bitcoin trading.

Type_45

short_butt_sweet wrote: »

i don't know the details of how these specific devices are set up. however, from the general principles of how cryptography works, it is possible to have a "secret" which is effectively available to either whoever is in possession of some physical device or somebody who knows some recovery words.

but there are still practical difficulties ...

first, the "recovery words" need to be cryptographically very strong, or somebody may be able to guess them. which is why you may want to write them down, rather than rely on memory. but then the paper can be lost / stolen.

secondly, somebody who's stolen the device could use it to steal your crypto coins, if they take action before you notice your loss and use the recovery words to shift your coins to a new address.

now, you could protect against that by requiring some further secret words to be used. in combination with the device, before it can be used to shift / steal coins. but then that secret needs to be cryptographically strong. and you may want to write it down. and that piece of paper could also be stolen. and so on.

basically, you can, in theory, easily use cryptography to make access to a secret (and hence: control of some crypto coins) be determined be any logical combination of access to physical devices and knowledge of (not easily guessable) words. so e.g. access might require either possessing device D1 or knowing words W1, and in any case also also knowing words W2. or it might require any 3 out of 4 of: possessing D1, possessing D2, knowing W1, and knowing W2. etc.

it's all very elegant in theory. but not especially practical, for real people to use. secret words tend to be so difficult to remember that people need to write them down (or they mess it up by using words that are guessable, compromizing security). and then it comes down to possession of some of out of a number of physical items, even if some of them are fancy devices and other are just bits of paper.

yes, you can probably think of several different places to store those items, considering the risks of theft, fire, and so on. but that doesn't mean you'd have any chance of keeping possession of your "coins" against a really determined and well-resourced adversary. it also doesn't doesn't remove the risk of messing up, or being unlucky, so that you simply lose access to your coins by any available recovery method. basically, if you were frustrated by some aspects of traditional banking, a little knowledge of crypto banking should be enough to make you love traditional banking again

I'm not qualified to have this conversation. I don't know how the technology works. Experts develop it, I buy it.


But the part in bold would only be applicable if someone keep their device in a drawer with a bit of paper containing the recovery words. Such a person would deserve to have their coins stolen.

Type_45

Linton wrote: »

Quite possibly, but it wont be bitcoin or any of the hundreds of other ones currently available. What it will be is virtual currencies managed by each national central bank, providing full traceability. The possibilities this would provide for automatic micro-taxation and prevention of fraud and tax avoidance look very attractive.


Then one can see the libertarians coming up with the concept of exchange of metal or paper tokens to avoid the prying eyes of the evil government.

That already exists. It's called Digital Banking. Most money is electronic thesedays. I only use paper/metal money when I have to. I prefer to pay for things with my mobile phone.

short_butt_sweet

Type_45 wrote: »

I'm not qualified to have this conversation. I don't know how the technology works. Experts develop it, I buy it.


But the part in bold would only be applicable if someone keep their device in a drawer with a bit of paper containing the recovery words.

hmmm. so does possession of the device matter at all? presumably you need a device, but would any new one do the job? is the only unique thing you need the recovery words?

(incidentally, personally i still usually use cash for small, in-person transactions. partly for the semi-anonymity )

Linton

Type_45 wrote: »

That already exists. It's called Digital Banking. Most money is electronic thesedays. I only use paper/metal money when I have to. I prefer to pay for things with my mobile phone.

Digital banking is very different to a government run digital currency. However if it is good enough for your needs why go crypto?

Type_45

short_butt_sweet wrote: »

hmmm. so does possession of the device matter at all? presumably you need a device, but would any new one do the job? is the only unique thing you need the recovery words?

(incidentally, personally i still usually use cash for small, in-person transactions. partly for the semi-anonymity )

You can lose the device, buy another one and (using your recovery words) proceed as normal. In fact, the manufacturers encourage people to buy more than one device so that you have a back-up.


For normal usage of the device, it's accessed with a simple pin number. It's only if you lose the device or forget your pin number that you'll need the recovery words.






The Winklevoss Twins (Bitcoin billionaires) keep their recovery words in offline safes spread across America.

Type_45

Linton wrote: »

Digital banking is very different to a government run digital currency. However if it is good enough for your needs why go crypto?

I have crypto purely as an investment/punt. If it takes off (eg, attracts institutional investment in the form of ETFs which brings money flooding into crypto) then I want to make sure I have a slice of the action.

EachPenny

Type_45 wrote: »

You'll be using crypto one day.

I'll use my first crypto to buy that nuclear powered vacuum cleaner they said everyone would be buying one day.

short_butt_sweet

Type_45 wrote: »

You can lose the device, buy another one and (using your recovery words) proceed as normal. In fact, the manufacturers encourage people to buy more than one device so that you have a back-up.

and not so that they can sell more devices!

still, at least somebody is making money out of this. compare cryptocurrency to electric cars. in both cases, we may well all be using this technology one day. the device manufacturers are a bit like tesla, in the sense that they are running a business. you are more like somebody who buys tesla cars, not to drive them, but to store them in a garage in the hope that they will go up in value.

For normal usage of the device, it's accessed with a simple pin number. It's only if you lose the device or forget your pin number that you'll need the recovery words.

OK. so it sounds like to have access you need to have:

either
possession of your device and knowledge of the corresponding PIN
or
knowledge of your recovery words

which implies that an attacker who steals (or takes a photo of) the piece of paper with your recovery words has all the info they need to steal your bitcoins. they may also need a device, but not your device, and they could easily already have one.

another question is how long is the PIN is. (could an attacker steal your device and try all possible PINs until they find the right one? does it lock you out after N wrong guesses?)

and there are lots more potential issues. how much do you trust the device manufacturers?

my point is not to suggest that this method of securing bitcoins is worthless. it is probably a real improvement on just storing your coins on your phone/laptop/etc (let alone storing them on an "exchange", i.e. on somebody else's server). my point is that things could still go wrong, even if you follow the recommended procedures.

Steve_GP220

4_Pete's_Sake wrote: »

I can't help but think that just like the dotcom bubble it is just waiting to burst.

They've been saying this for months if not the last year! It is a bit scary though, imagine forking out 16k and BOOM, gone!

Malthusian

Type_45 wrote: »

I have crypto purely as an investment/punt. If it takes off (eg, attracts institutional investment in the form of ETFs which brings money flooding into crypto) then I want to make sure I have a slice of the action.

Bitcoin ETFs already exist, and there is nothing to stop institutions from holding crypto already. Except, of course, fiduciary duty and lack of interest.