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Comment by itcmcgrath | Hacker News Reader

Which is essentially saying BTC will never become more than a semi-serious play thing for the tech community. How is the non-tech user ever going to be able to use this with anywhere near level of trust/safety they do with current traditional currencies. Hell, a lot of my tech friends can't keep their computer secure/clean, not to mention backed-up, so how are Joe and Jane Average?

Or, alternatively BTC embraces the same banking industry setup it is trying to get away from.

That said, I don't disagree with what you are saying (and upvoted) - just pointing out some implications.

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Those who want to trust BTC banks can do so. But now people have the choice not to trust them and instead manage their wallet themselves. You don't have that choice in the current banking system.

When I moved to the US, I spent a week+ living on cash until I had my bank account set up. Being able to buy pre-paid VISA cards for cash at retailers solves the part of the online issue as well. You can be a 'mattress' banker with cash if you wish, securing your house just like you would secure your computer.

Not sure there is as big as a difference between BTC and the current as people would lead you to believe. Emphasis on as since there obviously are differences - at least until new laws get thought up and passed.

> Not sure there is as big as a difference between BTC and the current as people would lead you to believe

1) The value of your card is unlikely to be stolen by a hacker, unless you make an online purchase.

2) If someone spends the value of your card, you have recourse

3) Bitcoin is used to store much large amounts of money than you likely had on your VISA card

You're presenting it as a choice between two equally viable options, but the point is that you really have to manage it yourself.

Yes, right now using these online wallets is not really an option if you are at all concerned about your bitcoins. But it will be in the future. Because online wallets are not less secure than an E-Banking account at a conventional bank. The difference is that banks spend a lot more money on security than the current online wallet operators (think penetration testing, code review, dedicated security staff, option to have two-factor authentication etc).

You make strong points, but (and without wanting to rehash some tedious arguments) there is still the fundamental difference that "e-banking" is not dealing with "e-cash" the way Bitcoin is "e-cash." Different members of the audience perceive this variously as a benefit or a drawback, but either way it will complicate security.

> Because online wallets are not less secure than an E-Banking account at a conventional bank.

Nope. Look at everything you can do with your online bank account. Transfers to other accounts, wires, bill pay, stop payments, ACH (if you're lucky), etc. What's the common there? All those transaction are reversable. This makes it hard for hackers to steal money from banks, they need an unwitting third party (mule) to accept an account transfer, and then go to a branch or ATM to withdraw cash.

So it's not like your online banking accounts are secure, you can purchase any number of stolen online banking credentials from trojan/botnet operators. The price for those accounts is quite low, because the real effort is in finding unwitting mules.

The problem with bitcoin, is that bitcoin transfers are irreversable. So banks will never be able to protect bitcoin wallets effectively, because they can't rely on being able to reverse transactions for compromised accounts.

Excellent points.

I worked in a bank designing systems at one point. Even with methods to retrieve money lost through fraudulent transactions, they still had monthly 'Fraud' budgets much larger than my salary for money they couldn't retrieve. Imagine BTC services 'Fraud Budget' when all transactions are non-reversible.

Banks do have a massive advantage in 'Practical' security as well in the form of a 'big stick' aided by the government. Since the practical risks of fraud against a bank are much higher than fraud against an online BTC service (who is the FBI more likely to help), the exposure would be much bigger.

Do banks regularly buy lists of their own compromised accounts? If not, why? Surely it'd be cheaper in the long run?

Surely that would be encouraging the market ?!

> How is the non-tech user ever going to be able to use this with anywhere near level of trust/safety they do with current traditional currencies.

Near everyone I know, regardless of age, does their banking online. I don't see how this is any different than a username/password being stored on some banking server, and getting stolen.

Best case? You boot to a clean ISO, make a wallet, generate an address, write down the public/private key, transfer all your btc to it, and call it a day. There is no digital trace, and you have a paper wallet.

This is wrong in so many ways.

If your bank is hacked you as the user are not liable for the loss. Online transactions are traceable and reversible. Banks are heavily regulated and the legal regime is well defined. Etc etc etc.

Having your online banking hacked is a bit like being mugged on the way out of the bank. Having an online wallet service hacked is like someone driving in a truck, emptying the vault and leaving without a trace.

And then the mugger shows up the next day and gives you your money back.

It's different because FDIC.

> "How is the non-tech user ever going to be able to use this with anywhere near level of trust/safety they do with current traditional currencies."

Insurance.

Insurance isn't a magic word.

Insurance works on risk profiles. Insurance also works by limiting exactly what situations they do and do not cover (see: All the people who 'thought' they had flood insurance over the years).

Something tells me insurance is going to be a lot more expensive for BTC, which can have a range of impacts that will make it unpalatable for the average consumer, if they or online services can even get (try insuring a Audi R8 under an 18 year old's name...)

That's all true. It's also the only way anyone is going to trust an online bitcoin wallet. Why is it surprising that it would be expensive?

Not surprising; 'Insurance' is less likely to have the impact people are saying it will - either it will be incredibly hard to get insurance in the first place (making it more of a non-factor), and/or it will not provide the same level of coverage/safety-net as you get with a Bank, and hence BTC will never get to the same level of trust.

Either case, I don't think 'Insurance' is going to be the magic thing that will make BTC as viable as traditional currencies.

Nobody in their right mind would insure Bitcoins.

Probably not for the reason you think.

Actuaries happen to be quite good an quantifying risk. If the price is right, someone will be willing to insure it. An insurer with a specialist background in systems and security could do well.

The actual problem is the implications of underwriting a fiat currency with a "real" currency.

You may as well be insuring cigars against arson.

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