9 ms·

Bitcoin Sinks After Hackers Steal $65M from Exchange

77 points by ucha 10y ago

koolba 10y ago
From the article (emphasis mine): > While trading was halted in all digital currencies, including ethereum, the exchange said losses were limited only to bitcoin. It also said U.S. dollar deposits were not impacted. As someone standing on the crypto currency sidelines with a bag of popcorn, I feel like this movie has gone from cyber punk drama to a played out comedy where you already know all the jokes and punchlines. Every time a company attempts any form of "hot" storage for Bitcoin this seems to happen. At this point, I'm convinced it's only a matter of "when" not "if" for anybody else doing it. People keep trying to find an intersection between security and convenience but the lines are parallel!
- odrekf 10y ago
  So how does Coinbase do it?
  - lojack 10y ago
    Coinbase uses cold storage. They have some reserves in hot storage, but presumably less funds accessable makes them a smaller target. Correct me if I'm wrong, but I believe they are able to pull this off because they aren't technically an exchange. Coinbase Exchange may be all in hot storage, but they provide a seamless way to transmit your exchange reserves to a cold storage backed wallet.
    - teod 10y ago
      Couldn't find too much information on this, but I see that [https://support.gdax.com/customer/portal/articles/2436336 https://support.gdax.com/customer/portal/articles/2436336] under "Is GDAX's ether hot wallet insured?" states "The majority of ether and bitcoin deposited to GDAX is held in highly secure cold storage." (GDAX is Coinbase's exchange platform) See also [https://www.coinbase.com/security https://www.coinbase.com/security].
- aianus 10y ago
  Real world banks get robbed every day. As long as the hot wallet is a small enough portion of the total funds (unfortunately not what happened here) it'll just be an occasional cost of doing business.
  - Aelinsaar 10y ago
    Real world banks are backed by the federal government, both in terms of the FDIC, and the FBI and broader DOJ. Robbing a bank is a federal offense, and that is frankly why "big heists" tends to be such great fiction. Mostly.
    - Karunamon 10y ago
      I'm pretty sure that stealing hundreds of thousands of dollars worth of a "thing", regardless of what that "thing" is, is a federal offense thanks to CFAA, if nothing else.
      - EdHominem 10y ago
        It depends. By design (for plausible deniability) the key is not a password, it's a mathematical fact which can be independently discovered. If you generated weak keys then it's not theft for me to guess/calculate them and allocate those coins to myself. This is why BTC is described as proving the strength of hash functions, etc. If it was easy to cheat, someone would claim the public bug bounty by giving themselves all the coins. Because they haven't, we have a fairly good minimum bound on the difficulty.
        dragonwriter 10y ago
        > If it was easy to cheat, someone would claim the public bug bounty by giving themselves all the coins. But giving yourself all the coins means demonstrates that the system doesn't work conclusively, and guarantees that no one will accept the coins for goods and services, so while giving yourself "all the coins" destroys a lot of value, it doesn't actually capture any value. So, if you wanted to profit from an exploit you developed, you would not do that (if you wanted to discredit bitcoin and had developed the exploit, you would do that.)
doorty 10y ago
What I learned from the video: Ninety percent of Bitcoin is traded in Chinese currency. Because most of the trading is in China, the impact of the hackers is minimized and the value is stabilizing after dropping twenty percent.
- solotronics 10y ago
  That actually may not be true, many of the Chinese exchanges have 0 fee trading so their volume could be 'fake'.. there is no way to tell definitively.
thomaszander 10y ago
> Bitcoin slumped 5.5 percent against the dollar as of 2:30 p.m. on Wednesday in Tokyo, bringing its two-day drop to 13 percent. Prices also sank 6.2 percent on Monday, although it was not clear if that initial move was related to the hack. The price has actually been dropping consistently since the 31st of July. Granted, this hack has caused a the drop to be bigger, but attributing the entire drop to it makes no sense. The timeline doesn't fit. The most likely reason the price has been dropping is because the Bitcoin miners have ran out of reasons and deadlines to stop the bitcoin hardfork which will cause an increase in block size, which is the main reason why Bitcoin is artificially blocked from accepting more customers and grow. Investors likely don't think its worth holding onto a currency if it has (and reached) an artificial ceiling.
- odrekf 10y ago
  Actually it makes perfect sense, and has happened in previous thefts. I'm an investor and I think it's worth holding onto a currency if I see it as a good store of value, it doesn't matter if not everyone on earth is using it (eg: does everyone use gold? Could everyone use gold? No. Still a good store of value). So please don't speak on my behalf.
- solotronics 10y ago
