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This is exactly why Bitcoin will never take off outside of the geek world. Can you imagine, in a world where millions used Bitcoin, the media fallout if users w

This is exactly why Bitcoin will never take off outside of the geek world. Can you imagine, in a world where millions used Bitcoin, the media fallout if users were being robbed with zero way to reclaim their money? Knowing how little "regular" people protect their devices, this scares me.

truthout 15y ago
Bitcoin would function as a backend and the payment would be done through processors like banks and credit card companies. What's the difference between bitcoin and dollars in that respect. The average person still has the ability to move coins trough the system but I'm sure processors will be regulated.
kmfrk 15y ago
You just described PayPal.
- olivercameron 15y ago
  Not at all. PayPal could not be more different than Bitcoin (centralised, insured etc.). Edit: I'm not defending PayPal, I'm saying Bitcoin and PayPal are two different systems.
  - ltamake 15y ago
    Doesn't mean that PayPal is invincible. It's been hacked before, and being centralised and insured doesn't mean anything.
    - olivercameron 15y ago
      I'm not saying its invincible at all, I'm saying comparing PayPal and Bitcoin isn't appropriate considering they're very different.
    - ceejayoz 15y ago
      > ... being ... insured doesn't mean anything. Uh... it means there's minimal risk that users will lose their money if PayPal gets compromised. That's pretty significant.
  - burgerbrain 15y ago
    Paypal regularly "freezes" peoples funds, and there is little legal recourse in those cases since Paypal cleverly has avoided making itself legally a bank in the US (even though it clearly preforms functions people usually receive from banks).
    - rmc 15y ago
      AFAIK PayPal are a bank in the EU. I don't know if their behaviour is much different, but I suspect it isn't.
shazow 15y ago
Here's some ways to fix this and why it won't be a problem: - Add encryption of the wallet and a password to the Bitcoin client and daemon. This is already being worked on and there is working prototype. It should be in the mainstream client very soon. Wallet Private Key Encryption: http://forum.bitcoin.org/index.php?topic=8728.0 http://forum.bitcoin.org/index.php?topic=8728.0 - Start trusted centralized institutions that hold your Bitcoins and protect them (maybe even give you a bit of interest growth). There are already numerous online eWallets that you can use—if you choose to keep your cash on your person then it's your decision and you should acknowledge the risks. List of eWallets: https://en.bitcoin.it/wiki/Category:EWallets https://en.bitcoin.it/wiki/Category:EWallets
- gojomo 15y ago
  Wallet encryption isn't any help against keyloggers and other local malware that can observe your use of the wallet. And wallet encryption simple enough for average folks — a short passphrase of their own choosing - is easy for digital pickpockets to crack.
  - wmf 15y ago
    Since Bitcoin miners have awesome GPUs, malware could use the victim's own GPU to crack their wallet. (And then go back to mining... for the malware owner.)
    - a3_nm 15y ago
      Bitcoin GPU miners are a quite small subset of Bitcoin users, and they're probably not the least knowledgeable.
      - jcoder 15y ago
        Maybe. Wasn't the victim of the recent 25k heist a miner?
        DavidSJ 15y ago
creativeembassy 15y ago
Bitcoins are a digital currency without a bank. If you kept all your money in cash at your house, and failed to secure your house, then someone could steal it. Sure, you could try to catch them based on the evidence they leave behind (fingerprints for cash, logfiles for bitcoin wallets), but once they have the cash, it's nearly untraceable. But if you have banks that store Bitcoins for you, then you're trusting their security processes, not your own. We don't have Bitcoin banks yet. For BC users, maybe that's worth looking into.
- cookiecaper 15y ago
  It actually would not necessarily be difficult to trace the thief of your bitcoins. All btc transactions are logged publicly; a victim can watch the blockchain and record every address that receives his stolen coins, and this may produce good leads as to the thief's identity.
- ssharp 15y ago
  I've read this real-life money / storing all your money at your house analogy a few times related to BitCoin. It seems disingenuous. There are just too many physical things that separate the dangers of BitCoin and hoarding money somewhere in your house. - I don't have to worry about 6,500,000,000 people having access to my house. At most, there is a market of around a million or so who would live in close enough proximately to me. - I don't have thousands of people across the world tapping on my windows to find out how easy they are to break into. - I'd trust the chances of a local thief being caught more than a hacker across the globe stealing BitCoins being caught. I could go on and on. Right now, the BitCoin landscape is like the Wild West, probably even worse. Systems simply aren't in place to really protect people, and you have the potential to steal from anyone in the entire world. In real currencies, we have systems in place to protect holders. In the U.S. we have the FDIC, which insures bank accounts up to a certain amount. This insurance incentives people to keep their money in banks instead of the house because it's safe (both physically safe from theft and safe from bank failure). My understanding is that there are BitCoin "banks" but there is nothing guaranteeing these deposits. There are also established systems in place to help prevent theft. Police departments, close physical proximity to others (neighbors being able to see odd activities), etc. to prevent thefts.
mike_esspe 15y ago
1) This is a problem. 2) It can be solved with the help of internet service. 3) It's easy to get started because you don't need a banking license. My conclusion - we will see a lot of startups solving this problem.
nextparadigms 15y ago
The technology is still in its beta period basically. Really, all this should've been expected, especially since we're talking about a currency and money. It was an early adopter risk, and I think most decided the risk was ok, because they could earn 10x,100x or even 1000x more money than they put in. The only mistake was to believe Bitcoin was 100% safe. The technology will mature.

