This is a valid question. If there is no more incentive to mine, then fewer people will mine, and yes, it could probably be vulnerable to a 51% attack.

But note the if there. As long as transaction fees per block are enough to incentivize miners to keep the blockchain properly protected, then there's nothing to worry about. Which means that either bitcoins need to become much more valuable than they are now, or the amount of transaction fees per block will eventually need to increase, or both need to occur to some degree. Considering we have well over 100 years before the last 0.00000001 BTC is mined, this should be addressed (or rendered moot) long before then.



Even in the face of quantum computing, bitcoins sitting in a cold storage address that has never been used before (and thus has never had its public key revealed) will still be safe.



As long as the person knows the private keys (basically just strings of letters and numbers) of the wallet, then even if the keys had to be chiseled into stone, they should still be able to type the keys into their system, import them into a client and spend the money in them.



The system can be extended to provide more decimal places as needed.

The owner of the ancient wallet would still be able to use their private keys, since extending the precision would not require any change to any keys.



Well, most of us here believe and hope that it is. However, we don't know that it is. It's something a gamble (as are most new things)... but it's a risk with an amazing potential payoff.



I think that's a fine gift. I've done the same for younger relatives, and their "savings accounts" have already grown in value quite a bit. I fully expect them to continue doing so long-term.

But keep in mind, you don't have to just rely on M-discs. Private keys can be stored anywhere that you can store letters and numbers, which means you're not limited to digital media. You could print them onto paper, engrave them in metal, chisel them in stone, or even have them stored on the inside of a solid plastic tschotske you whipped up on a 3D printer. They could be the literal numbers and letters, a QR-Code, or hidden inside of some poem that you wrote that represents the numbers and letters. The possibilities are endless; but of course, you'll want to let them know what the symbols are, and how to access them, and how important it is that they store them safely. It wouldn't be good if the system was so complex that they pull it out after 5 or 10 years, and can't make sense of how to extract the private keys (or worse, can't quite remember what it is.)

We don't really even need altcoins to handle this. Just plug in another private key encryption method into the client, one that's resistant to quantum computing, whenever it looks like QCs start to become a viable threat, and have everyone migrate to the newer addresses (or not, their choice.)

And the banking industry's slowly-grind-bitcoin-out-of-existence policy marches on. 

All in vain, but still damaging to those caught in the grinder.

Unfortunately, this only holds for unused addresses, since apparently the sha256(ripemd160()) is still difficult for a quantum computer to crack, whereas the EC isn't. Coins stored in paper wallets would be fine, but as soon as the public key was released, watch out.

The nasty implication of this is that since spending from an address requires revealing the public key, as soon as you broadcast a transaction, others could crack the private key before it made it into a block and re-broadcast a different spend, from that address to one of theirs. It might not work most of the time, but is still an uncomfortable thought.

Source: http://bitcoinmagazine.com/bitcoin-is-not-quantum-safe-and-how-we-can-fix/

Actually those cards see a great deal of fraud. Just ask anyone who deals with online orders for a decent-sized company. Part of the reason they have as much fraud as they do is because people are lax in their use and/or storage, because they know they can just perform a chargeback, or can call up their middleman and (often, not always) have him take care of their problem.

Of course, all of these extra services must be paid for too, whether the cost is upfront or hidden.

I'm not an IT security professional. But I try to fully digest anything related to the topic that I come across. From everything I've encountered, that second password probably isn't very strong. Only eight characters, consisting of a simple, repeated lowercase pattern and two digits on the end? I wouldn't trust it; I would think any reasonably-sophisticated password-testing algorithm wouldn't take too much time to stumble onto it.

Actual IT security professionals, feel free to corroborate or correct....

Yup.

When will people get it into their heads? Don't attempt to redistribute my coins. Period.

If this is what's in Bitcoin 2, count me out. In fact, count on me to actively discourage it's adoption by anyone else too (not that I'll care that much, as I'll never choose to use it.)

That sounds like a viable workaround to some of the problems with strictly-regulated economies. It would be great to see something like that spring up in Argentina.



