

Banks are too big to see what's coming - dublinclontarf
http://bitcoinmedia.com/too-big-to-see-whats-coming/

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tptacek
Let me spare you some trouble. Here's what this article says:

* 10-15% of all transactions are fraudulent. In other words, something like $150Bn-$200bn/yr, or up to 2 times the entire market cap of Cisco Systems, is being lost every year to online fraud.

* Banks are investing in multifactor authentication systems to try to do away with passwords.

* But that won't work, so the only solution is to scrap the entire financial system and start over...

* ... with Bitcoin, for which there is "no payment fraud", "no paper work", "no merchant accounts", and "more privacy".

This argument isn't even coherent enough to be wrong. The types of _mainstream
attacks_ modern banking authentication systems are trying to deal with assume
customer machines are _actually owned up by attackers_. They'd be happy just
to find a way to make it harder to automatically extract value from accounts
using standardized malware. This isn't a problem Bitcoin contemplates.

~~~
kiba
_Banks are investing in multifactor authentication systems to try to do away
with passwords._

The bitcoin ecosystem are also converging toward that. Or rather, any serious
bitcoin payment processor will also be exploring any real security solution,
even if it comes from traditional banks.

 _This isn't a problem Bitcoin contemplates._

Think of bitcoin technology as the OS which bitcoin _banks_ run on. There are
advantages and disadvantage to using bitcoin as cash, or storing bitcoin with
your bank, depending on situations you may encounter.

~~~
tptacek
Exasperating.

Bitcoin is on the scale of global commerce simply a thought experiment (or,
less charitably, a Ponzi scheme).

So, of course, anything the modern banking system doesn't fully accomplish is
"coming soon" for Bitcoin, right around the corner.

Never mind the fact that virtually all Bitcoin development is done either as a
hobbyist project or by fly-by-night operations that end up getting fully
compromised. No, somehow engineering problems that banks can't solve with tens
of millions of dollars of dedicated IT security investment are going to be
solved by Bitcoin startups for half-pennies on the dollar.

But, at any rate: exasperating though your argument is, it's also a non-
sequitor. My point is that banks are dealing with zombie customer machines
controlled by malware. Bitcoin falls to that same threat scenario too.

~~~
kiba
_Bitcoin is on the scale of global commerce simply a thought experiment (or,
less charitably, a Ponzi scheme)._

All successful things start small.

 _Never mind the fact that virtually all Bitcoin development is done either as
a hobbyist project or by fly-by-night operations that end up getting fully
compromised. No, somehow engineering problems that banks can't solve with tens
of millions of dollars of dedicated IT security investment are going to be
solved by Bitcoin startups for half-pennies on the dollar._

I don't claim that bitcoin startup solve problems that banks can't solve, just
that I am asking you to compare bitcoin banks with banks, not bitcoin to
banks.

~~~
tptacek
So do the unsuccessful things.

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bpd1069
I would like to see a major player accept bitcoins as a method of payment.

Just imagine for a moment, Google accepting bitcoins as floating currency, to
be used in its Google Play service, or with its Android devices with NFC
enabled Google Wallet. That would blur the line between digital currency and
digital/real goods and services.

~~~
iheartmemcache
As a developer who's been following (albeit not too fastidiously) the progress
of Bitcoin since it's emergence, I still have no idea how to accept Bitcoin
payments. Is there something like authorize.net (or better yet, Stripe) for
this? Bitcoin API bindings for the languages du jour would help adoption I'm
sure. Though, maybe there are libs out there already and I'm just not aware of
them

~~~
codexon
Download bitcoind and learn to use the json interface.

When a buyer comes, generate a new wallet for them. Poll the wallet to see if
payment comes.

That's how you accept bitcoin payments.

~~~
foxhill
generating a new wallet for every transaction is a bit wasteful, you can
however just create a new payment address, and watch for payments on that.

if you create a few hundred receiving addresses, then you can keep the wallet
(and hence private key) offline, as all transactions are public, and minimise
the risk of having funds stolen (as we've seen a lot of places lately getting
hacked and having their accounts drained..)

~~~
codexon
Yeah that's what I meant. Generate a new address for each payment.

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wmf
Yet another one-sided Bitcoin article. Yawn.

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jaipilot747
I think that Bitcoin payment services hold the most promise in third-world
countries where credit cards haven't really become the de facto payment
standard for non-cash transactions. Any company that could tie Bitcoin with
low-end mobile systems available in these countries would be of great service.

~~~
JumpCrisscross
I don't know if emerging markets are the right place for an inherently
deflating currency. That is a lot of continuous forecasting for a financially
un-sophisticated population to do, let alone one that generally needs to take
on debt to jump classes within a generation.

~~~
kiba
_I don't know if emerging markets are the right place for an inherently
deflating currency._

I think you mean a stable or predictable currency. What you need is more
volume in the bitcoin economy to stabilize the price. Of course, when the
economy grow at extreme rate, the expense of that is a predictable currency.
But with bitcoin, you can be certain 99% that it will never exceed 21
millions.

 _let alone one that generally needs to take on debt to jump classes within a
generation._

But you don't need debt if you can merely save and jump classes within a
generation. If you have saving, you can benefit from extreme growth in the
bitcoin economy.

------
incongruity
I feel like the basic premise is right – there is clearly a lack of regard for
the threat posed by the potential for disruptive innovation... AND there is
clearly a lack of regard for consumers and merchants (both are users of
banking products, of course and both are essential for banks to continue).

If not a completely radical solution like Bitcoins, even some low-margin,
relatively more secure solution seems to be more of a question of "when", not
"if".

I'm excited to see what happens, personally...

