How do you foresee the layman keeping their bitcoin secure? \ stacker news ~bitcoin

How do you foresee the layman keeping their bitcoin secure?

1255 sats \ 28 comments \ @satoshisat 10 Apr 2023 bitcoin

A family member just had someone withdraw $4,000 from their bank account. This family member quickly contacted the bank, the bank created a new account and transferred the balance over plus the $4,000 that was withdrawn by the thief. My family member lost no money and all is well.

This made me wonder: if Bitcoin is to reach mainstream status, how do you guys foresee the non-technical lay person keeping their funds secure or having a way to combat theft whether by social engineering or hacks? And let's be realistic here. People make mistakes. Telling someone to never fall for scam is not realistic. You cannot expect Bitcoin to become mainstream if all it takes is one good phishing email to wipe out all of your life savings with no recourse. Bitcoin, by it's very nature, is not at all forgiving. Once funds are transferred out of your wallet whether by mistake or by a nefarious actor, they're gone. This, to me, seems like the biggest impediment to widespread adoption of Bitcoin

Would love to hear your thoughts on this. Prove me wrong.

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15 sats \ 2 replies \ @LouisSignet 11 Apr 2023

Honest Answer? I don't.

Bitcoin is the same as cash at the end of the day.

When was the last time that you thought about how people keep their cash secure? Those that need extra security will find methods and services when (and if) appropiate.

0 sats \ 1 reply \ @satoshisat OP 11 Apr 2023

Appreciate the honest answer. Yes, if we treat Bitcoin like cash then it's a non-issue because you would just keep a small portion of your savings in cash (Bitcoin) so losing it from a mistake would just be a lesson learned, not a life altering event.

That said, my understanding of what the Bitcoin community espouses is the complete disconnect from the fiat system. This means banks, savings accounts, brokerage accounts, etc. In this case, where would someone store their savings which could be in the tens or hundreds of thousands (if not millions)? There are many people with retirement accounts with these amounts and if one day they just went to zero because someone transferred all the funds out, that would be devastating.

112 sats \ 0 replies \ @LouisSignet 11 Apr 2023

There's like levels to this stuff:

Custodial ( or hosted ) wallet
Single sig non-custodial regular wallet
Single sig hardware wallet approach
Multisig
Collaborative Multisig with Failsafe ( AKA Casa Bitcoin )
Qualified Institutional Custodians like Coinbase / BitcoinSuisse
Fully Insured Custodians like Knox Custody

All depends on your risk profile.

6 sats \ 6 replies \ @TheBTCManual 11 Apr 2023

I think normies will choose to have their bitcoin with a custodian or distributed federation who will eventually rug them, or they will hold it in a software wallet that they will expose to the malware of social engineering attacks or hold it on a hardware wallet that they will lose the device and the keys.

It's a funny old game, in bitcoin you are your worst enemy

0 sats \ 5 replies \ @satoshisat OP 11 Apr 2023

This is precisely what I think as well which means that the vast majority of people will at best not realize the benefit of Bitcoin (will use Bitcoin "banks" that will have the same pitfalls as fiat banks) or at worst will lose all of their life savings. Either one of these will impede Bitcoin from really catching on with the masses.

264 sats \ 4 replies \ @kepford 11 Apr 2023

Bitcoin banks would not have the same pitfalls. For one, the biggest pitfall of banks as they stand today is not the banks themselves but rather the banking system. The money printing Fed. For most people banks work just fine. That is until they don't. The real question is, why would someone trust a bad Bitcoin bank when there is open competition between banks. I imagine we will see many more FTX like situations in the future until people learn. I think you'd see competition create stronger banks. A bitcoin bank in the future could offer collaborative custody as several companies like Unchained Capital.

The bigger problem is the state and its control over money. We can argue about who is running who but the banks and the state have monopolies across the globe. The bitcoin network is one of the first real threats to this domination. The masses will go for what works and what is easy. I don't think the average person is going to have a hardware wallet but who knows. People like us are terrible at predicting the future and we do many things today that our ancestors could not have imagined.

