Bitcoin has a major crossroad ahead regarding a suitable platform for the
average non technical main stream user. Until now the majority of the
available solutions were at two extremes, or DIY your security and privacy
*OR* let a 3rd party service do it for you. The DIY solution is obviously
not scalable, but it seems that 3rd party solutions are not scalable as
well. If we compare for a second a 3rd party services with traditional
banks, it seems banks have two major "advantages" over them. Entry costs
for creating a bank are HUGE so a priori very few people can actually
create such a service, second, their physical and IT security
infrastructure are heavily regulated which insures a minimum of security
level to the end user (and even so money is stolen frequently). Entry costs
and regulation do not exist in the bitcoin space, meaning two programers in
their spare time can create a wallet/ platform and the non technical end
user cannot know if his money is safe, did they hire the right security
expert, did they invest enough in protecting and backing up his keys, etc.
Many services tried to tackle those problems with multisig (2 of 2 and 2 of
3) to create a syntactical 2 factor authentication/ authorisation mechanism
but in reality those solutions didn't really increase security and their
failure point is always a single device. Coupling those said problems with
the fact that bitcoin transactions are irreversible and are a scarce
commodity, trying to insure them the way our money is insured by the
government when we deposit it in the bank becomes a huge problem. Premiums
will be very high and will only grow as the appetite of hackers to steal
coins increase.
I personally believe we have the tools for creating a platform that is both
secure and private but most importantly it does it in a decentralised way.
Creating true 2 (or more) factor authentication/ authorisation schemes can
improve dramatically personal security to a point where 3rd party wallet
services will become a thing of the past. Succeeding in that will mean the
next billion non technical bitcoin users will have a platform to use
securely and a base line for building cool services on top.
Alon Muroch
bitcoinauthenticator.org
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