

Bitcoin’s Rise Constrained by Heists and Lost Fortunes - ibsathish
http://www.technologyreview.com/news/522411/bitcoins-rise-constrained-by-heists-and-lost-fortunes/

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gonvaled
I guess the problem is the same as with real wallets: you need two!

One for convenient, day-to-day use: you do not worry too much if this gets
lost or stolen.

And another to keep your millions. You can bury it, put it in a safe, or keep
it in a secure storage in a safe. Not for daily use.

Whenever you need funds, or you want to put away some savings, you open the
safe, access your wallet and make a transfer. After that, you put the big
wallet in the safe again.

Do not keep you millions in the open, do not walk around with them, do not
trust them to somebody else (online wallets), do not handle them carelessly,
do not throw them to the trash!

One thing that does not get mentioned very often in this context is: you can
make as many copies of your wallet as you want to! You can even encrypt your
wallet-copies with whatever mechanism you want to. Send your wallet
encryption-key to your aunt, in case you happen to lose it. You will be able
to decrypt any of the dozen copies of your wallet that you are keeping in
different places.

Encrypting your wallet gives you extra security that it won't be stolen, and
having multiple copies ensures that you will not lose it.

Bitcoin can be _a lot of things_ , that is what makes it so special. But with
choice comes responsibility!

~~~
jpmattia
> _And another to keep your millions. You can bury it, put it in a safe, or
> keep it in a secure storage in a safe. Not for daily use._

It's worth noting what happens in the real world: Most folks do not store
their own. They instead rely on banks and trusts to do the job. Those are
backed by various types of insurance.

I suspect that sort of ecosystem will need to evolve for bitcoin too, since
average joes don't know to protect their digital wallets.

~~~
gonvaled
Right. That is something than can be built on top of bitcoin, bringing
traditional banking services to it. If the problem is managing your private
keys, that can be delegated to a bank that you can trust - which will recover
them for you in case you lose them, paying a fee, for example. That
necessarily means that the bank has access to your wallet though.

Bitcoin even offers a bit of extra support for that too, via transparency,
based on the public blockchain. There is embedded protection against third
parties: if a rogue employee of the bitcoin-bank transfers bitcoins out of
your bank-wallet, the transaction can be followed. It might not be possible to
recover the money, but at least some kind of identification can be performed -
with the help of the bank and with legislative support, this can be enforced.
This transparency is not there for tradicional banks: if there is a problem,
you trust them to solve it, but you can not independently see what happened to
your money.

This relies on the fact that anonymity is a fragile concept in the bitcoin
world: an address is anonymous as long as nobody puts the effort (and has the
right extra pieces of information) to correlate address to person.

At the end of the day, it will be a matter of the bank having a business
interest in keeping a clean reputation. This is too early for the bitcoin
economy, so I would not trust any online bitcoin bank with more than a couple
of bitcoins. CitiBitcoinBank is not here yet.

------
olalonde
Which reminds me I lost about 30 BTC in total after Tradehill and
CryptoXchange closed a while back. Kind of ironic that Tradehill's founder is
giving security advice in this article.

~~~
jabbernotty
> Kind of ironic that Tradehill's founder is giving security advice in this
> article.

You do not realize how silly such a statement is? Edit: To clarify, one should
not immediately discount the man's insight because of a past security
incident. The experience probably adds value to his insights rather than
substract from it.

------
analog31
Heists and lost fortunes never stopped people from owning, trading, and
speculating in gold.

------
Aqueous
The ability to be stolen is a feature, not a bug.

~~~
Aqueous
I got modded down, but there is no objection here? The ability to be stolen is
what makes BitCoin like cash. That's one of the core innovations of BitCoin -
you can't double spend it, once it's gone it's gone

~~~
fivethree
So it's exactly like USD only: few accept it, there is a fee to transfer money
in any reasonable amount of time, it isn't backed by any country, all of the
exchanges are regularly stolen, it's a giant ponzi scheme, even the austrian
economics think it's worth nothing, and there is no form of consumer
protect/insurance whatosever. Sounds great, why hasn't the world switched over
yet?