I've been thinking about the day when Bank of America buys out a bunch of these bitcoin companies. When and if that happens we know we have won. The other alternative which I would rather see is BoA going out of business.

0 sats \ 3 replies \ @satoshisat OP 11 Apr 2023

I agree with most of what you've said. However, existing collaborative custody solutions such as Unchained Capital have, what I would consider, two major drawbacks:

If the customer posses 2 of the 3 keys (as is the case with Unchained Capital) then this does not protect against theft.
If the customer does not possess enough of the keys to not have to depend on the "bank" to withdraw funds, then you have the very scary possibility of the "bank" losing the key they hold for you and now you've essentially lost all of your savings. Another possibility is that they hold the key they hold for you hostage for whatever reason (think canadian government and the bank accounts they froze during the trucker protest).

So that leads to my main question: What method can be implemented to provide someone with the benefits the fiat banks offer while still maintaining the benefits that Bitcoin offers?

1 sat \ 0 replies \ @kepford 12 Apr 2023

I think this sums it up.

The average man does not want to be free. He simply wants to be safe.

~ Henry Louis Mencken

1 sat \ 1 reply \ @kepford 12 Apr 2023

There are many solutions to this but all of the ones I can think of have the trade off of less security and more trust. I don't think you can find an answer that doesn't involve the tradeoffs. What is different though is people will have an option they never had before.

0 sats \ 0 replies \ @satoshisat OP 12 Apr 2023

Fair enough.

10 sats \ 0 replies \ @kakocuro 11 Apr 2023

This is a very good question and I completely agree with you. It is a big hurdle. I still remember the first time I sent a transaction. I had to work up a nerve to do it and then sat there, refreshing the destination address whether it received it. The nervousness of the btc being somewher in ether beyond by control was not fun. Of couse, now I don't even worry about it, you get used to it, but I am also a technical person.

Many people are still not technical enough to understand how bitcoin works. We still need 2 generation shift in order for this to change a bit (at least 50 years). That is why you cannot compare storing bitcoin to cash. Everyone can use their hands and pockets, but not everyone is comfortable with using a smart phone and a computer (at least not at this stage).

With banks, you sort of get a do over if you send your money to the wrong account. With Bitcoin, you do not. Perhaps a feature that should be introduced.

Plus, since there is not central entity managing bitcoin, there is no organized customer support. Which of course is scary as hell for majority of people that they do not have anybody to contact regarding any issues with their wealth. (going to ask questions in Telegram or Discord to solve your problem is not an option for majority).

I think that decentrilized bitcoin network will be the engine that keeps turning and there will have to be centralized entities that help people with their needs. So, there still will be banksters and other ticks that suck blood out of the oblivious average consumer.

2 sats \ 0 replies \ @nullama 11 Apr 2023

Some will use banks to keep their Bitcoin "safe"

1 sat \ 3 replies \ @random_ 11 Apr 2023

“O divine art of subtlety and secrecy! Through you we learn to be invisible, through you inaudible, and hence we can hold the enemy's fate in our hands.”

-Sun Tzu

0 sats \ 2 replies \ @satoshisat OP 11 Apr 2023

No clue what this means lol

1 sat \ 1 reply \ @random_ 12 Apr 2023

To be honest, I think Sun Tzu was a visionary. The Art of War is great for any kind of relationship, be it personal, business, or adversary.

Speaking of Bitcoin, and the general bitcoiner condition, the path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. (He is outnumbered, outgunned, and outbrained.)

In this condition, stratagem is about the only way to survive.

Get creative with how you generate and store your private key, and don't tell a soul.

The omission of information is a powerful tool.

0 sats \ 0 replies \ @satoshisat OP 12 Apr 2023

Yes, and that's all well and good for us here in SN. However, if we want Bitcoin to take off and/or become mainstream, then there needs to be a method or strategy to secure the lay man's bitcoin without the very high risk of losing it all from a simple mistake.

