Author: The Bitcoin Historian, Crypto KOL
Compiled by: Felix, PANews
Allinvain mined Bitcoin when the price was less than $0.05 and owned 25,000 Bitcoins. This article takes you through the biggest robbery in the history of cryptocurrency: the tragic story of Allinvain’s $1.6 billion loss.
In 2010, Allinvain founded Bitcoin Express, one of the first Bitcoin exchanges. Bitcoin Express allowed users to buy BTC using PayPal. Allinvain sold 1,000 BTC for $5. That’s $0.005 per BTC.
But Allinvain is also a dedicated Bitcoin miner. He can mine 500 BTC per hour using only his laptop. That’s 1,200 Bitcoins per day.
Here’s what mining Bitcoin looks like when it’s worth $10: Allinvain can still use his home computer. He presses a button to generate BTC.
By 2011, mining difficulty had skyrocketed. The hash rate had soared to 4 TH/S. In 2010, the hash rate was just 0.001% of that — a 114,000% increase.
“It was like everyone, their mother, father, cousin, whatever, was starting to mine,” Allinvain said.
But the more Allinvain researched, the more he was amazed. Allinvain wanted to help Bitcoin and started promoting the purchase and sale of real goods with Bitcoin (BTC).
Allinvain soon became a Bitcoin whale, owning more than 25,000 Bitcoins. In early 2011, Allinvain cheered on the rise in Bitcoin prices, which surged to a high of $30. This was the first Bitcoin bubble. Allinvain owned $500,000 worth of the “magic” currency at the time.
On June 13, 2011, disaster struck.
Allinvain saw a transaction for 25,000 BTC in his wallet. Just like that, all his BTC were stolen.
Allinvain was devastated and fell into depression. All the work he had done for Bitcoin was lost.
To make matters worse, the news spread all over the world.
Forbes, The Atlantic, and NPR all reported on it. They called it the first Bitcoin theft.
The huge amount of money involved in the theft has sparked conspiracy theories. Some say that the whole thing was planned by Allinvain. They accuse Allinvain of spreading FUD.
In the end what happened?
Allinvain said it was all his own fault. "I trusted the security measures too much. It was stupid of me."
Allinvain backed up his wallet to Dropbox, Wuala, and SpiderOak. When he found out that Dropbox staff had remote access to the files, he deleted them. But the root of the problem was that someone had hacked into his computer and stolen the unencrypted wallet files.
Later, Allinvain discovered that this might be a Trojan virus disguised as Bitcoin mining software.
And once again, personal security is important when you hold BTC.
But the hack didn’t stop Allinvain from moving forward. He has remained active in the Bitcoin space and started his own managed mining business, doing everything he can to get his fortune back on track.
Allinvain's biggest mistake was that he kept his keys unencrypted on his computer. The hacker's actions serve as a reminder to always keep your private keys in a secure offline location. Even some of the most well-known companies in the Bitcoin space have suffered similar attacks.
To this day, Allinvain's story continues to remind people of the importance of Bitcoin security.
Related reading: The amount involved is about 300 million US dollars. From the recent huge cryptocurrency theft in Japan, we can see the latest fraud methods of hackers
