, Mark Karpeles, bowed deeply in apology at a news conference, as he pledged
to lodge a criminal complaint over the site's downfall.
Wearing a suit instead of his usual trademark T-shirt, the 28-year-old French entrepreneur added that bitcoin's
popularity would not be dented by the cyberheist.
"First of all, I'm very sorry," he said. "The bitcoin industry is healthy and it is growing. It will continue, and reducing the
impact is the most important point."
Angry investors have been seeking answers for what happened to their holdings of cash and bitcoins on the unregulatedTokyo-based exchange. MtGox, which was used overwhelmingly by foreigners, said it had lost 750 000 of its
users' bitcoins and 100 000 of its own. At the current bitcoin price of about $565, that would total some $480-million,
representing about 7% of the estimated global total of bitcoins.
Bitcoin users are able to buy goods anonymously in online marketplaces that use the virtual currency, and also avoid
sales taxes and currency controls. For instance, bitcoins proved popular in Cyprus last year when restrictions were
imposed on using the euro.
Unique solutionExchanges such as MtGox offer a way to convert official currencies such as dollars into bitcoins. Each virtual coin
represents a unique solution to a complex cryptographic problem, aimed at preventing duplication and forgery.
MtGox has 127 000 creditors, of whom 1 000 are Japanese, which means that, through the bankruptcy, traders have
lost, on average, the equivalent of $3 500 at current bitcoin prices, assuming no money is recovered.
Some investors interviewed after the MtGox collapse remained optimistic that the currency would survive. Roger Ver, a
major investor, said he did not know whether he would ever get any of his lost bitcoin back.
"But the important thing to realise is that MtGox is just one company using bitcoin. The bitcoin technology itself is still
absolutely amazing," he said.
"If one email service provider is having a problem, that doesn't mean people are going to stop using email. It’s the same
with bitcoin."
The "weakness in our system" referred to by Karpeles is thought to be an issue related to "transaction malleability", a
loophole in the bitcoin system that was exploited by malefactors to obtain free bitcoins from the site.
Increasing usage
"MtGox filing for bankruptcy is not the end of bitcoin but it is the beginning of the end of bitcoin in its current form," said
currency trader Alistair Cotton of Currencies Direct.
"Over the last year, we've seen ever-increasing usage and with it huge volatility in value and blows from banks and
regulators. These are growing pains as the currency evolves and the MtGox bankruptcy is part of that."
But one expert said the disappearance of MtGox's virtual assets could go down in history as the biggest heist of all time.
"If the theft is true," said Campbell Harvey, a professor at Duke University's Fuqua School of Business in North
Carolina, "it's the biggest bank heist in history" – apart from when Iraqi leader Saddam Hussein ordered his son Qusay
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 4/10
to withdraw $1-billion from Iraq's central bank in 2003.
Founded in 2009 by American software hacker Jed McCaleb, MtGox was originally a site for people to trade cards for
a game called Magic: The Gathering. MtGox is short for Magic: The Gathering Online Exchange. – © Guardian News& Media 2014
post a comment
email this article
print this article
login to clip
Your E-mail: Your Password: login
More Coverage
Bitcoin bank Flexicon closes after hacking theft
Indian entrepreneurs wary of Bitcoin
We recommend
From around the Web
Recommended by
Topics In This Section
Topics
bitcoins
Durban puts religious unity on
map
(News)
Banks bear brunt of gold-fix
blame
(News)
Westgate mall terrorists argued
over shooting children
(News)
The court of public opinion
(News)
Retirement is Changing -
Here's What You Need to Know
(Merrill Lynch: Wealth
Management)
Who makes more from sales at
the pump – industry or
government?
(ExxonMobil Perspectives Blog)
Best Places to Retire To
(Bring Your Challenges)
The easiest way to manage your
401(k): Don't
(PC Magazine)
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 5/10
Companies
Mt. Gox
Comments
1 Comment Mail & Guardian Login
Sort by Oldest Share
Join the discussion…
• Reply •
Jakes Bongani • 9 hours ago
How do you launder imaginary money?
1
Subscribe Add Disqus to your site
Favorite
Share ›
Merrill Edge® Tradingwww.merrilledge.com
$6.95 Flat Pricing. Unlimited Trades w/ No
Minimum - Start Today.
ART USB Dual Pre (2-ChUSB Pre / Interface)Free Gold/Silver Guide
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 6/10
Connect
Get the M&G in your inbox daily
Email address Subscribe
More from the M&G
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 7/10
'Rescuing' gay people in Africa is no solution
The recent passing of the anti-gay law in Uganda and the SA government’s mealy-mouthed
reaction to it demand attention, writes Melanie Judge.
Editorial: Justice for witnesses too
The Oscar Pistorius trial has highlighted the plight of witnesses in court cases, attacks on whom
compromise our justice system.
Broke MDC ditched by donors
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 8/10
Insiders say the troubled party is being starved of funds to force a change in its leadership.
Most Popular This Week
Most Read Most Commented
Gold fix study indicates a decade of manipulationBanks bear brunt of gold-fix blameTalks to end Amcu miners' strikecollapseNorthern Uganda's return to peace spurs foreign investment
Gold fix study indicates a decade of manipulationBanks bear brunt of gold-fix blameRecord-high diesel price offers
traders new hedging opportunitiesPIC demands Ecobank chief resign
Client Media Releases
Press Offices
SARS gears up for collection of foreign VAT
Deloitte
The Market Theatre presents Opera Nights
The Market TheatreJuniper Argon Secure unveiled
Security Summit 2014
Integr8 listed among top MSPs
Integr8
Open letter to Vodacom and MTN
Telkom Business
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 9/10
Read this week's stories online
Subscribe Online:
Paper Edition
iPad Edition
Kindle Edition
Online Edition
Advertisements
3/7/2014 $480m Bitcoin cyberheist makes history | Business | Mail & Guardian
http://mg.co.za/article/2014-03-06-480m-bitcoin-cyberheist-makes-history 10/10
Contact Us
About Us
Story Tip-offs
Corrections And Clarifications
Legal
Ethics & Social Media Policy
Comments Guidelines
Advertising
Rate Card
Subscriptions
All material © Mail & Guardian Online. Material may not be published or reproduced in any form without prior written
permission.