Bitcoin Forum

Hello everyone,
I have read Alot about BTC and its risks, except 51% attack and mining pool taking over BTC,
I think the biggest threat are the giving services online, for example Inputs.io and many more which got "hacked" (scammed by site owner)
when people give a certain service their trust and put their funds in their hands, sometimes the person who gives you the service gets blinded by the amount of bitcoins they have.
somtimes they think, "wouldn't it be easyer to steal all the coins and not work a day in my life?" YES it would!
is there anything can be done so their subscribers wont give their trust (and bitcoins) to a service but still use their service?

I actually agree.


Many service providers are actually scammers, that delay orders, claim wallets are hacked or even disappear.

This is extremely concerning because people with Bitcoins cannot define what is going to go wrong, and even veteran bitcoin users get scammed too. 

We need somthing to be done about this.
that is why its hard to use bitcoin as a currency its more of an asset (like gold).

we need to fix this issue, i think its the biggest one yet for bitcoin.

yes its called common sense and the wet wish rules..
common sense tells me, if i own property why would i give it to someone else to look after, unless they offered me something i couldnt do myself.

and the wet fish rules.
if you dont know this person..
cannot identify them officially..
cannot meetup with them...
cannot pass details about them for the police...

... to slap them across the face with a wet fish, if something went wrong... dont deal with them

Anonymity for the user, not the service provider. Don't put your coins into an unknown person's hands.
If inputs.io had been a registered company with the owner's real name and information verified and public, this wouldn't happen. Not unless the owner has a death wish.

If you leave coin in an online wallet it is like using an uninsured bank. If that bank gets robbed you get robbed. They can be convenient for small amounts of coin, like carrying cash you know you might lose it, so you don't carry your life savings around a dodgy neighbourhood.

The issue is that any business invites competition.  The most successful businesses will be the ones providing the best service for least amount of money.  Which means profit margins continually get reduced.  Which almost always means that a successful bitcoin business will inevitably face a point of where it's expected lifetime profits dip below its current rip off all coins and walk away value.  Then the customers are left to the mercy of the operator.  There are no easy solutions.  One is to insist on truly knowing the operators IRL.  Don't settle for corporate/company/website shell as the entity with which you are doing business.  All bitcoins in the end are quasi personal property.  There can only be one responsible alive human being behind the address.  And always remember coins not in your wallet aren't yours.

This tends to happen in a lot of industries in its early days when its still the 'wild wild west'... as things progress respectable companies and business owners start to pop up and it's much easier to know who to trust.

We see more and more companies ran by legitimate business owners who have a long and well documented history,  and companies backed by venture capitalists and professional people who you know aren't going to just run away with your coins.

I'm confident that this problem is already starting to fade away and will continue to as bitcoin becomes more popular and legitmate business owners get into the industry instead of a small fringe select group of people who often time wont even tell people who they are.

You really have to be quite naive to trust any "company" who's owners choose to remain anonymous. That's simply not good business (for the consumer).

If nobody ever lost money to a scammer then I wouldn't be careful with my BTC.

"Bitcoin: Be your own bank"

Not just a marketing catchphrase - sound advice for avoiding losses.

The right answer is to not create services which hold BTC on behalf of users. It's not a viable long term business model.

I don't think there's anything wrong with a service that holds your bitcoin.... infact that's something most consumers would want and its something thats needed if/when bitcoin becomes more mainstream. Just like most people don't want to hold onto all their cash or life savings, they want to put it in a bank somewhere because it's more secure and insured.   

The problem is you have/had a lot of anonymous people (always a bad sign of something sketchy) opening up services like this. Or people who had no business experience and no idea what they were doing.  The end result is people tended to get their bitcoins stolen.

There certainly are professional individuals and companies looking into this and working it though.  I don't think it's a bad thing, especially for the average consumer out there who doesn't know much about computers or security and is way too nerverous to be responsible for all their bitcoins.

Eventually services that hold Bitcoin will insure themselves against loss.

No, the average person does not want to be robbed. They are forced into it via preferential legislation and regulation that all but makes it impossible to avoid putting their money in banks.

http://investmentwatchblog.com/imf-discusses-super-tax-of-10-on-savings-in-eurozone/

Bitcoin is going to finally free the average person from the need to hand over their savings to third parties. The thieves will have to work harder for their loot from now on.

I know very few people that want to put their entire life savings in the house.  They want it in vaults and banks, and more importantly places that have insurance incase a robbery does happen.

I know even less people that want to put all their money on a computer when they know nothing about computers.

I have to disagree, i meet very few people who want large amounts of cash just laying around insecure places.


As far as it being "all but impossible" to avoid putting your money in banks... I know of nothing preventing me from not keeping my money in a bank account. I could easily go withdrawl all my life savings and stuff them under my matress if I wanted to.  I prefer not to though, that would require quite a bit of extra security for my house (something im not well versed in nor do i feel like paying for)  and would ultimately put my family at risk from intruders.


Using some random website to store your bitcoins,  yes thats stupid.  And sadly thats what a lot of people have done.  Using a legitmate company who has insurance on your bitcoins incase of a robbery  , thats something many consumers would get behind and it's certainly something a lot of startups in silicon valley are looking into.

just be very careful.  It does seem that there's a lot of too good to be true offerings.

What are the most reliable, trustworthy, and secure exchanges available today?  I know that some had trouble because they weren't registered with finCEN in the US, but that some are now registered.   

