http://arstechnica.com/tech-policy/...ncy-500000-bitcoin-heist-raises-questions.arsBitcoin, the decentralized virtual currency whose value has skyrocketed in recent weeks, faced a key test Monday as a veteran user reported that Bitcoins worth hundreds of thousands of dollars had been stolen from his computer.
Ars Technica was unable to independently verify the user's story, and he did not respond to our request for an interview. But whether the story is true or not, it highlights a major disadvantage of the currency's much-touted lack of intermediaries. Bypassing middlemen frees users from government meddling and bank fees. But it also deprives them of the benefits those intermediaries provide, including protection against theft and fraud.
Regardless of the truth of this story, it does indeed pin-point some of the weaknesses in the system, such as that of the requirement of unbeatable encryption, and the inability to track payments after they have occurred. There's also no way to reverse a payment, or practically investigate a theft. The idea of having no intermediaries is cute, but comes with a big host of issues.
I think it's a good moment to sit down and take a good hard look at this whole BitCoin thing