6 ms·

This is absolutely an issue that needs to be handled immediately. When there is real money involved, trust/faith is by far the most important factor. If there

by niggler 14y ago

This is absolutely an issue that needs to be handled immediately. When there is real money involved, trust/faith is by far the most important factor. If there is any concern about missing money, people will lose faith in the service and usually stop using it. To give an analogy, consider what is going on in the minds of the Cypriots while their accounts are in limbo.

bayesianhorse 14y ago
If anyone was thinking his transactions with a bitcoin exchange or their bitcoin account with some website was remotely as safe as a bank in Cyprus, we can't really call him a fiscally responsible adult...
- kragen 14y ago
  This week we've been looking at threats that Cypriot banks would never reopen again, and at a minimum large depositors will lose a quarter of their savings. It seems like you have it backwards!
  - ebbv 14y ago
    Just because Cypress is going to shit doesn't mean that moving your money into BTC is an awesome idea.
    - kragen 14y ago
      If your money is in Cypriot banks it's already too late, but it turns out in retrospect that it would have been an awesome idea a couple of weeks ago. Arguably nobody could have known that.
      - justincormack 14y ago
        It was fairly clear months ago that there would be depositor losses. The small amount of capital flight was surprising.
        bitcartel 14y ago
        I don't think it was clear at all. 1) 18 months ago, banks in Cyprus passed EU bank stress tests. 2) The EU has a deposit guarantee. 3) The new Prime Minister was elected because he promised deposits would never be touched. 4) Other countries received bail-outs without affecting deposit holders. Given the above, I think it would be quite reasonable for an ordinary Cypriot to put faith in the EU and their elected government, and just get on with their lives.
        arethuza 14y ago
        My understanding is that the EU itself does it guarantee bank deposits but rather it requires members states to have bank guarantee schemes.
        deleted 14y ago
        [deleted]
        SilasX 14y ago
        If it was obvious, why didn't that spark a run on the banks? Why did people seem to think their deposits were safe?
  - jff 14y ago
    And the general trend with Bitcoin "banks" is that at some point people lose a bunch of money and the website either shuts down or loses all trust. Your point?
    - kragen 14y ago
      I find your tone disappointingly arrogant, sarcastic, and dismissive, to a level which is not justified by your evident knowledge of the Bitcoin ecosystem. You may, if you choose, maintain Bitcoin in an account in a Bitcoin trading site, but you can also send it to a Bitcoin address whose private key seed you've memorized ("brainwallet"), maintained on an isolated machine, or printed out on a barcode kept in a safe. While I don't trade Bitcoin, my Bitcoin-enthusiast friends use these approaches. In short, Bitcoin trading sites do not provide the same service in the Bitcoin ecosystem that banks provide in the fiat-money ecosystem; they are more like Western Union or PayPal, as reflected in the FinCEN's new regulatory guidance this week. In the future, at least on Hacker News, please attempt to engage in rational discourse like a civilized human instead of a 4chan troll.
      - ohashi 14y ago
        Bitcoin exchanges provide a very similar role that banks play. They are a place to store money securely* and make sure it's easily available and exchangeable. Just because you can stick money under a mattress (the equivalent to your memorizing a bar code) has nothing to do with the role of banks or marketplaces. Bitcoin is supposed to allow you to send money to anyone given the address. The system itself is more like Western Union or PayPal. How are you making the claim that the exchanges are replacing them? That would mean they do nothing on top of the basic idea of Bitcoin. *Banks and bitcoin marketplaces get robbed, there is an illusion of security to some degree, except banks get things like FDIC insurance.
        derefr 14y ago
        > [Banks] are a place to store money securely* and make sure it's easily available and exchangeable. Not at all--what you're thinking of are "wallets." :) Banks are places we put money to prevent it from losing value. Money kept in a wallet (or under a mattress) steadily loses value because of inflation. A bank counteracts this by loaning out the money we give it (earning it money on interest), and then paying us another, smaller interest rate for our deposits in turn, which will offset inflation to whatever degree. Other entities also do this--mutual funds, for example--but banks do it while also making our money still somewhat convenient to re-liquidate and transfer; others may require, for example, 30 days' notice to facilitate withdrawal. One thing that's very interesting about Bitcoin is that, once it's all mined out, there won't be any inflation (or deflation) of its supply--the amount of Bitcoin out in the world will become effectively fixed. This means that, by and large, "banks" (in the "savings bank" sense; investment banks are a separate beast) are pretty irrelevant to a Bitcoin-based economy: there's no need to protect the value of your money; it's stable just sitting in a wallet. This property of Bitcoin might do strange things to the global economy if Bitcoin becomes more widely adopted. In effect, it would be a global version of what some Eurozone countries have experienced, where they have control over their fiscal policy (taxes and spending), but no control over their monetary policy (ability to print money.) It's common wisdom in Economics that at least a little bit of inflation is good--otherwise people tend to hoard money instead of investing it ventures that improve GDP. In a wholly-Bitcoin economy, there's no particular fear-based incentive to invest over just sitting on your money. (There's still a greed-based incentive to invest with banks for increased risk = increased reward in good economic times, but in times of economic volatility, the "flight to quality" toward stable Bitcoins would be absolute, moreso than treasury bills or gold have ever been.)
znowi 14y ago
I agree that they should have been more vocal on this issue, cause information vacuum gives way to posts like this and surely it doesn't do them good PR-wise. As for Cyprus, given how volatile and wild the bitcoin ecosystem is, I only tend to somewhat trust Mt.Gox and I view the rest as potential frauds (even if YC-backed).
- epscylonb 14y ago
  MTGOX is the most trustworthy and secure bitcoin service out there. I still wouldn't put a large amount of bitcoin through it all in one go.
- ponyous 14y ago
  I trust BitStamp, they are people only few KM away from me, that's why.

