Topic: Bitcoin's biggest problem (Read 2347 times)

That's a nice start, but there are several problems.
First of all, passing the secret to your family members in case you are deceased unexpectedly (who expects this, right)? Trusting a key to a lawyer is not very wise.
Second of all, couple of guys come into your house, politely hold a gun to your head and ask you to decrypt that little wallet you so conveniently have in your house. Now all of your security goes down the drain.

Much better solution would be to have a multisig wallet that would require secrets from, say, 3 out of 5 trusted people to sign. This way robbing you becomes impossible, your death does not block your family from accessing funds, and you can store the wallet anywhere you want, even on dropbox. Exact numbers depend on your family configuration, surely if you don't have people whom you can trust fully this also would not work - but for such cases, I'm sure there will be trusted third-party arbitrages soon who could hold your extra key and who will be able to sort it out in case you split up with your wife.

But the one thing which is clear now - only when you yourself can not access your funds immediately, they are safe. For spending money, use single signature wallets, but for any substantial amounts it's just asking for trouble.

dude, currently the privatekeys are there on the silvertablet to take for any malware programmer with half a brain encrypted only once with a single password  that's in most cases easy to brute. There's about 1001 options to improve on that, yet nobody seems to even realize the problem. You don't need a paradigmshift to improve on the miserable security of the privatekeys and on userfriendlyness.
As it is right now is a nightmare for security and noobs.
And as it is right now (years without ANY improvement on it) i think it will take another decade and private companies with whole thinktanks to figure out even what's the problem.

You can put your *encrypted* offline wallet in several bank deposits (copies).  The encryption makes that the bank, or any law enforcement, or burglars that break into the bank, or whoever opens your bank deposit, cannot do anything with it.  The fact that you can have several copies around the world in different bank deposits means that you cannot loose them (even a partial nuclear war would, hopefully, not bomb out all the banks where you have a copy in a bank).
The encryption phrase, you keep it in your head.  Eventually, you encode it in a line in your will.

As such, you have to trust the bank(s) much less than you would need to trust them for handling your money directly.

You keep one or two copies in your home (also encrypted of course) in order for you to have easy access.  The day your house burns down, or that burglars steal your USB stick, or whatever, you simply go to one of the banks where you put a copy, and you make a copy again.

Frankly the future of bitcoin wallets lies in multisig web wallets that are insured. Bitcoin has to be as simple as using hotmail.com.

You can also buy a Ledger Wallet, which is much cheaper than Trezor.

As Andreas Antonopolis has pointed out, humans have at least a 10,00 year history of physical security and we're pretty good at it. We have had only a couple generations at most of information security and we still suck at it, relatively speaking. We'll get better, but it's a steep-ass learning curve.

Classic denial.

Rationally (please leave your emotion to one side), do you have any reason to believe that energy, transaction time and ease-of-use are resolvable problems under Bitcoin?

I am arguing that all these problems are resolvable, sure, but not by Bitcoin.

I do not see any problem with bitcoin.
i see yes is the lack of security on servers that use bitcoins for some purpose

There is no problem with bitcoin, just like gold is not responsible for the theft of gold. The users lost their coins, just like they lost their other properties. Everyone will lose something in his life, so a wise move is to diversify the risk

For fiat money people has got used to relying on centralized authorities to take care of their money, and the price is that they become the slave of those organizations. If you want freedom, you need to do more homework

I would rather say biggest problem of bitcoins is untrustful people who are operating businesses.

Bitcoin's biggest problem?

Well, here are the three biggest problems as far as I can see:

1. Energy
The energy required by the network to confirm transactions is now a problem - problematic because of the giga-Watts, but more importantly, because of the centralisation of mining farms into the hands of a small number of people/corporations. Also problematic is the significant increase in the cost of transaction transmission.

2. Transaction authorization time
Visa/Mastercard are superior to Bitcoin in this regard - they authorize in seconds. You can't buy a coffee if you've to wait 30 minutes. It'll have gone cold by then.

3. Complexity
Bitcoin is just too complicated for normal folks who have more important things to be doing (working, family, hobbies, socializing).



Bitcoin is a really brilliant theory that came into being by the thought processes of a man who thought he could "do currency" better (create a currency that is distributed, fair, accessible and can't be easily manipulated by big government).

The theory of cryptocurrency is extremely elegant, but I'm afraid that the underlying theory, architecture and implementation of Bitcoin is fundamentally flawed. We need a much more polished cryptocurrency for use in the modern world (and by future generations) - a cryptocurrency that is: energy efficient, instant, easy-to-use, anonymous and secure.

