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Comment by nhaehnle | Hacker News Reader

Quite frankly, this type of system is the future. Moreover, this type of system already almost exists in many places (consider, for example, how regular people can easily transmit money within SEPA, the Single European Payments Area).

Bitcoin, by contrast, is interesting technology but with weaknesses that make it unsuitable as something that regular people interface with every day (security implications, mostly). It is also economically problematic (widespread use of Bitcoins would mean regressing back to gold-standard times).

Ideally, though, Bitcoin can play a useful role by putting enough pressure on other payment systems to remove any remaining suckiness (mostly the fact that existing payment systems are very bad at international and cross-currency payments).

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> security implications

Like what? I have a wallet with around $3000 in it and I feel my money is a lot safer there than in some bank, because I control the security, and it is all mathematically provable. You have to trust your bank, and at that trust your state to insure your deposits. I don't have to trust anyone with my wallet.

> widespread use of Bitcoins would mean regressing back to gold-standard times

The problem under the gold standard was that dollars were valued at fractions of gold and the US could not control the monetary base at all. With bitcoin they could hold a reserve to inject in or out of the economy to maintain consistent growth, and the rate of coin generation is incredibly predictable.

I don't think that btc is the right currency to use in daily transactions. Something like doge makes a lot more sense, because doge is perpetually inflating with constant volume increase, which keeps monetary velocity high. BTC is naturally regressive, so it is a fantastic gold replacement, but disincentivizes spending as the rate of generation slows and coins are lost over time since the monetary base is shrinking.

I would like to see someone try to implement a cryptocurrency where the generation algorithm is not as simple, that could take into account velocity in the economy to increase or decrease coin generation to attempt to maintain a healthy velocity (ie, not too much hoarding but not over-capacity spending like most fiat currencies are in right now, which I believe is one of the reasons 2008 happened, and why it will likely happen again soon).

$3000 dollars is a ridiculously low amount when it comes to trusting a bank. Deposits up to 100000$ are usually insured by the state and save unless there is a major crisis. I think the fundamental misunderstanding a lot of people have, is that they use money as a value store. It is pretty crappy at that and that is by design. You are supposed to invest or consume with the money you earn, not leave it in your bank account or wallet, which is why what currency you use is more or less irrelevant as long as it is relatively stable and doesn't devalue too fast. The things Bitcoins are good at are niche applications for the majority of the population and simply irrelevant for the majority of "business users" of money, since they already have ultra-fast money transfer etc. available.

I don't have to trust the bank very much to use an insured account.

I'm trusting the state whether or not I use bitcoin, so I might as well take advantage of its insurance.

I'm not cocky enough to assume I won't get hacked.

>I control the security, and it is all mathematically provable

The parts that are provable won't keep you safe. And control is a feel-good measure, not a safety measure. Consider the people scared of air travel despite how safe it is compared to automobile.

> I'm not cocky enough to assume I won't get hacked.

And I'm not going to my faith in the state to guarantee my assets because between my bank and bitcoin, I can (and have) read the source, the implementation, and the algorithms behind the security, whereas with my bank, I have no access to the software they use, to the procedures they use to secure my funds, or have any reason to trust the people in positions of power in the bank regarding my money. I'd much rather put faith in the mathematics I can observe and reason about than the behavior of an entity who wont' tell me squat about how they operate.

That, and the fact they are using terribly implemented mass produced web sites and apps to access critical bank details do not give me any faith in their actions. Individual bank entities are mingling in software intimately on the consumer facing front in ways they have been for decades on the backend but never have they been software companies and from my engagements with banks (I've talked to several local credit unions and regional banks about security and potentially working on contract to fix their broken web portals when I find loopholes) the decision makers are not computer literate or competent in the slightest. They deal in effectively informational data without any desire to invest or put effort into actually knowing what they are doing, and it is incredibly dangerous.

Given the long history of computer security, there doesn't seem to be a very strong correlation between "smart person believes code X is secure" and "code X is secure".

Of course, you can inspect the code that keeps your bank account safe. It's not source code, it's legal code. In particular the FDIC is a pretty well understood institution. It has been around 81 years this point, and despite many bank failures, it has never failed to make good on its guarantees. Consumer finance regulations are also publicly available and well tested.

Banks have terrible security, it's true.

