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Considering cryptocurrency seemed to originally be a rejection of the traditional banking system, wherein you put your savings in someone else's hands, and inst

Considering cryptocurrency seemed to originally be a rejection of the traditional banking system, wherein you put your savings in someone else's hands, and instead having your own secured "wallet" that is always securely in your own hands... it always confuses me a little bit at how quickly the crypto space lunged headlong into essentially recreating banks and once again having large numbers of people put their savings in someone else's hands instead of having personal control over their finance. Are hardware wallets that difficult and/or expensive? Or am I missing something that crypto exchanges offer that I am fundamentally misunderstanding? Because it seems like this keeps happening with these exchanges and that these were the kind of things crypto was supposed to be preventing, not doing.

stouset 4y ago
> Are hardware wallets that difficult and/or expensive? The entire thing is obscenely difficult and completely inscrutable for the average human. The number of ways a naïve participant can lose their entire balance is staggering. Even the notion of a hardware wallet is something that 90%+ of people holding cryptocurrencies will either never hear about, never understand, or never opt to use due to actual or perceived complexity. The average person is simply not qualified to hold onto substantial (to themselves) amounts of cryptocurrencies in any form. And as it turns out, all of the available evidence seems to indicate that most exchanges aren't qualified to do so either.
- kkielhofner 4y ago
  Nailed it. I’m waiting for the inevitable wave of social media posts, etc from all of the people who will lose access to their wallets, have them hacked somehow, etc. I’m sure centralized exchanges are already being flooded with customer support issues from people who don’t fully grasp what self-custody is and the risk it entails. Most people aren’t qualified or capable to build a fortress with medieval-castle or Fort Knox levels of security and process for their crypto wallets but that’s more equivalent than not of what’s required to properly secure them and maintain access over time. The general population hasn’t experienced “you’re completely on your own” for nearly anything in at least a couple of generations - and for good reason because it’s absurd.
  - thedaly 4y ago
    I gave my brother a Trezor and with approximately $1.5k USD worth of bitcoin on it as repayment for money he lent me. I'm fairly certain he hasn't touched it and has lost the pin/seed. I think I have his seed written down somewhere, I certainly gave him a written copy when I gave him the trezor, but if I can't find it his BTC will be lost.
    - halkony 4y ago
      I'm not super into crypto, but could you theoretically brute force a hardware wallet if you had enough computing power in the year 20XX?
      - mrguyorama 4y ago
        No. Most of these systems use enough "bits" in the key or whatever that brute forcing it would basically require hiring the entirety of AWS for a hundred years and also winning the lottery in terms of luck. Raw number crunching power of silicon would need to double like 5 to 10 times before it's even a thought in the NSAs mind, and I am in the camp of that never happening. There will never be enough computing power for cheap enough to crack a wallet holding $1500 in bitcoin, unless quantum computing literally magics up a solution, which might never happen, even in theory.
      - deleted 4y ago
        [deleted]
      - Nextgrid 4y ago
        There are 2 things you can brute-force: 1) the seed for the private key - this is infeasible to brute-force just like you can't brute-force a private key directly 2) the authentication credential to the hardware wallet - the key space is small enough that brute forcing it would normally be easy, except the whole purpose of a hardware wallet is to limit the amount of attempts. The former option is infeasible, the latter has a slim chance if some vulnerability in the hardware wallet was discovered in the future.
      - netfortius 4y ago
- danans 4y ago
  > The entire thing is obscenely difficult and completely inscrutable for the average human. For a particular kind of perspective (which I don't subscribe to), that could almost be seen as a feature rather than a bug. The scenario is the one cryptocurrency has actually replaced fiat currencies but the only people who can secure their assets are those with the sophistication and power (basically, weapons and private armies) to maintain the required opsec. And then we've basically recreated golden treasure hordes and the warlords who own them.
- otikik 4y ago
  Agree with everything. I will only add that all that complexity is there by design. The design wants to get you to feel like you understand it without you truly understanding it.
- chunkychili 4y ago