  There are some nuances that are often not fully understood when discussing the transaction limit in bitcoin. Firstly, since the transactions are processed by the miners in exchange for a fee we have evolved into a dynamically calculated fee system. Since the blockchain is immutable this makes sense so that it is costly for an attacker or abuser to flood the system with meaningless transactions. There is some contention in this, but from my perspective what has emerged is a free market where if you need a quick transaction guaranteed you will pay the few cents to get it. Also, the Lightning network payment layer is in testing currently and when it is added as another layer on top of bitcoin this enables a huge rate of transactions per second for negligible price.
- EdHominem 10y ago
  > Bitcoin is artificially blocked from accepting more customers and grow. There's no such thing as a bitcoin customer. And by growth, the only obstacle is number of transactions/block which is limited by design. But there's no tps limit that we wouldn't blow through in a day if it were free. Building a distributed DB? Nah, just dump it all in the blockchain and make the world hold it for you. Without a limit, and the prices that come from approaching that limit, the system would never reach a balance. The goal is that transaction costs pay miners. That only works if blocks are small enough to reasonably process and scarce enough to justify paying for. For everything else, build a sidechain and do your micropayments on it - link to BTC every now and then for larger fund transfers.
chollida1 10y ago
Can someone who really knows this help fix my ignorance? How does someone actually steal from an exchange? As I understand most of the funds(80-90+%) are kept in cold storage. Was the exchange not following this "best practice"? Is this not a best practice? The way the cash equities markets work is you make a trade to buy or sell shares and they get delivered in 3 days time. Why does a bitcoin exchange need to have any bitcoins at all in a wallet accessible to any machine connected to the internet? Could they not work in a manner like this? Why not net all trades and do settlement at the end of the day. If people want to withdraw bitcoins batch the requests up until the end of the day and then you can have a person or software review all requests before they are put into a hot wallet and sent out. I've written my fair share of risk systems over the past 15 years. I think I understand how to manage risk, and delaying transaction settlement is considered part of risk management. You can trade as fast as you want but the actual settlement, by design, lags trading to allow for errors to be caught.
- onestone 10y ago
  Bitfinex used to keep BTC in cold storage, but replaced that system with segregated multi-sig (2 of 3) wallets for each user account, backed by BitGo. In that scenario BitGo held one key, and Bitfinex held 2 keys for each account (one online and one offline). Supposedly BitGo should have enforced some limits on withdrawals to prevent such events, but for some reason that was bypassed.
  - chollida1 10y ago
    Sure, I think I understand that, and I appreciate your answer. My question is why do you need any bitcoins at all in hot storage? What's wrong with netting until the end of the day and then put the required amount of coins in a hot wallet to do settlement say 24 hours after a trade? Wouldn't this cooling off period give software and risk managers a chance to find invalid transactions and keep funds from being stolen out of a hot wallet?
    - zekevermillion 10y ago
      Bitfinex was required by US regulators to switch from cold storage to segregated per-user wallets. Something to do with margin requirements for commodities exchanges.
zekevermillion 10y ago
Bitfinex had inadequate security, that much is now proven. But more problematic, there is no such thing as provably adequate security for holding other people's private wallet keys. Any flaw in the process of generating or storing the keys is essentially the mother of all bug bounties. That is why over time, I hope that a decentralized method of exchanging digital assets will be used more widely.
homogeneous 10y ago
Does bitfinex have any legal responsibility to its customers? What are the U.S. laws (if any) surrounding the theft of bitcoins?
- mikeyouse 10y ago
  Most of what happens next depends on how they were organized and registered. The obvious next step is that Bitfinex will have to file for bankruptcy protection. Whether people get their cash balances / other crypto / etc. back or some proportion of the remaining assets will be up to the bankruptcy trustee. The trustee will follow the law but I don't know if they were properly registered, aka where depositers fall on the list or whether any of the assets would be considered secured.
  - celticninja 10y ago
    they would only need to file for bankruptcy protection if they could not cover the loss from their own funds. Right now with the price falling that could be an easier proposition tomorrow or next week.
    - tempestn 10y ago
      They likely also have insurance that may cover some or all of the loss.
solotronics 10y ago
The price has rebounded quite a bit. This is different from the largest exchange hack in BTC history (2014 - MtGox) because now the exchange volume is much more distributed. I think this is a reflection of the increased robustness of the bitcoin economy in whole. Pre Hack: $600 Low Point Post Hack: $465 Currently: $560
