Bitcoin Forum

I keep about 80% of my bitcoins in my Coinbase (US company) online vault, and about 20% online in my BTC-E (foreign company) account.  I always have a teeny tiny worry in the back of mind that I'll wake up one day and the headlines will read "US Government bans Bitcoin, freezes all Bitcoin assets" and I will be unable to access my Coinbase coins.  Am I paranoid?

Paranoid is the new sensible :D

But seriously, given exchange and wallet failures over last 2 or 3 years, ANY site seems to have about a 10% risk of getting fucked, whether by mismanagement, incompetence, hackers, regulation, just plain scamming or whatever.

So yeah, wouldn't leave coin on any of them.

Yes. I think you might have a tinge of paranoia.

In reality, the bitcoin "caretakers" have all been co-opted by the establishment, and are now, for the most part, under its control. Thus, there would be no reason for the US Government to ban the currency.

Keeping some of your coins in coinbase vault is a good idea if your not 100% sure about your offline storage solution, they should be safe from hackers there but government is another thing.
Have a look at something like Ledger or Trezor wallets.
Always a good idea to spread your BTC savings about a bit.
I always keep 70% cold storage, 20% Coinbase, 10% hot wallet or similar.

Good advices. It's not just the USG that you need to be weary of. Many things could happen to both of them and BTC-e is probably less safe for a multitude of reasons but I wouldn't keep large amounts online anywhere. Keep your 'savings' offline and keep a little in your online accounts to spend or trade etc.

If the coinbase vault works the way they claim, you would actually be safe in that scenario.  (Because, if it works the way they claim, they truly don't have access to all the private keys necessary to spend the multisig funds.)  Unfortunately, unless you examine the javascript code being used every single time you use the site, you can't be 100% sure that it works the way they claim.  Still, I think it's *likely* that it does, and that you would indeed be safe in such a situation.

However, as others have mentioned, when in doubt, always assume the worst, and if you and you alone don't control your private keys, then the money isn't yours.

I don't use coinbase's vault, because I'm savvy enough with Bitcoin to know how to secure my own funds.  But if I wasn't as good as I am, and I simply didn't know how to properly secure my funds-- then ya I wouldn't know who to trust, and indeed that would be a scary situation to be in.  So my advice to you is to learn more about tech and security, so that you can know enough to be confident in your own solution.  However, until that point, I think it's highly probable that you can trust Coinbase's vault, because if it works the way they claim, which I think it probably does, then you are safe.

 ::)
I don't know IF you're paranoid; however, also a foreign government could confiscate your BTC. So, I think if really want to be on the safe side you should resort to your own cold storage, maybe with paper wallets or pc wallets?
Maybe I am the real paranoid here.
 8)

Just My Two Satoshi

The government cannot actually "freeze" bitcoin assets as they would need the private keys of all addresses to effectively do this

They really cannot "ban" bitcoin either as it is something that can be traded in a p2p manner plus the various nodes can operate in ways that would prevent government detection.

But couldn't the USG issue an injunction against Coinbase and prevent users from being able to login to access their vaults and bitcoins i.e. effectively freezing them? 

By cold storage I assume you mean on a USB thumb drive in a safe or something like that correct?  I have considered that but the thought of large amounts digital money on a USB stick scares me.  luv2drnkbr may be right maybe I just need to educate myself more on bitcoin tech and security beyond online vaults and USB drives.

Yes, but, think of what things will be like when they go a little further and schizophrenia is the new sensible.   :D

I suggest you to make a cold wallet and remove your bitcoin from coinbase ;) , it is more secure .

Here (https://en.bitcoin.it/wiki/Cold_storage), You can find an explanation of Cold Storage (https://en.bitcoin.it/wiki/Cold_storage). As I said before You could use for your cold storage a Paper Wallet (https://en.bitcoin.it/wiki/Paper_wallet).

 8)

You keep 100% of your coins on online exchanges where you do not control the private keys....... punch yourself hard in the face.

