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Author Topic: what to charge for cold storage?  (Read 2802 times)
davout
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August 26, 2011, 03:16:55 PM
 #21

this is the only user definable cold storage solution on the market... 
Reworded : this is the only place where a user is not automatically protected by the cold storage measures that should be in place by default Smiley

I'll take the bitcoin-central example. The vast majority of our holding are in cold storage, we make it completely transparent to the user.

Users shouldn't have to worry about that, and they shouldn't have to pay either Smiley

A regular bank doesn't tell you that you have to choose how much of your cash should be in the safe as opposed to simply lying in the cashiers drawer.

Even mentioning cold storage communicates the idea that your regular storage is insecure.

Just my 2 satoshis

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August 26, 2011, 03:33:41 PM
 #22

Reworded : this is the only place where a user is not automatically protected by the cold storage measures that should be in place by default Smiley

Because that's impossible,  if anyone says that they are lying.   People wouldn't have access to their funds if they were physically offline.   They must be online in order for people to spend them on an ewallet.

Quote
Even mentioning cold storage communicates the idea that your regular storage is insecure.

It's not the bank's security,  it's the keylogger sitting on your machine is what scares us.

When I say "your" I am not meaning you personally,  just in aggregate we have thousands of clients, each person individual has their own security policy (or none)  if someone hacked into their local box it's possible for them to steal funds directly from their wallet.dat file located on their machine or just as they do with bank accounts via a keylogger or whatever.

That's my fear...  throwing them in cold storage forces a manual review...  hence why the demand is there.



  



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davout
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August 26, 2011, 03:48:29 PM
 #23

Because that's impossible,  if anyone says that they are lying. People wouldn't have access to their funds if they were physically offline. They must be online in order for people to spend them on an ewallet.
Or the operator can manage to have enough funds online to satisfy the withdraws while at the same time keeping most of the funds secured. If the online funds are stolen, the operator must eat the loss, the risk should be compensated by the fees.

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Even mentioning cold storage communicates the idea that your regular storage is insecure.
It's not the bank's security,  it's the keylogger sitting on your machine is what scares us.
There are better ways to prevent keyloggers from withdrawing from your account, mouse typed PINs, captchas, one-time passwords, etc.
These days everyone has a smartphone, generating OTPs on a smartphone is a really good and secure way of protecting accesses and ensuring that requests originate from humans.


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August 26, 2011, 04:09:04 PM
 #24

Or the operator can manage to have enough funds online to satisfy the withdraws while at the same time keeping most of the funds secured. If the online funds are stolen, the operator must eat the loss, the risk should be compensated by the fees.

That's possible (actually likely) in the future,  but we're still seeing wild swings in account balances..  I couldn't for sure state what is valid and what isn't in terms of an online reserve vs offline reserve.


Quote
There are better ways to prevent keyloggers from withdrawing from your account, mouse typed PINs, captchas, one-time passwords, etc.
These days everyone has a smartphone, generating OTPs on a smartphone is a really good and secure way of protecting accesses and ensuring that requests originate from humans.

Already in the plans Smiley   



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August 26, 2011, 04:12:13 PM
 #25

That's possible (actually likely) in the future,  but we're still seeing wild swings in account balances..  I couldn't for sure state what is valid and what isn't in terms of an online reserve vs offline reserve.
What we do at BC is simply put transfers in pending state when there is not enough to cover instantly, we get notified, fund the server, from there a periodic task processes pending transfers.

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August 26, 2011, 04:30:07 PM
 #26

no matter what you do with the wallet, the weak link would still be where the user communicates with you to get the funds back. if its just a web request that a username and password is needed, then thats not secure at all compared to bank vaults

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August 26, 2011, 04:31:17 PM
 #27

no matter what you do with the wallet, the weak link would still be where the user communicates with you to get the funds back. if its just a web request that a username and password is needed, then thats not secure at all compared to bank vaults
Captcha, OTP, mouse typed pin

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August 26, 2011, 05:17:23 PM
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Why do people keep comparing bitcoins to the old traditional way of banks? They are COMPLETELY incompatible. There is no federal insurance that covers theft, so everything is different.
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August 26, 2011, 05:46:09 PM
 #29

Why do people keep comparing bitcoins to the old traditional way of banks? They are COMPLETELY incompatible. There is no federal insurance that covers theft, so everything is different.

plus we have clients as banks,  trust me.. the hacking attempts on bitcoin related sites are multiples of what happens on normal bank websites.


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August 26, 2011, 06:08:02 PM
 #30

My bank charges about $40/year for a small (5x1.5x24) safe-deposit box. It is my responsiblity to move the coins in and out securely. I think charging a percentage rather than a flat rate may be problematic.

The advantage of a local safe-deposit box is that I can finally get around to having verified off-site back-ups.

