Not true:

http://www.bloomberg.com/news/2012-01-31/venezuela-receives-...

http://www.forbes.com/sites/afontevecchia/2013/01/16/germany...

Not only is gold shipped frequently, it's also stolen frequently:

http://rt.com/news/gold-shipment-stolen-france-304/

http://www.reuters.com/article/2013/05/16/us-usa-miami-gold-...

Not only is Bitcoin sent frequently, it's also stolen frequently:

http://rt.com/news/bitcoin-hacking-stolen-million-417/

http://www.nbcnews.com/technology/250-000-worth-bitcoins-sto...

http://www.esecurityplanet.com/network-security/czech-bitcoi...

edit: unrelated, someone should make an index of how many Bitcoin threads hit the front page of HN per day.

Your point stands, but most thefts occur on third party sites/applications where the address of the coins and their private key are stored in a central location. Owners of the bitcoin should transfer their coins to a private wallet.

I don't understand how so many sites can't use password hash generation to secure the private keys, or something to keep it more secure. The first link you posted was a site run by an 18 year old.

Sorry to digress a little, but I'm sensitive on age issues :)

Pinkie Pie won his first $50k award by creating a 0-day sandbox escape on Chrome, by chaining 10 different vulnerabilities. He was 19 (now almost 21). Two years before, at 17, he released jailbreakme.com, all by himself, which was a 0-day able to jailbreak all iOS models shipped to date by just visiting a website.

Age means nothing by itself, but the point is correct. The problem is that we don't know how much we can trust bitcoin site owners, as most of them are relatively new with no history to inspect, closed source, and sometimes even run by anonymous users whose experience we can't inspect.

Anecdotes don't negate stereotypes, which are themselves generalizations across numerous anecdotes. And stereotyping is not by itself an invalid source of information, just less reliable than, say, a study. Everyone knows one person who negates a stereotype -- any stereotype. The existence of that person doesn't reduce the usefulness of that stereotype.

Sure, there are 18 year olds with impressive technical chops.

But do you know _anybody_ who would deposit money in a bank run exclusively by an 18 year old?

Coding skills can be created and honed by highschoolers - business, legal, and commercial experience - very much less so.

I think any skills can be created and honed by highschoolers.

But I think it's extremely rare in the cases you mentioned.

the question is, if they really know if he/she is 18 year old or something.

Outliers exist, this doesn't make them likely, age does matter far far more often than not. Generalizations have value, but they're not expected to always be true.

Sorry, didn't mean to put down the skills of young people! I'm 28 and I work on lots of security related systems, and although I understand most all of it, I wouldn't attempt to build a Bitcoin exchange without someone with years and years of hardened workplace experience. That's all I meant ;)

This is a good point and one that I considered and wish I followed up on. I'm in the "support queue" with Coinbase right now because they absconded with 10% of my bitcoin holdings for no discernible reason. In case you're concerned, I'm not the one with $150M in bitcoin - it was 1 btc that went missing (greatly appreciated in value from when I acquired it).

Because "online wallet" sites are the sort of bad idea that _needs_ to have access to the private keys. If you can spend bitcoin out of an "online wallet", the person in control of the software managing that wallet _does_ have access to your bitcoin. Even if they've tried to set things up "securely", the very best they can do is achieve Lavabit levels of security - if they (or someone coercing them) wants to, they'll get full access to your funds anytime you try to access them.

Think of them as like keeping your change on the bar - the security relies _purely_ on social conventions encouraging the bar owner, bar staff, other customers, and your friends to not take your money.

You would no more store your weekly pay, your rent money, or your new car savings on the counter at a bar - why the hell are people storing those sorts of values of bitcoin in other people's webservices?

Sure, online wallets might be _useful_, but anyone keeping any more value than they can afford to lose in one is insane (or, less critically, very poorly informed).

True.

I may be wrong here - but is the private key only required to send the money? So, if the user kept the key and it wasn't recorded on the server...or if they use some type of password hash for encrypting it, then there wouldn't be hundreds or thousands of wallets stolen at once. The user would enter their password when they want to transfer funds, the hash is calculated, private key decrypted, transaction made, and the private key is never recorded anywhere.

But, this would require the user to NEVER forget their password, or else they lose their money.

