Comment by nytesky
4 months ago
It does feel like the security protocols necessary to secure $100k to $Ms of crypto which transfers instantly and non-reversibly is a challenge for the average user.
Even as a fairly tech enabled GenX, I have forgotten passwords and had to reset them (usually accounts I haven’t used in a while), had files corrupted without a good backup, lost a Yubikey somewhere in the house (I think at least).
From what I can tell I would need to have my crypto seed laser etched into titanium, and then treat that talisman as if it was made of pure platinum as far as securing and tracking it.
Versus keeping my money in SIPC and FDIC protected accounts.
I will say, the BTC appreciation is a big attraction of course, but long term I don’t see how it becomes widely adopted with so much logistics risk, and appreciation… well who knows about that.
1) if you don't exclusively have the private key (wallet), you don't own the crypto. if someone else gets the private key unwittingly, they now own the crypto
2) split cumulative funds into two wallets, a "hot" wallet and a "cold" wallet. keep the funds in the "hot" wallet to no more than for which total unintentional loss is tolerable. keep the private key to the "cold" wallet off any internet connected device except for the minimum duration required to transfer funds to the hot wallet.
3) print the recovery phrase for the cold wallet and store it in a physically secure location
4) if an ideally secure physical location is not possible, split risk across multiple "cold" wallets
that sounds tedious af and still prone to error, i'd rather literally pay someone to handle all of this for me, let's say, some kind of institution which specializes in storing and handling money
Hey, what if there was a way to get paid to have someone else handle this for you? That would be crazy right
It would also be cool if it were guaranteed up to a certain amount, very much like FDIC does for amounts smaller than $250k.
While practically that’s true of course, I think a hardware appliance that did this that you had to physically interact with to release the funds from would be cyberpunk and cool. Imagine exchanging a handful of currency chips for like a flying motorcycle or something.
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> 1) if you don't exclusively have the private key (wallet), you don't own the crypto. if someone else gets the private key unwittingly, they now own the crypto
That's not how the legal system works, and they're the ones who decide who owns things.
> From what I can tell I would need to have my crypto seed laser etched into titanium, and then treat that talisman as if it was made of pure platinum as far as securing and tracking it.
Not sufficient. You'd also need someone you trust 100% to have another seed protected as if it was the gold of Fort Knox. And then you'd only only use "multisig" to sign transfers.
And that other person needs to live on another continent.
And you both need a backup plan in case you die if you plan to leave these 0.1 Bitcoin to your heirs.
This makes the $5 wrench attack impossible to succeed. As to whether the attacker is willing to add gratuitous (because it's impossible it'd succeed) torture/killing to its list of crime is something else though.
> I will say, the BTC appreciation is a big attraction of course, but long term I don’t see how it becomes widely adopted...
I think mid-term to long-term people simply buy a Bitcoin ETF or stocks from a company holding shitloads of Bitcoins like MicroStrategy. Just like I buy SLV (paper silver) or the ZKB silver ETF (physical replication, in vaults in Switzerland).
Keeping your own Bitcoins is not unlike keeping physical gold coins. It's doable but risky. Multisig really helps a lot but buying a Bitcoin ETF is simply easier. Open bank or broker website, click click. Done.
I'm not saying Satoshi's dream or the Bitcoin maximalists' dream is good old Wall Street manipulating Bitcoin's price using paper Bitcoin (silver ETFs were in big trouble in 2021) but what I'm saying is I think that's how it's going to end.
>I think mid-term to long-term people simply buy a Bitcoin ETF or stocks from a company holding shitloads of Bitcoins like MicroStrategy. Just like I buy SLV (paper silver) or the ZKB silver ETF (physical replication, in vaults in Switzerland).
But what's the inherent value of BTC if it doesn't do the things it claims? What value does Michael Saylor owning a bunch of bitcoin, of which I have a pretend share, even have?
This is the paradox of Bitcoin. It's a really cool technology that's really hard for normies to use.
I feel that crypto offers a different risk profile than say the gold ETF. There certainly is significant risk and expense to storing and securing the physical gold backing the ETF. I think it also needed to be audited as matching expected reserves occasionally?
But crypto has similar it and physical security costs at a minimum, though physical storage will be cheaper. Auditing maybe similar costs, I’m not quite sure how you confirm ownership of an address or pile of BTC without transactions?
