Bitcoin Forum

Bitcoin is dangerous and people should steer away from using it. This is a bearish opinion held by many traditional investors, but not one you would expect from the man responsible for turning the virtual currency into a commodity worth billions.

Yet, that is the view of Gavin Andresen, chief scientist at the Bitcoin Foundation, the closest thing to a central bank for the nascent cryptocurrency. He is considered the leading custodian of the bitcoin code, the rules and software used to run the cryptocurrency. But far from being a cheerleader, Mr Andresen, is warning ordinary people to avoid bitcoin — for now.

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“It actually is dangerous and people should be aware it’s like the early internet,” he tells the Financial Times. “If you lived through time, you remember lots of press articles came out saying don’t give internet companies your credit card details. But the internet grew past that. Bitcoin will be the same way. Over time, I will stop saying to people, ‘Don’t use it unless you’re technically proficient enough to keep your computer secure’.”

Concerns about security were heightened on Monday after Bitstamp, Europe’s leading bitcoin exchange, suspended its operations following an apparent hack that led to the company losing 19,000 bitcoins, worth about $5m.

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These safety issues have led to a steady fall in the price of the cryptocurrency. At its peak, bitcoin was traded for $1,240 on the Mt Gox exchange, the Japanese group that filed for bankruptcy last year after losing about $450m worth of bitcoin in a cyber attack. According to Coindesk, the bitcoin news site, the price is now about $283.

“Bitstamp is handling the incident well,” Mr Andresen says, by being transparent and explaining to customers what happened. “I hope they take the time to publish a complete postmortem on details of the attack, so other exchanges can learn from their mistakes.

“I hope Mt Gox does the same because we still don’t know what happened.”

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Mr Andresen is considered the protégé to “Satoshi Nakamoto”, the name adopted by the supposed inventor of bitcoin. After collaborating on the project over email, Mr Andresen was given Mr Nakamoto’s blessing to become the “core maintainer” of the bitcoin source code, working full time on the project.

While Nakamoto appears to have vanished, Mr Andresen wields huge influence on the development of the currency. He helped to found the Bitcoin Foundation in 2012 and groups from financial regulators to the CIA seek his advice.

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His knowledge of bitcoin has led to suggestions he may actually be Nakamoto. “I am not Satoshi,” he laughs. “Ask any geek. Point them to code written by Satoshi and point them to code written by me. You can tell, they’re not the same guy.”

His theory is that the inventor is “a young academic type, somewhere in the world. I don’t think Japan. Perhaps the British Isles actually because in Satoshi’s communications he [used British rather than American spellings]. I think there’s an academic thinking about other stuff, sitting on a big pile of bitcoin.”

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The one person who Mr Andresen says is definitely not Satoshi Nakamoto is Dorian S. Nakamoto, the Japanese-American engineer that Newsweek named as bitcoin’s inventor last year. Mr Nakamoto, who lives in California, denies any role in bitcoin.

“He’s not the Satoshi I talked to,” says Mr Andresen. “I feel sorry for Dorian that so much personal attention got focused on this person. That shows why the actual Satoshi has worked so hard to stay anonymous.”

His influence at the Bitcoin Foundation could soon increase, after it emerged Jim Harper, its global policy counsel, was dismissed earlier this month. The move is seen as a shift in focus for the non-profit group away from policy and regulation and back towards developing bitcoin’s core technology.

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“It is always hard when an organisation pivots and priorities change,” he said. “Effective organisations have a clear mission and focus and there is plenty of work to be done on the technical front to keep the foundation busy.”

Though Mr Andresen concedes bitcoin remains in the early days of its development, he is confident it will mature, noting that more than $300m of venture money had been invested in bitcoin start-ups in 2014.

Mr Andresen is also at the forefront of efforts to ready the virtual currency for wider use. As it is currently designed, the bitcoin network can process just seven transactions a second. By comparison, Visa is capable of handling close to 50,000 transaction a second at peak times.

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Mr Andresen’s proposed solution is to increase the size of bitcoin blocks, the files that hold the data that underpins the currency. Their size limits the speed at which the bitcoin network can process transactions. Larger blocks can contain more transactions and, therefore, increase the capacity of the network.

But there are concerns that increasing the block size will put a strain on the network. Bigger blocks packed with more transactions requires transmitting and storing more data. This may also make it difficult for hobbyists to store a full copy of the “blockchain”, centralising power in the hands of corporations that can afford expensive servers in big data centres.

The issue is being debated by bitcoin developers. But Mr Andresen says that “we’re really close to consensus” to approve his proposal, a move that “in 20 years, would allow us to have enough capacity to handle every single electronic transaction in the world”.

While Mr Andresen tries to prepare bitcoin for mass usage, he advises caution to investors. He holds thousands of bitcoins, enough to retire comfortably. But he has been cashing them in slowly, investing in stock market funds instead.

