With those services you hold the keys to your Bitcoin, not Coinbase. With Coinbase they are in control over your Bitcoin, not you.
GreenAddress is the only wallet for Bitcoin with a 2-2 model Multisig offering a Bip0032 wallet with nLocktime on the Bitcoin blockchain.
Pretty much only the tech savvy will care to even understand what a key is or care to hold their own.
Bitcoin isn't a political movement to the masses, it's just a useful new technology; they aren't using it to kill banks or government and they don't care about the politics of the early adopters.
> Most people aren't going to want to hold their own keys as most people can't stop their computers from being constantly infected by malware.
We have cheap, secure hardware crypto tokens that rely on two-factor auth. You don't need to keep millions of dollars on a Windows PC.
> Just as people don't want to keep large amounts of cash in their safe, they will want someone else to take the responsibility of securing their coin.
"Someone else" is called a bank. The bank is FDIC insured, and they and the federal government guarantee that your money will be there. They use a huge number of human, automated, and physical processes to keep money secure, and they don't just keep their entire holdings lying around in digital gold bars.
Unless Coinbase et al are going to become (heavily regulated) banks, then they're just another Paypal, and the crypto doesn't even matter.
What if Paypal were to adopt bitcoin as a deposit/withdrawal method, right next to credit card and bank transfer? That won't change the public-private key nature of bitcoin crypto. The blockchain won't go anywhere. Coin mixers and dark markets will still be there.
Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about.
There's no point to a crypto-currency with insecure crypto. If you have insecure crypto, you need centralized regulation. If you have centralized regulation, you don't need crypto-currency.
> The point is that its that choice (for starters) which differentiates bitcoin from Paypal.
Paypal moves money in a lot of currencies, and there are lots of choices other than Paypal to move currency.
> Coinbase isn't going to take over bitcoin any more than MtGox did. I don't quite understand what you're worried about.
I think the analogy you're actually looking for is:
"Coinbase isn't going to take over bitcoin any more than Google took over e-mail"
When the social/service distribution gets lopsided, it does present a huge risk. But its "only" the risk that service blows up, not a risk of the protocol getting co-opted. Even with 80% of users on MtGox, that never compromised the essential decentralized feature of bitcoin: having absolute control over your coins on the blockchain. The analogy to google mail is that Gmail users can still e-mail hotmail users (and send/receive e-mail from users on their own custom SMTP servers).
An example of a protocol getting co-opted might be Google Talk, which they announced last year was discontinuing support of XMPP. So now Gchat users can only message other Gchat users, not other XMPP users (though I'm not sure if Google has actually disabled it yet). This would be like if someday Coinbase announced that users couldn't send to any bitcoin addresses anymore, only other Coinbase usernames.
I don't quite understand what you're
worried about.
It's the "largest and most established", until it isn't and your deposits have vanished like a fart in the wind.
You've confused Bitcoin for a political movement; for most, that's not what it is and never will be, it's simply a payment network for e-cash.
“We’re in uncharted territory, so hard to say if this stuff falls under a particular state’s MTL [money transmitting license] statutes,” says co-founder Fred Ehrsam. “We’re still talking to states to figure out how each responds, but Coinbase is prepared to get licensed where a regulator deems it’s necessary.”
In the meantime, he is continuing to do business, relying on the fact that Coinbase has its AML and KYC processes established.
[1] http://www.coindesk.com/coinbase-gmail-bitcoin/ (Oct 28 2013)
It's not much of a cryptocurrency if you hand the plaintext keys over.
Yes, that's a problem, and it's not even money. I don't use GMail, and it irks me that so many people willingly share our mutual correspondence with Google on my behalf.
Now, what if Google was holding my savings account and the only thing protecting me was ... what? A digital key, which they hold in escrow?
Even better with an anti tampering hardware wallet talking to a service provider for 2FA for most security
If you are interested we have an open source unminified client with independent blockchain data verification via the electrum network as well as a a quick video infographics.
The client can also verify that the P2SH belong to your HD seed and GreenAddress' all while not being identifiable as from GreenAddress externally unless explicitly requested in a coming feature within the payment protocol.
Lots of questions and links here: http://www.reddit.com/r/Bitcoin/comments/20puhg/while_blockc...
Please feel free to ask any question or to suggest any feature.
Source code https://github.com/greenaddress/
Cheers!
Compare this to signed, native applications produced by third-parties who do not run the service in question, where code signing guarantees that the code distributed to you was validated by a responsible building party, and the signing key is not accessible from compromised front-end web servers.
we have a chrome app non minified and open source on github. That client is local and no JS can be injected as it connects via ws.
Furthermore it verifies data against the electrum network and provides nLocktime transaction unlocking your funds.
2) You control the distribution keys for the silently updating Chrome app, and your signing key, which means all you need is the end-user's signing key to empty people's wallets -- which you (or any adversary that compromises you!) can get by pushing a Chrome app update.
3) Unless you are actually pushing users to use externally downloaded, NON-AUTOUPDATING, code signed applications by default, you're making users insecure by default. An open source client on GitHub doesn't do anyone any good if your default is to strip away crypto-currency's security. This is no different than Microsoft's previous policy of shipping insecure services enabled by default.
Essentially, this boils down to "trust us" -- you control the infrastructure that protects one half of the signing keys, and you already have access to the other half.
It'd make a helluva lot more sense if a locally installed client was maintained by a trusted third-party, and it was the default user mode.
Cloud-focused web people are undermining the promise of bitcoin by simply not understanding why the cloud is so dangerous, whether we're talking about user data (creating a vast treasure trove for the government), or money.
We are also trying to sponsor an Electrum plugin and our android app will soon work similar to the Chrome app (at the moment it uses appcache and it doesn't do the independent blockchain data verification via the electrum network.)
We are also working with hardware wallet manufacturers.
2) see (1)
3) We will update our website information to make the user aware but please keep in mind that 2FA (soon with transaction details) means malware has limited capacity. Also keep in mind that an attacker would have to attack both our service and our signing key at the store which are not in the same place and are kept encrypted when not used.
It simply isn't scalable. Sure, people who are on their computers 24/7 (eg. anyone who works in tech) might have the technical knowhow to deal with this, but for those who are very non-technical, Coinbase is a great way to invest in/hold Bitcoins without having to get into the technical nitty gritty.