Comment by bduerst | Hacker News Reader

Comment by bduerst | Hacker News Reader

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Coinbase is insured by Aon for only if their entire site is hacked, and is not insured for individual accounts as the FDIC does, because it's too expensive (there's you're explanation on why).

Because it's decentralized, Bitcoin suffers from Tragedy of the Commons. The miners, merchants, etc. are all rational actors looking to profit for themselves, even at each other's expense, which is why bitcoin can't get a census to upgrade. You may wish that they will come together under the banner of bitcoin benevolence, but they can't because they're too busy trying to make money off of each other and have competitive alternatives available.

You can't hand wave and say at some point in the far future someone will solve these very real problems for bitcoin, because some very basic economic principles are stopping it right now. Considering you haven't even made a single bitcoin transaction, and didn't even know about the limits until today, you're not really qualified to comment on it.

It's not a technical problem, but a problem with the design and the users - which was exactly what OP's point was to begin with.

No, Coinbase is insured even if only a "fraction" of their site is hacked. I am not sure why you would claim the insurance only covers a hack of the "entire site", but not a "fraction". See, my point is that there is nothing inherent to Bitcoin that prevents it from being insured. Insurance companies do insure dangerous businesses all the time. It's their job. I am certainly not going to claim that the level of insurance is equal to the average financial company. It will take years. But it's getting there. It's improving over time.

> why bitcoin can't get a census to upgrade

You say it can't be done but it has been done. Multiple times. You should read and learn from Bitcoin history. Bugs and limitations have caused the block chain to fork multiple times. Yet every single time the Bitcoin users have been able to reach a consensus about which software upgrade / software fix to follow: March 2013 fork due to BDB vs LevelDB, August 2010 due to an integer overflow, etc. It is very clear that when everybody will see their transactions never confirming because all blocks top out at the 1MB limit that everybody will want to upgrade the limit. People won't be stupid, sit there and do nothing, and watch Bitcoin die.

> Considering you haven't even made a single bitcoin transaction, and didn't even know about the limits until today, you're not really qualified to comment on it.

Huh? I never sold coins but I have made a few dozens transactions, since 2010. And I know very well the 1MB block limit.

Anyway when you start using personal attacks (accusing my competence) instead of using technical arguments, it is clear you are running out of logical arguments in this debate...

"The insurance covers losses due to breaches in physical or cyber security, accidental loss, and employee theft. It doesn’t cover bitcoin lost or stolen as a result of an individual user’s negligence to maintain secure control over their login credentials."

http://blog.coinbase.com/post/95927658922/coinbase-is-insure...

The only major fork that was adopted was because it was a critical bug that split half the network, and the entire network was shutdown in early 2013. This caused even more volatility as people sold. Honest question: Are they shutting down the network to force every enhancement, every change to policy? That's not a feature for a cryptocurrency, or even a currency.

This is just one of the real technical limitations, and even so, bitcoin is more than just a technology. As a decentralized network, the decision making power is distributed across it's many parts, which includes the users who employ it. Your insistence that we only discuss the technical limitations of bitcoin belies textbook confirmation bias.

Your credibility comes into question with your stubbornness in ignoring how currencies and payment processors work, and your No-True-Scotsman fallacy approach to twisting hypotheticals support bitcoin.

It's clear you have confirmation bias even now, and yes, ad hominem is appropriate when you yourself have demonstrated that you are fallacious.

> "The insurance covers..."

This statement is correct. But do we need insurance on negligence? No. The cash you carry in your pocket is not covered by insurance yet it doesn't prevent it from being reasonably useful/successful. I make the comparison to let you understand Bitcoin doesn't need insurance against negligence to be reasonably useful/successful.

> the entire network was shutdown in early 2013.

No it was not. The correct forked path of the block chain never stopped running during this incident. That's how a fork is always resolved: one path dies, the other continues to live undisturbed.

> Are they shutting down the network to force every enhancement,

No. There is a process to introduce changes without disrupting the network at all: https://en.bitcoin.it/wiki/Softfork This is how P2SH was added with zero disruption to the network.

> Your insistence that we only discuss the technical

You misunderstood me. It is of course OK to discuss other aspects: social, financial, etc. I was merely pointing out you should drop the personal attacks, as they make you look childish and as they degrade the quality of your comments.

> your stubbornness in ignoring how currencies and payment processors work...

Once again I don't want to ignore this. So far I have replied to all your arguments with logical counter-arguments. Let's keep the discussion civil.

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