Bitcoin Forum

Wouldn't Gox and Stamp be the most likely teams that would effectively be able to protect their coins?

If they can't do it, how can I, or my neighbor, or my parents?

One day I know I will wake up and my coins will be gone, just waiting for it to happen.

Bitcoin has to solve this, it has been 6 years. I think trust-less is a failed pipe dream, when it comes to protecting assets trusting ourselves appears to be a complete disaster.

By using a multisig or offline wallet, silly. https://www.bitgo.com/ you are welcome.

Or buy a Trezor if you want to safely spend your bitcoins on a malware-infested windows machine.

using offline wallets, will not help the future of bitcoin. they need to be spent and used

What happens when you lose your trezor?

No, the failure point is the human factor, the mtgox investigation already revealed that it was an inside job, and stamp and their "hack" fall into the same category.

You, and the people you know can protect your bitcoins if you keep them essentially unspendable, I know...

It's a matter of chance.

Bitcoin won't solve this, it's not intended to. It's virtual cash, with the same security implications.

you get another one and init it using offline seed. if you lose offline seed, you lose your money. trezor is good as a device for spending money, several coins to carry around; and you won't need to keep your keys on a computer connected to an internet.

Offline storage.... fixes all problems, only use it online when needed, and then back into coldc storage, never any problems

Except for the pita of having to keep shuffling them around and the unlikelyhood that the masses would ever want to learn how or do that.

Offline storage doesn't protect you perfectly, you can lose your keys no harder than losing your car keys. You can come up with a thousand ways to protect your coins but none are fail safe. guess where i put my cold storage keys, a safe deposit box. So i trust the bank more than my house or anything else. Funny how we come full circle. If I put my offline wallet in a bank, why not just trust a bank with the keys themselves?

I am aligning with your last comment. Bitcoin is really an asset that is best managed as I manage my cash, smaller amounts that are kept reasonably safe and readily available for spending.

But this means I should move larger amounts of Bitcoin into another asset, which speaks to the longer term value of the technology.

I don't really care about Bitcoin replacing all banking, it really just has to find a permanent real niche in our financial system to be wildly successful. But i think even current adopters really don't know what it is best for.

It is not best for hoarding store of value, yet.... IMHO

Bitcoin have the same problems as fiat money, you can always be subject to a robbery.
When some steals your money, then would it be silly to blame the dollar bills for being robbed.

Credit cards has solved this problem by adding insurance to their service, which of cause cost money.

I can only see two way of bitcon becoming a mainstream payment system:
1. People start taking responsibility over securing their own funds (people are morons when it comes to handling money).
2. Payment services emerge with a similar insurance system as CC.

Now why didn't stamp think of that?  You should drop those boys a line, they sure can use a security expert of your caliber.

If people have not secured their cash in a thousand years they won't learn to secure Bitcoins. I think the problem is not solvable by joe consumer.
This is what is going to happen, which makes me wonder then how that new world compares to the current world. Haven't thought about it enough to decide if it is differentiated enough.

I think #2 only will make sense when the bitcoin value is large enough that banks feel comfortable taking ownership of your assets for you. They can hold it or reinvest just like other assets. But then again how is that world different from today's world?

1st off, nobody's cared much for more than 3 years. 2nd, a few years ago, it wouldn't've been surprising if a hack like this Bitstamp one was for *all* their coins. And 3rd, good solutions *have* arisen the past year: as others noted, Trezor, BitGo, etc. These things take time: more time than most people who don't have a hand in actually implementing this stuff think.

Gawd, why do people keep asking this?

Just don't use your Internet money on the Internet, or store it on any machine that has been connected to the Internet.  ::)

Choo Choo, here comes the mainstream buyers!

I agree that this is an issue. It is actually bigger than bitcoin and this past year has shown that the old ways of doing security on the internet are failing. It is especially hard for a business like an exchange. They have to expose some of their coins to fraud just to facilitate transactions. We all know that a hot wallet is more vulnerable but often a necessity.  

