Bitcoin: Getting Started

[Wesley]

Have you taken into account the possible existence of a generalized quantum computer? One might or might not exist now, and I have no direct knowledge about that, but I don't think it's impossible that some nation state already has one. I have not tried the math myself, but it seems to me that some implementation of Shor's or Grover's algorithm might be able to break Bitcoin fairly quickly. I am not familiar with the Bitcoin math, and I am not a QC expert myself, so I can't say for sure. That said, I do have a good friend who is a QC expert. Can you point me to a concise paper describing the math? I will shoot it to him.

I don't have the paper on hand, but I do know that if quantum code breaking advances faster than quantum code making then bitcoin will have some trouble.

 

If quantum code exists (which will happen if they actually come close to making a viable quantum computer) then they will migrate bitcoin to the new code.

 

If quantum computing exists and any code can be easily hacked, then the security of bitcoin will be of minimal concern compared to everything else in the world that is currently encrypted at a much lower level than bitcoin is, so either way bitcoin would still be better off and it is not exactly an "apples to apples" criticism.

[LanceD]

So i'm using coinbase to buy coins. 

 

Question is, should I transfer all the coins I buy out of my Coinbase wallet and into a wallet on my phone or pc?

 

Isn't that more secure? 

 

Don't want to get Goxed

[Wesley]

So i'm using coinbase to buy coins. 

 

Question is, should I transfer all the coins I buy out of my Coinbase wallet and into a wallet on my phone or pc?

 

Isn't that more secure? 

 

Don't want to get Goxed

It depends on what you want to do with it. 

 

If you have it on Coinbase, then you are certainly exposing yourself to third party risk to some extent, no matter how good the procedures they have in place are.

 

However, I keep a small amount of petty cash on Coinbase in order to be able to spend the coin if I ever run into a random situation where I want to donate coin or I want to buy something. My requirement for being held on Coinbase in my mind is that "If it gets stolen, I don't care that much". If it ever gets more than that, then I move it off the site.

 

Next, I have what I keep on my PC. There isn't a third party risk, but my computer could still get hacked or my hard drive could crash (so I have paper wallet backups) or other things. I consider this my checking account. I keep a little more than I would have in my petty cash wallet, but if I need the funds it is possible to spend them from my computer or I can send some to Coinbase to refill my petty cash.

 

Finally, I have paper wallets. Someone needs to have the physical piece of paper in order to get the funds. I keep that piece of paper in a rather safe place (people are much better at understanding what it means for a physical object to be safely stored than they do for a digital object to be safely stored). This is my savings account. I never plan on accessing the funds any time soon, but I will slowly add to the account over time as I make more money. However, if something horrible were to happen and I needed to access the funds or if it was time for me to cash out, then I can import the wallet into Coinbase and sell the bitcoin for cash fairly simply. 

 

Thus, it is not necessarily wrong to put your coin in Coinbase. There is a question of how much risk you are willing to take, which always has diminishing returns and never is 0% risk. There are the questions of how much you might spend, how much you are willing to lose, and how much of the coin you need access to at a moments notice vs how much you can store and not really try to spend it for the next several years.

 

Try to pick a method or a funds distribution that best answers these questions for you, and understand that no matter how well a company is run, if you keep money with them then you need to trust them to that level in order to let them hold your money. 

 

I think Coinbase is run much better than Gox, which is why I use them. However, there is no need to expose myself needlessly to the risk that they might fail. 

 

Hopefully I was helpful in my description and didn't make things too complicated for you. I would be happy to explain something further if you would like. 

[LanceD]

That's about what I was thinking.

 

I believe my plan will be to buy coins with Coinbase and then transfer them all out.

 

Splitting them between my "petty cash" Bitcoin Wallet on Android and a cold storage savings account.

 

I just don't trust anyone else to hold my money.