I keep ALL my cins offline in my own private wallet that is not connected to the internet 24 hours a day :) so I have no worries about this. You can be sure if the US government ever did seize your Bitcoins. They would be selling them, HOWER they can not just seize them, a law would have to be passed, and they are not considered a currency so they have no legal right to seize them at all. If for a weird reason the US Government would recognize them as "Currency" or "Commodity" get your coins out of there, because at any time the US government has the right to Seize residents currency that could be related to terrorist actions. This includes USD, Gold, Silver, Bronze, platinum, or any other possible form of currency or commodity.

Coins at coinbase are not "properly secured" (per Holliday).

As was stated above, if you don't control the private keys, they are not your coins. You are just a creditor to whomever controls the keys.

Why do want to keep there in the first place? Given the history on exchangers going bust, that would tell you everything. Unlike paper money where you can't just keep everything in your house, bitcoin is totally different. Create your very own wallet and have your btc accessed only by you.

Are you familiar with the term "Goxed"?

They could crack the password like they did with some of DPR's coins, though if you have a ridiculously strong password this shouldn't be too much of an issue.

You should only worry about the way you store your coins.

Withdraw most of your coins to an offline wallet on your pc.

I have never seen some one who kept all his coins on exchanges  :D

Yeah, that could work "Sorry Mr Fed, only my alternate personality has the keys and he only comes out in tropical countries with no US extradition treaties."

Keep them in your own wallet.

If people start dumping USD en masse and a death-spiral starts to happen to fiat, the US government would certainly enact a ban/confiscation scheme on BTC. Anyone trusting a third party (ironic, since BTC eliminates that need) would immediately forfeit their assets.

Sorry to say but if some interested party was cruising the web and came here to find out about options to safely secure btc and they saw that cold storage (they'd be clueless) was the only sure option out there, then off they go and never return. If we're supposed to be getting regulations in place befitting this stuff to investors and allowing accredited outfits like circle and coinbase (perhaps even blockchain) to handle the masses, we'd better be having more confidence in the latter options for storage. This can't be the tech glee club storage option only coin. There's VC money going into all this stuff for a reason.

This.

You currently own 0 bitcoins.

Although I somewhat doubt the OP is using this feature, however coinbase does offer multisig vault where they control one key, one key is stored in your browser via your account and you control the 3rd key (for a 2 of 3 mulsig).

Paranoid is good if it may increase your chances of survival, like in this case. If there isn't a reason for you to keep bitcoin on exchanges (you aren't trading them actively), then don't keep them on exchanges. Even if you need to sell them fast, they can be transferred in half an hour and sold (if the need arise).

This.

I agree with most others - in your own offline wallet is best.

As far as government confiscation . . . in the USA at least I think that would be pretty far fetched.  I seem to recall Ben Bernanke actually sorta giving Bitcoin a little "wink" about a year ago.  He didn't necessarily say he was in support of digital currencies, but sorta suggested they might be "ok"

He still owns the coins in question, however not directly. He owns the bitcoin via his legal claim to the ownership of his accounts at coinbase and btc-e. The issue is that the assets in these accounts can potentially be taken via court order, ect, while this is not the case when you control the private keys of the subject addresses

Technically anyone with sufficient recourses could "freeze" bitcoin, governments included.

That is unlikely and is not the only reason why the government may freeze BTC accounts.
The death spiral of USD will be a long drawn out affair.  ;D

The US dollar is the world's reserve currency. If everyone starts "dumping" it, what are they going to trade if for? bars of gold? bitcoin? The reality is that if the dollar becomes suddenly worthless, so does just about everything else, including your life to anyone with a gun who wants your stuff.

Yes, the USD is still the world's reserve currency. However, there has been a slow but steady downtrend starting from around 2000, mostly due to a shift to the EUR and GBP.

I have seen idiot who had few thousands btc at exchange (3 yrs ago). He has not them anymore. But I think it is ok. As always money flow from idiots to lesser idiots.

They would need to invest in more money in mining equipment that would end up costing them more money then the amount of money they wold be freezing.

