Security Vs Convenience In Crypto

[TypoTonic]

[...] I often wonder what really makes managing your own seed phrase stressful. Do you even manage it? There's literally nothing you need to do about it except writing it down on a piece of paper and make sure you don't lose it. And it's pretty much simple.

I don't get it either. It's honestly more inconvenient having to submit your ID, along with other personal information, and then wait for approval just to register an account on a local CEX. And not only that, you will still need to verify every transaction you make due to regulatory requirements. It's no different than having to explain to the bank why you want to withdraw your own money, I've had enough of that which is why I prefer to have full control over my funds.

For crypto to reach mass adoption, do we need more convenience or should the focus remain on security and self-custody?

I don't think convenience is an issue when it comes to mass adoption, I believe it's more about the lack of awareness and education. The people should understand why self-custody matters, instead of using the traditional systems just because it's what they're familiar/comfortable with.

[macson]

Many users prefer centralized platforms because they are easier to use than self-custody wallets.

I don't think it's because exchanges are easier to use than self-custody wallets, but rather that with an exchange, someone can swap their Bitcoin to fiat and vice versa, and then withdraw it to their bank account. Exchanges also allow people to get involved in futures trading.

The various features provided by exchanges are what make people choose to use them, even with the risk that they are trading full control over their own assets for that accessibility.

[CryptoVoyager24]

Security and convenience are mutually exlusive.
Every time someone tries to make a wallet user friendly, they just open up a massive attack vector.
Cold storage is actually supposed to be annoying to access.
If its easy, its vulnerable.

[Dogedegen]

No, I don't agree. Security and convenience aren't mutually exclusive. You don't have to sacrifice one in order to avail of the other.

I don't know why you received merit for this post, because this is in direct opposition to knowledge that is being taught in security at universities. They teach that and it is well known that convenience and security are at direct odds with each other. And most often what happens is that the more secure something is the harder it is to use it. The easier it is to use it, the less safe it is. How many cloud based wallets need to be hacked or how many multisignature hardware wallets fail to be hacked for you to understand that this is true?

Convenience in crypto as from my understanding is basically just a more refined UX flow and nothing more.

People choose exchange because people care about making profit more than actually holding their bitcoin, they just want a faster way to sell their bitcoin and treat it like holding stocks.

User convenience is a defined thing that applies to every activity that a human can do and because of that your claim does not make sense. Users are not choosing exchanges because they care about profit, that is not true because having your coin on an exchange does not make you more profit. You profit the same whether on the exchange or off the exchange. The reason here is convenience of use and the speed of use. You don't have to learn how to store Bitcoin securely, you don't have to make transactions to do something. You click buttons on an exchange, it is faster, that is what convenience is about. It is not about making more profit.

Many users prefer centralized platforms because they are easier to use than self-custody wallets.

Is it though?

Yes it is, you are wrong about this.

Security and convenience are mutually exlusive.

Many people here wrote wrong things, but you understand it. I am happy to see that. 

[Glowy]

[...] I often wonder what really makes managing your own seed phrase stressful. Do you even manage it? There's literally nothing you need to do about it except writing it down on a piece of paper and make sure you don't lose it. And it's pretty much simple.

I don't get it either. It's honestly more inconvenient having to submit your ID, along with other personal information, and then wait for approval just to register an account on a local CEX. And not only that, you will still need to verify every transaction you make due to regulatory requirements. It's no different than having to explain to the bank why you want to withdraw your own money, I've had enough of that which is why I prefer to have full control over my funds.

For crypto to reach mass adoption, do we need more convenience or should the focus remain on security and self-custody?

I don't think convenience is an issue when it comes to mass adoption, I believe it's more about the lack of awareness and education. The people should understand why self-custody matters, instead of using the traditional systems just because it's what they're familiar/comfortable with.

The lack of awareness is a valid reason, especially with the information that; if you loss your passkey you loose accept to your asset. There are also news of people who lost funds because they can't track their seed.
I have had same experience, I had switched phones and I was so confident that my seed phrase was sitting pretty with the other passwords. I parted with that phone, few months later i installed the app, picked up my seed-phrase holder and figured I couldn't find that particular wallets phrase. It took a while before I accepted my reality. Not too many want to deal with such occurences.

