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Author Topic: Online wallets and their operators  (Read 131 times)
AverageGlabella
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March 11, 2019, 11:15:32 PM
Merited by Welsh (5), ETFbitcoin (2), LoyceV (1)
 #1

Anyone that operates a online wallet should not be trusted I know this is quite a bold statement to open with and you're probably thinking that this is going to be a rant. Although I'm hoping to provide the opposite and present some knowledge on why anyone that is operating a online wallet cannot be trusted and should do the right thing and stop their services. That's right I think that the person behind Blockchain.info is and inputs.io cannot be trusted. I think inputs.io is the perfect example of how a very well respected member of the forum went from hero to zero in a matter of days. Initially when the loss of funds from inputs.io came to realization everyone was giving the benefit of the doubt to TradeFortress and assumed that this was a glitch in the system and it would be fixed in no time. Yet this iconic member of the forums who has completed many of thousands of trades on the forum had to break the news that the online wallet service was compromised and funds and possible personal data was compromised.

The thing is I don't care whether it was a hack or TF decided to run away with the funds. The day that he opened up that website to store Bitcoin in a online wallet he lost all credibility to me and I'll tell you why. From the point of view of security online wallets are inadequate and actually encourage using lesser secure methods. That is something that I personally can't stand for or advocate. The fact that there was hundreds of people advertising this service is kind of incredible too. Okay I'm not on a witch hunt here and to be completely honest I don't care that anyone advertised the service really however I do care if people don't learn from these mistakes. Everyone who advertises online wallets is naive and should really reconsider things. Online wallets are not secure and they are only ever expected to be used by newbies in the cryptocurrency world because of ease of use and accessibility. However I would like to think that as soon as they have come acquainted with Bitcoin and how it works and most importantly what is stands for they would withdraw their Bitcoin and manage it themselves.

Its funny to see many of the members rocking a blockchain.info wallet to be posting about how the banks are bad and how Bitcoin solves that. Bitcoin fundamentally might change the way we store our money. But if you are putting your money into an online exchange you're going about it the wrong way. Brainwallets used to be a phase that was popular among new comers too but thankfully this practice looks to be fading away. I would in fact argue that brainwallets when done right are more secure than online wallets. The thing is with brainwallets you're responsible for securing your account but with online wallets not only do you have to be secure in setting up your account and credentials but you also have to trust the security of the site. Some people might argue that we are placing our trust in encryption and the Bitcoin core software or whatever wallet software we choose. However an attack on the encryption used or the Bitcoin software would be much more difficult than a website as proven by history. So I plead to anyone that is considering getting into Bitcoin or anyone that is using Blockchain.info or any other online wallet service to stop immediately. You are indirectly encouraging a system that should not have any place in the Bitcoin world. Online wallets are flawed by nature and present too many security risks and taking in the fact that removing a middleman who has access or control of your funds it the very nature of Bitcoin. They are directly against what Bitcoin stands for and should not be advertised or used by any serious Bitcoin enthusiast 
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March 12, 2019, 03:36:19 AM
Merited by suchmoon (4), Welsh (3), ETFbitcoin (2), LoyceV (1)
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I'm not sure if you realize it, but blockchain.info is not a custodial wallet. It does not have access to your coins or your keys. It is true that there are certain risks associated with it because it is a website, but there are also certain risks associated with using a wallet that runs on your phone or on your desktop.

On the other hand, exchanges and other custodial wallets are dangerous because you are relying on somebody else to protect your coins and you have no way of knowing how safe they are.
Welsh
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March 12, 2019, 07:05:00 PM
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You might have got mixed up with Blockchain.info a little bit, and I can't recall how inputs.io was actually ran, but like odolvlobo suggested your warning does have significance when it comes to exchange wallets, and how they're operated. Yet, I know personally people who continue to store large amounts of Bitcoin on them, because its "easy".
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March 13, 2019, 03:24:49 PM
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I use a portfolio linked to the Internet.
But I have never been in danger.
I became thinking about dealing with conservative cold.
Pmalek
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March 13, 2019, 08:34:46 PM
Merited by Welsh (3)
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Never underestimate the choices of lazy people. Throughout the years the human race has gotten used to the centralised control of the banks and them 'helping' us when we make mistakes. You forgot your PIN, no problem call your bank. You can't find your card after a night out, don't worry about it, just call your bank!

And now this new technology appears where no bank has control over you, you are the manager of your own funds and make all the decisions yourself. But people don't see the good but tend to focus on the bad. The bad is, if you lose your private keys your funds will no longer be accessible to you. If you don't write down your seed phrase properly your funds are lost. People would rather take a risk and use a website as their wallet because it is easier and quicker, you don't have to download the blockchain or write down weird word combinations etc.
They are thinking, nah what are the chances that someone steals my money? it will never happen!

And then...

AverageGlabella
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March 14, 2019, 10:26:20 PM
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I don't think I have confused how Blockchain.info operates. Yes they don't have access to your private keys but they have opened up a new point of attack that could be targeted. Several exchanges in the past have been hit and they spent thousands on security protections. Data is stored in the database of blockchain.info including passwords and other things but can also be a target for man in the middle attacks. I'm for having offline wallets that never see the light of the internet until they need to be spent thats the beauty of Bitcoin. You can make it as secure as you want it too and I think that blockchain.info is providing a easy to use system but not the most secure and is encouraging poor practices.
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March 15, 2019, 10:54:22 AM
 #7

I use a portfolio linked to the Internet.
But I have never been in danger.
I became thinking about dealing with conservative cold.

Just because bad things don't happens to you (yet), doesn't mean it's a good practice.

I also believe online or web based wallet is riskier than offline/software based wallet, but it's difficult to encourage users to use a more secure, or at least realise the danger and how they should mitigate the risk before they lost their money. Most people learned the hard way, not sure why.
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