- paulpauper 10y ago
  probably going back to $600 soon ,these selloffs are always temporary
mrb 10y ago
Interesting: the thief is currently attempting to launder a fraction (1000 BTC, worth ~$550k) through a giveaway: https://www.reddit.com/r/Bitcoin/comments/4vykkr/1000_btc_giveaway_from_your_friend_rekcahxfb/ https://www.reddit.com/r/Bitcoin/comments/4vykkr/1000_btc_gi... https://bitcointalk.org/index.php?topic=1574127.0 https://bitcointalk.org/index.php?topic=1574127.0 He is sending the coins as we speak: https://blockchain.info/address/1BfxSuxJqXuizBbTcP238JZY9DT4eqvzJG https://blockchain.info/address/1BfxSuxJqXuizBbTcP238JZY9DT4... As a contingency, to plan for his possible arrest/death/etc, he signed a NLOCKTIME transaction that would automatically destroy these 1000 BTC in a week if no action is taken. His handle "rekcahxfb" spells "bfxhacker" in reverse. No plans yet on what he will do with the remaining 118 500 BTC.
- paulcole 10y ago
  Just curious, how is he laundering them? Wouldn't he need to get clean bitcoin back in return?
  - teod 10y ago
    I suppose he could pose as the "winner" and claim ignorance, although I'm sure there's much better ways of laundering via a Mixing service [https://en.bitcoin.it/wiki/Mixing_service https://en.bitcoin.it/wiki/Mixing_service] or something similar.
  - andrewla 10y ago
    The idea, I think, would be the analog of throwing thousands of dollars from a bank robbery into the street. The stolen bills can be identified by their serial numbers, but if law enforcement tries to crack down every time they see one of those bills pop up, the actual thief will be buried in the noise. In Bitcoin land this is both more feasible and more complex at the same time -- it's very easy for a poorly planned version of this to make the thief no harder to identify, and even a well-executed version requires vigilance in the future to avoid betraying the identity of the thief vs. the identity of one of the giveaway recipients.
  - mrb 10y ago
    Presumably he will send some/all of the coins to himself (plausible deniability). Or maybe, you are right, he is not directly attempting to launder, but just "creating noise" in the block chain to make it hard for investigators to trace the stolen coins.
paulpauper 10y ago
This is the perfect crime. IN a about a few months the heat will wear off and the thief or thieves can gradually convert the coins into cash or just store them in 1000s of wallets for later use
devishard 10y ago
In the long run, I think this is good for Bitcoin. It's supposed to be a decentralized currency. Centralizing Bitcoin in an exchange makes the exchange a big target. This disincentivizes centralization and limits how much centralization can actually happen when people are foolish enough to try. For individuals who lose Bitcoin because of exchanges getting hacked, it's because they leave Bitcoin in the exchange. This is antithetical to how Bitcoin is intended to be used. The answer is, don't do that. Make cold storage paper wallets and keep your Bitcoin there.
- vectorpush 10y ago
  > this is good for Bitcoin ... The answer is, don't do that ... Make cold storage paper wallets and keep your Bitcoin there. Only in bitcoin land is theft considered good for the ecosystem. Only in bitcoin land does it make sense to blame laypeople for storing their money with financial institutions. Only in bitcoin land is it a best practice to secure your money using a password written on a piece of paper. Only in bitcoin land is it reasonable to expect consumers to do a better job of keeping their money secure than corporations with on staff security experts.
  - devishard 10y ago
    > Only in bitcoin land does it make sense to blame laypeople for storing their money with financial institutions. Uh, yeah. That's the entire point of Bitcoin. > Only in bitcoin land is it a best practice to secure your money using a password written on a piece of paper. God no, at least not a password intended for human consumption. That's not what a cold wallet should be. It should be a key. > Only in bitcoin land is it reasonable to expect consumers to do a better job of keeping their money secure than corporations with on staff security experts. No, non-expert consumers should be using off-the-shelf security solutions made by a staff of security experts that they can use locally (i.e. physical Bitcoin wallets). It's just that not many people are working on that stuff, because most of the companies making Bitcoin stuff are catering to speculators trying to get rich quick. There are a lot of really smart people working on creating centralized Bitcoin solutions, but frankly, that's just a bad idea, as evidenced by almost every centralized Bitcoin solution having been hacked at least once. A centralized system has too wide an attack surface and too high an incentive for attackers, and defeats most of the benefits of Bitcoin anyway. Sure, it makes Bitcoin a poor choice for speculators looking to get rich quick, but I don't care in the least. They're outsiders who don't understand the tool and aren't on board with the philosophy of why Bitcoin is important. If you don't understand decentralization and you try to be in Bitcoin, you're going to have a bad time.

