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Comment by yingw787 | Hacker News Reader

I still don't get cryptocurrencies. Yes, a blockchain works when zero trust is needed/desired for transactions, but that's still an implementation-level concern, and implementations aren't perfect. Without legal means of redress, somebody is always going to get burned. If there are legal means of redress, then by definition you trust somebody, right?

I think a blockchain fits well when you need to verify a legal authority, like a felonies database (can you trust the cop that filed the report?), but otherwise it kind of just goes around the legal system; by doing so, you're just re-inventing the wheel.

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Why would you say that there's no legal means of redress? If someone steals my cryptocurrency, then I can still have law enforcement track them down and attempt to recover the funds.

This is not dissimilar to how cash works -- if someone takes my cash, by fraud, by theft, or in legitimate exchange for goods or services, that's it. They can now spend it however they want. Cash itself is a trustless system in the same sense. Where there is trust it's largely a matter of preventing forgery; which is not dissimilar to the idea of preventing double-spends.

But until Bitcoin there was no real way to do cash-like transactions electronically.

In other words, the utility of Bitcoin is well-established; humans have been using cash for a very long time. The implementation is novel. I don't speak here to the general "blockchain" concept, which has become so nebulous that I don't feel it's worth making general statements about.

If you have to rely on and/or beholden to legal action, then BTC doesn't really provide trust at all.

>But until Bitcoin there was no real way to do cash-like transactions electronically.

There was Venmo and all the other small cash transfer apps. BTC is decentralized but that's of questionable worth to an end user.

>If you have to rely on and/or beholden to legal action, then BTC doesn't really provide trust at all...

Yep. Gotta agree with Jayd16 here, if you still need law enforcement, (ie - government), then bitcoin is not useful for operating without trust. The breathless hype about bitcoin was not just the technology level "distributed ledger" thing, but also the idea that you could do things independent of the system. If you still need the system to make it all work, then it definitely fails on the latter hype point.

> the idea that you could do things independent of the system. If you still need the system to make it all work, then it definitely fails on the latter hype point.

Bitcoin is independent of the "system" but that doesn't mean you don't still need some system. You're just not locked in to any particular system. Using bitcoin doesn't automatically make you an anarchist.

Venmo isn't exactly like cash. For example, my brother showed me that my transaction history was public by default (it hadn't even occurred to me that this was a conceivable design choice) and my brother was able to see who I had recently shared money with and in what amounts. Even if you know to disable that setting, that only prevents random people from seeing your transaction history, while Venmo and legal authorities still have easy access to it. Cash is nice because there is no history to it. It's private and anonymous.

Venmo is just a popular example and there are a lot of others. However, if privacy is your concern, global public ledger tech isn't a good option either.

Grin is quite amazing concept when it comes to privacy.

All other options like this share the property of a centralized trusted source mediating your transactions.

The entire point is Bitcoin is like "cash for the Internet" in that once I hand someone $20 in BTC it's just like handing them $20 in physical cash. I have no third party either telling me I can't make that transaction, or with the ability to reverse the transaction after the fact. This is a feature, not a bug.

Anything to disintermediate financial institutions that like to apply political and corporate policy on who I can conduct business with is a good thing in my opinion. This means my options when the third party frauds me are the traditional options employed by folks dealing with cash transactions since money was invented. I can sue them in court, forget about it, or round up some friends with lead pipes.

I think many folks completely miss the point. Cash is useful. Cashless society is about the worst dystopia I can imagine - with unaccountable third parties and government able to track your every spending move, while simultaneously applying their political or legal policy to every transaction. Bitcoin's first step into introducing cash-like digital currency is the innovation, and it clearly is needed. Certainly not perfect (privacy could be far better, security is a real problem, etc.) - but it's far better than anything that had previously come along.

Comparing venmo to bitcoin is simply not a comparison - they solve entirely different problems. Venmo lets you send money from your bank account to another bank account with all those political and legal restrictions applied to your transaction. Bitcoin effectively lets you send cash to anyone you want, in any amount, and no one can stop that transaction from happening because they didn't like the person you are sending it to or what you were buying.

