Interesting point. I have some BTC at Coinbase. Not sure how I proceed to own the keys?
So for a speculative trader, I dont e that holding keys if any more essential than physically holding goods is for physical commodities; you obviously have to account for trust/security of the entity serving as your agent/broker, but that's typical.
Now, holding the keys may be essential to realizing some of the benefits of bitcoin which drive is value to some users, but for people investing in bitcoin, that may be peripheral to the purpose.
https://en.wikipedia.org/wiki/Securities_Investor_Protection...
Not blanket protection, but enough to ask why such and such bitcoin exchange doesn't advertise their participation.
That's the point, though. You're looking at it as a speculative investment, and proceeding accordingly, which is good. The OP is admonishing people to not treat bitcoin like a standard bank account (which is all too easy to do), but rather in the same terms as you already do.
If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help; and the stock market bookkeeping system has the technical ability restore my shares to me. If someone gets a copy of my wallet key, I've got no recourse unless (unlikely) someone can track down the obfuscated thief.
If someone steals your bitcoin from an exchange, you can call on the government for help, too. If the exchange itself is completely insolvent, that may not be effective recourse, and that risk is certainly greater for the kind of firms people have been dealing with in the bitcoin space, which often aren't held by their customers to the same standards that customers of similar services for commodities other than bitcoin would hold companies to.
That's my point: the lack of recourse isn't essential to bitcoin (yes, holding the keys is like holding cash, and not holding the keys is giving something up just like not holding cash is -- but we deal with other businesses with accounts denominated in national currencies without holding all the cash ourselves all the time, and have recourse available for losses.) The lack of accountability is because the firms people choose to do business with are, compared to the firms that people do other financial business with, shady fly-by-night operators.
Many times, other companies have had that happen, and there is all kinds of recourse. To the extent bitcoin companies are special, its because people participating in the bitcoin craze have been willing to entrust large amounts of value with companies that don't have the basic characteristics that would otherwise establish trustworthiness, or at least accountability.
The same features of BTC that serve as its advantage and, arguably, goal make it more difficult to offer basic protections that other fiscal infrastructures have had for decades.
Many see this capacity of the US Treasury to fabricate money from nowhere as the very sort of flaw that BTC's coin-generation process is intended to avoid, but that protection does not come without a price.
Sure, but whether that difference from "the same protection" is more or less protection depends on the number of people that $100 million is held on behalf of.
I suspect that at the moment it may be more difficult to find an insurer for a vault with that piece of paper, compared to a vault with $100m cash though :) but perhaps that'll change.
FDIC-style insurance is for when the security is breached, not if.
Bitcoin, on the other hand, is irrevocable and pseudo-anonymous. In July 2011 the owner of MyBitcoin.com web wallet allegedly walked away with 50,000 btc of customer funds. We know where those funds are. You can see them on any block explorer. But it is not possible to freeze or confiscate those funds. And we don't know what real world person or people have access to the keys controlling those funds. So what are you going to do?
MtGox went under with 850,000 btc of customer funds. Its creditors are currently fighting over the 200,000 btc that was found to still be in possession by the company. The other 650,000 btc? Who knows.
It's just a simple fact of reality. If you don't have physical control over the keys for that bitcoin, it is not your bitcoin. Some of us have learned that lesson the hard way.
That is just a limitation of the Bitcoin protocol. One could build a protocol where communities could agree to freeze (not accept) or greatly devalue those funds.
It wouldn't even have to be done in a way that was visible on the bitcoin network, they would just have to agree to not include transactions from whatever addresses.
A strong majority could probably refuse to acknowledge blocks including the blocked addresses, which would be a real freeze (rather than the hassle freeze obtained by not including the address in blocks produced by the conspiracy).
Of course, without strong consensus (and a real algorithm/protocol) such attempts will likely just result in fractured blockchains (basically the state at the moment, with many competing implementations of the same basic idea).
You'll need 100%, because if a single miner decided to include the transaction, then it is in!
If a single miner includes the transaction, a majority can just bypass that sole miner.
You do need 100% of something, but that something is just >50% of the miners.
"help staple correct horse ..."
From there, just store that seed somewhere secure and you can use that to generate your keys whenever you want, on any machine you want. Personally I keep my seed in two different safe-deposit boxes and one on (shameless plug) my own encrypted text app I made called Onions - http://onionsapp.github.io.
Hmm, really? Why? The ledger sets up its own private key as well.