Bitcoin's catch-22

[Gregers]

With all the scamming and thefts going on, it seems like Bitcoins are only proving why an anonymous currency is a bad idea. If transactions are tracked, it kind of defeats the purpose. If they're not, anyone can make a profit from shoddy security and/or gullible users. It seems like the people benefiting the most from Bitcoins are speculators and scammers at the moment. It's an interesting experiment, but I think more people need to treat it as such and not put their life savings into it right off the bat. There are obviously a lot of wrinkles to iron out, and before that happens I think Bitcoins are going to suffer from a lot of negative publicity when people get hundreds or even thousands of dollars stolen from them. I feel that it should have been thought through a bit more before it was opened up to speculation.

What would you have done differently if you'd been the creator behind a new currency and what would you have kept the same?

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[DamienBlack]

Wallets need to be encrypted by default. I think the client needs to provide a "savings" wallet with a different password that you are instructed not to use often -- for extra security.

These are changes they are making now. Encryption will be in the next release of the bitcoin client. No need to restart.

[yeponlyone]

These are changes they are making now. Encryption will be in the next release of the bitcoin client. No need to restart.

Would you mind giving a link to where a developer said encryption would be in the next release? or is this more just you hope it will be in the next release?

[DamienBlack]

These are changes they are making now. Encryption will be in the next release of the bitcoin client. No need to restart.

Would you mind giving a link to where a developer said encryption would be in the next release? or is this more just you hope it will be in the next release?

https://forum.bitcoin.org/index.php?topic=16553.0

And I quote:

"Priority for next version:  wallet encryption"

You can see the progress on this issue here: https://github.com/bitcoin/bitcoin/pull/232

[rezin777]

As long as Bitcoin has value, there will always be someone out there trying to steal it. And they will find ways. Keep that in mind. This isn't a flaw specific to Bitcoin though.

I think people get lax on the protection of their Bitcoins because it isn't tangible. Someone who would never consider leaving $500,000 dollars worth of gold sit in the corner of their bedroom might leave their wallet on a computer connected to the internet. Protect yourselves people!

Bitcoin would receive negative press if it was perfect, and of course it isn't. People will screw up and the public will hear about it. The public eats up stories like this. Ever see how traffic slows down on the opposite side of a highway when there is an accident? Anyway, encrypt the wallet and some guy is going to forget the password to access his 25,000 Bitcoins and it will be all over the net.

There is a market for Bitcoin security, and someone will build a layer on top of Bitcoin to make it more secure for the average user, and they will get rich doing it. Think insurance companies and banks.

[flug]

I feel that it should have been thought through a bit more before it was opened up to speculation.

What would you have done differently if you'd been the creator behind a new currency and what would you have kept the same?

It wasn't "opened up to speculation". It simply came into existence as something with the properties of a currency, and people started to exchange it as such. Gavin Andresen is constantly counselling caution, saying there's a rocky road ahead.

I do think that adequate security is the next major hurdle to overcome for Bitcoin to make headway.

Bitcoin needs to have properly secure clients by default (and by that, I mean something that secures bitcoins as well as some of the other threads have described), and properly secure online storage.

People need confidence that bitcoins are as secure as conventional bank accounts, cash in you wallet and gold coins in a bolted down safe.

[niemivh]

I can't believe anyone would be leaving their Wallet on a WinXP box or on a Mircosoft OS for more than 5 minutes while it takes to copy it to a few thumb drives and then delete it off your computer.

[flug]

There is a market for Bitcoin security, and someone will build a layer on top of Bitcoin to make it more secure for the average user, and they will get rich doing it. Think insurance companies and banks.

+1

[flug]

I can't believe anyone would be leaving their Wallet on a WinXP box or on a Mircosoft OS for more than 5 minutes while it takes to copy it to a few thumb drives and then delete it off your computer.

The vast majority of normal people who just want easy to use digital cash without needing to be a geek?

[rezin777]

I can't believe anyone would be leaving their Wallet on a WinXP box or on a Mircosoft OS for more than 5 minutes while it takes to copy it to a few thumb drives and then delete it off your computer.

The vast majority of normal people who just want easy to use digital cash without needing to be a geek?

I agree, but all you need to do is hire a geek! Hell, there are plenty of geeks that have already given free, simple instructions on how to secure a wallet.

As usual, having the right information is extremely valuable. Of course, there are people who can't even follow instructions properly... They are the ones who are going to need the Bitcoin credit cards, and they are going to pay handsomely to use them, just like they do now!   

[Gregers]

So it's going to be the exact same system we have now, except that you can't print more Bitcoins? What makes that different from going back to the gold standard?

[chiropteran]

So it's going to be the exact same system we have now, except that you can't print more Bitcoins? What makes that different from going back to the gold standard?

1) You can "print" more gold. 