The disadvantage is that I may raise all kinds of red flags and get reported as a money launderer. Suspicious activity may include: frequent visits, visits with a backpack large enough to hide currency, visiting ATM after visiting safe-deposit box, renting safe-deposit box not at your nearest branch, etc.


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August 26, 2011, 07:04:20 PM
 #31

My bank charges about $40/year for a small (5x1.5x24) safe-deposit box. It is my responsiblity to move the coins in and out securely. I think charging a percentage rather than a flat rate may be problematic.

It's not right to do anything else...

1 bitcoin to store 1 bitcoin is too expensive

1 bitcoin to store 10,000 bitcoins is too cheap

trying a sliding scale still penalizes the guy on one end of the scale as compared to another...  trust me I did the math...  percentage is the only fair gambit... 

My thinking is that the guy that has only 2 bitcoins isn't going to use the service...

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August 26, 2011, 09:08:53 PM
 #32

My bank charges about $40/year for a small (5x1.5x24) safe-deposit box. It is my responsiblity to move the coins in and out securely. I think charging a percentage rather than a flat rate may be problematic.

It's not right to do anything else...

1 bitcoin to store 1 bitcoin is too expensive

1 bitcoin to store 10,000 bitcoins is too cheap

trying a sliding scale still penalizes the guy on one end of the scale as compared to another...  trust me I did the math...  percentage is the only fair gambit... 

My thinking is that the guy that has only 2 bitcoins isn't going to use the service...

It doesn't penalize anyone, they just do something cheaper and less secure because it's only one coin. If you charge a percent for something that has a roughly fixed cost then someone else will come and offer it at a fixed cost and take all of your high amount high fee customers.

It costs the same amount to move 10000BTC as 1BTC and everyone knows it.

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August 26, 2011, 09:36:42 PM
 #33

Quote from: FreeMoney

It costs the same amount to move 10000BTC as 1BTC and everyone knows it.

Not even close .  If something happened to one bitcoin I owe the guy 1 bitcoin.  10,000 and I owe him 100,000 USD



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August 26, 2011, 10:52:31 PM
 #34

Quote from: FreeMoney

It costs the same amount to move 10000BTC as 1BTC and everyone knows it.

Not even close .  If something happened to one bitcoin I owe the guy 1 bitcoin.  10,000 and I owe him 100,000 USD


Okay sure.

Insuring (promising to repay if the coins are lost) depends completely on the amount.

But doing "Procedure X" on 1 coin costs the same as doing it on 10000.

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August 27, 2011, 12:51:38 AM
 #35

Quote from: FreeMoney

It costs the same amount to move 10000BTC as 1BTC and everyone knows it.

Not even close .  If something happened to one bitcoin I owe the guy 1 bitcoin.  10,000 and I owe him 100,000 USD




wow if you are actually offering insurance on people's deposits then that is a huge first. Hype up the publicity and charge a decent 5% annual fee or something.

If whoever wants this service is too lazy to backup a single file to a usb drive... then they should be paying at least 5% annually for such a service and security. (assuming you actually have some kind of insurance contract with the deposit and the client)

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August 27, 2011, 01:16:59 AM
 #36

if this is a manual "white glove" service I think you definitely need to set a minimum balance, say 100 bitcoins minimum for cold storage.

You are getting back to the original point of Banking and that is a secure warehousing of money.  The banks today are so far away from their original purpose.

If these deposits are guaranteed, then you roll that into the white glove offline service as one bundled fee.  I agree it should be a percentage.  If anything, reduce the percentage for higher balances say > 1000 bitcoins, but still keep it a percentage.


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August 27, 2011, 01:41:59 AM
 #37

Why not just keep your coins in an exchange that offers cold storage for free?

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August 27, 2011, 02:01:16 AM
 #38

are the coins in cold storage insured? what if the drive fails, what if the bank raids your box.

id be willing to bet my coins are safer taped to my wall unencrypted than on a flash drive in a bank.

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August 27, 2011, 02:02:19 AM
 #39

Why not just keep your coins in an exchange that offers cold storage for free?

I think the main advantage here is that you can define how much do you want to keep in cold storage. Let's say you deposit 1000 coins at MtGox. If they get hacked, how much will you loose? You never know...

The other advantage is that flexcoin offers monthly "discounts" (which is basically interest). The more you save, the more you earn.
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August 27, 2011, 02:15:36 AM
 #40

Why not just keep your coins in an exchange that offers cold storage for free?

I think the main advantage here is that you can define how much do you want to keep in cold storage. Let's say you deposit 1000 coins at MtGox. If they get hacked, how much will you loose? You never know...

The other advantage is that flexcoin offers monthly "discounts" (which is basically interest). The more you save, the more you earn.

Also, unlike the exchanges, flexcoin pays a sort of "interest" on your holdings.
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