Bitcoin to Dollar Conversion Calculator

This is not the first theft of Bitcoins, and it won’t be the last. But, as defenders of the cryptocurrency point out, theft occurs in every currency! US dollars are stolen every day: and just because there are bank robberies from time to time doesn’t mean the US dollar isn’t a useful currency with a long and viable future ahead of it, right?

What I have never seen is an evidence based analysis of the robbery rate in dollars and Bitcoins. My work below is a first attempt, and I appreciate any concrete suggestions and data for making it more rigorous.

My first caveat is that measuring theft is tricky: a US dollar stolen in 2011 is worth about the same today…perhaps $0.95 due to the effects of inflation. Meanwhile a thousand BTC stolen when it was worth $10 in 2011 is very different from the same number of BTC stolen when it was worth $1000 in late 2013! The extreme volatility of the BTC/USD conversion means that I think we need to calculate all BTC thefts denominated in Bitcoins, and not convert them into the dollar equivalent. Next, due to the relatively recent history of Bitcoin, I am using a time frame of 2011 to end of February 2014, or 3.17 years.

According to the list of Bitcoin thefts online, and counting only thefts of 1, 000 BTC and more, from 2011 up until the Mt. Gox news, there were roughly 792, 000 BTC stolen. Add the 740, 000 stolen from Mt. Gox, and the total is about 1.53 million BTC stolen in 3.17 years, or just over 480, 000 BTC stolen per year.