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Wednesday, March 5, 2014

Bitcoin Bank Flexcoin Shutters After Hack

Posted By on Wed, Mar 5, 2014 at 3:20 PM

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Just as San Francisco's Bitcoin community was sloughing off the damage wrought by last week's Mt. Gox closure -- and voicing eternal optimism about the future of the crypto-currency -- more bad news came down the pike.

On Tuesday, Canadian Bitcoin bank Flexcoin announced its own death, in light of a $600,000 hacker theft. The company told reporters at Reuters that it lacks the resources to stanch such massive bloodletting. It will store its remaining coins offline -- "cold storage," in Bitcoin patois, and return them to users.

San Francisco-based Bitcoin entrepreneur Marshall Hayner told SF Weekly that he hopes the Mt. Gox fiasco will induce federal regulators to create coherent security guidelines for Bitcoin repositories and exchanges. "That will create accountability," Hayner explained, adding that a system of checks and balances will provide recourse to any Internet investor whose balance sheet is suddenly wiped clean overnight.

Moreover, Hayner says, it will help build trust in a currency that's just beginning to percolate into the mainstream. He notes that four years ago, Bitcoin was nothing more than a novelty: In May of 2010 a BitcoinTalk.org forum member famously traded 10,000 coins for pizza -- an exchange he must have come to regret, when the value of one Bitcoin jumped to $1,000 USD last December.

As of this afternoon, a Bitcoin will trade for some $645, which is still enough to keep the transaction system afloat, in San Francisco. At the very least, .014 BTC will still buy you a bento box in the Richmond District.


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About The Author

Rachel Swan

Rachel Swan

Bio:
Rachel Swan was a staff writer at SF Weekly from 2013 to 2015. In previous lives she was a music editor, IP hack, and tutor of Cal athletes.

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