5 ms·

I do as well. What's wrong with leaving it there?

stonemetal 11y ago
In general nothing. In specific there is no FDIC for bitcoins so if a MtGox type situation happens then you have no coins.
- dragonwriter 11y ago
  There's no FDIC providing government backed insurance for most commodities, or for non-bank accounts in fiat currency (e.g., those you'd have with a typical brokerage), so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment So for a speculative trader, I dont e that holding keys if any more essential than physically holding goods is for physical commodities; you obviously have to account for trust/security of the entity serving as your agent/broker, but that's typical. Now, holding the keys may be essential to realizing some of the benefits of bitcoin which drive is value to some users, but for people investing in bitcoin, that may be peripheral to the purpose.
  - maxerickson 11y ago
    It isn't quite the same as FDIC, but there is SIPC: https://en.wikipedia.org/wiki/Securities_Investor_Protection_Corporation#Caveats_and_clarifications https://en.wikipedia.org/wiki/Securities_Investor_Protection... Not blanket protection, but enough to ask why such and such bitcoin exchange doesn't advertise their participation.
  - pdpi 11y ago
    > so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment That's the point, though. You're looking at it as a speculative investment, and proceeding accordingly, which is good. The OP is admonishing people to not treat bitcoin like a standard bank account (which is all too easy to do), but rather in the same terms as you already do.
  - gohrt 11y ago
    There's a qualitative difference between "I own stock that might become worthless" and "I own a security that someone could just take from me because they notice my deed just sitting somewhere unprotected." If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help; and the stock market bookkeeping system has the technical ability restore my shares to me. If someone gets a copy of my wallet key, I've got no recourse unless (unlikely) someone can track down the obfuscated thief.
    - dragonwriter 11y ago
      > If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help If someone steals your bitcoin from an exchange, you can call on the government for help, too. If the exchange itself is completely insolvent, that may not be effective recourse, and that risk is certainly greater for the kind of firms people have been dealing with in the bitcoin space, which often aren't held by their customers to the same standards that customers of similar services for commodities other than bitcoin would hold companies to. That's my point: the lack of recourse isn't essential to bitcoin (yes, holding the keys is like holding cash, and not holding the keys is giving something up just like not holding cash is -- but we deal with other businesses with accounts denominated in national currencies without holding all the cash ourselves all the time, and have recourse available for losses.) The lack of accountability is because the firms people choose to do business with are, compared to the firms that people do other financial business with, shady fly-by-night operators.
maaku 11y ago
Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse.
- dragonwriter 11y ago
  > Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse. Many times, other companies have had that happen, and there is all kinds of recourse. To the extent bitcoin companies are special, its because people participating in the bitcoin craze have been willing to entrust large amounts of value with companies that don't have the basic characteristics that would otherwise establish trustworthiness, or at least accountability.
  - fixermark 11y ago
    Given that BTC is a currency that is not backed by a national treasury (and is, in fact, technologically not backable by printing more money), such insurance would be a prohibitively expensive percentage of a company's BTC resources. The same features of BTC that serve as its advantage and, arguably, goal make it more difficult to offer basic protections that other fiscal infrastructures have had for decades.
    - aianus 11y ago
      You can store $100m in bitcoin on a piece of paper in a vault. It reduces perfectly to the solved problem of securing $100m in $100 bills in a vault (which, yes, you can insure).
      - fixermark 11y ago
        While true, that does not offer the same protection as an FDIC-style insurance program (and restricts the storing entity's ability to compete and perform by preventing them from investing that $100m, so the market will tend ceteris parabus to punish companies that take such a step in good times with relatively-slower growth, acting as a disincentivizing counter-weight to offering insurance). In contrast, the FDIC has unlimited borrowing capacity with the US government; worst-case scenario, the Treasury can basically start printing money and the FDIC can hand it out to people with savings in failed banks. Many see this capacity of the US Treasury to fabricate money from nowhere as the very sort of flaw that BTC's coin-generation process is intended to avoid, but that protection does not come without a price.

