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This is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without re

This is my biggest complaint against cryptocurrencies in general. I'm happy with my bank's fraud protection. How can crypto users protect themselves without recreating traditional banking? Bitcoin was released ~13 years ago, and wallet/transaction security has been one of the most important requirements since then (along with scalability, but let's not go there). If trillion dollar market caps and god-knows-how-many billions of investment couldn't figure out how to protect consumers after 13 years...

MengerSponge 5y ago
We've seen oppressive regimes shut down cryptocurrencies when threatened by them. The remaining argument in favor of crypto boils down to "the problem with traditional currencies is that people who aren't me have too much of them"
88913527 5y ago
There's plenty of situations where traditional banking system does nothing. A social engineering scam led to a 6-figure USD theft, it was a down payment meant to be wired as part of a real estate transaction. The money was already out of the country; they got nothing back. There was a local news article about it.
- BoppreH 5y ago
  > 6-figure USD theft Traditional banking is not perfect by any means, but if 6-figure frauds are making the news, it means they are uncommon. Meanwhile, cryptocurrencies regularly have scams and hacks in the hundred-million dollar range.
idiotsecant 5y ago
I think the way you protect yourself is the same way people protected themselves before credit cards were widely used. By not spending your cash on things that are scams. Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.
- pjc50 5y ago
  Commercial banking is four centuries old. https://en.wikipedia.org/wiki/Banca_Monte_dei_Paschi_di_Siena https://en.wikipedia.org/wiki/Banca_Monte_dei_Paschi_di_Sien... ; the modern world is built around banking as much as it is around the limited liability corporation. The basic borrow short/lend long business of a bank is not going anywhere. Mind you, it's worth noting that MPS had four centuries of independence before listing itself on the stockmarket and losing its independence comparatively shortly afterwards in the 2008 crisis.
- captn3m0 5y ago
  There are other ways to protect payments than just (rent seeking) CCs. For eg, in India UPI equates to irreversible zero-cost instant bank transfers (and the irreversible part incentivizes scams) - the KYC/AML regulations make getting your money back a possibility (while not impossible, it's usually improbable, and depends on the amount)
- phpnode 5y ago
  "I would simply protect myself by not spending cash on things that are scams"
  - mschuster91 5y ago
    Even professional investors have a hard time telling scams apart from legit operations. Just look at the Madoff scandal. And when even the professionals fail to see scams, how is the general public supposed to do so?
    - nradov 5y ago
      Bernie Madoff's victims were mostly high net worth individuals (dumb money), not professional investors. While professional investors do occasionally get scammed that's much less common.
      - ourmandave 5y ago
        The list of Madoff investors is mostly institutions. And sadly a lot of charities. https://en.wikipedia.org/wiki/List_of_investors_in_Bernard_L._Madoff_Investment_Securities https://en.wikipedia.org/wiki/List_of_investors_in_Bernard_L...
wsc981 5y ago
Well, in Germany perhaps soon some banks will hold cryptos for their clients [0]. I would imagine these banks would offer some kind of fraud protection for the crypto assets they will hold, likely at some cost. I believe in the USA there was already some legislation passed some time ago that would allow banks to be custodians of crypto-currencies? --- [0]: https://bitcoinethereumnews.com/crypto/two-german-banks-commerzbank-and-volks-join-sparkasse-in-crypto-plans/ https://bitcoinethereumnews.com/crypto/two-german-banks-comm...
- PeterisP 5y ago
  This probably is the solution - as cryptocurrency advocates like to say, "not your keys, not your coins", but for certain people an IOU from a bank saying that the bank owes them some coins is preferable to having the actual coins and the benefits+risks associated with that. It's similar to stocks and bonds - you could own them yourself, but for not-huge private investment it's often simpler to have a financial institution hold them on your behalf.
matheusmoreira 5y ago
Just don't play the shitcoin casino.
SubiculumCode 5y ago
Okay, invest in a top 40 crypto. Defi scams usually involve outrageous APR and reward claims from a sketchy Telegram channel actively trying to recruit ignorant or vulnerable individuals. Same as every other scammer, but with the new and improved hype words
- BoppreH 5y ago