77 points by ucha 10y ago

From the article (emphasis mine): > While trading was halted in all digital currencies, including ethereum, the exchange said losses were limited only to bitcoin. It also said U.S. dollar deposits were not impacted. As someone standing on the crypto currency sidelines with a bag of popcorn, I feel like this movie has gone from cyber punk drama to a played out comedy where you already know all the jokes and punchlines. Every time a company attempts any form of "hot" storage for Bitcoin this seems to happen. At this point, I'm convinced it's only a matter of "when" not "if" for anybody else doing it. People keep trying to find an intersection between security and convenience but the lines are parallel!

odrekf 10y ago
So how does Coinbase do it?
- lojack 10y ago
  Coinbase uses cold storage. They have some reserves in hot storage, but presumably less funds accessable makes them a smaller target. Correct me if I'm wrong, but I believe they are able to pull this off because they aren't technically an exchange. Coinbase Exchange may be all in hot storage, but they provide a seamless way to transmit your exchange reserves to a cold storage backed wallet.
  - teod 10y ago
    Couldn't find too much information on this, but I see that [https://support.gdax.com/customer/portal/articles/2436336 https://support.gdax.com/customer/portal/articles/2436336] under "Is GDAX's ether hot wallet insured?" states "The majority of ether and bitcoin deposited to GDAX is held in highly secure cold storage." (GDAX is Coinbase's exchange platform) See also [https://www.coinbase.com/security https://www.coinbase.com/security].
aianus 10y ago
Real world banks get robbed every day. As long as the hot wallet is a small enough portion of the total funds (unfortunately not what happened here) it'll just be an occasional cost of doing business.
- Aelinsaar 10y ago
  Real world banks are backed by the federal government, both in terms of the FDIC, and the FBI and broader DOJ. Robbing a bank is a federal offense, and that is frankly why "big heists" tends to be such great fiction. Mostly.
  - Karunamon 10y ago
    I'm pretty sure that stealing hundreds of thousands of dollars worth of a "thing", regardless of what that "thing" is, is a federal offense thanks to CFAA, if nothing else.
    - EdHominem 10y ago
      It depends. By design (for plausible deniability) the key is not a password, it's a mathematical fact which can be independently discovered. If you generated weak keys then it's not theft for me to guess/calculate them and allocate those coins to myself. This is why BTC is described as proving the strength of hash functions, etc. If it was easy to cheat, someone would claim the public bug bounty by giving themselves all the coins. Because they haven't, we have a fairly good minimum bound on the difficulty.
      - dragonwriter 10y ago
        > If it was easy to cheat, someone would claim the public bug bounty by giving themselves all the coins. But giving yourself all the coins means demonstrates that the system doesn't work conclusively, and guarantees that no one will accept the coins for goods and services, so while giving yourself "all the coins" destroys a lot of value, it doesn't actually capture any value. So, if you wanted to profit from an exploit you developed, you would not do that (if you wanted to discredit bitcoin and had developed the exploit, you would do that.)

