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I'd say the onus is on the cryptocurrency people to show that "the many ways [...] in which they are wildly inferior" are fixable.

sgeisler 8y ago
For example "irrevocability of transactions" is fixable by introducing arbitrators. This has the huge benefit of making the trade off explicit and still allowing for irrevocable transactions. With 2-of-3 multi-sig escrow services can be implemented in a decentralized and trust less way (if both parties agree no escrow agent has to be involved). Handling private keys has also become much simpler in the past years due to hardware wallets and hierarchical deterministic keys. But I can see why someone could not want to be responsible for the safekeeping of their savings.
- root_axis 8y ago
  "Arbiter" aka a centralized authority. At that point you're better off with a bank.
- psychedelic 8y ago
  I think we still have a long way to come in regards to handling private keys. In my efforts to get my family/friends informed on cryptocurrency it amazes me how difficult these things are. I think that is why Coinbase has been so successful. If my mom wants to hold some bitcoin, I'm sending her to coinbase. She can't be trusted with her own private keys. I'm interested to read more on the multi-sig escrow services you mentioned though. Do you have any recommended reading material on the matter? Thanks.
  - tim333 8y ago
    Here's some more on multi-sig & escrow https://coincenter.org/entry/what-is-multi-sig-and-what-can-it-do https://coincenter.org/entry/what-is-multi-sig-and-what-can-...
  - _nalply 8y ago
    Perhaps we should go physical. After all we seem to cope rather well with physical keys. Perhaps we should set up an infrastructure with 3D-printing keys and backup keys. Key scanners are able to read the key if (and only if) you insert the key. The keys are designed such that it is not possible to copy them from a picture of them. The idea is, if the majority of people understands private keys like they understand door keys, then perhaps managing cryptocurrency private keys will be possible for everybody? Perhaps with some prevention measures against physical loss or theft like Dapp-based insurance or arbitrage?
chrisco255 8y ago
The option to control your private keys is nice, but not necessary for crypto to thrive. Crypto key management services exist, and the average user will use these services just as they do their current banks. The difference is, key management services are much cheaper to provide than full-on banking solutions. As for the irrevocable nature of crypto transactions...this can be alleviated with smart contracts on ETH network, or likely some 3rd party will develop some kind of purchasing/account insurance that provides this service for those willing to pay for it. The nice thing is, you will have the choice as a user. That is wildly superior to the current system.
- yorwba 8y ago
  I'm pretty sure that most of the cost of normal banking does not stem from storing the currency amounts in customer's accounts (which is analogous to storing their private keys for them), but rather from providing customer service, securing the data and compliance with regulations. A crypto-currency equivalent of a bank that could replace traditional banking for the majority of users would have all those costs as well.
- vkou 8y ago
  The reason that full-on banking solutions are more expensive to provide is because storing money is a tiny part of what banks actually do. The primary business of a bank is extending credit. Of course it's easier to build a wallet app then run a bank - the former's scope is orders of magnitude smaller. It (and also the role they play in wealth management and fraud prevention) is why banking devours such a large percentage of our gdp. It's not going to be replaced by another Bitcoin fork.

sgeisler 8y ago

For example "irrevocability of transactions" is fixable by introducing arbitrators. This has the huge benefit of making the trade off explicit and still allowing for irrevocable transactions. With 2-of-3 multi-sig escrow services can be implemented in a decentralized and trust less way (if both parties agree no escrow agent has to be involved). Handling private keys has also become much simpler in the past years due to hardware wallets and hierarchical deterministic keys. But I can see why someone could not want to be responsible for the safekeeping of their savings.

root_axis 8y ago
"Arbiter" aka a centralized authority. At that point you're better off with a bank.
psychedelic 8y ago
I think we still have a long way to come in regards to handling private keys. In my efforts to get my family/friends informed on cryptocurrency it amazes me how difficult these things are. I think that is why Coinbase has been so successful. If my mom wants to hold some bitcoin, I'm sending her to coinbase. She can't be trusted with her own private keys. I'm interested to read more on the multi-sig escrow services you mentioned though. Do you have any recommended reading material on the matter? Thanks.
- tim333 8y ago
  Here's some more on multi-sig & escrow https://coincenter.org/entry/what-is-multi-sig-and-what-can-it-do https://coincenter.org/entry/what-is-multi-sig-and-what-can-...
- _nalply 8y ago
  Perhaps we should go physical. After all we seem to cope rather well with physical keys. Perhaps we should set up an infrastructure with 3D-printing keys and backup keys. Key scanners are able to read the key if (and only if) you insert the key. The keys are designed such that it is not possible to copy them from a picture of them. The idea is, if the majority of people understands private keys like they understand door keys, then perhaps managing cryptocurrency private keys will be possible for everybody? Perhaps with some prevention measures against physical loss or theft like Dapp-based insurance or arbitrage?

chrisco255 8y ago

The option to control your private keys is nice, but not necessary for crypto to thrive. Crypto key management services exist, and the average user will use these services just as they do their current banks. The difference is, key management services are much cheaper to provide than full-on banking solutions. As for the irrevocable nature of crypto transactions...this can be alleviated with smart contracts on ETH network, or likely some 3rd party will develop some kind of purchasing/account insurance that provides this service for those willing to pay for it. The nice thing is, you will have the choice as a user. That is wildly superior to the current system.

yorwba 8y ago
I'm pretty sure that most of the cost of normal banking does not stem from storing the currency amounts in customer's accounts (which is analogous to storing their private keys for them), but rather from providing customer service, securing the data and compliance with regulations. A crypto-currency equivalent of a bank that could replace traditional banking for the majority of users would have all those costs as well.
vkou 8y ago
The reason that full-on banking solutions are more expensive to provide is because storing money is a tiny part of what banks actually do. The primary business of a bank is extending credit. Of course it's easier to build a wallet app then run a bank - the former's scope is orders of magnitude smaller. It (and also the role they play in wealth management and fraud prevention) is why banking devours such a large percentage of our gdp. It's not going to be replaced by another Bitcoin fork.