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The "mainstream users should use hosted wallets" meme is inaccurate. 3rd party wallets do not provide security via black magic. They use tools like passwords,
by marcell 12y ago
The "mainstream users should use hosted wallets" meme is inaccurate.
3rd party wallets do not provide security via black magic. They use tools like passwords, 2FA, and email addresses, all of which could be compromised on a user's computer. Think key loggers, viruses, social engineering, people leaving their computers unattended with the wallet open.
There is no technical reason why the security measures that Coinbase implements cannot be done using a personal wallet. Moreover, when storing coins on Coinbaes, you are additionally subject to counter party risk (Coinbase goes under, loses their coins) as well as regulatory risk (Coinbase shuts down withdrawals due to regulations).
- aaron-lebo 12y agoI don't consider it a meme. Yes, they use passwords, 2FA, and email addresses, but those are all things mainstream users are familiar with and have to use for any other major service. They are not familiar with the concept of encrypting a wallet or the fact that deleting a wallet can lose you money. Of course you are at risk of something bad happening to Coinbase, but steps like getting insurance are hedges against that. I should point out that when I talk about mainstream users, I'm not so much talking about right now, but in potentially a few years when Coinbase is more of a known institution or existing banks or other parties have jumped into the game. At that point a wallet hosted by Google or something will be a much better bet for most consumers.