Bitcoin Forum

Simple question - will I ever be able to store my bitcoin with an organisation who will provide secure storage for it, whilst at the same time allow me easy access to it (like a bank currently does with my cash)?

In the past, online-wallet sites have been untrustworthy. We all know that... Is it ever going to change? What does it take to be considered both trustworthy and secure?

People (especially non-geeks) would definitely go for this, and would gladly pay a fee to have someone look after their bitcoin if it reduced the risk of loosing it due to n00bness or a virus or whatever. (Who could currently safetly store even $100K in cash without a bank? Not many people I don't think)

What does it take to have an entity that can provide this sort of thing - security and trust being the two biggest hurdles as far as I can tell. How does this 'bank' become trusted? And can it ever be truly 'secure' eg social engineering etc.

Will it ever happen? Are there fundamental reasons why it won't?

Very few people keep suitcases of cash or bars of gold either at home or even under their own security offsite etc, yet bitcoin as it stands expects people to do this. Seems kinda strange nobody has been able to offer this service yet.

http://flexcoin.com (http://flexcoin.com)

Flexcoin kind of fits the bill.

flexcoin is a really amazing site, a great idea, I am very impressed.

However, what distinguishes it as trustworthy as compared to something such as MyBitcoin? How do you verify that this organisation will keep your coin for you?

I guess this boils down to philosophy more than technology, but I can imagine a lot of people would genuinely wonder how to verify the trust of what is essentially 'just another website'.

Strongcoin and blockchain.info require little to no trust thanks to their browser encryption, and they let you print paper copies of your private keys.  Stashes of cash or gold take up space and need security, and banks need your deposits as reserves for their fractional magic to generate profits of them.  A flash drive or piece of paper don't take up much space and don't require much physical security. And there is no fractional magic profits yet with Bitcoin. Not much incentive for banking services.

I print paper wallets from a saved offline copy of bitaddress.org.

Call me skeptical but I don't trust websites that offer browser side encryption. That's because they could be compromised and changed to disable such encryption anytime.   No one is going to "view source" and audit the page with each use, so the benefit is illusory.

The address generator at bitaddress.org is a single static html page needing no network.  It can be saved to a flash drive.  If you save a copy of bitaddress.org's homepage and it still works on a computer with no Internet connection, it's probably safe.

i've been looking for an easy way to generate 11 separate wallets.

i just opened bitaddress.org on another tab in Chrome.  i then turned off the wifi connection on my laptop and the address generator continues to work just fine.

are the addresses this html page is generating totally safe and considered an offline wallet?

Some use safety deposit boxes, you could do the same thing with bitcoins.
Make a few offline private/public keys, print them and put in safe, store a copy of just the public keys, and transfer surplus to the stored addresses.

A bit difficult to get them again, but its safe if the private keys have never been on a internet enabled machine.

I sure hope so, I have thousands of BTC on Bitaddress.org printouts (mine were generated on a machine that never saw the internet ever)

You can download the entire code for Bitaddress and run locally offline. It will prevent that that possible case where they have been hacked and a tiny snibbit of code has been changed that no one would notice for a little while. I think it would be great if they just made a github repo that you could download from, and this way you can keep track of any changes easily.

You should also consider using botg.sh if you run linux on any boxes. I am going to be switching to that for PrintCoins this way I don't have to copy and paste from Bitaddress (I'll just enter quantity and denomination and click print)
https://github.com/RobKohr/PHP-Bitcoin-Address-Creator/blob/master/lib/botg.sh

Trust takes time. Transparency and enough real world info for accountability go a long way as well.
I would like to know where Flexcoin LLC is registered?  (I checked PA and Fl and could not find anything.)
Who owns it? (real life names)
Where do they live?
Are there any plans to 'bond' some amount to protect against loss of the coins in either 'hot' or 'cold' storage?

For a bank as a store of money, I think that there is no reason to store your coins with a bank.

I think having a seed for a deterministic wallet stored on multiple machines and backed up on paper that needs to be combined with a password of some strength is all you need. Once you have that, you don't need a bank.

Let's say there are some large number of users that use a single bank, and it is open about its book for transparency's sake (very important to prevent fractional reserves). How many millions of dollars could they be trusted with. Does the trust really matter? Remember, the criminal underworld is becoming an early adopter of bitcoins. People that would have no problem pulling up to some bank owner's house in a black Cadillac and some serious muscle ready to brute force a password out of someone. At that point, it isn't a matter of trust. The bank will be compromised by its weakest link.