The big risk is that these big holding companies of bitcoin become targets of state-scale cybercrime hacking armies. Can you imagine an adversary deploying constant attack on every facet of you IT infrastructure, from accessing the private keys presumably stored in hot wallets to support active trading to the interface where they may try interfere with client functions to all sorts of ends from theft to market manipulation.
I partially agree, although I can see more companies offering these kinds of services in the future. Block already has a system with Bitkey, custody companies like Casa and Unchained are providing services as signers, and AnchorWatch is stepping in as both a custody and insurance provider at the institutional level. Despite the government's best efforts to limit participation from existing banks[1], other services are jumping through the arduous hoops of regulation to fill in the void.
[1] https://www.swanbitcoin.com/politics/biden-s-sab121-veto-sta...
> Just like I buy SLV (paper silver) or the ZKB silver ETF (physical replication, in vaults in Switzerland)
I'd suggest that holding precious metals without actually having physical metal under your exclusive control is essentially as flawed as holding crypto without exclusively holding the private key.
I have no doubt that at least some especially in the early days envisioned crypto as a legitimate alternative to fiat currency. That being said, in it's mature state as a technology, it amounts to nothing more than a clone of the modern financial system with a different set of oligarchs, except that it has far fewer consumer protections, and the nature of it makes implementing said protections in any way extremely difficult.
That combined with the extreme volatility of value that is not only endemic to any coin with meaningful usage, but is generally a goal of most coins, makes it only really useful as a speculative vehicle, and those same properties also make it uniquely bad in terms of a store of value to be used in commerce unless the seller also plans to speculate on the value.
And, even if you're good with all of that: Yes, the tech itself is decentralized, but if you don't have at least some background in basic software development or scripting, you're almost certainly going to end up using some product or another to manage your wallets and transactions, and while the wallet is anonymous, the accounts you connect the wallet to are often quite the opposite, and because of the structure of the chains, your entire transaction history is visible to everyone on the network, at all times. So it's private by default, but basically any casual user is immediately and forever doxxable.
Xmr aims to be a digital cash, and basically achieves that. Btc has goals more akin to digital gold, hence being more useful to speculators than people buying things is somewhat intentional.
I don't know who the oligarchs you're talking about are. Buterin? Bankman Fried? In either case, their position is quite different from that of a banking titan.
> I will say, the BTC appreciation is a big attraction of course
What are the other desirable features of BTC?
It’s great for laundering money.
It is not.
It's not anonymous, but pseudononymous. It's a public ledger, for everyone to copy and analyze. It's a public ledger that's mathematically proven to not have mistakes in it.
Exchanges are highly regulated. KYC is rediculously tight.
Sure, Bitcoin allows one to flee/fly to some criminals' paradise with their entire wealth stored in their brain (or on a napkin). And as long as they keep the money in crypto or black, it's unstoppable, really.
But it's a terrible medium to turn black money into white money. One of the worst of all options, really. And that's what laundering is.
Now, it's used for laundering. But that's more because its a great and easy store of value in itself. Not because a public, tracable ledger without any anonymity other than pseudonimity is a great system for laundering, because it's the exact opposite of that.
And certainly, if you mix in monero, defi, otc-trades and -there they are- "corrupt bankers", crypto as a whole can turn black money into white, circumvent blockades, fund terrorism and whatnot. But hardly easier or simpler than paper-money, gold, and corrupt bankers already can.
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It's great for transferring ransoms. Basically a criminal's dream coming true.
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It isn't, banks are way better and cash is still king:
https://www.cnn.com/2024/10/10/investing/td-bank-settlement-...
https://www.icij.org/investigations/fincen-files/global-bank...
https://www.investopedia.com/stock-analysis/2013/investing-n...
https://www.coinbase.com/blog/fact-check-crypto-is-increasin...
Even from SWIFT: "Identified cases of laundering through cryptocurrencies remain relatively small compared to the volumes of cash laundered through traditional methods" https://www.swift.com/sites/default/files/files/swift_bae_re...
What you're saying is simply unsubstantiated.
Non centralized proof of ownership is pretty cool.
How is it non-centralized? Basically everybody actually using crypto uses exchanges.
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SIPC and FDIC don’t protect against fraud.