If it isn't done by the community, it will be done by the government and banking regulators. It's happened time and time before and the government will find a way to make it happen here. Downvote me all you want but I am speaking the truth of what will come to pass.
Internet "regulation" as such has led to the creation of companies like Amazon, Ebay and others where folks can buy with more confidence.
If you want the average consumer to buy with more confidence, then there needs to be a way to prevent fraud. In relation to Mt. Gox, self-regulation would have required that 2 factor authentication would be enabled by default such that a loss could not have occurred. This best practices effort demanded by the coin community would have been required for Mt. Gox to continue to get some sort of seal of approval.
Self-regulation would have meant that LTC-Wallet possibly could not have gone on the air with hundreds of thousands of dollars from the community without some sort of background check.
Now that Bitcoin is 'money', we have to either be self-regulated ... or regulated by the folks that are professional thieves (the banking/government community).
MD
Internet "regulation" as such has led to the creation of companies like Amazon, Ebay and others where folks can buy with more confidence.
If you want the average consumer to buy with more confidence, then there needs to be a way to prevent fraud. In relation to Mt. Gox, self-regulation would have required that 2 factor authentication would be enabled by default such that a loss could not have occurred. This best practices effort demanded by the coin community would have been required for Mt. Gox to continue to get some sort of seal of approval.
Self-regulation would have meant that LTC-Wallet possibly could not have gone on the air with hundreds of thousands of dollars from the community without some sort of background check.
Now that Bitcoin is 'money', we have to either be self-regulated ... or regulated by the folks that are professional thieves (the banking/government community).
MD
I understand your points fully. But I still don't see how it becomes a winning proposition for anyone who puts their neck on the line. In the real works, there are banks who earn their keep loaning our their customers deposits and there are trust companies earn theirs through trustee fees, and not insubstantial ones at that. Bitcoin lending, at least on a commercial scale, is incredibly risky. Might be less so with much stringer controls, but with controls that strong, there's be no difference in going to a bjtcoin institution versus taking out a dollar denominated loan from an ordinary bank.
You could do it in the form of a trust company but I fail to see a way to value add enough so that people would be willing to pay to keep a balance somewhere. So how does the institution you're proposing suppor itself? How does it adequately compensate its owners or directors for not only sticking their necks out, but also ponying up the bitcoins theyed either post as reserves or post as bond? Let alone paying for audits, because a regulated institution, or one that is expecting that much trust from the public can't just say "we're doing great"they need to establish that as fact.
And really, this is a peer to peer currency. I would say there isn't any reason to leave ones savings in anyone else's hands but your own. I don't understand why people insist on leaving sums at gox or anywhere else. Especially in light of constant losses. People should use exchanges for the purpose they're intended, to exchange bitcoin for cash or vice versa, and when they log out, transfer their balances to a wallet under their control. That alone would stop creating such juicy looking targets.
But I don't understand your idea that "self regulation" would "require" mtgox to use TFA. By its definition, self regulation would mean that they choose what to do. Now, they could require people use some form of TFA going forward, but even that, I'm not a lawyer of course, but I might think that that would open them up to being sued for past losses, where people could claim them negligent for not requiring TFA then even though they should have known it would do a better job at stopping fraud.
End of the day, people need to understand what bitcoin is. It's a means of transacting that is absolutely irreversible. And they need to be responsible. There is zero reason why people should leave balances in anyone's wallet but their own. Doing so opens then up to too many risks. Or someone could take a stand and sue gox for its negligence. But that would cost a lot, require a trip to Japan, and its uncertain that anyone would even find them negligent rather than the person raising the suit for not taking adequate protections. Who knows, maybe a jury (If they have them in Japan) would find in the plaintiffs favor and gox would take steps towards making sure customers removed their excess balances from their books.
