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Bitcoiners have been saying this whole time not to keep your crypto with a 3rd party and this is exactly why. Satoshis original message about Bitcoin mentions e

Bitcoiners have been saying this whole time not to keep your crypto with a 3rd party and this is exactly why. Satoshis original message about Bitcoin mentions explicitly you don't need any trusted third party. A whole lot of people think they can make money outsmarting the original concepts of Bitcoin and they get scammed in new ways each cycle. https://nakamotoinstitute.org/trusted-third-parties/ https://nakamotoinstitute.org/trusted-third-parties/

anonymousab 4y ago
At the same time, storage of value bitcoiners - the majority that titanically dwarfs medium-of-exchange/currency bitcoiners - have been trying to get the average layman to put money into the system as much as possible. More bag holders at any cost. And it turned out that that cost was something that would give the illusion of security, and hide away the technical minutiae that would prevent the system from sucking in those non-technical users. The bitcoin and other crypto communities don't get to have it both ways. You can't pull in average folks with these mechanisms, to increase the value of your holdings, while simultaneously admonishing them for using and trusting the systems set up to bring them into the fold.
- MrMan 4y ago
  thank you
- mattwilsonn888 4y ago
  That doesn't make a whole lot of sense. For starters you make assumptions about the motivations of all 'Bitcoiners,' even extending your cynical projection to the ones most vocal about using Bitcoin safely. But let's take the cynical viewpoint. If I, as a hypothetical Bitcoin holder, want the dollar value of my Bitcoin to go and stay up, then the last outcome I desire is for massive volumes of Bitcoin to end up centralized into a few pockets where they will be gambled on and sold when those bets fail. The most cynical Bitcoin holder has it in their interest for all retail holders to custody their own supply. Considering the educated base of Bitcoiners have been screaming and citing examples of what happened with FTX since the protocol's inception, "Not your keys, not your coins," it's rather dubious to try and blame them. The reason people get into the space and trust their coins to some third party is that those people are chasing the end of a market cycle and never even come across or seek out the wisdom of the people that were they in the beginning. 'Bitcoiners' at large, judging by the on chain metrics for holders through negative price action, would much rather the volatile market cycles played out as a smoothed average with each new user coming in educated rather than speculators rushing in at the end by any means necessary.
jb12 4y ago
Do you think self-custody is simple enough for mass adoption by non-technical users?
- solotronics 4y ago
  If you can write down 12 or 24 words on a piece of paper thats all you need for a backup. Hardware wallets make this easier but I agree it needs to be simplified for the masses.
  - kemotep 4y ago
    I can barely convince my relatives that a 16 character minimum password and a password manager for their accounts protected by multi-factor authentication will make their life easier by only needing to memorize the 1 long password, that they could also write the password down and keep somewhere safe.
- MrMan 4y ago
  forget simplicity - why is "self-custody" not a thing already with other currencies? let's start there.
  - jb12 4y ago
    I mean, it is - you can put your cash under your mattress. But there is a reason you don't.
  - xur17 4y ago
    I'll agree that crypto self-custody isn't really something the vast majority of folks can safely do. That said, self custody of crypto is different than self custody of fiat currencies. With fiat currency, you have to physically store the cash in 1 location. With crypto I can store multiple keys to my crypto on physical devices that require a pin to unlock (and reset after a few failed attempts). I can store my key across multiple locations in such a way that n of m copies of the key are required to move funds. I can require a waiting period before moving funds. I can require another person to approve the transactions in certain scenarios (ex: moving large amounts of funds).
malthaus 4y ago
There's a reason no normal human being outside of a small nerd-circle uses PGP for encrypting mails or rsync instead of Dropbox. Why would any non-techie ever want to deal with safely storing keys to a wallet. Or without having access to a trusted third party to help when issues arise. This is such a non-starter and one of the many reasons why there will NEVER EVER be mass adoption of Bitcoin outside of speculation. Just because an unholy alliance of utopian nerds and fraudsters wish this to be true doesn't make it happen.
- mattwilsonn888 4y ago
  That's simply not true. I have personally and remotely set up a professed tech-phobe with a hardware wallet. If I were to die they could recover it on their own. But, taking your point and rolling with it, there is nothing necessarily wrong or futile about using a properly set up and insured bank with crypto if the hardware wallet is still too intimidating. It could even be set up with certain multi-sig schemes such that a fourth party + the client could withdraw without the bank's permission. The point is that even when custodied, Bitcoin has arguable benefits over normal currency. I'm sure you will disagree with those benefits, but at this point that would be a Red Herring.
matai_kolila 4y ago
The whole point of keeping your crypto with BlockFi was how much interest they were paying out. But yeah, this whole debacle with FTX has finally made me realize that if I were to ever keep meaningful quantities of crypto, I would need to do so in a cold wallet.
erehweb 4y ago
How, practically does this work? Is it a password that you remember? What happens if you forget, or lose the piece of paper or hard drive it's written on? Do you end up like the guy trying to dig through landfill? (https://www.thecitizen.co.tz/tanzania/news/business/the-search-for-over-160-million-in-bitcoin-buried-in-a-welsh-landfill-3957932 https://www.thecitizen.co.tz/tanzania/news/business/the-sear...) Or is the answer, "don't forget"? This doesn't work for most people.
- rahen 4y ago
  You use a cold wallet, that is, a secure element storing your private key. Those chips are physically isolated from the computer and cannot be tempered with. If you lose your device (which should NEVER happen, it's a safe, not a purse), your keys are still encrypted with your PIN code and the device will self erase after 3 unsuccessful attempts. You can retrieve your private key from a 24 word sequence (seed key), which you will usually store on a fire proof and water proof medium like a like a billfodl or stamped washers. For added security, the private key will be derived from the seed plus an additional passphrase only known to you (kind of like a salt), so your key doesn't get compromised if someone gets his hands on your seed. Cold wallets didn't exist by the time of the incident you mention. https://steemit.com/cryptocurrency/@angelol/cryptocurrency-hardware-wallets-explained-ledger-nano-s https://steemit.com/cryptocurrency/@angelol/cryptocurrency-h...
deleted 4y ago
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qdog 4y ago
The people "investing" in FTX weren't doing it because they wanted cryptocurrency, they wanted a 15% guaranteed return. Without the exchanges, the USD->cryptocurrency onramp/offramp is a lot more difficult to do, I don't think most people want to only shop at places that do actual on-chain settlement. I predict we will continue to see large numbers of scams involving cryptocurrency as long as there are essentially unregulated banks and investment firms. Expecting lots of people to be sufficiently interested and educated enough to only use 'cold wallets' or use good secops on their systems is a bit too hopeful. Even after reading about it for years, the overhead of using cryptocurrency vs a debit or credit card just doesn't seem worth it to me, and I have a tech background.