“Bitcoin is wild and crazy investment that I’m diversifying out of all the time,” he says. “If bitcoin is wildly successful, I’m still holding on to a good chunk of bitcoin. It could be worth tens of millions of dollars, but it could be worth zero. It doesn’t make sense to hold more than that amount. I don’t have a desire to be a multi-billionaire. That’s not what motivates me, I have no desire to be filthy rich.”

Copyright The Financial Times Limited 2015

Found on Reddit:

http://www.reddit.com/r/Bitcoin/comments/2s3f2c/so_bitcoin_gavin_andresen_made_the_front_page_of/ (http://www.reddit.com/r/Bitcoin/comments/2s3f2c/so_bitcoin_gavin_andresen_made_the_front_page_of/)

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Here's the link to the full article:

http://www.ft.com/cms/s/0/9b27fb72-967f-11e4-922f-00144feabdc0.html#axzz3OafGQGCA (http://www.ft.com/cms/s/0/9b27fb72-967f-11e4-922f-00144feabdc0.html#axzz3OafGQGCA)

Couldn't read the full article (reading the article online requires registration and free registration can only let you read 3 articles per month; how lame is that?)

Couldn't read the full article (reading the article online requires registration and free registration can only let you read 3 articles per month; how lame is that?) but it is possible that he also talked about Bitcoin's strength and potential, but the newspaper chose to quote the other part.

We have seen such media attempts in past and this one is no different.

Search the title of the article on google, and click from it.
In this case "A bitcoin believer on its perils and its potential", you will be able to read it.

Though Mr Andresen concedes bitcoin remains in the early days of its development, he is confident it will mature, noting that more than $300m of venture money had been invested in bitcoin start-ups in 2014.

Mr Andresen is also at the forefront of efforts to ready the virtual currency for wider use. As it is currently designed, the bitcoin network can process just seven transactions a second. By comparison, Visa is capable of handling close to 50,000 transaction a second at peak times.

While Mr Andresen tries to prepare bitcoin for mass usage, he advises caution to investors. He holds thousands of bitcoins, enough to retire comfortably. But he has been cashing them in slowly, investing in stock market funds instead.

(...)Bitcoin... needs banks that can assist with transactions...[/b].

While Mr Andresen tries to prepare bitcoin for mass usage, he advises caution to investors. He holds thousands of bitcoins, enough to retire comfortably. But he has been cashing them in slowly, investing in stock market funds instead.

“Bitcoin is wild and crazy investment that I’m diversifying out of all the time,” he says. “If bitcoin is wildly successful, I’m still holding on to a good chunk of bitcoin. It could be worth tens of millions of dollars, but it could be worth zero. It doesn’t make sense to hold more than that amount. I don’t have a desire to be a multi-billionaire. That’s not what motivates me, I have no desire to be filthy rich.”

At least he's being open to tell the truth. If look at it positively, it's even worse if let's say for someone new to bitcoin who has completely zero knowledge about bitcoin security and ended up getting hacked and later comes up with a negative conclusion. It's like he already telling you to take security seriously before you even get started into bitcoin. So what is wrong with that?

His warning is legit, but he is scaring people off bitcoin. I think new users should start off with a small amount of coins to learn and not avoid it completely.

If you look closely, you can see the antennae with which he receives instruction from the CIA.

nice. gets the word out.  and the more you say 'don't...', the more they get curious.  ;D

His warning is fair. 2015 is the year to make Bitcoin ironclad.

The ideal message should imo be "Give bitcoin a try, but don't put too much money in it".

+1

I don't get to write the headlines, though...

Did u really say "Bitcoin is dangerous, avoid it" as is being discussed here (https://bitcointalk.org/index.php?topic=922041.0) ?

Bitcoin is dangerous and people should steer away from using it. This is a bearish opinion held by many traditional investors, but not one you would expect from the man responsible for turning the virtual currency into a commodity worth billions.

This is the most sensible thing I've heard anyone in a position of authority say about Bitcoin yet. I applaud Mr. Andresen for having the guts to say it. Someday, Bitcoin will be a magnificent tool to financially free the people of the world. However, someday isn't today. We can't allow our greed and personal desire for success to overpower logic and reason. The more people we invite to use Bitcoin today that are disappointed with the experience (for whatever reason) the fewer the number of users we will have tomorrow. Slow and steady wins the race. I'm sorry I ever believed you were just a puppet of the business community. That's obviously not true because they have to hate this viewpoint.

Sensible , but too far possibly? What is wrong with suggesting non technical people to make a small investment with mutisig and insured services like circle and coinbase where they take on the security responsibilities?

This is the most sensible thing I've heard anyone in a position of authority say about Bitcoin yet. I applaud Mr. Andresen for having the guts to say it.  ...

