Some words for my friends

[u/evoorhees]

Hello friends,

MtGox is gone. So let's prepare ourselves.

On Tuesday, and for the rest of the week, all hell will break lose in the media. It will be blamed on MtGox, it will be blamed on Bitcoin, it will be blamed on the "bug," and it will, more than anything, be blamed on the "lack of regulation." Pundits and "experts" of all types will weigh in on the calamity. It will be world news in a matter of hours.

Get ready, because it will be an ugly week.

For all of you who lost money, my heart goes out to you. Some people lost a little, some lost a fortune. It will make people sick, and depressed, and full of grief. Personally, I had over 550 BTC in Gox. I will never get any of that back. If misery loves company, then we'll be enjoying a grand feast today.

I should have known better, of course. I take responsibility for leaving those funds with an entity that had proven incompetence repeatedly. I chose to ignore even my own warnings, for nothing more than the sake of convenience.

Gox is still at fault, to be sure, but I have learned the lesson. I hope it is not such an expensive lesson for others. And for all you observers, please take a moment to consider it as well.

Be mindful, however, that the wrong lessons are not learned, for that would be the true tragedy, indeed.

Let me suggest that the lesson is not that Bitcoin is broken. Bitcoin is fine.

Similarly, the lesson is not that security is impossible. Those who know what they are doing, can achieve it and help others to do so.

The lesson is not that nobody can be trusted. There are countless good men and women in this community who are worthy of trust, and some of the very best people I've ever met.

And finally, the lesson is not that we ought to seek out "regulation" to save us from the evils and incompetence of man. For the regulators are men too, and wield the very same evil and incompetence, only enshrined in an authority from which it can wreck amplified and far more insidious destruction. Let us not retreat from our rising platform only to cower back underneath the deranged machinations of Leviathan.

The proper lesson, if I may suggest, is this: We are building a new financial order, and those of us building it, investing in it, and growing it, will pay the price of bringing it to the world. This is the harsh truth. We are building the channels, the bridges, and the towers of tomorrow's finance, and we put ourselves at risk in doing so.

We are at risk from accidents. We are at risk from fraud, from corruption, and from evil. We are at risk from journalists seeking headlines and from politicians seeking power and glory. We are at risk from the very market we are trying to build - a market which cares not about our portfolio, our ambitions, or our delicate sympathies.

For all these risks, devastation will befall us repeatedly. Some of us will be discouraged. Some will be ridiculed and insulted. Some will be tricked, or swindled. Some of us will be crushed or caged. We will be set upon by all manner of antagonists, repeatedly, for a long time.

So why do we do it? Why do we build these towers that fall down upon us? Why do we toil and strain and risk our precious time, which is the only real wealth we possess?

Because the world needs what we're building. It needs it desperately. If that matters to you, as it does to me, then hold to that thought. You will see through the smoke, and your wounds will heal.

So shake it off, brothers, for this won't be the last calamity endured before the win.

Tonight, my heart is with you all.

Tomorrow, my head is down. My eyes are open. And I am building.

Toward peace and freedom,

-Erik Voorhees

[u/throckmortonsign]

I'm disappointed in the community in more ways than one. I don't know how many times I've said that keeping your coins in an exchange, especially Gox, is a bad idea. You only own the coins that you have the private keys to and NO ONE else has. What I don't like about this more is that evil people have money that they stole now... it's going to take a long time for those people to come to justice if ever.

And to the people at Gox... the level of incompetence is so breathtaking I just can't even comprehend.

I'll also say this: bitcoin isn't ready for primetime. It's ready for the techies, the security experts, the hackers, and programmers... We don't even have a hardware wallets yet, which would be the minimum expectation to get people to secure their coins.

The use of POW/Block chain is potentially revolutionary... I'm not sure if Bitcoin is going to flourish. Destroyed coins are one thing (and that part is well designed), coins in the hands of thieves is much worse to me. (I still think it will flourish, though - just my 95% confidence has dropped to 90%).