[Youngrebel]

The lack of awareness is a valid reason, especially with the information that; if you loss your passkey you loose accept to your asset. There are also news of people who lost funds because they can't track their seed.
I have had same experience, I had switched phones and I was so confident that my seed phrase was sitting pretty with the other passwords. I parted with that phone, few months later i installed the app, picked up my seed-phrase holder and figured I couldn't find that particular wallets phrase. It took a while before I accepted my reality. Not too many want to deal with such occurences.

It is not just about understanding how it works, but also the responsibility that comes with it. Unlike traditional banking, there is no forgot password option when it comes to your seed phrase and once it is gone, access is gone too and our experience really highlights how easy it is to make that kind of mistake. You can be confident everything is safe, and then one small oversight changes everything. And the worst part is that realization moment, when you know there’s nothing you can do to recover it. That’s not something everyone is ready to deal with. It also shows why awareness and proper storage habits are so important. Things like keeping backups in secure places, not relying on just one copy, and treating your seed phrase like something extremely valuable can make a huge difference and at the same time, situations like this are exactly why some people still prefer centralized platforms, even with their downsides and they offer a safety net.

[Dogedegen]

The lack of awareness is a valid reason, especially with the information that; if you loss your passkey you loose accept to your asset. There are also news of people who lost funds because they can't track their seed.
I have had same experience, I had switched phones and I was so confident that my seed phrase was sitting pretty with the other passwords. I parted with that phone, few months later i installed the app, picked up my seed-phrase holder and figured I couldn't find that particular wallets phrase. It took a while before I accepted my reality. Not too many want to deal with such occurences.

I disagree that it is a lack of awareness. There are countless cases and if you investigate also in more detail you will find that people were told that the seed is the most important thing and that under all circumstances they have to keep it. After this they did not do it, they misplaced it or lost it. How is this a lack of awareness? You were told, that means that you were aware and you knew. If you don't put enough importance into something, that is not really a lack of awareness it is a deeper or more complicated issues. One of my theories and it is just part of the whole is that Bitcoin feels too unreal for many. They do not have a natural feeling to it as they are used to physical things, but it is just numbers on a screen. So even when they have significant value in it they may not feel the same way like they would with a wallet full of cash or credit cards.

It is not just about understanding how it works, but also the responsibility that comes with it. Unlike traditional banking, there is no forgot password option when it comes to your seed phrase and once it is gone, access is gone too and our experience really highlights how easy it is to make that kind of mistake. You can be confident everything is safe, and then one small oversight changes everything. And the worst part is that realization moment, when you know there’s nothing you can do to recover it. That’s not something everyone is ready to deal with. It also shows why awareness and proper storage habits are so important. Things like keeping backups in secure places, not relying on just one copy, and treating your seed phrase like something extremely valuable can make a huge difference and at the same time, situations like this are exactly why some people still prefer centralized platforms, even with their downsides and they offer a safety net.

These people do exist that you are referring to, but I don't think that they are in the majority except maybe during bull markets where the news are going crazy about Bitcoin. In such times many people that do not have the technical skills are coming into Bitcoin on their own. In other times, many people have come through direct referral by people who they know. As such they do understand the basics. We are not talking about deep technical knowledge, but a simple fact that since the system is decentralized you are responsible for your own money. When compared to cash money in your wallet, it is very easy to understand this so I don't think is an issue. If you lose 10 dollars from your wallet, a bank can't help you recover this money.

[aylabadia05]

Should we sacrifice security for usability?

Clearly, we don’t want to sacrifice security for the sake of usability.
Most cryptocurrencies were created not out of a desire to build something that prioritizes utility over security and trust, but rather because they were designed to generate profits for their creators.
Bitcoin was created for security, trust, and utility with a limited supply, and that is crystal clear.
In this highly advanced era, creating a token or coin is no difficult task.

[DiMarxist]

What do you mean by convience, crypto currency is built on the grounds of security and privacy which gives rise to self custody. There should be no compromise just to satisfy a few who may not be in tuned with what is happening on the crypto community. I will advise that such people should learn and equip themselves to get used to crypto.

