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Author Topic: Avoid web wallets and distrust those who offer them  (Read 37 times)
AverageGlabella
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June 16, 2018, 01:07:10 AM
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Why online wallets shouldn't be used:

1. Downtime or going offline

Online wallets could be the target of malicious attacks such as DDOS attacks. As well as just completely going offline. Most online wallets (including exchanges) do not provide private keys and only provide an address. If the website can no longer be accessed for whatever reason you have now lost your coins.

2. Hacks
There's been several exchanges which have been targeted by hackers in the past. Some of these may have well been "exit scams" however it's safe to assume that exchanges are likely subject to attacks with the goal of getting access to the database and as a result everyones private keys and addresses.

3. Phishing
Because of the nature of online wallets you could become subject to phishing attempts that you don't realize at the time. There are multiple ways to avoid this however the risk is totally avoided by using a desktop wallet or hardware wallet.

4. Online wallets are known to calculate fees wrong

As a result this is costing you money or time. It's a pretty well known fact that Blockchain.info in particular is often wrong in it's estimation in fees. 

TradeFortress & Inputs.io
Let's take a look at the well known inputs.io website which was ran by TradeFortress. We all know how this turned out but over 4000 BTC was lost due to a "hack" however some suspected that TradeFortress was behind this and cashed in the coins himself. This to my knowledge has never been proven however the fact still remains that the website was insecure and TradeFortress was responsible for it one way or another.

Why you should not trust anyone that offers online wallets
Creating a website which has the capability of storing Bitcoin for the long term is encouraging people to use a less than secure option. It's promoting malpractice and ignorance.  Using the example above at the time of opening Inputs.io TradeFortress was considered one of the most trustworthy members on the forum. However this didn't stop him from losing over 4000 btc and not being able to reimburse those that lost coins.
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pooya87
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June 16, 2018, 03:47:26 AM
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just some points:
- try to have consistency when you write something like this. for example you started with the title "web wallets" then you use "online wallets" in their stead. online wallet is a bit misleading to describe web wallets in my opinion.
- exchanges are not wallets and should not be used as such. storing coins on exchanges for trading purposes for short term is a different thing that we all do.

also i wouldn't say web wallets are bad and should never be used. i think they are actually a good thing to have. specially services like Coinbase that are not exactly wallets but more like accounts. these help newcomers get started with bitcoin fast and easy. and many people are lazy! we can encourage them to move to a secure desktop and cold storage wallet but as the start i think they are good.

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June 16, 2018, 03:59:04 AM
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Most online wallets (including exchanges) do not provide private keys and only provide an address.
If you can’t access your private key, you do not have a wallet.
Quote
A cryptocurrency wallet stores the public and private keys which can be used to receive or spend the cryptocurrency.

There's been several exchanges which have been targeted by hackers in the past.
I think you confuse exchanges sites and web wallets. "do not trust both to Store your coins

As a result this is costing you money or time. It's a pretty well known fact that Blockchain.info in particular is often wrong in it's estimation in fees. 
You are not obliged to abide by those fees


Let's take a look at the well known inputs.io website which was ran by TradeFortress.

When you want to store your coins, make sure you have access to your private key and then choose a well-programmed wallet from ----> https://bitcoin.org/en/wallets/

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Warning: online wallets are banks that you are trusting

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June 16, 2018, 07:56:50 AM
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just some points:
- try to have consistency when you write something like this. for example you started with the title "web wallets" then you use "online wallets" in their stead. online wallet is a bit misleading to describe web wallets in my opinion.
- exchanges are not wallets and should not be used as such. storing coins on exchanges for trading purposes for short term is a different thing that we all do.

also i wouldn't say web wallets are bad and should never be used. i think they are actually a good thing to have. specially services like Coinbase that are not exactly wallets but more like accounts. these help newcomers get started with bitcoin fast and easy. and many people are lazy! we can encourage them to move to a secure desktop and cold storage wallet but as the start i think they are good.
Thats just semantics over a word. They are the same thing anything hosted on the web which you can store coins on is a web wallet and an online wallet. Both should be avoided.

How is online wallet misleading to describe web wallets?

I don't think it's a good start to encourage people to store their money on a service which they don't control at all. It encourages bad security. I'm not arguing over the fact that you have to deposit money into their web wallet in order to exchange but it should not be kept there for a long period of time.

It's exactly why brain wallets are insecure because people are lazy. But I for one would rather encourage those new to Bitcoin to start as they mean to go on and by properly secure their funds otherwise its likely they will just keep it in an insecure environment.
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June 16, 2018, 08:01:12 AM
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There's been several exchanges which have been targeted by hackers in the past.
I think you confuse exchanges sites and web wallets. "do not trust both to Store your coins
No I have not confused anything. Exchanges which have a web wallet built in is the exactly the same as another web wallet which does not have an exchange. Both are insecure to store coins in the long term.

As a result this is costing you money or time. It's a pretty well known fact that Blockchain.info in particular is often wrong in it's estimation in fees.  
Quote
You are not obliged to abide by those fees

This is coming from a newbie perspective hence why its in the newbie board which will blindly follow the recommended amounts.


Let's take a look at the well known inputs.io website which was ran by TradeFortress.

You do realize that theres been hundreds of differnt websites which reported on inputs.io when the alleged hack happened? This does not mean that it was popular to store coins on (over 4000 btc still) but its well known because TradeFortress was the owner of the site who is probably one of the most famous people on this forum.
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