Bitcoin is fundamentally broken and unviable in current form

[Indamuck]

The security breach at Bitfinex is just beyond the pale. No online wallets/businesses are trustworthy. I can't with a clear conscience recommend that anybody invest in or hold cryptocurrency until the community puts an end to the rampant theft.

I'm slow, and overdue, but now taking all my coins offline to a cold wallet, and not coming back until there is some fundamental change in security protocols, such that I will never risk suffering a 100% loss like some have experienced at Bitfinex. **I didn't have a btc balance at bfx at the time of hack, but I only got lucky.

[Laviathon]

I only transfer to coin to an exchange to cash out.  Bitfinex supposedly had all the coins that were stolen in cold storage so explain that.

[Holliday]

Bitcoin is broken because third parties continuously fail to secure their private keys and thus can't make good on their IOUs?

If you say so.

[kokojie]

I only transfer to coin to an exchange to cash out.  Bitfinex supposedly had all the coins that were stolen in cold storage so explain that.

They weren't in cold storage, Bitfinex had 120k Bitcoin in essentially a hot wallet.

[Holliday]

Bitfinex supposedly had all the coins that were stolen in cold storage so explain that.

Word is they stored the bitcoins in multi-sig wallets with Bitgo. This isn't cold storage.

[Jonaswakefield]

The security of paper money is just absurd. Credit created without transparency on a centralized digital system run by privately owned banks that currently represents 97% of the money supply is systemic robbery. I would advise every developed nation to flee from the central banking system. Until then I'm using all my paper money to buy crypto.

P.s. I hate getting robbed in these alleys.

[Indamuck]

Bitfinex supposedly had all the coins that were stolen in cold storage so explain that.

Word is they stored the bitcoins in multi-sig wallets with Bitgo. This isn't cold storage.

I'm not a tech expert, but BFX has always been the exchange gold standard for me. In the early days I inadvertently logged into a fake Bitfinex site and had about US$10k worth of coin taken from my account. Bitfinex was partially to blame because I was having issues and they gave me poor guidance. But they made me completely whole, earning my wholesale trust.

Later they lost or had stolen their stale accounts, so I lost some dust-like transactions then. Now this. It seems even the most experienced, largest exchanges/wallets/entities are unable to ensure security. I just don't trust the ecosystem anymore.

[Laviathon]

Why would a company have $72,000,000 us dollars worth BTC not secure.

[Indamuck]

Why would a company have $72,000,000 us dollars worth BTC not secure.

I'm sure they believed it was secure. That is the problem. Nobody knows how to ensure security. Pat answers like 'cold storage' or 'offline paper wallets' don't cut it. There needs to be some ironclad, ecosystem-wide protocol that all but ensure against wholesale theft like this.

[Indamuck]

Meanwhile today I've been busy withdrawing coins from several online sites (wallets, gambling, investment) that I have grown accustomed to using regularly. I don't trust any of it, and suspect I'm not alone. Multiply my retreat over thoussands of btc users and you see that transaction volume just plummets. I'm not coming back until there is some fundamental change ...

[Holliday]

I'm not a tech expert, but BFX has always been the exchange gold standard for me.

So, you fully understood how funds were secured with Bitgo's multi-signature solution and you were comfortable with that?

Could you direct me to a page describing their security practices in detail? Example: https://www.kraken.com/en-us/security/practices

[Indamuck]

I'm not a tech expert, but BFX has always been the exchange gold standard for me.

So, you fully understood how funds were secured with Bitgo's multi-signature solution and you were comfortable with that?

Could you direct me to a page describing their security practices in detail? Example: https://www.kraken.com/en-us/security/practices

That is the point. I don't feel competent to evaluate security practices. The best practice I've seen is the derivatives exchange Bitmex ... but they are only derivatives and don't accept US-based customers. Beyond that, I've reached the point where I don't trust anyone. Which means I'm done putting coins anywhere, and that hurts bitcoin businesses that I had been patronizing.

When you consider opening an account at a local Credit Union, BofA branch, or Citibank, do you need to consider their relative security measures? No. It is all basically the same. What one does consider is the level & type of service one will get.

[kokojie]

Why would a company have $72,000,000 us dollars worth BTC not secure.

I'm sure they believed it was secure. That is the problem. Nobody knows how to ensure security. Pat answers like 'cold storage' or 'offline paper wallets' don't cut it. There needs to be some ironclad, ecosystem-wide protocol that all but ensure against wholesale theft like this.

There is, it's exactly called "cold storage"/"offline wallet", exchanges that religiously follow this practice are not hacked, ie. coinbase/bitstamp as they put 95%+ of their funds in cold storage. Bitfinex did not, they had 120k Bitcoin in bitgo, which is essentially a hot wallet.

