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It's not about money, it's about power. If you hold a physical item, you have the maximum power over it as possible. If you want to entrust someone else with it

It's not about money, it's about power. If you hold a physical item, you have the maximum power over it as possible. If you want to entrust someone else with it, go ahead, but at the end of the day your access to the item will be subject to their whims and those of the greater political establishment / woke clergy / corrupt and powerful.

midhhhthrow 4y ago
Trusting someone else: Well we do this every day with money in the bank, with all the risks that come with it
- reedjosh 4y ago
  And the guarantee of dilution. The banks are _securely_ creating debt based digital dollars they gain the interest on. Since they're already practically minting their own dollars they don't need to steal yours. And if for some reason the FDIC fails, then they effectively will have stolen your dollars.
ebiester 4y ago
And if you entrust it to a safe deposit box, then... ? And if you trust it to a safe in your bedroom, and your house burns down, then... ? Which is more likely?
- seanhunter 4y ago
  A hardware wallet is a physical device that stores some private keys in a tamper-proof secure element. Those private keys can be regenerated from a recovery phrase[1] which acts as a seed to regenerate the keys in a deterministic way. The hardware device is typically itself secured by means of a pin. Without the pin, the device can’t be unlocked so can’t be used, too many incorrect pin attempts will brick the device. So the answers to your questions are: 1) If you entrust it to a safe deposit box then if someone steals it, it is worthless without the pin. 2) If the safe is itself destroyed and with it the device (this is also the case if you have it in a safe deposit box and the depository is burned down or something) then the private keys (and transitively the funds) can still be recovered using the recovery phrase. So if you have securely stored your recovery phrase and are able to retrieve it even this kind of problem won’t cause the accounts to be lost. So what people tend to recommend is choosing good secure storage for your pin, keeping reasonable physical care of the device, taking the recovery phrase and splitting it into parts and storing those parts separately. If one of the parts is destroyed then you will need to urgently replace the hardware wallet, move the funds and securely store the new recovery phrase because if not you don’t have a fallback if the hardware wallet is destroyed, but otherwise you are good. [1] https://medium.com/coinmonks/mnemonic-generation-bip39-simply-explained-e9ac18db9477 https://medium.com/coinmonks/mnemonic-generation-bip39-simpl...
  - thefounder 4y ago
    I wonder, couldn't a such "wallet" be built on top of secure element (i.e on iOS/android)? Carrying around an additional device just for "wallet" features is very inconvenient.
    - seanhunter 4y ago
      Presumably yes, although some people prefer having a special-purpose device even if it is an extra thing to carry around. It does depend on your threat model I guess.
  - nytesky 4y ago
    So don’t you have to secure this recovery phrase as well as the hardware wallet? So if someone doesn’t have my wallet but has my recovery phrase they can regenerate my keys and brick my hardware wallet as it sits in my home safe??
    - seanhunter 4y ago