The issue is that it is comparable for many of the use cases that people refer to when talking about Bitcoin. You are personally concerned with a central authority but the majority of users are not. Its not so much that people miss the point of, its just not relevant to most people. Its not made better by the BTC evangelists cramming bitcoin into every conceivable problem, either.

Fair enough, I was being uncharitable there.

I do agree most users do not have the same concerns so the use case is far more limited than the hype. I do also still see a lot of value in "digital cash" as a whole, but I never really bought the whole store of value argument and the raft of grifters it attracted.

If someone steals money from my Bank account my bank will retun the money next business day. No police reports required and little intervention on my part. I’ve had it happen twice when my card was skimmed in Europe. Both times they called me to report suspicious activity.

Your comparing cash to something electronic. No matter how you spin it Bitcoin is not physical. It’s more akin to cash in a bank account. Cash is in my hand, Bitcoin is virtual.

>The $0 Liability Guarantee covers fraudulent transactions made by others using your Bank of America consumer credit cards and consumer and small business debit and ATM cards. To be covered, report transactions made by others promptly, and don't share personal or account information with anyone. Access to funds next business day in most cases, pending resolution of claim. Consult client and account agreements for full details.[1]

[1]https://www.bankofamerica.com/privacy/faq/data-compromise-fa...

Your bank takes the loss on those stolen funds.

Bitcoin is more akin to cash in hand than cash in a bank account, the title of the white paper is a 'A Peer-to-Peer Electronic Cash System'.

It behaves like cash.

You're conflating reduction of risk (system-wide) and offloading of risk.

In your bank example, the bank likely took the financial hit. With bitcoin as an underlying tech, there's some reduction of risk (with a whole bunch of asterisks).

Why would I care if the banks took a hit? If fraud was hurting their margins significantly we would see the government step in. The banks would also do more to prevent it. The US just switched over to chip cards.

Because you're paying for it with your money. They can afford to take a hit (and can afford the insurance for such losses) because of the fees they charge you directly, and the money they make utilizing your principle for other purposes while it's there.

There could be a crypto based bank account just like there are usd based bank accounts

You can have a bank working on top of a cryptocurrency network. It's the same except that everything is transparent + you don't need a bank if you don't want one.

Essentially all these services and exchange that offer bitcoin wallets are like banks. I think they have been the main way to get and hold bitcoin since the early days, I would guess normal standalone wallets are in the minority when it comes to the amount of users. For quantity stored maybe not so much.

Bitcoin is an attempt to make digital stuff that behaves as much as possible like physical cash. In terms of the way it works, a bank account is very much not the correct analogy. Cash is.

Losing $60,000 in Bitcoin is like losing $60,000 in cash. It’s not exactly a surprise that it can happen, and it’s expected that there will be no real recourse.

I think the trouble is that people still aren’t really thinking of it properly. If this story happened with cash, the first question everybody would be asking would probably be, “Why did you have $60,000 in cash sitting around? What did you think was going to happen?”

Like cash, most people shouldn’t be holding large amounts of Bitcoin themselves. If they want large Bitcoin holdings for whatever reason, they should be held with a trustworthy entity that can properly secure them, like a bank. If they do insist on holding large amounts of Bitcoin directly, they need to understand that it’s like keeping a vault full of cash, and they need to work hard to keep it secure.

Correction: BTC is an attempt to make digital stuff that behaves as much as possible like physical gold.

Cash is a fiat currency and reproducible infinitely by the controlling government. The point of gold (as a money medium) is that it self-regulates the amount in circulation by being a tangible material in finite supply with cost associated in seeking more. This model has significant benefits and drawbacks (and, it's probably worth noting, its drawbacks are what led to the fiat model most countries use today).

I don’t think “cash” necessarily implies fiat. Bitcoin’s model of creating new currency is different from both fiat and gold, although it’s certainly a lot closer to gold.

Remember the last time 20 different entities forked gold, and battles erupted over which one was "the one true gold"?

Neither do I.

Then you're fighting two fronts.

Practical digital cash of the type you describe needs to have two properties in addition to preventing double spending-- a) quick transaction time (close to immediate) and b) extremely small fees. Otherwise having small amounts of the digital cash doesn't make any sense.