[CryptoVoyager24]

The abstraction part is huge. Like @Dogedegen said, people dont feel the weight of digital assets. They treat a seed phrase like a forgotten wifi password instead of actual bearer bonds.
Convenient crypto is honestly just a myth. If u want it easy, your just doing tradfi with extra steps and accepting counterparty risk. The moment u hand over keys to an exchange for "convenience", u stop owning the coins. Holding your own wealth is supposed to have friction.

[Dogedegen]

Clearly, we don’t want to sacrifice security for the sake of usability.

It is something that must not be done, but for consumer products it has to be done to some amount. Overall they try to find some balance.

Most cryptocurrencies were created not out of a desire to build something that prioritizes utility over security and trust, but rather because they were designed to generate profits for their creators.

That is right, not many people actually say this truth out loud. Most shitcoins never needed to be created, but the creators are greedy so they created thousands of shitcoins and millions of junk tokens. Almost none of them have a real use case.

Bitcoin was created for security, trust, and utility with a limited supply, and that is crystal clear.

Exactly right, Bitcoin is just so different from these other things and that is why they can't ever copy what Bitcoin is. They repeat all claims that they are decentralized, better than Bitcoin all sorts of things they write. But they do this because it is not true, they can't get over the superiority of Bitcoin otherwise they would write the truth and admit their real position which is always going to be secondary to Bitcoin.

In this highly advanced era, creating a token or coin is no difficult task.

You can create a token in less than 5 minutes, and a coin in a few hours. It really means nothing these days..

The abstraction part is huge. Like @Dogedegen said, people dont feel the weight of digital assets. They treat a seed phrase like a forgotten wifi password instead of actual bearer bonds.
Convenient crypto is honestly just a myth. If u want it easy, your just doing tradfi with extra steps and accepting counterparty risk. The moment u hand over keys to an exchange for "convenience", u stop owning the coins. Holding your own wealth is supposed to have friction.

Some parts of this conversation are not the same as others, but if we focus on the seed phrase issue it really comes to light how true this is. We can focus on having a backup and keeping it safe. How many people fail to create the proper backup of the 12 or 24 words? Many others also input it online in shady websites of all sorts. This tells us that they do not feel the weight and they do not understand what they are doing. It is as if you open some random website that tells you please send me all your bank money to this address and you just proceed to do it? It is pretty crazy when you think of it like this, because that is exactly what people are doing.

And when you think about the seed phrase, it is a very simple concept and I don't think it could be simplified more. It is also very easy to store and keep safe. Easier than cash, gold, anything else of this kind. You can fold it up and hide it in the smallest places, so even if your house got robbed it would never be found.

[Jubilee58]

For mass adoption to happen, crypto must become easier to use.
But every layer of convenience seems to introduce new risks.

Should we sacrifice security for usability?

Events like the collapse of FTX reminded the industry that convenience sometimes comes with hidden risks.

Many users prefer centralized platforms because they are easier to use than self-custody wallets.

For crypto to reach mass adoption, do we need more convenience or should the focus remain on security and self-custody?

Before you engage yourself in any investment, the first thing that should come into your mind is the security of your investment. If you compromise the security of your investment, you stand the risk of even loosing your entire asset. This is exactly what applies to bitcoin investing, some investors have choosing convenience instead of security, therefore exposing their Bitcoin asset to danger. Bitcoin is safer in your wallet rather keeping it in an exchange. When your bitcoin asset is kept in the exchange, it is exposed to scammers, and what ever happens to that exchange affects your investment, this is unlike wallet. When you keep bitcoin in your wallet, the storage is offline, and all you have to do is to keep your security keys, and seed phrase safe and secured to enable easy access each time you want to access your wallet.