If the user kept the secret key, that's not much of an online wallet - you might as well just use your secret key at home and send it directly yourself. They could encrypt it with a password or a pin that isn't saved on their site so that you would have to enter it to decrypt the secret key. That still counts on the site not just lying and keeping it or you getting it keylogged or otherwise compromised on your side. Many online wallets do nothing of the kind, they simply have the secret key and use it to send. Someone with your password or access to the site could do the same. It's the same as a normal bank really, you have no physical/technical control over what they or someone who snuck into the bank does. You can control your access credentials (passwords, cards, account numbers, ID info, etc) and that's good and well, but there's nothing preventing it from disappearing on their side besides what they (not you) do for security.

It's possible to sign transactions offline, so that the private key never touches a device that's connected to the internet. Check out http://www.bitcointrezor.com/

How about the users keeping the key and supplying each time its need from a separate secure app? And that app wouldn't even contain the complete key, but requires they supply the last three digits each time. And they can tattoo that somewhere on their body.

It's well-known that you can at least secure your bitcoins as well as you can secure gold, if you use cold wallets.

The advantage, however, is you don't have to worry nearly as much about the security of a transaction (moving it from one place to another)

It has been demonstrated that:

1) gold can be stolen due to mistakes

2) bitcoin can be stolen due to mistakes

but this does not mean that it is impossible to avoid having either stolen.

I agree that long term storage of both of these can be done very securely, but the risk for both is when trading or using them. Additionally, Bitcoin does require a lot of worry about security - how many people do you think have airgapped wallets?

Aren't the facts that you shouldn't store Bitcoin at exchanges, should use an airgapped storage mechanism, and are otherwise out of luck if your computer is compromised, enough to demonstrate that you also have to worry a lot about the security of Bitcoin transactions? Your stack of gold ingots won't vanish if you take one from the pile in your safe, but your Bitcoins can if you don't take stringent precautions.

If you view a Bitcoin transaction as only what happens on the blockchain, you're missing the context of where it occurs - which gives both gold and Bitcoin risk.

Good point, the minimum security of Bitcoin is that of gold; i.e. a safe guarded by people with weapons.

But since Bitcoin is digital, its maximum security is far, far higher. Your private keys can be encrypted and safely stored with any desired level of redundancy. Paper wallets are a big step backwards.

Also, if secret sharing is used, Bitcoins cannot be stolen unless the attacker gets to k of the n involved parties.

Not really. It is much easier to lose or make illegible a piece of paper or data than it is to lose large heavy gold or to damage the gold to a degree that severely reduces its value.

OTOH, its hard to make redundant copies of a gold bar that retain the full value of the original so that if the original is damaged, nothing is lost.

Actually, you could--you could irradiate the gold to the point where decontamination would cost on the order of the worth of the gold itself.

I don't know about you, but no, I can't do that.

upvote for mentioning the evil scheming of a Bond villain in a serious conversation as a serious answer :)

No one said it was impossible to damage gold (there are easier wayd than to make it radioactive).

It's just much harder compared to doing comparable or greater value destruction to a bitcoin address, especially accidentally.

The difference is Bitcoin can be secured much more cheaply than gold. You can't encrypt gold, setup "n-of-m" multisig transactions, etc. Unless you want to transport gold yourself you're always going to have to trust someone.

Hardware wallets should help immensely as well.

From where I stand, this seems to be true of Bitcoin as well. I've never had any Bitcoins personally, but don't you have to store them in a wallet, which you're either going to have to worry about backing up, keeping secure, etc on your own. Or you're going to have to trust someone else to do it for you.

There is a difference in how the two scale, because one is physical.

Adding a BTC to a transaction doesn't really require any additional infrastructure. But once you've packed your first tanker with gold, you kind of have to hire a second boat.

Given the way each scales, it seems that BTC transfers are easier, at least at some values.

There is not enough gold in the whole world to fill up a tanker.

The word "tanker" was evocative, I wouldn't get hung up on it.

All I was saying was that physical stores of value increase in awkwardness (principally through weight and volume) when you increase their number, not so for digital.

Challenges in movement of large sums of gold: http://blogs.reuters.com/felix-salmon/2011/08/23/how-to-get-...

Here's what $300 Billion in gold looks like: http://www.celebritynetworth.com/articles/entertainment-arti...

(Note that it would be harder to transport, than, say, the amount of gold one can fit in a pocket.)

You can also store it physically, like on a piece of paper I believe. Or on a USB.

Yep: https://blockchain.info/wallet/paper-tutorial

As with _all_ security, there's a tradeoff between security and convenience. Inline wallets are spectacularly convenient - and guess what that implies security-wise?