Worse, you've got prior art in Ecash that not only had those properties but also unlinkability. So it can be done, Bitcoin doesn't do it, and as a result the market for it is extremely small and out of touch with the hype around it.

In terms of the way it works, cash is very much not the correct analogy, too.

Transaction wise, cash transactions happen both live and physically, meaning you have some means to make sure the counterparty honors their part of transaction. Electronic cash systems involve third party to coerce the counterparty or refund you. In Bitcoin world, apart from hopes and dreams and magical reputation, there is literally no way to stop the counterparty shoving you their Prodeum. Bitcoin removes the trusted third party of electronic cash, but fails to introduce physical measures of physical cash.

Bitcoin transactions are hardly even transactions, more like throwing money into numbered bin and hoping for the best. To be fair, the system has not gone down the drain once some form of market formed, so the hopes mostly did not backfire. The absence of full transactions in my opinion (I may be wrong, though) means Bitcoin IOUs cannot exist and with that whole financial products market, for better or worse.

Loss wise, cash is either in your posession or not and a lot of times can be recovered when lost. Stolen private keys can remain dormant for indefinite amount of time until they are actually used to move coins to a different address. With cash that one has in their immediate possession it would be immediately obvious if someone tries to take them away. If physical cash bills got sticky, you have taken an extra bill, dropped it on a counter and noticed your mistake, then you can still take back the extra bill. If you have transferred too much/many coins, then it's SFYL. Forgetting a wallet with physical cash somewhere can be SFYL, can still be recoverable if no one took possession of it. Losing access to private keys is permanent SFYL.

>cash transactions happen both live and physically, meaning you have some means to make sure the counterparty honors their part of transaction

I'm assuming you're referring to threat and/or use of violence, but that's not a viable option if the counterparty is prepared. Are you really willing to get into a fist/knife/gun fight if you're trying to sell a Xbox and the other side doesn't want to pay up?

Not necessarily violence, transaction happening in a public place with oversight poses risk of being exposed/caught, which could be enough to deter the counterparty from running away with goods or money, scammers tend to go for easier targets, but yes, physical measures including violence are an option with cash, while electronic one-sided irreversible pseudonymous transactions mostly eliminate those options.

The point is that the threat model of Bitcoin is quite different from that of cash.

That’s a property of how you use it. You can use cash in private, or even without being anywhere near the recipient (for example, by mailing it). You can carry out a Bitcoin transaction while next to the recipient in public if you want.

This is another example of how people don’t think of it properly. Sending Bitcoin to some stranger online is basically equivalent to mailing them cash (minus the chance of having the letter stolen). Most of us would understand that mailing cash to a stranger is probably a bad idea, but Bitcoin is used differently.

> they should be held with a trustworthy entity that can properly secure them, like a bank

No such entity exists.

Perhaps, in which case the logical conclusion is that you should never hold a significant amount of Bitcoin in any way.

>Your comparing cash to something electronic. No matter how you spin it Bitcoin is not physical.

You say that like it's a bad thing. Bitcoin is something that has the advantage of physical cash (trust-less) and the advantage of electronic communications (you can't practically send cash to the other side of the world).

It also, of course, has the disadvantage of physical cash which is, once it's gone, it's gone. There is no way to reverse trust-less transactions now and there was none in the (pre-Bitcoin) past. Nothing has changed there and this is not what crypto solves. What crypto solves is trust-less transactions over the internet.

Doesn't it also have the disadvantage that, unlike physical cash, it can be stolen electronically? At least with cash someone has to mug me in person to take it, which reduces the attack surface quite a lot.

You could write down your seed on paper instead of storing it or the private key electronically.

>> Why would you say that there's no legal means of redress? If someone steals my cryptocurrency, then I can still have law enforcement track them down and attempt to recover the funds.

Then you are effectively trusting a third party to make it right when you have been wronged. Isn't this contradictory to the promise of blockchains: That trusting a third party is not required??

Taking this further, you are saying that the data on a blockchain cannot be trusted because the transactions might be reversed due to outside action. Honest question: How does this fit into the concept of a blockchain?

