_ Here's how it works: Anybody can ask a question Anybody can answer The best answers are voted up and rise to the top up vote 0 down vote favorite I'm new to bitcoin and have been reading some intros and FAQs.Most features of bitcoin seem better than our current currency systems.However, the one thing that strikes me is the ability to have your wallet stolen.Either through malware, keylogger, in person, etc. I've reading some posts on here about securing your wallet.But the fact remains that it could get stolen.And if it gets stolen your bitcoin balance is gone.There is no way to recover it.If you compare that to credit cards, when your card (or card number) gets stolen, the thief may make payments using the card, but the trusted third party (bank or credit card company) will usually not hold you liable and refund the money.Therefore, if bitcoin were to become the most widely used currency in the world, people could lose their life savings just by a single virus infection or devious hacker.

Having that bank or credit card company involved provides that extra level of shelter.Does anyone think this will hold back bitcoin use from becoming widespread throughout the world?wallet security trust up vote 1 down vote No, in fact from a payment recipient's perspective this is one of the biggest selling points of Bitcoin!The service provided by the trusted third party essentially represents an insurance on your balance.This insurance service causes a significant cost to the provider which on the other hand sustains itself by forwarding the cost to its users.this is why many credit cards cost annual fees and why shop owners are charged a percentage of payments as fee by the credit card company.In that aspect, Bitcoin is like cash: After it leaves your wallet, you cannot get it back by petitioning a third party.I am sure, if you ask shop owners most of them would much rather have cash than a credit card payment as it just about doubles their margin.up vote 1 down vote Security is, of course, an issue and when using Bitcoin you should exercise caution.

That being said, it is important to remember that the Bitcoin community is rapidly evolving, and new technologies, systems, and services are being developed.As Bitcoin continues to evolve, companies and computer programs will come up with new solutions to challenges and problems.For example, as you point out wallet security is a major issue.Already, companies are coming up with more secure wallets, that are hacker proof, and larger exchanges and service providers are being established.For a major company like Mt.Gox there is no incentive to steal Bitcoins, they have a profitable business model and any blow back from theft would far outweigh the incentive to steal.Over time, companies will probably grow in size so that they can provide third party security comparable to a bank or credit card company for Bitcoins.Of course, it's relevant to wonder if they can do so while maintaining confidentiality.Security companies will also likely grow in size past that point that they would consider trying to launch any type of scam.

Think about it, do you think Norton Anti-virus would ever try to launch a virus program?Currently, most Bitcoin security companies are pretty small, but over time a few brand names will likely emerge.So to get to the point: No I don't think that the security issues you present will hold back Bitcoin.The Bitcoin community is creative, dynamic, and able to respond to challenges.Companies and programmers will see these challenges as opportunities, and will respond appropriately.bitcoin group sam leeMy guess, Bitcoin will eventually be able to provide a sort of third party security, much like a bank, to those who want the extra layer of security, most likely for increased fees.ethereum ether tokenThose who do not want or need that extra layer of security won't be forced to accept it.ethereum cash deposit

So, is the lack of a third party an advantage or disadvantage?Honestly, I think that depends on the situation.If you want to have a highly confidential way to store and transfer money, having a third party involved means someone will be looking into your transactions, at least to some extent.If your biggest concern is having a secure way to store money, than third parties can provide extra security.That being said, there are ways to secure your Bitcoins, and as I stated I believe Bitcoin will eventually be able to provide similar levels of protection.ron paul bitcoin youtubeOn a separate note since you are new to Bitcoin, if you are using Bitcoin, I would personally advise that you not keep all of your funds in one account.bitcoin miner software comparisonDivide your bitcoins into several accounts, and if possible keep the bulk of your funds secured offline.python send bitcoin

If you have a large amount of funds, you could even consider something like a safety deposit box at a bank.Also, I advise going with trusted brand names, like Mt.Gox, or using service providers backed by Silicon Valley funding, things like that.These sites and services should be more secure.Browse other questions tagged wallet security trust or ask your own question.Brace yourselves for the next wave of bitcoin startups, and prepare to be surprised: they may not have much to do with bitcoin as a payment mechanism at all.We usually see bitcoin as disruptive to the payments industry, as its technology greases the wheels of transaction, and eliminates the need for currency conversions and hefty fees.We think of banks and credit cards.But just as we're getting used to that idea, the next wave of disruption is coming – with new targets.This wave takes aim at those who hold money for us as guarantors for contracts or deals we've made: escrow companies, betting agencies and bookmakers.Digital currency technology has the ability to secure and enforce a whole range of digital contracts all by itself, performing functions that have previously required a trusted (human) third party with access to the deal-makers' money.