anonymousab 4y ago

At the same time, storage of value bitcoiners - the majority that titanically dwarfs medium-of-exchange/currency bitcoiners - have been trying to get the average layman to put money into the system as much as possible. More bag holders at any cost. And it turned out that that cost was something that would give the illusion of security, and hide away the technical minutiae that would prevent the system from sucking in those non-technical users. The bitcoin and other crypto communities don't get to have it both ways. You can't pull in average folks with these mechanisms, to increase the value of your holdings, while simultaneously admonishing them for using and trusting the systems set up to bring them into the fold.

MrMan 4y ago
thank you
mattwilsonn888 4y ago
That doesn't make a whole lot of sense. For starters you make assumptions about the motivations of all 'Bitcoiners,' even extending your cynical projection to the ones most vocal about using Bitcoin safely. But let's take the cynical viewpoint. If I, as a hypothetical Bitcoin holder, want the dollar value of my Bitcoin to go and stay up, then the last outcome I desire is for massive volumes of Bitcoin to end up centralized into a few pockets where they will be gambled on and sold when those bets fail. The most cynical Bitcoin holder has it in their interest for all retail holders to custody their own supply. Considering the educated base of Bitcoiners have been screaming and citing examples of what happened with FTX since the protocol's inception, "Not your keys, not your coins," it's rather dubious to try and blame them. The reason people get into the space and trust their coins to some third party is that those people are chasing the end of a market cycle and never even come across or seek out the wisdom of the people that were they in the beginning. 'Bitcoiners' at large, judging by the on chain metrics for holders through negative price action, would much rather the volatile market cycles played out as a smoothed average with each new user coming in educated rather than speculators rushing in at the end by any means necessary.

jb12 4y ago

Do you think self-custody is simple enough for mass adoption by non-technical users?

