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This is a discussion on Bitcoin Advice within the Cryptocurrencies forums, part of the Markets category; All you guys have to do is put the slightest bit of research into how Bitstamp and other top exchanges ...

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Old Mar 24, 2015, 7:27pm   #9
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All you guys have to do is put the slightest bit of research into how Bitstamp and other top exchanges operate and you will know its safe. This bigdata guy doesn't know what he is talking about at all.

The bulk of the Bitcoin that these exchanges hold is held in a fully secure, backed-up offline wallet. A small proportion of these Bitcoin is held online to facilitate the day-to-day transactions and essentially make the market. Bitstamp has had its online wallet hacked before. Nothing changed, everyone still kept their coin, and the security system was further improved.

I don't care if you leave them with an exchange or not, but I had to dispel the bull**** in this thread. An exchange like Bitstamp will be able to keep the Bitcoin more secure than you will be able to as a newcomer to Bitcoin.. You hear story after story of people losing all their coin.
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Old Mar 24, 2015, 8:45pm   #10
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Bitcoin is a pyramid scheme .
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Old Mar 24, 2015, 10:01pm   #11
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Why do you say that Tar?
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Old Mar 25, 2015, 9:38am   #12
 
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Quote:
Originally Posted by LON:RMG View Post
All you guys have to do is put the slightest bit of research into how Bitstamp and other top exchanges operate and you will know its safe. This bigdata guy doesn't know what he is talking about at all.

The bulk of the Bitcoin that these exchanges hold is held in a fully secure, backed-up offline wallet. A small proportion of these Bitcoin is held online to facilitate the day-to-day transactions and essentially make the market. Bitstamp has had its online wallet hacked before. Nothing changed, everyone still kept their coin, and the security system was further improved.

I don't care if you leave them with an exchange or not, but I had to dispel the bull**** in this thread. An exchange like Bitstamp will be able to keep the Bitcoin more secure than you will be able to as a newcomer to Bitcoin.. You hear story after story of people losing all their coin.
Bitstamp:
  • is based in Slovenia
  • was hacked for $5million in Jan 2015
  • has still not explained the nature of the hack
  • is now operating fractional reserve system while it tries to make back the money that it lost

So the question is, would I advise someone to use a FIAT currency that falls under an asset protection scheme (GB, USD...) or to use the above Slovenia based exchange where your money would be used to pay for the losses of other Bitcoin owners? Having both technical and professional knowledge of the currency I have a duty to recommend FIAT, I would advise in particular to avoid this exchange until independently audited and provides a full statement of the hack.

Saying that I am a massive fan of Bitcoin, I working with the technology almost daily, I just do not believe anyone that it's safe enough to be held in any significant quantities.

Best,

A

Last edited by bigdatascience; Mar 25, 2015 at 9:47am.
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Old Mar 25, 2015, 9:08pm   #13
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Well, if you have your own backed up and colocated server, wouldn't that be safe enough? I mean, double location full backup?
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Old Mar 27, 2015, 10:40am   #14
 
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Originally Posted by davidcraigson View Post
Well, if you have your own backed up and colocated server, wouldn't that be safe enough? I mean, double location full backup?
The attacks are so sophisticated that I would never feel safe holding the currency, I know the limits of my security which are not in any way small. An example, the TOR system was manipulated so that servers Tor Nodes used by Bitcoin hackers had the traffic sent to them (which is a non-trivial task) rather than other TOR nodes on the network. They then were able to intercept encrypted traffic, perform a Man-In-the-Middle attack that undermined the SSL encryption between the website and the user as the implied security of the onion routing encryption to steal BTC from TOR users. This is indicative of highly resourced commercial hackers who are very intelligent and tech savy. Given the increase of BTC money launderers (Bitcoin Fog and such like) and the expertise of these hackers I simply cannot see why it's preferable to hold BTC in any quantity.

Best,

Alan
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Old Mar 28, 2015, 7:01am   #15
 
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clarification much needed please

Quote:
Originally Posted by bigdatascience View Post
The attacks are so sophisticated that I would never feel safe holding the currency, I know the limits of my security which are not in any way small. An example, the TOR system was manipulated so that servers Tor Nodes used by Bitcoin hackers had the traffic sent to them (which is a non-trivial task) rather than other TOR nodes on the network. They then were able to intercept encrypted traffic, perform a Man-In-the-Middle attack that undermined the SSL encryption between the website and the user as the implied security of the onion routing encryption to steal BTC from TOR users. This is indicative of highly resourced commercial hackers who are very intelligent and tech savy. Given the increase of BTC money launderers (Bitcoin Fog and such like) and the expertise of these hackers I simply cannot see why it's preferable to hold BTC in any quantity.

Best,

Alan

Hi Alan,

Would you mind breaking this down a bit? Its clear you know what you are talking about technically (more than I),
but this is a bit confusing for us newcomers trying to work out whether we should use an online wallet or not.
I have about 1 BTC which is in an offline wallet, I dont use a hosted wallet.
I send my BTC from my online computer with the active wallet, to a second wallet which is permanently offline and stored in several USB memory devices.
Do you think this is as secure as I can hope to be?
It is all quite confusing to be honest.
I am having trouble understanding the details of your explanation and how it can relate to my situation, and also the situation "asimpleplan" finds themselves in with trying to work out how to buy a small amount of BTC.

PS thanks Alan and everyone else for the advice on here, it is all useful.

Regards, CW, London.
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Old Mar 28, 2015, 5:17pm   #16
 
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To do this justice I would need literally hundreds of pages since it encompasses the intricacies of IT security, encryption and financial engineering. In layman's terms:

1. Cold storage (not connected to the internet) is the only safe way to store BTC. Unfortunately if the BTC was intercepted in some way to the cold storage then can still be stolen (double spent).

2. Hot storage (online) is high risk, irrespective of the vendor for reasons which cover social engineering, 0-day exploits, criminality, lack of over-sight.....

3. Even if BTC was safe to store, it is so volatile as an asset price that you can literally lose 10-50% of it's value overnight. To manage the risk of asset price volatility you really need it in a hot storage but as I have said this is far to dangerous.

It is a great concept, the technology will revolutionise FinTech and Trading, it's just not something that I would recommend folks swapping FIAT currency while it's still in a alpha state of development. I have blogged more in-depth analysis but not allowed to refer you to my website from here.

Best,

A

Last edited by bigdatascience; Mar 28, 2015 at 5:49pm.
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