Bitcoin's biggest problem

[RodeoX]

It is bitcoin's fault there was an inside job at gox, and god knows what at bitstamp?  ...

Oh I'm totally with you man. It's not really a bitcoin problem per-se. But because users have to be responsible for themselves, and because sometimes they aren't, the ecosystem has security issues.  It's still the safest payment system though.

[DeathAndTaxes]

I am aligning with your last comment. Bitcoin is really an asset that is best managed as I manage my cash, smaller amounts that are kept reasonably safe and readily available for spending.

But this means I should move larger amounts of Bitcoin into another asset, which speaks to the longer term value of the technology.

Not necessarily but it does require some common sense.  Just because someone has $100,000 in cash doesn't mean they should stuff it all in their wallet and walk around with it everyday.  The funny thing is that nobody does and they don't even consider it however they do exactly that with Bitcoin.  Likewise it wouldn't really make sense to keep all of your money in a safety deposit box either.  "Oops need to buy a candy bar let me drive to the bank, show ID, wait for the guard, sign out my safety deposit box at the bank, remove $1, lock the box, drive to the store and buy the candy bar".  That scenario is also equally dumb and nobody would even consider doing that in the fiat world.   Why?  Most people would use common sense.  Somehow people know how to keep cash secure and part of that means limiting the amount which can be stolen while not making it excessively inconvenient.  Keep daily needs in wallet, an emergency amount in home safe, and bulk of cash strongly secured in safety deposit box (or federally insured bank).   People instinctively know how to do it when it is dollars or euros but soon as you say Bitcoin all the common sense goes out the window. 

[Peter R]

...

Haha, welcome back!  Happy New Years and all the best for 2015!

[piramida]

I am aligning with your last comment. Bitcoin is really an asset that is best managed as I manage my cash, smaller amounts that are kept reasonably safe and readily available for spending.

But this means I should move larger amounts of Bitcoin into another asset, which speaks to the longer term value of the technology.

Not necessarily but it does require some common sense.  Just because someone has $100,000 in cash doesn't mean they should stuff it all in their wallet and walk around with it.  Likewise it wouldn't really make sense to keep all of it in a safety deposit box either.  "Oops need to buy a candy bar let me sign out my safety deposit box at the bank, remove $1 and then spend it."  Most people would use common sense.  Somehow people know how to keep cash secure and part of that means limiting the amount which can be stolen while not making it inconvenient (keep daily needs in wallet, an emergency amount in home safe, and bulk of cash strongly secured).   Not sure why but soon as it becomes Bitcoin all common sense goes out the window.

Scary to think what people asking these questions would do if they'd store their wealth in gold bars "Gold is cool and all but shopping becomes a real problem for me"

[NotLambchop]

^So we agree that BTC isn't money?  We're making progress

[Morecoin Freeman]

It is not bitcoin that is unsafe.
It is the exchanges.

On the exchanges you don't trade with actual coins. The coins never move. It is just the exchange software playing with numbers. Only time coins move is on Withdrawals and Deposits, and when hackers steal them.

See for yourself:

http://www.stealmywallet.com/

Coins never got stolen. If you know how to protect your wallet with a complex password you should be okay.
Check out the top 100 bitcoin rich list. It is all public. No coins got stolen...

[piramida]

No coins got stolen

We know that, but the issue of device security is a real one. As bitcoin pointed out several years ago, personal computing security habits were close to non-existent. If that's the only good thing that will come out of bitcoin, it already is worth billions.

Real progress is being made in how to make a small string worth thousands $ secure on consumer devices; that should get rid of 12345 passwords and windows xp zombie machines eventually.

For now, as a temporary measure, there are special wallet sites and devices to keep your hot wallets relatively safe even with no knowledge of computer security basics. It should only get easier with time, we should arrive at actually secure home computing systems.

[DieJohnny]

I am aligning with your last comment. Bitcoin is really an asset that is best managed as I manage my cash, smaller amounts that are kept reasonably safe and readily available for spending.

But this means I should move larger amounts of Bitcoin into another asset, which speaks to the longer term value of the technology.

Not necessarily but it does require some common sense.  Just because someone has $100,000 in cash doesn't mean they should stuff it all in their wallet and walk around with it.  Likewise it wouldn't really make sense to keep all of it in a safety deposit box either.  "Oops need to buy a candy bar let me sign out my safety deposit box at the bank, remove $1 and then spend it."  Most people would use common sense.  Somehow people know how to keep cash secure and part of that means limiting the amount which can be stolen while not making it inconvenient (keep daily needs in wallet, an emergency amount in home safe, and bulk of cash strongly secured).   Not sure why but soon as it becomes Bitcoin all common sense goes out the window.

