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Question: Do you trust yourself to manage your own private keys?
Yes, 100%, and I always will. - 129 (82.2%)
Yes, only because I don't yet trust bitcoin banks. - 19 (12.1%)
Not at all, I lose everything, or am not technical enough. - 2 (1.3%)
No, but someday I'd like to manage my own bitcoin and private keys. - 7 (4.5%)
Total Voters: 157

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Author Topic: Do you trust yourself to manage your own private keys?  (Read 6497 times)
Xapo
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March 17, 2015, 09:47:59 PM
 #1

Criticism often comes to online wallet providers (Xapo, Coinbase, etc) saying, if you don't own your private keys, you don't actually own your bitcoin. On the other hand, if your cash is in a traditional bank, you don't really own your cash either. The only possible difference, traditional banks have been around longer, and more people trust them. Many bitcoin users who criticize bitcoin vaults, store their cash in a traditional bank. Hypothetically, if Bank of America, or Barclay, or DeustcheBank announced they've invested millions into a highly protected, advanced, security architecture, would you trust someone to store it then? I personally don't trust myself to store my own bitcoin, for now. That could change in the future, but right now, I'm not a fan of the options, as the technology depends too much on my ability to maintain hardware, or, not lose something. I think about pictures, movies, files, documents, I had on my computer 10 years ago (and I always backed up), and I probably couldn't retrieve a single one without relying on a cloud-based service (Facebook, Google Drive, Dropbox, etc.). I have no idea where the original photos of my trip to Indonesia in 2008 are, but I know that album is still easily accessible on Facebook. Are critics right to say, don't use an online wallet provider, it's not safe?

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EcuaMobi
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March 17, 2015, 09:52:41 PM
 #2

Other big differences why most people trust banks and not exchanges:
- Banks are controlled and regulated, BTC exchanges are not
- It's difficult and dangerous to save lots of cash at home so it makes more sense to deposit on a bank, it's not as hard to hold BTC

I completely trust myself to hold my own private keys however I would never hold a big amount of cash.

BitcoinExchangeIndia.com
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March 17, 2015, 09:57:34 PM
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Criticism often comes to online wallet providers (Xapo, Coinbase, etc) saying, if you don't own your private keys, you don't actually own your bitcoin. On the contrary, if your cash is in a traditional bank, you don't really own your cash either............... Are critics right to say, don't use an online wallet provider, it's not safe?

Yes. The critics are right to say so. Because one of the main reason of bitcoin's popularity is the control is back to the people. Banks can not dictate anymore. But, when an online wallet is keeping the private key with them, they are taking away the right of ownership from the people and becoming the bank of bitcoin, which is undesirable to a lot of bitcoiners.

But, yes... safety of private key is a problem at personal level as well. I think multisig implementation of bitgo, greenaddress etc. almost solves the problem...

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March 17, 2015, 10:38:49 PM
 #4

I prefer being responsible for my own keys.  Banks have too much power. We don't need a bitcoin bank that can "freeze" accounts or blacklist or place levys etc.

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March 17, 2015, 10:43:01 PM
 #5

Moment you invest fiat in bank you dont realy own that money and that is investment so bank pays interest on your deposit. Moment you invest Bitcoin in online wallet you dont realy own that coins anymore and online wallet pays you shit for that so i dont see how you can compare those two at all.
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March 17, 2015, 11:24:14 PM
 #6

For years I've been managing PGP keys that I use to encrypt valuable and sensitive files that I can't afford to lose. The exact same techniques can be used to manage Bitcoin private keys, so it is no big deal if you are already used to it.
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March 17, 2015, 11:36:33 PM
 #7

I trust myself with the keys more than any other online wallet. I still use online wallets because they are convenient and I do not have much coins with them.

Traditional banks are brick and mortar banks. They are just dwon the road and I know I will have support when something is wrong. Online wallets with support tickets are a different story. My deposits are safer with tradition banks than online wallet services.
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March 17, 2015, 11:43:23 PM
 #8

I keep my keys locked away at a secure place so that if comes the time I need to recover I will recover what is needed. Or generally use paper wallets to use as offline storage for coins and keep my keys in a safe and secure place.
AltcoinInvestor
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March 17, 2015, 11:46:50 PM
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Yes I do. If unexperienced people start to trust bitcoin banks etc and huge amounts of btc are kept in those banks bitcoin will not be longer decentralised...
ticoti
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March 17, 2015, 11:58:53 PM
 #10

If I can't trust myself who else could I trust?

You can't trust today in any third part 100% and less in the bitcoin industry
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March 18, 2015, 12:25:39 AM
 #11

Criticism often comes to online wallet providers (Xapo, Coinbase, etc) saying, if you don't own your private keys, you don't actually own your bitcoin. On the contrary, if your cash is in a traditional bank, you don't really own your cash either.

Both are true.

It is naive to believe that banks holding fiat are completely safe. If a bank in the U.S. fails (and they frequently do), a person that has deposited more that $250,000 in that bank will lose some of their money.

Ask the people that deposited money in banks in Iceland and Cyprus about how safe banks are.


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March 18, 2015, 12:41:18 AM
 #12

I don't trust myself because I'm not a encrypt seurcity expert, even the biggest could be hacked, I do can't trust myself, besides,  I'm an arts students, not a computer genius.

