AMA: Long-time DU lurker and democratic supporter, know everything there is to know about bitcoin

[Rassah]

112. He made a really stupid mistake

one that anyone running an online bitcoin service should already be aware of and never be making. And that is, he was storing all the bitcoins in what's called a "hot" wallet, which is a wallet connected to the internet, along with the website, instead of holding 90% of the coins in a "cold wallet," which is a PC that is not connected to the web, and thus can't be hacked. Since bitcoins are basically a string of random digits, it's possible to copy that string to a disconnected computer, delete it from the online computer, and "lock" them away, only taking them out manually a bit at a time when people make withdrawals larger than 10% of the hot wallet. As far as I know, all such bitcoin services do this, but apparently this guy didn't. And yes, it could be an inside job, but just as the FBI wouldn't be able to track where those coins went or prove anything if they were stolen, there is no way for anyone to prove whether or not he himself stole them, either. Lesson is, never trust your coins with others. That's why local wallets, phone apps, and even blockchain.info (which doesn't keep copies of your private keys) are for.