How Steve Wozniack had his bitcoin stolen
He sold them, but the buyer paid with a stolen credit card and reversed the charges. Easy as that.
Apple's Steve Wozniack was drawn to bitcoin by its "pure" nature, says India's Economic Times.
"Bitcoin to me was a currency that was not manipulated by the governments. It is mathematical, it is pure, it can’t be altered," he told a crowd at the Economic Times Global Business Summit. "I had them so that I could someday travel and not use credit cards, wallets or cash. I could do it all on Bitcoin. I studied which hotels and facilities accepted Bitcoin... it’s still very difficult to do so. I also tried to buy things online and trade Bitcoin online."
He ended up selling them and cutting the experiment short, he said, because he found himself watching the prices too much and didn't want the stress. This was also when he was cheated out of 7 bitcoin, worth a ballpark US$70,000 at the time of writing. It was a relatively easy payday for the thief.
"Somebody bought them from me online through a credit card and they cancelled the credit card payment. It was that easy. And it was from a stolen credit card number so you can never get it back," Wozniack said.
In today's burgeoning market you can still buy and sell bitcoin and other cryptocurrencies with a credit card, but typically only through a large, well-established and trusted intermediary. It's probably a good idea to avoid accepting a credit card when selling directly to another party peer to peer for that exact reason. This chargeback problem is also why it's so difficult (but not impossible) to buy and sell cryptocurrency with PayPal. Much like credit cards PayPal allows chargebacks.
But necessity is the mother of invention, and some peer to peer services like LocalEthereum have built in their own solution to this problem in the form of an escrow smart contract. This adds a fully automatic intermediary to the equation, taking the place of the third party.
An escrow smart contract?
Smart contracts are one of those blockchain features that everyone's excited about.
They're simply a computer program that performs a certain function. But because they're open source and built on blockchain architecture they can be 100% trustworthy and tamper-proof.
This makes them very useful for functions that would otherwise need a third party, such as escrow services.
Not all cryptocurrencies have their own smart contract systems though. Ethereum was the first to introduce it, but bitcoin might someday have its own in the form of an add-on blockchain layer.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, SALT, BTC