4 ms·

The difference is that stolen bitcoin equates to a permanent loss of funds while a stolen credit card number equates to a customer service phone call.

grubles 12y ago
>13.1 million identity-theft cases were reported in 2013, resulting $18 billion in losses. from https://www.javelinstrategy.com/uploads/web_brochure/1405.R_2014IdentityFraudReportBrochure.pdf https://www.javelinstrategy.com/uploads/web_brochure/1405.R_...
- thedufer 12y ago
  Banks are the ones taking those losses, and it comes out of the CC fees paid by merchants. Yes, this probably results in price increases, which is like buying insurance - I will pay 2% more for pretty much every good I buy, and in return I will never be defrauded out of my entire life's savings at once. Seems like a good deal to me?
  - grubles 12y ago
    You don't see the problem here do you? 13.1 million people were defrauded because they used a credit card. $18 Billion were lost as a result. Losses due to bitcoin are peanuts in comparison.
    - thedufer 12y ago
      Excellent. Yes, let's go there. Over the course of a year, $18 billion were lost to CC fraud. Meanwhile, CC transactions totaled about $6 trillion [0] (that was 2010, the most recent I could come up with, but it's been increasing every year for a long time so I'll be generous and use it). That's .3% - clearly affordable on the 2-3% merchants typically pay. Meanwhile, Mt. Gox defrauded users out of about 650,000 bitcoins [1]. This was a single instance of fraud, remember - I'm trying to be generous. Eyeballing this chart [2], I'm going to give bitcoin a clearly-exaggerated 200,000 BTC in daily transactions, or 73 million BTC in a year. This comes out to .9%, or about 3 times higher than CC fraud. But remember what I said earlier - CC companies essentially insure you against loss by paying out the fraud themselves and then forcing merchants to raise prices a bit to make up for it. In bitcoin, a given person can easily lose thousands, tens of thousands, millions of dollars, all at once. No recompense. So not only is the rate 3 times higher, the outcome is _way_ worse per dollar lost fraudulently. [0] http://www.nerdwallet.com/blog/credit-card-data/credit-card-transaction-volume-statistics/ http://www.nerdwallet.com/blog/credit-card-data/credit-card-... [1] https://coinreport.net/99-of-mt-gox-bitcoin-losses-likely-fraud-suspect-police/ https://coinreport.net/99-of-mt-gox-bitcoin-losses-likely-fr... [2] https://blockchain.info/charts/estimated-transaction-volume https://blockchain.info/charts/estimated-transaction-volume
      - grubles 12y ago
        Multisignature transactions solve the "annnd it's gone" due to hacked merchants/exchanges. The rate may be 3 times higher but bitcoin is almost 1/8th as old as the credit card system. Losing $18 billion a year is not a good sign for a system of such age. At least bitcoin can and has improved and will continue to improve. Yes, I noticed you failed to address the 13.1 million people a year who have their lives ruined because they had their identity stolen.
        thedufer 12y ago
        > Multisignature transactions solve the "annnd it's gone" due to hacked merchants/exchanges. Theories are great for people who can afford to lose tens of thousands of dollars. Until the actual rate goes down, recommending bitcoin to average consumers on the basis of "this is supposed to work" is stupid. > Yes, I noticed you failed to address the 13.1 million people a year who have their lives ruined because they had their identity stolen. No, I didn't. Here, I'll quote myself: > CC companies essentially insure you against loss by paying out the fraud themselves and then forcing merchants to raise prices a bit to make up for it. Almost no one is having their lives ruined. You call your credit card company's fraud department (actually, these days they often catch it first and call you). You spend 20 minutes getting your card canceled and showing them which purchases were fraudulent. You wait three days for a new credit card to show up. Hardly life-ruining.
vanzard 12y ago
Not always true. The reality is less rosy than you depict it. Most credit card issuers don't let you charge back transactions older than 60 days. It is always fun to discover this fact after a merchant invents believable excuses to stall your order for 60+ days... ("Warehouse stock depleted, wait 4-6 weeks. We shipped it! Sorry we shipped the wrong item!") Merchants can dispute chargebacks, and in fact do win 40% of them. See page 12 of http://bit.ly/10iW5wJ http://bit.ly/10iW5wJ A lot of this is friendly fraud but still... CC issuers will typically hold you liable and refuse chargebacks if the PIN code was used (the hacker guessed it, stole it, or cloned it). Check your CC fine print, for example: "If your Password or PIN is used in such a transaction, you will be liable for the full debt" from http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_credit_agreement.pdf http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...
- vectorpush 12y ago
  Fair enough. Credit cards offer decent but limited consumer protections; bitcoins offer none.
  - grubles 12y ago
    The difference with bitcoin is that the protection is up to you. Same as with holding cash or precious metal in a safe at home. Except with bitcoin, you have m-of-n signatures, encrypted wallets, brain-wallets even. You can backup your encrypted wallet anywhere. Someone even put their wallet.dat on a website for anyone to download, but their passphrase is probably 1,000 random characters or something.
    - ForHackernews 12y ago
      Why would anyone want that? Most people are not interested in holding cash or precious metal in a safe at their house. It's extremely inconvenient, expensive to do correctly, and still much riskier than keeping your money in an FDIC-insured bank. This is the problem with bitcoin: Everything its advocates claim is a desirable feature is actually a huge bug for normal people.
  - 12y ago

grubles 12y ago

>13.1 million identity-theft cases were reported in 2013, resulting $18 billion in losses. from https://www.javelinstrategy.com/uploads/web_brochure/1405.R_2014IdentityFraudReportBrochure.pdf https://www.javelinstrategy.com/uploads/web_brochure/1405.R_...