  Not "obscenely difficult and completely inscrutable". This is a massive exaggeration. Hardware wallets are on par with changing a car tire, filing a tax return, installing an operation system or navigating a foreign subway. Any competent person who can follow directions will be fine. Think higher of your fellow man.
  - arlcode 4y ago
    I don't think that covers the full extent of it. In addition to opsec and "daily usage" there is a dimension of physical safety that requires people to keep the wallet and the seed safe in different places. In the worst case of a fire or a flood you don't want to discover that all your life savings are gone as well because you stored them together. Physical security of valuable, small and fragile items is a proven hard problem for regular people. It's one of the reasons banks were created.
horsawlarway 4y ago
Having been in this space since back when a bitcoin was a fraction of a dollar... "Rejection of the traditional banking system" was mostly a symptom of "Doing things the traditional system would label 'illegal'". In which case the upsides of crypto are clear - You can pass money around online without regulation. And the downsides are WELL understood - the "system" does not have your back if/when things go wrong. Just like most black market trades. The problem happened when the "finance" crowd started seeing bitcoin's value increase at a large rate (and particularly how little media coverage was needed to temporarily spike the value), and essentially turned the entire thing into a ponzi scheme. They weren't interested in using it as anything other than a pump and dump investment vehicle, and its lack of regulation was a magnet for the worst sort of folks. As a tool for online dark exchanges, or other government forbidden actives (ex: fleeing the country with ill-gotten gains, or holding businesses hostage with malware) - there is a small niche for digital currency. I'm pretty well convinced there is NO other use case where your national currency does not serve as a better alternative. Even the semi-plausible use cases (ex: preserve value during times of high inflation) have proven to be utterly meaningless if you're holding US dollars, and the vast majority of cases you would be better holding onto shiny metal instead.
- okokwhatever 4y ago
  Oh my God. This guys again...
- bartvk 4y ago
  This comment feels like it's generated.
- samsin 4y ago
  > and the vast majority of cases you would be better holding onto shiny metal instead. Please explain this a bit more, because historically Bitcoin has seen much better returns than precious metals. What are some of the cases where precious metals have outperformed crypto?
  - horsawlarway 4y ago
    Within the context of the statement... The entire period where we've been experiencing high inflation. Ex: Gold went into 2021 at $1,798.89 and is now $1,874.00 (per/oz) Bitcoin went into 2021 at $40,257 and is now $17,536 Gold passed the "inflation hedge" check, in that it's returning higher yields than both your investment accounts (if you invested in the general US stock market as a whole) and your available savings accounts rates. It's certainly worse than an i-bond, but most everything is in this case, and those are capped at 10k. Crypto flunked with flying fucking colors. Turns out it's a shite inflation hedge despite that being a common refrain from those who peddled this snake oil bullshit.
johnny22 4y ago
most people weren't in it for the cryptocurrency, but the ability to convert it back and forth to actual dollars/euros/whatever. The cryptocurrency itself was just a means, not an end.
- seydor 4y ago
  most people were trading coins for other coins so it was pretty much an end. The exchange itself was the means
justapassenger 4y ago
On top of difficulty, hardware wallets and lack of centralized exchanges is undesired for majority of the crypto players. Why? Because, no matter how you spin it, crypto of last few years is get rich scheme. And having centralized entities enable all form of fraud - from super basic ones, like FTX just openly stealing people's funds, through market manipulations all the way to more subtle and complex forms of scam.
jasonwatkinspdx 4y ago
Running your own wallet and such is simply beyond what most people are capable of. Hence they outsource it to an exchange. But the main motivation for people buying into these coins is to speculate on them, having watched the bitcoin billionaires bloom. And while I think there's a strong argument that "they should have known these crazy returns were too good to be true" I also think you have to take seriously just how hugely this stuff has been pushed in media, and by huge traditional financial player as well. When all the apparent authorities are saying "this is awesome join us" it's just inevitable that a broad swath of people will take that at face value.
xiphias2 4y ago
It turns out that securing a cryptographic key is super hard especially when the payout is huge. Luke Dash Jr is an original Bitcoin core developer who understands Bitcoin deeply (he proposed the idea for the practical implementation for segregated witness), and he was able to lose 200 BTC (all his money) just recently by a hack.