1 sat \ 1 reply \ @DarthCoin 11 Apr 2023

Read https://darthcoin.substack.com/p/bitcoin-private-banks-over-lightning

0 sats \ 0 replies \ @satoshisat OP 12 Apr 2023

I read that article a year ago I believe. If hyper local private banks (think family or town owned) is your answer then I would say that all that does is shift the responsibility from the individual to another individual or group and centralizes a bunch of wallets into one main database of keys that makes it an even juicier target for hackers and more likely to get compromised if the person or group managing the hyper local bank is less not up to snuff on their IT security knowledge.

1 sat \ 9 replies \ @clr 11 Apr 2023

Bitcoin, by it's very nature, is not at all forgiving.

Exactly. It's about personal responsibility.

My take is that the state and the fiat system will get so bad, weird and dictatorial that people will adopt bitcoin out of necessity, rather than out of convenience.

10 sats \ 8 replies \ @satoshisat OP 11 Apr 2023

Yeah, no. If personal responsibility is what you're going to tell someone when they've lost all of their life savings because they made a mistake then Bitcoin will never take off. The rate of people losing their savings will eclipse any other benefit.

Let's not be naive here. There is a benefit to the fiat system and that is the protections it has in place against scams and theft. I know that if someone steals my credit card info and uses it, I will not lose any money.

What I want to try and figure out is if it's possible for Bitcoin to have some sort of similar protection. Maybe it's not something that exists today but something that is being worked on or can be worked on in the future?

Maybe the answer is that these two things are mutually exclusive. Maybe Bitcoin can't be Bitcoin without it being unforgiving. I hope that's not the case because if it is then I really can't truthfully see a future for Bitcoin.

10 sats \ 7 replies \ @Undisciplined 11 Apr 2023

There will likely be insured custodial "banks" that offer financial services. Those deposits would probably come with a monthly fee to cover the insurance costs, rather than bearing interest like today's bank deposits.

10 sats \ 6 replies \ @satoshisat OP 11 Apr 2023

So I was thinking that as well but then what stops Bitcoin from following in the path of fiat once you introduce "banks" into the equation? Would the bank hold your private key or would they hold one key of a multisig? I guess if its the latter, then this would prevent the bank from falling into the fractional reserve trap that fiat banks are in.

So maybe that's the answer. Bitcoin banks that hold one key of your multisig wallet and charge a fee to cover insurance. One problem I see with this approach is that the fee would have to be pretty high to be able to cover the potentially massive losses that some people may incur. Hmm...

Another approach could be a bank that sends funds in time locked fashion to allow the owner to cancel the transaction if fraud is detected. The only problem with this is how long would the time lock be and then this would slow transactions down considerably.

Is anyone in the Bitcoin community working on this problem? Are there any promising solutions?

264 sats \ 5 replies \ @Undisciplined 11 Apr 2023

I think what might stop the old gold-fiat-collapse type pattern is the inability to confiscate Bitcoin. There probably will be credit bubbles built on top of a Bitcoin standard, but since people can always opt to manage their own Bitcoin accounts the whole system won't turn into a house of cards.

As far as specifically how these institutions will be set up, I don't know, all of the above probably. Whatever is possible on Bitcoin and meets some consumer preferences will be done.

0 sats \ 4 replies \ @satoshisat OP 12 Apr 2023

This is a good point but I would argue that any type of "bank" would have the ability to confiscate bitcoin. For example, if the bank possesses one key of a 2 of 2 multisig account then they can just refuse to provide the key to the customer if so coerced by a group or government. If the bank possesses only one key of a 2 of 3 multisig account and the customer possesses 2 keys then the bank only serves as a backup in case of a lost key and doesn't solve the problem of the customer having to be very careful not to get scammed out of their keys and bitcoin.

1 sat \ 3 replies \ @Undisciplined 12 Apr 2023

Well, banks now can confiscate people's money and almost no one cares, so I don't see why that arrangement wouldn't continue.

0 sats \ 2 replies \ @satoshisat OP 12 Apr 2023

Exactly so why would a lay man switch to Bitcoin as opposed to staying with fiat? You cannot implement methods in Bitcoin that have the same consequences as fiat otherwise you remove any incentive for people to make the move.

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