      Yes you absolutely do[1]. But that’s true of any wallet (software wallets also have the exact same recovery phrase system so for example if you lost the hardware wallet you could configure a software wallet by using the recovery phrase and get your crypto back). Someone else using your recovery phrase to steal your private keys wouldn’t actually brick your hardware wallet. It would still work but obviously since the thing that it was there to secure (your keys) had been stolen that would be moot. The subtext is that keeping all this stuff secure is hard and depending on your threat model may not be worthwhile. This is similar to the way in which for most people it makes sense to have a bank look after their funds. In the world of crypto though we’ve seen obvious examples of these centralised custodians being untrustworthy and since they are not regulated or FDIC insured or anything of that kind it’s much more risky. [1] If you want the ability to recover your funds if the hardware device becomes inoperable, lost, stolen etc. If not you could just burn the recovery phrase so you don’t need to secure it.
- adql 4y ago
  Well, both of them are less likely to lose your money than bitcoin apparently. Especially if you stored solid brick of gold instead of money
andreskytt 4y ago
Nope, not at all. Your hardware wallet is useless without the bitcoin trust frameworks and the implicit agreement among many people that these particular bits on your hardware denote anything of value. Both of these are completely beyond your control and reliant on mechanisms not fully understood. It’s a system boundary question: yes, your wallet is under your control (how do you know what’s baked into the silicone or firmware, I do not know), but the whole system is not. There is a huge amount of vested interest in persuading people bitcoin or ethereum require no trust in third parties. This is not true, as illustrated by this case: the person writing code that’s supposed to secure your money made incorrect assumptions about security and was thus robbed. If you own bitcoin, you necessarily need to trust this person and his colleagues are neither malicious nor stupid. Why that’s better than making the same assumptions about state institutions and banks is, to me, not clear.
- hi5eyes 4y ago
  why does everyone trust the bitcoin core dev to be telling the truth about getting "hacked" and having his funds immediately mixed? this seems more like it could be similar to a simple boating accident
  - bb88 4y ago
    Or the russian oligarchs suddenly flinging themselves off buildings... apparently.
- humanizersequel 4y ago
  >There is a huge amount of vested interest in persuading people bitcoin or ethereum require no trust in third parties. It requires trust that third parties will act rationally in accordance with the incentives provided by the system, which is very different from trusting someone to custody assets for you. At a larger level it requires trust that people will continue to see BTC/ETH/etc as being worth something, but that isn't a unique problem to blockchain based digital currency solutions.
  - pipodeclown 4y ago
vl 4y ago
As Canadian truckers learned first-hand quite recently.
adql 4y ago
You're not holding anything in your wallet. It's just fancy login systen to a transaction system that is bitcoin. It's no different from bank login in the end, once someone has it, it can be transferred at will. Sure, the difference is that in banking system bank doesn't need your credentials to do stuff with money but even that when big crypto bois money are involved stops being immutable as DAO ethereum fork proves, fuck with important people money and nothing is sacred.
- not_kurt_godel 4y ago
  > It's no different from bank login in the end, once someone has it, it can be transferred at will. Bank login credentials do not confer undisputed ownership of an account. If someone unauthorized gets ahold of them, the bank doesn't throw up its hands and say "welp, nothing we can do now, the account just belongs to the hacker".
  - Oxidation 4y ago
    At least partly because they're not allowed to do that because there are specific rules about it. If banks could just say "so sad, too bad", they absolutely would. I know someone who had to resort to the financial ombudsman to get their money after a hack because the "bank" (Revolut or Monzo) would not engage with them to even acknowledge anything had happened. Pretty much this is what banks try if they can: https://youtube.com/watch?v=CS9ptA3Ya9E https://youtube.com/watch?v=CS9ptA3Ya9E

