101–110 of 136 posts
I am only so familiar with Bitcoin, but why not have an additional wallet per user of the exchange? That way its not possible to exceed the funds of that wallet.
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Perhaps, in the case of the most cautious developers. But right now, I'd be happy with just competent developers. And to me, at least, it's pretty clear why competent, responsible developers are not participating in this space -- we're too frightened by possible government sanctions.
Is it really just government sanctions? Or do regulatory cost and exposure to liability have something to do with it, too? I think that in the USA at least, government sanctions are far from guaranteed - the courts have confirmed that BTC is a currency. What that means is that there is no longer a question of if you can legally start a Bitcoin exchange in the USA - it's a question of what hoops you have to jump throu…
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Perhaps any online Bitcoin service is going to have to expect a certain loss rate due to hacking and budget accordingly. Just as credit card issuers expect to charge off some percentage due to fraud. The trick is to keep that loss rate manageable. It's clear that many of the same features that Bitcoin users like about it also make it attractive to criminals.
Most credit card purchases, like almost everything in the financial system, are reversible. Things that aren't reversible are the exception, and those are the places where, pun intended, the buck stops. If someone gets my credit card, they can't get $50,000 out of it and disappear. It's very very hard to buy cash equivalents via credit card, and this is not an accident. Nothing in Bitcoin is reversible. Everyone work…
For thousands of years the only way to pay for something was with non-revertible mediums, either cash or bartering for other goods. Reversible transactions are new in the grand scheme of things.
If I ran a bank and didn't bother to lock the doors or keep the money in a safe and someone comes in and steals the money, I don't get to do a chargeback and get the cash back.
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Most credit card purchases, like almost everything in the financial system, are reversible. Things that aren't reversible are the exception, and those are the places where, pun intended, the buck stops. If someone gets my credit card, they can't get $50,000 out of it and disappear. It's very very hard to buy cash equivalents via credit card, and this is not an accident. Nothing in Bitcoin is reversible. Everyone work…
>Things that aren't reversible are the exception For thousands of years the only way to pay for something was with non-revertible mediums, either cash or bartering for other goods. Reversible transactions are new in the grand scheme of things. If I ran a bank and didn't bother to lock the doors or keep the money in a safe and someone comes in and steals the money, I don't get to do a chargeback and get the cash back.
Look: every startup gets owned up somehow in its first year or so. If you think your company hasn't, I have an adage about the sucker at the poker table for you. I'm not sure how many people on HN really understand this, because every thread I read about Bitcoin companies having security problems features highly-voted comments expressing shock at how bad their security must have been. No: this problem is universal. T…
cat sharing companies Off-topic, but as someone with too many cats I would like this idea to take off pronto. I could use a full night's sleep. I'll show myself out.
YC '14, here I come.
If BTC is going to survive there needs to be insurance against loss. An FDIC for Crypto. The exchanges take a cut on every transaction, so Poloniex should have self insured for the first 3% (or what ever their transaction fee is). After all they made that money on the transaction. They should carry insurance for the rest. The 12.3% deducted from everyone's account is "wrong" in my view because Poloniex absorbed none…
How much would such insurance cost? More than the money deposited?
I don't know enough about the current economics of exchanges.
A Currency exchange would typically not be a bank. They would have a lot more in transactions than they would have cash on hand. $4M in transactions on $500k cash on hand. They would have little ability to lose a customers money because the customer would have to be in the store when it was robbed.
A bank would not have all of its money in a place that could be robbed, so they don't have 100% risk (or 12.3%).
So for a bank the insurance is about .2% of transactions. For BTC it would likely be closer to 3% because the systems are audited.
The missing link for bitcoin is coverage under something like the Uniform Commercial Code- a system that specifies general principles governing transactions and the framework for their completion and resolution of conflicting claims. Caveat emptor is not a foundation for a currency.In practice bitcoin's very anonymity makes it a more attractive target for theft- bitcoins come pre-fenced. As Patio points out, the bitc…
In practice bitcoin's very anonymity makes it a more attractive target for theft Also the fact that the people making software seem incompetant when it comes to technology.
Among bitcoin holders there seems to be a tendency to assume the technical sophistication of bitcoin mining and blockchains somehow perfects operations involving the buying and selling of bitcoin. The analogy I would draw is to notes which can be exchanged for gold and backed by a central government.
It can be the case that notes are reliably exchangeable for gold and also the case that a bank takes these notes for deposit without writing down the deposit in a ledger. Likewise the bank allows withdrawal of notes, again without writing them down. If An individual makes the decision to deposit notes with that bank based on the certainty the notes may be exchanged for gold, they have used the wrong set of facts as the basis of their decision.
At best the robustness of bitcoin is independent of the robustness of bitcoin businesses. My suspicion is that in practice their is a negative correlation because stolen bitcoin are largely unrecoverable and do not trade at a discount.
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My (completely pulled out of thin air) opinion is that there is no way that startups populated by young, hip developers can build a proper system for handling money. You need to have a baggage of a thousand bizarre things how these systems can be violated, unless you want to repeat the same mistakes - and that comes with time and experience. There are literally at least hundred thousand developers who have worked for…
Moreover, these things should be built upon the certainty that somebody smarter than you, the coder, might be interested in free money, and that the software will be broken. Only with that mindset can one build a system that doesn't screw over every legit customer when it happens.
If you start a BTC exchange, write half of the initial code yourself, have access to the servers and own the company - then you should ask a simple question: could I myself steal funds undetected? If you're an investor, could the CEO/founder steal funds undetected? If the answer is yes, you have work to do.
There are some theft options by privileged people that can't be realistically prevented, but you can make sure that those scenarios would be detected within a day, and thus those privileged people simply wouldn't do it to avoid jail.
I made a comment on an earlier thread about the security properties of hot/cold wallet and the security properties of separating the matching and settlement systems. ( https://news.ycombinator.com/item?id=7340505 ) This incident is an example of the Bitcoin community's best practices "working." They lost 12.3% rather than 100%. That's actually a considerable accomplishment in Bitcoin, but not a success condition for…
This is the most fascinating part of the Bitcoin story: watching a group of people who are philosophically opposed to most elements of the modern economy discover, one by one, why all those elements exist.
Look: every startup gets owned up somehow in its first year or so. If you think your company hasn't, I have an adage about the sucker at the poker table for you. I'm not sure how many people on HN really understand this, because every thread I read about Bitcoin companies having security problems features highly-voted comments expressing shock at how bad their security must have been. No: this problem is universal. T…
cat sharing companies Off-topic, but as someone with too many cats I would like this idea to take off pronto. I could use a full night's sleep. I'll show myself out.