Right but really how many people keep 100k in cash? NOBODY I have ever met keeps 100k in cash, not a single solitary millionaire, and I have met a lot. Not a single solitary drug dealer keeps that much cash. A drug lord yes, but their security system is far better than mine ever will be.

[piramida]

I am aligning with your last comment. Bitcoin is really an asset that is best managed as I manage my cash, smaller amounts that are kept reasonably safe and readily available for spending.

But this means I should move larger amounts of Bitcoin into another asset, which speaks to the longer term value of the technology.

Not necessarily but it does require some common sense.  Just because someone has $100,000 in cash doesn't mean they should stuff it all in their wallet and walk around with it.  Likewise it wouldn't really make sense to keep all of it in a safety deposit box either.  "Oops need to buy a candy bar let me sign out my safety deposit box at the bank, remove $1 and then spend it."  Most people would use common sense.  Somehow people know how to keep cash secure and part of that means limiting the amount which can be stolen while not making it inconvenient (keep daily needs in wallet, an emergency amount in home safe, and bulk of cash strongly secured).   Not sure why but soon as it becomes Bitcoin all common sense goes out the window.

Right but really how many people keep 100k in cash? NOBODY I have ever met keeps 100k in cash, not a single solitary millionaire, and I have met a lot. Not a single solitary drug dealer keeps that much cash. A drug lord yes, but their security system is far better than mine ever will be.

Keeping it in the bank account, or deposit box, or personal safe, is keeping it in cash. You never met people who keep 100k in cash? I am surprised. Come to europe I'll show you.

[sgbett]

Wouldn't Gox and Stamp be the most likely teams that would effectively be able to protect their coins?

If they can't do it, how can I, or my neighbor, or my parents?

One day I know I will wake up and my coins will be gone, just waiting for it to happen.

Bitcoin has to solve this, it has been 6 years. I think trust-less is a failed pipe dream, when it comes to protecting assets trusting ourselves appears to be a complete disaster.

You are not required to maintain a public facing website that is specifically designed with the intention of buying and selling bitcoin to the whole world. That right there increases your number of attack vectors. Also you probably don't have millions of dollars worth. (or if you do then congrats to you!)

Keep what you need day to day on your desktop, laptop, phone whatever. Keep the rest in 'savings' (offline pc, paper whatever you choose).

[podyx]

The only way bitcoin will work as a currency(still needs to grow a lot more to function as a currency; the speculation phase) is if Average Joe gets told "Use this site to safely secure your bitcoins and use this wallet to safely spend them". I think this will happen in the future which is why I still have alot of faith in the protocol. Is there any reason to question that this would not happen?

The way it is now is "Do this compliacted fucking shit that you will never understand to secure your bitcoins, if you don't know how, then use this site and pray to god they'll be safe there. As for spending there are 10 different wallets. Use any of them because you won't understand a single one of them anyway."

What I'm saying is that there should be an easy and common way to, both secure and spend, that all people who use bitcoin should be pointed to, either by word of mouth or websites such as bitcoin.org. Of course there can be several options but there should be one, the best of them, that is listed with a lot bigger letters and a recommendation sign.
A centralized system is better in this aspect but if a decentralized system can do this, it's obviously 10 times better. Which again, is why I have no problem maintaining faith in the protocol.

[B.A.S.]

As dumb as it sounds, personally securing large sums of their own money is a new idea to the American average joe. Out of the Great Depression came the FDIC. Since then, the public has had backed protection in their bank accounts from the kinds of troubles Bitcoin is facing today. Many people believe leaving coins on the exchange is safe because they have to log in, they have a password and that log in is linked to their phone. It's a real dilemma to overcome. A third party arbitrator with multisig would be awesome.

[tabnloz]

It is bitcoin's fault there was an inside job at gox, and god knows what at bitstamp?
...

No, it's not Bitcoin's fault that it has attracted every interwebs scammer, hax0r & has-been con man.
But Bitcoin's problem (not fault) is that it has no mechanism for dealing with theft and fraud.

This is a good point. But although there is no recourse, controlling your own private keys / having exchanges go multisig is a step in the evolution of the industry. There has been bitcoinica, mybitcoin etc etc which were rip offs / hacks that happened on the back of third parties controlling the priv keys. Now, with Stamp, they had a cold wallet and hot wallet so the 'damage' was limited to the hot wallet. This is better, but not great. Not good for PR, for that exchange and possibly not for customers (depending on how it pans out).

In the real economy, and probably with Gox etc, insiders get out and big interests aren't hurt but the average joe gets beaten and there is often no recourse. Some events make it into the vernacular of the times - 'getting Corzined' - or some events get so smothered in disinfo (2008 crisis & subsequent bailouts, 'austerity' here in Europe).

Unfortunately, the concept of decentralization is very hard to understand. When you factor computer security into this equation most people become like an 80 yr old trying to figure out the internet for the first time. Its a long curve in learning. As Death and Taxes wrote "Not sure why but soon as it becomes Bitcoin all common sense goes out the window."