This isn't a fantasy folks, and that is a reason so many coins should never be trusted with one individual. That combined with the trust in that person's moral fiber is a bit much.

Bitcoin banks only work when they don't have the ability to walk off with your money. Especially with a money system such as bitcoin which has no legal recognition. If someone took or lost your coins, what are you going to do about. Try to sue for virtual currency? That would be the same as trying to sue for WoW gold, or Zynga goats.

So for the 99% of people who don't even own multiple machines let alone know that they should use them in this manner and least of all even care to use them (laziness etc)... what about them? I think they need a bank. You grandmother would never use multiple machines to store bitcoin, but she can use fiat cash and she can use a bank. Hence, imo, she can't use bitcoin. I think this is a big part of allowing adoption of bitcoin as a currency, and the current attitude of 'its safe as it is' contributes somewhat to the hinderance of uptake.


This applies as much to regular people as much as to banks if not moreso. Banks can use the collective money from fees to provide legitimate security and 'hired muscle' to protect wealth that an individual never could. Any responsible/trustworthy bank would do this

I always think to myself, if my boss paid me in hard cash, I would be nervous as hell trying to store that in my house or wherever. But really, this is exactly how bitcoin works, and it seems kinda, not unsafe, just... absurd. It's not right to expect people to put themselves at those sorts of risks.

You present an interesting perspective ... worth thought. I'm not sure how to respond yet other than to say it is an interesting idea. Bitcoin wallets are quite different than keeping your physical cash in a physical wallet in your home. I, too, would feel uneasy keeping (say), $10k in cash in my house. But a bitcoin wallet can easily be kept encrypted. It can still be stolen, but if encrypted cannot be used by anyone other than yourself. As long as you keep backup copies your bitcoin will be safe. So, personally, I see this as a non-issue. But you would classify me as a 'geek', and perhaps this is why I am comfortable with a wallet kept 'at home'. Someone who you classify as 'grandma' may see things differently.

My grandma kept her money in here sock drawer and under the mattress. She has no trust of banks.

It is fairly common for those who lived through the great depression. That and an affinity for condensed canned milk.

Anyone can open an account at www.bitcoin-central.net (http://www.bitcoin-central.net), deposit their bitcoins for safe storage and withdraw to pay their online purchases.

Now to store a large amount of bitcoins, it makes sense to use a paper wallet.

Yes, when real BANK of fiat money begin to deal with bitcoin.

It already does. Look up the definition of what a bank does, and you'll find that MtGox fits that description quite well.

Yep there have been quite a few banks. I am waiting for MyBitcoin to open back up so I can put some bitcoins in.

Not a simple answer.  Your cash is safe because the FDIC (Federal Deposit Insurance Corporation --> www.fdic.gov) insures your usd in a FDIC bank (which all of them are).  We don't have, and possibly don't want btc being insured by the FDIC.

With security you get less liquidity.  For every btc taking part in some networked system in which it can be transferred on a moments notice, is going to be under risk from threat agents.  When you move btc away from networked systems and into a storage situation there is substantially less, but different risk, and at the same time a liquidity problem rises up.

I wouldn't trust anyone with holding an amount of btc on my behalf that I couldn't walk away from with little regret.

Here is a little tip - You must take a risk based approach to how you hold your btc (this is from an older post of mine):

1 - Quick access spend thrift account (no more than 200 usd exposure) - Windows XP/7 with standard bitcoin software.  Password protect your login and make sure your running some decent anti-virus

2 - Medium access large account (no more than 5,000 usd of exposure) - VMware image of Ubuntu JeOS with OS based full disk encryption.  Has no services running (if it's running apache you fail) and a stable release of bitcoind.  Connect this only to known trusted nodes when needing to move coins

3 - Hard access mother account (all those secret coins generated the first year) - Every possible disk that ever held a private key is suspect.  Almost all of those should have been wiped with random data 5 times.  <-- before doing that, account key pairs should be replicated to 3 types of medium (dvdrw, flash drive, usb ext. hd) and each of these medium would be placed at separate bank security deposit boxes

While it is correct that all banks have some form of FDIC insurance. Not all accounts or depsoits qualify for fdic insurance..  There is a lot of fine print to read on it. Don't quote me on this but I believe the TL;DR on it is that noninterest-bearing accounts are coverd; legal max $250k with a few exceptions varying by bank. SOME Money Market deposit accounts are covered up to a standard max of $250k. Many interest-bearing accounts are NOT covered..
Here is a quick read of what is insured and not insured; http://www.fdic.gov/consumers/consumer/information/fdiciorn.html
Sadly, though you see the terms 'covered no matter what', there are some things that are NOT coverd, no matter what.
They are,
Treasury Certificates
Theft or Robberies
Stocks and Bonds
Annuities
Money Market Mutual Funds

I certainly agree we do not want the fdic to insure bitcoins. ;p

I would have thought there's no need to insure bitcoins so long as banks do genuinely 'hold' them and don't dig their own graves by loaning at an interest rate which would of course eventually mean that there were more loan repayments to be made than bitcoins to pay back. Actually this point makes me wonder if 'bitcoin loans' can ever be meaningful.