Either the merchant or the customer has to have a device allowing some sort of internet access; even trading Casascius coins or bitcoins stored in private keys printed to paper requires checking the address to make sure it is actually funded.

If the merchant is relying on the customer to have a device to send the transaction, then one way to accept the transactions is to pre-print the payment addresses. The merchant can generate a few thousand payment addresses onto paper (or ask his service provider to do so.) Each paper could have a QR-code of the payment address, the full text of the address (in case the customer has to actually type it in) and an empty space for jotting notes. The merchant shows the QR-code to the customer, watches him send the bitcoins, then jots down any important info (amount, item sold, etc.) in the blank area. If the number of customers spending bitcoins is small enough that it won't create difficulty with the accounting, the merchant could instead have a permanent payment address on a nice display next to the register, and ask the customers to make their payments to that address.

Granted, it would be far better if the merchant could at least check the blockchain to verify that the transaction has been sent; but if that's simply not possible, then at least this would allow honest customers to make purchases, even if it allows for thieves to merely pretend they sent the coins.

Hmmm.


Well, let's be honest here... a lot of this depends on how one defines "fail."

I'm one of those who feel the system will fail--as in, no longer be in use and be replaced with another system or no system--and soon (but not necessarily "very soon.") I think this because the global financial system as it stands is simply unsustainable. It doesn't matter what those with power want; if what they want is things to continue going on as they are until the end of time, they can't have it. Frankly, I seriously doubt things will continue on as they are for another 50 years. That's just how far gone the system is, based on all reasonable indicators, and we all know that things that cannot continue, inevitably end.

Now, maybe those in power will be able to successfully transition to another system without any disturbance in the lives of everyone on the globe, and while simultaneously retaining their power. I just find that highly unlikely, given human nature.



I don't think Bitcoin is deflationary, and if it were I wouldn't think that was necessarily good. Rather, Bitcoin is *not inflationary,* and there's a world of difference in those two descriptions. Your bitcoins aren't designed to eventually evaporate away; there's simply a set number of them, released in a predictable and fair fashion, and no one can ever inflate the currency into worthlessness. THAT is the trait that I find compelling, the lack of ability for some group to steal my wealth through barely-noticed socioeconomic voodoo designed to enrich a privileged few.

Whether or not it becomes this huge store of wealth isn't as important as that. Mind you, I do think Bitcoins are incredibly undervalued at <$100, just based on future utility alone. But I don't base that on expected deflation at all.



I don't know why someone would say it "doesn't work." I mean, I also buy my food and pay my bills with it on a regular basis.

I'd rather just argue that it works until it doesn't; that it's unsustainable... and that history shows this to be true for all fiat monies. All fiat money either becomes worthless, or transitions to another form of money that is really nothing like the first, only the name was kept (an example of this is the dollar after Nixon closed the gold window. You no longer had gold receipts. You had green scraps of paper that only had value due to their necessity in tax-paying and oil-buying.) And if it transitioned to another fiat money, then it's only a matter of time before THAT one has to likewise end.

Why accept the notion that we must continue using unsustainable forms of money that eventually result in the loss transfer of value for from the users?



Well, I personally think this is a possibility. A modestly-sized one, but a possibility nonetheless. It won't be sudden if it happens, and it's possible that quite a few things will keep it from happening altogether. But the number of people with lots of bitcoins won't be what stops it; in fact, considering an extreme increase in bitcoin price won't be all that sudden, as it happens, bitcoins will become more and more distributed. After all, how many sold at $250+? How many will sell at $1000, even if it's just enough to buy a few luxuries that they've been eyeing? The higher it goes, the more most holders will sell, and the fewer there will be with thousands of bitcoins.

I think if it's going to happen at all, it'll be within our lifetimes; either bitcoins will grow in value beyond what most imagine, or it'll be stopped by forces beyond our control. It's something of a gamble, for sure.

I believe this is an erroneous assumption. At this point in the growth of bitcoin, you simply can't trust anyone else to hold your coins for you. IMHO, the main reason that bitcoin businesses can't and that banks can boils down to two simple issues: insurance, and the nature of the money itself.

