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It's just that people have to understand that current Bitcoin service implementations are wrong. If you have Bitcoin private keys laying somewhere on your serve

by M4v3R 13y ago

It's just that people have to understand that current Bitcoin service implementations are wrong. If you have Bitcoin private keys laying somewhere on your server, you are doing it wrong. If you're covering that by the fact that you have "cold storage", you are doing it wrong. The only proper way to proceed is to use multisignature wallets. If you want to know why that's better, visit our explanation site: https://www.bitalo.com/why_bitalo https://www.bitalo.com/why_bitalo Fortnunately Bitalo is not the only service that provides this. More and more services were created lately, most notably: https://api.trustedcoin.com/wallet/ https://api.trustedcoin.com/wallet/ http://www.bitgo.com http://www.bitgo.com http://greenaddress.it http://greenaddress.it Vote with your money, don't support "Bitcoin banks" that can run with your money any time they want.

jzwinck 13y ago
With all due respect, I do not think multi-signature solves the real problem. The real problem is that Bitcoin transactions are irreversible, so even if we realize within hours that a hack has occurred, we can do nothing about it. Banks as we knew them did not work this way. Yes, having to wait three days for settlement is absurd, but folks are working to speed that up (to just one day, haha). Yes, the fees add up. But the systems have been developed over a really long time, and they have multiple levels of protection against you losing all your money. In the US that's the FDIC and SIPC, for regular-sized accounts. There will never been a direct equivalent for BTC, precisely because no one's national security is tied to BTC. And most people won't buy deposit insurance at any price higher than the "free" one they get from their government. Early adopters of Bitcoin spoke fondly of the fact that there are no chargebacks. That's a great way to reduce transaction costs. It's also a great way to make sure that when you get hacked (and you will) you cannot recover. Compare this to the situation with ACH transfers (the US-only, low-cost "wire transfer" system). Anyone who knows anything about computers would be aghast at the technology comprising that system. The security appears to be pretty lame. Yet people do not lose their savings via ACH. Why? It isn't because ACH transfers are so secure--it's because the banks can undo them, which in turn lowers the incentive for thieves. This is a virtuous cycle, by contrast to Bitcoin's vicious one, and the way it works has nothing to do with technology.
- M4v3R 13y ago
  Irreversibility is not a bug of Bitcoin, it's one of its greater strengths. Just look at the numbers that Paypal/eBay and merchants publish about the fraud caused by reversing payments. It's counted in millions, if not billions already. What we need is a safe way to use Bitcoin with all its strengths, not to make it more similar to flawed solutions that we currently have.
  - JohnTHaller 13y ago
    No consumer protection is why bitcoin simply won't take off as a method of legally spending money online. I have no promise a merchant will deliver me what's promised (or anything at all, for that matter). And no recourse if they don't. Bitcoin needs a solution to address this for it to be a valid way of spending money. And irreversibility, pseudonymity, and no regulation make it impossible.
    - M4v3R 13y ago
      This is what third party escrow services are for. They can use the Bitcoin as a framework to utilize customer protection if it's implemented right.
      - JohnTHaller 13y ago
        A 3rd party escrow I have to trust. Also without regulation. Likely, consumers wouldn't trust such an entity unless it was rather large, already known, and otherwise regulated. Like a bank. Consumers can trust those. Of course, the bank would want an escrow fee. Probably on par with the standard credit card fees.
        BrokenPipe 13y ago
        Or much much lower cause you bring worldwide competition with no infrastructure. Disclaimer: I'm with GreenAddress.it
hierro 13y ago
Please, don't ever send money nor coins to these guys, they're scammers. M4v3R used to run http://bitmarket.eu http://bitmarket.eu and lost all the users' coins while running some sort of (according to his own words) "hedge fund" around December 2012. Around April 2013, with bitcoin around $50 he "kindly" offered to reimburse everyone over time, valuating each coin at 10€ arguing that it was their value when he lost them. I told them wanted my 10btc, not money, and they still owe me to this day. See https://bitcointalk.org/index.php?topic=134208.0 https://bitcointalk.org/index.php?topic=134208.0
danielweber 13y ago
It's like communism. Every time it fails, the supporters say "oh, no, they were doing it wrong." Really, I'm not going to go to your site to find out why this variation of the perpetual motion machine is going to work. And it's the "only proper way to proceed" which means if we find a problem in it, there is no proper way to proceed. Last week on HN someone called a Bitcoin wallet a pressurized system that can in an instant lose everything. There is no room for error. The slightest hole anywhere and you lose, instantly and irrevocably.