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bri912678
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March 18, 2015, 12:41:26 AM
 #13

Yes I do. If unexperienced people start to trust bitcoin banks etc and huge amounts of btc are kept in those banks bitcoin will not be longer decentralised...

I'd trust myself far more than a Bitcoin bank. I don't care how secure they claim to be, they can always say they were hacked and all your money's gone. If they start storing more coins than the big exchanges they will be heavily targeted by the same hackers responsible for hacking the big exchanges.
Chef Ramsay
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March 18, 2015, 12:42:10 AM
 #14

These online wallets need to be secure and safe for usage because very few people, when more adoption comes, will be able to nor have the expertise to hold their own keys. Lining up their 2FA should be enough secondary encryption that can and should be trusted to keep their funds secure. Just like in any freer market, reputation and credibility should be the biggest sought after virtues of any online exchange or wallet. Staying bug free in regards to security seems to be pretty good for now in the likes of Coinbase, Blockchain, Xapo and their business models seem to have been set up to prevent inside jobs from heists. The user just needs to make sure they don't fall for phishing operations. Kinda like you don't just get a voicemail from some outfit and call back with your social security or account numbers.
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March 18, 2015, 01:14:04 AM
 #15

Even the most trustworthy, secured , and insured bitcoin "banks" are vulnerable to state theft. We need to improve usability but should do so with hardware wallets and not by trusting central parties or investing in speculative bitcoin ETF's and derivatives.

Secure your bitcoins yourself securely:
https://bitcointalk.org/index.php?topic=858604.0

Do not trust your private keys with anyone.

bri912678
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March 18, 2015, 01:18:58 AM
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Even the most trustworthy, secured , and insured bitcoin "banks" are vulnerable to state theft. We need to improve usability but should do so with hardware wallets and not by trusting central parties or investing in speculative bitcoin ETF's and derivatives.

Secure your bitcoins yourself securely:
https://bitcointalk.org/index.php?topic=858604.0

Do not trust your private keys with anyone.

I had not considered state theft. Various states have deducted money from people's bank balances when they were in trouble. The same thing could happen to Bitcoin banks and ironically Bitcoin was partially invented to get around that problem.
inBitweTrust
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March 18, 2015, 01:29:26 AM
 #17

I had not considered state theft. Various states have deducted money from people's bank balances when they were in trouble. The same thing could happen to Bitcoin banks and ironically Bitcoin was partially invented to get around that problem.

The risks extend beyond asset forfeiture, lawsuits supported by unfair legislation, and frozen accounts. States have institutionalized theft with taxes. In the USA you will have 15-40% stolen from any bitcoin gains you make. What's even more depressing about this is the fact that a significant chunk of those stolen funds are supporting unethical and corrupt policies.

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March 18, 2015, 01:32:47 AM
 #18

These online wallets need to be secure and safe for usage because very few people, when more adoption comes, will be able to nor have the expertise to hold their own keys. Lining up their 2FA should be enough secondary encryption that can and should be trusted to keep their funds secure. Just like in any freer market, reputation and credibility should be the biggest sought after virtues of any online exchange or wallet. Staying bug free in regards to security seems to be pretty good for now in the likes of Coinbase, Blockchain, Xapo and their business models seem to have been set up to prevent inside jobs from heists. The user just needs to make sure they don't fall for phishing operations. Kinda like you don't just get a voicemail from some outfit and call back with your social security or account numbers.

But those online companies have GOT to get their acts together.

This explains how people could bypass 2FA with those sites using AUTHY up until about a month ago: http://sakurity.com/blog/2015/03/15/authy_bypass.html/

And then there's always social engineering (people calling up and saying they lost their phone):

http://www.theverge.com/a/anatomy-of-a-hack

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March 18, 2015, 01:34:20 AM
 #19

I go back and forth.  I use paper wallets but always get nervous that everything worked.  And I can't test the private key without defeating the purpose of cold storage.  But let's say coinbase gets hacked and you loose all your coins.  On the other hand at this point in the game if a exchange like that goes down the price is going to plummet and your coins will be near worthless anyway.
DannyHamilton
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March 18, 2015, 01:38:06 AM
 #20

Criticism often comes to online wallet providers (Xapo, Coinbase, etc) saying, if you don't own your private keys, you don't actually own your bitcoin.

That's not criticism, that's just the reality of the situation.

On the contrary, if your cash is in a traditional bank, you don't really own your cash either.

How is that "on the contrary"?  You're saying the same thing about both. I don't think that phrase means what you think it means.

The only possible difference, traditional banks have been around longer, and more people trust them.

That's the "only possible difference"?  Really?  There aren't any other possible differences?

Do they both operate under the same government regulations?
Are your deposits insured in both by the Federal Deposit Insurance Corporation (or some other equivalent insurance underwriter)?
Are they both held to the same financial audits?

Many bitcoin users who criticize bitcoin vaults, store their cash in a traditional bank.

Some do.  Some don't.  So what?

Hypothetically, if Bank of America, or Barclay, or DeustcheBank announced they've invested millions into a highly protected, advanced, security architecture, would you trust someone to store it then?

That would depend on the specifics of the situation, but probably not.

Are critics right to say, don't use an online wallet provider, it's not safe?

Yes.

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