I feel like some of these comments are autogenerated from some GPT3 running in the cloud.
Cryptography ensures that transaction amounts, sender, receiver are encrypted. There is no way to decrypt the data. You can verify the encrypted data without decrypting it. Everything works similar to Bitcoin but now you and others have no way of figuring out anything valuable by looking at the blockchain, because everything on the blockchain is just encrypted bytes.
Even the node that is the first one to receive all bytes has no idea who is sending, receiving and the amount. Everything is always encrypted.
When I create a transaction that includes my wallet address and the address that receiver gave me, once the transaction is made, the receiver cannot see the original address of my wallet, the 3rd party cannot see the amounts or addresses in the transaction and the receiver can move the money to a different address and I would have no way of figuring out that happened. Similarly, receiver can send me back the amount and I would have no idea from which wallet address it came.
In an authority-less and irreversible transaction currency it still surprises me when I hear about someone losing money to a service such as this - without an authority the burden of security truly is on the user themselves and they are at the mercy of the (supposed) security of whatever exchange or service they are attempting to use. In this case, having someone manage your wallet for you.
I personally keep my bitcoin wallet encrypted with GPG, I manually (like a safe) decrypt it when I want to make a bitcoin transaction and encrypt it when I'm done.
This shows a fundamental misunderstanding of how cryptocurrency works. Bitcoins aren't stored anywhere. You don't need to get hacked; to have your bitcoins stolen.
Probably stupid question: Why not just exchange it to zcash or monero or some other coin that hides transaction details? Then you can send it to a new wallet; theoretically 100% untraceably.
How so? It keeps track of them in the same place as the private keys - a local encrypted wallet file. Have you ever used bitcoin or any cryptocurency? Are you sure you actually understand them?
OK, you and I exchanging coins do not know about each other's wallets or even the origin & destination of our transaction.
This anonymity depends on encryption to hide the wallets & transaction, and decryption to verify it, and for the receiver to be able to use the funds in the future.
So, who/what controls those keys? Seems they've just exchanged an open ledger problem for a key management problem - why is this not the case?
But see, the private key has to be funded! Unless people start exchanging private keys instead of bitcoins, and never transfer money in and out of the wallet, there will still be a trail.
Exchanging private keys is fraught with peril- the originator doesn't lose knowledge of what the key was when they give it to you. The only way to make it work safely is to immediately transfer funds out of the key you just received (to ensure the originator doesn't pull the funds before you can use them), and then we are back to having a trail. As far as someone following that trail is concerned, it is just an extra "hop"- the money still flowed from IllegalVendorA to <unknown> to You.
You can certainly try to obfuscate things, but the point is all the data is there and always will be, and even if it seems like a human wouldn't be able to figure it out, computers are very good at working through graphs!
The malicious wallet could encrypt the data it's reporting before splitting it into bits to report it. Then there won't be any pattern to show up on statistical tests.
I think this is really the sticking point that makes consumer Bitcoin adoption pretty much impossible, as the level of computer security required to keep Bitcoin safe and easy to use at the same time is just not something available to your average joe.
If your private key is compromised, the thief takes your entire balance, and there's nothing you can do about it. So you really want to keep it safe.
Lose your private key, lose everything it was protecting. So keeping the key in only one place, and one place where only you can access, is a big problem. There is nobody out there to give access to your money if you pass away. A hardware failure can be catastrophic.
The problem is that everything that makes the private key survive accidents makes it easier to hack. The way we treat something like this in a corporation is with things like shared secrets: Need 3 out of 5 people to use their issued keys so that the real private key protecting everything is revealed. And even with that level of effort, getting the key is still possible with enough effort.
why thye fuck would you keep adding coins to it if you dont know the password?
More likely you have obtained someone elses wallet.dat file that they have encrypted and they do not know you have a copy of this wallet.dat so they are still using it, and you do not know their key but would quite like to access their coins.
I'm surprised no one mentioned bitcoin. For a couple of years (2018-2020) I had the private keys to 11 BTC sitting in an unencrypted text file on my desktop. During that time I was pretty sure my system wasn't compromised.
err... I think I disagree on those first two points.
Managing a wallet in a manner that won't result in it getting stolen (as in, disconnected from your main machine) is not easy. Though I suppose tools can be created to make this easier, they don't exist yet.
Also, bitcoin is very traceable. Publicly traceable even. You know which group is getting what, when, and once you ask those recipients for who, you know who's being getting what, when, where, and maybe a bit about how much they have.
Apparently this can be improved? I have no idea how without trusting someone.
My understanding is that every bitcoin contains the entire block chain which contains a record of every transaction made in the network.
A transaction is basically three pieces of data: private key signature of the sender/payer, public key of the receiver/payee, amount of bitcoins.
The blockchain is very difficult to counterfeit, so theoretically a site like MyBitcoin.com can't actually 'control' your wallet or transfer all the bitcoins to themselves, at least without all the private keys of their depositors.
Cryptography ensures that transaction amounts, sender, receiver are encrypted. There is no way to decrypt the data. You can verify the encrypted data without decrypting it. Everything works similar to Bitcoin but now you and others have no way of figuring out anything valuable by looking at the blockchain, because everything on the blockchain is just encrypted bytes.
Even the node that is the first one to receive all bytes has no idea who is sending, receiving and the amount. Everything is always encrypted.
When I create a transaction that includes my wallet address and the address that receiver gave me, once the transaction is made, the receiver cannot see the original address of my wallet, the 3rd party cannot see the amounts or addresses in the transaction and the receiver can move the money to a different address and I would have no way of figuring out that happened. Similarly, receiver can send me back the amount and I would have no idea from which wallet address it came.
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