There are no bitcoin insurance companies yet. So if Mt. Gox gets hacked and loses all of it's bitcoins, everyone--you, Mt. Gox, and all their customers--are just out of luck. And while every hacker on the planet knows about Mt. Gox, and knows they hold millions of dollars worth of bitcoins, very few know about any bitcoins you keep stashed away yourself, so the risks to Mt. Gox's bitcoin stash are far greater than the risks to your own. This will likely change as bitcoin continues to grow, but yes, currently this is an advantage banks have over the bitcoin network.

The second issue, the nature of the money, is something that simply isn't going to change, because of the way it all works. Bitcoin is different from the fiat banking systems, with advantages and disadvantages. The only way bitcoin will have those disadvantages removed is to use an infrastructure built on top of bitcoin that changes it to effectively act like the traditional banking system. It's an either-or thing; you can't have the advantages without the corresponding downsides.

All that said...



Ideally, you would design (or have designed for you) a system that does exactly what you expect Mt. Gox or blockchain.info to do, but does it more securely, and in secrecy. This isn't a monumental undertaking; Bitcoin-Qt is already designed to process most of what you need, the backups and redundancy is routine, and there are extra tools to help with security (Armory comes to mind.) But of course, it's going to cost some money and involve some effort setting up and handling the hardware, just as if you wanted to custom-design and run your own website rather than letting someone else build and run one for you.

It sounds like that's what it will take to securely do what you want to do with bitcoins.


Yes, there's a way to make an online wallet (more) secure. You mainly do it by not having your private keys online. You setup a server that checks and processes incoming transactions, dispenses pre-generated payment addresses, and creates unsigned transactions for spending the bitcoins. Then you transfer those unsigned transactions to an offline system that has the private keys, and checks and signs them; you then transfer the transactions back to the online system to be broadcast. There are a number of ways to do the transfer, and ideally it would require physical movement of a file and manual authorization each time, but that's the basic idea.

If that doesn't fit into the time constraints of your system (you HAVE to have automated spending of the bitcoins, you don't want customers to have to wait to pull out funds,) you could keep a "hot wallet," but keep the bulk of your bitcoins in an offline system. The hot wallet is online, but has few bitcoins at any given time, and it transfers bitcoins to the cold storage stash whenever it goes over an certain limit. You transfer bitcoins from cold storage to the hot wallet as needed, and at best you'll only lose what's in the hot wallet. There's still the risk that some customers will have to wait for a transfer from cold storage if a lot of them make withdrawals all at once, but it should automate most of the system, at the cost of reduced security.

But you still have to do all this yourself. Even if some company did this as part of their regular operations, they still would be in control of your bitcoins, and it's still a significant security risk.

<Edited for brevity>

Probably depends on why they have to be stored online. What specifically do you need? I know you said "with regards to running an online business that moves bitcoins to and fro" but with more details, you will be more likely to get a helpful answer.

Is it because the bulk of the coins you receive as income are quickly spent (meaning nothing of significance stays stashed away) so you want one location to easily view and manage transactions, and spend from, all by hand?

Is it because you do not want to (or cannot) setup your own system/hardware to manage the transactions automatically?

Do you have several employees and want to use a distributed system "in the cloud" rather than relying on direct-access systems that an employee can compromise?

The more we know (that isn't personal info,) the more of a help we can be. But you should also understand that the answers may not be the ones you were looking for.

I'm happy to be considered a pioneer in this.

Those of us with the vision and technical knowledge to see how revolutionary and brilliant this is are confident in the future success of Bitcoin, or at the very least one of it's descendants. Those of us with the understanding of how the system works, why it desperately needs change, and how Bitcoin is the launchpad for that change will strive toward that future success for as long as humanly possible.

@HenryRomp - It was a great post; I just didn't want to pick anything in particular out of it, and was waiting for others to respond first.

Thanking them for scaring him about an obviously ingenious technology. Wow. Nice.

Bet he'd also probably squeal with glee if he ever got a pat on the head from them for this. Makes you wonder.

