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The problem is that people who think they have the technical ability to do it right is astronomically higher than reality, not because people overestimate thems

by beaner 12y ago

The problem is that people who think they have the technical ability to do it right is astronomically higher than reality, not because people overestimate themselves, but because they underestimate the difficulty of "rolling your own bitcoin storage." I mean, you can make these arguments, but the history proves that so far centralized storage has been safer than self storage, on average. Further, Coinbase does give users access to their private keys with the multisig vault, so one of your two criteria has already been met.

sillysaurus3 12y ago
Are most Coinbase users using multisig? Since it's not the default, I'm pretty sure the answer is no. So unless multisig is the default at their new exchange, all of those people are at risk. Few are helped by multisig if few people use it. Since Coinbase has a large cold storage reserve, and since multisig-protected coins can't be put into cold storage, the answer is pretty clear: Coinbase protects few people. It's a false dichotomy that coins must be stored in a personal wallet that users mess up, or a webwallet that exchanges mess up. There's a third option: Convert those coins back into USD and stick it in a bank. As long as you're storing less than $500,000, you're guaranteed to have it. Anything else is pure greed. As someone who has been burned by greed, my misfortune stands as a warning to others: please don't make my mistakes. The reason I lost coins is because I was tempted by Mt. Gox. Their 2FA auth made it seem very unlikely that my coins could go anywhere, just like Coinbase. If I'd researched Mt. Gox, I would have discovered a history of technical problems. Yet if you research Coinbase right now, you'll discover they've had a history of those too. There have been at least two or three high-profile Coinbase incidents over the years which were featured on HN. And if you research Bitstamp, you'll see they just lost $5 million. The common denominator is that exchanges and webwallets aren't trustworthy.
moe 12y ago
but the history proves that so far centralized storage has been safer than self storage, on average. No it doesn't. History proves the polar opposite; MtGox alone ate more coins (>750k) than all known incidents of wallet theft together. Best practice is to use your own wallet. Has always been this way, will likely stay this way for a long time to come.

by beaner 12y ago

sillysaurus3 12y ago

Are most Coinbase users using multisig? Since it's not the default, I'm pretty sure the answer is no. So unless multisig is the default at their new exchange, all of those people are at risk. Few are helped by multisig if few people use it. Since Coinbase has a large cold storage reserve, and since multisig-protected coins can't be put into cold storage, the answer is pretty clear: Coinbase protects few people. It's a false dichotomy that coins must be stored in a personal wallet that users mess up, or a webwallet that exchanges mess up. There's a third option: Convert those coins back into USD and stick it in a bank. As long as you're storing less than $500,000, you're guaranteed to have it. Anything else is pure greed. As someone who has been burned by greed, my misfortune stands as a warning to others: please don't make my mistakes. The reason I lost coins is because I was tempted by Mt. Gox. Their 2FA auth made it seem very unlikely that my coins could go anywhere, just like Coinbase. If I'd researched Mt. Gox, I would have discovered a history of technical problems. Yet if you research Coinbase right now, you'll discover they've had a history of those too. There have been at least two or three high-profile Coinbase incidents over the years which were featured on HN. And if you research Bitstamp, you'll see they just lost $5 million. The common denominator is that exchanges and webwallets aren't trustworthy.

moe 12y ago

but the history proves that so far centralized storage has been safer than self storage, on average. No it doesn't. History proves the polar opposite; MtGox alone ate more coins (>750k) than all known incidents of wallet theft together. Best practice is to use your own wallet. Has always been this way, will likely stay this way for a long time to come.