It seems like you still keep your alt coins on exchanges! We all remember what happened to Mt. Gox and now BTER with NXT.. hasn’t that taught us a lesson? After all, investors and traders are still willing to take risks. What we need to do is to convince all traders to withdraw their crypto-currencies from exchanges and store them in a safer places like: encrypted wallets, paper wallets, COLD wallets.
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Here are some good easy ways to protect your coins
Run your own wallet client (usually QT) and encrypt it!! For short term safety, putting a wallet on a device where you control the keys is a safe bet. For longer and safer storage, you can configure your wallets on a USB stick and save a copy in your safe deposit box. And always backup your wallet.dat but be weary of using cloud storage.
Paper wallet generators are an easy way to create a secure storage system for your coins. However, paper may not be durable enough for long term storage. You can configure key pair records in your favorite password management system. Password Box also gives you the ability to share your passwords so you can give access to your legacy manager or your lawyer so your crypto-currency holdings are not forgotten or lost in case you pass away.
This last bit of advice may be the best way to keep crypto-currency in a completely invisible way. You can create a mnemonic Bitcoin wallet from a phrase or a list of words. It’s called a brain wallet and most wallet generators have this option. But be careful, if you use a simple password or an obvious phrase that has been published before, you will lose your coins within 24 hours!
I understand it’s so much easier to trade by keeping your altcoins on exchanges. When you see an opportunity, all you need to do is click on a few buttons and you are ready to buy a new coin. Unfortunately, exchanges are not a safe enough yet to store coins long term. July 14th, there was a successful attack on Mintpal exchange. 30% of Vericoin were stolen because Mintpal did not store VRC in cold wallets (approximately USD$2,000,000 worth of coins).
Hopefully, these attacks will serve as wakeup call. Attacks like these provide a big incentive to the exchanges to improve their security. Even though this situation seems “awkward”, hackers are good for the crypto world. I believe the only way altcoins and bitcoin will really go mainstream is with the participation of exchanges security. The day people will feel “safe” keeping money in crypto exchanges, will be the day mainstream will adopt it, just like they do leave fortunes in a bank account accessible by internet solutions.
When people tell me about the Mt. Gox story, and that they are not investing in Bitcoin because it’s not safe, I simply tell them that they are doing the same thing, right now, with the banking system. Banking websites are being hacked as you read these words. The Associated Press reported in July that the bank account of a California escrow firm, Efficient Services Escrow Group, was hacked in December 2012 and January 2013, with three payments totaling $1.5 million wired to accounts in China and Russia. Only $432,215 was recovered, and the company shut down.Online banking frauds are rising year after year. Dailymail.co.uk reported that in 2012 banks intern frauds increased by 28% in UK. Billions of dollars are stolen in fraud hacks, phishing sites every year since banks started using internet solutions. The French bank Societe Generale lost £3.7 billion in one of the biggest corporate banking frauds of all time. In 2002 John Rusnak, a currency trader at US bank Allfirst, based in Baltimore, Maryland, and then a subsidy of Allied Irish Bank, pleaded guilty to fraud amounting to $691 million (£345 million).
I think the bitcoin network, exchanges and blockchain are still better trading tools than bank internet solutions (with a very small budget compared to what the banks are paying for security). In a couple of years with similar budgets, crypto-currencies exchanges will be much safer. Even though it’s theoretically a better model, there’s a lot of room for improvement. We need to make alt coins exchanges better and devs around the world should collaborate to make out community better. One day we will feel safe keeping our altcoins in exchanges, just like we have money in our bank accounts. When it happens, bitcoin will be at $USD10,000.
It has been a very exciting week for the cryptocurrency world, from the price decline of Bitcoin spurred by the PBOC seeking to prohibit Bitcoin companies from banking to the announcement of Vertcoin implementing a merge mining collaboration with Monocle. And just announced earlier today is Reddcoin’s shift of algorithm to a brand new system called PoSV (proof of stake velocity).
Reddcoin has made a revolutionary move and has created a concept that may be key to their survival against Asic mining hardware, as well as providing its investors an incentive of 5% interest.
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The conversion process has yet to be implemented, nor has the source codes been unveiled for public scrutiny on github. In all aspects, the full explanation of why you should be interested in PoSV or how it works is a very complicated and technical one. The new wallet featuring the POSV algorithm is set to be released tomorrow.
I have taken the main points of the white paper and presented them in a way that is easy to understand from a mostly nontechnical analysis.
What exactly is PoSV, and why should I know about this?
PoSV is an asic resistant algorithm that will protect the coin from being heavily mined and dumped on the exchanges, which will lead to a downward spiral in value. In addition, PoSV encourages the holders of Reddcoin to make active transactions to their wallets (not to each other ) frequently in order to receive 5% interest on their holdings.
Why is this a good thing?
Miners that are currently acquiring Reddcoin, are disheartened in their resolve to support the coin through mining because of its low value of 2 satoshi prior to the new announcement. With Posv, miners need not purchase Asics mining gear in order to keep up and risk facing the equipment expiring due to heavy usage before recouping their ROI.PoSV will make the coin un-mineable, thus removing the threat of ASICS farms in the future.Miners can still ‘mine’ coins through a multi-pool that will mine other coins and pay the miner in reddcoins
I’m not a miner, how does this benefit ME?
If you are a potential investor or one one of the people who purchase shares in the IPO previously,or if you are simply in possession of reddcoin you received as a tip- you will qualify to earn 5% interest by simply keeping your updated Reddcoin wallet open, even if its stored in a crypto exchange you will continue to earn interest! The yet to be released wallet will include the new PoSV algorithm to enable your coins to go through ‘minting’( gaining interest). The more coins you have, the more coins you will mint.
How does minting work, and how will it affect the total number of coins that haven’t been mined?
Minting occurs when a Reddcoin wallet syncs with the Blockchain and verifies transaction. Through constant verification, the network remains more secure and your stake of Reddcoin is authenticated, thus enabling you to receive 5% interest as long as the wallet stays online.
The current total cap of coins is 109 billion, but PoSV in theory will mean there is an infinite supply due to Transaction fees.
PoSV promotes stability to a coin’s economy by reducing the capability for miners to dump the coin on exchanges thus immensely lowering the coin’s value. Reddcoin in their recently released White Paper has claimed that the PoSV systme will be very hard for any other coin to replicate due to the uneven distribution they will experience. Reddcoin was mined for approximately 3 months and has been given the chance to distribute the wealth fairly evenly. Reddcoin promotes itself as being the social currency and many users have received tips from others and the coin has been flowing rather than being hoarded for the most part.
Merged mining may seem like an incentive to some coins, but it poses a threat of the weaker coin being ‘taken over’ by the one of higher value in the long term. PoSV is likely the best system for other coins to take up, though it will be close to impossible to create a system that will be evenly distributed like Reddcoin due to scrypt asics being released this summer.
This revolutionary development marks another notch on Reddcoin’s belt for being innovative and possessing the initiative to make positive alterations to their coin to increase value and further develop the infrastructure and durability of the coin.