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A problem with an untraceable currency is that it's also very easy for an exchange to collaborate with a hacker and vanish (or declare banckrupcy). Not saying t

by shuw 14y ago

A problem with an untraceable currency is that it's also very easy for an exchange to collaborate with a hacker and vanish (or declare banckrupcy). Not saying that is what happened here, but that would be my fear.

genwin 14y ago
Yep. Exploring that risk, they might say something like "the attacker gained accesses to an unencrypted backup of the wallet keys", then say they'll consider making everyone whole, then go bankrupt.
javert 14y ago
Those kinds of trust issues are present in some form in many kinds of commercial transactions, and there are many ways of dealing with them (insurance, lawsuits, interact with companies you can trust and avoid ones you can't, etc.).
- shuw 14y ago
  Bitcoin provides plausible deniability, which makes lawsuits difficult. In contrast to centralized banking systems which leave a paper trail. And insuring bitcoins has its own logistical challenges that will probably scare an actuary. Trust is a hard one as I'm sure the people who used bitfloor had trusted it until today.
  - javert 14y ago
    Insuring bitcoins is actually pretty easy. As a sidenote, there are already people doing it. The ideal way to do it would be to audit the exchange, and possibly also use an escrow, populated with money from the exchange, that pays you (the insurer) if the exchange loses money. It would be in the interest of the exchange to cooperate in these areas, in order to promote the availability of cheaper insurance, and therefore more customers. A digression: Bitcoin would be the government regulator's wet dream if you could assign people addresses (and they could only use the assigned address), because you can trivially track all transactions. Actually, I have in mind a way to implement such a system in a (likely) cryptographically sound and enforceable way. But in theory, the government could outlaw cash and track all transactions anyway.

by shuw 14y ago

genwin 14y ago

Yep. Exploring that risk, they might say something like "the attacker gained accesses to an unencrypted backup of the wallet keys", then say they'll consider making everyone whole, then go bankrupt.

javert 14y ago

Those kinds of trust issues are present in some form in many kinds of commercial transactions, and there are many ways of dealing with them (insurance, lawsuits, interact with companies you can trust and avoid ones you can't, etc.).

shuw 14y ago
Bitcoin provides plausible deniability, which makes lawsuits difficult. In contrast to centralized banking systems which leave a paper trail. And insuring bitcoins has its own logistical challenges that will probably scare an actuary. Trust is a hard one as I'm sure the people who used bitfloor had trusted it until today.
- javert 14y ago
  Insuring bitcoins is actually pretty easy. As a sidenote, there are already people doing it. The ideal way to do it would be to audit the exchange, and possibly also use an escrow, populated with money from the exchange, that pays you (the insurer) if the exchange loses money. It would be in the interest of the exchange to cooperate in these areas, in order to promote the availability of cheaper insurance, and therefore more customers. A digression: Bitcoin would be the government regulator's wet dream if you could assign people addresses (and they could only use the assigned address), because you can trivially track all transactions. Actually, I have in mind a way to implement such a system in a (likely) cryptographically sound and enforceable way. But in theory, the government could outlaw cash and track all transactions anyway.