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Author Topic: Online wallet conundrum.  (Read 663 times)
Hands
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August 01, 2011, 01:57:16 PM
 #1

With the mybitcoin.com problem burning across the horizon a common comment is "you shouldn't trust your wallet to an online service" which is a fine idea if you never want to use your wallet except on your personal computer. However we live in a world with multiple computers, mobile devices and of course there is the merchant side of things to deal with. If we raise the barrier of entry for merchants to accept bitcoins then we lower the viability of bitcoins.  So there are two sides to this problem.

1) How do we make bitcoins more usable by the consumer (get them off our laptops/PCs and into our daily lives)
2) How do we lower the barrier of entry and increase the trust for merchants.

Online services (like mybitcoin.com was) seemed to promise to be the answer to that.. But obviously with its going down multiple times (and maybe/ maybe not coming back).. They have failed.

So lets start an open dialog about what a "good service" would need to do to become trusted, and what features it would need to provide.

I think everyone should have a voice here and would love to hear from all the various parties, Miners, Consumers, Merchants, etc.. if you are involved in using bitcoins write up your service wishlist and post it.

I'm not sure where this conversation will take us, other than allowing those entities that might be interested in making a good wallet service to know where the bar is, and god forbid, make a service we could both trust and be willing to use.. Oh wait, that would be a good thing right :-).

~Josh

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August 01, 2011, 03:03:53 PM
 #2

tl;dr:
  • use https://instawallet.org if you want to introduce somebody to bitcoins.
  • there are no good alternatives to mybitcoin at the moment.


At present, we already do have a number of online wallet services, namely (in no particular order, and without claiming completeness):

  • mybitcoin.com
    • us-american (?)
    • not much known about the people behind it
    • possibly gone for good
  • instawallet.org
    • german
    • very simplistic, easy-to-use interface
    • small feature set
    • API service
    • no merchant-services
    • (unconfirmed) potentially traceable german resident
    • not-for-profit project, so don't expect "customer service"
    • not a bank, not recommended for deposits
  • walletbit.com
    • danish
    • very young project, not yet widely tested
    • some merchant services
    • (unconfirmed) potentially traceable danish resident
    • (unconfirmed) traceable danish bank account
    • probably a one-man-enterprise, don't expect realtime / phone line customer service
  • bit-bank.org
    • canadian
    • very young project, not yet widely tested
    • rich feature set
    • API service
    • not much known about the people behind it
    • probably a one-man-enterprise, don't expect realtime / phone line customer service
  • flexcoin.com
    • us-american
    • young project, not yet widely tested
    • (for me) unknown feature set
    • claims to pay interest on positive balance
    • (unconfirmed) potentially traceable US resident / company with employees
    • smells fishy, but also possibly legit, dunno really  Huh, the "founder" isn't helping very much when it comes to building up confidence


Summary: instawallet is a good service if you want to get someone started with bitcoin, but you should definitely not deposit large amounts there.
For merchant services, alternatives to mybitcoin exist, but they are most likely one-man-shows with little to no professional customer service and probably not a very high level of security as well.
Flexcoin, the seemingly most professional out of the mentioned services, claims to pay interest on your balance, which may or may not be legal (in most countries it is not, but i am unsure about US laws). All in all, that site screams "SCAM" all over the place, but on the other hand there seems to be a real person / company behind it. It would be very easy for flexcoin to build up some trust if only they would reveal a few more details about themselves, and yet, they don't. Really, i don't know, but for the moment, i'd stay away.


Feel free to add to this list.

Yeah, well... I'm gonna go build my own blockchain, with blackjack and hookers. In fact, forget the blockchain!
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August 01, 2011, 04:03:03 PM
 #3

I noticed one of your key comments on all of these was that you didn't feel comfortable with them.. So lets start there.. what would a Wallet/merchant service provider need to do to build trust with its users..  What are the key features, that if you saw them (and could verify them) you would say "ok thats a wallet I can get behind"...

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August 01, 2011, 04:59:27 PM
 #4

I noticed one of your key comments on all of these was that you didn't feel comfortable with them.. So lets start there.. what would a Wallet/merchant service provider need to do to build trust with its users..  What are the key features, that if you saw them (and could verify them) you would say "ok thats a wallet I can get behind"...

I actually am perfectly happy with instawallet.org as it is. But, instawallet is just that: an instant wallet service for tiny amounts. Just like carrying your cash around in the pocket of your trousers.

For a full-blown online wallet service, i personally would require the following:
  • full name and (company) address of the people behind it, confirmed by some kind of authority
  • located in a country where i know i could potentially successfully sue them (btw, that's why i included the countries in my listing)
  • some financial backing, for example an Ltd. with an original capital of somewhere around 25.000 EUR
  • insurance for my deposit, covering loss due to criminal offence, technical problems, you-name-it
  • general insight into their security measures (not too much details, but things like distribution of servers, backups, etc.)

Yeah, well... I'm gonna go build my own blockchain, with blackjack and hookers. In fact, forget the blockchain!
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August 01, 2011, 06:50:27 PM
 #5

All this talk of a central authority brings up some of the reasons why people prefer bitcoin to fiat currencies in the first place.

I think The phone applications are a much better route then the online service. As long as I can pay/receive money from my phone there is no need for instawallet, mybitcoin or any of them.

It is also a step towards another important goal for more wide-spread adoption, being able to use them in physical stores.

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August 01, 2011, 07:08:17 PM
 #6

All this talk of a central authority brings up some of the reasons why people prefer bitcoin to fiat currencies in the first place.

For those users who wish to stay anonymous, online wallets will probably never be an ideal solution. Sooner or later, online wallet services will face legal requirements to have at least some kind of "traceability" regarding their users.

I don't actually see that as a problem, there will always be a tradeoff between security and anonymity. Those of us fortunate enough to be able to reveal their identity will have slightly better protection from evildoers. Those of us fortunate enough to stay completely anonymous will probably never be able to sue somebody who ran with their bitcoins. Some of us might want both, a secure, covered-by-insurance bitcoin "bank" account, as well as a wallet of dirty money  Cool


I think The phone applications are a much better route then the online service. As long as I can pay/receive money from my phone there is no need for instawallet, mybitcoin or any of them.

Agreed, they are a good alternative for some of the cash purposes of online wallets. They are not an alternative to merchant or banking services, which online wallets may or may not offer.


It is also a step towards another important goal for more wide-spread adoption, being able to use them in physical stores.

Being able to accept bitcoins without the need to install any hard- or software at all is a major step towards wide-spread adoption, and online wallets offer just that.

Don't get me wrong here, i do not advertise online wallets as the solution for everything, and i won't encourage anyone to use any of the momentarily existing online wallet services for anything but petty cash, but i am absolutely certain that online wallets will be the main means of using bitcoins for the average Joe in the near future, like it or not.

Yeah, well... I'm gonna go build my own blockchain, with blackjack and hookers. In fact, forget the blockchain!
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August 01, 2011, 07:52:11 PM
 #7

MyBitcoin had an option to always send received bitcoins to another address. During the short time I used MyBitcoin, I enabled this to send received coins back to my personal wallet. And I left it enabled, though I stopped using MyBitcoin months ago.

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