truthout 15y ago

Bitcoin would function as a backend and the payment would be done through processors like banks and credit card companies. What's the difference between bitcoin and dollars in that respect. The average person still has the ability to move coins trough the system but I'm sure processors will be regulated.

kmfrk 15y ago

You just described PayPal.

olivercameron 15y ago
Not at all. PayPal could not be more different than Bitcoin (centralised, insured etc.). Edit: I'm not defending PayPal, I'm saying Bitcoin and PayPal are two different systems.
- ltamake 15y ago
  Doesn't mean that PayPal is invincible. It's been hacked before, and being centralised and insured doesn't mean anything.
  - olivercameron 15y ago
    I'm not saying its invincible at all, I'm saying comparing PayPal and Bitcoin isn't appropriate considering they're very different.
  - ceejayoz 15y ago
    > ... being ... insured doesn't mean anything. Uh... it means there's minimal risk that users will lose their money if PayPal gets compromised. That's pretty significant.
- burgerbrain 15y ago
  Paypal regularly "freezes" peoples funds, and there is little legal recourse in those cases since Paypal cleverly has avoided making itself legally a bank in the US (even though it clearly preforms functions people usually receive from banks).
  - rmc 15y ago
    AFAIK PayPal are a bank in the EU. I don't know if their behaviour is much different, but I suspect it isn't.

shazow 15y ago

Here's some ways to fix this and why it won't be a problem: - Add encryption of the wallet and a password to the Bitcoin client and daemon. This is already being worked on and there is working prototype. It should be in the mainstream client very soon. Wallet Private Key Encryption: http://forum.bitcoin.org/index.php?topic=8728.0 http://forum.bitcoin.org/index.php?topic=8728.0 - Start trusted centralized institutions that hold your Bitcoins and protect them (maybe even give you a bit of interest growth). There are already numerous online eWallets that you can use—if you choose to keep your cash on your person then it's your decision and you should acknowledge the risks. List of eWallets: https://en.bitcoin.it/wiki/Category:EWallets https://en.bitcoin.it/wiki/Category:EWallets

gojomo 15y ago
Wallet encryption isn't any help against keyloggers and other local malware that can observe your use of the wallet. And wallet encryption simple enough for average folks — a short passphrase of their own choosing - is easy for digital pickpockets to crack.
- wmf 15y ago
  Since Bitcoin miners have awesome GPUs, malware could use the victim's own GPU to crack their wallet. (And then go back to mining... for the malware owner.)
  - a3_nm 15y ago
    Bitcoin GPU miners are a quite small subset of Bitcoin users, and they're probably not the least knowledgeable.
    - jcoder 15y ago
      Maybe. Wasn't the victim of the recent 25k heist a miner?
      - DavidSJ 15y ago

creativeembassy 15y ago

Bitcoins are a digital currency without a bank. If you kept all your money in cash at your house, and failed to secure your house, then someone could steal it. Sure, you could try to catch them based on the evidence they leave behind (fingerprints for cash, logfiles for bitcoin wallets), but once they have the cash, it's nearly untraceable. But if you have banks that store Bitcoins for you, then you're trusting their security processes, not your own. We don't have Bitcoin banks yet. For BC users, maybe that's worth looking into.

cookiecaper 15y ago
It actually would not necessarily be difficult to trace the thief of your bitcoins. All btc transactions are logged publicly; a victim can watch the blockchain and record every address that receives his stolen coins, and this may produce good leads as to the thief's identity.
ssharp 15y ago
I've read this real-life money / storing all your money at your house analogy a few times related to BitCoin. It seems disingenuous. There are just too many physical things that separate the dangers of BitCoin and hoarding money somewhere in your house. - I don't have to worry about 6,500,000,000 people having access to my house. At most, there is a market of around a million or so who would live in close enough proximately to me. - I don't have thousands of people across the world tapping on my windows to find out how easy they are to break into. - I'd trust the chances of a local thief being caught more than a hacker across the globe stealing BitCoins being caught. I could go on and on. Right now, the BitCoin landscape is like the Wild West, probably even worse. Systems simply aren't in place to really protect people, and you have the potential to steal from anyone in the entire world. In real currencies, we have systems in place to protect holders. In the U.S. we have the FDIC, which insures bank accounts up to a certain amount. This insurance incentives people to keep their money in banks instead of the house because it's safe (both physically safe from theft and safe from bank failure). My understanding is that there are BitCoin "banks" but there is nothing guaranteeing these deposits. There are also established systems in place to help prevent theft. Police departments, close physical proximity to others (neighbors being able to see odd activities), etc. to prevent thefts.

mike_esspe 15y ago

1) This is a problem. 2) It can be solved with the help of internet service. 3) It's easy to get started because you don't need a banking license. My conclusion - we will see a lot of startups solving this problem.

nextparadigms 15y ago

The technology is still in its beta period basically. Really, all this should've been expected, especially since we're talking about a currency and money. It was an early adopter risk, and I think most decided the risk was ok, because they could earn 10x,100x or even 1000x more money than they put in. The only mistake was to believe Bitcoin was 100% safe. The technology will mature.