| > But I still see the lack of reversibility of transactions (one of bitcoin's strengths) as the major problem here. "Stop Saying Bitcoin Transactions Aren't Reversible" http://elidourado.com/blog/bitcoin-arbitration/ The n-of-m multisignature facilities described in that article are the future of Bitcoin. You probably don't need multisig arbitration when you buy a coffee or a stick of gum, but you probably do when you're transferring large sums. Of course, there was no multisig protection in sight in the MtGox case, but then there was no blockchain in sight either. Far worse errors of judgement were made there. Bitcoin makes the use of arbitration services optional, and it makes the actual mechanics of arbitration services safer and more efficient. The arbiter in a 2-of-3 multisig transaction can't freeze or seize funds in transit -- hello PayPal! -- and takes zero action in the vast majority of cases, where there is no dispute. Banks, credit card companies, and existing payment systems like PayPal can't easily, optionally disintermediate themselves. They must play arbiter. And we must pay for it. > bitcoin tries to workaround them for no good reason. There's a good reason. Why do businesses today pay transaction fees when you use your card to buy that coffee? I'll just quote the opening paragraph of the original Bitcoin paper: "Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party." https://bitcoin.org/bitcoin.pdf |