[Mauser]

The security breach at Bitfinex is just beyond the pale. No online wallets/businesses are trustworthy. I can't with a clear conscience recommend that anybody invest in or hold cryptocurrency until the community puts an end to the rampant theft.

I'm slow, and overdue, but now taking all my coins offline to a cold wallet, and not coming back until there is some fundamental change in security protocols, such that I will never risk suffering a 100% loss like some have experienced at Bitfinex. **I didn't have a btc balance at bfx at the time of hack, but I only got lucky.

That definitely makes sense to store your coins in a cold wallet. Of course online wallets are not secure. They are just much easier to use and access than any offline wallet. If you have only $50 to store in my opinion an online wallet is fine because a loss wouldn't mean the end of the world. But if you own more than 1 BTC you should never store than online.

[JeffBrad12]

Bitcoin is broken because third parties continuously fail to secure their private keys and thus can't make good on their IOUs?

If you say so.

But I'm always curious the factor can make the third parties always fail to secure the private key?Whether is always there are a chance it's caused by hacked or other intentions from the intern factor.

[Searing]

So along this theme of btc is broken will they pay back the 60 million in btc or will the exhchange go belly up?

edit:

added a thread with a poll on this

Bitfinex. Will they cover the 65 million dollar BTC Theft or just fold?

https://bitcointalk.org/index.php?topic=1573661.msg15797288#msg15797288

[kokojie]

Bitcoin is broken because third parties continuously fail to secure their private keys and thus can't make good on their IOUs?

If you say so.

But I'm always curious the factor can make the third parties always fail to secure the private key?Whether is always there are a chance it's caused by hacked or other intentions from the intern factor.

It's almost always due to failure to secure the funds in a cold wallet. So far 0 properly secured cold wallet has been hacked (ie. coinbase/bitstamp).

[kokojie]

So along this theme of btc is broken will they pay back the 60 million in btc or will the exhchange go belly up?

It's just like a bank robbery, if the robber made off with more than the bank can cover, then yeah it will go bankrupt. Though in the US your deposits are insured by FDIC up to 250k. It's a good idea to now start using exchanges that insure their customer deposits, ie. coinbase

[Indamuck]

So along this theme of btc is broken will they pay back the 60 million in btc or will the exhchange go belly up?

Must go belly up, I think. Unless some VC-type of angel investor wants the name and reputation of Bitfinex enough to buy them out. Not sure I see that happening. As a community we need a decent, large exchange with some characteristics of centralization to keep spreads tight and liquidity decent.

[Holliday]

I'm not a tech expert, but BFX has always been the exchange gold standard for me.

So, you fully understood how funds were secured with Bitgo's multi-signature solution and you were comfortable with that?

Could you direct me to a page describing their security practices in detail? Example: https://www.kraken.com/en-us/security/practices

That is the point. I don't feel competent to evaluate security practices. The best practice I've seen is the derivatives exchange Bitmex ... but they are only derivatives and don't accept US-based customers. Beyond that, I've reached the point where I don't trust anyone. Which means I'm done putting coins anywhere, and that hurts bitcoin businesses that I had been patronizing.

When you consider opening an account at a local Credit Union, BofA branch, or Citibank, do you need to consider their relative security measures? No. It is all basically the same. What one does consider is the level & type of service one will get.

Well, I don't know how you can blame Bitcoin when many users have had no issues what-so-ever securing private keys. Obviously huge thefts are going to be very visible to all, but what you won't see is the thousands of users, who keep their private keys secure, posting that another day has gone by where their coins remain safe. Bitcoin provides a user with monetary freedom, but this comes with the price of individual responsibility.

Hopefully you haven't misjudged BitFinex and they are able to make users whole again. I have my doubts.

It's good that you don't trust anyone anymore. This is why I started using Bitcoin in the first place. I took "be your own bank" to heart and I've never looked back since. It's unfortunate that such a terrible incident has had to occur to open your eyes to this (I don't know if you were personally affected by this or not). You are not a new user here, certainly you've heard many times that a cold storage/air-gapped wallet is a fool-proof method to be sure your coins are safe. When I first got involved with Bitcoin, a user named Allinvain was hacked, and at that point I learned everything that was required to protect myself. It was immediately clear to me that anything connected to a network was potentially insecure. Somehow, people forget this lesson and continue to make the same mistakes over and over again.

Consider patronizing bitcoin businesses which are not involved in holding users funds for them.

Yes, I would most certainly consider the security measures at any typical bank. In fact, I don't trust banks at all, so I don't use them to store funds (only for transferring amounts I can afford to lose).