Perhaps it's time for hardware wallets and requiring 2-factors for everything? I'm on my third bankcard in a year and have begun removing my card data from shopping websites. Bitcoin is a more secure option than a card, but BTC wallets are still just files and subject to the same threats as other files.

i have an idea to drastically increase security but i can't code and nobody wants to buy it from me. I was even told by coders i can not have that idea because i am not a coder.
But i am also not willing to give it away for free so someone else get rich off my idea without giving me a slice of the pie. Here you go with the dilemma.

I decided to not release it at all and let people choke on this problem instead because not even these milionaires have spare coins to buy virgin ideas which could be groundbreaking.
Maybe get a patent later and sell that in case others can't improve on it.

Solutions are there but the programmers think they know it all and are lazy too.
It's not my problem in the end of the day.

Any solution that is built in the paradigms we operate in today will be vulnerable. You say your solution requires coding, I cannot believe you have come up with a software solution that is truly a paradigm shift. Software is vulnerable period.

For me to believe your solution is interesting, you would have to convince me that when you say "coding" you mean something different than what I hear when you say coding.

A great bitcoin solution would also be a great solution for Cash, is your solution a great solution for protecting my cash?

It is bitcoin's fault there was an inside job at gox, and god knows what at bitstamp?

A friend of mine used to steal steak from the grocery store he worked at when we were kids.  We better blame that god dammed steak.  There is something wrong with steaks.  If the grocery store cannot protect steak, how can I?  The steak is destined to fail, it can be stolen to easily. 

How many people have been mugged for fiat?

How many people have been mugged for bitcoin?

We better not carry fiat, and start only carrying bitcoin, because statistically speaking people who carry fiat are 100 percent more likely to be mugged and buttraped than those who carry bitcoin.

No, it's not Bitcoin's fault that it has attracted every interwebs scammer, hax0r & has-been con man.
But Bitcoin's problem (not fault) is that it has no mechanism for dealing with theft and fraud.

Oh I'm totally with you man. It's not really a bitcoin problem per-se. But because users have to be responsible for themselves, and because sometimes they aren't, the ecosystem has security issues.  It's still the safest payment system though.

Not necessarily but it does require some common sense.  Just because someone has $100,000 in cash doesn't mean they should stuff it all in their wallet and walk around with it everyday.  The funny thing is that nobody does and they don't even consider it however they do exactly that with Bitcoin.  Likewise it wouldn't really make sense to keep all of your money in a safety deposit box either.  "Oops need to buy a candy bar let me drive to the bank, show ID, wait for the guard, sign out my safety deposit box at the bank, remove $1, lock the box, drive to the store and buy the candy bar".  That scenario is also equally dumb and nobody would even consider doing that in the fiat world.   Why?  Most people would use common sense.  Somehow people know how to keep cash secure and part of that means limiting the amount which can be stolen while not making it excessively inconvenient.  Keep daily needs in wallet, an emergency amount in home safe, and bulk of cash strongly secured in safety deposit box (or federally insured bank).   People instinctively know how to do it when it is dollars or euros but soon as you say Bitcoin all the common sense goes out the window. 

Haha, welcome back!  Happy New Years and all the best for 2015!

Scary to think what people asking these questions would do if they'd store their wealth in gold bars :) "Gold is cool and all but shopping becomes a real problem for me"

^So we agree that BTC isn't money?  We're making progress :)

It is not bitcoin that is unsafe.
It is the exchanges.

On the exchanges you don't trade with actual coins. The coins never move. It is just the exchange software playing with numbers. Only time coins move is on Withdrawals and Deposits, and when hackers steal them.

See for yourself:

http://www.stealmywallet.com/

Coins never got stolen. If you know how to protect your wallet with a complex password you should be okay.
Check out the top 100 bitcoin rich list. It is all public. No coins got stolen...

We know that, but the issue of device security is a real one. As bitcoin pointed out several years ago, personal computing security habits were close to non-existent. If that's the only good thing that will come out of bitcoin, it already is worth billions.

Real progress is being made in how to make a small string worth thousands $ secure on consumer devices; that should get rid of 12345 passwords and windows xp zombie machines eventually.

