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I'm having a hard time following your argument. PR: With no evidence to support your claim that this is a nightmare, I believe you're overstating the situatio

I'm having a hard time following your argument. PR: With no evidence to support your claim that this is a nightmare, I believe you're overstating the situation. The current BPI/Winkdex/etc. values show there are plenty of people still quite confident in the Bitcoin system. Risk management: Consider parent's option (a) again: there is no intrinsic reason Bitcoin-based services can't reduce their hot wallet size down to zero and send all settlement through a human review process. The "hot/cold wallet" design is a choice that many naive but greedy people are choosing in building their Bitcoin-based systems but it is not the only choice. In banks you usually only STP low-value, low-risk transactions; in the current breed of Bitcoin-based systems, it would appear that system designers are naivly STPing everything. There is no evidence I have seen to suggest that Bitcoin-based systems intrinsically cannot manage risk properly (this is obvious when you simply consider that the majority of coins have not been stolen). Regulation: There is some kind of strange unstated assumption on HN that regulation magically makes banking safe all by itself, and until that regulation is in place Bitcoin-based systems cannot be safe or effectively risk managed. With the exception of insured deposits, which is a question of policy and time rather than strictly a matter of regulation, there is no reason that Bitcoin-based services can't proactively implement policies that the banking world is required to implement by law (AML/KYC rules, auditing, active risk monitoring, human review in settlement, etc.) Using a service that doesn't implement these policies is a risky choice (and yes, I believe many Bitcoin supporters will probably have to change their opinions about e.g. identity verification if they want to see Bitcoin survive and succeed). Before anybody makes assumptions: I do not have an opinion about whether Bitcoin will succeed or not. I do think the underlying technology and possibilities are being unfairly stigmatised by critics' generalizations of the inadequacies in implementations of current Bitcoin-based systems.

mcv 13y ago
> There is some kind of strange unstated assumption on HN that regulation magically makes banking safe all by itself, and until that regulation is in place Bitcoin-based systems cannot be safe or effectively risk managed. Magically? No, that's not how regulation works. It takes a lot of work and diligence. But if done right, it will make it safer. If a regulator with sufficient authority had audited MtGox, it would have been closed down a long time ago, and people wouldn't have lost remotely as much money. Without it, bitcoin users are at the mercy of a bunch of utter amateurs.
- ryanjshaw 13y ago
  > If a regulator with sufficient authority had audited MtGox, it would have been closed down a long time ago, and people wouldn't have lost remotely as much money. You state this as though it was the only option people had available for not losing money. > Without it, bitcoin users are at the mercy of a bunch of utter amateurs. This statement is simply untrue. Nothing stops people from exchanging BTC in person. Nothing stops people from exchanging small low risk volumes on exchanges at a time. Regulatory oversight is not necessary to manage risk - it just makes things easier (and FWIW, something I support). People who lost money on MtGox lost it because of decisions they made which they had 100% control over. There were viable alternatives open to them, they simply chose not to pursue those options. Every government with an opinion on Bitcoin thus far has made it abundantly clear that (1) Bitcoin is risky (2) if you stuff up, nobody will rescue you. If you decide to participate despite these warnings, that's your own free choice. If you are not aware of those warnings, you're putting your money into something you haven't adequately researched, and would likely be bound to lose your money either way.
  - mcv 13y ago
    > Nothing stops people from exchanging BTC in person. Nothing stops people from exchanging small low risk volumes on exchanges at a time. Lack of technical knowledge and understanding stops most people from handling BTC safely. In order to manage risk, you need to understand the risk, and a lot of people just don't, and nobody is telling them or helping them in an accessible, understandable and reliable way. > People who lost money on MtGox lost it because of decisions they made which they had 100% control over. But that doesn't mean they understood them 100%. You make it sound like they intentionally threw money away. They didn't. They didn't expect this, didn't understand this was possible, not to mention likely. Had everybody known how MtGox operated, and had trustworthy experts explained what that meant, nobody would have put money in MtGox. No person on earth can afford to understand 100% of everything he deals with. Easy, safe, reliable interfaces are vital once you move from hunting and gathering to a more complex society.
    - ryanjshaw 13y ago
bertil 13y ago
> With no evidence to support your claim that this is a nightmare You want evidence for a figure of speech? > BPI/Winkdex/etc. values Those measure people smugly happy that they did not put their money elsewhere, or probably cut off from the sentiment that so many hacking it burying the perception. Given how easy it has proven to be to manipulate BitCoin, I doubt holding value is nearly a problem. My point was not that people already convinced are unhappy, but that those that need convincing are not going to be with an accounting ploy that will only widen the spread, but something that address the story—whatever is the digital equivalent of a thick vault door. And the story is that BitCoin is too complicated to be tamperproof. > The "hot/cold wallet" design is a choice that many naive but greedy people are choosing in building their Bitcoin-based systems but it is not the only choice. In banks you usually only STP low-value, low-risk transactions; in the current breed of Bitcoin-based systems, it would appear that system designers are naivly STPing everything. STP: standard transfer protocol? Your point would be that BitCoin ‘banks’ (on-line hosting of your keys) when asked to transfer above a certain sum need to ask for escrow and wait for two-point authentification? It seems convoluted (which is too say a lot in BitCoin's case) but not a bad idea. > There is some kind of strange unstated assumption on HN that regulation magically makes banking safe all by itself, and until that regulation is in place Bitcoin-based systems cannot be safe or effectively risk managed. It's neither unstated, nor an assumption: it's the point of regulation. Some people claim to regulate, but actually try to cover their asses (namely, the many people whom I’ve known personally for a decade, in charge of monitoring Kerviel) it doesn’t change the stated goal. > until that regulation is in place Bitcoin-based systems cannot be safe or effectively risk managed Nope, greed, expensive individual verification and the fact that security is costly says so. There are plenty of options (all conveniently listed at the end of Akerlof‘s _A Market for Lemons_, a recommended read) many self-enforced, but none is: “My bank is safe because I said so. [Tug on fedora.]” > Using a service that doesn't implement these policies is a risky choice Then it's not a service, nor more than you’d expect to find an economy based on nitroglycerin as currency.