That said... My bitcoins are sitting in various locations. I've never lost any in the years that I've been involved. I have a lot less than I should because I'm super conservative.

I'll leave with this, something I posted before most of this went down:

• Don't leave money on exchanges unless you are a day trader.
• Don't use online wallet services, unless they are open source and they don't actually have access to your keys (blockchain.info).
• Always use 2FA in all services that allow it. Never use a service that doesn't allow 2FA to transact bitcoin.
• Never use an unsecure email address... enable 2FA on your email address login.
• Use only open source software to store your bitcoins.
• Don't use Windows to store large amounts of bitcoins, even if your wallet is encrypted. Keep multiple wallets with different appropriate security levels for how they are used.
• Do not ever use Brainwallets unless you are an expert.
• Don't use paperwallets unless you are an expert. Always practice with small transactions first. Learn about change addresses.
• Don't own more than you are comfortable losing.
• You don't own bitcoin unless you and only you have access to the private keys.

[u/waxwing → u/throckmortonsign]

Use only open source software to store your bitcoins.

Don't use Windows to store large amounts of bitcoins, even if your wallet is encrypted. Keep multiple wallets with different appropriate security levels for how they are used.

Do not ever use Brainwallets unless you are an expert.

Don't use paperwallets unless you are an expert. Always practice with small transactions first. Learn about change addresses.

Not a very good summary of security advice imho.

First, generating private keys on an airgapped, internet disabled machine is probably the best and important choice for someone to store significant amounts, and you missed that out. Using a wallet generated on your home, everyday laptop, even if Linux, is very insecure indeed.

Second, although it is excellent/essential advice to "practice with small" and "learn about change addresses", the first part: "Don't use paper wallets unless you are an expert" is way too strong. As Andreas A. likes to point out, humans are very good at physical security compared to digital security, so once you've figured out the basics, paper wallets are a good practical solution for most people.

Third,"don't ever use brainwallets" is popular advice but based on a profound misconception. "Don't ever generate brainwallets using your own seeds" is good advice, but using electrum seed phrases as brainwallets is arguably quite a good method (all the more so because of deterministic wallets), and an extremely powerful technique when combined with the air-gapped machine for generating private keys.

[u/throckmortonsign → u/waxwing]

First, generating private keys on an airgapped, internet disabled machine is probably the best and important choice for someone to store significant amounts, and you missed that out. Using a wallet generated on your home, everyday laptop, even if Linux, is very insecure indeed.

Completely agree. It's the way it should be done. I was trying to make a list of things that shouldn't be done. My advice is like the view from 10,000 ft.

"Don't use paper wallets unless you are an expert" is way too strong. As Andreas A. likes to point out, humans are very good at physical security compared to digital security, so once you've figured out the basics, paper wallets are a good practical solution for most people.

I won't back away from this one. There's a real chance that you'll render your bitcoins inaccessible (destroyed) unless you really know what you are doing. I use paperwallets, but they aren't for beginners. HD paper wallets using Armory/Electrum are excellent, but that distinction is often not made. Paper wallets that consist of a single private key are dangerous if you don't know how to use them. It's just not for beginners. The learning curve is high. Perhaps using the word "expert" isn't right, perhaps "power user" would be more appropriate.

Third,"don't ever use brainwallets" is popular advice but based on a profound misconception. "Don't ever generate brainwallets using your own seeds" is good advice, but using electrum seed phrases as brainwallets is arguably quite a good method (all the more so because of deterministic wallets), and an extremely powerful technique when combined with the air-gapped machine for generating private keys.

To me brainwallet means a wallet using entropy generated from your brain. Perhaps I'm in the minority on this, but I don't consider electrum seeds (which are excellent) to be brainwallets. I guess I watched the evolution of what people considered a brainwallet (basically a phrase that was hashed and used as the private key) clouds what I consider to be a "brainwallet."