For now, as a temporary measure, there are special wallet sites and devices to keep your hot wallets relatively safe even with no knowledge of computer security basics. It should only get easier with time, we should arrive at actually secure home computing systems.

Right but really how many people keep 100k in cash? NOBODY I have ever met keeps 100k in cash, not a single solitary millionaire, and I have met a lot. Not a single solitary drug dealer keeps that much cash. A drug lord yes, but their security system is far better than mine ever will be.

Keeping it in the bank account, or deposit box, or personal safe, is keeping it in cash. You never met people who keep 100k in cash? I am surprised. Come to europe I'll show you.

You are not required to maintain a public facing website that is specifically designed with the intention of buying and selling bitcoin to the whole world. That right there increases your number of attack vectors. Also you probably don't have millions of dollars worth. (or if you do then congrats to you!)

Keep what you need day to day on your desktop, laptop, phone whatever. Keep the rest in 'savings' (offline pc, paper whatever you choose).

The only way bitcoin will work as a currency(still needs to grow a lot more to function as a currency; the speculation phase) is if Average Joe gets told "Use this site to safely secure your bitcoins and use this wallet to safely spend them". I think this will happen in the future which is why I still have alot of faith in the protocol. Is there any reason to question that this would not happen?

The way it is now is "Do this compliacted fucking shit that you will never understand to secure your bitcoins, if you don't know how, then use this site and pray to god they'll be safe there. As for spending there are 10 different wallets. Use any of them because you won't understand a single one of them anyway."

What I'm saying is that there should be an easy and common way to, both secure and spend, that all people who use bitcoin should be pointed to, either by word of mouth or websites such as bitcoin.org. Of course there can be several options but there should be one, the best of them, that is listed with a lot bigger letters and a recommendation sign.
A centralized system is better in this aspect but if a decentralized system can do this, it's obviously 10 times better. Which again, is why I have no problem maintaining faith in the protocol.

As dumb as it sounds, personally securing large sums of their own money is a new idea to the American average joe. Out of the Great Depression came the FDIC. Since then, the public has had backed protection in their bank accounts from the kinds of troubles Bitcoin is facing today. Many people believe leaving coins on the exchange is safe because they have to log in, they have a password and that log in is linked to their phone. It's a real dilemma to overcome. A third party arbitrator with multisig would be awesome.

This is a good point. But although there is no recourse, controlling your own private keys / having exchanges go multisig is a step in the evolution of the industry. There has been bitcoinica, mybitcoin etc etc which were rip offs / hacks that happened on the back of third parties controlling the priv keys. Now, with Stamp, they had a cold wallet and hot wallet so the 'damage' was limited to the hot wallet. This is better, but not great. Not good for PR, for that exchange and possibly not for customers (depending on how it pans out).

In the real economy, and probably with Gox etc, insiders get out and big interests aren't hurt but the average joe gets beaten and there is often no recourse. Some events make it into the vernacular of the times - 'getting Corzined' - or some events get so smothered in disinfo (2008 crisis & subsequent bailouts, 'austerity' here in Europe).

Unfortunately, the concept of decentralization is very hard to understand. When you factor computer security into this equation most people become like an 80 yr old trying to figure out the internet for the first time. Its a long curve in learning. As Death and Taxes wrote "Not sure why but soon as it becomes Bitcoin all common sense goes out the window."

We are seeing more and more exchanges go multisig and hopefully this stops exchange hacks and becomes standard. There is a lot of wishful thinking on here and you're always quick to trivialize it and that's fine (and funny). My hope for this bitcoin experiment is that the industry will adapt and the issues that skeptics hold up as signs of ultimate demise, will be innovated away in the future.
 

Bitcoin's biggest problem?

Well, here are the three biggest problems as far as I can see:

1. Energy
The energy required by the network to confirm transactions is now a problem - problematic because of the giga-Watts, but more importantly, because of the centralisation of mining farms into the hands of a small number of people/corporations. Also problematic is the significant increase in the cost of transaction transmission.

2. Transaction authorization time
Visa/Mastercard are superior to Bitcoin in this regard - they authorize in seconds. You can't buy a coffee if you've to wait 30 minutes. It'll have gone cold by then.

