5 ms·

This is why multi-sig exists. Put the funds in a 6-of-10 account, done. You would need a 60% attack (60% of the executives to collude/conspire, or 60% being hac

by knocte 9y ago

This is why multi-sig exists. Put the funds in a 6-of-10 account, done. You would need a 60% attack (60% of the executives to collude/conspire, or 60% being hacked/kidnapped) to be robbed.

charlesdm 9y ago
Yes, if you're a $10m hedge fund or a small family office. But not if you need to manage $400bn; then you (really) want a custodian. These people allocate and mostly invest in funds with exposure to certain asset classes (private equity, VC, hedge funds, equity and bond funds, etc).
- knocte 9y ago
  > you (really) want a custodian Are you really referring to a single (non-plural) custodian...?
  - wmf 9y ago
    A custodian company, not a person.
    - knocte 9y ago
      Ah, sure, and that custodian company will most likely hold the bitcoins in a multisig account. Now you have to pay a company for this service and also have counter-party risk. Great. Maybe the risk and cost is not worth it and setting up a multi-sig inhouse is worth it?
      - asadlionpk 9y ago
        Looks like most don't think this way. They think that they don't have the 'expertise' in-house for maintaining multisig account. So they will just have to hire an 'expert' custodian to reduce risk.
        knocte 9y ago
        And this is why most funds that hold bitcoin will fail, at some point. Bitcoin is a paradigm shift. Its more important value proposition is the lack of counterparty risk (which other people refer to as "self financial sovereignity"). If you're hiring a custodian to hold the bitcoins for you, you're doing it wrong. > They think that they don't have the 'expertise' If bitcoin is seen as requiring some special knowledge to hold it safely, it's simply a UX problem that will be solved when wallet software/hardware matures.
        Fredej 9y ago
        I disagree. As a private person I would feel a lot more secure if I could pay someone to safely hold my cryptocurrency for me. I trust my bank a lot more than I trust myself to keep things safe. This seems to be a controversial opinion in the crypto-space :)
        knocte 9y ago
        People like you, in the long term, will learn that the risk associated using an identity-based custodian based services (be it for fiat or for crypto) is never worth it. Why? In the crypto case, because counterparty risk is higher in this space (companies get hacked more often than banks being robbed). In the fiat case, because of the diminishing rate of value of your holdings due to inflation.
        charlesdm 9y ago
        To be honest, bearer shares weren't exactly the best invention ever. They held considerable risks, and losing the shares meant losing your investment and/or company. Crypto ownership is very similar.
        Fredej 9y ago
        I would love to have a way for my bank to hold my crypto for me, with the same amount of insurances and security audits as they have for other assets. The "be your own bank" idea which crypto offers was one of the reasons it has taken me a while to get into it. That was something that I really didn't want. I trust my bank living up to the task of keeping it safe and reimbursing me if they don't. I don't care about the individual coins but I do care about the value they represent and I trust that even if a bank loses a number of coins that it will not affect me. Just like if a bank vault was broken into it would not come out of my account.