Additionally any kind of 51% attack can be overcome via the network adopting to the attack's methods and essentially ignore any found blocks by the attacker

http://imgs.xkcd.com/comics/security.png


The U.S. government stole everyone's gold in the 1930's so you can't trust them or anyone they have their tentacles into. More to the point:  what is your strategy for defending against the $5 Wrench Attack?

Move them to your own possession.

Stop using exchanges as banks.

Be your own bank.

There are several ways to secure your wallets, I'd reccomend to put them on a local storage that doesn't access to the internets daily.
I am a linux users but I had to install Windows on my pc due to my job, but I felt my coins were in danger being on a windows enviroment.
So ultimately I came up with a dual boot solution, I have my coins stored on my linux OS where I access to just for security updates whilst I use windows for daily use.
You can also setup a virtual machine on windows installed on a encrypted partition as well, or store your coins on a removable device (remember to backup!)

But for fucks sake, do not trust any third part.

You should never risk a penny in those sites or services, if you intend to leave them there.
There is always a huge risk .

It's like having a huge vault with 3 feet thick walls of steel and an unbreakable lock, but instead of storing your money in that vault you put them into a card box next to it. In fact, you are the exact opposite of paranoid - Pronoid (http://en.wikipedia.org/wiki/Pronoia_%28psychology%29)

Well in the OP's case his protection is the rule of law. If he were to be in possession of his own private keys then the government could use "a $5 wrench" to get him to give them his bitcoin, which would be difficulty to trace/prove actually happened. On the other hand since he keeps his bitcoin in services which hold his private keys on his behalf, the government would need to use the court system to take his bitcoin and the OP could use the court system to get his money back and/or otherwise fight a confiscation.

Not only is Bitcoin government confiscation, but also it is bank and money confiscation. It's about time the people got to confiscate government, banks and money... using Bitcoin.

:)

I wish there was something people could do against the government in that sense.
Currently people are helpless in these cases.

Wrong. But the training takes a little time. Start here http://www.youtube.com/watch?v=HOkAHRzuiOA&list=PLHrkQxgz0mg6kUBciD-HIvTXByqjcIZ-D.

Then go here http://www.myprivateaudio.com/Karl-Lentz.html and here http://www.youtube.com/user/765736/videos?view=0&live_view=500&flow=grid&sort=da .

Then Google and Youtube searches. And don't forget DuckDuckGo.

:)

The sad truth is that:

a) chances are that exchanges can lock your funds without BTC becoming illegal - like Paypal or banks do all the time, using AML or KYC or something else as an excuse
b) chances are that the exchange goes bankrupt in which case you will lose access to your funds too and
c) if BTC becomes illegal in major jurisdiction like USA, the value will drop so much that you don't need to worry about your coins

That is very different from the Roosevelt gold robbery in 1933, because gold did not lose value after Roosevelt robbed the gold of his peons. In fact, price went up from there.

If Obama outlaws BTC today and seizes all the coins on domestic exchanges, and even those of verified US customers on international exchanges, this would devalue BTC so much that the government would not benefit by selling it, but just from destroying the competition.

To be honest I think the biggest obstacle to higher BTC price is a, b, and c - not so much the Roosevelt scenario. Because a, b and c have been happening many times already over the last 2 years.

YOU ARE RICHER THAN 0% OF BITCOINERS

Time to change that I guess lol.. I dont like being dirty poor.

you should keep all of your coins offline except what you can afford to lose.  What happens when coinbase goes bust, or some employee of their company decides to steal your coins??

This is probably the most important and most difficult thing to understand with respect to Bitcoin. The anonymity of the transaction completely changes what we all know about accounts and our savings and our investments.

You are not paranoid...

Your decision to let these people hold your bitcoins on your behalf is not only extremely risky for your own personal finances but also puts others at risk.  Services like coinbase and btc-e (you mention them) become targets when people like you use them inappropriately.  This makes them more risky as exchanges for people who are using them correctly (move money in and out as quickly as possible). 

I doubt if the OP is bothered about the incremental risk of coinbase becoming a target because he has stored bitcoins in it.  ;D
It is still not advisable as he can secure his bitcoins better than coinbase can.

