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This argument (editing for clarity: “the argument that exchange insolvency is somehow good, because people will finally learn”), as good as it makes you feel to
by infotogivenm 4y ago
This argument (editing for clarity: “the argument that exchange insolvency is somehow good, because people will finally learn”), as good as it makes you feel to type, always ends the same way. These two questions are illuminating:
1. How do you expect users of this system to obtain their coins?
2. Have you ever in your life forgotten something even though you knew it was important?
- the__alchemist 4y ago1. Send it to a hardware wallet address.
- infotogivenm 4y agoSend what from where? Consider: You had to send fiat to an exchange to buy the coin. Unfortunately before you have a chance to spend it, the exchange halts all withdrawals. How did your hardware wallet help you here?
- the__alchemist 4y agoYou click a few things on the Coinbase page and copy+paste the address now; don't wait for the halt.
- __dundernull__ 4y agoWhat in the world are you talking about? There is a period of waiting for confirmation, but after that you will have custody of your coins. It’s the users call whether they leave coins on the exchange or move them. The chance of an exchange going down during a transaction that is planned to be outgoing from the exchange is slim, even for nefarious exchanges. Just move your coins after you buy them, don’t leave them on the exchange.
- infotogivenm 4y agoCorrect. Anytime an exchange becomes insolvent, some number of people end up losing everything - just by trying to onboard their money into the system (even if they plant to move it to hardware wallet ASAP). By your own admission, there is often even a mandatory waiting period here. The point being: “good. not your keys not your coins” is not an appropriate response to exchange insolvency, and further makes you sound like a complete asshat. “just avoid the insolvency window!” is better advice (edit to add an explicit “/s” on this last sentence. Dunno what is with these downvotes).
- __dundernull__ 4y agoI think the key point here is that the insolvency window is not an obvious thing to avoid, however you can always check to see if you have the keys, regardless of the state of the exchange. So without considering the insolvency of the exchange, if you don’t have the keys, a user shouldn’t think they have singular access to those coins. For this reason, I don’t think it makes you an asshat to assert that if you don’t have the keys you don’t have the coins. It’s meant to be a warning of something to avoid. Also how do you propose one avoid the insolvency window? It’s something that’s defined post-action, whereas evaluating ownership of the keys can be accomplished at any time.
- infotogivenm 4y agoI 100% agree with you that this is what OP intended. My point is it’s a base trivialization of the facts, and regardless of whether you use your own wallet or not exchange insolvency is a viable risk to users of the ecosystem. There is nothing “good” about it, and further making broad generalizations like this about financial victims that are not 100% correct is, indeed, asshat-ery. But the latter is merely an opinion and precludes how one treats others. > Also how do you propose one avoid the insolvency window? I do not propose it can be addressed, but maybe someone else has ideas.
- garbagetime 4y agoI don't think you have a good point. There are two separate things at play here. The first is having an organisation that can't be trusted hold "your" coins for a long period of time. It is a bad idea because you could hold the coins yourself (that is, there is a less-bad alternative). The second is buying coins from that same organisation. This may not be a bad idea, because the risks involved in the short transaction may be very low, and you may not have a better alternative.
- carewell 4y agoI don't think you understand how foreign this concept is to the vast majority of ordinary people. Buying a trusted hardware wallet, setting it up, moving their crypto, storing keys somewhere, storing the hardware wallet somewhere, etc. Plus most investors/wallets own far less than 1 BTC.
- __dundernull__ 4y agoThis is dead simple for anyone who does the research even without a hardware wallet. Use a usb based OS like tails, make an address, write down the 24 words or memorize them.
- sillysaurusx 4y agoAh yes, tails, the most user friendly and accessible of all OS’es. :) I think you’re right that it’s still simple, but what’s lacking is a “follow these exact steps” guide. People don’t want to think too much about it, they just want to throw money at crypto. Something like: 1. Buy X hardware wallet 2. Open account at X bank, store seed phrase in the vault. If your house burns down, your money is safe. 3. Here’s exactly how to use the hardware wallet for all common operations. Do this (and nothing else), and your money is safe. If it was wrapped up in a nice package with a pretty red bow on it, people would buy into it. But I’d say I’m more crypto-inclined than most tech people, yet I’m still nervous. I was already burned by Gox and not eager to repeat that, so Coinbase is out. Which leaves hardware wallets, which I know nothing about.