stouset 4y ago

> Are hardware wallets that difficult and/or expensive? The entire thing is obscenely difficult and completely inscrutable for the average human. The number of ways a naïve participant can lose their entire balance is staggering. Even the notion of a hardware wallet is something that 90%+ of people holding cryptocurrencies will either never hear about, never understand, or never opt to use due to actual or perceived complexity. The average person is simply not qualified to hold onto substantial (to themselves) amounts of cryptocurrencies in any form. And as it turns out, all of the available evidence seems to indicate that most exchanges aren't qualified to do so either.

kkielhofner 4y ago
Nailed it. I’m waiting for the inevitable wave of social media posts, etc from all of the people who will lose access to their wallets, have them hacked somehow, etc. I’m sure centralized exchanges are already being flooded with customer support issues from people who don’t fully grasp what self-custody is and the risk it entails. Most people aren’t qualified or capable to build a fortress with medieval-castle or Fort Knox levels of security and process for their crypto wallets but that’s more equivalent than not of what’s required to properly secure them and maintain access over time. The general population hasn’t experienced “you’re completely on your own” for nearly anything in at least a couple of generations - and for good reason because it’s absurd.
- thedaly 4y ago
  I gave my brother a Trezor and with approximately $1.5k USD worth of bitcoin on it as repayment for money he lent me. I'm fairly certain he hasn't touched it and has lost the pin/seed. I think I have his seed written down somewhere, I certainly gave him a written copy when I gave him the trezor, but if I can't find it his BTC will be lost.
  - halkony 4y ago
    I'm not super into crypto, but could you theoretically brute force a hardware wallet if you had enough computing power in the year 20XX?
    - mrguyorama 4y ago
      No. Most of these systems use enough "bits" in the key or whatever that brute forcing it would basically require hiring the entirety of AWS for a hundred years and also winning the lottery in terms of luck. Raw number crunching power of silicon would need to double like 5 to 10 times before it's even a thought in the NSAs mind, and I am in the camp of that never happening. There will never be enough computing power for cheap enough to crack a wallet holding $1500 in bitcoin, unless quantum computing literally magics up a solution, which might never happen, even in theory.
    - deleted 4y ago
      [deleted]
    - Nextgrid 4y ago
      There are 2 things you can brute-force: 1) the seed for the private key - this is infeasible to brute-force just like you can't brute-force a private key directly 2) the authentication credential to the hardware wallet - the key space is small enough that brute forcing it would normally be easy, except the whole purpose of a hardware wallet is to limit the amount of attempts. The former option is infeasible, the latter has a slim chance if some vulnerability in the hardware wallet was discovered in the future.
    - netfortius 4y ago
danans 4y ago
> The entire thing is obscenely difficult and completely inscrutable for the average human. For a particular kind of perspective (which I don't subscribe to), that could almost be seen as a feature rather than a bug. The scenario is the one cryptocurrency has actually replaced fiat currencies but the only people who can secure their assets are those with the sophistication and power (basically, weapons and private armies) to maintain the required opsec. And then we've basically recreated golden treasure hordes and the warlords who own them.
otikik 4y ago
Agree with everything. I will only add that all that complexity is there by design. The design wants to get you to feel like you understand it without you truly understanding it.
chunkychili 4y ago
Not "obscenely difficult and completely inscrutable". This is a massive exaggeration. Hardware wallets are on par with changing a car tire, filing a tax return, installing an operation system or navigating a foreign subway. Any competent person who can follow directions will be fine. Think higher of your fellow man.
- arlcode 4y ago
  I don't think that covers the full extent of it. In addition to opsec and "daily usage" there is a dimension of physical safety that requires people to keep the wallet and the seed safe in different places. In the worst case of a fire or a flood you don't want to discover that all your life savings are gone as well because you stored them together. Physical security of valuable, small and fragile items is a proven hard problem for regular people. It's one of the reasons banks were created.