Right now they are in my Coinbase online wallet (i.e. "My Wallet").  What about the Coinbase Vault option?  https://www.coinbase.com/vault#features.  Could the USG freeze that too, or at least freeze access to my Coinbase account?  In this scenario maybe they couldn't "steal" the bitcoins from me but couldn't they indefinitely freeze them and prevent me from accessing them?

I'm not a tech expert but I am a staunch libertarian -- I have very little faith or trust in the USG.  I believe it's only a matter of time before the USG declares war on BTC, decrees it illegal, and freezes all US online exchanges and wallets.  I think this will happen right before a USD and US economic collapse (there are always insiders).  As another poster said I do think this will cause BTC to drop in value precipitously but if I am able I will buy more at that time, as I do believe BTC will rise like a phoenix as the new world currency.  Ok off my soapbox haha

keep small amount on exchanges to trade
keep rest on offline laptop, encrypted password

also backup on thumbdrive

plus divest some btc into altcoins imo
don't keep all eggs in one basket

and no, you're not paranoid
but a little foolish to keep in online exchanges

Any wallet storage solution where you don't hold all the private keys private to yourself is susceptible to being frozen by the government.

Here is a hint: if you can sign the transaction from a web browser on any non-specific computer and you don't have to enter a private key, then it is guaranteed that you have no control of your keys.

We have to be smart to choose wallet

Because in bitcoin world,everything is possible

If you aren't using them then best store them in a paper wallet. What happens if the gov. confiscates the coinbase.com domain and you can't log in?

Even if you are safe with coinbase as regards they will always pay back fund, you could be froze out by US gov for a couple years from access if something went wrong.

This, those are not your bitcoins my friend.

you keep 100% of your coins online. You could loose it all.

Be it to malware on your computer, default of coinbase or your government

Lots of risk there. Learn to use the qt-wallet and how to secure your privatekeys yourself.

In reality you do not have any bitcoin. You only have bitcoin when you have the privatekey.

Riiiiight... That's why they use the ugly euphemism of 'freezing the assets'. To get around that sticky Constitutional provision about no takings of private property without due process of law. Has the Philippine government not yet caught up with this legalistic sleight of hand?

Ok I'm convinced.  I'm taking them all offline and putting them on a USB stick & paper for redundancy.  Then I'll stick the USB stick & paper in a safe.

Is there a particular "bullet-proof" USB stick that y'all would recommend for this purpose, like one that would survive Armageddon?  I think they also make encrypted ones, is that necessary do y'all think?

What about this one?

Corsair Flash Survivor
http://www.amazon.com/Corsair-Flash-Survivor-32GB-CMFSV3-32GB/dp/B006B7R8ZG/ref=sr_1_fkmr0_1?s=pc&ie=UTF8&qid=1421074386&sr=1-1-fkmr0&keywords=usb+thumb+drive+heavy+duty+encrypted (http://www.amazon.com/Corsair-Flash-Survivor-32GB-CMFSV3-32GB/dp/B006B7R8ZG/ref=sr_1_fkmr0_1?s=pc&ie=UTF8&qid=1421074386&sr=1-1-fkmr0&keywords=usb+thumb+drive+heavy+duty+encrypted)

Very true. I only keep money on 3rd party sites when i'm trading. Other than that, not a good idea.

That type of thinking is a bit on the extreme side, but you never know what will happen. The good thing is it is hard to track in a lot of ways. The safest is probably to use some anonymous solution so that it cannot be tracked or linked to an address.

True. The government cannot seize from you only things that they know you have.  :)

 ;D hey dude,
keep your bitcoins in your own wallet ,for eg . multibit or electrum . Coinbase is a bank , you can't risk 80% btc assets on it . And so does the platform.

I'd suggest several USB sticks in various safe locations.

unless you are doing something illegal the US Government can not seize anything. Sure they can frame you and find ways liek they do with everything else, but they can not confiscate property. Not even in times of war can they just confiscate personal property, they can however in times of war confiscate cash, gold and silver to help them finance a war if they deem it necessary. Better sell yoru cash for bitcoins because war is the most profitable business there is.

