[jzwinck]

Well thank goodness for that. At least this way there is no chance of recovery.

I enjoyed the bit at the end about a potential lawsuit to get the BTC back. Sounds awfully familiar to the legal posturing after some other BTC heists--none of which got anywhere AFAIK.

Do people still think the irrevocability of BTC transactions is a good thing?

[oleganza]

Gold, which was easier to track down and confiscate "back" was historically confiscated in much larger quantities by much tougher guys. This "insured" government debt-backed money that you have today is a result of having heavy money that is ultimately owned by someone who is bigger than you.

While Bitcoin is stolen from some exchanges from time to time, it's much more diffused and it's enormously harder to take bitcoins massively from population than gold.

See also: http://en.wikipedia.org/wiki/Executive_Order_6102

By the way, these "insured" USDs that you have in your account are not owned by you. Try to cash out everything in paper. Or move anywhere at once without asking for permission. Or what would you do when they impose capital controls like in Cyprus or Argentina? Or when your % of total USDs in the economy is going down while Fed is printing more dollars? Or when some new taxation is applied retroactively? Or when some bureaucrat didn't see your tax return papers in time and your entire account is frozen during investigation?

Bitcoin reduces systemic risk like the one present in banking system and shifts the burden on individual users. You can still create a bank if you want, but that's totally optional and you have many other options as well. In the future people will develop hundreds really different devices, services and tricks to store your coins securely. Compare that with monopolised non-innovative heavily regulated banking.

As bitcoins are so cheap to store, security is asymmetrical: it's much harder to take, than to hide. Gold, or any physical commodity, are as hard to protect as to take from you. Hence, most brutal guys end up owning precious metals over the course of the history. Average Joe can only have as much gold as he can hide in his pants.

[foobarqux]

States are powerful. You are mistaken if you think bitcoin can somehow materially evade that power, you have to interact with the real world some time.

Putting aside the increasingly clear fact that network-attached computers won't be secure from state-actors for the foreseeable future --- and bitcoin transactions always have to hit the network --- states can effectively control bitcoin being spent or bitcoin cash-outs being transferred in country as well as any currency.

Presently the risk of losing or having stolen your bitcoin is far higher than the same for gold or conventional stores of value.

[ogig]

>Do people still think the irrevocability of BTC transactions is a good thing?

Yes. Third parties will provide escrow/insurance services if there is demand for them. Transactions been irreversible "by default" is a core benefit of bitcoin and merchants may preffer that over chargebacks at 18€.

[fat0wl]

I've heard that this type of insurance is expensive and a large part of banks' transaction fees. I can only imagine how expensive an insurance service like that for Bitcoin would be.

[maaku]

However unlike the existing system there will be a transparent, competitive market for such insurance mechanisms, and they will be available to consumers/businesses directly.

[fat0wl]

I think the banks are pretty focused on offering competitive products that are packaged together neatly to avoid putting too much of burden on consumers (what's the diff between choosing a bank or choosing a private transaction-insurance service?).

I'm paranoid of investment banks but I think plain old banks are benign. You put a certain amount of money in your account and they handle all this for you. There is usually no charge for checking. Credit cards don't charge interest unless you go into debt, etc.

I don't think lack of competition is so much an issue, it seems that the Bitcoin movement just has a fundamental distrust of govt/corporations. I think if Bitcoin money didn't magically appreciate in value so much it wouldn't be much cheaper than banking except for big international money transfers.

[filam]

Insurance does not eliminate risk from the market.

[ogig]

Market risk is not related to irreversible transactions, at least i don't see how.

What insurance might solve regarding bitcoin irreversible transactions and thieves is that customers of bitcoin services could have their funds reimbursed after a heist.

[executive]

yes. events like this encourage better security.

[jzwinck]

If that's true, why did we see three significant Bitcoin services get hacked in basically the same way in the last year? I'm talking about the Linode ones.

Events like this encourage better thieves.

[Sae5waip]

Because the people running these services apparently cared more for quick money than for security. Or running their own server. I mean, who runs that kind of thing on a cheap rented server? No pity here.

They took a risk, and one don't always win when taking a risk. (You startup folks should know.)