Bitcoin Forum

Bitcoin Axiom #0 - If you do not have the private keys for your bitcoins, then you have no bitcoins.

If you deposit your bitcoins with an exchange then although their site may display an amount of bitcoins what you have is an IOU for a certain amount of bitcoins.   An IOU is a form of debt, it only has value as long as it is honored.  A significant portion of debt is never repaid.  Bitcoin has no counterparty risk, a bitcoin IOU does have counterparty risk.

If I lose the keys to my house, it's still my house.

It's almost like crypto keys and physical keys aren't really comparable or something.

Untill one day goverment officials ask you the keys because you did not paid back loans. ... this is good dream continue dreaming... i am safe i am safe  i have keys i am safe.

Nothing is really yours everything belongs to govs. For example all companies when wanted become goverments... Welcome to the planet earth.
House is yours because you pay taxes.

Excellent point.  If you do not have private key for your house, then you still own the house.  Bitcoins are not houses.  The key to a house only grants access, ownership of houses is by a centralized ledger run by the state.  This is why if you lose your house key, you may have a temporary loss of access but you still own the house.  The entry in the state's ledger will still list you as the owner.  Bitcoin has no centralized ledger of ownership.  It was intended to remove the need for a centralized ledger of ownership thus the private key for bitcoins is more relevant than the key to your house.

Bitcoin private keys are the deed and the keys rolled into one. As long as you can protect your private keys, no one, including the government, can take your Bitcoins without your permission.

If you aren't the sole controller of your private keys, you don't have any bitcoins.

Create secure private keys, and then protect them, and you will never lose any bitcoins.

This statement makes no sense about losing keys to a house. Has nothing to do with making payments lol.

This is what every owner of bitcoin should know. Great advice Holliday.

I think it does -- the block chain.

Bitcoin in itself is perfectly organized.

Until you insert humans into the equation.

The blockchain is a ledger but it isn't centralized, it is decentralized.  It has no central authority, changes to the ledger are by consensus.

Takes time to understand... Yes. Enjoy. think a bit. I question here, what is really yours in the real life? You can own a home but it is not your home. You can have a company billion dollars worth but one of day, goverment officials decide it's their anymore.
 You can own a bitcoin it's yours. Because bitcoin anonymous. You only lose it when you lose keys.

With that scenario, your computer is not yours, government can take it. If you have no computer, you have no bitcoins.

From a legal perspective, you can say that the coins an exchange owes are still yours even if they lose them. You might even be right.

Guess what? Bitcoin doesn't give a shit. You can talk about law until you're blue in the face, but the network won't care.

Bitcoin is a distributed computer that enforces a rule that says, "satisfying the conditions of an input script is both necessary and sufficient to spend bitcoins".

That is the only law bitcoin recognizes.

---With that scenario, your computer is not yours, government can take it. If you have no computer, you have no bitcoins.
---
Yes with one little difference, no body knows if i own bitcoin...  ;D

From a legal perspective, you can't prove anything. Nobody can claim the right to a Bitcoin private key thus nobody can claim the right to any Bitcoin.

Yea, guess what? Bitcoin doesn't give a...

There's no place for the human element in mathematics.

That's because your house has weak locks. Put an infinitely strong lock on the house, and try the analogy again.

What if I told you that you could store your bitcoins not on a computer and you could make multiple redundant encrypted copies to ensure you retain control even if a single copy remains?

That's the moment you realize you should have been buying XCP all along.

This is clever, apt and well said.

Bitcoin is the most advanced form of wealth storage the world has ever known.  Using an offline computer to generate private keys and storing those keys encrypted in multiple geographic locations nearly eliminates all threats including theives, hackers, natural disasters, government confiscation and, yes, corrupt third parties such as exchanges.

If I put an infinitely strong lock on the house, how does that change my analogy? If I lose the key, the key is lost, it don't matter what type of locks I had.

Here's a riddle for you: will an infinitely strong lock protect you better than a weak lock if I have your key?

That's fine and dandy, but if you have no computer, you still have no bitcoins.

Of course I do.  My (and all) bitcoins are decentrally stored on the blockchain spread across hundreds of thousands of computer all over the planet.  A wallet contains no bitcoins, it contains keys which allows one to authenticate a request to transfer those bitcoins to the control of a different key (a transaction).   The Bitcoins are in the blockchain, they are always in the blockchain.  I still retain control over the future movement of those Bitcoins if I retain control over the private key(s).  They key(s) don't need to be online.  Now with offline signing the keys don't ever need to be online.

