Bitcoin Advice

This is a discussion on Bitcoin Advice within the Cryptocurrencies forums, part of the Markets category; I've decided to take the plunge with BTC; I'm a bit of a newb although I've done a bit of ...

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Old Mar 20, 2015, 12:17am   #1
Joined Jan 2015
Bitcoin Advice

I've decided to take the plunge with BTC; I'm a bit of a newb although I've done a bit of research.

To buy the BTC, I've decided to use Kraken as the exchange (first on google rank!) and so I guess they must have some credibility.

The bigger question is that of an offline wallet?

According to: https://bitcoin.org/en/choose-your-wallet, there are 6 to choose from:

Bitcoin Core, Armory, Electrum, mSIGNA, MultiBit, Green Address - all of which have a weakness of some sort.

(My general approach for BTC is to just buy a few and hold them. If BTC goes global, I'll be happy, if not, and BTC becomes obsolete, no big loss.)

So, let's suppose I chose Electrum, which seems to be one of the easier ones to use.

If I download the wallet to a computer, can I then move the BTCs to an external HDD? Or, do I have to store them only on the computer? It's just that I have a netbook I don't use much with Windows 7 starter and thought I could use that. The question is, what happens if the HDD on the netbook fails, do I lose the BTCs?

I'm also a bit unclear about BTC addresses? When I buy the the BTCs on Kraken, for example, I have to give an address from my offline wallet? How is the address generated?

Thanks in advance.
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Old Mar 21, 2015, 5:56pm   #2
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Create an account with Bitstamp and leave your Bitcoin with them. I have been with them for around 3 years now and they have proved to be trustworthy - I have upwards of 30 Bitcoins with them at any given moment.

They will be safer than storing in a cold wallet. If you lose your HDD, or if someone gives your computer a bath - you'll lose them.

The only cold wallet I have used is btcQT which I downloaded a couple of years ago. It was sweet and I never had any problems with it.
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Old Mar 24, 2015, 11:19am   #3
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asimpleplan started this thread Mmmm, not sure any exchange can really be trusted TBH regardless of their good intentions - all it takes is one bad egg at the company and the BTCs are all gone. Better to stick with the 'hiding under the mattress' approach just to be sure.
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Old Mar 24, 2015, 11:26am   #4
 
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Dont hold bitcoin

Quote:
Originally Posted by asimpleplan View Post
I've decided to take the plunge with BTC; I'm a bit of a newb although I've done a bit of research.

To buy the BTC, I've decided to use Kraken as the exchange (first on google rank!) and so I guess they must have some credibility.

The bigger question is that of an offline wallet?

According to: https://bitcoin.org/en/choose-your-wallet, there are 6 to choose from:

Bitcoin Core, Armory, Electrum, mSIGNA, MultiBit, Green Address - all of which have a weakness of some sort.

(My general approach for BTC is to just buy a few and hold them. If BTC goes global, I'll be happy, if not, and BTC becomes obsolete, no big loss.)

So, let's suppose I chose Electrum, which seems to be one of the easier ones to use.

If I download the wallet to a computer, can I then move the BTCs to an external HDD? Or, do I have to store them only on the computer? It's just that I have a netbook I don't use much with Windows 7 starter and thought I could use that. The question is, what happens if the HDD on the netbook fails, do I lose the BTCs?

I'm also a bit unclear about BTC addresses? When I buy the the BTCs on Kraken, for example, I have to give an address from my offline wallet? How is the address generated?

Thanks in advance.
It's not safe to be held online BY ANY EXCHANGE. Nor is it practical to hold in cold storage. Our advice to all our clients is to trade it as a CFD, not to own the underlying or to use the exchanges which are being targeted by hackers. If you want to hold the coin as an investment here are some reasons why you should not:

http://www.bigdatascience.ie/blog/20...ng-bitcoin-bad

Best,

Alan
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Old Mar 24, 2015, 1:05pm   #5
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asimpleplan started this thread OK, I have a basic idea of CFDs but I don't have trading experience with them. Obviously, that'd increase one's leverage and exposure to BTC price moves.

Also, how would you go about hedging BTCs? Whether I buy BTCs outright or use the CFDs, the long term aim would be to go long but of course I'd need to safeguard my position.

Sorry, I'm a bit of an amateur but hopefully getting there.
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Old Mar 24, 2015, 1:20pm   #6
 
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Hedging a highly volatile underlying is inadvisable and Bitcoin is highly volatile, the re-hedging would cost more than any likely profit.

The likely move in digital currency is that the central banks will create a EURCoin, USDCoin... of their own which they are licensed to swap for EUR/USD making BTC essentially worthless so it's not going to be long term buy asset you want to hold on to.

Check out coinarch.com for information on trading the currency and the options available, they are one of the more professional systems out there but do not hold BTC in any quantities.
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Old Mar 24, 2015, 1:47pm   #7
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asimpleplan started this thread OK, thanks for the advice.

"The likely move in digital currency is that the central banks will create a EURCoin, USDCoin... of their own which they are licensed to swap for EUR/USD making BTC essentially worthless so it's not going to be long term buy asset you want to hold on to."

I'm not sure. The notion of a freely floated international currency independent of borders is not something that'll disappear any time soon. Given the endless list of frauds and hacks with BTC, and the fact the market keeps returning to support it, it strongly suggests there's an appetite for BTC even though that support may come from dubious sources (like that article suggested), but then again, all money is tainted somehow (20% of world trade is the black market and that's probably a conservative estimate).

OTOH, http://www.coindesk.com/breaking-uk-...encies-report/ the language of the report is interesting, where the emphasis is digital currencies as opposed to BTC.

Nonetheless, you're right about exposure to BTC, if I just want to buy BTCs from an investment point of view, CFDs are obviously a smarter way to go.

Also, what about spreadbetting BTCs? How exactly does that differ from CFDs?
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Old Mar 24, 2015, 2:05pm   #8
 
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Quote:
Originally Posted by asimpleplan View Post
OK, thanks for the advice.

"The likely move in digital currency is that the central banks will create a EURCoin, USDCoin... of their own which they are licensed to swap for EUR/USD making BTC essentially worthless so it's not going to be long term buy asset you want to hold on to."

I'm not sure. The notion of a freely floated international currency independent of borders is not something that'll disappear any time soon. Given the endless list of frauds and hacks with BTC, and the fact the market keeps returning to support it, it strongly suggests there's an appetite for BTC even though that support may come from dubious sources (like that article suggested), but then again, all money is tainted somehow (20% of world trade is the black market and that's probably a conservative estimate).

OTOH, http://www.coindesk.com/breaking-uk-...encies-report/ the language of the report is interesting, where the emphasis is digital currencies as opposed to BTC.

Nonetheless, you're right about exposure to BTC, if I just want to buy BTCs from an investment point of view, CFDs are obviously a smarter way to go.

Also, what about spreadbetting BTCs? How exactly does that differ from CFDs?
I agree that Digital currencies outside state control will continue, check out sidechains which will be an interesting technology in the future.

Google BTC at IG and you will see their offering for CFDs and Spreadbets.
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Old Mar 24, 2015, 6:27pm   #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, 7:45pm   #10
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Bitcoin is a pyramid scheme .
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Old Mar 24, 2015, 9:01pm   #11
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Why do you say that Tar?
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Old Mar 25, 2015, 8:38am   #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 8:47am.
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Old Mar 25, 2015, 8:08pm   #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, 9:40am   #14
 
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Quote:
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, 6:01am   #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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