In general nothing. In specific there is no FDIC for bitcoins so if a MtGox type situation happens then you have no coins.

dragonwriter 11y ago
There's no FDIC providing government backed insurance for most commodities, or for non-bank accounts in fiat currency (e.g., those you'd have with a typical brokerage), so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment So for a speculative trader, I dont e that holding keys if any more essential than physically holding goods is for physical commodities; you obviously have to account for trust/security of the entity serving as your agent/broker, but that's typical. Now, holding the keys may be essential to realizing some of the benefits of bitcoin which drive is value to some users, but for people investing in bitcoin, that may be peripheral to the purpose.
- maxerickson 11y ago
  It isn't quite the same as FDIC, but there is SIPC: https://en.wikipedia.org/wiki/Securities_Investor_Protection_Corporation#Caveats_and_clarifications https://en.wikipedia.org/wiki/Securities_Investor_Protection... Not blanket protection, but enough to ask why such and such bitcoin exchange doesn't advertise their participation.
- pdpi 11y ago
  > so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment That's the point, though. You're looking at it as a speculative investment, and proceeding accordingly, which is good. The OP is admonishing people to not treat bitcoin like a standard bank account (which is all too easy to do), but rather in the same terms as you already do.
- gohrt 11y ago
  There's a qualitative difference between "I own stock that might become worthless" and "I own a security that someone could just take from me because they notice my deed just sitting somewhere unprotected." If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help; and the stock market bookkeeping system has the technical ability restore my shares to me. If someone gets a copy of my wallet key, I've got no recourse unless (unlikely) someone can track down the obfuscated thief.
  - dragonwriter 11y ago
    > If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help If someone steals your bitcoin from an exchange, you can call on the government for help, too. If the exchange itself is completely insolvent, that may not be effective recourse, and that risk is certainly greater for the kind of firms people have been dealing with in the bitcoin space, which often aren't held by their customers to the same standards that customers of similar services for commodities other than bitcoin would hold companies to. That's my point: the lack of recourse isn't essential to bitcoin (yes, holding the keys is like holding cash, and not holding the keys is giving something up just like not holding cash is -- but we deal with other businesses with accounts denominated in national currencies without holding all the cash ourselves all the time, and have recourse available for losses.) The lack of accountability is because the firms people choose to do business with are, compared to the firms that people do other financial business with, shady fly-by-night operators.

maaku 11y ago

Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse.

dragonwriter 11y ago
> Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse. Many times, other companies have had that happen, and there is all kinds of recourse. To the extent bitcoin companies are special, its because people participating in the bitcoin craze have been willing to entrust large amounts of value with companies that don't have the basic characteristics that would otherwise establish trustworthiness, or at least accountability.
- fixermark 11y ago
  Given that BTC is a currency that is not backed by a national treasury (and is, in fact, technologically not backable by printing more money), such insurance would be a prohibitively expensive percentage of a company's BTC resources. The same features of BTC that serve as its advantage and, arguably, goal make it more difficult to offer basic protections that other fiscal infrastructures have had for decades.
  - aianus 11y ago
    You can store $100m in bitcoin on a piece of paper in a vault. It reduces perfectly to the solved problem of securing $100m in $100 bills in a vault (which, yes, you can insure).
    - fixermark 11y ago
      While true, that does not offer the same protection as an FDIC-style insurance program (and restricts the storing entity's ability to compete and perform by preventing them from investing that $100m, so the market will tend ceteris parabus to punish companies that take such a step in good times with relatively-slower growth, acting as a disincentivizing counter-weight to offering insurance). In contrast, the FDIC has unlimited borrowing capacity with the US government; worst-case scenario, the Treasury can basically start printing money and the FDIC can hand it out to people with savings in failed banks. Many see this capacity of the US Treasury to fabricate money from nowhere as the very sort of flaw that BTC's coin-generation process is intended to avoid, but that protection does not come without a price.