by M4v3R 13y ago

jzwinck 13y ago

With all due respect, I do not think multi-signature solves the real problem. The real problem is that Bitcoin transactions are irreversible, so even if we realize within hours that a hack has occurred, we can do nothing about it. Banks as we knew them did not work this way. Yes, having to wait three days for settlement is absurd, but folks are working to speed that up (to just one day, haha). Yes, the fees add up. But the systems have been developed over a really long time, and they have multiple levels of protection against you losing all your money. In the US that's the FDIC and SIPC, for regular-sized accounts. There will never been a direct equivalent for BTC, precisely because no one's national security is tied to BTC. And most people won't buy deposit insurance at any price higher than the "free" one they get from their government. Early adopters of Bitcoin spoke fondly of the fact that there are no chargebacks. That's a great way to reduce transaction costs. It's also a great way to make sure that when you get hacked (and you will) you cannot recover. Compare this to the situation with ACH transfers (the US-only, low-cost "wire transfer" system). Anyone who knows anything about computers would be aghast at the technology comprising that system. The security appears to be pretty lame. Yet people do not lose their savings via ACH. Why? It isn't because ACH transfers are so secure--it's because the banks can undo them, which in turn lowers the incentive for thieves. This is a virtuous cycle, by contrast to Bitcoin's vicious one, and the way it works has nothing to do with technology.

M4v3R 13y ago
Irreversibility is not a bug of Bitcoin, it's one of its greater strengths. Just look at the numbers that Paypal/eBay and merchants publish about the fraud caused by reversing payments. It's counted in millions, if not billions already. What we need is a safe way to use Bitcoin with all its strengths, not to make it more similar to flawed solutions that we currently have.
- JohnTHaller 13y ago
  No consumer protection is why bitcoin simply won't take off as a method of legally spending money online. I have no promise a merchant will deliver me what's promised (or anything at all, for that matter). And no recourse if they don't. Bitcoin needs a solution to address this for it to be a valid way of spending money. And irreversibility, pseudonymity, and no regulation make it impossible.
  - M4v3R 13y ago
    This is what third party escrow services are for. They can use the Bitcoin as a framework to utilize customer protection if it's implemented right.
    - JohnTHaller 13y ago
      A 3rd party escrow I have to trust. Also without regulation. Likely, consumers wouldn't trust such an entity unless it was rather large, already known, and otherwise regulated. Like a bank. Consumers can trust those. Of course, the bank would want an escrow fee. Probably on par with the standard credit card fees.
      - BrokenPipe 13y ago
        Or much much lower cause you bring worldwide competition with no infrastructure. Disclaimer: I'm with GreenAddress.it

hierro 13y ago

Please, don't ever send money nor coins to these guys, they're scammers. M4v3R used to run http://bitmarket.eu http://bitmarket.eu and lost all the users' coins while running some sort of (according to his own words) "hedge fund" around December 2012. Around April 2013, with bitcoin around $50 he "kindly" offered to reimburse everyone over time, valuating each coin at 10€ arguing that it was their value when he lost them. I told them wanted my 10btc, not money, and they still owe me to this day. See https://bitcointalk.org/index.php?topic=134208.0 https://bitcointalk.org/index.php?topic=134208.0

danielweber 13y ago

It's like communism. Every time it fails, the supporters say "oh, no, they were doing it wrong." Really, I'm not going to go to your site to find out why this variation of the perpetual motion machine is going to work. And it's the "only proper way to proceed" which means if we find a problem in it, there is no proper way to proceed. Last week on HN someone called a Bitcoin wallet a pressurized system that can in an instant lose everything. There is no room for error. The slightest hole anywhere and you lose, instantly and irrevocably.