midhhhthrow 4y ago

Trusting someone else: Well we do this every day with money in the bank, with all the risks that come with it

reedjosh 4y ago
And the guarantee of dilution. The banks are _securely_ creating debt based digital dollars they gain the interest on. Since they're already practically minting their own dollars they don't need to steal yours. And if for some reason the FDIC fails, then they effectively will have stolen your dollars.

ebiester 4y ago

And if you entrust it to a safe deposit box, then... ? And if you trust it to a safe in your bedroom, and your house burns down, then... ? Which is more likely?

seanhunter 4y ago
A hardware wallet is a physical device that stores some private keys in a tamper-proof secure element. Those private keys can be regenerated from a recovery phrase[1] which acts as a seed to regenerate the keys in a deterministic way. The hardware device is typically itself secured by means of a pin. Without the pin, the device can’t be unlocked so can’t be used, too many incorrect pin attempts will brick the device. So the answers to your questions are: 1) If you entrust it to a safe deposit box then if someone steals it, it is worthless without the pin. 2) If the safe is itself destroyed and with it the device (this is also the case if you have it in a safe deposit box and the depository is burned down or something) then the private keys (and transitively the funds) can still be recovered using the recovery phrase. So if you have securely stored your recovery phrase and are able to retrieve it even this kind of problem won’t cause the accounts to be lost. So what people tend to recommend is choosing good secure storage for your pin, keeping reasonable physical care of the device, taking the recovery phrase and splitting it into parts and storing those parts separately. If one of the parts is destroyed then you will need to urgently replace the hardware wallet, move the funds and securely store the new recovery phrase because if not you don’t have a fallback if the hardware wallet is destroyed, but otherwise you are good. [1] https://medium.com/coinmonks/mnemonic-generation-bip39-simply-explained-e9ac18db9477 https://medium.com/coinmonks/mnemonic-generation-bip39-simpl...
- thefounder 4y ago
  I wonder, couldn't a such "wallet" be built on top of secure element (i.e on iOS/android)? Carrying around an additional device just for "wallet" features is very inconvenient.
  - seanhunter 4y ago
    Presumably yes, although some people prefer having a special-purpose device even if it is an extra thing to carry around. It does depend on your threat model I guess.
- nytesky 4y ago
  So don’t you have to secure this recovery phrase as well as the hardware wallet? So if someone doesn’t have my wallet but has my recovery phrase they can regenerate my keys and brick my hardware wallet as it sits in my home safe??
  - seanhunter 4y ago
    Yes you absolutely do[1]. But that’s true of any wallet (software wallets also have the exact same recovery phrase system so for example if you lost the hardware wallet you could configure a software wallet by using the recovery phrase and get your crypto back). Someone else using your recovery phrase to steal your private keys wouldn’t actually brick your hardware wallet. It would still work but obviously since the thing that it was there to secure (your keys) had been stolen that would be moot. The subtext is that keeping all this stuff secure is hard and depending on your threat model may not be worthwhile. This is similar to the way in which for most people it makes sense to have a bank look after their funds. In the world of crypto though we’ve seen obvious examples of these centralised custodians being untrustworthy and since they are not regulated or FDIC insured or anything of that kind it’s much more risky. [1] If you want the ability to recover your funds if the hardware device becomes inoperable, lost, stolen etc. If not you could just burn the recovery phrase so you don’t need to secure it.
adql 4y ago
Well, both of them are less likely to lose your money than bitcoin apparently. Especially if you stored solid brick of gold instead of money

andreskytt 4y ago

Nope, not at all. Your hardware wallet is useless without the bitcoin trust frameworks and the implicit agreement among many people that these particular bits on your hardware denote anything of value. Both of these are completely beyond your control and reliant on mechanisms not fully understood. It’s a system boundary question: yes, your wallet is under your control (how do you know what’s baked into the silicone or firmware, I do not know), but the whole system is not. There is a huge amount of vested interest in persuading people bitcoin or ethereum require no trust in third parties. This is not true, as illustrated by this case: the person writing code that’s supposed to secure your money made incorrect assumptions about security and was thus robbed. If you own bitcoin, you necessarily need to trust this person and his colleagues are neither malicious nor stupid. Why that’s better than making the same assumptions about state institutions and banks is, to me, not clear.

hi5eyes 4y ago
why does everyone trust the bitcoin core dev to be telling the truth about getting "hacked" and having his funds immediately mixed? this seems more like it could be similar to a simple boating accident
- bb88 4y ago
  Or the russian oligarchs suddenly flinging themselves off buildings... apparently.
humanizersequel 4y ago
>There is a huge amount of vested interest in persuading people bitcoin or ethereum require no trust in third parties. It requires trust that third parties will act rationally in accordance with the incentives provided by the system, which is very different from trusting someone to custody assets for you. At a larger level it requires trust that people will continue to see BTC/ETH/etc as being worth something, but that isn't a unique problem to blockchain based digital currency solutions.
- pipodeclown 4y ago

vl 4y ago

As Canadian truckers learned first-hand quite recently.

adql 4y ago

You're not holding anything in your wallet. It's just fancy login systen to a transaction system that is bitcoin. It's no different from bank login in the end, once someone has it, it can be transferred at will. Sure, the difference is that in banking system bank doesn't need your credentials to do stuff with money but even that when big crypto bois money are involved stops being immutable as DAO ethereum fork proves, fuck with important people money and nothing is sacred.

not_kurt_godel 4y ago
> It's no different from bank login in the end, once someone has it, it can be transferred at will. Bank login credentials do not confer undisputed ownership of an account. If someone unauthorized gets ahold of them, the bank doesn't throw up its hands and say "welp, nothing we can do now, the account just belongs to the hacker".
- Oxidation 4y ago
  At least partly because they're not allowed to do that because there are specific rules about it. If banks could just say "so sad, too bad", they absolutely would. I know someone who had to resort to the financial ombudsman to get their money after a hack because the "bank" (Revolut or Monzo) would not engage with them to even acknowledge anything had happened. Pretty much this is what banks try if they can: https://youtube.com/watch?v=CS9ptA3Ya9E https://youtube.com/watch?v=CS9ptA3Ya9E