My BTC safer in my Electrum wallet than in my Bitstamp account ?

[gentlemand]

Bitcoin in Bitstamp is nothing more than an IOU from them to you. You don't have coins any more, just a credit. They can force details out of you to retrieve them, they may get hacked again, you're 100% dependent on their competence, good will  and luck.

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[ziggy2]

Thank you for the warning.

I think things are clear on this subject. I'would add the following comment, though :

Beyond the comparison between online wallet and PC-based wallet, it seems that the value and behaviour of the BTC is anyway in the hands of (groups of) people A- whom I don't know, and 2- who can decide things like : "BTU" is best", or "a hardfork" (?) is needed", or "the blockchain needs big changes", etc... (all matters in which I am completely incompetent of course), and I am absolutely unable to know what would happen, including big drop in value of the BTC, and even - I don't know - a breakdown of the whole "system" ? Or am I too pessimistic ?

[European Central Bank]

Beyond the comparison between online wallet and PC-based wallet, it seems that the value and behaviour of the BTC is anyway in the hands of (groups of) people A- whom I don't know, and 2- who can decide things like : "BTU" is best", or "a hardfork" (?) is needed", or "the blockchain needs big changes", etc... (all matters in which I am completely incompetent of course), and I am absolutely unable to know what would happen, including big drop in value of the BTC, and even - I don't know - a breakdown of the whole "system" ? Or am I too pessimistic ?

yep. that all sounds about right. but the same goes for many markets. everyone's at the mercy of either a small group of insiders or the will of the herd. that's the bet you're taking.

if that makes you uncomfortable then shop elsewhere. most people here are pissing in the wind and hoping it lands in the right place.

[ziggy2]

Risk is everywhere, but there are different kinds and magnitudes of risks. It's not about feeling comfortable or uncomfortable of course. I make my own investment choices, taking into account all facts that I know.

I'm just highlighting some very peculiar aspects of the BTC : those crypto-mathematical-IT factors are completely unintelligible for most of us, and in addition, the (groups of) people playing with it "in the dark", so to speak, are unknown .... and they play by rules that we ignore or don't understand. Finally, no laws whatsoever can prohibit malevolent or dangerous behaviours...- whilst in the world of normal currencies, at least people and Companies have a name, regulations and laws exist, are written and known - even if not enforced properly sometimes. You therefore can broadly understand the rules and the risks, and, to some extend, courts and lawyers can help you win if some one does something.

I think this is worth thinking about, because it is very unique to the BTC system (although probably true for other alternative currencies) ; it's unprecedented and not comparable to, say, buying stock, bonds, gold, diamonds or classic cars - all of which work within a relatively well-known frame, and in general with identified players.

Now, I reckon that the value of the BTC essentially relies on the trust that buyers and holders put in it, and it has worked quite well in the last 4-5 years. If more and more people trust it, the value will be stable or rise more than other assets, it will continue to grow. And although the current period is a bit worrying, I am confident that it will continue to "work" well, for many reasons : need for alternate investment vehicle, independent from the banking system and from governments, very low costs and fees, very fast transfers, etc... Good luck to the BTC !

[European Central Bank]

I think this is worth thinking about, because it is very unique to the BTC system (although probably true for other alternative currencies) ; it's unprecedented and not comparable to, say, buying stock, bonds, gold, diamonds or classic cars - all of which work within a relatively well-known frame, and in general with identified players.

it's the ultimate free for all basically.

it attracts everyone from hedge funds to basement dwelling psychopaths. that boundless potential is what's so attractive to so many. and there's also boundless potential for it all to turn to shit in a second. that's the nature of the beast and it's not gonna change any time soon.

[Cereberus]

Both contains risks but Bitstamp contains a much higher risk as they are a third party looking after your bitcoins. This is against the core philosophy of bitcoin which is to be you your own bank in charge of all your money (bitcoins).

In Electrum you are as safe as your PC is free from viruses, spyware,malware or keyloggers. If you think that your PC is clean of such threats then Electrum surely is safer to hold your bitcoins there.