This is a good point. But although there is no recourse, controlling your own private keys / having exchanges go multisig is a step in the evolution of the industry. There has been bitcoinica, mybitcoin etc etc which were rip offs / hacks that happened on the back of third parties controlling the priv keys. Now, with Stamp, they had a cold wallet and hot wallet so the 'damage' was limited to the hot wallet. This is better, but not great. Not good for PR, for that exchange and possibly not for customers (depending on how it pans out).

In the real economy, and probably with Gox etc, insiders get out and big interests aren't hurt but the average joe gets beaten and there is often no recourse. Some events make it into the vernacular of the times - 'getting Corzined' - or some events get so smothered in disinfo (2008 crisis & subsequent bailouts, 'austerity' here in Europe).

Unfortunately, the concept of decentralization is very hard to understand. When you factor computer security into this equation most people become like an 80 yr old trying to figure out the internet for the first time. Its a long curve in learning. As Death and Taxes wrote "Not sure why but soon as it becomes Bitcoin all common sense goes out the window."

We are seeing more and more exchanges go multisig and hopefully this stops exchange hacks and becomes standard. There is a lot of wishful thinking on here and you're always quick to trivialize it and that's fine (and funny). My hope for this bitcoin experiment is that the industry will adapt and the issues that skeptics hold up as signs of ultimate demise, will be innovated away in the future.
 

As dumb as it sounds, personally securing large sums of their own money is a new idea to the American average joe. Out of the Great Depression came the FDIC. Since then, the public has had backed protection in their bank accounts from the kinds of troubles Bitcoin is facing today. Many people believe leaving coins on the exchange is safe because they have to log in, they have a password and that log in is linked to their phone. It's a real dilemma to overcome. A third party arbitrator with multisig would be awesome.

The only way bitcoin will work as a currency(still needs to grow a lot more to function as a currency; the speculation phase) is if Average Joe gets told "Use this site to safely secure your bitcoins and use this wallet to safely spend them". I think this will happen in the future which is why I still have alot of faith in the protocol. Is there any reason to question that this would not happen?

The way it is now is "Do this compliacted fucking shit that you will never understand to secure your bitcoins, if you don't know how, then use this site and pray to god they'll be safe there. As for spending there are 10 different wallets. Use any of them because you won't understand a single one of them anyway."

What I'm saying is that there should be an easy and common way to, both secure and spend, that all people who use bitcoin should be pointed to, either by word of mouth or websites such as bitcoin.org. Of course there can be several options but there should be one, the best of them, that is listed with a lot bigger letters and a recommendation sign.
A centralized system is better in this aspect but if a decentralized system can do this, it's obviously 10 times better. Which again, is why I have no problem maintaining faith in the protocol.

You are not required to maintain a public facing website that is specifically designed with the intention of buying and selling bitcoin to the whole world. That right there increases your number of attack vectors. Also you probably don't have millions of dollars worth. (or if you do then congrats to you!)

Keep what you need day to day on your desktop, laptop, phone whatever. Keep the rest in 'savings' (offline pc, paper whatever you choose).

Keeping it in the bank account, or deposit box, or personal safe, is keeping it in cash. You never met people who keep 100k in cash? I am surprised. Come to europe I'll show you.

Right but really how many people keep 100k in cash? NOBODY I have ever met keeps 100k in cash, not a single solitary millionaire, and I have met a lot. Not a single solitary drug dealer keeps that much cash. A drug lord yes, but their security system is far better than mine ever will be.

We know that, but the issue of device security is a real one. As bitcoin pointed out several years ago, personal computing security habits were close to non-existent. If that's the only good thing that will come out of bitcoin, it already is worth billions.

Real progress is being made in how to make a small string worth thousands $ secure on consumer devices; that should get rid of 12345 passwords and windows xp zombie machines eventually.

For now, as a temporary measure, there are special wallet sites and devices to keep your hot wallets relatively safe even with no knowledge of computer security basics. It should only get easier with time, we should arrive at actually secure home computing systems.

It is not bitcoin that is unsafe.
It is the exchanges.

On the exchanges you don't trade with actual coins. The coins never move. It is just the exchange software playing with numbers. Only time coins move is on Withdrawals and Deposits, and when hackers steal them.

See for yourself:

http://www.stealmywallet.com/

Coins never got stolen. If you know how to protect your wallet with a complex password you should be okay.
Check out the top 100 bitcoin rich list. It is all public. No coins got stolen...

^So we agree that BTC isn't money?  We're making progress