Earlier this week, Instawallet shut down its Bitcoin wallet service after falling victim to a cyberattack. SiliconAngle founding editor Mark “Rizzn” Hopkins discussed the news and the possible implications on the virtual currency on this morning’s NewsDesk segment.

Hopkins starts by elaborating on the hack. He says that Instawallet did not disclose any details about the incident, but security experts believe that the attack was most likely a standard DDoS attack or a brute-force password cracking offensive.  Either way, the hackers were successful in their attempt to infiltrate the service and gain the personal information of account holders.

For the full analysis, including Hopkins’ explanation as to why BitCoin qualifies as a currency, check out the clip below.

According to Hopkins, Bitcoin holders whose accounts were compromised can file a claim for compensation. There may be more than one claim per account (although competing claims will most often be proven illegitimate), and disputes that involve over 500 Bitcoin are handled personally by the Instawallet staff.

Hopkins goes on to provide his personal take on the attack:

“Bitcoin is meant to be a currency reckoned as much you can with anything virtual…if I download my wallet to my tablet; my Bitcoins are on that tablet. Should somebody blow up my tablet, those coins will no longer be accessible. Similarly, Instawallet functions like a digital safe or a bank if you will, like a safety deposit box. Users trusted Instawallet like a bank to hold their gold, their Bitcoins, and their safe was cracked.”

The Instawallet heist was a part of a coordinated attack against several major Bitcoin services, but thankfully none of the other sites were compromised.   Hopkins says that this surge in hacker activity is the result of recent exchange range fluctuations: on Tuesday one BitCoin was worth $100, but now the same coin equals around $135.

photo credit: jurvetson via photopin cc