doorty 10y ago

What I learned from the video: Ninety percent of Bitcoin is traded in Chinese currency. Because most of the trading is in China, the impact of the hackers is minimized and the value is stabilizing after dropping twenty percent.

solotronics 10y ago
That actually may not be true, many of the Chinese exchanges have 0 fee trading so their volume could be 'fake'.. there is no way to tell definitively.

thomaszander 10y ago

> Bitcoin slumped 5.5 percent against the dollar as of 2:30 p.m. on Wednesday in Tokyo, bringing its two-day drop to 13 percent. Prices also sank 6.2 percent on Monday, although it was not clear if that initial move was related to the hack. The price has actually been dropping consistently since the 31st of July. Granted, this hack has caused a the drop to be bigger, but attributing the entire drop to it makes no sense. The timeline doesn't fit. The most likely reason the price has been dropping is because the Bitcoin miners have ran out of reasons and deadlines to stop the bitcoin hardfork which will cause an increase in block size, which is the main reason why Bitcoin is artificially blocked from accepting more customers and grow. Investors likely don't think its worth holding onto a currency if it has (and reached) an artificial ceiling.

odrekf 10y ago
Actually it makes perfect sense, and has happened in previous thefts. I'm an investor and I think it's worth holding onto a currency if I see it as a good store of value, it doesn't matter if not everyone on earth is using it (eg: does everyone use gold? Could everyone use gold? No. Still a good store of value). So please don't speak on my behalf.
solotronics 10y ago
There are some nuances that are often not fully understood when discussing the transaction limit in bitcoin. Firstly, since the transactions are processed by the miners in exchange for a fee we have evolved into a dynamically calculated fee system. Since the blockchain is immutable this makes sense so that it is costly for an attacker or abuser to flood the system with meaningless transactions. There is some contention in this, but from my perspective what has emerged is a free market where if you need a quick transaction guaranteed you will pay the few cents to get it. Also, the Lightning network payment layer is in testing currently and when it is added as another layer on top of bitcoin this enables a huge rate of transactions per second for negligible price.
EdHominem 10y ago
> Bitcoin is artificially blocked from accepting more customers and grow. There's no such thing as a bitcoin customer. And by growth, the only obstacle is number of transactions/block which is limited by design. But there's no tps limit that we wouldn't blow through in a day if it were free. Building a distributed DB? Nah, just dump it all in the blockchain and make the world hold it for you. Without a limit, and the prices that come from approaching that limit, the system would never reach a balance. The goal is that transaction costs pay miners. That only works if blocks are small enough to reasonably process and scarce enough to justify paying for. For everything else, build a sidechain and do your micropayments on it - link to BTC every now and then for larger fund transfers.