It is this 'pure holding' bank that I am interested in, to provide security for me (which is what I pay the bank for). I believe that such a bank can exist (ie there is a method of security that means you can always get back your coins) and that it can be trusted (not sure how that trust can be established, and certainly can't think of a 'mathematically verifiable trust').

Safe deposit boxes are one such style of bank. However, they don't really provide me with the infrastructure (especially digital) to easily move the contents of my deposit around (eg use some of it to buy goods)

I think that ultimately bitcoin banks will exist and be successful and trustworthy, however I personally like that I don't have to trust them and I have the option to safely (encryption etc) store them on my own terms.

It's not the interest repayment that causes the problems, it's the fractional reserve loans.  Banks don't loan out depositors money and collect interest on repayment.  They hold depositors money as a reserve to make loans, and the reserve is only a fraction of the loan amount, the rest is just created and interest is due on the entire amount.  I hope this never comes to Bitcoin.  This thread has good info on banking https://bitcointalk.org/index.php?topic=56088.0 (https://bitcointalk.org/index.php?topic=56088.0)

ty, this is a much more accurate response than the one I gave earlier about the issue.

Thread conclusion?

A bitcoin bank can exist, and there have been several.

They pose some serious issues with both trust and security. There are various levels of security (likely depending on your holdings).

Bitcoin banks present an easy way for new users to get started, which is pretty bad as they are the people that know very little about what they are getting into.

I think wallets have a long way to go on usability & security (some better at one than the other) and it would be great if they get to a point where they are easy for someone new (potentially a poor old grandma) to use without getting confused.

Does granny have a credit card or bank card? Those now have a computer built in so that they can participate in public key authentication without revealing the private key (to discourage cloning). I currently have my bank card in a aluminum foil faraday cage pending X-ray and Near-feild reader removal. A bitcoin smart-card would likely have a display and keypad built-in, such that you would not have to trust your "normal" computer.
 

You can have your boss sent the Bitcoin directly to a paper plastic wallet buried at the bottom of the ocean. That way, you don't have to physically carry the bitcoin at predictable intervals.

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Many banks can and will accept bitcoin deposits someday soon, if not this year then the next few years.  These banks will presumably provide banking services for customers with accounts denominated in bitcoin.  Just like banks do for other currencies.

If you can't wait for that, you can use a non-bank institution as other posters have suggested, but if they lose your money, you won't have much recourse.

Storing bitcoins in some sort of bank is not a non-issue. So I concur 100% with the posts above saying that we need to have those in place. It's not even about actual grandmas, there are people who are considerably younger and won't be grandma for many years who already have 'grandma' status when it comes to computers let alone online banking let alone bitcoin.

I'm not talking about people still using fax machines - those are cool. I'm talking about people who choose not to incorporate computers into their daily life to a degree that it will ever make them use a bitcoin client. So if you say using bitcoin and making sure your money is safe is a non-issue really think about this to check your geek status:

5 years ago, would you have considered running through Diablo 2's hell 'naked' in a team of three in order to look for rare items to drop so you could sell them as virtual items on ebay? If you can answer this question with 'yes' you're a nerd and should not be making real world suggestions on how it's no problem to create multiple btc accounts or print out private keys. Even many bitcoins adopters will probably ask 'what are those private keys anyway?'

Forget flexcoin. But could it be a good idea to convince pool owners to turn their pools into banks? Some of them have earned themselves a lot of trust already, they are tech-savy (pool security, programming code, DDOS attack counter measures) and have little to no incentive to run away with our money.

Do you have any source for this?  I don't know of any US banks that take bitcoin deposits, and don't see any incentive for them to do so. But I like the optimism, and would be happy to be wrong.

It's not flexcoin LLC it's actually Yooter InterActive Marketing,  1 south second street pottsville, pa 17901 ...

the parent company is http://www.yooter.com

I know it because Yooter is my company.

:)