Futures contracts, world event prediction exchanges, insurance, even your last will and testament can now be settled in this manner.If the subject of the agreement is something that can be factually proven with a specific time set for the decision, it's possible.Enter Reality Keys, a new service by Tokyo-based startup Social Minds due for public launch on 20th January.Reality Keys provides real-world data in a form that can be used to complete or disregard bitcoin transactions, based on quantifiable facts.Users can request information on a range of subjects including: exchange rates, cryptocurrency transactions and data in the Freebase open database, which lists 39 million topics covering everything in the known universe.Users then specify a date at which they would like to confirm the status or outcome of a particular event, and two cryptographic public keys are provided: one for if the event happens and another for if it doesn't.At the specified date, a private key is released corresponding to the outcome that occurred.

Social Minds' founder Edmund Edgar says he saw the potential for bitcoin to be used in this way after the failure of the original Intrade prediction market, which closed last April with a $700,000 cash shortfall following the death of its CEO John Delaney on Mount Everest.Intrade, which took bets in US dollars on real-world events and was known to be quite accurate at predicting them correctly, was also the subject of regulatory action by the US Commodity Futures Trading Commission.Similar companies have since risen, like Predictious, which takes bitcoin bets on anything "from presidential elections to the Oscars, to the sales of the iPad."The catch is that you need to deposit your money with a third party, Predictious itself.Two examples in which Reality Keys could be used are: 1) Currency hedging.You're an American importing wine from France.But fluctuating currency values hit your expenses hard as the Euro suddenly shoots up, and you must still pay your staff in US dollars.2) Event prediction and betting.

You'd like to put a wager on Hillary Clinton winning the 2016 presidential election.In both scenarios you deposit a certain amount (let's say 1 BTC) into an address that required two of three keys to spend: your key, the other person's key, and the Reality Key for one of those scenarios becoming true (i.e., the US dollar is worth less than the Euro, or Hillary Clinton wins the election).If the prediction indeed comes true, the 1 BTC is paid to you.If not, and you lose, it's paid to your betting partner."The rise of bitcoin owes a lot to with the failure of trusted third parties that were supposed to be looking after our money for us," said Edgar."But a lot of bitcoin services have ended up embracing the same model.I think we've seen enough people lose their hard-earned bitcoins to prove that this model has to change."By limiting its role to providing data and making it usable on the block chain, Reality Keys empowers users to create their own digital contracts and transact directly with each other.

It is all, of course, anonymous.Reality Keys provides only the keys, and has no interest in or knowledge of the nature of the contract or the amounts of bitcoin at stake."I wouldn't even call it a platform – just an information service," Edgar continued.Should one layer of digital signature protection not be enough, they can even structure their transactions to use additional signatures provided by other external parties, providing layers "as deep as you like" of assurance that don't depend on Reality Keys or any other single company or individual.Edgar said that, although this capability has existed within the bitcoin protocol for a while, it is limited by a lack of software client support and the logistics of brokering and setting up transactions.Blockchain.info supported multi-signature transactions for a short while but has since withdrawn the feature, citing low usage."The community's been suffering from a chicken-and-egg problem where we don't have services set up to broker multi-signature transactions because the clients don't support it, but the clients don't support it because there aren't enough services to make use of it."

"We decided to go ahead and build our little part of the infrastructure we think the community needs, so people working on the other parts can build their parts too," he added.Edgar sees most use of the service to come via its "simple, really accessible API," as developers build it into their own projects.It can also be used directly through its own web interface.Reality Keys is free for anyone to use, but charges a fee if you somehow require human intervention (e.g., if a data source like Freebase produces incorrect information that needs correction).Edgar said he is keen to expand the service to provide other kinds of data for a potentially huge ecosystem of peer-to-peer distributed markets."Our service doesn't really care what data it is providing.If you can point us to a data source with a public API and reasonably friendly Terms of Service, we can monitor it and plug it into the block chain," he concluded.Keys, Tokyo and Maths Images via Shutterstock The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies.