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Bitcoin is an attempt to make digital stuff that behaves as much as possible like physical cash. In terms of the way it works, a bank account is very much not t

Bitcoin is an attempt to make digital stuff that behaves as much as possible like physical cash. In terms of the way it works, a bank account is very much not the correct analogy. Cash is. Losing $60,000 in Bitcoin is like losing $60,000 in cash. It’s not exactly a surprise that it can happen, and it’s expected that there will be no real recourse. I think the trouble is that people still aren’t really thinking of it properly. If this story happened with cash, the first question everybody would be asking would probably be, “Why did you have $60,000 in cash sitting around? What did you think was going to happen?” Like cash, most people shouldn’t be holding large amounts of Bitcoin themselves. If they want large Bitcoin holdings for whatever reason, they should be held with a trustworthy entity that can properly secure them, like a bank. If they do insist on holding large amounts of Bitcoin directly, they need to understand that it’s like keeping a vault full of cash, and they need to work hard to keep it secure.

fixermark 8y ago
Correction: BTC is an attempt to make digital stuff that behaves as much as possible like physical gold. Cash is a fiat currency and reproducible infinitely by the controlling government. The point of gold (as a money medium) is that it self-regulates the amount in circulation by being a tangible material in finite supply with cost associated in seeking more. This model has significant benefits and drawbacks (and, it's probably worth noting, its drawbacks are what led to the fiat model most countries use today).
- mikeash 8y ago
  I don’t think “cash” necessarily implies fiat. Bitcoin’s model of creating new currency is different from both fiat and gold, although it’s certainly a lot closer to gold.
- 908087 8y ago
  Remember the last time 20 different entities forked gold, and battles erupted over which one was "the one true gold"? Neither do I.
jancsika 8y ago
Then you're fighting two fronts. Practical digital cash of the type you describe needs to have two properties in addition to preventing double spending-- a) quick transaction time (close to immediate) and b) extremely small fees. Otherwise having small amounts of the digital cash doesn't make any sense. Worse, you've got prior art in Ecash that not only had those properties but also unlinkability. So it can be done, Bitcoin doesn't do it, and as a result the market for it is extremely small and out of touch with the hype around it.
friendzis 8y ago
In terms of the way it works, cash is very much not the correct analogy, too. Transaction wise, cash transactions happen both live and physically, meaning you have some means to make sure the counterparty honors their part of transaction. Electronic cash systems involve third party to coerce the counterparty or refund you. In Bitcoin world, apart from hopes and dreams and magical reputation, there is literally no way to stop the counterparty shoving you their Prodeum. Bitcoin removes the trusted third party of electronic cash, but fails to introduce physical measures of physical cash. Bitcoin transactions are hardly even transactions, more like throwing money into numbered bin and hoping for the best. To be fair, the system has not gone down the drain once some form of market formed, so the hopes mostly did not backfire. The absence of full transactions in my opinion (I may be wrong, though) means Bitcoin IOUs cannot exist and with that whole financial products market, for better or worse. Loss wise, cash is either in your posession or not and a lot of times can be recovered when lost. Stolen private keys can remain dormant for indefinite amount of time until they are actually used to move coins to a different address. With cash that one has in their immediate possession it would be immediately obvious if someone tries to take them away. If physical cash bills got sticky, you have taken an extra bill, dropped it on a counter and noticed your mistake, then you can still take back the extra bill. If you have transferred too much/many coins, then it's SFYL. Forgetting a wallet with physical cash somewhere can be SFYL, can still be recoverable if no one took possession of it. Losing access to private keys is permanent SFYL.
- gruez 8y ago
  >cash transactions happen both live and physically, meaning you have some means to make sure the counterparty honors their part of transaction I'm assuming you're referring to threat and/or use of violence, but that's not a viable option if the counterparty is prepared. Are you really willing to get into a fist/knife/gun fight if you're trying to sell a Xbox and the other side doesn't want to pay up?
  - friendzis 8y ago
    Not necessarily violence, transaction happening in a public place with oversight poses risk of being exposed/caught, which could be enough to deter the counterparty from running away with goods or money, scammers tend to go for easier targets, but yes, physical measures including violence are an option with cash, while electronic one-sided irreversible pseudonymous transactions mostly eliminate those options. The point is that the threat model of Bitcoin is quite different from that of cash.
driverdan 8y ago
> they should be held with a trustworthy entity that can properly secure them, like a bank No such entity exists.
- mikeash 8y ago
  Perhaps, in which case the logical conclusion is that you should never hold a significant amount of Bitcoin in any way.

