Specifically the lack of fraud protection is obviously advantageous for merchants (who often are the ones, not the banks, paying out in the case of fraud) but for the consumer its distinctly worse.
Wrong. In many cases he is responsible.
Scenario #1: 60 days (typically) after the transaction, the customer has no recourse to report fraud. You were browsing your credit card statements and notice a $50 charge 2 months ago that you never authorized? Tough luck.
Scenario #2: When the card was physically present during the transaction, and when a pin code was used, the customer is always (edit: I meant "typically") held responsible unless he can prove he and his authorized users were definitively not present.
I think you ought to fact check on Scenario #2 (at least in the US), The merchant is responsible for confirming the identity of the customer matches the one stated on the card - the customer does not need to prove anything.
Link (re pin number use): http://www.occ.gov/static/news-issuances/memos-advisory-lett...
As for Scenario #1 - the 60 day limit is quite reasonable. What kind of investigation of unauthorized usage could a bank possibly conduct 60 days after an unauthorized $50 payment?
Regarding scenario #1, it is irrelevant if the amount is $50 or $1000. My point is, you have no recourse. Credit cards won't protect you from fraud in this case.
Anyways, debating the effectiveness of consumer fraud-protection is quite beside the point, since Bitcoin offers absolutely no fraud protection and very circumstantial utility (i.e. the ability to make anonymous or pseudo-anonymous payments).
"If your Password or PIN is used in such a transaction, you will be liable for the full debt, including interest arising from such use" Source: http://www.scotiabank.com/ca/common/pdf/borrowing/revolving_...
In other words, if a thief somehow steals my PIN, I will be liable as a customer. If you still don't believe me, read any of the stories reported by journalists explaining how banks reject fraud claims when the PIN was used: http://mymoneycounselor.com/card-fraud-blame-shift Merchants may be responsible for verifying the customer's identity, but often they don't. This is why credit card fraud is prevalent.
> debating the effectiveness of consumer fraud-protection is quite beside the point
On the contrary, this is important in this debate. You can't use "zero-liability" as a reason why credit cards are superiors to Bitcoin when I prove to you customers are actually held liable in many cases.
Bitcoin can be superior to credit cards, because when the wallet is properly secured (for example a passcode-protected hardware wallet), theft and fraud becomes increasingly unlikely, whereas credit card fraud continues to become a bigger and bigger problem, and banks increasingly shift the liability toward customers as I documented above.
For all intents and purposes, people having money in mtgox was the equivalent of people holding money in a crappy (security or fraud-wise) bank.
1. to take (the property of another or others) without permission or right, especially secretly or by force:
(http://dictionary.reference.com/browse/steal)
Note that the definition does not take into consideration whether you think the victim should have done more to protect themselves, just as the fact that every year thousands of criminals are successfully prosecuted for stealing even in cases where homeowners did not have dogs, 24x7 security guards, etc.
Also the analogy that other person raised ("Your stuff can't be stolen. Period. A different thing is that you may suck at protecting your house") is a good one too.
However, we're talking about different things here.
When do bitcoins really get "stolen"? When terrible things happen, like if people install malware or trojans by accident, or don't apply security updates to their systems.
This, to me, is the equivalent of leaving the door of your house wide open. Not simply not putting an alarm system, you know.
That is, if you want to use bitcoin, have some common sense and minimal computer knowledge, first (minimal includes knowing how to keep your operating system updated, not be a certified sysadmin).
In that case, you should think more carefully about the problem because you're conflating two unlike things. Even ignoring the fact how many bitcoins have been stolen were compromised by previously-popular third parties, your current position is the equivalent of hearing about someone's house being broken into and saying “Oh, your stuff wasn't really stolen – everyone knows that you shouldn't buy a Kwikset lock/ever invite guests over/forget to arm your alarm”.
Designing a system which assumes humans will perfectly follow the best operating procedures is the security equivalent of hawking a perpetual motion device. In the real world, people delay updates or get let down by an unreliable updater, get hit by zero-days or suckered by scammers, etc. Anyone serious about building a financial system needs to plan for that and build in layers of safety precautions.
I get that you really want Bitcoin to succeed but the way to do that is by taking problems seriously and working to fix them rather than pretending them away.