We are seeing more and more exchanges go multisig and hopefully this stops exchange hacks and becomes standard. There is a lot of wishful thinking on here and you're always quick to trivialize it and that's fine (and funny). My hope for this bitcoin experiment is that the industry will adapt and the issues that skeptics hold up as signs of ultimate demise, will be innovated away in the future.
 

[Eamorr]

Bitcoin's biggest problem?

Well, here are the three biggest problems as far as I can see:

1. Energy
The energy required by the network to confirm transactions is now a problem - problematic because of the giga-Watts, but more importantly, because of the centralisation of mining farms into the hands of a small number of people/corporations. Also problematic is the significant increase in the cost of transaction transmission.

2. Transaction authorization time
Visa/Mastercard are superior to Bitcoin in this regard - they authorize in seconds. You can't buy a coffee if you've to wait 30 minutes. It'll have gone cold by then.

3. Complexity
Bitcoin is just too complicated for normal folks who have more important things to be doing (working, family, hobbies, socializing).



Bitcoin is a really brilliant theory that came into being by the thought processes of a man who thought he could "do currency" better (create a currency that is distributed, fair, accessible and can't be easily manipulated by big government).

The theory of cryptocurrency is extremely elegant, but I'm afraid that the underlying theory, architecture and implementation of Bitcoin is fundamentally flawed. We need a much more polished cryptocurrency for use in the modern world (and by future generations) - a cryptocurrency that is: energy efficient, instant, easy-to-use, anonymous and secure.

[waterpile]

Bitcoin's biggest problem?

Well, here are the three biggest problems as far as I can see:

1. Energy
The energy required by the network to confirm transactions is now a problem - problematic because of the giga-Watts, but more importantly, because of the centralisation of mining farms into the hands of a small number of people/corporations. Also problematic is the significant increase in the cost of transaction transmission.

2. Transaction authorization time
Visa/Mastercard are superior to Bitcoin in this regard - they authorize in seconds. You can't buy a coffee if you've to wait 30 minutes. It'll have gone cold by then.

3. Complexity
Bitcoin is just too complicated for normal folks who have more important things to be doing (working, family, hobbies, socializing).



Bitcoin is a really brilliant theory that came into being by the thought processes of a man who thought he could "do currency" better (create a currency that is distributed, fair, accessible and can't be easily manipulated by big government).

The theory of cryptocurrency is extremely elegant, but I'm afraid that the underlying theory, architecture and implementation of Bitcoin is fundamentally flawed. We need a much more polished cryptocurrency for use in the modern world (and by future generations) - a cryptocurrency that is: energy efficient, instant, easy-to-use, anonymous and secure.

I would rather say biggest problem of bitcoins is untrustful people who are operating businesses.

[johnyj]

Wouldn't Gox and Stamp be the most likely teams that would effectively be able to protect their coins?

If they can't do it, how can I, or my neighbor, or my parents?

One day I know I will wake up and my coins will be gone, just waiting for it to happen.

Bitcoin has to solve this, it has been 6 years. I think trust-less is a failed pipe dream, when it comes to protecting assets trusting ourselves appears to be a complete disaster.

There is no problem with bitcoin, just like gold is not responsible for the theft of gold. The users lost their coins, just like they lost their other properties. Everyone will lose something in his life, so a wise move is to diversify the risk

For fiat money people has got used to relying on centralized authorities to take care of their money, and the price is that they become the slave of those organizations. If you want freedom, you need to do more homework

[mlferro]

I do not see any problem with bitcoin.
i see yes is the lack of security on servers that use bitcoins for some purpose

[Eamorr]

I do not see any problem with bitcoin.
i see yes is the lack of security on servers that use bitcoins for some purpose

Classic denial.

Rationally (please leave your emotion to one side), do you have any reason to believe that energy, transaction time and ease-of-use are resolvable problems under Bitcoin?

I am arguing that all these problems are resolvable, sure, but not by Bitcoin.

[billyjoeallen]

Wouldn't Gox and Stamp be the most likely teams that would effectively be able to protect their coins?

If they can't do it, how can I, or my neighbor, or my parents?

One day I know I will wake up and my coins will be gone, just waiting for it to happen.

Bitcoin has to solve this, it has been 6 years. I think trust-less is a failed pipe dream, when it comes to protecting assets trusting ourselves appears to be a complete disaster.

As Andreas Antonopolis has pointed out, humans have at least a 10,00 year history of physical security and we're pretty good at it. We have had only a couple generations at most of information security and we still suck at it, relatively speaking. We'll get better, but it's a steep-ass learning curve.

[wang_yan]

You can also buy a Ledger Wallet, which is much cheaper than Trezor.