This is true for all wallets that advertise in-browser cryptography.
They are all vulnerable to code-poisoning when the central server gets compromised.
To properly do javascript cryptography you need to publish a signed browser extension that therefore doesn't get served dynamically and therefore is invulnerable to server-side code-poisoning.
Basically, that means that blockchain.info, strongcoin.com, {insert client-side JS wallet here} is inherently less safe than a standalone client, and not much safer than a hosted wallet.
Thoughts welcome !
Sorry to dredge up an old conversation, especially when I obviously don't understand what is being said as well as any of the posters in this thread, but I had a question about the security issue discussed. here.
Would the dangers you discuss, server-side poisoning, dishonest site owner using any of the methods you discuss, etc., still apply in the case of someone who carried out the procedure of creating a wach-only address by logging in, disconnecting internet, creating the address in private browsing mode, printing out the paper wallet for the new address, deleting all traces in the browser, then logging in and importing the new address as a new watch only address?
I mean to say that if this procedure was done so that the address and private key were created offline and then if the user NEVER sent bitcoins out of that address, therefore never entering the private key for the transaction, would the site owner or someone who poisoined the code still be able to derive the private key in some way? I mean if a user had a watch only address in their wallet and never even entered the private key to send coins then how could the private key be captured?
Thanks for any responses!