Hacker News Reader

Comment by mkbrody | Hacker News Reader

“The bank that is storing my money is highly regulated by federal regulators and backed by a government with a huge army behind it,” James Angel, a business professor at Georgetown University, told Ars last month.

The irony is that:

1. Bitcoin doesn't need a highly regulated financial institution to securely store your money (but it does require highly secure technology).

2. Acknowledging that the only thing backing legal tender post gold-standard is coercive force (you could even argue that implied force is the main driver behind market demand for $USD - i.e. petrodollars, the EURO, the Federal Reserve, government agencies that only accept payment in $USD, etc.).

View on HN

> 1. Bitcoin doesn't need a highly regulated financial institution to securely store your money (but it does require highly secure technology).

Only if you don't consider protection from theft an attribute of secure money storage. If somebody compromises my bank account credentials, it will be annoying and time consuming but I will ultimately get my money back. If somebody steals my bitcoin wallet, I am shit out of luck.

Bitcoin is like cash. If someone steals a bunch of cash from you, you're likely to be out of luck.

You could build a complicated banking system on top Bitcoin too, that could do things like reverse unauthorized transactions, but that would get rid of the reason some people are really interested in Bitcoin.

Someone could build the banking system for those who would like the warm fuzzies it gives them, and others could still choose not to use it, keeping their bitcoins in their own wallet in their own house. Again, just like cash. The cool thing is that, unlike cash, you can send and receive bitcoin to and from anywhere in the world electronically without that big banking system's help!

> Bitcoin is like cash.

Right, which is the point. No one same would argue that cash is a secure form of money storage. It's got some selling points, but security is not one of them.

What I'm trying to get at is that a bank is only as secure as it's regulators say it is. The Government is what insures all depositors money up to $100,000, as well as theoretically stops it from taking too great of risk and losing your capital.

The other purpose a bank serves is to protect your money; A bank at it's most basic level is physical security: steel vaults doors, security deposit boxes, security processes, guards, etc. All ancillary (and highly profitable) services flow up from providing this primary need for it's depositors.

Because BitCoin relies on technology to secure your money, so long as users could find an acceptable level of security to replicate this with "high"-technology, there wouldn't be a need for traditional banks to store your money.

Reply on news.ycombinator.com