  I don't want to speculate in cryptocurrencies, I want to use them for their intended purpose, financial transactions. The problem is that I can't do that at anywhere near the safety of my traditional banking institution.
  - SubiculumCode 5y ago
    Of course, a lot of cryptocurrencies aren't really meant to be used as currencies. So here is that. Also there are companies that offer insurance on your crypto.
evergrande 5y ago
Granted, but every new technology goes through this and the tools and best practices are improving. The code is open source too. I don't know why people, technologists especially, aren't recognizing this. It's also worth examining the current system. How happy are you with your bank's 0.01% interest rate? Which is actually negative when you factor in inflation that's eroding the value of our dollars faster than ever, and increasingly transferring wealth to the top 1%? How happy are you about bank CEO compensation and bailouts? No one in crypto is asking for a bailout, even when it crashes 80%. And what about the fact that bank's charge poor people the most or flat out deny service? Or the fact that it's all closed source and behind closed doors.
Sohcahtoa82 5y ago
Normal individual transactions are secure. I can send money to Bob without worry that someone is going to somehow use the data in that transaction to steal my entire wallet. The "rug pulls" you see are from contracts written maliciously. DeFi is a ponzi scheme written into a Smart Contract, but some of them have an extra function that allows the creator to instantly steal all the money out of it.
- BoppreH 5y ago
  > Normal individual transactions are secure. For a very narrow definition. You still need a way to get Bob's wallet address, and to secure your own wallet. Just look around and you'll see plenty of experts failing to do that correctly. > The "rug pulls" you see are from contracts written maliciously. And the contracts, being from DeFi land, are immune from chargebacks or legal prosecution. Regular old fraud, made exponentially more damaging because of cryptocurrencies.
  - Sohcahtoa82 5y ago
    > For a very narrow definition. You still need a way to get Bob's wallet address, and to secure your own wallet. Just look around and you'll see plenty of experts failing to do that correctly. Fair enough. A transaction is secure, but the wallets might not be. If you rely on a 3rd party to host your wallet (ie, Coinbase), then you risk your money being stolen when they get hacked. If you host it yourself, then you risk losing the keys unless you make a backup, and the backup could get lost, or if you store it in cloud storage, it could get stolen there. Credit cards are harder to secure than wallets IMO, but at least with CCs, you have recourse in the case of fraud.
friendzis 5y ago
Cryptocoins are deliberately based on the concept of money reduced to "cash". There is no banking, there is no fraud protection. It is supposed to work that way. The whole at least somewhat civilized world has moved to a more advanced versions of money, but cryptocoins are a step backwards and it is entirely intentional.
- BoppreH 5y ago
  No, cryptocurrencies are reduced to "mailing cash to an anonymous postbox", which has a lot fewer guarantees. I'm happy giving cold hard cash to buy something from a brick-and-mortar store to be delivered in the future. I'd never mail cash for that purpose.
  - deltree7 5y ago
    Bingo! There are <0.0001% of the population who understand transaction risk. If I pay $Cash for Goods, In a trustless network, both side of the exchange have to be instantaneous. I can never pay cryptocurrency for any item that are not verifiable by the network itself, unless there is another trusted 3rd party (cough cough, Credit Card Processors/Banks).
cheeseomlit 5y ago
>How can crypto users protect themselves without recreating traditional banking? They could just invest in well-established projects with proven technology instead of obvious scams in hopes of a "moon shot". This has very little to do with Bitcoin and other legitimate projects, which are a far cry from useless fly-by-night ERC-20 tokens with stupid animal names
- BoppreH 5y ago
  Bitcoin/Ethereum is what allowed these scams to be executed, not be reverted, and to go unpunished. If you want to push for those technologies, you have to explain how to give consumers a minimum level of protection.
  - surfingdino 5y ago
    There are plenty of ways and tools for the scammers to be tracked on a public blockchain. Tokens are not worth much until they are exchanged for fiat currency. The authorities do not want to chase after them, yet, but anyone engaging in such fraud is leaving plenty of evidence on public, cryptographically protected blockchains to provide evidence that's difficult to repudiate. Sooner of later those responsible will be brought to justice. I am working with people in the banking industry to add a layer of protection without compromising core values of crypto (permissionless, trustless), but funnily enough they do not want to do anything against the regulators. Retail banks have become very cautious after 2008 and won't do anything unless they are told to do it by the regulators. And the regulators are a bit clueless, tbh.