I think the difference is the police officially recognize one currency and do not officially recognize the other. The U.S. dollar is backed by the full faith and trust of the U.S. government. A cryptocurrency's value is backed by the amount of other fiat currencies pumped into it. If in the future, an authority figure (say, the President of the United States) created a cryptocurrency and ordered the FBI to prioritize cybercrimes relevant to that currency and drop investigations for others, you'd be in a bad place if somebody in a different state stole your money. He/she could never do that with the U.S. dollar, since manipulating that infringes on his/her literal ability to order people around.

There is not a separate crime of "theft of money" and "theft of property". Electronic crimes, like the theft of key material, is usually covered by different laws.

In places where there have been cryptocurrency thefts that have been prosecuted, they have been primarily pursued as cases of theft -- the US statutory definitions of theft usually only use the monetary value (the USD equivalent) as the determiner of the severity.

While such a policy of "do not pursue bitcoin theft" would theoretically be possible either as an explicit policy or an informal, I thing it would be unlikely to survive judicial scrutiny; it would be like insisting that car thefts only be investigated and prosecuted for American-made cars.

>If someone steals my cryptocurrency, then I can still have law enforcement track them down and attempt to recover the funds.

Is this something that actually happens? Police hardly help with with recovering stolen physical goods; I highly doubt they'd even consider helping if your crypto gets hacked

They might claim that they tried to help.

There's a significant difference between Bitcoin and cash, which is that the worst-case scenario for loss of your cash is the government in control of it just prints more and gives it to you (in effect, distributing the cost of your loss among everyone who holds that currency). This is not technically possible with Bitcoin, and AFAIK no system has grown up organically yet to provide some kind of "loss insurance" in the form of keeping some BTC in reserve for making victims whole.

>This is not technically possible with Bitcoin [...]

Of course, it is. The government could force everyone to send Bitcoins to a special account which is then distributed to victims (i.e. a tax). That would actually be better than what we have now. By printing more cash, people with cash are punished while actually rich people (who own stock, real estate, factories, jets etc.) are not.

By "not technically possible," I meant specifically that no government can cause new BTC to manifest into existence. The scenario you're describing is (government mandated and legally enforced) loss insurance, which is the system I observed hasn't (to my knowledge) organically manifested yet.

What you're describing is basically an insurance mechanism. There is no reason you couldn't implement the same for cryptos. But at least under that explicit framework, those who had not participated in that scheme would not have to pay the risk premium associated with it which is currently incurred by fiat holders whether they like it or not (under your scenario).

It’s great for people who are sheltered enough to think that their governments are the least trustworthy organizations in existence, or who live in countries where they are.

When you're buying drugs or transferring money for other illegal purposes the government is definitely the organization you have the least trust in.

I always find such opinions quite pigeonholed. Many third world countries do not have access to online banking or credit cards. Cryptocurencies were the only way I could pay for goods and services online and the only thing that made me feel like an actual citizen of the world and not just some content pirate.

Those barriers are likely due to money laundering laws and whoever is accepting the bitcoin is (probably) breaking the law when they convert to USD or other currencies. So you're right that it's not necessarily illegal purchases so much as illegal transactions.

You can break the cryptocurrency usage into 4 main groups: Speculators, Lawbreakers, Libertarian types, and Techies. Otherwise, the financial system provides cheaper or more convenient options for payment.

> Those barriers are likely due to money laundering laws

Again, the world is much bigger and more nuanced than you think, non-covertible currencies are a thing and they are due to a country's central bank policy not money laundering laws.

> the financial system provides cheaper or more convenient options for payment.

No it does not, if I had had ways to pay for a server using my country's currency, I would have used it.

>Again, the world is much bigger and more nuanced than you think, non-covertible currencies are a thing and they are due to a country's central bank policy not money laundering laws.

What difference does it make which law or "policy" the users are circumventing?

>No it does not, if I had had ways to pay for a server using my country's currency, I would have used it.

And if it were legal to do so there would be a way.

You do realize the world is bigger than US and EU, right? That there are many other countries in the world where the situation is not the same as in the first world?

No, this is the first I'm hearing of it. Please go on about these "other countries".

