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Comment by wil421 | Hacker News Reader

Bitcoin seems way too prone to being stolen or exploited for me to ever take it seriously. I dont have the same problems with exchanging real money, investing real money, and withdrawing real money.

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I think coders just haven't got it through their head yet that BTC is cash. You do not keep more than an operating float of cash behind the counter. You keep it in the vault. And if that makes large cash transactions have to run asynchronously, well, too bad.

All of these companies have been operating as if keeping heaping wads of cash behind the counter was fine, merely because it was convenient.

If you are servicing very many people it seems like the necessary operating float is going to look a lot like a heaping wad of cash.

No, it means that you divide transactions into "can be served from petty cash" and "requires a wait while we get some bitcoins out of the vault".

Then implement the vault as offline storage (encrypted files burned onto DVDs and physically stored in a vault for example).

Yeah, I get the principle. But a busy cash register at a store services dozens of people an hour. A mildly successful exchange will be servicing hundreds or thousands each hour.

You wave your hands in the air and say 'they wait', but there goes all your speed and cost advantages.

Just like people who use UDP because it's more efficient, and then have to re-add all the stuff TCP has. It looks like Bitcoin has to re-add all the protections that the old money system has.

A cash register has things incoming and outgoing. It's not constantly draining all day. You might need someone to run to the bank to get a bunch of pennies or a bunch of singles to make change.

(And with the "cold storage" concept, it's free and instantaneous to move money into your own cold storage whenever your till gets over a certain amount.)

A float only has to cover volatility in the rate of deposits and withdrawals, because if ins == outs you can simply turn around the BTC from Peter to pay Paul. So the amount needed may be smaller than you think.

So put some numbers down. Let's say the transaction limit out of the float is something like 1 bitcoin, or 0.1 bitcoin (lower than that and you basically shouldn't be advertising any liquidity). How much skew should the float be able to cover there? 5 customers at the limit? 50? More?

edit: some small percentage of customers would be a smarter measure than some specific number.

> You do not keep more than an operating float of cash behind the counter. You keep it in the vault.

You're still making a fundamentally invalid comparison: with cash, your security threats are still limited to people who are nearby and have both the time and means to move large amounts of currency. Bitcoin allows anyone in the world to steal amounts which would require a large team with dump-trucks in the real world even if the bank completely screwed up their security design.

One million dollars in $100 bills is 10,000 bills. A bill is 0.010922 cm in thickness. That would be 109.2 cm. That would be a stack of bills just over 3 1/2 feet high if you made a single stack. You could probably fit a million bucks in a decent sized brief case and could definitely fit it inside a duffle bag. It doesn't take dump-trucks to steal a million bucks.

Sure, but at MtGox, the theft was 477 millions.

http://news.yahoo.com/mtgox-opens-call-centre-500m-bitcoin-l...

That's a lot of duffle bags to haul.

In addition to what petit_robert pointed out about the Mt. Gox theft being orders of magnitude larger, you're assuming the densest available US currency and that it's conveniently pre-packaged for easy shipment.

What we're actually talking about, however, is like being able to teleport into a bank anywhere in the world, wave a magic wand which converts everything on the premises into tightly packaged $100 bills, and teleporting back out of the country. In the real world, running out the door with a bunch of duffel bags and people shouting tends to attract a lot of attention and make escape a lot harder than closing a network connection.

I fail to see how 99% of USD, which are just records in a database, is different than bitcoins in that regard then. The failure I would argue is in the original analogy of taking physical money to begin with.

Because electronic money transactions are reversible. If you can convince the right people that a transaction was illegitimate, it can be reversed and you can be made whole.

Or maybe bitcoin isn't cash. Maybe it's just Tamagotchi petting tokens.

BTC is not Cash period. Cash can be held in your hand in the form on Notes or Coins. There is no where around where I live that you could walk in a buy things with BTC.

In larger cities you can. There's a Bitcoin ATM even 2 blocks from my office.

Are you in San Fransisco? I live in a major city (top 10 population in us) and I'm not aware of any place I could go buy grocery, gas, or withdraw money with BTC.

I'm in Boston and there's a handful of places I can use BTC. But not many. The ATM is at South Station. I could do a bit with them when I lived in NYC over the summer too.

> I dont have the same problems with exchanging real money, investing real money, and withdrawing real money.

That's because there's a huge security net provided by the general public against the fuck-ups of banks, no matter how big.

Exactly. That seems to support his statement.

> Exactly. That seems to support his statement.

Oh, I don't disagree with him/her.

It's symptomatic of all online wallets with instant automatic withdraw capabilities. Not just limited to Bitcoin. Online wallets, that transfer real money to external third parties (not just an internal credit transfer like Paypal or credit cards, which don't actually remit the money to unverified receivers outside of their system for 30 to 60 days) will all have this problem.

It's not at all required though. You can easily build per-user wallets that employ multisig, where the user has to actually authorise each transfer. If the service shuts down (or gets seized) you just publish your key and users can withdraw their own cash.

Why would I need an online wallet though. I mean that's what I use my bank for. They even give me a small amount of interest for the money I keep there. Anything not in my bank is in a real wallet in my back pocket.

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