1) What are the best practises for having a bunch of bitcoin? You say you shouldn't keep it stored on your local machine but where? Keeping it stored on exchanges is kind of prone to failure in the bitcoin world. If you want to use a cold wallet you need a second computer that you don't plan to use for anything else and you need to learn linux or its pointless
2) Just because its new doesn't mean its better or makes more sense than the existing methods.
There are a number of technological solutions to the security issues related to storage. BIP38 and multisig are both very promising innovations, and there will be more. We're really at the very early stages of Bitcoin's development. Think 1994 for the Internet.
1) Best practice is typically separating it into "savings account"/ personal wallet. So cold storage and a hot/low security wallet.
2) Agreed. There are no guarantees, however strong indicators it will improve. Remember e-commerce didn't make sense either back in the day (no salesperson, can't touch goods, security - all “rational” reasons) -- but all solved.
On that point I don't even view BTC as currency actually (my personal view).
It is first of it's kind with no precedent (is it currency, asset, ledger, protocol…?). Is it all of above? Or something else? Reminds me of when first iPad came out and people just viewed it as a “large iPhone” (true, in some ways - but it’s definitely not defined that way anymore. It’s own unique category now. Public aware of nuances). No precedent. Still defining by analogy to old paradigms.
BTC is similarly nuanced. I actually view it as more buying a stock in protocol. Yup sounds crazy/doesn't make sense using old paradigms. But I’ll leave that for another post (the gist of the idea is here: http://btcgeek.com/dawn-of-autonomous-corporations/).
>What are the best practises for having a bunch of bitcoin?
Given that it's designed as a digital replacement for cash (not savings and checking accounts - cash), keeping more than a few hundred dollars around at a time would seem to be as advisable as storing the equivalent $100 bills, with the same level of extraordinary security measures needed.
1) Store it on coinbase. And don't invest your life savings into bitcoin in the same way that you might not want to "invest" your life savings into Western Union Travelers Checks.
2) What is a way that I can transfer value to somebody in a far away place that is easier (if both parties already accept coins) than bitcoin?
1) Given the history of exchanges is it really smart to store your bitcoin in one?
2) Is only easier if you ignore the process of getting bitcoins and the process of converting them to something else. If you do that then me sending you an email saying "IOU value" is easier.
1) If you don't feel comfortable storing things in coinbase, and don't feel comfortable storing coins on your local machine, then you might not want to use bitcoins. This is fine, but there are plenty of people (like me) who are completely fine with coinbase.
2) If you had an easy way of converting that IOU into USD, or converting it into real goods (by, for instance buying something on newegg), then I would say that yeah, that would be just as good. In fact, that's a great analogy! Bitcoin is a very widely accepted system of IOUs (kindof like a banking system...or cash).
there are plenty of people (like me) who are completely fine with coinbase.
As far as I know, Coinbase has no insurance for their users' coins. If they go bankrupt, you'll lose all your money.
Coinbase is a startup. Failure is the norm, not the exception. Until they get insurance, you shouldn't store more than you're comfortable losing.
Since most consumers can't afford to lose very much, and since most consumers aren't comfortable using an offline storage solution like Armory, they'll need to stick with cash or credit to stay safe. This harms bitcoin adoption among consumers, because they don't have bitcoin on hand with which to buy things on a whim.
bitcoin is at a stage where it's not trivial to secure if you are not a technical person. There are companies that are working at making this easier by providing the security and even insuring the bitcoins if something happens. When services like this are out we will see a huge turning point IMO.
I've been looking for a liveCD based offline paper-wallet solution, but so far no luck. Perhaps someone can point me to one? The point is to generate a paper wallet on a machine with no capability of retaining the keys after the paper wallet has been generated - and the only way I know how to do that is through the removal of hardware (no hard drive, no USB stick, no networking. Maybe no speaker either.)
That would be the cold storage option I mentioned would it not?
AFAIK there is only one company that has claimed the insurance angle(Xapo) and if you read the policy you basically need to have the person that stole them be arrested before they will pay out.
Use a Live CD with a lightweight client that doesn't need to download the entire blockchain. Keep the wallet on a separate USB key so you can keep any generated change addresses (since a LiveCD is read-only). This should be pretty effective unless the hardware itself is compromised.. If you're worried about the machine being exploited while online performing the transaction, you could limit exposure somewhat by generating an offline transaction.
2) Just because its new doesn't mean its better or makes more sense than the existing methods.