[AmoreJaz]

The abstraction part is huge. Like @Dogedegen said, people dont feel the weight of digital assets. They treat a seed phrase like a forgotten wifi password instead of actual bearer bonds.
Convenient crypto is honestly just a myth. If u want it easy, your just doing tradfi with extra steps and accepting counterparty risk. The moment u hand over keys to an exchange for "convenience", u stop owning the coins. Holding your own wealth is supposed to have friction

And some people are just too lazy to be accountable with their own assets. Of course, if you have valuable assets on hand, you also have the responsibility to take care of it, to secure that it won't just get out of your hands. But some are relying to third party entities to hold their coins, which we all know is quite risky because you have no control of your assets. But people don't want accountability - the reason why a lot are still depositing their hard-earned money to banks. For them, they feel safe and secure that other entity is holding their funds. But the truth is, they are just merely holding it for you and they are using it to grow for their business. And in return, you can get the security but with very minimal amount of interest. So if you used it to fund your business, you can grow it accordingly. But what I've said earlier is that many people are just happy knowing that someone is holding their assets safely and with insurance.
But for me, it is quite different with crypto exchanges. Hard to trust your coins in those exchanges as some of them won't survive long. So once the site disappeared or got shutdown, I don't think you can recover your coins in that case. This is why it is always advisable to store your coins and study how to have your own control of your crypto assets.

[tbct_mt2]

Self custody is safer IF you know what you're doing, many people lose coins also by themself, lost seed, wrong backup, phishing, stuffs like that. Exchange is risky yes, but for small amounts or like active trading they're still practical. The real mistake is keeping everything there just because its easy.

Being self custodians is the best and safest approach to store their bitcoin so it's the way they should go. They can learn and practice with wallet and bitcoin on testnet to understand steps to do for wallet creation, backup, funding, storage, recovery. When they mastering these steps on testnet, they can do it on Bitcoin main net, and with very first practice, they can try with very small fund so if any mistake is made on main net, they will only lose a small fund and can learn from own mistake and come back with another try and fund.

How to backup a seed phrase?
https://bitcoin.org/en/secure-your-wallet
https://bitcoinsecurity.org/

Best approach in my opinion is to split it, for long term holdings on hardware wallet, stored properly offline and for trading or quick access, keep a smaller amount on an exchange.

Biggest fund part should be store in their non custodial wallets like hardware wallet and for holding purpose only.
Smaller funds can be used for trading and spending. Small fund for payment can be stored in a hot wallet like computer or mobile device. Trading is risky so trading fund should be very small too.

[CryptoVoyager24]

Clearly, we don’t want to sacrifice security for the sake of usability.

It is something that must not be done, but for consumer products it has to be done to some amount. Overall they try to find some balance.

Most cryptocurrencies were created not out of a desire to build something that prioritizes utility over security and trust, but rather because they were designed to generate profits for their creators.

That is right, not many people actually say this truth out loud. Most shitcoins never needed to be created, but the creators are greedy so they created thousands of shitcoins and millions of junk tokens. Almost none of them have a real use case.

Bitcoin was created for security, trust, and utility with a limited supply, and that is crystal clear.

Exactly right, Bitcoin is just so different from these other things and that is why they can't ever copy what Bitcoin is. They repeat all claims that they are decentralized, better than Bitcoin all sorts of things they write. But they do this because it is not true, they can't get over the superiority of Bitcoin otherwise they would write the truth and admit their real position which is always going to be secondary to Bitcoin.

In this highly advanced era, creating a token or coin is no difficult task.

You can create a token in less than 5 minutes, and a coin in a few hours. It really means nothing these days..

The abstraction part is huge. Like @Dogedegen said, people dont feel the weight of digital assets. They treat a seed phrase like a forgotten wifi password instead of actual bearer bonds.
Convenient crypto is honestly just a myth. If u want it easy, your just doing tradfi with extra steps and accepting counterparty risk. The moment u hand over keys to an exchange for "convenience", u stop owning the coins. Holding your own wealth is supposed to have friction.

Some parts of this conversation are not the same as others, but if we focus on the seed phrase issue it really comes to light how true this is. We can focus on having a backup and keeping it safe. How many people fail to create the proper backup of the 12 or 24 words? Many others also input it online in shady websites of all sorts. This tells us that they do not feel the weight and they do not understand what they are doing. It is as if you open some random website that tells you please send me all your bank money to this address and you just proceed to do it? It is pretty crazy when you think of it like this, because that is exactly what people are doing.

And when you think about the seed phrase, it is a very simple concept and I don't think it could be simplified more. It is also very easy to store and keep safe. Easier than cash, gold, anything else of this kind. You can fold it up and hide it in the smallest places, so even if your house got robbed it would never be found.

Anyone who thinks securing a seed phrase means folding a piece of paper and hiding it under a mattress is one house fire away from losing everything.

