The Privacy BlogPrivacy, Security, Cryptography, and Anonymity

Feb/14

25

Mt. Gox bitcoin exchange appears to have failed, coins are missing.

Bitcoin Pile

The Mt. Gox Bitcoin Exchange Has Disappeared — Is Bankruptcy Next? | Re/code

Here is another example of he problem with storing your cash in an untrustworthy entity. Many Bitcoin services are based on having some third party store your coins for you.This has now lead to major thefts or losses of coins on a number of occasions. There is no insurance or mechanism for restitution to the people who have lost their coins. Reports suggest that 740,000 Bitcoin have gone missing. The precipitous loss of value on exchanges has also cause a further hit to the value of everyone’s coins
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I strongly encourage Bitcoin users to follow one of the following strategies to protect themselves.

1) Only purchase Bitcoins immediately prior to use, and convert your coins back to a conventional currency in an insured bank account as quickly as possible after receiving them. This minimized your exposure to loss, theft, or market volatility.

2) Keep your Bitcoins securely stored in your own, ideally offline, wallet. Only allow third parties to have the minimum possible amount of coins for as short a time as possible.

Lance Cottrell is the Founder and Chief Scientist of Anonymizer. Follow me on Facebook and Google+.

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