[hayksaakian]

part of the reason is that bit coin does not depend on any banks

if you have 100 btc in an offline wallet, you will still have it tomorrow, despite whatever bugs/attacks hit the exchanges.

imagine if your bank was hacked, many people would literally be removed of their money.

With cryptocoins, you have the advantages of keeping dollars under your mattress while still bring able to spend them anywhere that accepts them.

[mrkickling]

In what way is that different from fiat money? You can keep fiat money in your mattress and spend it anywhere that accepts them. If you have $100 in a mattress (offline) then you would still have it tomorrow. The problem is that the moneys value may change tomorrow, especially if we are talking about bitcoin.

[kordless]

You can't secure cash under your mattress with a password, for one thing. That makes cash (and paper wallets) venerable to physical attack, even by vermin: http://metro.co.uk/2007/03/27/mouse-eats-cash-machine-makes-...

There is no problem with value changing tomorrow as this is a potential problem with any new payment methodologies. Adoption does not appear magically overnight. The US Dollar is velocity stable due to its wide spread use and being propped up by the equivalent of a bunch of duct tape and bailing wire.

[flatline]

I've seen more people get jacked of all their cryptocurrency holdings than any significant amount of fiat on their person, due to targeted viruses and backdoored systems. I've also seen numerous occasions where someone sent money to the wrong address and that was it, the money was forever sent into the void.

There was a guy on reddit who had all of his DOGE and BTC lifted right off his computer. He was using strong, auto-generated passwords stored in a password manager, so he was not even typing in passwords that a keylogger could intercept. Presumably the attacker had a backdoor into his system, watched him work, and just transferred out the funds when he wasn't at his desk. Poof - all gone, with more or less proper security measures in place and no clear sign of an intruder other than the missing money. Several other people reported similar events in that thread.

These are still major problems for mass adoption of crypto, completely setting aside the massive cases of fraudulent pools, online wallets, exchanges, etc., etc. There are many subtle problems that are difficult to diagnose and cure that come with a technological solution like bitcoin, that paper money simply does not have.

[waterlesscloud]

A true story- My grand-uncle, who had lived through the Great Depression, never trusted banks. So he buried a considerable amount of cash in the forest behind his house in mason jars (seriously!).

When he died, my grand-aunt, who always thought he was being silly, went out in the woods and retrieved all the jars.

The cash had rotted and deteriorated to the point that it was unspendable.

However, she was able to work with the US Treasury to sort through the remains and identify the bills and replace them with new currency.

There's not really a bitcoin lesson here, just some family lore that seemed relevant. :-)

[dnautics]

this is why we buy gold and silver.

[StavrosK]

Isn't the commission too expensive?

[nationcrafting]

No. You can usually buy physical at spot + 1 or 2% max. In the UK, coins like Sovereigns or Britannias are capital gains tax free, so you typically pay a bit more for them, like 4 or 5% above spot. But then you won't have the headache of remembering what you bought them for when you sell them (aside from the pleasure of saving CGT-free).

[Canada]

Worth it for long term storage like that.

These days spending old banknotes is problematic, even if they're in perfect condition.

Some people love gold, some people hate it, but everyone agrees it's the only thing that really has zero counterparty risk.

[dnautics]

let's say the trade commission was a horrifying 50%, and in the best case scenario for the other direction the treasury exchanged those bills exactly one for one. Would you rather have $1000 or gold from 50 years ago valued at $500 from 50 years ago? Even if you think gold is in a bubble, and, say worth $200/oz instead of $1600/oz, you would have far more than 5 oz worth from 500 1963 dollars.

[watty]

If someone is going to physically break into your house and access your money what's to stop them from physically assaulting you until you give them the password? Or just taking the computer that stores the "offline" wallet?

[branchan]

Unless someone has some kind of insider information, no burglar is going to assume that you have a stash of bitcoins.

[eclipxe]

Until now!

[anigbrowl]

There are these things called safes...

[branchan]

Are you going to put the safe under your mattress? Or do you think a secure encrypted and password protected wallet stored on a tiny USB drive or SD card might be more secure?

[Sheepshow]

You're right, all solid savings plans must fit comfortably beneath a mattress. Reminds me of the old saying "If I can't lie down and sleep on top of it comfortably, it's not an investment"

[anigbrowl]

Embed it in the floor, since you ask.

Not that I think this is the ne plus ultra of security, but since having a digital wallet doesn't obviate the existence of valuable physical documents (eg passports, title deeds) you might still want to use a safe to protect against fire, burglary, and so on.

One distinct benefit of a physical store is that removal or tampering are more obvious.

[lmm]

If you burn your cash there's zero risk of it being stolen. But what matters is that you have access to it in the future, and I'm a lot more confident of that with a safe than with a complicated piece of electronics that can only be used by connecting it to an even more complicated piece of electronics.