kyruzic 5y ago
Use a trusted exchange if you are worried about that. Holding crypto in a wallet is the equivalent of keeping cash in your wallet. No bank in the world will care if someone steals your wallet.
- sroussey 5y ago
  True, but you can’t hold a billion dollars in the wallet in your back pocket.
- bananabernhard 5y ago
  yeah, but then you recreated traditional banking, just as they said. It's almost like there are reasons, as to why things are like they are right now.
  - kyruzic 5y ago
    No. The person I replied to wanted a traditional bank in the crypto space. I told them how to replicate it. If you didn't notice the total crypto market cap is 2 trillion dollars. People are happy with the way crypto works, most don't want it to be like a bank, but for those that do there is ways to make it so.
- arthur6667 5y ago
  Right. I did that. And got scammed. I had my BTC in a trusted exchange at the time. Then they dissappeared on me. Then I was told it was my own fault for using an exchange. You just can't win this game can you..
  - beardog 5y ago
    ding ding! If you keep it in exchange and it gets stolen, it's your fault for daring to trust your fellow human. If you keep it yourself and it gets stolen, it's your fault for not having a multisignature hardware wallet stored in 5 different countries with armed guards. Ok i'm exaggerating of course, it just seems like some people are not willing to admit that cryptocurrency does not address certain things that people want out of a money/payments system.
mbesto 5y ago
This is my favorite story about crypto fraud protection: The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key. https://www.nytimes.com/2017/12/19/technology/bitcoin-winklevoss-twins.html https://www.nytimes.com/2017/12/19/technology/bitcoin-winkle...
- TacticalCoder 5y ago
  It's quite crazy to think that these guys not only were basically behind FB (they won the lawsuits, with an 's', proving it) but also saw Bitcoin early on. They bought at less than ten and were billionaires when it hit $10 K. So these dudes both "saw" FB and cryptocurrencies. Hate as much as you want on FB and cryptocurrencies, it's still quite a feat to have foreseen both. Regarding storing parts of the secret here and there: it's basically and "m out of n" scheme AFAICT. There are many variations of this but the overall idea is that you can afford to lose (n - m) parts and yet you'll be able to recover the secret. And if a thief were to steal parts, he'd need m parts to be able to recover the secret.
  - thinkmassive 5y ago
    > Regarding storing parts of the secret here and there: it's basically and "m out of n" scheme AFAICT. There are many variations of this but the overall idea is that you can afford to lose (n - m) parts and yet you'll be able to recover the secret. And if a thief were to steal parts, he'd need m parts to be able to recover the secret. The difference between a Shamir scheme and a true multi-signature scheme is that the former requires combining the m-of-n pieces to reveal the single private key to sign a transaction, which is a huge vulnerability and single point of failure. Bitcoin script allows the m-of-n signatures to remain geographically dispersed, each signing the transaction with only their own key, so no single party ever needs to possess the full private key.
- elliotec 5y ago
  This key storage system is a now very common and (ostensibly) very secure model that has been iterated on and is in wide use, especially for hardware wallets like Trezor. The model they use is called the "Shamir Backup," here's more info: https://wiki.trezor.io/Shamir_backup https://wiki.trezor.io/Shamir_backup
vmception 5y ago
your bank fraud protection doesn't prevent the bank from losing money. banks lose a lot of money to fraud and nobody is prosecuted. from my perspective, you are comparing a user experience that has nothing to do with the technology. a bank is a third party service providing custody to bearer instruments. a future financial institution will be a third party service providing custody or other protections to your crypto bearer instruments. > If trillion dollar market caps and god-knows-how-many billions of investment couldn't figure out how to protect consumers after 13 years... there are DeFi insurance protocols, many people get paid back after being scammed, rug pulled, exploited. Look at the source, it is convenient for this to not be mentioned as all chainanalysis does is sell fear to governments to land contracts.