Paper wallets are much more hassle. But a paper wallet in a bank vault is arguably up there with the most secure bitcoin storage techniques.

As the stored value of your bitcoin varies - so should your security requirements. If I need to keep under $100USD available to pay for my anonymous vpn or my torrent-box vps - an online wallet (who's operator could make off with my half or quarter of a bitcoin at any time) might be a sensible choice. If I'd been mining bitcoin at a reasonable rate since 2009 and was sitting on a house-worth of bitcoins, I'd make a _very_ different choice.

Consider the value of your wallet(s) - if they were piles of $50 notes, how much would you spend securing that? Would you leave it in your pocket? Hide it under you mattress? Buy a lockbox or a safe for your home? Rent a safe deposit box? At what stage is a never-internet-connected laptop a perfectly sensible expense to incur? I'd suggest a lot of people I see posting in forums about how much they lost in onine-wallet-hack-de-jour who should be kicking themselves for not having a dedicated $300 laptop fr storing their wallets on.

>someone should make an index of how many Bitcoin threads hit the front page of HN per day

Something like that: http://influxdb.org/blog/visualizing_bitcoin_post_frequency_... ?

Awesome! Thank you, I was hoping someone else would have had the same idea.

This is a point that I can't help thinking about regularly. Gold and cash, at least 147 million dollars worth is physically difficult to store and transfer. In most cases it is also difficult to steal.

The equivalent commodity value in BTC can be stored on a tiny rom, and transferred anywhere in the world for free from anywhere with network access.

I hate to be cynical, because the ideals behind this currency seem nobel -- but I can't help but feel dread that it is only a matter of time before bad things start happening here.

Is this outlook too negative?

Central banks moving gold reserves is very different from everyday financial transactions because reserves have a special status tied to their physicality. They act as a form of physically controlled collateral.

Corporations and individuals generally do not move wealth via physical assets.

False, and trivially easy to demonstrate.

Off the top of my head, I am thinking of ...

- A deep, pervasive culture of gold hoarding and gold wealth transfer for dowries (yes, even in 2013) for Indians.[1]

- Persians/Iranians who have a deep cultural link to carpets as a store of value that can be used in day to day life, but also transported and stored as value.

How about any middle american over the age of 50 who counts his or her "vehicle" as an asset and shops/deals in used cars every 12-18 months. A lot of people think about cars this way.

As for corporations just consider casino counting rooms and exxon tankers full of crude oil.

[1] http://www.bloomberg.com/news/2013-11-17/gold-laden-brides-i...

I think you need to google the definition of 'generally'. A list of narrative exemplars does not refute an assertion of proportion.

Like the first google result for payments volume yeilds this: http://www.gfmag.com/component/content/article/119-economic-... As you can see, credit transfers dwarf everything. It's worth noting that all of these payment types are cleared electronically (including checks).

I sincerely doubt gold bugs and Persian carpet fans are trading at total volumes of 100's of trillions of fucking dollars globally.

True but these are both transferring gold so that the gold is in a different physical location, not transferring gold to pay someone. I'm sure both cases would much rather sell the gold in place A and buy it in place B, but that's just not possible at this quantity of gold.

The same can be done with bitcoins - because they do exist in physical locations (as many physical locations as you want, actually, but you probably don't want too many...)

Is orders of magnitudes larger than 150$, I am pretty sure $150 million are usually wired.

That's only if the two entities can both interact with the global banking infrastructure (i.e. they hold money in reserve currencies, their accounts aren't frozen, etc.)

If someone in Argentina wanted to buy something from anywhere else in the world in 2000, for example, they'd basically have to trade natural resources or gold for access to foreign currency, and then spend that.

Still today in fact. Not sure exactly of all the details, but Argentinians are simply not allowed to change their currency.

They need to fill documents to officially ask the government, which will likely refuse you the right if it is for a huge amount (remember, this 'non-change' policy is exactly for that, avoid flights of capitals).

AFAIK, the government does allow the exchange of currency, it just mandates an unrealistic exchange rate at which there is practically no supply. However, there is a lively black market that is tolerated (probably because it's cash based and thus does not scale but serves average people well enough) - newspapers publish the rates, traders operate quite openly.

In an interesting validation of basic economy, the black market rates are much closer to the official ones in rurual tourist hotspots, presumably due to the much bigger supply of foreign currencies.