solotronics 4y ago
If you can write down 12 or 24 words on a piece of paper thats all you need for a backup. Hardware wallets make this easier but I agree it needs to be simplified for the masses.
- kemotep 4y ago
  I can barely convince my relatives that a 16 character minimum password and a password manager for their accounts protected by multi-factor authentication will make their life easier by only needing to memorize the 1 long password, that they could also write the password down and keep somewhere safe.
MrMan 4y ago
forget simplicity - why is "self-custody" not a thing already with other currencies? let's start there.
- jb12 4y ago
  I mean, it is - you can put your cash under your mattress. But there is a reason you don't.
- xur17 4y ago
  I'll agree that crypto self-custody isn't really something the vast majority of folks can safely do. That said, self custody of crypto is different than self custody of fiat currencies. With fiat currency, you have to physically store the cash in 1 location. With crypto I can store multiple keys to my crypto on physical devices that require a pin to unlock (and reset after a few failed attempts). I can store my key across multiple locations in such a way that n of m copies of the key are required to move funds. I can require a waiting period before moving funds. I can require another person to approve the transactions in certain scenarios (ex: moving large amounts of funds).

malthaus 4y ago

There's a reason no normal human being outside of a small nerd-circle uses PGP for encrypting mails or rsync instead of Dropbox. Why would any non-techie ever want to deal with safely storing keys to a wallet. Or without having access to a trusted third party to help when issues arise. This is such a non-starter and one of the many reasons why there will NEVER EVER be mass adoption of Bitcoin outside of speculation. Just because an unholy alliance of utopian nerds and fraudsters wish this to be true doesn't make it happen.

mattwilsonn888 4y ago
That's simply not true. I have personally and remotely set up a professed tech-phobe with a hardware wallet. If I were to die they could recover it on their own. But, taking your point and rolling with it, there is nothing necessarily wrong or futile about using a properly set up and insured bank with crypto if the hardware wallet is still too intimidating. It could even be set up with certain multi-sig schemes such that a fourth party + the client could withdraw without the bank's permission. The point is that even when custodied, Bitcoin has arguable benefits over normal currency. I'm sure you will disagree with those benefits, but at this point that would be a Red Herring.

matai_kolila 4y ago

The whole point of keeping your crypto with BlockFi was how much interest they were paying out. But yeah, this whole debacle with FTX has finally made me realize that if I were to ever keep meaningful quantities of crypto, I would need to do so in a cold wallet.

erehweb 4y ago

How, practically does this work? Is it a password that you remember? What happens if you forget, or lose the piece of paper or hard drive it's written on? Do you end up like the guy trying to dig through landfill? (https://www.thecitizen.co.tz/tanzania/news/business/the-search-for-over-160-million-in-bitcoin-buried-in-a-welsh-landfill-3957932 https://www.thecitizen.co.tz/tanzania/news/business/the-sear...) Or is the answer, "don't forget"? This doesn't work for most people.

rahen 4y ago
You use a cold wallet, that is, a secure element storing your private key. Those chips are physically isolated from the computer and cannot be tempered with. If you lose your device (which should NEVER happen, it's a safe, not a purse), your keys are still encrypted with your PIN code and the device will self erase after 3 unsuccessful attempts. You can retrieve your private key from a 24 word sequence (seed key), which you will usually store on a fire proof and water proof medium like a like a billfodl or stamped washers. For added security, the private key will be derived from the seed plus an additional passphrase only known to you (kind of like a salt), so your key doesn't get compromised if someone gets his hands on your seed. Cold wallets didn't exist by the time of the incident you mention. https://steemit.com/cryptocurrency/@angelol/cryptocurrency-hardware-wallets-explained-ledger-nano-s https://steemit.com/cryptocurrency/@angelol/cryptocurrency-h...

deleted 4y ago

[deleted]

qdog 4y ago

The people "investing" in FTX weren't doing it because they wanted cryptocurrency, they wanted a 15% guaranteed return. Without the exchanges, the USD->cryptocurrency onramp/offramp is a lot more difficult to do, I don't think most people want to only shop at places that do actual on-chain settlement. I predict we will continue to see large numbers of scams involving cryptocurrency as long as there are essentially unregulated banks and investment firms. Expecting lots of people to be sufficiently interested and educated enough to only use 'cold wallets' or use good secops on their systems is a bit too hopeful. Even after reading about it for years, the overhead of using cryptocurrency vs a debit or credit card just doesn't seem worth it to me, and I have a tech background.