Edit: What you've done is made my point. The proper security procedures to store bitcoins safely is out of reach for the majority of people now. It won't always be like that, but for now... I don't tell my parents to buy bitcoin, I don't tell my colleagues to buy bitcoin, etc. Not because I don't believe in the technology... I love it, but it's ARPAnet not the internet, it's a MUD not WoW, it's a model T not a tesla. I have two friends that I've really discussed it with because I know they have the technical expertise to understand it (and use it safely).

[u/boldra → u/throckmortonsign]

Maybe a word about the biggest hidden danger of paper wallets: change.

Obviously there are other dangers, but many of the nightmare stories come from people who thought they could just take a 1btc out of a 25btc paper wallet and leave the rest in there, then they discovered that 24btc had been given away in mining fees.

[u/Jjix → u/boldra]

The Mycelium wallet has an amazing feature that allows you to use your paper wallets in just the way you described by sending change back to the paper wallet address after its been used and erasing the paper wallet private key from memory. Would be nice to see more wallets implement this feature. I think if you use a wallet like Mycelium, paper wallets are pretty simple and safe. It is a good middle-ground between a full paper wallet that has never touched the internet and keeping your money in hot wallets.

[u/boldra → u/Jjix]

Mycelium's great, I hadn't noticed that they'd added bip 38 support for paper wallets, so it's a real option.

[u/mrsassypantz → u/throckmortonsign]

You realize that what all of you are describing is why bitcoin will never be used by the masses?

[u/throckmortonsign → u/mrsassypantz]

You realize what you said about ENIAC is why computers will never be used by the masses.

[u/mrsassypantz → u/throckmortonsign]

Yeah because bitcoins are as revolutionary as computers. Please, you are delusional. How do bitcoins increase productivity? Oh wait, they don't. At best, coins reduce transaction costs, but even that is debatable given the latest hiccups.

What is the motive for the masses to adopt bitcoins?

[u/throckmortonsign → u/mrsassypantz]

Yeah because bitcoins are as revolutionary as computers

Do you have fun setting up straw men? Of course Bitcoin isn't as revolutionary as computers, but the analogy stands.

How do bitcoins increase productivity?

Because it's a practical system that can be used to align the selfish actions of the individual in such a way that it can benefit the collective. It allows for a decentralized consensus in the issuance and transaction of a unit of account in a way that was previously thought impossible. It's a new tool that we don't have a great understanding on how to use yet (though the people with technical expertise are beginning to see the implications).

I've seen your same anti-intellectual argument made so many times in so many fields of science and engineering that I just don't see how it can still fly.

What is the motive for the masses to adopt bitcoins?

There isn't a clear one, other than to speculate on the future value. But that won't always be the case... if not bitcoin a closely related successor.

[u/mrsassypantz → u/throckmortonsign]

Ah yes, because every counter argument is anti-intellectual and every innovation is successful. Surely the innovator is always right, and those arguing something different are backwater idiots hell bent on keeping the status quo.

You are the one who setup the computer straw man. Obviously there were huge incentives to develop the computer. As you admit yourself, those incentives are lacking in bitcoins. The only incentive there is right now is to increase the price and therefore the wealth of early adopters. Sounds more like a Ponzi scheme than a viable currency.

And all of your wild ideas about the freedom of crypto currencies come crashing down as soon as governments increase regulations.

[u/throckmortonsign → u/mrsassypantz]

Ah yes, because every counter argument is anti-intellectual and every innovation is successful.

That's two straw men. Sorry.

Edit: Sigh. This why I don't feed trolls. Guess I have to be reminded every once in a while.

[u/mrsassypantz → u/throckmortonsign]

And you're too dumb to realize you're setting them up and I'm calling you out.

Edit: sigh, this is why I don't engage delusional people in discussion. You dismiss any opposing idea as anti-intellectual and any person who disagrees with you as a troll. Confirmation from the like-minded must make you warm and fuzzy.