Burglars literally trash houses. They pull out every drawer, empty every book, and check every vent. But the real enemy isnt even a thief. Its water damage, humidity, and fire.

If u hold actual value, paper is just a temporary transfer mechanism. U write it down, verify it, and then instantly stamp it into solid metal. Treating a highly flammable, water-soluble piece of paper as a permanent vault is peak newbie behavior.

[SableTeacup]

we should not trade security for convenience, instead crypto should make secure options easier to use. The FTX collapse showed that convenience on centralized platforms can hide big risks, for mass adoptions, selc custody wallets need to become as simple as banking apps. the best future for crypto is convenience with security, not convenience instead of security  

[Z-tight]

If u hold actual value, paper is just a temporary transfer mechanism. U write it down, verify it, and then instantly stamp it into solid metal. Treating a highly flammable, water-soluble piece of paper as a permanent vault is peak newbie behavior.

Backing up your seed phrase on a piece of paper and making more than one copy of it is recommended, i do not consider it to be a newbie behaviour, surely you'd not keep it 'under the bed' like you said, nor in plain sight, but somewhere safe and dry. However, engraving your seed phrase on a stainless steel or titanium offers the best level of security, especially because it offers protection from fire and water. But that doesn't mean you cannot use paper, if you know what you're doing.

selc custody wallets need to become as simple as banking apps.

They are already as simple as that. Because even a complete newbie who can use a mobile phone or laptop can easily set up and use electrum or bluewallet.

[sokani]

The lack of awareness is a valid reason, especially with the information that; if you loss your passkey you loose accept to your asset. There are also news of people who lost funds because they can't track their seed.
I have had same experience, I had switched phones and I was so confident that my seed phrase was sitting pretty with the other passwords. I parted with that phone, few months later i installed the app, picked up my seed-phrase holder and figured I couldn't find that particular wallets phrase. It took a while before I accepted my reality. Not too many want to deal with such occurences.

Just a little advice. You should occasionally be checking your seed phrase to ensure that it is where you kept it and in the right condition. Also, you need to have multiple backups stored in different locations. So that if, by chance, something like this happens again, or there is a fire outbreak, flooding, or earthquake, you can retrieve it from another location.

[Fivestar4everMVP]

For mass adoption to happen, crypto must become easier to use.
But every layer of convenience seems to introduce new risks.

Should we sacrifice security for usability?

Events like the collapse of FTX reminded the industry that convenience sometimes comes with hidden risks.

Many users prefer centralized platforms because they are easier to use than self-custody wallets.

For crypto to reach mass adoption, do we need more convenience or should the focus remain on security and self-custody?

Let's face reality, there will not be much adoption for bitcoin if everything about is centered around security and self - custody, and the real fact remains that not every body has the technical know how and skills to effectively manage self custody wallet, isn't this the reason why there are people spending millions and billions of dollars buying the ETF version of bitcoin rather than spending that money to invest in the real bitcoin which they can withdraw onchain to their self custody onchain wallet?

And the truth is that the ecosystem have actually sacrificed alot of the features Satoshi envisioned for bitcoin to bitcoin to where it is today, are we going to turn back now? I don't think that's a wise thing to do, we have to finish what we started and that is doing every thing required to make bitcoin a currency recognized and accepted every where around the globe.

[Catenaccio]

Backing up your seed phrase on a piece of paper and making more than one copy of it is recommended, i do not consider it to be a newbie behaviour, surely you'd not keep it 'under the bed' like you said, nor in plain sight, but somewhere safe and dry. However, engraving your seed phrase on a stainless steel or titanium offers the best level of security, especially because it offers protection from fire and water. But that doesn't mean you cannot use paper, if you know what you're doing

Backing up wallet with paper is a classic backup method and it's a good method. Everyone can use it and it works well for us most of the times. Surely we can not leave our fund safety on paper with probability of physical damages from water, fire, and other things.

So there are other backup methods to use, and they are good to use as your main backup methods while paper can still be used as your extra backup method. It's not bad to have different wallet backups and in different forms too because they all can help you recover your wallet in the future. It is a good practice of "Never put all eggs in one basket" and with wallet backups "don't use only one wallet backup method or have only one backup".