chollida1 10y ago

Can someone who really knows this help fix my ignorance? How does someone actually steal from an exchange? As I understand most of the funds(80-90+%) are kept in cold storage. Was the exchange not following this "best practice"? Is this not a best practice? The way the cash equities markets work is you make a trade to buy or sell shares and they get delivered in 3 days time. Why does a bitcoin exchange need to have any bitcoins at all in a wallet accessible to any machine connected to the internet? Could they not work in a manner like this? Why not net all trades and do settlement at the end of the day. If people want to withdraw bitcoins batch the requests up until the end of the day and then you can have a person or software review all requests before they are put into a hot wallet and sent out. I've written my fair share of risk systems over the past 15 years. I think I understand how to manage risk, and delaying transaction settlement is considered part of risk management. You can trade as fast as you want but the actual settlement, by design, lags trading to allow for errors to be caught.

onestone 10y ago
Bitfinex used to keep BTC in cold storage, but replaced that system with segregated multi-sig (2 of 3) wallets for each user account, backed by BitGo. In that scenario BitGo held one key, and Bitfinex held 2 keys for each account (one online and one offline). Supposedly BitGo should have enforced some limits on withdrawals to prevent such events, but for some reason that was bypassed.
- chollida1 10y ago
  Sure, I think I understand that, and I appreciate your answer. My question is why do you need any bitcoins at all in hot storage? What's wrong with netting until the end of the day and then put the required amount of coins in a hot wallet to do settlement say 24 hours after a trade? Wouldn't this cooling off period give software and risk managers a chance to find invalid transactions and keep funds from being stolen out of a hot wallet?
  - zekevermillion 10y ago
    Bitfinex was required by US regulators to switch from cold storage to segregated per-user wallets. Something to do with margin requirements for commodities exchanges.

zekevermillion 10y ago

Bitfinex had inadequate security, that much is now proven. But more problematic, there is no such thing as provably adequate security for holding other people's private wallet keys. Any flaw in the process of generating or storing the keys is essentially the mother of all bug bounties. That is why over time, I hope that a decentralized method of exchanging digital assets will be used more widely.

homogeneous 10y ago

Does bitfinex have any legal responsibility to its customers? What are the U.S. laws (if any) surrounding the theft of bitcoins?

mikeyouse 10y ago
Most of what happens next depends on how they were organized and registered. The obvious next step is that Bitfinex will have to file for bankruptcy protection. Whether people get their cash balances / other crypto / etc. back or some proportion of the remaining assets will be up to the bankruptcy trustee. The trustee will follow the law but I don't know if they were properly registered, aka where depositers fall on the list or whether any of the assets would be considered secured.
- celticninja 10y ago
  they would only need to file for bankruptcy protection if they could not cover the loss from their own funds. Right now with the price falling that could be an easier proposition tomorrow or next week.
  - tempestn 10y ago
    They likely also have insurance that may cover some or all of the loss.

solotronics 10y ago

The price has rebounded quite a bit. This is different from the largest exchange hack in BTC history (2014 - MtGox) because now the exchange volume is much more distributed. I think this is a reflection of the increased robustness of the bitcoin economy in whole. Pre Hack: $600 Low Point Post Hack: $465 Currently: $560

paulpauper 10y ago
probably going back to $600 soon ,these selloffs are always temporary

mrb 10y ago

Interesting: the thief is currently attempting to launder a fraction (1000 BTC, worth ~$550k) through a giveaway: https://www.reddit.com/r/Bitcoin/comments/4vykkr/1000_btc_giveaway_from_your_friend_rekcahxfb/ https://www.reddit.com/r/Bitcoin/comments/4vykkr/1000_btc_gi... https://bitcointalk.org/index.php?topic=1574127.0 https://bitcointalk.org/index.php?topic=1574127.0 He is sending the coins as we speak: https://blockchain.info/address/1BfxSuxJqXuizBbTcP238JZY9DT4eqvzJG https://blockchain.info/address/1BfxSuxJqXuizBbTcP238JZY9DT4... As a contingency, to plan for his possible arrest/death/etc, he signed a NLOCKTIME transaction that would automatically destroy these 1000 BTC in a week if no action is taken. His handle "rekcahxfb" spells "bfxhacker" in reverse. No plans yet on what he will do with the remaining 118 500 BTC.