2) Gold standard requires a central authority, which requires larger fees, which also creates a single point of failure

[onesalt]

Wallets need to be encrypted by default. I think the client needs to provide a "savings" wallet with a different password that you are instructed not to use often -- for extra security.

These are changes they are making now. Encryption will be in the next release of the bitcoin client. No need to restart.

The bitcoin client loads the entire wallet, unenctypted, into memory. This is why people with VM setups and suchlike still get hacked and shit stolen.

[flug]

So it's going to be the exact same system we have now, except that you can't print more Bitcoins? What makes that different from going back to the gold standard?

You mean the current US monetary system? I don't live in the US. I live on the internet lol.

[wujh]

Wallets need to be encrypted by default. I think the client needs to provide a "savings" wallet with a different password that you are instructed not to use often -- for extra security.

These are changes they are making now. Encryption will be in the next release of the bitcoin client. No need to restart.

I cannot tell you my joyfulness when I read this.

[Gameover]

Wallets need to be encrypted by default. I think the client needs to provide a "savings" wallet with a different password that you are instructed not to use often -- for extra security.

These are changes they are making now. Encryption will be in the next release of the bitcoin client. No need to restart.

Encryption does not matter, you still need to use your bitcoin address at some point, and this is the point at which it will be stolen, trojans can wait for minutes or years, they don't care, if your machine is compromised encryption does nothing.  The only thing that will deter thievery is law and punishment, and since by its very nature bitcoin has no central authority to enforce law and deal punishment, there will always be massive thievery, this is on the tip of iceberg.

The press have opened the floodgates.  When you think of all of the compromised machines for the purpose of sending an unsolicited email worth a billionth of the cent, just imagine how much pressure there will be to compromise machines when the payout is millions and there is no recourse for thievery.

[Klestin]

I can't believe anyone would be leaving their Wallet on a WinXP box or on a Mircosoft OS for more than 5 minutes while it takes to copy it to a few thumb drives and then delete it off your computer.

Actually Windows 7 by default is a pretty tight ship.  It is arguably more secure than OSX in many ways.  In fact, the main "weakness" of Microsoft OSes at this point is that they're so popular, which makes them a juicier target.

I've run every flavor of Windows since 3.0, and DOS before that, as well as several variants of Unix, Linux, and Mac OS over the last 25 years, servers and desktops alike.  I have yet to catch a single virus or worm, nor have I ran a single trojan horse. Simple rules:
- Be smart about what you download and run
- Keep your OS, browsers, and supporting programs up to date
- Use a hardware firewall

In my experience dealing with infected user machines, the vast (VAST) majority of them caught their virus by downloading something they should have known better about such as a cracked program, key generator, self-extracting "video", etc.

It was once the case that securing a Windows box took significant skill, but these days if you catch a virus/trojan/etc, the fault is likely your own.

[wujh]

So it's going to be the exact same system we have now, except that you can't print more Bitcoins? What makes that different from going back to the gold standard?

You mean the current US monetary system? I don't live in the US. I live on the internet lol.

Suppose that I crashed into a online shop which accepts the btc, and I can buy the stuff with my bitcion, easy to transfer the money.
But I'm not able to  throw a small piece of gold from my home to the shop owner.

And if someone print paper money or creat digital currency backed up by gold, there MUST be a central bank in that system. It cannot be guranteed that the "Back up" promise will ever be kept.  You know, Uncle Sam break his words in 1971.

[rezin777]

The only thing that will deter thievery is law and punishment, and since by its very nature bitcoin has no central authority to enforce law and deal punishment, there will always be massive thievery, this is on the tip of iceberg.

Yeah, law and punishment certainly stops thieves in the current system. I think it's been almost 16 years now since anyone has stolen a single federal reserve note!

Besides, the fact that the Bitcoin network is decentralized does not mean that laws regarding theft of property do not apply. Gimme a break.

The only thing that will deter thievery is security. Make yourself less of a target than someone else.

[hugolp]

With all the scamming and thefts going on, it seems like Bitcoins are only proving why an anonymous currency is a bad idea. If transactions are tracked, it kind of defeats the purpose. If they're not, anyone can make a profit from shoddy security and/or gullible users. It seems like the people benefiting the most from Bitcoins are speculators and scammers at the moment. It's an interesting experiment, but I think more people need to treat it as such and not put their life savings into it right off the bat. There are obviously a lot of wrinkles to iron out, and before that happens I think Bitcoins are going to suffer from a lot of negative publicity when people get hundreds or even thousands of dollars stolen from them. I feel that it should have been thought through a bit more before it was opened up to speculation.

What would you have done differently if you'd been the creator behind a new currency and what would you have kept the same?

Do you think the dollar is a failure?

Well, there has been thefts in dollars for values order of magnitude higher than the Bitcoin theft. It just happens that th peress has given a lot of publicity to the Bitcoin one, while it almost never reports the numerous dollar thefts.

So do you think the dollar is a failure? (I do, but for other reasons).