But it is too late to use a bank. He was mugged and his money stolen. What do you tell him?
You avoid answering because you know that cash theft is a big hassle.
Bitcoin shares some of the properties of cash. This includes its advantages (direct people-to-people transactions, no account can be "frozen", pseudo-anonymity, etc) but also its inconvenients (thefts are hard to recover). And smanek's point is that if cash is good enough despite its weaknesses, then surely Bitcoin is good enough too.
Furthermore, unlike cash, Bitcoin has numerous ways to palliate these inconvenients. Two examples:
0. You cannot "back up" cash (if you put it in a bank, you lose all its aforementioned advantages), but you can back up bitcoins by making copies of a wallet file. Very useful especially when using deterministic wallets.
1. Cash can only be secured in primitive ways (physical security), but Bitcoins can also be secured by using wallet encryption, storing them offline, remembering them (brainwallet!). Soon you will be able to store them on tamper-proof credit-card-sized hardware Bitcoin wallets protected with PINs or similar.
I will be the first one to admit that Bitcoin is not yet easy enough to be used securely by inexperienced users. But these problems are solvable, and are being solved.
Yeah, and I know what they are, although I wouldn't describe generating a wallet on an offline PC and keeping it offline as 'very clever'. At any rate, after reading it again I think I confused what the parent was insinuating, so nevermind.
Right, and while you could store cash or bitcoins physically in a bank, there's no point in doing so for the average consumer. Cash is comparable to bitcoins in this regard: it's a riskier form of money because it's anonymous and can be stolen relatively easily, but it's also really convenient for financial transactions.
People in the thread were talking about computer security mostly, though. In the end, the best "protection" is that insurance will reverse your losses in case security fails. Something a lay person "securing" their bitcoins on their own computer won't have.
Currently? Of course not. But when the idea of storing money on your computer (e.g. in a file) becomes more widespread, then the answer would be yes. Or at the very least it would be equally secure.
It's not that hard to provide people with a secure environment, as long as that environment is designed with with security in mind. A non-jailbroken smartphone is probably good enough, though a dedicated device might be better. And you can use live boots.
I can see a future where we use such (or similar) things to do money transfers.
Wells Fargo is a bigger target, but they also have many more layers of protections and an interest in providing customer service. My hunch would be that it would be easier for a criminal to profit off of attacking WF than attacking a personal bitcoin user, but that it would be easier to actually cause financial harm to a personal bitcoin user (even without profiting themselves). But to clarify that, I have a couple of questions about how storing your own bitcoins works, since I've never used it:
* How does bitcoin storage work with offsite backups? If someone compromised the backup, would that give them access to your money?
* If you lose the file (hard drive crash, home burns down, backup system fails, whatever), does neither you nor anyone else have that money anymore? I.e., someone wouldn't have to gain access to the money themselves to deprive you of it?
keep your wallet file encrypted and back it up to multiple locations on a regular basis (to update the backups with new private keys that are created by your client software).
there are also ways of generating bitcoin keys completely offline as well as producing signed valid bitcoin transactions completely offline. This way you can forward funds to keys that are not on a machine connected to the internet, or keys that are backed up only on paper (in multiple safety deposit boxes if you like). And also you can then put signed transactions from the offline machine onto a usb stick or whatever and then use a networked machine to forward those valid transactions to the bitcoin network.
Coinbase is doing something like this for their storage of customer funds. Coinbase seeks to be a bitcoin bank that wont get hacked or that if it somehow does get hacked (cough inside job, cough) that only very small losses could occur.
Absolutely not. But then again, I used Android at version 1.6, I run a 12 hour old nightly rom and my desktop is my server running 3.7-rc5 and running a 12TB BTRFS RAID. "Stable" or "mainstream" isn't really in my vocabulary.
To be sure, I'm not advocating that my parents start using BitCoins. I just tire of this implication that somehow USD is, by virtue of being USD, automagically more secure than Bitcoins.
Armchair loud mouths (I have one in mind who went into hiding after trolling HN repeatedly) stop by for months following an online wallet incursion to tell us how stupid Bitcoin and Bitcoin users are.
Sure, but if you use a "real" Bitcoin bank, theoretically there is someone you can go sue as well. They won't have the bank roll that WF has, you're right, but there is still grounds for a civil case I'd imagine.