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I hate to be a party pooper here, but if this project would ever take off, and the project would receive serious amounts of bitcoin that would mean that serious amount of bitcoin would have to be managed and secured by whoever runs that project.

The past has shown that everyone, even persons who run e-wallets and currency exchanges, severely underestimates the amount of security such an endeavour requires.

There's a hundred questions you should ask anyone who asks you to keep care of bitcoin. How large is the hot wallet? How is the offline wallet stored? Where's the source code? What hardware does the service run on? Who are you? What will you do when someone steals your hot wallet? What monitors do you run to make sure the books add up?

So, nice idea, but please make sure this is actually going to be safe.

(BTW there seems to be a way to escrow bitcoin where a third party decides if the transaction should pass, but that third party never gains access to the bitcoin themselves, I haven't read the details of it, but that would seem perfect for this sort of thing)




If only there was some party out there that could protect us from things like this. Possibly even insuring us in the case of something going really wrong and the person holding our money loses it all. They could also establish rules that anyone holding money would have to comply with in order to be certified as safe. Wouldn't that be grand...


It would be grand indeed. It would even be more grand if a small project like this would be able to partake in that party's service without paying thousands of dollars for audits, registration fees, insurance fees and such.

But perhaps it would be more grand if that expensive and bureaucratic third party could just be avoided with a smart technical solution :)


I think he's simply referring to a bank account.


So was tinco.


I was not actually, I was talking about how expensive it is to be a bank.

A bank account of course solves all those things, but because of the nature of bitcoin it's rather hard if not impossible to realize the financial system we know as banking using Bitcoin instead of government controlled currencies.

So if he was indeed talking about a bank account, then it was a sneer towards Bitcoin itself, and he'd be quite right, the banking system solves this problem very well.

I still think the three party transaction system would be preferable even to banking, if it can be done.


My criticism was on the idea that so many bitcoin proponents put forward that not having any central controlling or regulatory body is a strength of bitcoin. Even if we ignore all of the macroeconomic issues this might cause, you still lose a lot without any regulations. This particular example is the complete lack of consumer protection in any dispute you encounter when dealing with someone in bitcoin.

Instead of trying to improve on the monetary policies and regulations that exists around the world, bitcoin simply tries to replace them and leave nothing in their place. It is like going from the current US government to anarchy. There are a lot of things that can and should be improved in the old system, but that doesn't mean we should throw it completely out and have nothing to replace it.


You can add consumer protection systems on top of Bitcoin; they just aren't forced on every transaction. Even the protocol itself has features that facilitate escrow and similar protections. And the public ledger allows you to prove that you sent BTCs to someone without having to use a third-party service to independently verify that.


Consumer protection is possible in Bitcoin - it's voluntary on the part of the service provider, and should be demanded by customers.


Since when does a bank account require me to "pay thousands of dollars for audits, registration fees, insurance fees and such"?


Yes, it is a risk. Same question partially answered here: https://bitcointalk.org/index.php?topic=315802.msg3910308#ms... . If project gets traction then most of the collected bitcoins will probably be stored in offline wallet (and hopefully 5% fees would allow to cover losses in case of a hot wallet hack).

update: fixed a mistake (online to offline)


Escrow is only really viable if you know the future recipient or if you can depend on the sender to return to approve transactions. Seems difficult to fit it to this type of situation.




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