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What users of the Bitcoin network own are private keys. These allow you to control corresponding entries on the Bitcoin ledger by signing transactions and broad
by thinkmassive 6y ago
What users of the Bitcoin network own are private keys. These allow you to control corresponding entries on the Bitcoin ledger by signing transactions and broadcasting them to the Bitcoin network.
Signed transactions can even be shared through other channels, to be broadcast at a later time for settlement, like a check. This is how the Lightning Network functions.
Keys can be held in many forms, including purely in software, digitally inside a hardware secure element, or converted to words and printed on paper or metal.
Bitcoin even has basic scripting that allows more complex setups, such as only allowing a ledger entry to be updated after a certain duration (timelocks) or requiring a quorum of signers (multisig), so simply having a corresponding private is not always sufficient to immediately spend the corresponding funds.
In the past “brain wallets” were popular, where the private key is generated from a memorized passphrase. These are a bad idea because it’s trivial to watch addresses corresponding to every entry a password dump, and automatically move these funds whether you’re the original owner or not. I mention this to illustrate how having the corresponding private key is necessary to control funds but it’s not sufficient to prevent someone else from controlling the same funds.
On top of all this, most “Bitcoin users” leave “their” Bitcoin on exchanges, so what they really own are IOUs rather than Bitcoin itself.
Bitcoin “ownership” can be pretty abstract.
- vinay_ys 6y agoAlso almost all governments have KYC/AML/CFT regulations that apply to crypto exchanges as well. And governments can monitor, control, sanction your bitcoin transactions by controlling these exchanges through regulations. When the local currency becomes unstable and the local government becomes unstable, one should assume access to crypto exchanges like coinbase will be very very hard.
- lynx234 6y agothis is where decentralized exchanges like Uniswap come into play, no KYC, no account
- RestlessMind 6y agoAnd how do you move your money to/from a DEX? It still needs a regulated exchange like Coinbase to interface with Fiat money, no?
- vinay_ys 6y agoYes, that's correct. Basically, bitcoin doesn't have privacy and is losing self-sovereignty through regulation.
- thinkmassive 6y agoYou can sell goods and services locally and accept Bitcoin as payment. Craigslist even added a “cryptocurrency ok” flag you can set on your posts. LocalBitcoins enables face to face transfers. Bisq is a DEX that enables remote exchanges using any form of payment, including most centralized payment services, and even cash through snail mail.
- RestlessMind 6y agoBut then, the seller has to pay taxes - either business taxes if it is a merchant or capital gains taxes in case they sold an asset. And taxes are paid only in Fiat. So you still need Fiat integration somewhere.
- thinkmassive 6y agoYou’re right, “not your keys, not your coins”