thedufer 12y ago
Banks are the ones taking those losses, and it comes out of the CC fees paid by merchants. Yes, this probably results in price increases, which is like buying insurance - I will pay 2% more for pretty much every good I buy, and in return I will never be defrauded out of my entire life's savings at once. Seems like a good deal to me?
- grubles 12y ago
  You don't see the problem here do you? 13.1 million people were defrauded because they used a credit card. $18 Billion were lost as a result. Losses due to bitcoin are peanuts in comparison.
  - thedufer 12y ago
    Excellent. Yes, let's go there. Over the course of a year, $18 billion were lost to CC fraud. Meanwhile, CC transactions totaled about $6 trillion [0] (that was 2010, the most recent I could come up with, but it's been increasing every year for a long time so I'll be generous and use it). That's .3% - clearly affordable on the 2-3% merchants typically pay. Meanwhile, Mt. Gox defrauded users out of about 650,000 bitcoins [1]. This was a single instance of fraud, remember - I'm trying to be generous. Eyeballing this chart [2], I'm going to give bitcoin a clearly-exaggerated 200,000 BTC in daily transactions, or 73 million BTC in a year. This comes out to .9%, or about 3 times higher than CC fraud. But remember what I said earlier - CC companies essentially insure you against loss by paying out the fraud themselves and then forcing merchants to raise prices a bit to make up for it. In bitcoin, a given person can easily lose thousands, tens of thousands, millions of dollars, all at once. No recompense. So not only is the rate 3 times higher, the outcome is _way_ worse per dollar lost fraudulently. [0] http://www.nerdwallet.com/blog/credit-card-data/credit-card-transaction-volume-statistics/ http://www.nerdwallet.com/blog/credit-card-data/credit-card-... [1] https://coinreport.net/99-of-mt-gox-bitcoin-losses-likely-fraud-suspect-police/ https://coinreport.net/99-of-mt-gox-bitcoin-losses-likely-fr... [2] https://blockchain.info/charts/estimated-transaction-volume https://blockchain.info/charts/estimated-transaction-volume
    - grubles 12y ago
      Multisignature transactions solve the "annnd it's gone" due to hacked merchants/exchanges. The rate may be 3 times higher but bitcoin is almost 1/8th as old as the credit card system. Losing $18 billion a year is not a good sign for a system of such age. At least bitcoin can and has improved and will continue to improve. Yes, I noticed you failed to address the 13.1 million people a year who have their lives ruined because they had their identity stolen.
      - thedufer 12y ago
        > Multisignature transactions solve the "annnd it's gone" due to hacked merchants/exchanges. Theories are great for people who can afford to lose tens of thousands of dollars. Until the actual rate goes down, recommending bitcoin to average consumers on the basis of "this is supposed to work" is stupid. > Yes, I noticed you failed to address the 13.1 million people a year who have their lives ruined because they had their identity stolen. No, I didn't. Here, I'll quote myself: > CC companies essentially insure you against loss by paying out the fraud themselves and then forcing merchants to raise prices a bit to make up for it. Almost no one is having their lives ruined. You call your credit card company's fraud department (actually, these days they often catch it first and call you). You spend 20 minutes getting your card canceled and showing them which purchases were fraudulent. You wait three days for a new credit card to show up. Hardly life-ruining.

vanzard 12y ago

Not always true. The reality is less rosy than you depict it. Most credit card issuers don't let you charge back transactions older than 60 days. It is always fun to discover this fact after a merchant invents believable excuses to stall your order for 60+ days... ("Warehouse stock depleted, wait 4-6 weeks. We shipped it! Sorry we shipped the wrong item!") Merchants can dispute chargebacks, and in fact do win 40% of them. See page 12 of http://bit.ly/10iW5wJ http://bit.ly/10iW5wJ A lot of this is friendly fraud but still... CC issuers will typically hold you liable and refuse chargebacks if the PIN code was used (the hacker guessed it, stole it, or cloned it). Check your CC fine print, for example: "If your Password or PIN is used in such a transaction, you will be liable for the full debt" from http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_credit_agreement.pdf http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...

vectorpush 12y ago
Fair enough. Credit cards offer decent but limited consumer protections; bitcoins offer none.
- grubles 12y ago
  The difference with bitcoin is that the protection is up to you. Same as with holding cash or precious metal in a safe at home. Except with bitcoin, you have m-of-n signatures, encrypted wallets, brain-wallets even. You can backup your encrypted wallet anywhere. Someone even put their wallet.dat on a website for anyone to download, but their passphrase is probably 1,000 random characters or something.
  - ForHackernews 12y ago
    Why would anyone want that? Most people are not interested in holding cash or precious metal in a safe at their house. It's extremely inconvenient, expensive to do correctly, and still much riskier than keeping your money in an FDIC-insured bank. This is the problem with bitcoin: Everything its advocates claim is a desirable feature is actually a huge bug for normal people.
- 12y ago