Silk Road 2 $2.7m Bitcoin Theft

Silk Road 2, an underground website where people buy and sell drugs was recently hacked and had all 4,440 of the bitcoins they had in their escrow account stolen. The amount of bitcoins stolen is equal to $2.7 million; the theft was announced by the sites administrator who is only known as Defcon.

The theft was blamed on a glitch in bitcoin protocol that is referred to as transaction malleability, a situation where someone changes a code, that tricks the system into thinking the transaction hasn’t occurred yet and keeps on making payments until the account is depleted.

A couple of bitcoin exchanges claim they were attacked earlier in the same week, and suspended all their transactions until they fix the problem. Defcon stated that he should have suspended all transactions on Silk Road when the issue was first reported, but was slow to act.

With the theft, some of the fears of people who are skeptical about bitcoins because they are stateless and unregulated came true. The bitcoins that were stolen from Silk Road will be almost impossible to retrieve, which is part of the reason bitcoins were created, and the people who had bitcoins in Silk Road accounts cannot be reimbursed because unlike banks, the bitcoins are not insured.

Some Silk Road users are have been wondering if the bitcoin theft was an inside job, since there is nothing stopping Defcon and his staff who are anonymous from taking the bitcoins which are valued at $2.7 million, and claiming they were robbed.

As expected Defcon denies the accusations of foul play, and has promised that Silk Road will pay pack everyone that had a bitcoin in their escrow account. How he intends to pay them is a mystery because people are going to be skeptical about doing business with them in the future.

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