This Is Not Investment Advice
Who is Tom Williams? MyBitcoin.com, which disappeared without explanation from the internet about a week ago, is back up with a messages “From the desk of Tom Williams, operator of MyBitcoin.com.” The statement, labeled an “incident report,” is the only live page on the site. MyBitcoin noticed a large amount of BTC missing, the statement says, realized its security had been breached, and pulled the site immediately. After investigating the hack, the statement says, the “we” behind MyBitcoin realized it
was bankrupt and “would have to go into receivership.” There will be a claims process for reimbursing users, the statement says.
We’re not exactly sure what constitutes receivership in a system with no central authority, or why the site’s anonymous operators would feel obligated to refund its anonymous users given the utter lack of accountability. Before the statement hit, word on the street was that MyBitcoin.com, the user-friendly Bitcoin wallet that was the go-to for most Bitcoin newbies, was an elaborate ploy set up by a group of (Canadian?) hackers who swindled naive Bitcoin users for the money and the lulz. At the time it went down, MyBitcoin.com had more deposits than the third largest Bitcoin exchange, Bitomat.pl. Bitomat.pl had 17,000 BTC on hand when it went down this weekend due to human technical error. But just one Bitcoin user, the vocal Bruce Wagner, had 25,000 BTC stored at MyBitcoin when it disappeared. Betabeat had 6 BTC there, and we’re surely not the only ones. At today’s prices, MyBitcoin had more than $250,000 in its coffers.
This Is Not Investment Advice
THE BEST WAY TO FIND serious traders of the digital currency Bitcoin is to log onto Internet Relay Chat—that bare-bones, plain-text experience that hasn’t changed much since its creation in 1988—around midnight, and jump into one of the many conversations dedicated to the phenomenon. Bitcoin, a decentralized payment system that approximates cash, has been quickly gaining popularity since May, when its bit part in a Gawker story about an “underground website where you can buy any drug imaginable” turned into a starring role in stories like Fast Company’s “Funny Money: Is Bitcoin the Future of Currency … Or a Total Scam?”
One indication of how far the currency has evolved: the emergence of Bitcoin derivatives. Despite reluctance by merchants to embrace the new money and a near-constant stream of crises, from cyberattacks to technical failures, the two-and-a-half-year-old technology—carefully designed by a group of anonymous programmers to serve as a standard for digital payments without the need for a central authority—seems to have staying power. This is especially true among its investors, who have graduated from simple transactions like buying and selling to negotiating options and futures contracts.
Okay. The fact is, I spent upwards of $30 on a round of whiskey and pickle juice shots Saturday. That money is gone forever. I decided to do something similar today: Buy Bitcoin! After a month of fascination, I think it’s time to see BTC from the other side, Planet Money-style. So I set about trying to figure out how to buy a Bitcoin. I quickly discovered that person-to-person cash transactions are a vastly superior method because it still takes days to shuffle money if there is a bank involved. Dwolla, the PayPal competitor that takes Bitcoin, takes a few days to a week to verify your bank account and transfer the money; TradeHill.com, the newer Bitcoin exchange, takes one to three business days for a bank transfer and charges $10 a transaction to deposit funds from a U.S. bank. And if you place an order for BTC on an exchange, you have to wait for a seller to come along and accept it. Bitcoin is still rather volatile so by the time an order gets filled, drastic things could happen to the price or the currency–no good.