- echelon 4y agoThis works for the 0.001% of the population that understands how to use PGP and sign their own email. For the bitcoin economy to hold any significant value whatsoever, you need the people who are using exchanges and "banks". If it works for only a handful of people, you may as well trade unsealed copies of "Zelda II" between each other.
- beambot 4y agoHardware doesn't have an indefinite shelf life either. Are people also keeping engravings & whatnot as ultimate backup?
- bb88 4y agoBTC will change sooner by politics than the shelf life of hardware.
- RustyRussell 4y agoActually, there are a whole range of metal seed backup systems available! But seriously, write down the 12 seed words, keep it somewhere safe. Make another copy, tear it in half (6 words each) and keep one with a relative and one at work. Check them at 1, 2, 4, then every 6 months. But for most people this is all overkill: just use a mobile wallet.
- throwup 4y ago> tear it in half (6 words each) This isn't a good idea; every word an attacker knows makes the remaining words exponentially easier to brute force. if you're going to split your key into pieces, you should use something like https://linux.die.net/man/1/ssss https://linux.die.net/man/1/ssss
- MarkPNeyer 4y ago2) You can't have power without responsibility. If you want money that can be 'fixed' for you by the authorities, well, that's what you'll get. They'll fix it for you real good.
- infotogivenm 4y agoCorrect answer here (no /s). Now unless youre a bitcoin maxi (props if you are), your coins are probably being fixed all the time by “authorities”, but I digress :) The problem is of course most people do forget things, and regrettably prefer usable systems. This is just to say, we are still far from a system I would call usable, although I would say interesting progress has been made: multisig, hardware wallets, etc. My only point in this thread is as follows: there is nothing “good” about this. It’s a failure of design and engineering for systems intended for humans. There is nothing to celebrate here, as the OP was oddly doing.
- MarkPNeyer 4y agoI'm a bitcoin maxi. > there is nothing “good” about this. There totally is, but the good is only apparent to people with the perspective of most of our ancestors. Nixon took us off the gold standard in 71', and yet he lied at the time and said it was 'temporary'. Why was that? We grew up in school being told that the gold standard was a janky old technology that failed leading to the great depression. If that's true, why did we stay on the gold standard until 1971 and why did Nixon lie when he took us off of it? All of history, property rights have been workable only with armies to enforce them. And what inevitably happens is that the armies will end up stealing from the people whose property rights they are ostensibly protecting. The existence of property that, in the hands of a skilled user, _cannot_ be stolen, is, indeed revolutionary. I agree that this system is far too complex for most people. Most people will probably just end up using federated chaumian mints. "All" they will get is the benefit of a currency that doesn't depreciate, year after year, and the resulting cultural shift that arises when people don't need to participate in complex mechanisms they don't understand, just to save for the future. I think we are likely to see the rise of a technobrahmin class that understands both crypography and ML, and uses this knowledge in the service of tiny micro-tribes of people they grew up with. Civilization has long required specialization, and i think we're about to see a migration of 'trusted information authorities' from places like the New York Times, all the way down the social hierarchy to, 'a guy i went to grade school with that i know is honest'.
- jrm4 4y agoI think question 1 is very valid. I'm not a fan of 2. I'm definitely in the camp of -- one of the most irresponsible things ever created was third-party password managers. I'm fully aware than capitalism isn't a fan of "sorry, but this is hard and you should just learn it.." But passwords and security on computers is hard and you should just learn it, at least at this stage. It is THEORETICALLY is possible to have a world wherein password security is made easier for the user -- but it's not viable until you somehow bring in skin-in-the-game for the third party who's taking on the responsibility, e.g. liability or lawsuits or some other real actual punishment for the third party that screws up.
- __dundernull__ 4y agoI don’t see how question 1 is valid. You just move the coin immediately after acquisition. If you’re speculating and leaving them on the exchange that’s risky. But as far as “obtaining” the coins, you simple have to be in control of the keys. This can be accomplished within minutes or hours after purchase. Hence not your keys, not your coins.
- EFreethought 4y agoCould you explain why you do not like password managers? I started using KeePassXC a few years ago, and I think it's the best thing since sliced bread.