paulcole 10y ago
Just curious, how is he laundering them? Wouldn't he need to get clean bitcoin back in return?
- teod 10y ago
  I suppose he could pose as the "winner" and claim ignorance, although I'm sure there's much better ways of laundering via a Mixing service [https://en.bitcoin.it/wiki/Mixing_service https://en.bitcoin.it/wiki/Mixing_service] or something similar.
- andrewla 10y ago
  The idea, I think, would be the analog of throwing thousands of dollars from a bank robbery into the street. The stolen bills can be identified by their serial numbers, but if law enforcement tries to crack down every time they see one of those bills pop up, the actual thief will be buried in the noise. In Bitcoin land this is both more feasible and more complex at the same time -- it's very easy for a poorly planned version of this to make the thief no harder to identify, and even a well-executed version requires vigilance in the future to avoid betraying the identity of the thief vs. the identity of one of the giveaway recipients.
- mrb 10y ago
  Presumably he will send some/all of the coins to himself (plausible deniability). Or maybe, you are right, he is not directly attempting to launder, but just "creating noise" in the block chain to make it hard for investigators to trace the stolen coins.

paulpauper 10y ago

This is the perfect crime. IN a about a few months the heat will wear off and the thief or thieves can gradually convert the coins into cash or just store them in 1000s of wallets for later use

devishard 10y ago

In the long run, I think this is good for Bitcoin. It's supposed to be a decentralized currency. Centralizing Bitcoin in an exchange makes the exchange a big target. This disincentivizes centralization and limits how much centralization can actually happen when people are foolish enough to try. For individuals who lose Bitcoin because of exchanges getting hacked, it's because they leave Bitcoin in the exchange. This is antithetical to how Bitcoin is intended to be used. The answer is, don't do that. Make cold storage paper wallets and keep your Bitcoin there.

vectorpush 10y ago
> this is good for Bitcoin ... The answer is, don't do that ... Make cold storage paper wallets and keep your Bitcoin there. Only in bitcoin land is theft considered good for the ecosystem. Only in bitcoin land does it make sense to blame laypeople for storing their money with financial institutions. Only in bitcoin land is it a best practice to secure your money using a password written on a piece of paper. Only in bitcoin land is it reasonable to expect consumers to do a better job of keeping their money secure than corporations with on staff security experts.
- devishard 10y ago
  > Only in bitcoin land does it make sense to blame laypeople for storing their money with financial institutions. Uh, yeah. That's the entire point of Bitcoin. > Only in bitcoin land is it a best practice to secure your money using a password written on a piece of paper. God no, at least not a password intended for human consumption. That's not what a cold wallet should be. It should be a key. > Only in bitcoin land is it reasonable to expect consumers to do a better job of keeping their money secure than corporations with on staff security experts. No, non-expert consumers should be using off-the-shelf security solutions made by a staff of security experts that they can use locally (i.e. physical Bitcoin wallets). It's just that not many people are working on that stuff, because most of the companies making Bitcoin stuff are catering to speculators trying to get rich quick. There are a lot of really smart people working on creating centralized Bitcoin solutions, but frankly, that's just a bad idea, as evidenced by almost every centralized Bitcoin solution having been hacked at least once. A centralized system has too wide an attack surface and too high an incentive for attackers, and defeats most of the benefits of Bitcoin anyway. Sure, it makes Bitcoin a poor choice for speculators looking to get rich quick, but I don't care in the least. They're outsiders who don't understand the tool and aren't on board with the philosophy of why Bitcoin is important. If you don't understand decentralization and you try to be in Bitcoin, you're going to have a bad time.