This is an idea for a website.

Why not set up a website like reviewcentre.com, but strictly for bitcoin services and merchants. Or maybe it already exists, I am just not aware of?

That's why you have to learn.  It's like saying I don't want to drive a car or talk on the phone because I don't know how those things work inside.  Using technology safely can be done without knowing every in and out.  Also how is bitcoin storage insecure?  Private key storage might be insecure but bitcoins themselves are very secure.

I agree with this. That's why deposit banks have no future.

Just ask the people of Cyprus about the dangers of leaving their cash in insecure places.

there has to be a service with a 100% insurance if i lose my bitcoins. that could be a mind-changer and a success.

but i wouldnt leave my coins at a third party anyway  ::)

I see two great issues with bitcoin comparing it to Paypal+Fiat:

Not scalable for millions of users: Paypal can handle millions of transactions/day - Bitcoin cannot, and it would require revolutionary changes to the protocol to fix that problem

Deflation: Many central banks aims to have a stable and low inflation rate of a couple percent per year - Bitcoin will go from extremely inflationary to extremely deflationary in just a decade

The combination of low scalability in terms of transactions per second, and deflation makes bitcoin a bad currency/payment method for online commerce.
It reminds me more of gold, not easy to transfer but very good as a store of value.
The deflationary attribute of bitcoin can make it very valuable, but that's very bad as a currency for commerce. Why should I spend bitcoins to buy stuff now, if its value doubles in a month? I use my dollars instead and let the bitcoin gain value more and more...

Either bitcoin has to evolve and handle this two problems, or some alt-coin will come and grab a decent market share the coming years.

I believe the monetary base of a new currency should have an S-shape, low inflation of 10%/year in first stage, high inflation of at most 100%/year in the second stage, and low inflation of 3% again afterwards and for ever. The inflation must be 3% to compensate for the deflationary effect of lost coins and hoarded coins, the real inflation will be 1-2%.

http://upload.wikimedia.org/wikipedia/commons/thumb/8/88/Logistic-curve.svg/600px-Logistic-curve.svg.png

You have some good points!, thanks.
Do you think there is a coin currently availble that gets close to your discription of an online trade currency?

I have seen you make this claim several times before. I don't recall seeing your derivation thereof. Please show your work. The numerical assumptions that go into your proof will help to target the parts that need improvement.

My hypothesis is simple: bitcoin relies on a blockchain that is copied and evaluated by ALL nodes in the network. millions of users daily would mean that the blockchains grows to terrabytes in size, and the nodes will need to allocate maybe 10% of that amount in RAM (more than 100 GB RAM).
And each block itself has limits in how many transactions can be handled per block.
The limit for bitcoin is 7 tps (transactions per second) compared to PayPals 100 tps or VISAs 8500 tps.

Bottlenecks for running bitcoin is: HDD, RAM, network speed. You could of course have several heavy datacenters around the world doing the work, but then we are back to a centralized system and the whole point of bitcoin being decentralized is lost. I believe this issue can be solved, but it should be handled before its to late, otherwise people will lose confidence in bitcoin.

More info on: https://en.bitcoin.it/wiki/Scalability
https://bitcointalk.org/index.php?topic=322748

All that want a copy of the blockchain, yes...


Do you have an equation to justify this assertion? And even so, who cares? You can buy a 4TiB HDD today for about 0.333 XBT. Two years from now, the same _dollar_ cost will buy you 8TiB. Filesystems that scale to EiB are readily available. Who cares about storage?


This claim I am somewhat more skeptical of. Care to show your work? Even so, 16 GiB costs under one XBT today, and Moore's axoim shows no signs of stopping...


I am sure it does. What are those limits? Are these endemic to the protocol, or merely parameters used in the current clients?


i was not aware of this number. Probably due to the fact that whatever it is, is enough for the time being. Where does this number come from? So we only need to increase the throughput 15x to match PayPal? Sounds like a trivial slam dunk to me.

I don't know whether or not it is true, but I read that Visa's all-time-high was 27,000 tps. Doesn't seem _that_ daunting. At least in light of the fact that we don't need that throughput before the network scales at last x4,000.


As far as I care, I will consider it decentralized as long as there are no arbitrary barriers to anyone who wants to start up a full node. I do not consider dollar or time cost to be a valid consideration in 'is it decentralized?'


I believe it will be solved. By the time it matters. If for no other reason, because the code base is open source, and there is plenty time for even li'l ol' me to learn the code well enough to make the necessary adjustments.

The bottlenecks I'm talking about is not about hardware being expensive, but most regular users are not going to sacrifice 90% of their PCs hardware capacity just for the sake of running a bitcoin node, so they will instead use bitcoin wallet in the cloud. The blockchain is right now eating up 20% of my laptop SSD so Im considering to uninstall the bitcoin client...

So we end up having a few datacenters running bitcoin nodes, and that's how the banks are operated: redundant infrastructure, but centralized.
The goal should be to keep bitcoin both scalable and decentralized (easy to run a node for small guys like me and you).

A possible solution of course is to stop using bitcoin for small transactions.  There already are many different crypto currencies and likely they will continue to grow.  So you might have a few that are long term wealth storage and others more for everyday use.  It's also been speculated that these certain limits are good because it makes bitcoin more viable because eventually fees have to be high enough to pay miners to support the network when there are no more block rewards.