mcv 13y ago

> There is some kind of strange unstated assumption on HN that regulation magically makes banking safe all by itself, and until that regulation is in place Bitcoin-based systems cannot be safe or effectively risk managed. Magically? No, that's not how regulation works. It takes a lot of work and diligence. But if done right, it will make it safer. If a regulator with sufficient authority had audited MtGox, it would have been closed down a long time ago, and people wouldn't have lost remotely as much money. Without it, bitcoin users are at the mercy of a bunch of utter amateurs.

ryanjshaw 13y ago
> If a regulator with sufficient authority had audited MtGox, it would have been closed down a long time ago, and people wouldn't have lost remotely as much money. You state this as though it was the only option people had available for not losing money. > Without it, bitcoin users are at the mercy of a bunch of utter amateurs. This statement is simply untrue. Nothing stops people from exchanging BTC in person. Nothing stops people from exchanging small low risk volumes on exchanges at a time. Regulatory oversight is not necessary to manage risk - it just makes things easier (and FWIW, something I support). People who lost money on MtGox lost it because of decisions they made which they had 100% control over. There were viable alternatives open to them, they simply chose not to pursue those options. Every government with an opinion on Bitcoin thus far has made it abundantly clear that (1) Bitcoin is risky (2) if you stuff up, nobody will rescue you. If you decide to participate despite these warnings, that's your own free choice. If you are not aware of those warnings, you're putting your money into something you haven't adequately researched, and would likely be bound to lose your money either way.
- mcv 13y ago
  > Nothing stops people from exchanging BTC in person. Nothing stops people from exchanging small low risk volumes on exchanges at a time. Lack of technical knowledge and understanding stops most people from handling BTC safely. In order to manage risk, you need to understand the risk, and a lot of people just don't, and nobody is telling them or helping them in an accessible, understandable and reliable way. > People who lost money on MtGox lost it because of decisions they made which they had 100% control over. But that doesn't mean they understood them 100%. You make it sound like they intentionally threw money away. They didn't. They didn't expect this, didn't understand this was possible, not to mention likely. Had everybody known how MtGox operated, and had trustworthy experts explained what that meant, nobody would have put money in MtGox. No person on earth can afford to understand 100% of everything he deals with. Easy, safe, reliable interfaces are vital once you move from hunting and gathering to a more complex society.
  - ryanjshaw 13y ago

bertil 13y ago

> With no evidence to support your claim that this is a nightmare You want evidence for a figure of speech? > BPI/Winkdex/etc. values Those measure people smugly happy that they did not put their money elsewhere, or probably cut off from the sentiment that so many hacking it burying the perception. Given how easy it has proven to be to manipulate BitCoin, I doubt holding value is nearly a problem. My point was not that people already convinced are unhappy, but that those that need convincing are not going to be with an accounting ploy that will only widen the spread, but something that address the story—whatever is the digital equivalent of a thick vault door. And the story is that BitCoin is too complicated to be tamperproof. > The "hot/cold wallet" design is a choice that many naive but greedy people are choosing in building their Bitcoin-based systems but it is not the only choice. In banks you usually only STP low-value, low-risk transactions; in the current breed of Bitcoin-based systems, it would appear that system designers are naivly STPing everything. STP: standard transfer protocol? Your point would be that BitCoin ‘banks’ (on-line hosting of your keys) when asked to transfer above a certain sum need to ask for escrow and wait for two-point authentification? It seems convoluted (which is too say a lot in BitCoin's case) but not a bad idea. > There is some kind of strange unstated assumption on HN that regulation magically makes banking safe all by itself, and until that regulation is in place Bitcoin-based systems cannot be safe or effectively risk managed. It's neither unstated, nor an assumption: it's the point of regulation. Some people claim to regulate, but actually try to cover their asses (namely, the many people whom I’ve known personally for a decade, in charge of monitoring Kerviel) it doesn’t change the stated goal. > until that regulation is in place Bitcoin-based systems cannot be safe or effectively risk managed Nope, greed, expensive individual verification and the fact that security is costly says so. There are plenty of options (all conveniently listed at the end of Akerlof‘s _A Market for Lemons_, a recommended read) many self-enforced, but none is: “My bank is safe because I said so. [Tug on fedora.]” > Using a service that doesn't implement these policies is a risky choice Then it's not a service, nor more than you’d expect to find an economy based on nitroglycerin as currency.