It has been a rough couple of months for bitcoins.
In October, the U.S. government shut down the Silk Road website, where bitcoins were being used to purchase illegal drugs. Then in early November a researcher at Cornell University published a paper asserting that the virtual currency is broken — that is, that the system of difficult algorithms that one must solve to obtain bitcoins might be successfully exploited by a group of sufficiently clever and selfish bitcoin miners.
Next came the U.S. Senate hearings aimed at discovering whether these so-called crypto-currencies are a tool for drug dealers and money launderers to do business beyond official scrutiny. And now, just in time for the holiday shopping season, comes the disclosure that the Bitcoin Internet Payment System — or BIPS — has been hacked. Customers lost the equivalent of about $1 million in bitcoins.