3. Complexity
Bitcoin is just too complicated for normal folks who have more important things to be doing (working, family, hobbies, socializing).



Bitcoin is a really brilliant theory that came into being by the thought processes of a man who thought he could "do currency" better (create a currency that is distributed, fair, accessible and can't be easily manipulated by big government).

The theory of cryptocurrency is extremely elegant, but I'm afraid that the underlying theory, architecture and implementation of Bitcoin is fundamentally flawed. We need a much more polished cryptocurrency for use in the modern world (and by future generations) - a cryptocurrency that is: energy efficient, instant, easy-to-use, anonymous and secure.

I would rather say biggest problem of bitcoins is untrustful people who are operating businesses.

There is no problem with bitcoin, just like gold is not responsible for the theft of gold. The users lost their coins, just like they lost their other properties. Everyone will lose something in his life, so a wise move is to diversify the risk

For fiat money people has got used to relying on centralized authorities to take care of their money, and the price is that they become the slave of those organizations. If you want freedom, you need to do more homework

I do not see any problem with bitcoin.
i see yes is the lack of security on servers that use bitcoins for some purpose

Classic denial.

Rationally (please leave your emotion to one side), do you have any reason to believe that energy, transaction time and ease-of-use are resolvable problems under Bitcoin?

I am arguing that all these problems are resolvable, sure, but not by Bitcoin.

As Andreas Antonopolis has pointed out, humans have at least a 10,00 year history of physical security and we're pretty good at it. We have had only a couple generations at most of information security and we still suck at it, relatively speaking. We'll get better, but it's a steep-ass learning curve.

You can also buy a Ledger Wallet (https://www.ledgerwallet.com/r/56b8), which is much cheaper than Trezor.

Frankly the future of bitcoin wallets lies in multisig web wallets that are insured. Bitcoin has to be as simple as using hotmail.com.

You can put your *encrypted* offline wallet in several bank deposits (copies).  The encryption makes that the bank, or any law enforcement, or burglars that break into the bank, or whoever opens your bank deposit, cannot do anything with it.  The fact that you can have several copies around the world in different bank deposits means that you cannot loose them (even a partial nuclear war would, hopefully, not bomb out all the banks where you have a copy in a bank).
The encryption phrase, you keep it in your head.  Eventually, you encode it in a line in your will.

As such, you have to trust the bank(s) much less than you would need to trust them for handling your money directly.

You keep one or two copies in your home (also encrypted of course) in order for you to have easy access.  The day your house burns down, or that burglars steal your USB stick, or whatever, you simply go to one of the banks where you put a copy, and you make a copy again.

dude, currently the privatekeys are there on the silvertablet to take for any malware programmer with half a brain encrypted only once with a single password  that's in most cases easy to brute. There's about 1001 options to improve on that, yet nobody seems to even realize the problem. You don't need a paradigmshift to improve on the miserable security of the privatekeys and on userfriendlyness.
As it is right now is a nightmare for security and noobs.
And as it is right now (years without ANY improvement on it) i think it will take another decade and private companies with whole thinktanks to figure out even what's the problem.

That's a nice start, but there are several problems.
First of all, passing the secret to your family members in case you are deceased unexpectedly (who expects this, right)? Trusting a key to a lawyer is not very wise.
Second of all, couple of guys come into your house, politely hold a gun to your head and ask you to decrypt that little wallet you so conveniently have in your house. Now all of your security goes down the drain.

Much better solution would be to have a multisig wallet that would require secrets from, say, 3 out of 5 trusted people to sign. This way robbing you becomes impossible, your death does not block your family from accessing funds, and you can store the wallet anywhere you want, even on dropbox. Exact numbers depend on your family configuration, surely if you don't have people whom you can trust fully this also would not work - but for such cases, I'm sure there will be trusted third-party arbitrages soon who could hold your extra key and who will be able to sort it out in case you split up with your wife.

But the one thing which is clear now - only when you yourself can not access your funds immediately, they are safe. For spending money, use single signature wallets, but for any substantial amounts it's just asking for trouble.