- jrm4 4y agoToo much risk without sufficient liability. They work as long as they work, but there's no punishment for if they break. They increase your threat surface by an entire party that's centralized. Grandma's little notebook next to the computer isn't perfect, but can be much safer.
- EFreethought 4y agoI use KeePassXC locally. Are you referring to something online, like LastPass or 1Passord? I do not like the idea of online password managers at all. Another issue with PM sites is a couple of them have bumped features up to higher pricing tiers, leaving some people up a creek and unable to access their own information.
- Grimburger 4y ago1. Bisq
- bioemerl 4y agoI would generally expect users to use a system like Coinbase to buy the coins and then transfer the coins into one of their own wallets. If you want to sell your coins to someone you transfer the coins to coinbase, then transfer them. 2 - Yes, but not something that I use with any sort of frequency. If you store bitcoins in a wallet and leave them for years and years you would expect to forget password eventually and that would be a problem. So, don't do that. If you're super scared of it, go ahead and use an exchange, be aware that could be screwed.
- infotogivenm 4y agoSee my replies below. You could 100% use Coinbase and plan to use an offline wallet the exact way you have prescribed, and still lose everything due to exchange insolvency. To save time on replies: “you’d have to be unlucky for that to happen,” and “just try to be fast” is not an ideal mitigation strategy.
- dymk 4y agoPretty much the only other option is to use something like localbitcoins and hope someone is willing to meet you with an envelope of cash.
- infotogivenm 4y agoAgreed. Unfortunately many parts of the world call this “money laundering” and impose stiff penalties.
- willmadden 4y agoIt's a perfectly good mitigation strategy. You transfer small amounts, sell them, withdraw the the fiat, and repeat. The same works for buying.
- cinntaile 4y agoThere is no need to debate unlikely risks such as... The exchange might limit withdrawals between that period. Buy your coins and then move them to your hardware wallet. It will be fine.
- throwup 4y agoNot everyone is cut out to be their own bank. Many people out there have the tech skills to use a hardware wallet and back up 24 words, but also many don't. Anyone in the second group who wants exposure should probably not use an exchange and instead hold out for an ETF (despite what the TV commercials say)
- acdha 4y agoAnd a fair number of people in the first group are overly optimistic, too. This is the kind of thing you can tell yourself you’re good at, but then life happens and people forget to practice or get sick/old/injured and this risks of losing everything are higher than you might like.
- enkid 4y agoHow reliable are hardware wallets? Seems like there significant risk of them either being cheaply made or backdoored.
- landemva 4y agoFor cold storage, I think hardware wallets are unnecessary and add risk of the supply chain of that device. Those manufacturers are good at marketing what they sell.
- throwup 4y agoIf your hardware wallet dies it should be merely an inconvenience, since your seed phrase can be restored to another device. Since it's an open standard, it's even portable between device manufacturers in case one goes out of business. Your second concern is valid - choose a device that's been audited.
- halflife 4y agoBy the same companies that audit crypto banks?
- 4y ago
- RustyRussell 4y agoExchanges these days are casinos, not on-ramps. You can use them like that, but it's not their core business. There are trustworthy businesses (e.g keys.casa) which help with custody. But it's a different business these days.
- deleted 4y ago[deleted]
- hungryforcodes 4y agoCasinos how exactly? Bitcoin crypto is meant to be self custodied. This is THE most trustworthy solution. You are just replacing one counter party risk with another.
- eurasiantiger 4y agoExchanges with dozens of tokens to bet on aren’t that different from horse races.
- hungryforcodes 4y agoSo this makes them different from TradFi stock exchanges how exactly?
- eurasiantiger 4y agoWell, going long on a TradFi stock is like betting that a draft horse can plow more field next year than the previous one. Going long on a DeFi token is like betting that the horse is more beautiful than the other horses in the stable
- Ekaros 4y agoThey are forex trading. So a way to gamble against others. With downside that they are even more opaque than fiat currencies. Not that there wouldn't be point for exchange if tokens had some real use or value. As forex exchanges have.
- natch 4y ago1) Swan Bitcoin, pretty simple, not an exchange, aimed at HODLers, easy and semi automated regular transfer to self custody, refrains from all involvement with shitcoins, promotes education about bitcoin. 2) yes