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    Author Topic: A possible hurdle for bitcoin banks..?  (Read 2370 times)

    • gigabytecoin (OP)
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    March 31, 2011, 03:07:03 AM
     #1
    As it stands - with my visa credit card and/or bank checking account... if a hacker/virus happens to "steal my identity" and then make fraudulent charges towards my account... the bank will pay me back.

    Either they will stop the transaction before it completes (and give me a call to confirm it usually when I am in another country...) - or they will swallow the loss if they cannot recover the funds and re-imburse me all of the money that was "lost/stolen".

    They can do this because they charge me (and everybody else in Canada) ~$10/month for my checking account. That an gouge us on a million other different obscure fees. Also they save a bunch of money by not having to pay bank tellers to deal with transactions... so they can afford to re-imburse any stolen funds.

    If a "bitcoin bank" in the sense that most of us are thinking were to seriously take hold, they would have to charge a similarly high/ridiculous fee as a form of insurance against all of us joe-shmoe idiots allowing a virus or hacker to access our computers/sniff our wifi/etc...

    Just sayin...

  • Syke
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    March 31, 2011, 07:48:26 AM
     #2
    Quote from: gigabytecoin on March 31, 2011, 03:07:03 AM
    As it stands - with my visa credit card and/or bank checking account... if a hacker/virus happens to "steal my identity" and then make fraudulent charges towards my account... the bank will pay me back.
    Actually, bitcoin pretty much solves this problem. The reason there's so much fraud is because there is no private key with credit cards, bank accounts, etc. Whenever you use your credit card, anyone can take that number and use it again as much as they want.

    With bitcoin, I can make a payment to anyone, and no one will ever be able to use that address to take anything from me.

    Here, I'll show you. Here's my bitcoin address 1H8KtBi9tFtD2vKhNaY9NV5Tbe4rLm4267. Now you post your credit card number and let's see what happens.
    Buy & Hold

  • em3rgentOrdr
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    March 31, 2011, 08:03:26 AM
     #3
    Quote from: Syke on March 31, 2011, 07:48:26 AM
    Quote from: gigabytecoin on March 31, 2011, 03:07:03 AM
    As it stands - with my visa credit card and/or bank checking account... if a hacker/virus happens to "steal my identity" and then make fraudulent charges towards my account... the bank will pay me back.
    Actually, bitcoin pretty much solves this problem. The reason there's so much fraud is because there is no private key with credit cards, bank accounts, etc. Whenever you use your credit card, anyone can take that number and use it again as much as they want.

    With bitcoin, I can make a payment to anyone, and no one will ever be able to use that address to take anything from me.

    Here, I'll show you. Here's my bitcoin address 1H8KtBi9tFtD2vKhNaY9NV5Tbe4rLm4267. Now you post your credit card number and let's see what happens.

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  • Mike Hearn
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    March 31, 2011, 11:03:47 AM
     #4
    It's also worth noting that banks are trying to eliminate their liability for CC fraud. In Europe the introduction of EMV smartcards for in-person payments means that if there is a fraudulent card-present transaction, you are liable for it not the bank.

  • grue
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    March 31, 2011, 01:51:30 PM
     #5
    Quote from: [mike] on March 31, 2011, 11:03:47 AM
    It's also worth noting that banks are trying to eliminate their liability for CC fraud. In Europe the introduction of EMV smartcards for in-person payments means that if there is a fraudulent card-present transaction, you are liable for it not the bank.
    isn't there a Cambridge university paper proving that chip and pin cards are not safe?
    It is pitch black. You are likely to be eaten by a grue.

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  • Mike Hearn
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    April 01, 2011, 08:05:04 PM
     #6
    There were some alarmingly easy attacks against them, yes. I'm not sure I'd call them "not safe", they're certainly way better than magstripes.

  • eMansipater
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    April 03, 2011, 11:56:05 AM
     #7
    Quote from: Syke on March 31, 2011, 07:48:26 AM
    Here, I'll show you. Here's my bitcoin address 1H8KtBi9tFtD2vKhNaY9NV5Tbe4rLm4267. Now you post your credit card number and let's see what happens.
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  • bitlotto
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    April 03, 2011, 03:44:27 PM
     #8
    I think the biggest problem with Bitcoin is that there is no built in means of quickly encrypting your wallet and backing it up somewhere. If Bitcoin did this and made sure the password wasn't too simple there would be no need for someone to hold on to your money for you. Only you would have access to it. Unlike banks, I foresee a computer company coming out that provides software that locks up peoples wallets and backs them up and essentially provides a computer security application for people who don't know much about computer security. 
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  • canadaduane
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    April 06, 2011, 06:24:53 PM
     #9
    Quote from: Syke on March 31, 2011, 07:48:26 AM
    Here, I'll show you. Here's my bitcoin address 1H8KtBi9tFtD2vKhNaY9NV5Tbe4rLm4267. Now you post your credit card number and let's see what happens.

    This highlights an interesting aspect of the bitcoin transaction: it is the *sender*, not the *receiver* who must do the computation/communication that ultimately results in a transfer of money.  In the case of a credit card, it is the *receiver* who must do the computation/communication.  I don't think this would have worked, say, a decade ago when all computers were thought of as large and living on desks.

    At any rate, thanks for the good one-liner Smiley

  • gigabytecoin (OP)
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    April 06, 2011, 06:31:40 PM
     #10
    Quote from: Syke on March 31, 2011, 07:48:26 AM
    Quote from: gigabytecoin on March 31, 2011, 03:07:03 AM
    As it stands - with my visa credit card and/or bank checking account... if a hacker/virus happens to "steal my identity" and then make fraudulent charges towards my account... the bank will pay me back.
    Actually, bitcoin pretty much solves this problem. The reason there's so much fraud is because there is no private key with credit cards, bank accounts, etc. Whenever you use your credit card, anyone can take that number and use it again as much as they want.

    With bitcoin, I can make a payment to anyone, and no one will ever be able to use that address to take anything from me.

    Here, I'll show you. Here's my bitcoin address 1H8KtBi9tFtD2vKhNaY9NV5Tbe4rLm4267. Now you post your credit card number and let's see what happens.

    Either you didn't get my original question, or you created a straw man argument out of it.

    I'm talking about what happens when somebody's password is "phished" from an online bitcoin bank, and all of their money "withdrawn/stolen/etc"...

    As it stands, if am stupid enough to enter my username and password into a webpage that LOOKS LIKE my banks... as much money as possible will be withdrawn in as short as time as possible before they account is closed or the perpetrators caught.

    I'm just saying the idea that there will be free bitcoin banks out there charging 0% or next to 0% in fees is a fairy tale.

    Banks will always need to take in large amounts of money as a form of insurance against phishing/theft/fraud which are all possibilities when you use a central banking website.

    No matter what format you keep your money in, somebody will figure out a way to take it from you.

  • Anonymous
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    April 07, 2011, 02:51:38 AM
     #11
    I believe all of you are missing a key feature of most banks: they are also lending institutions. Future bitcoin banks will offer CDs and such.

    Security is rather simple which only requires storing acquired BTC on an offline unit with a RAID configuration. Only a temporary cache of BTC needs to be available online, since there are only going to be so many withdrawals at any given time, especially if most CDs haven't reached full maturity.

    Frankly, I think this insurance label is overblown. If you want your Bitcoins secure, keep them off the internet.
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