Bitcoin’s Rise Constrained by Heists and Lost Fortunes(technologyreview.com)
technologyreview.com
Bitcoin’s Rise Constrained by Heists and Lost Fortunes
http://www.technologyreview.com/news/522411/bitcoins-rise-constrained-by-heists-and-lost-fortunes/
4 comments
> And another to keep your millions. You can bury it, put it in a safe, or keep it in a secure storage in a safe. Not for daily use.
It's worth noting what happens in the real world: Most folks do not store their own. They instead rely on banks and trusts to do the job. Those are backed by various types of insurance.
I suspect that sort of ecosystem will need to evolve for bitcoin too, since average joes don't know to protect their digital wallets.
It's worth noting what happens in the real world: Most folks do not store their own. They instead rely on banks and trusts to do the job. Those are backed by various types of insurance.
I suspect that sort of ecosystem will need to evolve for bitcoin too, since average joes don't know to protect their digital wallets.
Right. That is something than can be built on top of bitcoin, bringing traditional banking services to it. If the problem is managing your private keys, that can be delegated to a bank that you can trust - which will recover them for you in case you lose them, paying a fee, for example. That necessarily means that the bank has access to your wallet though.
Bitcoin even offers a bit of extra support for that too, via transparency, based on the public blockchain. There is embedded protection against third parties: if a rogue employee of the bitcoin-bank transfers bitcoins out of your bank-wallet, the transaction can be followed. It might not be possible to recover the money, but at least some kind of identification can be performed - with the help of the bank and with legislative support, this can be enforced. This transparency is not there for tradicional banks: if there is a problem, you trust them to solve it, but you can not independently see what happened to your money.
This relies on the fact that anonymity is a fragile concept in the bitcoin world: an address is anonymous as long as nobody puts the effort (and has the right extra pieces of information) to correlate address to person.
At the end of the day, it will be a matter of the bank having a business interest in keeping a clean reputation. This is too early for the bitcoin economy, so I would not trust any online bitcoin bank with more than a couple of bitcoins. CitiBitcoinBank is not here yet.
Bitcoin even offers a bit of extra support for that too, via transparency, based on the public blockchain. There is embedded protection against third parties: if a rogue employee of the bitcoin-bank transfers bitcoins out of your bank-wallet, the transaction can be followed. It might not be possible to recover the money, but at least some kind of identification can be performed - with the help of the bank and with legislative support, this can be enforced. This transparency is not there for tradicional banks: if there is a problem, you trust them to solve it, but you can not independently see what happened to your money.
This relies on the fact that anonymity is a fragile concept in the bitcoin world: an address is anonymous as long as nobody puts the effort (and has the right extra pieces of information) to correlate address to person.
At the end of the day, it will be a matter of the bank having a business interest in keeping a clean reputation. This is too early for the bitcoin economy, so I would not trust any online bitcoin bank with more than a couple of bitcoins. CitiBitcoinBank is not here yet.
Which reminds me I lost about 30 BTC in total after Tradehill and CryptoXchange closed a while back. Kind of ironic that Tradehill's founder is giving security advice in this article.
> Kind of ironic that Tradehill's founder is giving security advice in this article.
You do not realize how silly such a statement is? Edit: To clarify, one should not immediately discount the man's insight because of a past security incident. The experience probably adds value to his insights rather than substract from it.
You do not realize how silly such a statement is? Edit: To clarify, one should not immediately discount the man's insight because of a past security incident. The experience probably adds value to his insights rather than substract from it.
[deleted]
Heists and lost fortunes never stopped people from owning, trading, and speculating in gold.
The ability to be stolen is a feature, not a bug.
I got modded down, but there is no objection here? The ability to be stolen is what makes BitCoin like cash. That's one of the core innovations of BitCoin - you can't double spend it, once it's gone it's gone
So it's exactly like USD only: few accept it, there is a fee to transfer money in any reasonable amount of time, it isn't backed by any country, all of the exchanges are regularly stolen, it's a giant ponzi scheme, even the austrian economics think it's worth nothing, and there is no form of consumer protect/insurance whatosever. Sounds great, why hasn't the world switched over yet?
One for convenient, day-to-day use: you do not worry too much if this gets lost or stolen.
And another to keep your millions. You can bury it, put it in a safe, or keep it in a secure storage in a safe. Not for daily use.
Whenever you need funds, or you want to put away some savings, you open the safe, access your wallet and make a transfer. After that, you put the big wallet in the safe again.
Do not keep you millions in the open, do not walk around with them, do not trust them to somebody else (online wallets), do not handle them carelessly, do not throw them to the trash!
One thing that does not get mentioned very often in this context is: you can make as many copies of your wallet as you want to! You can even encrypt your wallet-copies with whatever mechanism you want to. Send your wallet encryption-key to your aunt, in case you happen to lose it. You will be able to decrypt any of the dozen copies of your wallet that you are keeping in different places.
Encrypting your wallet gives you extra security that it won't be stolen, and having multiple copies ensures that you will not lose it.
Bitcoin can be a lot of things, that is what makes it so special. But with choice comes responsibility!