- BoppreH 5y ago
  > banks lose a lot of money to fraud and nobody is prosecuted. That's true some times, but then it works like an insurance policy to me. I like insurance, especially when it's about my life savings. > a future financial institution will be a third party service providing custody or other protections to your crypto bearer instruments. As you mentioned, that's a bank. There's no reason to believe that crypto-based banks will be any better than traditional ones, especially if you compare to newer fintechs. > many people get paid back after being scammed, rug pulled, exploited I was not aware of that, thank you. But it's still too few compare to the whole.
  - vmception 5y ago
    > There's no reason to believe that crypto-based banks will be any better than traditional ones That wasn't the supposition. Who cares? Wait I know people that do care, you thought I was one of those? I view blockchains as a platform to launch projects, and crypto as the necessary fuel to use those platforms, I like the censorship resistance but I don't care about the ideologies, I would like to seamlessly move unlimited sums in and out of them and thats that. I care about fulfilling market needs and niches, I don't care about the accuracy of those needs. Regarding Defi insurance protocols, there is a lot of education necessary and some ease of use improvements necessary.
  - 5y ago
nathanyz 5y ago
Agreed, and where I think is one of the bigger failings of blockchain. We don't actually want a system where mistakes, fraud, or theft are irreversible. Some will say that you can still prosecute the crimes even if you can't initially reverse the transaction, but you can see how well that is working with hackers from adversary nations. Basically no prosecution and risk free ability to move on to the next victim. "Friction is a feature with money transfer" My experience is that moving money between countries where there is a high likelihood of collaborative justice against scams and thefts, ends up being pretty simple. It gets harder to transfer money to places where it is easier for thefts and scammers to get away with it. I think we want it this way. How many people get taken in by the romance scams[1] where they wire their money to a country with 0 chance of recovery. The money transfer system has been specifically making it more difficult to send money to countries where this is commonplace as that is the only effective way to stop the crime. There is no viable criminal process only friction to make it less profitable and more difficult for the scammers. [1] https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/romance-scams https://www.fbi.gov/scams-and-safety/common-scams-and-crimes...
TimJRobinson 5y ago
DeFi is 2 years old at most. Still very early days and lots of newbies that get exploited.
- BlueTemplar 5y ago
  Wait, Ethereum tokens don't count as DeFi ? Those are older than that...
spyder 5y ago
If someone uses your credit card or other account info to withdraw cash then the bank cannot reverse that, similarly to crypto transactions. The protection is having an insurance fund to reimburse affected clients. Crypto projects can do the same thing but they rarely do it yet. There are projects like nexusmutual.io where you can get covered against smart contract failure & exchange hacks. But even if you would be more protected against frauds in crypto, it has a lot to improve to get closer to it's promises because it's still far from it.
- BoppreH 5y ago
  That's a really cool project with its democratic claim assessment, and I admire their transparency. But as with everything related to safety in crypto, today it's still based on optimism. For example, today the 5-member Advisory Board has unilateral power to change the contract as they see fit[1], and only the smart contracts have been audited, not the organization itself[2]. The only information about this all-powerful Advisory Board is on the home page, and I'm forced to take that at face value. What happens if I put my money there, the board runs away with it, and I try to sue them only to find out that these five people don't exist, or are not related to the project? This is far from the basic security level of any traditional financial institution. Again, I have major respect for this team. The service is useful, and the documentation is honest and comprehensive. But a blockchain plus this insurance does not make a safe consumer space. [1] https://nexusmutual.gitbook.io/docs/users/understanding-nexus-mutual/governance#decentralisation-trade-offs https://nexusmutual.gitbook.io/docs/users/understanding-nexu... [2] https://nexusmutual.gitbook.io/docs/welcome/audits-and-security https://nexusmutual.gitbook.io/docs/welcome/audits-and-secur...