But you don't lose your dollars when they get hacked.

You do lose bitcoins in a hack.

>faith in the mathematics

All the mathematics do is keep your money from disappearing in the situation where there are no security breaches. I'm confident enough in the bank+FDIC to do that.

So how exactly do you steal bitcoin out of a password protected wallet, when I have never written the password anywhere, it is "reasonably secure" (no dictionary, mixed notation, 16+ characters) and it is encrypted AES-256, which has not been cracked yet? I'm not talking about online wallets which are just as untrustworthy as banks unless they FOSS their implementation, and even then you are trusting their system administration, especially if they keep backups of your password and thus have access to the contents on their end.

Virus on your computer as you type in that password.

I'm wondering how I'm going to get a virus on a curated Arch installation without usb autoexecute, also considering its on my office and usually locked, behind two firewalls without any inbound ports default open. They would need to get an executable on my system - shell or not - somehow give it executable permissions (which reminds me, there really should be some mechanism in almost any file transfer protocol to deny-execute on downloaded files so users need to manually allow it), run it somehow, and have it running when I'm accessing my wallet, via somehow injecting itself into an autorun mechanism. And I have PAX disabled access to xinitrc, bashrc, bash_profile, ~/.config/systemd, ~/.pam_environment, and ~/.config/autostart.

I'll take my chances. If I heard of wallets getting keylogged, I'd just access my wallet via a TTY without my desktop running without any user autostart configuration. It is also a partial advantage that X is horribly implemented and since the window manager grabs the keyboard, you need to exploit the window manager to listen to keystrokes like that, if you deny /dev access to keystroke polling. I think it gets even better in Wayland where the system compositor controls keyboard access, so you can stay diligent in only passing keystrokes to the actually selected application, and take steps to avoid situations like false frames over the GUI login prompt that passthrough keystrokes from an invisible keylogger (I'm not aware of if thats even possible on X or Wayland, though, should look into that).

What program are you using to make the actual transaction? It needs knowledge of the blockchain, is that coming from another computer or is it connecting to the network? A firewall isn't going to protect you in the latter case.

I would want a nearly completely airgapped machine before I would be comfortable using it to self-manage significant quantities of bitcoin. Maybe feed blockchain info over a one-way serial cable. Definitely no disk sharing.

With a bank I know that a hack might happen but nothing is irrevocable. If they want to use bad security it only hurts their insurance premiums.

>I control the security, and it is all mathematically provable >> The parts that are provable won't keep you safe. And control is a feel-good measure, not a safety measure. Consider the people scared of air travel despite how safe it is compared to automobile.

Exactly. Why would I think _I'm_ better at security than professionals who have spent years getting good at it? The past year has shown us that even the professionsl who have spent years getting good at it make major mistakes -- but that doesn't mean I'll make fewer myself!

To me, it means I'd never trust a significant portion of my wealth to computer security, with no recourse if the computer security fails. What's different about my money in a bank isn't just that it's professionals doing security (I dont' think bank IT is very good), it's that if it gets hacked, that's not the end of the story I'll probably be made good for it.

> I would like to see someone try to implement a cryptocurrency where the generation algorithm is not as simple, that could take into account velocity in the economy to increase or decrease coin generation to attempt to maintain a healthy velocity

Vitalik Buterin wrote a very interesting essay on that subject: https://blog.ethereum.org/2014/11/11/search-stable-cryptocur...

I like digital currency, and at the same time I am somewhat concerned about the idea of moving away from paper currency and over to an electronic system. My main concern is that once we can't buy something with coins or paper currency, it will be too easy for the government to suppress people by threatening their ability to perform even the smallest transaction.

Then thats why bitcoin is a good thing. No one individual or group has control over it, and if it were adopted by a state it would have enough mining power to eclipse whatever 51% attack a state might attempt.

The only thing a state could do is try to outlaw transacting with individual addresses, which is only as effective as trying to tell people not to do in person transactions with them. I guess the downside is that you can trace all payments, but with bitcoin you can easily generate new addresses and pad your money path to obscure who you are.

SEPA is nice, but it still takes too much time to transfer money. If I make the transfer on a Friday at 16h00, the recipient might only get in on Tuesday, despite the fact that the money was immediately written off my account.

That's fine for paying my rent and such, but not for many use cases, especially w.r.t. commerce.

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