[nmcfarl]

I've had a significant number of USB drives, (and SD drives) get corrupted and simply stop working. This seems to happen with heavy use, but it also happens just sitting in a drawer untouched - for quite a bit of time. I'm not trust these suckers as the sole repository of things as valuable as my pictures, much less cash.

[kordless]

USB drives have the advantage of small. There's literally a hundred places I could hide one in my house. Hell, I could hide 20 fake ones haphazardly and one legit one really well.

The chances of everyone doing this and being comfortable with it is pretty low though. We need brain storage medium.

[SilasX]

I'm not sure that's an apples-to-apples comparison.

In both cases, there is one physical good which, when stolen, deprives you off the money. With cash, it's the physical notes. With Bitcoin, it's the private keys in the wallet (or private key to unlock the wallet's private keys). Making backups of the keys can protect against accidental data loss, but not against theft, as it increases attack surface (i.e. number of locations where the same money can be stolen from).

There is still an advantage here favoring Bitcoin, though: if the key is stolen and you know this, you still have a chance to preserve the wallet's holdings: just generate new keys (addresses) and broadcast a transaction of all the wallet's money to those addresses. If you can get the message to the network's nodes faster than the attacker, the money will be "signed away" before they can use it, and such attempts will be rejected as double-spends.

There is no corresponding feature for physical cash.

[hayksaakian]

You need to physically be somewhere to spend cash, with BTC, you don't need a presence.

While you could construct a procedure to spend cash remotely without one powerful intermediate, this property is just built into to *coins, and it is simply how they work.

[smrtinsert]

A huge difference is fractional banking, which deserves a good read. http://en.wikipedia.org/wiki/Fractional_reserve_banking

[this_user]

I'd argue that fractional reserve banking is still better than having a "currency" that is backed by absolutely nothing and may lose up to 90% of its value on a moment's notice.

[Canada]

> imagine if your bank was hacked, many people would literally be removed of their money.

Are you sure about that? For the most part those transactions would simply be reversed. Bitcoin exchanges seem a lot more exposed to computer security breaches to me.

> With cryptocoins, you have the advantages of keeping dollars under your mattress while still bring able to spend them anywhere that accepts them.

Paper currency is a bearer instrument. It can be used for offline payments. Cryptocoin can't be. Both parties need to be connected to the rest of the coin network so the transfer can confirmed by other nodes.

Not to say that cryptocoins have no under-the-matress advantages. They are a lot easier to hide than cash and you can make backup copies of them, which obviously can't be done with cash.

[base698]

You need to be connected to send them but not receive them.

[Canada]

You certainly need to be connected to confirm that you have received them!

[base698]

No you don't, blockchain.info would tell you.

[akkartik]

Is that really true? Could a botnet not conceivably make transactions out of your wallet? Doesn't the distributed ledger have tentacles reaching under your mattress?

[VMG]

A valid digital signature gives a recipient reason to believe that the message was created by a known sender, such that the sender cannot deny having sent the message (authentication and non-repudiation) and that the message was not altered in transit (integrity).

http://en.wikipedia.org/wiki/Digital_signature

The purpose of the blockchain is to establish an ordered sequence of transactions.

[lmm]

Sure, but no-one calculates digital signatures in their head. Your bitcoins are worthless without computer systems, and those computer systems are the subject of attack by thieves.

[VMG]

Sure, but this attack is not about that.

This is a DDOS attack on the integrity on the distributed database, which is very bad, but not able to spend Bitcoin that isn't yours.

[mrkickling]

http://learncryptography.com/51-attack/

I guess it would be possible.

[SomeoneWeird]

No, even if you successfully achieve a 51% attack, you can't spend coins from arbitrary wallets.

[mrkickling]

Well, you could control the blockchain, wouldn't that include spending coins from any wallet?

[eatitraw]

You don't "control" the blockchain in the strict sense. To generate a transaction from one address to another, you must know the private key corresponding to the sender's address. Without that, the transaction is invalid, and no sane node will accept block containing such transaction.

When you have 51% of mining power, you can do a lot of nasty things(like stopping confirming transaction at all), but not spend someone else's bitcoins.

[maxerickson]

No. Transactions have to be signed by a private key matching the from address.

The double spend attack works by convincing the other party that the transaction has completed (so they release whatever escrow is in place) and then replacing the blockchain.

(But a botnet infection could watch for wallets on a computer and cause the coins in the wallet to be spent)

[SolarNet]

No. The wallets are protected with public/private key cryptography. Controlling the block-chain simply lets you control whose transactions get processed, and hence potentially allow someone to attempt to double spend their money. You could also prevent other people from spending their money entirely.

[ye]

No, a botnet can't ever achieve 51%. One modern ASIC rig is equivalent to a few thousand average CPU+GPU computers that make up a botnet.

[jonknee]

What about a botnet of modern ASIC rigs?

[ye]

How would you get one?

ASIC owners are paranoid about their earnings. They would notice they are getting less than they usually do the next day after the infection.