      - monort 9y ago
        You should pay to five companies in different jurisdictions for a 3 of 5 multi-sig. As far as I know, nobody offers such service right now, but I think it will exist in the future.
- garmaine 9y ago
  > Yes, if you're a $10m hedge fund or a small family office. But not if you need to manage $400bn; then you (really) want a custodian. Who, if they are competent, will happily print out a bunch of keys on paper and lock them in boxes, and charge you a 75 basis point asset under management fee for that service. What has that really accomplished though?
empath75 9y ago
How many multisig wallets have had bugs?
- knocte 9y ago
  None AFAIK? Maybe you're thinking of parity, which is ethereum not bitcoin.
  - dest 9y ago
    Some Armory M of N wallets were unsafe. The flaw they had made the security equivalent to a 1 of N wallet. https://btcarmory.com/fragmented-backup-vuln/ https://btcarmory.com/fragmented-backup-vuln/ edit: the problem has been fixed since
    - garmaine 9y ago
      That’s Shamir secret sharing, not multisig.
      - dest 9y ago
        Thank you for pointing out the difference, I learned it today. See a good Reddit post about it: https://www.reddit.com/r/Bitcoin/comments/2uj2qe/difference_between_shamir_secret_sharing_scheme/co9hp6t/ https://www.reddit.com/r/Bitcoin/comments/2uj2qe/difference_... However, I still don't really get the usage difference between SSS and multisig. In a M of N situation, you give N secrets to N people, and M people together can spend the funds. In my mind, Shamir secret sharing wallets (e.g. Armory) belong to the family of multisig wallets. It would be nice if you could elaborate on that point.
        DennisP 9y ago
        I can think of two practical differences: - SSS can be bad if just your own client gets it wrong, multisig can be bad only if the blockchain itself is implemented incorrectly and somehow everybody who's been poking at its crypto for years with billions of dollars at stake has missed it. - With SSS, once you reconstruct the key, there's one person holding that single key who will sign a transaction with it. You'd better trust that person. With multisig, each of the m keys can be controlled by a different person and they don't have to share. So (unbroken) SSS is fine for protecting your own key, but an organization that wants to distribute responsibility should use multisig.
deleted 9y ago
[deleted]
rtpg 9y ago
...why though? Firstly it's not the executive's money to actually hold onto. Secondly they have sooooooo many options where their own incompetence/mistakes will not be a factor in their money literally disappearing into nothingness. There's a reason why bank deposit insurance exists. If you think you can hold onto the money cheaply, by all means start this business and get them as a client. But you'll probably want insurance, you'll likely need some security measures, etc etc. Things start costing money. Not to mention the coordination costs for them of "yet another holder of assets". What if they want to sell a chunk of it? They need to get 60% of execs in a room every time? These people hold money for a living. I understand that they might not be aware of the latest and greatest technical stuff... but this is their job and they've likely thought of a lot of details here. There's also value in a human being the last step in the security mechanism. No matter what happens, a court order/explanation of force majeure/etc means that the money is never really truly lost.