Venezuela is a place where the government is the equivalent of a guy bursting into a shopping mall and shooting it up. In their case Bitcoin does have a genuine purpose.

And that purpose is breaking Venezuelan law. If the Venezuela government weren't a bunch of gangsters and made hard currency transactions legal then they wouldn't use Bitcoin.

You're right that crypto is pretty useless for people like you and I who have access to high quality bank services. But to people who don't really have access to legitimate bank services they're a godsend.

Because i really don't know.... How common is it to have access to electricity, an internet capable device, internet connection and a knowledge of cryptocurrencies but not a bank?

It's not.

It's the same logic where cryptocurrency advocates say that if a country's currency goes down the crapper then the people can use bitcoin, and the country can't break that! But why can't they just use dollars, or euros, instead? Because the local government would make that illegal! Why wouldn't they make bitcoin use illegal? Because... because... shut up!

In the UK a "fraud marker" will make it very difficult for a person to open a bank account.

"I only accept bitcoin" is the biggest fraud marker there is, though. :-P

What I mean is that this is a non-solution to that problem.

How many banks allow you to buy drugs with your account?

This thread is about access to banking, What does drugs have to do with this?

Because bitcoin.

The killer feature for bitcoin is buying drugs. It's essentially all it is for. That and tax evasion and speculation.

Try to think outside of the US/Eurozone. At least a billion unbanked individuals still have cellphones.

Meanwhile in SF, the homeless all have cell phones. They are also frequent customers of Bitcoin ATMs according to an convenience store clerk that I asked because he watches over one.

1) Why can't the cellphone connect to a bank? Or ANY central database?

2) How exactly is it a good idea to have your wallet on a cellphone?

As for homeless & Bitcoin ATMs. Yes: 3) That's how I'd launder money too. Pay off a homeless person to go to a bitcoin ATM. 4) That's how I'd conduct drug deals too if I were homeless and in the drug trade as buyer or seller.

You can't just say "homeless people use bitcoin ATMs therefore bitcoin is good for homeless people".

(no, I'm not saying homeless = drug related, and you know I'm not)

banking services aren’t exactly a right, they have the right to refuse service to anyone they want. So under certain circumstances, eg, you have a bad credit history, are not a citizen, or don’t have enough money, it can be difficult to open a bank account in certain countries.

Originally from California, but now living in Vietnam for the last 3 years. My experience here is that what you're asking about is actually something very common.

People in small villages have modern cell phones and thanks to the govt military owning the primary telco, fast internet. They might not have access to a bank due to being so remote. They also don't trust their banks, for good reason [1].

[1] https://e.vnexpress.net/news/news/vietnam-bank-ceo-gets-life...

What redress do you think you have even if you "trust" someone? That 100 dollar widget you bought in cash didn't work? Well fuck you, see you in court. Now what? Are you going to take the store to court over 100 bucks? Pay with a card and your card company doesn't want to reverse charges? Same problem... I'd bet that per 5000 transactions, debit and credit cards have more fraud that the 'end user' has no remediation for than bitcoin does.

Sometimes, reinventing the wheel is exactly the point when the wheel has been engineered to favor the engineers.

A block chain doesn't solve this in any way. By the time you determine your widget doesn't work, the transaction is complete.

Of course you can stiff the legal system. But you can only stiff it so far. I Googled "Ethereum steal" and the top three results have figures in the millions, through something as straightforward as a 51% attack. No court system can simultaneously claim to be fair and just and legitimate, and let slide a $1.1M USD theft. And in such situations, other people usually have a bone to pick with said thief too, bolstering resources on your side.

If a cryptocurrency scales and somebody pulls off a Madoff-level theft (>$64B USD), could you guarantee some amount of clawbacks by technology alone? I wouldn't bet on it.

>through something as straightforward as a 51% attack

... which has never been done before on Ethereum (or Bitcoin). Are you talking about Ethereum Classic? It's something entirely different and amateur. Using it as a criticism of Ethereum is like complaining banks are untrustworthy because a kid at school called himself a bank and didn't give the money back you lent him.

If your card company doesn't reverse charges you can take them to small claims court, and also change card company.

