All questions of its own merits aside, how is Bitcoin still worth anything at all after so many hacks? Isn't a large part of value the security to know that you'll actually be able to realize it?
Think of it a bit like this. Treat Bitcoin like the Dollar and the Exchanges like banks. The underlying value of the dollar isn't so badly effected because bank robberies happen.
Instead of Storing your money in your own personal vault, people are storing their money in the banks vault(s) because it allows for more convenient usage of your funds. Instead of having to unlock your own safe, deposit what you took out your own vault into a bank and then drive to the store to do your shopping and pay on your card, you can go right to the store as you already have your funds in the bank (Bit of a shit anagogy as this would be more fitting if the store didn't accept cash, only plastic).
To get a quicker exchange of bitcoin to other coins / cash and back again (and have lower fee's), people are storing their coins in the exchanges wallets instead of their own. Instead of breaking into thousands of peoples homes and breaking into everyone's vault in turn, Hackers are targeting the exchanges as its a single place storing large amounts.
EDIT: Tweak a few bits of wording. I'm blaming the lack of coffee :-P
Since you and a number of other sibling comments have raised this point: This comparison is poor.
There are tens of thousands (probably even hundreds of thousands) of banks worldwide, each of which hold only a literally trivial fraction of their assets in (robbable) cash.
That's why bank robberies don't matter.
In contrast to that, a substantial fraction of total Bitcoin transactions are handled by just a handful of exchanges, each of which have a substantial amount of their assets in hackable digital form.
Bank of America has $2.34 trillion dollars in assets. If they had that in robbable cash, in one place, then it's safe to say bank robberies would matter.
Edit: My number of banks worldwide is way off as I was thinking in terms of banking licenses, whereas for bank robberies, it's the physical branches that should be counted. In that case, there are about 80.000 banks in the U.S. alone.
Binance said that the coins were taken from their hot wallet and not their cold wallets. It could be said that separating these wallets (if done correctly) is removing the vast majority of their assets from the "robbable on site cash".
> Bank of America has $2.34 billion dollars in assets. If they had that in robbable cash, in one place, then it's safe to say bank robberies would matter.
Exchanges (imo) need to adopt the same security measures as retail banks do. Multiple cold wallets (Like how there are multiple cash depots in the banking system) and multiple hot wallets (like how there are multiple branches of a single retail bank).
I'm not trying to defend the security practices of exchanges at all (imo, a lot of them to it in a very poor manner). And not saying bank robberies don't matter (Didn't the price of BTC dip after the mtgox hack?) but that with the right practices in place a robbery shouldn't matter too much. Which if the CEO of this exchange is to be believed the lost coins will be replaced from their "rainy day fund". (Though I'm always skeptical that such funds do infact exist)
My point is, the underlying security of bitcoin isn't what keeps getting hacked. But the security of the exchanges holding said coins.
Note: I'm not a Bitcoin "supporter" (the power usage for transactions alone blow my mind) though I do see the value of a decentralised payment system removing the ability to have your payment platform taken away from you because your thought process doesn't align with the gatekeepers (Example: https://finance.yahoo.com/news/mastercard-activist-sharehold... )
Bitcoin itself worked as expected, and the fact that no one can easily reverse transactions is one of the features described in the original whitepaper:
"Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers"
Well, because in bank robberies, it is the bank losing money, not the customers - this is exactly what bitcoin is missing.
> this is exactly what bitcoin is missing
What you mean to say is this is what many cryptocurrency exchanges are often missing, which I agree with.
"$12 billion in U.S. currency was transported from the Federal Reserve to Baghdad in April 2003 and June 2004, where it was dispensed by the Coalition Provisional Authority. A Vanity Fair magazine report concluded that of this sum, "at least $9 billion has gone missing"" [1]
$12 Billion in cash!!
[1] https://en.wikipedia.org/wiki/Allegations_of_misappropriatio...
That's simply false. https://en.wikipedia.org/wiki/Quantitative_easing#After_2007
Japan, Switzerland, Sweden, the UK, the Eurozone...
The EU injected €2.4 trillion in this fashion over a four year period. (https://www.independent.co.uk/news/business/news/ecb-money-p...) $12B is nothing.
>No other country can do that without going into hyperinflation.
Other CBs have significant enough credibility or special situations where they can print comparable money without setting off hyperinflation. Definitely Japan's and probably Europe's.
It turns out warfare is extremely expensive (see also: guns v. butter) and one of your line items is buying off local warlords.
It's worth something because the people using it feel it's worth something, and that's true for non-fiat currencies as well. Bitcoin and gold are non-fiat, but still heavily depend on demand to determine their value.
https://www.europol.europa.eu/newsroom/news/mastermind-behin...
$1 Billion stolen from a Bangladeshi Bank
https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery
MoneyTaker operated silently for years without being caught stealing millions from US and Russian banks.
https://www.reuters.com/article/us-cyber-banks-atm/hackers-h...
Conflating physical bank heists made by desperate people and sophisticated cybercrime is disingenuous.
No. Most of it never went out, and much of what did was recovered.
"The Federal Reserve Bank of New York blocked the remaining thirty transactions, amounting to $850 million, due to suspicions raised by a misspelled instruction. All the money transferred to Sri Lanka has since been recovered. However, as of 2018 only around $18 million of the $81 million transferred to the Philippines has been recovered."
I don't think it's possible to harden a modern OS against some potential hacker on the internet. Especially when we know that 0-days are sold and traded. So the idea of putting $41m worth of Bitcoin in a single wallet is frankly frighting to me. We saw what happens with pwn2own. Now scale that up a few million USDs.
Theres a common saying in bitcoin communities - "Not your keys, not your coins". Never leave bitcoin on an exchange with a third party. In this case though binance will have to reimburse their customers.