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The mtgox débâcle springs to mind. EDIT: My point is that a financial service is more than just the protocols used. Actually the protocols are the least import

The mtgox débâcle springs to mind. EDIT: My point is that a financial service is more than just the protocols used. Actually the protocols are the least important thing to the average customer. The more important thing is trust. I trust that my money in the bank will stay there and that transactions made using my bank will go to the person I say they should. Part of the reason for my trust is in the regulation around the banking industry. E.g. the savings guarantee here in the UK(/EU?). The bitcoin industry (not the protocol but the services around it) have yet to provide me that level of trust coupled with comparative ease of use.

celticninja 11y ago
But that was not a disaster for bitcoin, that was a case of fraud and theft. Not much different to someone embezzling fiat from a firm e.g.secure investmen, and that wasn't a disaster for fiat currencies or the traditional banking system. I think that many people hold bitcoin and bitcoin businesses to a higher standard than they would companies that operate outside this sphere.
- JupiterMoon 11y ago
  > I think that many people hold bitcoin and bitcoin businesses to a higher standard than they would companies that operate outside this sphere. I hold them to exactly the same standard as traditional financial services. I can see you point in that for many people bitcoin is just voodoo (on the other hand for many people traditional financial services are voodoo and people trust them with their pensions).
- mentat 11y ago
  They clearly said "the bitcoin industry" so their comment stands.
- vkou 11y ago
  If someone stole 5% of all the world's fiat currency from an unregulated, uninsured financial institution (Which in that sense was no different from any other BTC exchange... So it's not like anyone had better options.) with customers not getting any recourse, that would be a disaster for fiat currencies. At least, it would be an unmitigated disaster for the Wild West style of regulating fiat currencies. People hold BTC businesses to a higher standard because after your BTC is stolen by 'hackers' in an ex-Soviet republic, you have absolutely zero recourse. They hold BTC to a higher standard because no individual in the fiat world siphoned off a trillion dollars into his accounts last year. They hold BTC to a higher standard because the companies operating in the space absolutely refuse to properly protect their customers.
  - JupiterMoon 11y ago
    I would note that siphoning off massive amounts of money does happen in the fiat world despite regulation (but because off ineffective implementation of regulation) e.g. the Madoff case.
  - celticninja 11y ago
    Have a look at secure investment, they split with $130 million dollars in fiat. What about the $1bn stolen from moldovan banks? There has been no customer recourse there. Trillion? Really? That is an order of magnitude grater than bitcoins total market cap.
    - vkou 11y ago
      The MT.Gox disaster included the theft of ~7% of all BTC. Depending on how you want to measure the amount of fiat currency in circulation, 7% of that would be close to a trillion dollars.
celticninja 11y ago
Yes there is a savings guarantee in the US/UK/EU however if funds are stolen from your bank account you are as unlikely to get them returned as you are to get stolen bitcoin back. The difference is that the government is covering (with taxes) the loss incurred by the bank (if necessary) but that doesn't mean you are automatically covered by this insurance in the case of a theft.
- JupiterMoon 11y ago
  In terms of theft. It depends upon the manner of the theft. If one follows the banks required precautions then one is usually covered (in the UK at least). If one does not then one is not covered -- although I'd agree that banks are increasingly not covering people if they can avoid doing so. I was more thinking of institutional theft (i.e. embezzlement). I'm almost certain my bank won't just vanish the money I have lent them through my savings account. Of course the same cannot be said of "Random Investment Company Name" who was recommended to me on a forum/down the pub. As yet (and I hope that this changes) non of the bitcoin service companies have risen above this level of trust (for me personally). EDIT: Added fact that my assessment of trust is my personal subjective opinion and shouldn't be taken as a fact.
- schrodinger 11y ago
  I've had my credit card and debit card stolen several times. One time, the person who got it took out over a thousand dollars from an ATM in another country. I got it all back (from Chase) within 5 days every time, which would never happen with Bitcoin.
celticninja 11y ago
Yes there is a savings guarantee in the US/UK/EU however if funds are stolen from your bank account you are as unlikely to get them returned as you are to get stolen bitcoin back. The difference is that the government is covering (with taxes) the loss incurred by the bank (if necessary) but that doesn't mean you are automatically covered by this insurance in the case of a theft.

celticninja 11y ago

But that was not a disaster for bitcoin, that was a case of fraud and theft. Not much different to someone embezzling fiat from a firm e.g.secure investmen, and that wasn't a disaster for fiat currencies or the traditional banking system. I think that many people hold bitcoin and bitcoin businesses to a higher standard than they would companies that operate outside this sphere.

JupiterMoon 11y ago
> I think that many people hold bitcoin and bitcoin businesses to a higher standard than they would companies that operate outside this sphere. I hold them to exactly the same standard as traditional financial services. I can see you point in that for many people bitcoin is just voodoo (on the other hand for many people traditional financial services are voodoo and people trust them with their pensions).
mentat 11y ago
They clearly said "the bitcoin industry" so their comment stands.
vkou 11y ago
If someone stole 5% of all the world's fiat currency from an unregulated, uninsured financial institution (Which in that sense was no different from any other BTC exchange... So it's not like anyone had better options.) with customers not getting any recourse, that would be a disaster for fiat currencies. At least, it would be an unmitigated disaster for the Wild West style of regulating fiat currencies. People hold BTC businesses to a higher standard because after your BTC is stolen by 'hackers' in an ex-Soviet republic, you have absolutely zero recourse. They hold BTC to a higher standard because no individual in the fiat world siphoned off a trillion dollars into his accounts last year. They hold BTC to a higher standard because the companies operating in the space absolutely refuse to properly protect their customers.
- JupiterMoon 11y ago
  I would note that siphoning off massive amounts of money does happen in the fiat world despite regulation (but because off ineffective implementation of regulation) e.g. the Madoff case.
- celticninja 11y ago
  Have a look at secure investment, they split with $130 million dollars in fiat. What about the $1bn stolen from moldovan banks? There has been no customer recourse there. Trillion? Really? That is an order of magnitude grater than bitcoins total market cap.
  - vkou 11y ago
    The MT.Gox disaster included the theft of ~7% of all BTC. Depending on how you want to measure the amount of fiat currency in circulation, 7% of that would be close to a trillion dollars.

celticninja 11y ago

Yes there is a savings guarantee in the US/UK/EU however if funds are stolen from your bank account you are as unlikely to get them returned as you are to get stolen bitcoin back. The difference is that the government is covering (with taxes) the loss incurred by the bank (if necessary) but that doesn't mean you are automatically covered by this insurance in the case of a theft.

JupiterMoon 11y ago
In terms of theft. It depends upon the manner of the theft. If one follows the banks required precautions then one is usually covered (in the UK at least). If one does not then one is not covered -- although I'd agree that banks are increasingly not covering people if they can avoid doing so. I was more thinking of institutional theft (i.e. embezzlement). I'm almost certain my bank won't just vanish the money I have lent them through my savings account. Of course the same cannot be said of "Random Investment Company Name" who was recommended to me on a forum/down the pub. As yet (and I hope that this changes) non of the bitcoin service companies have risen above this level of trust (for me personally). EDIT: Added fact that my assessment of trust is my personal subjective opinion and shouldn't be taken as a fact.
schrodinger 11y ago
I've had my credit card and debit card stolen several times. One time, the person who got it took out over a thousand dollars from an ATM in another country. I got it all back (from Chase) within 5 days every time, which would never happen with Bitcoin.

celticninja 11y ago