You can't point to one case and say that it doesn't work. My experience is that you as a consumer will win a chargeback. It's so reliable that there mere mention of it to a merchant will make them refund you, because their fees go up if their chargeback rate goes up.

Also cryptocurrencies make this infinitely worse, not better.

If you want to make a case for cryptocurrencies you should actually go with the safety for the merchant, not the consumer. The consumer holds the power with credit cards. But then again today the merchant can always choose to only take debit cards, thus fixing the whole problem.

And it's not like you don't have to trust anyone to use cryptocurrencies. The government will still kick down your door if you break the law because that's what people want from society.

Also the losing side pays the chargeback fees in a chargeback case, which is why for small sums, unless the issuing bank is damned sure they'll win the chargeback, they'll just write it off and give the money to the customer.

A blockchain is just an immutable database that can be appended to or overwritten by majority.

It doesn't have anything to do with trust and definitely doesn't provide any form of it, but trust is at the core of several human concerns like currency. Thus, blockchains are fundamentally unable to serve those uses regardless of how much hype is thrown at it.

part of trust is eliminating double spend. you can "trust" that when you received ownership of the digital asset, that somebody else didnt also get a copy or equal ownership. the decentralized trust replaces an authority saying "so and so owns this" or "you already spent that dollar." this happens in an environment where participants DONT trust each other to not cheat.

when participants don’t trust each other, they delegate to a third party they both trust: a bank, a notary, an external accountant, etc.

Blockchain provides nothing, and people end up building replicas if real-world trust systems around it (even silk road had a reputation system not built on blockchains)

None of that has to do with blockchain. You as a human have the same trust in something.

In this case, instead of a verified, regulated, audited central bank, you've decided to instead trust anonymous, unaudited, unregulated actors who vote in majority.

There's a difference between trusting a human with your money, and trusting that you correctly understand an open system which fully incentivizes everyone to operate predictably.

It's the difference between trusting Facebook to keep your messages private and trusting PGP to keep your messages private.

Yea, that difference isn't relevant here, and your second sentence is not an example of the first. We know the encryption works but nothing about blockchain/bitcoin incentivizes anyone to operate predictably.

Humans are soft, irrational and messy in interactions. This isn't compatible with the perfectly technical math-based operations of bitcoin as a currency, and that's after they choose to trust it in the first place.

I mean sure, there's always the always the possibility that a majority of miners ally together, forfeit millions of dollars of mining rewards, and likely cause all of their cryptocurrency holdings to plummet in value, all in order to double-spend a few of their own transactions. But if we're going to worry about the possibility of everyone involved becoming irrational, then I'm going to worry about the more realistic scenario of my bank doing something surprising with my money and causing me to go through legal hell, especially if my lawyer and the judge decide to be irrational too since we're comparing against a case of whole groups of people acting irrationally.

It's also worth mentioning that Bitcoin and Ethereum have never had a 51% double-spend attack. People do occasionally go through legal hell related to their bank/paypal/whatever accounts, or have problems sending money through their bank to who they want to send it to.

It's not about all people being irrational, it's about humans having negotiations and softly defined deals when it comes to money. Bitcoin doesn't fit this scenario like human-powered trusted authorities do.

There's a reason why the legal system exists to offer you the case-by-case evaluation when needed. Many people have lost money through bitcoin, through hacks or poorly coded contracts, or to scams, or directly funded criminals and terrorists. Those people would have much preferred a little "legal hell" as you call it rather than no recourse at all.

Requiring trust is not a positive aspect of currencies. Gold and silver succeeded in large part because they can be verified.

Gold and silver have nothing to do with currency, and they can only be used as such through trust in a currency system by participating people.

There is no such thing as a trustless currency.

This is completely untrue to the point of being the polar opposite of reality. Look up the attributes of ideal money.

Gold and silver are the original currencies. They are trustless because they can be verified easily and transferred physically.

The more trust a currency requires, the less valuable it becomes due to decreased fungibility and liquidity.