He didn't say don't use Bitcoin. The idea that Bitcoin is for people willing to take the risk and have enough knowledge to be sucessful needs to be presented.  All the businessmen want is expansive growth because profit hides there. Wise businessmen will realize that profit will be short lived.

“It actually is dangerous and people should be aware it’s like the early internet,” he tells the Financial Times. “If you lived through time, you remember lots of press articles came out saying don’t give internet companies your credit card details. But the internet grew past that. Bitcoin will be the same way. Over time, I will stop saying to people, ‘Don’t use it unless you’re technically proficient enough to keep your computer secure’.”

Actually, he did tell people not to use it unless they are technically proficient according to the article:
 

I applaud him for his intentions and honesty but I would suggest this is going too far as I would be comfortable recommending my luddite mother invest a couple thousand on the side and store it in the insured multisig vault with coinbase. People should diversify their investments and that includes partially investing into Bitcoin.

P.S.... perhaps the author was quote mining him and left off the part where he recommended non-technical people to use regulated and insured mutisig solutions?

You just clarified what I said. Currently, Bitcoin is not for the faint of heart investor playing with tomorrow's morgage payment. It's not for world travelers that need to ensure they have enough money to safely travel. It's not for going to the grocery store with three kids in tow. It's an experiment that hopefully will lead to all of the above someday. When you get screwed by a company they will likely lose your business forever and you will give a negative report on that company to everyone that asks about them. Why should anyone want Bitcoin to suffer the same fate? Tell them the truth now and they will trust you tomorrow.

I think the problem is not with what Gavin said but the way he was quote mined and editorialized. Hopefully, he doesn't suggest non technical people shouldn't have 50 usd of btc on their cell phone and a couple grand(if they have other investments) in an insured multi-sig wallet like circle or coinbase.

I think the problem is not with what Gavin said but the way he was quote mined and editorialized. Hopefully, he doesn't suggest non technical people shouldn't have 50 usd of btc on their cell phone and a couple grand(if they have other investments) in an insured multi-sig wallet like circle or coinbase.

...people should be aware that's like the early Internet...

True, the next few years will be the time to improve bitcoin security

I think every bitcoin user need to at least understand what is a private key. There is no short cut, just like people must be able to learn how to identify gold in order to make sure they don't get fake gold

In a trust-less model, any security solution provided by third party (even the bitcoin core application) has a potential of being compromised. (I have seen fake bitcoin applications taking user's coin). If people want to put real serious money into bitcoin, they must be 100% sure that their coin will not going to be compromised without their own fault, and each step of the security measure must be clearly understandable by average users. That will take a lot of education and practice

Thank you Gavin for screwing all your investors you ass face. maybe we shuld all move onto to other coins as well thanks for the heads up nut sack.

True, the next few years will be the time to improve bitcoin security

I think every bitcoin user need to at least understand what is a private key. There is no short cut, just like people must be able to learn how to identify gold in order to make sure they don't get fake gold

In a trust-less model, any security solution provided by third party (even the bitcoin core application) has a potential of being compromised. (I have seen fake bitcoin applications taking user's coin). If people want to put real serious money into bitcoin, they must be 100% sure that their coin will not going to be compromised without their own fault, and each step of the security measure must be clearly understandable by average users. That will take a lot of education and practice

I applaud him for his intentions and honesty but I would suggest this is going too far as I would be comfortable recommending my luddite mother invest a couple thousand on the side and store it in the insured multisig vault with coinbase. People should diversify their investments and that includes partially investing into Bitcoin.

Really?

If your luddite parents' computer might already be compromised, they cannot securely connect to coinbase (or circle or any other easy-enough-for-a-luddite-to-use service) to set up an account. The might THINK they're connecting to coinbase/circle/whoever, but malware could be man-in-the-middle attacking the website they're looking at.

They think they're opening an account at coinbase/circle/whatever... but they're just giving the attacker all their bank account information, getting bitcoin 'deposit' addresses from the attacker, etc. Your parents will have no clue until their bank tells them about odd wire transfers or they try to send bitcoin somewhere, it fails, and coinbase customer support tells them "Sorry, can't help you, you don't have an account with us."

I would say the same about traditional online banking, except your luddite parents almost certainly already have a relationship with their bank, and the bank already knows their name and how to contact them. And it is harder for an attacker to man-in-the-middle the fiat banking system and get away with it, since identities are tied to bank accounts, wire transfers, etc.

I don't know how the "Bitcoin for Luddites" problem will be solved. Maybe hardware wallets, maybe hardware authentication tokens, maybe Apple or Google will get iPhone or Android security tight enough to trust, maybe it will take "come to our branch to set up an account" to get good-enough security and usability.

I think the problem is not with what Gavin said but the way he was quote mined

So you're saying the problem with Bitcoin is the miners