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Posted at 03:31 PM ET, 04/05/2013

Coinbase security problems highlight bitcoin-related startups’ growing pains

Correction: This post has been corrected to reflect changes made in the Apr. 5 blog post by Coinbase regarding the description of data indexed by Google.

Original blog post: Coinbase is now among the latest bitcoin-related entities to experience security complications. The service provides a virtual wallet option for purchasers and vendors interested in buying and transacting in bitcoins. Users had discovered that transaction merchant data on the Coinbase site had been indexed by Google, revealing e-mail addresses and other contact information as well as descriptions of individual transactions products.

In a response on reddit, Coinbase co-founder and CEO Brian Armstrong said that the information being indexed on Google belonged only to certain users, specifically merchants.

“What we’re looking at is a list of merchant checkout pages,” wrote Armstrong, “Your information is not going to be shown on one of these pages unless you created a ‘buy now’/donate button or checkout page and posted a public link to it somewhere. Order pages are designed to be public so customers can reach them, although we should have taken more care to not make them easily indexible by Google.”

Coinbase published a blog post hours later outlining in more detail the nature of the information shared on Google. In the post, Armstrong apologized for including e-mail addresses on the site’s checkout pages and for failing to prevent having the pages indexed by Google, which may have led to the phishing attack Coinbase warned about in an April 4 blog post. According to Anderson, two users have been affected by the phishing scam.

This is not the first security problem a bitcoin-related service has experienced, and it almost certainly will not be the last. The entire scenario drives home bitcoin’s youth and the potential risks for users that can result from its growing pains.

As Coinbase co-founder and former Goldman Sachs trader Fred Ehrsam noted in an interview with The Washington Post earlier this week, “It’s a very nascent asset market and one that has extreme potential. And, with that potential, will most likely come volatility.”

Let us know your thoughts on bitcoin and the evolving marketplace, and read more news and ideas on Innovations:

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By  |  03:31 PM ET, 04/05/2013

 
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