by knocte 9y ago

This is why multi-sig exists. Put the funds in a 6-of-10 account, done. You would need a 60% attack (60% of the executives to collude/conspire, or 60% being hacked/kidnapped) to be robbed.

charlesdm 9y ago

Yes, if you're a $10m hedge fund or a small family office. But not if you need to manage $400bn; then you (really) want a custodian. These people allocate and mostly invest in funds with exposure to certain asset classes (private equity, VC, hedge funds, equity and bond funds, etc).

knocte 9y ago
> you (really) want a custodian Are you really referring to a single (non-plural) custodian...?
- wmf 9y ago
  A custodian company, not a person.
  - knocte 9y ago
    Ah, sure, and that custodian company will most likely hold the bitcoins in a multisig account. Now you have to pay a company for this service and also have counter-party risk. Great. Maybe the risk and cost is not worth it and setting up a multi-sig inhouse is worth it?
    - asadlionpk 9y ago
      Looks like most don't think this way. They think that they don't have the 'expertise' in-house for maintaining multisig account. So they will just have to hire an 'expert' custodian to reduce risk.
      - knocte 9y ago
        And this is why most funds that hold bitcoin will fail, at some point. Bitcoin is a paradigm shift. Its more important value proposition is the lack of counterparty risk (which other people refer to as "self financial sovereignity"). If you're hiring a custodian to hold the bitcoins for you, you're doing it wrong. > They think that they don't have the 'expertise' If bitcoin is seen as requiring some special knowledge to hold it safely, it's simply a UX problem that will be solved when wallet software/hardware matures.
        Fredej 9y ago
        I disagree. As a private person I would feel a lot more secure if I could pay someone to safely hold my cryptocurrency for me. I trust my bank a lot more than I trust myself to keep things safe. This seems to be a controversial opinion in the crypto-space :)
        knocte 9y ago
        People like you, in the long term, will learn that the risk associated using an identity-based custodian based services (be it for fiat or for crypto) is never worth it. Why? In the crypto case, because counterparty risk is higher in this space (companies get hacked more often than banks being robbed). In the fiat case, because of the diminishing rate of value of your holdings due to inflation.
        charlesdm 9y ago
        To be honest, bearer shares weren't exactly the best invention ever. They held considerable risks, and losing the shares meant losing your investment and/or company. Crypto ownership is very similar.
        Fredej 9y ago
        I would love to have a way for my bank to hold my crypto for me, with the same amount of insurances and security audits as they have for other assets. The "be your own bank" idea which crypto offers was one of the reasons it has taken me a while to get into it. That was something that I really didn't want. I trust my bank living up to the task of keeping it safe and reimbursing me if they don't. I don't care about the individual coins but I do care about the value they represent and I trust that even if a bank loses a number of coins that it will not affect me. Just like if a bank vault was broken into it would not come out of my account.
    - monort 9y ago
      You should pay to five companies in different jurisdictions for a 3 of 5 multi-sig. As far as I know, nobody offers such service right now, but I think it will exist in the future.
garmaine 9y ago
> Yes, if you're a $10m hedge fund or a small family office. But not if you need to manage $400bn; then you (really) want a custodian. Who, if they are competent, will happily print out a bunch of keys on paper and lock them in boxes, and charge you a 75 basis point asset under management fee for that service. What has that really accomplished though?

empath75 9y ago

How many multisig wallets have had bugs?

knocte 9y ago
None AFAIK? Maybe you're thinking of parity, which is ethereum not bitcoin.
- dest 9y ago
  Some Armory M of N wallets were unsafe. The flaw they had made the security equivalent to a 1 of N wallet. https://btcarmory.com/fragmented-backup-vuln/ https://btcarmory.com/fragmented-backup-vuln/ edit: the problem has been fixed since
  - garmaine 9y ago
    That’s Shamir secret sharing, not multisig.
    - dest 9y ago
      Thank you for pointing out the difference, I learned it today. See a good Reddit post about it: https://www.reddit.com/r/Bitcoin/comments/2uj2qe/difference_between_shamir_secret_sharing_scheme/co9hp6t/ https://www.reddit.com/r/Bitcoin/comments/2uj2qe/difference_... However, I still don't really get the usage difference between SSS and multisig. In a M of N situation, you give N secrets to N people, and M people together can spend the funds. In my mind, Shamir secret sharing wallets (e.g. Armory) belong to the family of multisig wallets. It would be nice if you could elaborate on that point.
      - DennisP 9y ago
        I can think of two practical differences: - SSS can be bad if just your own client gets it wrong, multisig can be bad only if the blockchain itself is implemented incorrectly and somehow everybody who's been poking at its crypto for years with billions of dollars at stake has missed it. - With SSS, once you reconstruct the key, there's one person holding that single key who will sign a transaction with it. You'd better trust that person. With multisig, each of the m keys can be controlled by a different person and they don't have to share. So (unbroken) SSS is fine for protecting your own key, but an organization that wants to distribute responsibility should use multisig.

deleted 9y ago

[deleted]

rtpg 9y ago

...why though? Firstly it's not the executive's money to actually hold onto. Secondly they have sooooooo many options where their own incompetence/mistakes will not be a factor in their money literally disappearing into nothingness. There's a reason why bank deposit insurance exists. If you think you can hold onto the money cheaply, by all means start this business and get them as a client. But you'll probably want insurance, you'll likely need some security measures, etc etc. Things start costing money. Not to mention the coordination costs for them of "yet another holder of assets". What if they want to sell a chunk of it? They need to get 60% of execs in a room every time? These people hold money for a living. I understand that they might not be aware of the latest and greatest technical stuff... but this is their job and they've likely thought of a lot of details here. There's also value in a human being the last step in the security mechanism. No matter what happens, a court order/explanation of force majeure/etc means that the money is never really truly lost.