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Traditional finance isn't any easier to unwind than bitcoin. If I give you $5 I can't magically "erase" that transaction. The $5 bill doesn't materialise back

Traditional finance isn't any easier to unwind than bitcoin. If I give you $5 I can't magically "erase" that transaction. The $5 bill doesn't materialise back in my pocket. Instead, I get the police to force you to give the money back. As an accountant, if you erase a transaction (even if it was a mistake), you can go to jail. What you do it make a balancing transaction to correct the mistake. Nothing is stopping you from doing the same thing with bitcoin. Making it so you can't erase or hide the previous transaction just enforces rules that already exist -- and it a great feature. The main difference is that it is infeasible to hold large amounts of cash, and so we usually allow a third party to hold on to our money. That third party will usually hand over your money if requested by the government (some overseas banks are notable exceptions!!). With bitcoin I can hold on to it myself and not have to worry about the actions of a third party. Secondly, even if you horde cash, it's hard to secure it. It's basically impossible to make it so that only you can access it. With Bitcoin, it is easy to secure a large amount of value and ensure that only you can access it. Bizarrely, a large number of people totally ignore this advantage... This is the entire point of bitcoin. With the hype, fraud and what not, people often assume that bitcoin must have been developed as a scam. But I really do believe that the purpose was to allow people to have access to money and not have to rely on a third party who probably doesn't have your best interests at heart. It's not really surprising that criminals will be interested in this kind of system. They are the ones with the highest need. The government can't freeze your account. The interesting question is: do we need that kind of security? Do we trust the banks and government to act appropriately with our money?

drngdds 9y ago
How do you secure large amounts of Bitcoin? Keeping it all in a hardware wallet is a lot like keeping all your money in a safe in your closet, and keeping it on your computer or in an exchange is even worse.
jacques_chester 9y ago
The difference is that if there is an error, I can unwind the error with the counterparty's cooperation or without it. A bit harder to do that when someone deprives me of bitcoin by theft or fraud. I am familiar with compensating transactions. Ledgers are a necessary mechanism, but they are not a sufficient mechanism to safeguard against theft, fraud and error. These systems work because of multiple overlapping defences and they still fail. I find that I tense up at the strong strain of technoutopianism that runs through bitcoin and cryptocurrency circles. You're asking the rest of us to bet everything on block. I don't trust anyone to not make a mistake and I don't believe in single lines of defence, no matter how computationally intractable they are on paper.
viraptor 9y ago
> Traditional finance isn't any easier to unwind than bitcoin. This is one of those cases where the theory and practice don't match. The are two cases: the destination account exists or doesn't. If it doesn't, your bank returns your money minus some handling fees. Your Bitcoin in the same situation is gone to an unused wallet which nobody can access. If the account is valid: With Bitcoin it's on you to track down who owns your funds now and figure out how to recover it. In case of a bank though you raise an issue with them and start the process - either internal or across banks. It allows the person receiving the money to approve a quick reveal, or allows you to start legal action to recover your funds. At some high, abstract level, these are similar. But in practice, banks make it pretty easy to recover your funds in case of simple mistakes.
viraptor 9y ago
> With Bitcoin, it is easy to secure a large amount of value and ensure that only you can access it. Bizarrely, a large number of people totally ignore this advantage... We had examples of a number of entities, which tried to apply the best practices and were aware of the risks, completely failing at the task. Multiple exchanges, smart contract operators, and other companies failed to protect their coins. The real world shows us that this is not that easy given clever adversaries.

drngdds 9y ago

How do you secure large amounts of Bitcoin? Keeping it all in a hardware wallet is a lot like keeping all your money in a safe in your closet, and keeping it on your computer or in an exchange is even worse.

jacques_chester 9y ago

The difference is that if there is an error, I can unwind the error with the counterparty's cooperation or without it. A bit harder to do that when someone deprives me of bitcoin by theft or fraud. I am familiar with compensating transactions. Ledgers are a necessary mechanism, but they are not a sufficient mechanism to safeguard against theft, fraud and error. These systems work because of multiple overlapping defences and they still fail. I find that I tense up at the strong strain of technoutopianism that runs through bitcoin and cryptocurrency circles. You're asking the rest of us to bet everything on block. I don't trust anyone to not make a mistake and I don't believe in single lines of defence, no matter how computationally intractable they are on paper.

viraptor 9y ago

> Traditional finance isn't any easier to unwind than bitcoin. This is one of those cases where the theory and practice don't match. The are two cases: the destination account exists or doesn't. If it doesn't, your bank returns your money minus some handling fees. Your Bitcoin in the same situation is gone to an unused wallet which nobody can access. If the account is valid: With Bitcoin it's on you to track down who owns your funds now and figure out how to recover it. In case of a bank though you raise an issue with them and start the process - either internal or across banks. It allows the person receiving the money to approve a quick reveal, or allows you to start legal action to recover your funds. At some high, abstract level, these are similar. But in practice, banks make it pretty easy to recover your funds in case of simple mistakes.

viraptor 9y ago

> With Bitcoin, it is easy to secure a large amount of value and ensure that only you can access it. Bizarrely, a large number of people totally ignore this advantage... We had examples of a number of entities, which tried to apply the best practices and were aware of the risks, completely failing at the task. Multiple exchanges, smart contract operators, and other companies failed to protect their coins. The real world shows us that this is not that easy given clever adversaries.