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Earlier in the week, TechRaptor covered the story of Bitstamp being hacked and losing over $5 million worth of Bitcoins. Bitstamp is the second largest Bitcoin exchange in the world, and this hack has shaken the confidence of some in Bitcoin as a currency. Bitstamp went offline for a few days so they could completely rebuild their system.

Today it was announced on the Bitstamp blog that they are ready to resume operations. The Bitstamp staff confirms that the loss was less than 19,000 BTC, representing a small fraction of their reserves. They assure their users that any Bitcoins held with them prior to the temprorary shutdown will be honored. They have been working with law enforcement to investigate the matter.

As a major component of its new security measures, Bitstamp will be the first Bitcoin exchange to incorporate the BitGo security system. BitGo relies on a system where any two out of three security keys are required to make transactions. The client will hold two keys and BitGo itself has one key. Typically one of the user’s two keys is a backup, which is printed out at the time of creation and stored physically, and only used in emergencies. BitGo itself will only authorize transactions with its key if it can verify the user’s identity through a two-factor authentication.

Bitstamp has stated several other security measures. They are using completely new hardware, which is running on a secure backup of their code and data. They are also using Amazon Web Services to secure their cloud infrastructure. Despite these new measures some may still be uneasy about trusting Bitstamp, or any Bitcoin exchange, with their money.

Bitstamp has also announced that all transactions performed on Bitstamp will be commission free until January 17. The reason given is to thank all their loyal customers, but it might also be a way to win back some customers who were less than loyal, and give them a reason continue using Bitstamp.

Do you think Bitstamp took appropriate measures to secure their Bitcoin Exchange? Do you think they can be trusted to store people’s Bitcoins? Leave your comments below.

Max Michael

Senior Writer

I’m a technology reporter located near the Innovation District of Kitchener-Waterloo, Ontario.