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Save only your Bitcoins with someone who allows you to revise them from BlockChain.
Last week Facebook bought whatsapp for $ 19 billion. Currently, the total value of all minured Bitcoins is at the rate of Bitstamp less than $ 6 billion. In raw monetary terms, it is difficult to blop on the radar.
However, every day, Bitcoin seems to install headlines, both in the main and technical media, seemingly piercing well above his weight of the dollar. Why are everyone so interested?
Bitcoin attracts all this attention because it is basically, it is a revolutionary new technology. As well as so many great inventions before him, it leads to the wealth of new applications, and good and bad, legal and illegal, and the world noticed.
One exciting application of the BitCoin Protocol, and the one who talked the most, its use is as a decentralized form of currency. In the midfather’s recent financial crisis, people want more control over their money and want to be less reliable to opaque layers of expensive transaction services.
In this context, one of the huge advantages of Bitcoin that all transactions were recorded in the public book, “Blockchain”. This allows users to follow their funds and check their balance sheets without relying on the account on the account reported by a third party. In short, wherever you keep your money, you can check it alone to be still there.
So what happened on Mt.Gox? Although the details are still unclear, now the most customers’ funds are stored on MT.Gox lost. But if everything is visible in Blockchain, why didn’t anyone notice your balance on the account decreases?
Until I will enter the technical details on how HT.Gox has been hacked (see more about it here), the key part of the problem was their lack of transparency. What Blockchain gives, Mt.Gox takes.
When you make a Bitcoin deposit on Mt.Gox (and on several other wallet / exchange services), your funds are collected with all other customers. If Alice, Bob and Carol all deposit 5 BTC (Bitcoins) each, exchanging them all in the pot, and maintains the record of each balance of each customer in their own database. If Alice sends 2 BTC Bob, the pool remains unchanged, but the exchange updates its database.
This is much similar to how the traditional bank acts, and works well when everything goes well. The problem occurs when someone starts stealing from complete funds. Since there is no internal connection between the funds in the pool and the balance of users, Carol can apply to its exchange bill and see the balance of 5 BTC, despite the fact that all funds stolen stolen.
So what’s the alternative? Shouldn’t Carol be able to check the balance using BlockChain? We do not deal with customer funds for this reason. When Alice, Bob and Carol deposit in our vault, their funds remain separate. We do not maintain a separate database for recording account balance, as it is all gifted in Blockchain. If Alice wants to switch 2 BTC to Bob, make a standard Bitcoin transaction from her wallet on his, and that is recorded publicly in the blockade.
The great result of this segregation fund is that all Bitcoins are stored with an elliptic can check independently. If you want to know if your funds are still in the vault, you don’t have to download our word for it – you can use us using BlockChain. There are several information services out there (eg Blockchain.info) that allow you to see the balance of the BitCoin address from the outside, so you have the peace of mind that Bitcoins are stored with elliptical that they are really there.
In short, if you decide to store your Bitcoins anyone, make sure you can check the condition on your own. If you have to take over their word for it, then you lost the transparency you first came to Bitcoin looking for.
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