fixermark 8y ago

Correction: BTC is an attempt to make digital stuff that behaves as much as possible like physical gold. Cash is a fiat currency and reproducible infinitely by the controlling government. The point of gold (as a money medium) is that it self-regulates the amount in circulation by being a tangible material in finite supply with cost associated in seeking more. This model has significant benefits and drawbacks (and, it's probably worth noting, its drawbacks are what led to the fiat model most countries use today).

mikeash 8y ago
I don’t think “cash” necessarily implies fiat. Bitcoin’s model of creating new currency is different from both fiat and gold, although it’s certainly a lot closer to gold.
908087 8y ago
Remember the last time 20 different entities forked gold, and battles erupted over which one was "the one true gold"? Neither do I.

jancsika 8y ago

Then you're fighting two fronts. Practical digital cash of the type you describe needs to have two properties in addition to preventing double spending-- a) quick transaction time (close to immediate) and b) extremely small fees. Otherwise having small amounts of the digital cash doesn't make any sense. Worse, you've got prior art in Ecash that not only had those properties but also unlinkability. So it can be done, Bitcoin doesn't do it, and as a result the market for it is extremely small and out of touch with the hype around it.

friendzis 8y ago

In terms of the way it works, cash is very much not the correct analogy, too. Transaction wise, cash transactions happen both live and physically, meaning you have some means to make sure the counterparty honors their part of transaction. Electronic cash systems involve third party to coerce the counterparty or refund you. In Bitcoin world, apart from hopes and dreams and magical reputation, there is literally no way to stop the counterparty shoving you their Prodeum. Bitcoin removes the trusted third party of electronic cash, but fails to introduce physical measures of physical cash. Bitcoin transactions are hardly even transactions, more like throwing money into numbered bin and hoping for the best. To be fair, the system has not gone down the drain once some form of market formed, so the hopes mostly did not backfire. The absence of full transactions in my opinion (I may be wrong, though) means Bitcoin IOUs cannot exist and with that whole financial products market, for better or worse. Loss wise, cash is either in your posession or not and a lot of times can be recovered when lost. Stolen private keys can remain dormant for indefinite amount of time until they are actually used to move coins to a different address. With cash that one has in their immediate possession it would be immediately obvious if someone tries to take them away. If physical cash bills got sticky, you have taken an extra bill, dropped it on a counter and noticed your mistake, then you can still take back the extra bill. If you have transferred too much/many coins, then it's SFYL. Forgetting a wallet with physical cash somewhere can be SFYL, can still be recoverable if no one took possession of it. Losing access to private keys is permanent SFYL.

gruez 8y ago
>cash transactions happen both live and physically, meaning you have some means to make sure the counterparty honors their part of transaction I'm assuming you're referring to threat and/or use of violence, but that's not a viable option if the counterparty is prepared. Are you really willing to get into a fist/knife/gun fight if you're trying to sell a Xbox and the other side doesn't want to pay up?
- friendzis 8y ago
  Not necessarily violence, transaction happening in a public place with oversight poses risk of being exposed/caught, which could be enough to deter the counterparty from running away with goods or money, scammers tend to go for easier targets, but yes, physical measures including violence are an option with cash, while electronic one-sided irreversible pseudonymous transactions mostly eliminate those options. The point is that the threat model of Bitcoin is quite different from that of cash.

driverdan 8y ago

> they should be held with a trustworthy entity that can properly secure them, like a bank No such entity exists.

mikeash 8y ago
Perhaps, in which case the logical conclusion is that you should never hold a significant amount of Bitcoin in any way.