MengerSponge 5y ago

We've seen oppressive regimes shut down cryptocurrencies when threatened by them. The remaining argument in favor of crypto boils down to "the problem with traditional currencies is that people who aren't me have too much of them"

88913527 5y ago

There's plenty of situations where traditional banking system does nothing. A social engineering scam led to a 6-figure USD theft, it was a down payment meant to be wired as part of a real estate transaction. The money was already out of the country; they got nothing back. There was a local news article about it.

BoppreH 5y ago
> 6-figure USD theft Traditional banking is not perfect by any means, but if 6-figure frauds are making the news, it means they are uncommon. Meanwhile, cryptocurrencies regularly have scams and hacks in the hundred-million dollar range.

idiotsecant 5y ago

I think the way you protect yourself is the same way people protected themselves before credit cards were widely used. By not spending your cash on things that are scams. Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.

pjc50 5y ago
Commercial banking is four centuries old. https://en.wikipedia.org/wiki/Banca_Monte_dei_Paschi_di_Siena https://en.wikipedia.org/wiki/Banca_Monte_dei_Paschi_di_Sien... ; the modern world is built around banking as much as it is around the limited liability corporation. The basic borrow short/lend long business of a bank is not going anywhere. Mind you, it's worth noting that MPS had four centuries of independence before listing itself on the stockmarket and losing its independence comparatively shortly afterwards in the 2008 crisis.
captn3m0 5y ago
There are other ways to protect payments than just (rent seeking) CCs. For eg, in India UPI equates to irreversible zero-cost instant bank transfers (and the irreversible part incentivizes scams) - the KYC/AML regulations make getting your money back a possibility (while not impossible, it's usually improbable, and depends on the amount)
phpnode 5y ago
"I would simply protect myself by not spending cash on things that are scams"
- mschuster91 5y ago
  Even professional investors have a hard time telling scams apart from legit operations. Just look at the Madoff scandal. And when even the professionals fail to see scams, how is the general public supposed to do so?
  - nradov 5y ago
    Bernie Madoff's victims were mostly high net worth individuals (dumb money), not professional investors. While professional investors do occasionally get scammed that's much less common.
    - ourmandave 5y ago
      The list of Madoff investors is mostly institutions. And sadly a lot of charities. https://en.wikipedia.org/wiki/List_of_investors_in_Bernard_L._Madoff_Investment_Securities https://en.wikipedia.org/wiki/List_of_investors_in_Bernard_L...

wsc981 5y ago

Well, in Germany perhaps soon some banks will hold cryptos for their clients [0]. I would imagine these banks would offer some kind of fraud protection for the crypto assets they will hold, likely at some cost. I believe in the USA there was already some legislation passed some time ago that would allow banks to be custodians of crypto-currencies? --- [0]: https://bitcoinethereumnews.com/crypto/two-german-banks-commerzbank-and-volks-join-sparkasse-in-crypto-plans/ https://bitcoinethereumnews.com/crypto/two-german-banks-comm...

PeterisP 5y ago
This probably is the solution - as cryptocurrency advocates like to say, "not your keys, not your coins", but for certain people an IOU from a bank saying that the bank owes them some coins is preferable to having the actual coins and the benefits+risks associated with that. It's similar to stocks and bonds - you could own them yourself, but for not-huge private investment it's often simpler to have a financial institution hold them on your behalf.

matheusmoreira 5y ago

Just don't play the shitcoin casino.

