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> At some point Bitcoin exchanges will have to realise that they need to be ~as secure as a bank is~ orders of magnitude more secure than a bank. For exactly th

> At some point Bitcoin exchanges will have to realise that they need to be ~as secure as a bank is~ orders of magnitude more secure than a bank. For exactly the same reason. Fixed that for you. Banks can accept risks to liquidity pretty readily because cash is centrally controlled. Considering that cryptocurrencies are hyper-liquid and are unrecoverable short of a hard fork in the event of a catastrophic event (e.g. with eth after the DAO hack), exchanges need to have measures in place which would be unheard-of at most other firms.

candiodari 9y ago
This is right. Lax security practices at a bank are "more acceptable" because stupidity can be partially compensated for. Stealing money from banks, even if you have the ability to spend it for years is very risky, can be turned back (for losses of banks and governments, not, of course, when normal people get hacked/scammed/...) If we are to have currencies beyond the reach of laws and courts (which seems to be the point of bitcoin and the like), we will need actually capable organizations. I wonder what countries and governments will do ? Because we all know that they won't actually have good security practices. https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery
lucozade 9y ago
> Banks can accept risks to liquidity pretty readily Depends on the size of the liquidity crunch. It's not exactly unknown to bring a financial institution to its knees for lack of liquidity. > cryptocurrencies are hyper-liquid How so? > unrecoverable short of a hard fork Which is the usual way of dealing with this. I can't think of any cryptocurrencies that are decentralised enough that a small quorum of people can't effect a substantial change. > exchanges need to have measures in place which would be unheard-of at most other firms What are they doing that's more than financial institutions? Startups selling coffee or whatever, sure.

candiodari 9y ago

This is right. Lax security practices at a bank are "more acceptable" because stupidity can be partially compensated for. Stealing money from banks, even if you have the ability to spend it for years is very risky, can be turned back (for losses of banks and governments, not, of course, when normal people get hacked/scammed/...) If we are to have currencies beyond the reach of laws and courts (which seems to be the point of bitcoin and the like), we will need actually capable organizations. I wonder what countries and governments will do ? Because we all know that they won't actually have good security practices. https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery

lucozade 9y ago

> Banks can accept risks to liquidity pretty readily Depends on the size of the liquidity crunch. It's not exactly unknown to bring a financial institution to its knees for lack of liquidity. > cryptocurrencies are hyper-liquid How so? > unrecoverable short of a hard fork Which is the usual way of dealing with this. I can't think of any cryptocurrencies that are decentralised enough that a small quorum of people can't effect a substantial change. > exchanges need to have measures in place which would be unheard-of at most other firms What are they doing that's more than financial institutions? Startups selling coffee or whatever, sure.