Very good answer, and you are correct in this case.
No private key, no coins.

Axiom #0 is an absolute truth, but it is somewhat abused by services like blockchain.info in order to provide a false sense of security to its customers.

Despite of what the operators of blockchain.info and similar services like to say, having the exclusive possession of your private keys is *not* the only security measure you should follow to take counterparty risk out from the equation. A third-party service like blockchain.info can still steal users coins in a trivial way just by injecting code, as it happened when strongcoin "intercepted" 1k coins to return them to OzCoin after a hack (http://bitcoinmagazine.com/4273/ozcoin-hacked-stolen-funds-seized-and-returned-by-strongcoin/). More info also in this post (https://bitcointalk.org/index.php?topic=184610.0) and this one (http://www.reddit.com/r/Bitcoin/comments/1czhlg/two_wrongs_dont_make_a_right_why_i_applaud_the/).

Sharim secret sharing ( http://en.wikipedia.org/wiki/Shamir's_Secret_Sharing ) is an algorithm for sharing a secret as "pieces" between multiple people where some subset is needed to recreate the original secret.  So encrypt your cold storage wallet using SSS which requires n of m keys.   Distribute the m keys to yourself and friends.   Even if n of them conspire against you they would need to be able to retrieve the encrypted keys from secure storage.  Someone which has the encrypted and doesn't know the keyholders would not be able to gain access.

If you are super paranoid put the encrypted secret in deposit boxes in banks in different countries. :)

Well the power of good software is that it makes complicated, difficulty things easy.  Bitcoin is incredibly complicated, hell the protocols bitcoin relies upon TCP/IP are also complicated.

+1 to Holliday and D&T.

Private keys are like bearer bonds where if you have the bond, you own it, no questions asked.  You could do what you wanted with them, clip the coupons and get paid etc.  But you had to store them somewhere safe from thieves, natural disasters and the like.  There was no way to get them back if destroyed by fire for example.  If there were "bearer deeds" for houses, and you lost it, the house would no longer be yours.  Private keys are not analogous to house keys, despite the name.

As far as the complicated nature, yes, the internet and everything from credit cards to cars is complicated but we abstract the complicated portions downward so it seems simple.  Bitcoin will have that eventually so people can protect themselves better.

Query: if you could store 100 bitcoins in one address or in 10000, which makes more sense? From a protection standpoint, the 10000. From an easy of use standpoint as of now, the former.  Soon though, you'll be able to store each whole coin in 10 or 100 places so that you won't lose much if one private key is exposed. It will all be abstracted down so you do t even know it though.  

The suggestions above help prevent the loss of keys by storing them in a distributed fashion or encrypting them so that they are inaccessible even if viewed. Compared to bearer bonds, that is good.

The point is that you should have your own coins under your control or you just have a ledger entry for them on someone's books.

:-)

Keeping your Bitcoin on an exchange is like buying paper gold! If you don't have the physical gold in your hand, despite what that neat little piece of paper says, you don't own any gold!

If you keep your Bitcoin on an exchange, as proved by the 744,408 Bitcoin that people thought they owned because their computer screen said that their Mt. Gox account held X ammount of coins, you may one day find out that you in fact DO NOT own any Bitcoin!!  

Update

Bitcoin Axiom #0 - If you do not have provably secure [air gap generated] private keys for your bitcoins, then you have no bitcoins.

I'm working on this for bitaddress.org
But without needing to have an 'Encrypted private key' be Encrypted with another key which is then split using Shamirs scheme. You could just select m and n and the number of keys left in the safety deposit box such that you need to have access to the box plus other key parts to spend. Thereby accomplishing the goal quoted above.

I have moved my bitcoins around many, many times. I have never been asked to produce a private key, and I don't even know where to find them. Is that wrong?

For most users, that's perfectly fine. The software you use manages your private keys for you and stores them in the wallet-file. If you use any of the standard Bitcoin wallet clients (Bitcoin Core, Multibit, Electrum, etc...) that's good.

If you use a web-service to manage your Bitcoins, then you don't have your private keys on your computer and you're 100% reliant on the web-service to keep your money safe. This is not recommended (except for small amounts for convenience).

blockchain.info runs mostly on the client, the server does not have your private keys in a usable form, and you are free to export them.

Nailed it.

If your house was like Bitcoin - secured by the laws of the universe itself, mathematics, you'd be fucked if you lost your keys.