The probabilities of losing your funds

Leonidas

Active Member
Oct 22, 2016
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Hello everybody !

Would anybody be able to tell me (doesn't have to be based on maths, experience in the cryptosphere is ok) what actually are the risks of getting your funds stolen based on the type of wallet you use ? Exchange, mobile, computer, cold storage ?

I mean risks as in percentage. 1 out of 10, 1 out of 1000 ?
 

jimbursch

Well-known Member
Mar 5, 2017
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Impossible to say because it depends on competence of the user. Can you be more specific about what you are trying to learn?
 

aleix

Well-known Member
Foundation Member
Apr 4, 2014
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Would anybody be able to tell me (doesn't have to be based on maths, experience in the cryptosphere is ok) what actually are the risks of getting your funds stolen based on the type of wallet you use ? Exchange, mobile, computer, cold storage ?

I mean risks as in percentage. 1 out of 10, 1 out of 1000 ?
With a hardware wallet like Trezor and basic common sense protection (like not opening malware mails) you can be pretty secure. You control your private keys and are stored not online.

In the other side, exchanges and online wallets (like Blockchain.info for bitcoin, DASH has no online wallet service) are more insecure. You don't control your private keys, so you are not in control of your money.

With the wallets in the computers depends a lot of your behave.
 
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Leonidas

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Oct 22, 2016
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Thank you for your answer @aleix.

What I was trying to aim at with that question is that I believe that recommandation on security are very vague in the cryptocurrency world.

I was actually trying to check if somebody could figure out some hard numbers (even though approximative) that would help noobs to choose how to secure their money based the time they want to dedicate and the money they have.

The general message in our cryptographic world everywhere is "exchange = danger = do not store your funds there".

Although you are not in control of your private key, although some exchange have been hacked, I guess that to loose your money on an exchange is not as high as 1 chance out of 2, or is it ?

But I can tell that this is was for example the feeling I had when I got interested based on what I was reading : I really had the feeling that there was a high probability to loose my funds (again, a vague term, that is relative to everybody, hence the point of my question).

It is of course paramount for somebody who has a lot of dash to not store them on an exchange. But I have that feeling that it is the only speech that we hear and we give. A speech that is aiming at people with a lot of assets, but completely forgetting all those people that starts with some 20-50 € to get a taste of it. Feeling that chances are high that you will loose your funds to some hacker on an exchange scare many people off IMO, independtly on how small they are, because you will have just the sense of throwing your money out of the window. And also because other options (desktop, trezor, cold storage) are not that accessible. You need to get deeper in this world to make the right choice.

People should be encouraged to just change 20-50 € in an exchange, take a break, let it sink in, then come back to it and start studying other options, other kind of wallet, etc..

Beside, the general level of computer and knowledge of security is really low in the normal world. And there is a big gap between all of us in the community and all the people that are outside of this world.

"common sense protection" I can assure you, is valid for maybe 80 % of the cryptographic community but probably not common for 5 % of the real world (I talk from experience).

So that fact that you need to teach yourself is a really big step. Plus, it is not really clear the value that you will get if you teach yourself to get a desktop wallet, a trezor or a cold storage. As you say, it will be "more secure" which is again vague term.

I believe that a tailored speech for beginners should be made. Because having 1% chance of lossing your 10 € to an exchange when you start in this world is completely fine (IMO) while we still need to warn that people with 10000 dash should not keep it on an exchange.

Anyways, what I observe is that in the cryptocurrency world you have many different kind of people : some with a lot of assets from the early days, some people with a lot of fiat currency that would like to get involved in cryptocurrency but also some people with not that much fiat currency. Then depending on you aversion to risk, people might want to invest an 0.0001 % of their wealth meanwhile other 80 %. All those person are different and can't approach the security of cryptocurrency the same ways if we efficiently want to convince everybody to join in.

That's why the point of my question was to try to replace words like "it's risky", "it's more secure" by hard numbers that will take away the relative situation of each indivual that will then be able to easily make a decision.

But I understand that this might be impossible for the fact that, as you gys have said, this manily depends on the user behavior.

But can't we teach user behaviour ? With some plain words ?

