[Cryptography] Bitcoin theft and the future of cryptocurrencies

[Jameson Lopp]

On Sat, Dec 16, 2017 at 2:25 PM, Phillip Hallam-Baker <phill at hallambaker.com
> wrote:

>
>
> On Wed, Dec 13, 2017 at 5:21 AM, Georgi Guninski <guninski at guninski.com>
> wrote:
>
>> If your bitcoin wallet is compromised, all your bitcoins are gone
>> forever. With a credit card, you have some chance of only minor
>> damage. If your computer is owned, your wallet is at risk.
>>
>> This appears major problem for the widespread adoption of bitcoin
>> IMHO.
>>
>
> ​Since a vast proportion of the market cap of BitCoin has been stolen at
> some point, clearly it isn't a bar to whatever it is Bitcoin it adopted
> for. It does disqualify it as a payment transfer system.​
>
>
Bitcoin is disqualified as a payment transfer system because it's fungible?
Does not compute.

>
>
>> Fixing it appears to contradict decentralization, which opens another
>> can of "worms".
>>
>
> ​Here is the central problem with BitCoin. Proponents wave away all
> objections claiming that cryptocurrencies are in their infancy and these
> will be solved. What they refuse to acknowledge is that every solution to
> these problems that has shown to work in practice requires the introduction
> of the trusted third parties and intermediaries and regulation that they
> claim to have made obsolete.
>
> Its like taking the alternator off your car and showing it will still
> start, it just won't run for very long without tons of batteries and that
> therefore the alternator was never necessary because someone will find a
> solution that doesn't need such big batteries. Of course such a solution
> already existed and was known - the alternator.
>
>
Second layer solutions such as Lightning Network do not require the
introduction of trusted third parties.
https://www.youtube.com/watch?v=rrr_zPmEiME

>
>
>> Potential approach is to use "trusted wallet proxy", but this may not
>> work in practice.
>>
>> Are these concerns taken seriously?
>>
>
> ​Not by enthusiasts. ​
>
>
>
>> Any technical attempts at mitigating cryptocurrency theft?
>>
>
> ​None that I can see.​
>
> I'm surprised that no one has mentioned Mosen-Eyal-Sirer style covenants.
http://hackingdistributed.com/2016/02/29/bitcoin-vaults/

http://fc16.ifca.ai/bitcoin/papers/MES16.pdf

Last I recall, they had been implemented in the Elements Project
https://blockstream.com/2016/11/02/covenants-in-elements-alpha.html


>
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