The worst problem in my opinion is not even this. With crypto currencies you can NEVER be sure that you are the owner of what you think you own. The only thing that guarantees your property of crypto currency is the EXCLUSIVE ownership of a private key. But what guarantees that other people don't already have access to the key you think is private, through any of the millions of forms of hacking that are available? Even if you have your private key secured nowadays, there is always the possibility that someone else in the past hacked and had access to that same private key and can use it at any time. So, even the notion private property cannot be guaranteed with crypto currencies.

That's why we have the ledger.

How does that stop others from gaining access to your private keys?

It's a hardware wallet, pretty hard to hack: https://www.ledger.com/

The same could be said for any number of things we consider to be private property. Unless you physically can see with your own eyes everything that you "own", how do you know some bad actor hasn't run off with it? Well, our society gives us a whole bunch of protections in place which give us some peace of mind (security systems, laws, etc.), but you can't know for sure without some verification.

So if you have the private key in your hand, and the address with your Bitcoin still has Bitcoin, while someone else could have your private key, why wouldn't they just transfer the money out?

> The same could be said for any number of things we consider to be private property.

Except if we are wrong in those other cases, we can usually use the legal system to help us recover our stolen property.

> So if you have the private key in your hand, and the address with your Bitcoin still has Bitcoin, while someone else could have your private key, why wouldn't they just transfer the money out?

Maybe they are waiting for you to deposit more bitcoin into that address, or maybe they are waiting to collect more private keys before exploiting them all at the same time, or maybe they... why speculate?

The idea that money can disappear without recourse because of one mistake in security or one highly motivated targeted attack is not, in my opinion, a desirable property of a currency.

> Maybe they are waiting for you to deposit more bitcoin into that address, or maybe they are waiting to collect more private keys before exploiting them all at the same time, or maybe they... why speculate?

Well, from a criminal's point of view, I don't see the upside in waiting. The owner of the coins could move them at any time, and then your loot is gone for good. I think it's safe to assume that if someone else has possession of your private keys, your addresses will be drained immediately.

Sure, maybe for a random target. Maybe for a targeted attack the criminal knows more money is coming in and doesn't want to tip his hand yet. Who knows... that's the point of not speculating.

theli0nheart has addressed that we're not dealing in absolutes. To complement, I can be pretty sure that if someone unscrupulous had hacked my private key away, they would have been very incentivised to empty the account immediately, before I or another thief did it. If it was just me, sure, they could take a risk and wait for bigger deposits. But tragedy of the commons also happens to criminals.

On the other hand, after being the victim of social engineering attacks on AWS and Gandi, I often feel like I don't really own anything when anyone with mere persistence can attack a customer support vector.

Or the fact that in pull based financial systems like the US, someone who got your debit card number when buying a coffee can charge you again in the future, so you need to be eternally vigilant with your statements.

To me, cryptocurrency is a breath of fresh air in these regards. It's a predictable system to plan around.

> Or the fact that in pull based financial systems like the US, someone who got your debit card number when buying a coffee can charge you again in the future, so you need to be eternally vigilant with your statements.

Which is why banks analyze your transaction history, and call you when they observe suspicious patterns of use of your credit card.

And it's full of false positives, false negatives, only works in some conditions, and it's not a service I want to pay for on every single transaction. That's basically a bandage on top of a shitty system.

I'm not so naive to say that one thing is the best, but I'm willing to speak up for trade-offs in these absolutist arguments.

> And it's full of false positives, false negatives, only works in some conditions, and it's not a service I want to pay for on every single transaction. That's basically a bandage on top of a shitty system.

The per-transaction costs of this fraud-prevention are miniscule, the false positives don't affect me (I get a phone call, and I tell them everything's fine), and I have recourse, both procedural, and legal against false negatives.

Just because you sprinkle a bunch of crypto powder on a transaction doesn't mean that all possibility for fraud goes away. The median per-transaction cost in crypto for this sort of thing is zero, while the worst-case cost is 'you lose the entire transaction/all your money'. And that latter one happens far too frequently for me to bank my life on it.

I like the piece of mind that when I send or receive 0.001 BTC, it's final.

You've been steering this towards your crypto=bad hobby horse. But if your point is that you wouldn't "bank your life" on something, we can agree. I wouldn't "bank my life" on anything, like hoping I catch a recurring payment on my debit statement that I 100% canceled.

