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The same thing can be said about credit cards. If there is a problem with Bitcoin (and I'm not sure that there is) it is that unlike with credit cards there is

The same thing can be said about credit cards. If there is a problem with Bitcoin (and I'm not sure that there is) it is that unlike with credit cards there is no possible recovery of stolen coins.

superuser2 12y ago
Converting stolen CC numbers to cash actually turns out to be difficult since government and other authorities can revoke the cards, freeze fraudulent merchant accounts, and seize assets once they've hit your bank accounts. You have to mitigate all of these risks and won't always be successful. If you manage to steal Bitcoin, you can transfer it all to your personal wallet in one transaction in broad daylight and, by design, no one can stop you or reverse the transaction once it's discovered to be fraudulent. Maybe run it through a darknet tumbler for good measure, but you're basically home free the second you get the private keys. Stealing $100m worth of Bitcoin would be massively more valuable than stealing CC numbers with access to $500m in credit because you can actually cash out all of it. So much larger R&D budgets and more sophisticated attacks make financial sense.
- danielweber 12y ago
  There is good research that indicates that the bottleneck in electronic bank theft is finding the endpoints that are irreversible (think ATMs). Doubling the amount of stolen credit cards wouldn't come anywhere close to doubling the amount of money stolen out of the system. With Bitcoin, every marginal theft adds 100% to the total Bitcoin thefts.
  - mike_hearn 12y ago
    Could you give a citation for that? Not saying I disbelieve you, it sounds plausible, but I'd be interested to read that research.
- hibikir 12y ago
  I think this is really the sticking point that makes consumer Bitcoin adoption pretty much impossible, as the level of computer security required to keep Bitcoin safe and easy to use at the same time is just not something available to your average joe. If your private key is compromised, the thief takes your entire balance, and there's nothing you can do about it. So you really want to keep it safe. Lose your private key, lose everything it was protecting. So keeping the key in only one place, and one place where only you can access, is a big problem. There is nobody out there to give access to your money if you pass away. A hardware failure can be catastrophic. The problem is that everything that makes the private key survive accidents makes it easier to hack. The way we treat something like this in a corporation is with things like shared secrets: Need 3 out of 5 people to use their issued keys so that the real private key protecting everything is revealed. And even with that level of effort, getting the key is still possible with enough effort.
  - bmm6o 12y ago
    Exactly. Nobody is going to want to manage their own bitcoin holdings, much as I don't keep all of my savings in a safe in my house. So that gets out-sourced and insured, and somebody has to pay for that. I expect it's much less than the credit card's take, but when it's paid for by the consumer it's much different psychologically. Consumers are going to have to get a cut of the savings.
oafitupa 12y ago
That's not a problem, it's a feature. It's like saying "the problem with gold is that you can't recover it". But that's precisely what gold holders want: Not letting the government "recover" it (ie. seize/steal it).

The same thing can be said about credit cards. If there is a problem with Bitcoin (and I'm not sure that there is) it is that unlike with credit cards there is no possible recovery of stolen coins.

superuser2 12y ago

Converting stolen CC numbers to cash actually turns out to be difficult since government and other authorities can revoke the cards, freeze fraudulent merchant accounts, and seize assets once they've hit your bank accounts. You have to mitigate all of these risks and won't always be successful. If you manage to steal Bitcoin, you can transfer it all to your personal wallet in one transaction in broad daylight and, by design, no one can stop you or reverse the transaction once it's discovered to be fraudulent. Maybe run it through a darknet tumbler for good measure, but you're basically home free the second you get the private keys. Stealing $100m worth of Bitcoin would be massively more valuable than stealing CC numbers with access to $500m in credit because you can actually cash out all of it. So much larger R&D budgets and more sophisticated attacks make financial sense.

danielweber 12y ago
There is good research that indicates that the bottleneck in electronic bank theft is finding the endpoints that are irreversible (think ATMs). Doubling the amount of stolen credit cards wouldn't come anywhere close to doubling the amount of money stolen out of the system. With Bitcoin, every marginal theft adds 100% to the total Bitcoin thefts.
- mike_hearn 12y ago
  Could you give a citation for that? Not saying I disbelieve you, it sounds plausible, but I'd be interested to read that research.
hibikir 12y ago
I think this is really the sticking point that makes consumer Bitcoin adoption pretty much impossible, as the level of computer security required to keep Bitcoin safe and easy to use at the same time is just not something available to your average joe. If your private key is compromised, the thief takes your entire balance, and there's nothing you can do about it. So you really want to keep it safe. Lose your private key, lose everything it was protecting. So keeping the key in only one place, and one place where only you can access, is a big problem. There is nobody out there to give access to your money if you pass away. A hardware failure can be catastrophic. The problem is that everything that makes the private key survive accidents makes it easier to hack. The way we treat something like this in a corporation is with things like shared secrets: Need 3 out of 5 people to use their issued keys so that the real private key protecting everything is revealed. And even with that level of effort, getting the key is still possible with enough effort.
- bmm6o 12y ago
  Exactly. Nobody is going to want to manage their own bitcoin holdings, much as I don't keep all of my savings in a safe in my house. So that gets out-sourced and insured, and somebody has to pay for that. I expect it's much less than the credit card's take, but when it's paid for by the consumer it's much different psychologically. Consumers are going to have to get a cut of the savings.

oafitupa 12y ago

That's not a problem, it's a feature. It's like saying "the problem with gold is that you can't recover it". But that's precisely what gold holders want: Not letting the government "recover" it (ie. seize/steal it).