horsawlarway 4y ago

Having been in this space since back when a bitcoin was a fraction of a dollar... "Rejection of the traditional banking system" was mostly a symptom of "Doing things the traditional system would label 'illegal'". In which case the upsides of crypto are clear - You can pass money around online without regulation. And the downsides are WELL understood - the "system" does not have your back if/when things go wrong. Just like most black market trades. The problem happened when the "finance" crowd started seeing bitcoin's value increase at a large rate (and particularly how little media coverage was needed to temporarily spike the value), and essentially turned the entire thing into a ponzi scheme. They weren't interested in using it as anything other than a pump and dump investment vehicle, and its lack of regulation was a magnet for the worst sort of folks. As a tool for online dark exchanges, or other government forbidden actives (ex: fleeing the country with ill-gotten gains, or holding businesses hostage with malware) - there is a small niche for digital currency. I'm pretty well convinced there is NO other use case where your national currency does not serve as a better alternative. Even the semi-plausible use cases (ex: preserve value during times of high inflation) have proven to be utterly meaningless if you're holding US dollars, and the vast majority of cases you would be better holding onto shiny metal instead.

okokwhatever 4y ago
Oh my God. This guys again...
bartvk 4y ago
This comment feels like it's generated.
samsin 4y ago
> and the vast majority of cases you would be better holding onto shiny metal instead. Please explain this a bit more, because historically Bitcoin has seen much better returns than precious metals. What are some of the cases where precious metals have outperformed crypto?
- horsawlarway 4y ago
  Within the context of the statement... The entire period where we've been experiencing high inflation. Ex: Gold went into 2021 at $1,798.89 and is now $1,874.00 (per/oz) Bitcoin went into 2021 at $40,257 and is now $17,536 Gold passed the "inflation hedge" check, in that it's returning higher yields than both your investment accounts (if you invested in the general US stock market as a whole) and your available savings accounts rates. It's certainly worse than an i-bond, but most everything is in this case, and those are capped at 10k. Crypto flunked with flying fucking colors. Turns out it's a shite inflation hedge despite that being a common refrain from those who peddled this snake oil bullshit.

johnny22 4y ago

most people weren't in it for the cryptocurrency, but the ability to convert it back and forth to actual dollars/euros/whatever. The cryptocurrency itself was just a means, not an end.

seydor 4y ago
most people were trading coins for other coins so it was pretty much an end. The exchange itself was the means

justapassenger 4y ago

On top of difficulty, hardware wallets and lack of centralized exchanges is undesired for majority of the crypto players. Why? Because, no matter how you spin it, crypto of last few years is get rich scheme. And having centralized entities enable all form of fraud - from super basic ones, like FTX just openly stealing people's funds, through market manipulations all the way to more subtle and complex forms of scam.

jasonwatkinspdx 4y ago

Running your own wallet and such is simply beyond what most people are capable of. Hence they outsource it to an exchange. But the main motivation for people buying into these coins is to speculate on them, having watched the bitcoin billionaires bloom. And while I think there's a strong argument that "they should have known these crazy returns were too good to be true" I also think you have to take seriously just how hugely this stuff has been pushed in media, and by huge traditional financial player as well. When all the apparent authorities are saying "this is awesome join us" it's just inevitable that a broad swath of people will take that at face value.

xiphias2 4y ago

It turns out that securing a cryptographic key is super hard especially when the payout is huge. Luke Dash Jr is an original Bitcoin core developer who understands Bitcoin deeply (he proposed the idea for the practical implementation for segregated witness), and he was able to lose 200 BTC (all his money) just recently by a hack.