This will all be abstracted in time. One way I can think of is to have the funds periodically moved to different addresses, and obviously don't keep all your funds in a single address. This can all be automated and abstracted.

>... there is always the possibility that someone else in the past hacked and had access to that same private key

That one's not too hard - if in any doubt transfer to a new wallet with a new private key.

Nothing is 100% secure - you can but do a reasonable job. My biggest worry when I have my own keys is losing the keys rather than being hacked.

The number of legitimate uses seems to drop pretty dramatically when you talk about a system that is used in a zero trust situation and irreversible.

I think the block chain philosophy as far as crypto currency and use for legitimate business just doesn't go hand in hand like some folks thought it might. People really don't want to do business if there is zero trust, and centralized databases, and strong courts, are fine. Even when there aren't strong courts blockchain doesn't so much fill the gap as provide a risky solution... that involves a lot of illegal and undesirable behavior.

True cryptocurrencies, read properly decentralized (which currently means through an expensive and well distributed PoW process) allow the creation of digital assets whose issuance and transfer mechanisms can't be tempered with by a central agent. This is a true pretty massive innovation. This is not reinventing the wheel, that wheel did not exist until bitcoin showed up.

It comes with unique upsides, eg: a central bank can’t inflate them, which for monetary assets, is a massive part of the valuation equation, eg: I can transact in them in a collapsed economy with no functioning money (ie venezuela). It comes with downsides, eg: if i get my bitcoin stolen I have less governmental power to find redress. But there’s a bit of a fallacy in the thinking that fiats are better from that perspective.

I would argue fiats are generally the same but the government has an additional option in that they can print more money to make specific people whole. Example a bank goes under because there was fraud, someone managed to pull out fiat through some means (pulling out cash for example). Because the government owns the press they can print more fiat to make depositors whole. This isn’t a magic bullet though, because you’re in effect imposing a monetary tax on the rest of the fiat saving community by doing so.

Outside of that solution, which isn’t a 0 cost one, the situation is identical to cryptos, you have to go through the courts to get your stolen holdings back. And if you lost them, it's no different than if your bundle of cash had gone up in flames or your stash of gold had gone down with a ship, you'd be out of luck. The massive thing cryptos provide is a digital savings mechanism that can’t be inflated by a central agent. If you’re a digital monetary saver, that’s a hugely compelling alternative which has a massive potential market base.

When a bank fails the US government doesn't print more currency. The depositors are made whole from an existing insurance fund, which the failed bank had been paying into the whole time (along with all other banks). It's risk pooling, not inflation.

>just goes around the legal system; by doing so, you're just re-inventing the wheel.

Going around the legal system is actually a big deal both for straight criminal stuff like extortion and also things that morally not too bad but where the law is a pain like raising money for ventures with less paperwork and fees or sending funds to Venezuela without the approval of its present government.

> Yes, a blockchain works when zero trust is needed/desired for transactions, but that's still an implementation-level concern

This premise is not true and is one of the (many) reasons why blockchain is just a buzzword.

Maintaining the ledger still requires trust, even if that trust is less centralized than a single company (and thats often not the case either)

What's wrong with reinventing the wheel? I think having alternatives for financial transactions is just a good thing in itself. Of course you don't have to use them if you don't like.

Some people want just virtual cash. No banks, chargebacks, 3rd parties(visa, paypal etc) additional "verification" etc. Just old good "hard" cash for the XXI century.

I’m not entirely convinced that they do. Many say that they do, but then don’t treat it the way they would treat a similar quantity of cash, lose it, and are befuddled as to how it happened.

That's because the technology is new and people seem to trust wallets and exchangers usually developed unknown amateurs. This leads us to issue number two:

Many holding crypto currencies are using the funds as investment so I assume they were aware of the high risk to loose all the funds for various reasons. Once the crypto investments/ponzi scheme is gone we can work on crypto payments.

Your comment is irrelevant to this article.

This article is about an unproven accusation that Coinomi wallets can be exploited because the seed phrase is spell-checked over a TLS connection.

Reply on news.ycombinator.com