SubiculumCode 5y ago

Okay, invest in a top 40 crypto. Defi scams usually involve outrageous APR and reward claims from a sketchy Telegram channel actively trying to recruit ignorant or vulnerable individuals. Same as every other scammer, but with the new and improved hype words

BoppreH 5y ago
I don't want to speculate in cryptocurrencies, I want to use them for their intended purpose, financial transactions. The problem is that I can't do that at anywhere near the safety of my traditional banking institution.
- SubiculumCode 5y ago
  Of course, a lot of cryptocurrencies aren't really meant to be used as currencies. So here is that. Also there are companies that offer insurance on your crypto.

evergrande 5y ago

Granted, but every new technology goes through this and the tools and best practices are improving. The code is open source too. I don't know why people, technologists especially, aren't recognizing this. It's also worth examining the current system. How happy are you with your bank's 0.01% interest rate? Which is actually negative when you factor in inflation that's eroding the value of our dollars faster than ever, and increasingly transferring wealth to the top 1%? How happy are you about bank CEO compensation and bailouts? No one in crypto is asking for a bailout, even when it crashes 80%. And what about the fact that bank's charge poor people the most or flat out deny service? Or the fact that it's all closed source and behind closed doors.

Sohcahtoa82 5y ago

Normal individual transactions are secure. I can send money to Bob without worry that someone is going to somehow use the data in that transaction to steal my entire wallet. The "rug pulls" you see are from contracts written maliciously. DeFi is a ponzi scheme written into a Smart Contract, but some of them have an extra function that allows the creator to instantly steal all the money out of it.

BoppreH 5y ago
> Normal individual transactions are secure. For a very narrow definition. You still need a way to get Bob's wallet address, and to secure your own wallet. Just look around and you'll see plenty of experts failing to do that correctly. > The "rug pulls" you see are from contracts written maliciously. And the contracts, being from DeFi land, are immune from chargebacks or legal prosecution. Regular old fraud, made exponentially more damaging because of cryptocurrencies.
- Sohcahtoa82 5y ago
  > For a very narrow definition. You still need a way to get Bob's wallet address, and to secure your own wallet. Just look around and you'll see plenty of experts failing to do that correctly. Fair enough. A transaction is secure, but the wallets might not be. If you rely on a 3rd party to host your wallet (ie, Coinbase), then you risk your money being stolen when they get hacked. If you host it yourself, then you risk losing the keys unless you make a backup, and the backup could get lost, or if you store it in cloud storage, it could get stolen there. Credit cards are harder to secure than wallets IMO, but at least with CCs, you have recourse in the case of fraud.

friendzis 5y ago

Cryptocoins are deliberately based on the concept of money reduced to "cash". There is no banking, there is no fraud protection. It is supposed to work that way. The whole at least somewhat civilized world has moved to a more advanced versions of money, but cryptocoins are a step backwards and it is entirely intentional.

BoppreH 5y ago
No, cryptocurrencies are reduced to "mailing cash to an anonymous postbox", which has a lot fewer guarantees. I'm happy giving cold hard cash to buy something from a brick-and-mortar store to be delivered in the future. I'd never mail cash for that purpose.
- deltree7 5y ago
  Bingo! There are <0.0001% of the population who understand transaction risk. If I pay $Cash for Goods, In a trustless network, both side of the exchange have to be instantaneous. I can never pay cryptocurrency for any item that are not verifiable by the network itself, unless there is another trusted 3rd party (cough cough, Credit Card Processors/Banks).

cheeseomlit 5y ago

>How can crypto users protect themselves without recreating traditional banking? They could just invest in well-established projects with proven technology instead of obvious scams in hopes of a "moon shot". This has very little to do with Bitcoin and other legitimate projects, which are a far cry from useless fly-by-night ERC-20 tokens with stupid animal names

BoppreH 5y ago
Bitcoin/Ethereum is what allowed these scams to be executed, not be reverted, and to go unpunished. If you want to push for those technologies, you have to explain how to give consumers a minimum level of protection.
- surfingdino 5y ago
  There are plenty of ways and tools for the scammers to be tracked on a public blockchain. Tokens are not worth much until they are exchanged for fiat currency. The authorities do not want to chase after them, yet, but anyone engaging in such fraud is leaving plenty of evidence on public, cryptographically protected blockchains to provide evidence that's difficult to repudiate. Sooner of later those responsible will be brought to justice. I am working with people in the banking industry to add a layer of protection without compromising core values of crypto (permissionless, trustless), but funnily enough they do not want to do anything against the regulators. Retail banks have become very cautious after 2008 and won't do anything unless they are told to do it by the regulators. And the regulators are a bit clueless, tbh.