For ultimate security it is always advised a hardware wallet.

[bohr]

Thanks to both of you.
Could you please elaborate a little on the reasons why it is safer : Bistamp could go "bankrupt" for example (like MtGox) or become unacessible, or ...?
And also, why is Electrum vulnerable - if my PC fails without a backup ?

If you have your bitcoin in a web wallet there are lots of risk, like a hacker gaining access, an employee getting access, the site goes bankrupt, the site decides to take everyones coins, most of the risk are nullified by you having your own wallet and securing your coins yourself.

[ziggy2]

Thank you. I understand.
I also learned that a "hot" wallet (located on an online PC) is also potentially vulnerable, whilst storing BTC in a properly created "cold" wallet is really the safest method (people interested may look at this other post : "Backing up an Electrum wallet" : https://bitcointalk.org/index.php?topic=1814313.new#new ).

Thank you to all of those who are helping beginners to feel more comfortable with this complex subject...

[Ayiranorea]

Both are third party service providers, but electrum as a wallet service commuter has gained good reputation and will try to gain more positive testimonials. Bitstamp at times might levy terms and conditions in the withdrawal limit and so on making the users get frustrated.

[ziggy2]

Actually, I begin to think that Bistamp is not up to its relatively good reputation.

During the first year, I felt comfortable with the ergonomy of the site, the functionnalities, and with the relationship with their Customer Support, it looked professional and reliable.
But recently they started sending those messages about their "know your client" questionnaire, and they demand with insistance scans of their clients' income and bank statements, among other things, and ask questions, all of which is in my opinion quite intrusive. I understand that laws against money laundry make them do it. But they don't specify clearly what is mandatory by the law - and what is just feeding their own "marketing database" (or will be sold to third parties for example).
Also, receiving several time the same email request, directed to the same support message - although I already answered their questions -  makes me feel like talking with a robot  - not good.

I know that I am off-topic here, may be some of us having a good experience of them (or of other similar providers) may start a specific topic on this.

[favdesu]

with electrum you own the keys to your bitcoin tresor.
In bitstamp you own a promise that they open their tresor to give your bitcoin back.

use electrum.

[ziggy2]

Yes, I 've read a couple of comments along the same line. A properly used wallet is much safer than a web-wallet.
However, I don't think that you can buy and sell BTC (against USD or EUR for example) without using a platform like Coinbase, Bitstamp or Kraken..or..?

[exabb]

just remember that anything that exists on hardware (like your hard disk) is vulnerable to either being hacked if not encrypted properly or you had something like a keylogger on your system and accidentally open the wallet on that system.
or is susceptible to hardware failure such as your HDD not working again because of electrical shock or something similar.
remember to make a hard copy (write down the seed on paper) of your wallet.

It is my understanding that it is the Private Key that gives you access to your money, and so it is really this that you should have written down in the event that Electrum disappeared. The seed phrase wouldn´t be of any use if that happened. Or am I wrong here?

[poetra2501]

Hello,
I read somewhere that your BTC are less at risk if, instead of keeping them on your BTC account (say at Bitstamp), you transfer and keep inyou PC wallet (say Electrum), until you need to use them.
Is this true ?  (if there is a simple answer to this question). Thank you !

If you have a big amount of bitcoin and you are skilled technically on keeping your bitcoins in your pc is the best way to go. But if you are not technically inclined then if you keep your bitcoin in your pc and then you encounter a virus or you hardware was damaged and you dont know what to do you will eventually lost your bitcoins. And so if you doesnt know the necessary things that there are to learn about keeping bitcoin in your pc then just keep it on web wallet but dont place it on one site but on different sites so you will have a lesser risk.

But, isn't if our hardware damage we can backup before? Yeah I think for safety our funds,
I am also use a desktop wallet like electrum but we must be carefully with any virus
and keeping our hardware from any what can make it damaged.

[barnes13]

Electrum certainly safer than putting your Bitcoin in your Bitstamp account, because in electrum you have access to private key, and importantly also your computer don't have viruses.