Comment by DrTarantism | Hacker News Reader

Comment by DrTarantism | Hacker News Reader

Banks may be greedy but in exchange for their greed they protect my money. As an analogy, Governments may be lacking in integrity, but they offer protection such as police, laws, and human rights. Putting your faith in Bitcoin is like trying to live at sea so that you can be "free" of all governments. But I would rather put up with the ills of Government than the ills of piracy and the instability of the ocean. This article cannot be taken seriously if it will not address the recent problems with Bitcoin (thefts, illegal markets etc) and offer explanations and reassurances. Maybe I'm wrong but the excitement around Bitcoin seems to be an extension of the old Utopian ideas born out of the anarchist movements: if only we remove the Government and the status quo from the equation all our problems will be solved.

No matter what security measures people devise for Bitcoin or anything else on the web, they will never be perfect. Look at heartbleed! What protects us is the system: laws, repercussions, investigations, insurance. Once you have laws and police to protect the banks, the banks are happy guaranteeing you your money back if you are a victim of fraud or theft. Bitcoins biggest selling point is also its Achilles heel. I'll keep my money in the bank until Bitcoin is legislated and protected.

> Once you have laws and police to protect the banks, the banks are happy guaranteeing you your money back if you are a victim of fraud or theft.

This is really just not true. It's also less and less true as time goes on. There are now cases of small businesses hit by Zeus malware suing their banks for not covering the fraud losses. Its also getting more difficult for defrauded customers to get Visa to issue chargebacks; eg, my mom was told she would first have to file a court claim against a sketchy moving company which stole her credit card deposit. In China, UnionPay (the Visa of China) simply doesn't do chargebacks for customers, that's why TaoBao (eBay/amazon of China) offers escrow services.

Furthermore, watch any American Greed episode, it's on its sixth or seventh season on CNBC. Tell all the victims profiled on that show that their losses to investment frauds, mortgage frauds, ponzi schemes etc., that their money is guaranteed by the bank. It just isn't.

True, bitcoin is a Wild West. But fraud happens very often through the legacy banking system as well.

You're right, but Bitcoin does little to prevent fraud as well. The only kind of fraud Bitcoin prevents is "check's in the mail" type schemes, or fraud involving a customer trying to scam a vendor (by performing a chargeback after receiving a product, for example).

I think Bitcoin has a ton of great uses, but fraud protection is not one of them for consumers at least.

That's correct, but this shouldn't be understated. Bitcoin provides the ability to be sure that a transaction is legitimate when you're on the receiving end, and that the it can't be canceled later. This can be done without knowing anything about the person on the sending end, much less require a level of trust based on the sender's reputation.

I never said that all claims were paid or that all banks were equal. I simply said that Bitcoin is not the great solution people think it is. Its much worse than what you are describing. How many people who lost bitcoin funds were able to take their issues to courts? How many were able to turn to the police? What evidence can you take to court when every transaction is anonymous? And it makes sense for the bank to ask your mum to file a claim first. How else will they know if she is lying and trying to defraud the bank? And your comment about investment fraud, mortgage frauds and ponzi schemes are beyond the scope of this debate because those types of fraud are beyond the simple matter of financial savings and payments. Investments always carry a level of risk and are never guaranteed. Stop comparing apples and oranges to make your argument seem stronger

> Banks may be greedy but in exchange for their greed they protect my money

...provided tax payers bail them out, at least that has been so in the recent past. So banks dont really protect your money.

There indeed existed regulatory separation and barrier between the risky side and the non risky side. A client of a bank could choose which side to be on. But bankers thought this was too much of an imposition on their creativity. It still would have been fine if the removal of the barrier was not forced on other banks and countries, which I hear they were.

I live in Australia so we do have greater protections and safer banks than in America. But regardless, those tax payer bail outs are still part of the banking system. The banking system is more than the actual banks themselves, it includes the legal and political climate such as bail outs. You can't compare Bitcoin and Banks without looking at the full picture, otherwise that is just a distortion of reality.

Most (all?) banks in the US are FDIC insured up to $250k per person. Even if tax payer money hadn't been lent to banks to keep them afloat, provided you had less than $250k across any banks that might've gone under, you'd have been okay. In that sense, saying that they don't really protect your money isn't really true.

Realistically, I'm much much much more likely to lose money stored in a Bitcoin wallet I maintain than money stored in a bank, and I'd imagine that's probably also the case for most people.

> Realistically, I'm much much much more likely to lose money stored in a Bitcoin wallet

Oh absolutely. What I was commenting on is that the source of this protection is not the bank alone, but the expectation that someone will pull it through if it went bust.

> ...provided tax payers bail them out, at least that has been so in the recent past. So banks dont really protect your money.

In some theoretical sense, sure. On a practical level, I pay my taxes either way, in the banking system my money is insured, in the bitcoin system my money isn't insured.

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