kyruzic 5y ago

Use a trusted exchange if you are worried about that. Holding crypto in a wallet is the equivalent of keeping cash in your wallet. No bank in the world will care if someone steals your wallet.

sroussey 5y ago
True, but you can’t hold a billion dollars in the wallet in your back pocket.
bananabernhard 5y ago
yeah, but then you recreated traditional banking, just as they said. It's almost like there are reasons, as to why things are like they are right now.
- kyruzic 5y ago
  No. The person I replied to wanted a traditional bank in the crypto space. I told them how to replicate it. If you didn't notice the total crypto market cap is 2 trillion dollars. People are happy with the way crypto works, most don't want it to be like a bank, but for those that do there is ways to make it so.
arthur6667 5y ago
Right. I did that. And got scammed. I had my BTC in a trusted exchange at the time. Then they dissappeared on me. Then I was told it was my own fault for using an exchange. You just can't win this game can you..
- beardog 5y ago
  ding ding! If you keep it in exchange and it gets stolen, it's your fault for daring to trust your fellow human. If you keep it yourself and it gets stolen, it's your fault for not having a multisignature hardware wallet stored in 5 different countries with armed guards. Ok i'm exaggerating of course, it just seems like some people are not willing to admit that cryptocurrency does not address certain things that people want out of a money/payments system.

mbesto 5y ago

This is my favorite story about crypto fraud protection: The Winklevosses came up with an elaborate system to store and secure their own private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key. https://www.nytimes.com/2017/12/19/technology/bitcoin-winklevoss-twins.html https://www.nytimes.com/2017/12/19/technology/bitcoin-winkle...

TacticalCoder 5y ago
It's quite crazy to think that these guys not only were basically behind FB (they won the lawsuits, with an 's', proving it) but also saw Bitcoin early on. They bought at less than ten and were billionaires when it hit $10 K. So these dudes both "saw" FB and cryptocurrencies. Hate as much as you want on FB and cryptocurrencies, it's still quite a feat to have foreseen both. Regarding storing parts of the secret here and there: it's basically and "m out of n" scheme AFAICT. There are many variations of this but the overall idea is that you can afford to lose (n - m) parts and yet you'll be able to recover the secret. And if a thief were to steal parts, he'd need m parts to be able to recover the secret.
- thinkmassive 5y ago
  > Regarding storing parts of the secret here and there: it's basically and "m out of n" scheme AFAICT. There are many variations of this but the overall idea is that you can afford to lose (n - m) parts and yet you'll be able to recover the secret. And if a thief were to steal parts, he'd need m parts to be able to recover the secret. The difference between a Shamir scheme and a true multi-signature scheme is that the former requires combining the m-of-n pieces to reveal the single private key to sign a transaction, which is a huge vulnerability and single point of failure. Bitcoin script allows the m-of-n signatures to remain geographically dispersed, each signing the transaction with only their own key, so no single party ever needs to possess the full private key.
elliotec 5y ago
This key storage system is a now very common and (ostensibly) very secure model that has been iterated on and is in wide use, especially for hardware wallets like Trezor. The model they use is called the "Shamir Backup," here's more info: https://wiki.trezor.io/Shamir_backup https://wiki.trezor.io/Shamir_backup

vmception 5y ago

your bank fraud protection doesn't prevent the bank from losing money. banks lose a lot of money to fraud and nobody is prosecuted. from my perspective, you are comparing a user experience that has nothing to do with the technology. a bank is a third party service providing custody to bearer instruments. a future financial institution will be a third party service providing custody or other protections to your crypto bearer instruments. > If trillion dollar market caps and god-knows-how-many billions of investment couldn't figure out how to protect consumers after 13 years... there are DeFi insurance protocols, many people get paid back after being scammed, rug pulled, exploited. Look at the source, it is convenient for this to not be mentioned as all chainanalysis does is sell fear to governments to land contracts.