Attaching a bike to a post just makes sense because you know that if somebody want to steal it, they will need a saw and so on. So even if you are well aware that you might get it stolen, you know that it is unlikely (and know why) depending on the area where you live, or that you are just willing to take the risk independtly of it.

Because we have been riding bikes for so long, those risks are asbolutely common knowledge. Such as the behaviour of buying and putting a lock. Even though it is not 100 % sure, it takes a lot of the risk off.

What we need for the cryptocurrency world is an education about that usees comparison to make it comprehensible.

Example : using an email provider such as protonmail is like locking your bike, using a vpn is like taking of the saddle...(I know that my example is not pertinent because I have no idea, but it is just to convey what I mean)

Sorry for that long post !
 

Tallyho

Member
Mar 15, 2015
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Personally, I don't see that there's anything wrong with scaring newbies off storing their coins on an exchange. If just one person takes notice and avoids losing everything the next time an exchange is breached then isn't it worth it? All the newbie guides I've seen start with "download a wallet", then buy coins to put in it. I don't see that it's that hard and security is probably the most important lesson to learn with crypto, so why not make it lesson number 1? It certainly wouldn't be right to deliberately talk down the risk or Dash itself could be blamed in the next breach for not doing enough to warn people. Of course Trezor-level security is too advanced for newbies and daunting, but I don't see that there's anything wrong with telling newbies: First download Dash core wallet, encrypt it, write down the passphrase because it's super-super-super important. Then go and buy some coins to put in your wallet. Exvhanges are good for buying but never never leave your coins on the exchange longer than necessary.

In my opinion, storing coins on an exchange is like leaving your wallet at the supermarket checkout while you do your shopping. You will have to have coins on an exchange, just like you'll have to get your wallet out at the checkout to pay for your shopping, but that doesn't mean it should be regarded as any safer to leave the coins there than it is to leave your wallet on the checkout while you go back and grab some items you've forgotten.
 

Leonidas

Active Member
Oct 22, 2016
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It certainly wouldn't be right to deliberately talk down the risk
Hard to sometimes express what you have on your own mind ;) : I didn't mean at all that we should talk down the risk of putting your coin on an exchange.
I was saying that it would be nice to have hard number for every type of wallet. I talk mainly about exchange but my question is for all types because when you have downloaded a desktop wallet same questions rise again : is it safe enough, shouldn't I buy a trezor ? Or should I even buy a safe to put some usb sticks ?

Again, my point was to see if somebody could bring hard number to the table or some comparison that will help any newbie having a better vision of what they get themselves
into.

Which is actually what you do with the supermarket comparison, so thank you for that ! Could you develop the comparison with the other type of wallet (jaxx, exodus, dashcore, trezor, paperwallet) ?
 

TroyDASH

Well-known Member
Jul 31, 2015
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It's difficult to come up with a hard number because even storing your wallet on a desktop, it depends greatly on how much connectivity your PC has to the internet, your internet habits, how secure your password is and where you keep your password, whether other people have physical access to your PC,...etc.

As for exchanges, the sample size isn't high enough probably, if you're talking only major exchanges. In general, smaller less established exchanges are probably much more risky than large ones.
 

Leonidas

Active Member
Oct 22, 2016
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how much connectivity your PC has to the internet, your internet habits, how secure your password is and where you keep your password, whether other people have physical access to your PC,...etc.
I agree with you. It is also what was saying @jimbursch.

So I guess what I believe is there is need for general education on coherent best practices about data protection and privacy behaviour on the digital world (whether connected to internet or not). It takes a lot of education and time to grasp the extent of it and I want to simplify it. I don't even think I have managed to do it for myself as everyday I find some holes in my fortress.

Our privacy and our identity are is attacked from so many places (Internet Provider, Email, Search Engine, Web Browser, Cloud, Operational System, Online Messengers, etc.) that is really hard to know when you are really protected and to what extent.

I feel like that when you first step in the cryptocurrency world when you are a lamba user with lambda skills, following security steps for your wallet is like looking right and looking left before crossing but actually crossing with your eyes closed...

So what I'm trying to figure out is what are the practices that will make you cross safely the road. I will give it more thoughts and come back to you guys with some things maybe more precises. Thank you for all your answers !
 
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