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> So let this be a lesson about the dangers of trusting a third party with your money, unless that third party is insured by a government in the event of disast

by user24 12y ago

> So let this be a lesson about the dangers of trusting a third party with your money, unless that third party is insured by a government in the event of disaster. This is a great point. I never did understand why so many bitcoiners were on the one hand extolling the virtues of this decentralised currency while at the same time storing staggeringly large amounts of it in a third party system that they didn't control. The whole point of bitcoin was/is to eliminate the third party, Satoshi's original paper makes that abundantly clear. None of this could possibly have happened if people had used bitcoin as intended.

krautsourced 12y ago
> None of this could possibly have happened if people had used bitcoin as intended. But this also proves the point that the way it _is_ intended is way too cumbersome for everyday use. Convenience will always trump security, ask anyone who ever tried to enforce any sort of security, only to find every password written down on sticky note on the users' monitor.
- user24 12y ago
  I agree but am not sure whether this is a fundamental problem or merely a current one, with bitcoin. Is it necessarily cumbersome or just happens to be like that at the moment? My intuitive feeling is that it can't be inherently cumbersome; that _must_ be an addressable problem.
  - lukeschlather 12y ago
    I think it's inherently cumbersome. The traditional banking system has really bankstrong safeguards against this sort of thing. A technical glitch can't just make millions of dollars disappear - if there's a glitch the bank and/or the authorities step in and reconstruct what the actual balances should be. Keeping Bitcoin requires you to be really good at both storing a specific string of bits, and also keeping that string of bits secret. Even for a really skilled sysadmin, trusting your life's savings to your own ability to secure and back up a single string doesn't strike me as very wise - compromise or misplacement of digital secrets is almost inevitable.
    - user24 12y ago
      > Keeping Bitcoin requires you to be really good at both storing a specific string of bits, and also keeping that string of bits secret. Even for a really skilled sysadmin, trusting your life's savings to your own ability to secure and back up a single string doesn't strike me as very wise - compromise or misplacement of digital secrets is almost inevitable. This is one of the best & simplest arguments I've heard against bitcoin-as-a-mainstream-phenomenon for a long time.
  - hibikir 12y ago
    It definitely is inherently cumbersome. You need a good backup system (think offsite), while putting all eggs in the basket of computer security. If someone hacks my bank account, I will be inconvenienced. If I had all that money in BTC at home, and someone gets the password, I lose all of it, with no recourse. If I lose access to my own password, it's all lost too. You can build your own recovery mechanisms, but those quickly become new attack vectors: Just ask anyone that has lost online accounts of any sort. With the difference being that there's nobody that will ever hand you access again,because you are not trusting any authority. So any setup I would consider safe enough to hold mode than 10 thousand dollars worth of coin is one that is no simpler than an enterprise level security system. It's enormous overhead for any individual. And given how BTC is designed, it's absolutely impossible to delegate most of this work to a third party without opening yourself to more risk. It's a bit like having your money under a mattress, with the difference being that someone can automate hacking into houses to search under the mattress. And that doesn't even get into issues like accidents: You also need a backup plan on what to do if you die, or go into a coma. Does anyone get to recover your coins, or are they stuck forever in limbo? It's yet another thing you might want to deal with. In the regular financial system, all of this stuff is handled for you. If you roll your own, you have to manually build all of this yourself, find who to trust with what... and every single protection you build is also a new attack vector. It sounds rather unsolvable to me.
    - user24 12y ago
      > it's absolutely impossible to delegate most of this work to a third party I am sailing into waters I am not at all familiar with here, but I think the currently-underused multisig/escrow features might offer a solution here. But this really is the limit of my knowledge on bitcoin now.
- nkuttler 12y ago
  Mtgox was not for everyday use, it was a trading platform for speculators who wanted to trade currency <-> btc.
  - redthrowaway 12y ago
    Or for people who wanted to buy bitcoin as a way to get into it. New users aren't likely to go out and build an asic farm; they buy some coins then figure out what to do with them -- while they linger in their gox/coinbase/etc accounts.

by user24 12y ago

krautsourced 12y ago

> None of this could possibly have happened if people had used bitcoin as intended. But this also proves the point that the way it _is_ intended is way too cumbersome for everyday use. Convenience will always trump security, ask anyone who ever tried to enforce any sort of security, only to find every password written down on sticky note on the users' monitor.

user24 12y ago
I agree but am not sure whether this is a fundamental problem or merely a current one, with bitcoin. Is it necessarily cumbersome or just happens to be like that at the moment? My intuitive feeling is that it can't be inherently cumbersome; that _must_ be an addressable problem.
- lukeschlather 12y ago
  I think it's inherently cumbersome. The traditional banking system has really bankstrong safeguards against this sort of thing. A technical glitch can't just make millions of dollars disappear - if there's a glitch the bank and/or the authorities step in and reconstruct what the actual balances should be. Keeping Bitcoin requires you to be really good at both storing a specific string of bits, and also keeping that string of bits secret. Even for a really skilled sysadmin, trusting your life's savings to your own ability to secure and back up a single string doesn't strike me as very wise - compromise or misplacement of digital secrets is almost inevitable.
  - user24 12y ago
    > Keeping Bitcoin requires you to be really good at both storing a specific string of bits, and also keeping that string of bits secret. Even for a really skilled sysadmin, trusting your life's savings to your own ability to secure and back up a single string doesn't strike me as very wise - compromise or misplacement of digital secrets is almost inevitable. This is one of the best & simplest arguments I've heard against bitcoin-as-a-mainstream-phenomenon for a long time.
- hibikir 12y ago
  It definitely is inherently cumbersome. You need a good backup system (think offsite), while putting all eggs in the basket of computer security. If someone hacks my bank account, I will be inconvenienced. If I had all that money in BTC at home, and someone gets the password, I lose all of it, with no recourse. If I lose access to my own password, it's all lost too. You can build your own recovery mechanisms, but those quickly become new attack vectors: Just ask anyone that has lost online accounts of any sort. With the difference being that there's nobody that will ever hand you access again,because you are not trusting any authority. So any setup I would consider safe enough to hold mode than 10 thousand dollars worth of coin is one that is no simpler than an enterprise level security system. It's enormous overhead for any individual. And given how BTC is designed, it's absolutely impossible to delegate most of this work to a third party without opening yourself to more risk. It's a bit like having your money under a mattress, with the difference being that someone can automate hacking into houses to search under the mattress. And that doesn't even get into issues like accidents: You also need a backup plan on what to do if you die, or go into a coma. Does anyone get to recover your coins, or are they stuck forever in limbo? It's yet another thing you might want to deal with. In the regular financial system, all of this stuff is handled for you. If you roll your own, you have to manually build all of this yourself, find who to trust with what... and every single protection you build is also a new attack vector. It sounds rather unsolvable to me.
  - user24 12y ago
    > it's absolutely impossible to delegate most of this work to a third party I am sailing into waters I am not at all familiar with here, but I think the currently-underused multisig/escrow features might offer a solution here. But this really is the limit of my knowledge on bitcoin now.
nkuttler 12y ago
Mtgox was not for everyday use, it was a trading platform for speculators who wanted to trade currency <-> btc.
- redthrowaway 12y ago
  Or for people who wanted to buy bitcoin as a way to get into it. New users aren't likely to go out and build an asic farm; they buy some coins then figure out what to do with them -- while they linger in their gox/coinbase/etc accounts.