BoppreH 5y ago
> banks lose a lot of money to fraud and nobody is prosecuted. That's true some times, but then it works like an insurance policy to me. I like insurance, especially when it's about my life savings. > a future financial institution will be a third party service providing custody or other protections to your crypto bearer instruments. As you mentioned, that's a bank. There's no reason to believe that crypto-based banks will be any better than traditional ones, especially if you compare to newer fintechs. > many people get paid back after being scammed, rug pulled, exploited I was not aware of that, thank you. But it's still too few compare to the whole.
- vmception 5y ago
  > There's no reason to believe that crypto-based banks will be any better than traditional ones That wasn't the supposition. Who cares? Wait I know people that do care, you thought I was one of those? I view blockchains as a platform to launch projects, and crypto as the necessary fuel to use those platforms, I like the censorship resistance but I don't care about the ideologies, I would like to seamlessly move unlimited sums in and out of them and thats that. I care about fulfilling market needs and niches, I don't care about the accuracy of those needs. Regarding Defi insurance protocols, there is a lot of education necessary and some ease of use improvements necessary.
- 5y ago

nathanyz 5y ago

Agreed, and where I think is one of the bigger failings of blockchain. We don't actually want a system where mistakes, fraud, or theft are irreversible. Some will say that you can still prosecute the crimes even if you can't initially reverse the transaction, but you can see how well that is working with hackers from adversary nations. Basically no prosecution and risk free ability to move on to the next victim. "Friction is a feature with money transfer" My experience is that moving money between countries where there is a high likelihood of collaborative justice against scams and thefts, ends up being pretty simple. It gets harder to transfer money to places where it is easier for thefts and scammers to get away with it. I think we want it this way. How many people get taken in by the romance scams[1] where they wire their money to a country with 0 chance of recovery. The money transfer system has been specifically making it more difficult to send money to countries where this is commonplace as that is the only effective way to stop the crime. There is no viable criminal process only friction to make it less profitable and more difficult for the scammers. [1] https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/romance-scams https://www.fbi.gov/scams-and-safety/common-scams-and-crimes...

TimJRobinson 5y ago

DeFi is 2 years old at most. Still very early days and lots of newbies that get exploited.

BlueTemplar 5y ago
Wait, Ethereum tokens don't count as DeFi ? Those are older than that...

spyder 5y ago

If someone uses your credit card or other account info to withdraw cash then the bank cannot reverse that, similarly to crypto transactions. The protection is having an insurance fund to reimburse affected clients. Crypto projects can do the same thing but they rarely do it yet. There are projects like nexusmutual.io where you can get covered against smart contract failure & exchange hacks. But even if you would be more protected against frauds in crypto, it has a lot to improve to get closer to it's promises because it's still far from it.

BoppreH 5y ago
That's a really cool project with its democratic claim assessment, and I admire their transparency. But as with everything related to safety in crypto, today it's still based on optimism. For example, today the 5-member Advisory Board has unilateral power to change the contract as they see fit[1], and only the smart contracts have been audited, not the organization itself[2]. The only information about this all-powerful Advisory Board is on the home page, and I'm forced to take that at face value. What happens if I put my money there, the board runs away with it, and I try to sue them only to find out that these five people don't exist, or are not related to the project? This is far from the basic security level of any traditional financial institution. Again, I have major respect for this team. The service is useful, and the documentation is honest and comprehensive. But a blockchain plus this insurance does not make a safe consumer space. [1] https://nexusmutual.gitbook.io/docs/users/understanding-nexus-mutual/governance#decentralisation-trade-offs https://nexusmutual.gitbook.io/docs/users/understanding-nexu... [2] https://nexusmutual.gitbook.io/docs/welcome/audits-and-security https://nexusmutual.gitbook.io/docs/welcome/audits-and-secur...