Well, it does sound like a typical dumb bureaucrat move to just keep reposting the same negative videos several times a day on a searchable website (one powered by Google and maaaaybe having some semblance of relevancy rankings) in the vain hope of trying to slow the groundswell. 

Or maybe some flunkies are just being paid per MB of anti-BTC video uploaded and their handlers either don't notice or don't really care.

In any case, it's somewhat amusing... in a sad, that-guy-thinks-missed-lotto-drawings-affect-future-chances sort of way.

Totally understand the concern about putting your faith in an ethereal nothingness used as money. The dirty secret of modern society though, is that nearly all money (and paper assets!) is the same thing... bits in a computer somewhere. Backed up, maybe, but you can do backups too.

Which brings me to the important point of your post: that the private key is the means of accessing your money.

Some wallets are very simple, and don't allow you to import keys (BitcoinSpinner, a slick Android wallet, comes to mind.) But many will, and even if you couldn't get to one, as long as you have the private key, if you *had* to, you could write out a transaction to move your money by hand and push it to the bitcoin network. It's real, true digital cash.

The downside of course, being that just like cash, you have to secure it yourself. You'll want to make sure you backup your main wallet ASAP!

But... importing your key from one wallet to another like that isn't really recommended. If you spend from one wallet, then later look at the other, you might wonder why THAT wallet's balance looks wrong. It was a good way to prove the concept though. (It's probably a good idea now to either wipe that second wallet, or remove the key you imported from it, to avoid confusion.)

EDIT: Also, in case it wasn't clear, most wallets contain more than one private key, they may have hundreds. Usually when you spend bitcoins, you get change that automatically goes to one of your other address-key pairs. It's not complicated, but does take some learning and some caution if you plan to mess with private keys inside of your wallets.

You know, I had a more complicated two-wallet routine all written out for the OP to use. But after re-reading, thinking a bit, and seeing this, I'm just going to say Jan is probably right in that this is all you need.

I'd only add a few points:

- Keep your private key and address in a safe, secure place
- Make at least one copy of the private key and address, and keep it in a separate safe place

Here's a thread that touches on how to make a paper wallet:

https://bitcointalk.org/index.php?topic=213342.0

There's also an Android app, Bitcoin Address Utility Tool, that can help if you have an old smartphone or tablet that you don't keep online constantly. Just jump on wifi, download it, then disconnect before running. If you choose to use it, it requires a passphrase, but I would strongly recommend not trying to make a passphrase you can remember. Instead make it a very long, random string of letters, numbers and symbols that you carefully write down later along with the private key and address.

So the thief waits a mere year, then dumps the coins into a Mt. Gox account that will almost certainly be linked to his real-life identity? Hmph. Either someone was just framed; or the thief has an unusual level of trust in Mt. Gox keeping his identity secret; or he gambled that no one would notice, and lost.

I don't see the problem. Until bitcoin use is widespread enough for BTC prices to be stable, goods and services will continue to be priced in fiat currencies. So you'll pay based on a fiat price, converted to BTC, and when you get a refund you'll receive the fiat value, converted to BTC.

There's no other way it can work right now, but again, I don't really think it presents a real problem. If you don't want to risk losing your bitcoins, then every purchase made with bitcoins needs to be matched by buying more bitcoins to cover it, that's all.

That's the thing... all miners occasionally lose out due to bad luck, one way or another. If that didn't happen, then you're also not benefiting from good luck--or else the pool would go bankrupt So really, there's no point in trying to avoid it. I'd rather see the downturns all laid out in a direct correlation (payment = % of block) rather than hidden behind extra fees (and not really knowing how much I'm really losing.)

I'm sticking with Bitminter; I find the payouts to be quite fair.

Your other option is to just buy bitcoins with whatever you can afford over time.

You've already missed the window of opportunity. If you bought a miner right now, you would just be paying money for a device that will give you newer coins than the ones you spent (or could have spent) on it.

Mining isn't the only way to profit. Buy $50 worth of coins a month, or whatever amount, and just wait. You might make a return, you might not, but your chances are far better than buying a miner now.