BitCoin has an analog in cash. Yes, it's anonymous but there are things you simply dont do with it.
Computer compromise leads to theft of bitcoins valued at $500,000 USD
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Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#52Correct me if I'm wrong, but given the P2P nature of bitcoin, wouldn't it effectively give someone interested in malicious activity a list of target IP addresses? In theory he could set up his own P2P, watch for large transactions, and then he has an ip running a bitcoin client who (potentially) has a large wallet. Then it's just a matter of running common exploits (or new ones, if you have them) in order to access t…
There's no way to know which IP address corresponds to which bitcoin address.
The point is that all of the IP addresses recorded in the network transactions are Bitcoin users.
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#53Earlier quoted context omitted.
Banks are regulated by law and have the funds insured by FDIC. i.e even if the bank goes belly up, the FDIC will make sure the depositors get the money. With BitCoin, how do you trust a bank? Even if it's just by word-of-mouth trust, eventually the bank will be taken over or run by non-trustworthy people. The threat of federal prison keeps most real banks honest. Nothing like that exists in the BTC world.
How did people trust banks before FDIC?
They didn't, necessarily. Banks were just a place to get loans and a slightly more secure place to keep money than a hole in the back yard:
http://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corpo...
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#54Earlier quoted context omitted.
What prevents you from setting up a BitCoin bank? More interestingly: are the features that let you set up a dollar-denominated bank features or bugs?
Banks are regulated by law and have the funds insured by FDIC. i.e even if the bank goes belly up, the FDIC will make sure the depositors get the money. With BitCoin, how do you trust a bank? Even if it's just by word-of-mouth trust, eventually the bank will be taken over or run by non-trustworthy people. The threat of federal prison keeps most real banks honest. Nothing like that exists in the BTC world.
Banks also inflate the money supply using fractional reserve banking, effectively diminishing the value of every other dollar in active currency.
If you think that is honest behavior, then bury all your money for 10 years and then try to spend it. Suprise! You've been robbed.
If I'm not mistaken, there is an eventual limit on the amount of bitcoins that can ever be created.
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#55Third sentence: > If only the wallet file was encrypted on the HD. Yep. Anyone who doesn't do this is stupid.
I haven't used Bitcoin, so this is an honest question - Why doesn't the software encrypt the wallet automatically?
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#56It's not really $500,000 though is it? As soon as you exchange a small amount of that into dollars you crash the exchange and the value drops significantly. I'd estimate it at about $30,000 worth.
Can you elaborate on how to came to the discount factor you used?
He means that there isn't enough people to cash with the current rate. That is $500K.
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#57The worst part of this is how irreversible it is. With a bank you might be able to get it back, with cash nobody can just siphon the actual paper money remotely, but with bitcoin you're out of luck.
Traceability in the real world banking institutions has its advantages. As a business owner I've once had a mistaken transactions that resulted in erroneous withdrawal of +10,000 from business bank account. A phone call to the bank and a bit of investigation fixed things and I don't think the bank was out any money either, it was just a wrong account number issue. With bitcoin, things are not at all reversible. Also…
Also I expect bitcoin to be shutdown because it could be a great way to fund terrorist activities.
So is cash :)
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#58I now understand that BitCoin is actually an experiment to teach people basic economics and why many of today's rules and institutions (e.g., banks) exist. Sorry for criticizing it. BitCoin is an awesome educational tool.
What prevents you from setting up a BitCoin bank? More interestingly: are the features that let you set up a dollar-denominated bank features or bugs?
How would a bank stop you from getting taken to the cleaners if an outsider got access to your bank account in malicious ways?
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#59Third sentence: > If only the wallet file was encrypted on the HD. Yep. Anyone who doesn't do this is stupid.
I haven't used Bitcoin, so this is an honest question - Why doesn't the software encrypt the wallet automatically?
Beats me. Probably one of those "get around to it later" things.
Re: Computer compromise leads to theft of bitcoins valued at $500,000 USD
#60Earlier quoted context omitted.
Banks are regulated by law and have the funds insured by FDIC. i.e even if the bank goes belly up, the FDIC will make sure the depositors get the money. With BitCoin, how do you trust a bank? Even if it's just by word-of-mouth trust, eventually the bank will be taken over or run by non-trustworthy people. The threat of federal prison keeps most real banks honest. Nothing like that exists in the BTC world.
Banks also inflate the money supply using fractional reserve banking, effectively diminishing the value of every other dollar in active currency. If you think that is honest behavior, then bury all your money for 10 years and then try to spend it. Suprise! You've been robbed. If I'm not mistaken, there is an eventual limit on the amount of bitcoins that can ever be created.
That's not entirely a negative... We're better off that people are incentivized to not bury all their money. Deflationary spirals are no fun.