I think they use reserve accounts with each other backed against gold held in larger central banks. At the end of the day it's still a plain bank wire (I owe you x) hoping for an opposing (we owe you x) to cancel it off. Or for the reserves to build up of what is owed..

In 2000...

2013 Argentinian here. To buy a house right now you usually have to pay dollars cash because nobody accepts a currency that devaluates 25% per year.

The political class here is crazy corrupt and rich like in every third world country, and they are known for using piles of 500 euros bills to stay out of the bank system because euros have more wealth density than dollars.

I'm a little offended by the "like in every third world country" statement. Chile is not like that at all, and we are a third world country.

In fact, here we are ranked right under (20th) the US (19th) in terms of transparency:

http://www.transparency.org/country#CHL http://www.transparency.org/country#USA_DataResearch

Argentina is ranked 102: http://www.transparency.org/country#ARG_DataResearch

In all of Latin America, the closest countries to Chile in that transparency ranking are Costa Rica, with the 48th place, then Cuba 58th and then Brazil 69th.

Edit: added justification data with links / I'm proud of Chile

Chile will probably stop being third-world soon enough, though (I heard something about startup accelerators popping up there?)

There should be a term for "third-world country that's probably going to stay third-world for the forseeable future, excepting a revolutionary change of government." Maybe... dystopia? Argentina is a dystopia.

Checkout http://startupchile.org they've made a lot of noise. There are quite a few cool (and successful) companies that have come out of there. My two favorites: Padlet (padlet.com) and Admetricks (admetricks.com). Padlet was also in YC and Imagine K-12 (after StartupChile)

USA and allies: 1st-world; Soviets and allies: 2nd-world; all others: 3rd-world.

>Chile will probably stop being third-world soon enough

Sorry, I don't think so. Chile is doing good nowadays but basically their only export is copper. Copper is a semi-precious metal right now and thats why that country suddenly has so much wealth, but the difference between rich and poor is abysmal and their economy is tied to the price a single non-renewable resource.

Compared to Chile, Argentina still has a huge tech industry capable of exporting value-added products like cars.

Chile is in the top-10 freest countries in the world right now, alongside Switzerland, Hong Kong, Singapore and other economic successes. Taxes are low, and there are huge incentives for people to start their own businesses. You can register a new business in 3 days, and registering trademarks is one of simplest processes in the world. This is in very sharp contrast to Argentina.

Yes, copper is selling very well, and it takes up a large proportion of the country's exports, but you are mistaken to think that this is the driving cause of the country's increase in wealth over the last 20 years.

The increase in wealth comes from the fact that incentives now exist for people to create wealth. Where wealth is created, there is more wealth. It's the same principle we have seen working throughout history.

Check out this graphic http://atlas.media.mit.edu/explore/tree_map/export/chl/all/s...

"Third-world" is a loaded term and doesn't really have a useful definition anymore.

You are right, just like developed country. Your comment reminded me of this very interesting video that compares the US, Cuba and Chile: http://www.gapminder.org/videos/gapmindervideos/gapcast-6-ch...

not exactly.. there was a proper term.. fourth world as well.

for 15-20 years, third world in military terms at least, meant the signatory of NAM movement. fourth world was anyone left after that.

The other big issue is how hard it is to exchange pesos for dollars. The government is doing all they can to make it nearly impossible for the average Argentinian to avoid the massive devaluation.

Yes, in 2000, because that was during the period Argentina's currency was collapsed. Any other country's currency could collapse at any time, putting some other group in the same situation.

Rushed and misread your comment, apologizes.

The parent comment said direct transfer. Bank wire involves intermediate parties, is subject to various capital limits, account closures, funds freeze etc.

and fees

with Bitcoin, fees are optional

And if you don't pay the Bitcoin bribes, sorry fees, your transaction can take hours or even days to be accepted by the benevolent miners.

Isn't this what happens at the Reserve in downtown Manhattan?

Everyone just keeps (a huge portion of) their gold in a single vault. A gold transfer involves carrying gold bars from one compartment of the vault to a second compartment in the same vault.

Reminds me one of Michael Lewis' anecdotes from The Big Short. Something along the lines of one of the big Wall Street banks transferring tens of billions of dollars to the Fed by literally gathering up a set of bonds from their safe, putting them in a briefcase and giving them to a secretary and an armed guard to carry to the building across the street where the Fed had set up an impromptu office.

>For money transfer like this we use bank wires

Yeah and there is a fee involved too, right?

Any transfer over 10,000 requires a signature.