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Comment by whizzkid | Hacker News Reader

I am now comparing the bitcoin holders to regular banks' online systems in my mind and I wonder why bitcoin systems are constantly getting hacked while regular banks' are functioning properly. I am not really sure which one of these reasons are true;

- Code that is written for bitcoin banking is fairly new comparing the real banks' code which contains lots of vulnerabilities.

- These guys hold huge amount of money from other people which becomes very tempting so that some insiders decide to take it and make it look like they are hacked

- Law enforcements are not as high as comparing to stealing dollars to bitcoins which makes hackers to focus on bitcoin.

Not really sure and i am really not an expert on bitcoin systems, i just wonder.

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http://www.nytimes.com/2015/02/15/world/bank-hackers-steal-m...

Are banks functioning properly? Just today we heard that online attackers stole hundreds of millions of dollars from them.

That is true actually, I guess I meant i don't see for example HSBC(just an example) shutting whole company down because of they are getting hacked while bitcoin systems are are either on or off, isn't it?

Most bank transactions are reversible. ATM withdrawals aren't, but they have limits. Lots of attacks use ATMs so it's not enough to shut down a bank.

But how many depositors lost money because of that? My guess is zero.

We should remember that exchanges aren't like commercial banks. You don't need banks just to store your Bitcoins. Exchanges are like Forex trading brokers; you don't get FDIC insurance for those accounts either, and you will lose money when they go bust (see last month, after the Swiss correction).

When you put $100 in a bank it doesn't matter if that exact $100 bill is stolen by a bank robber, you still have $100 in the bank. Additionally bank accounts are federally insured.

That isn't the case with bitcoin.

What happens when you get robbed at gun-point and have your cash stolen? What will the bank do then?

What does that have to do with the bank?

That's not exactly true. If someone uses your debit card number to spend your money there are some circumstances where you will not recoup all of your losses. http://www.consumer.ftc.gov/articles/0213-lost-or-stolen-cre...

Which is why I only use credit cards.

> When you put $100 in a bank it doesn't matter if that exact $100 bill is stolen by a bank robber, you still have $100 in the bank.

For the majority of digital currency exchanges that I've used, deposits may be sent to unique address to associate it with your user record, but the funds are then typically moved into a pool to facilitate trading. I don't know off-hand of any exchanges that atomically isolate user funds and utilize the block chain to handle internal transaction reconsiliation. There's an off-shoot of block chain tech that is attempting to do atomic, cross-chain trading using the block chain, but it's still very new and experimental[1].

> Additionally bank accounts are federally insured.

Up to a certain amount. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.[2]

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[1] https://en.bitcoin.it/wiki/Atomic_cross-chain_trading

[2] https://www.fdic.gov/deposit/deposits/

Right, $250k, not really worth nothing every time since that is basically infinity to everyone in the US.

Banks are hacked very regularly, probably a lot more than you'd think.

It's just much more difficult to actually extract money from them. With Bitcoin, all you need to do is copy 32 bytes (the length of the ECDSA private key) over and over and suddenly you're a millionaire. It was a little more complicated in this scenario, since the attacker exploited an application flaw and appears not to have gained access to any private keys, but they still gained permanent control of the coins in a simple manner.

its because bitcoin is irreversible. If a traditional bank gets hacked, they just rollback the database to before the attack. With bitcoin, there is no rolling back. All security lessons are learned the hard way.

It seems to me that if you hack a bank and get it to put money into an account that is not rightly yours, or get access to an account that is not rightly yours, you need to do something with the funds before the error is caught that can neither be reversed nor traced. And there are lots of limits on activity that looks like you are doing this. With Bitcoin you just transfer it to a new wallet and you buy yourself all the time in the world to do this.

I wonder about this too. Banks were also basically unaffected by Heartbleed. Is this because they were very lucky, or because they were very cautious?

Banks do get hacked, and there's probably more going on than we hear about, but even so it seems banks are better at keeping money/secrets safe than Bitcoin exchanges, and probably better than the top-tier internet sites too (Google, Facebook, PayPal, Apple, Amazon).

One of the benefits to having between a few decades and a few centuries of security procedures and policies in place.

I imagine that there are only a handful of digital currency exchanges that can boast about teams with deep experience in cryptography, block chain technologies, and extensive financial software security expertise.

Banks also spend literally hundreds of millions of dollars annually to secure their systems.

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