by niggler 14y ago

bayesianhorse 14y ago

If anyone was thinking his transactions with a bitcoin exchange or their bitcoin account with some website was remotely as safe as a bank in Cyprus, we can't really call him a fiscally responsible adult...

kragen 14y ago
This week we've been looking at threats that Cypriot banks would never reopen again, and at a minimum large depositors will lose a quarter of their savings. It seems like you have it backwards!
- ebbv 14y ago
  Just because Cypress is going to shit doesn't mean that moving your money into BTC is an awesome idea.
  - kragen 14y ago
    If your money is in Cypriot banks it's already too late, but it turns out in retrospect that it would have been an awesome idea a couple of weeks ago. Arguably nobody could have known that.
    - justincormack 14y ago
      It was fairly clear months ago that there would be depositor losses. The small amount of capital flight was surprising.
      - bitcartel 14y ago
        I don't think it was clear at all. 1) 18 months ago, banks in Cyprus passed EU bank stress tests. 2) The EU has a deposit guarantee. 3) The new Prime Minister was elected because he promised deposits would never be touched. 4) Other countries received bail-outs without affecting deposit holders. Given the above, I think it would be quite reasonable for an ordinary Cypriot to put faith in the EU and their elected government, and just get on with their lives.
        arethuza 14y ago
        My understanding is that the EU itself does it guarantee bank deposits but rather it requires members states to have bank guarantee schemes.
        deleted 14y ago
        [deleted]
      - SilasX 14y ago
        If it was obvious, why didn't that spark a run on the banks? Why did people seem to think their deposits were safe?
- jff 14y ago
  And the general trend with Bitcoin "banks" is that at some point people lose a bunch of money and the website either shuts down or loses all trust. Your point?
  - kragen 14y ago
    I find your tone disappointingly arrogant, sarcastic, and dismissive, to a level which is not justified by your evident knowledge of the Bitcoin ecosystem. You may, if you choose, maintain Bitcoin in an account in a Bitcoin trading site, but you can also send it to a Bitcoin address whose private key seed you've memorized ("brainwallet"), maintained on an isolated machine, or printed out on a barcode kept in a safe. While I don't trade Bitcoin, my Bitcoin-enthusiast friends use these approaches. In short, Bitcoin trading sites do not provide the same service in the Bitcoin ecosystem that banks provide in the fiat-money ecosystem; they are more like Western Union or PayPal, as reflected in the FinCEN's new regulatory guidance this week. In the future, at least on Hacker News, please attempt to engage in rational discourse like a civilized human instead of a 4chan troll.
    - ohashi 14y ago
      Bitcoin exchanges provide a very similar role that banks play. They are a place to store money securely* and make sure it's easily available and exchangeable. Just because you can stick money under a mattress (the equivalent to your memorizing a bar code) has nothing to do with the role of banks or marketplaces. Bitcoin is supposed to allow you to send money to anyone given the address. The system itself is more like Western Union or PayPal. How are you making the claim that the exchanges are replacing them? That would mean they do nothing on top of the basic idea of Bitcoin. *Banks and bitcoin marketplaces get robbed, there is an illusion of security to some degree, except banks get things like FDIC insurance.
      - derefr 14y ago
        > [Banks] are a place to store money securely* and make sure it's easily available and exchangeable. Not at all--what you're thinking of are "wallets." :) Banks are places we put money to prevent it from losing value. Money kept in a wallet (or under a mattress) steadily loses value because of inflation. A bank counteracts this by loaning out the money we give it (earning it money on interest), and then paying us another, smaller interest rate for our deposits in turn, which will offset inflation to whatever degree. Other entities also do this--mutual funds, for example--but banks do it while also making our money still somewhat convenient to re-liquidate and transfer; others may require, for example, 30 days' notice to facilitate withdrawal. One thing that's very interesting about Bitcoin is that, once it's all mined out, there won't be any inflation (or deflation) of its supply--the amount of Bitcoin out in the world will become effectively fixed. This means that, by and large, "banks" (in the "savings bank" sense; investment banks are a separate beast) are pretty irrelevant to a Bitcoin-based economy: there's no need to protect the value of your money; it's stable just sitting in a wallet. This property of Bitcoin might do strange things to the global economy if Bitcoin becomes more widely adopted. In effect, it would be a global version of what some Eurozone countries have experienced, where they have control over their fiscal policy (taxes and spending), but no control over their monetary policy (ability to print money.) It's common wisdom in Economics that at least a little bit of inflation is good--otherwise people tend to hoard money instead of investing it ventures that improve GDP. In a wholly-Bitcoin economy, there's no particular fear-based incentive to invest over just sitting on your money. (There's still a greed-based incentive to invest with banks for increased risk = increased reward in good economic times, but in times of economic volatility, the "flight to quality" toward stable Bitcoins would be absolute, moreso than treasury bills or gold have ever been.)

znowi 14y ago

I agree that they should have been more vocal on this issue, cause information vacuum gives way to posts like this and surely it doesn't do them good PR-wise. As for Cyprus, given how volatile and wild the bitcoin ecosystem is, I only tend to somewhat trust Mt.Gox and I view the rest as potential frauds (even if YC-backed).

epscylonb 14y ago
MTGOX is the most trustworthy and secure bitcoin service out there. I still wouldn't put a large amount of bitcoin through it all in one go.
ponyous 14y ago
I trust BitStamp, they are people only few KM away from me, that's why.