There are laws called civil forfeiture laws that are used by both federal and state governments that essentially make people prove that assets were legally acquired and not gained via criminal activity. There has been a lot of controversy regarding this as of recently and hopefully voters will demand changes to these laws

Jeebs - I thought you were an ex-pat? You musta been gone a loooooong time. Google "civil forfeiture". It is a real problem, and it is quickly growing worse.


Never was it so. And it gets worse. Not only can they seize entire automobile manufacturing companies, they can seize you too, and put you on the front line in the role of slave cannon fodder.

https://www.youtube.com/watch?v=H6b70TUbdfs    :)

I feel much more educated on this subject now thanks to y'all's replies and to coinbase support

https://community.coinbase.com/t/saving-all-bitcoins-on-usb-stick-so-they-are-safe-from-usg-confiscation/233

Is there some reason you might think the usg might not confiscate all your USB sticks?

Coinbase is a great company, unfortunately The US is very corrupt and coinbase will roll over to their demands at a whim.
By storing your Bitcoins at coinbase the best outcome you can hope for is the government stealing 15% of them.

Do not store your Bitcoins in coinbase, but in a paperwalet or hardware wallet-

Read this -
https://bitcointalk.org/index.php?topic=858604.0

and this

https://bitcointalk.org/index.php?topic=899253.0

For more information.


This is not secure because all the IRS or an ex-wife has to have knowledge of is mere suspicion which can and will happen
 with normal reporting or an audit. Remove your bitcoin and transfer them a few times to other new addresses before
securing them with one of the options above.

Personally, I am very sloppy with my bitcoin and keep losing it, forgetting my passwords, and giving it away. ;D

I think transfer to other addresses should include processing such a transfer via one or more BTC-mixers (https://en.bitcoin.it/wiki/Category:Mixing_Services) like bitmixer.io (https://bitmixer.io/index.html), etc. Also, You may wish to use the Onion version of bitmixer.io to further improve your anonimity.

This Bitcoin mixer, is that acting like laundering your money buy mixing-up the lot?

I recommend storing your private keys in two or more geographic locations.
Obviously each location increases the chance of physical compromise and theft.

I eventually hope to upgrade to m of n keys stored in 3 or more geographic locations.
If more than one key needs to be compromised. looking into Tamper-evident seals (https://www.youtube.com/watch?v=W07ZpEv9Sog) may be something you want to consider.

Video summary: if your are serious about tamper-evident seals, you should carefully check for tampering every time you break the seal.

Very important point.
The tamper evident seals is an excellent security precaution that I will add to my best practices thread.

Yeah.. that would work like a charm..! I dont think other than super early adopters there r many ppl who have long time holdings..!

I don't see how tamper evident seals/bags are going to help anything. All that an attacker would need to do is break the seal, get the key, repeat until they have enough to sign a transaction and spend the unspent inputs to an address they 100% control.

It may take the attacker time to find , hack into , or acquire the other keys for a multisig. Knowing someone has some of the keys may allow to to prevent them mid heist. Additionally, knowing how the theft occurred is crucial for forensics after the fact.

Well someone could just take the tamper resistant/evident bag with them and destroy it. The only thing that tamper evident bags are really good for is when someone transports something specific to another place and there and the person transporting the valuable items do not want to be blamed for any discrepancies.

If they modify, take or destroy the tamper resistant bag than the user will know that it has been tampered with and thus be alerted to take defensive measures.

I don't think this would protect you from the government. The government has the ability to to search your property (as well as to seize your property) so they could easily take your raspberry pi and get the private keys

So to transfer coins from one paper wallet to another, I need an "intermediary" software wallet - ?  If that is correct, which one would y'all say has the best security:ease-of-use ratio? 

How about Bitcoin Wallet for Android?  https://play.google.com/store/apps/details?id=de.schildbach.wallet (https://play.google.com/store/apps/details?id=de.schildbach.wallet)