Topic: Is Cryptographic Trust Enough? (Read 1503 times)

i am new member on this site, Greetings all, please guided me to get bitcoin here

It does.  You just haven't been paying attention.

Because it is heavily regulated. More security is bought with (limiting oneself) freedom. Also traditional banking suffers from some other security issues (government robbery taxation, violation of privacy, forced bail-ins, monetary reforms, state collapses...) which Bitcoins offer protection against.
It is up to everyone to choose. Both systems should coexist and display its advantages and disadvantages. It is easy to say that something is "better" or "necessary" if you have no comparison.

Good point.  If fiat exists to such a percentage in digital format, why doesn't traditional banking suffer from these security issues at the same level?

You can't put all of cryptography technologies into one bag and make everyone put opinions about it. General idea is great but we need proper way amount of people or trusted enough company that would work on it.
To make it even more complicated actual cost of such services would be rather hard to define and might be even too high for most of consumers.

In general, even though certain technologies are safe, we can't be sure about it all the time. At some point there might be hacker who would figure it out. Of course such events are less likely then possibility someone would rob your house. at one end we need dude with crowbar, at other group of well skilled and experienced people. For sure it is still better idea then keeping all of data on your computer without any kind of protection. Also according to me, best way to protect yourself is to not keep all of you money at one place. Rather old, traditional way but for sure it works. Recent events related to actual safety of money were not important because bitcoin is less safe then other solution. Those events are important because in the future, whenever someone would trust certain site or group too much, neglect safety, this person should recall mt.gox.

Reputation is everything, so does reputation of any crystallographic company.

economists estimate that only 8 percent of the world's currency exists as physical cash. The rest exists only on a computer hard drive, in electronic bank accounts around the world.

http://www.howstuffworks.com/currency6.htm

I'm work in a small business and about 90% of sales goes through PDA machines ...  myself.....well I dont have more than 10 quids in my pocket for ages ... every time I lost my debit/credit card .. I rush to the bank agency because I simple don't have enought banknotes with me...

With no machines (ie. miners) to process your transactions, you have only a piece of paper with a QR code.  No one will accept that as payment.  Bitcoin does nothing as a protocol in a vacuum.  It has to exist inside of a computer in the real world to be useful. 

Cash on the other hand, requires nothing additional but itself.  You hand me product, I hand you cash, we are done.  The downside of cash is that it does require proximity or trusted courier, (ie. banks). 

Bitcoin solves the proximity and courier problems by bringing computers and networks into the equation.  We can't then ignore them and only believe the protocol is the security of bitcoin. The network is the currency as much as the protocol.

We seem to further confuse the situation by pointing fingers and saying it's someone else's problem to solve.  For the adoption of bitcoin the protocol, this is everyone's problem.  The only answer can't be "Don't trust bad people with your BTC."  We have to trust services with our BTC temporarily to do business in a lot of case.  We've seen some supposed pillar services of the community famously blow up or implode over the years not to mention the last few weeks.

As banks are the infrastructure fiat/cash lives in; computers and networks are the infrastructures digital currency lives in.  Everything that cryptographic trust is built on assumes the hardware it is running on can be trusted (and by proxy the owners).  It has been proven time and again this isn't always the case.  Systems are compromised all the time.  Whether it be outside from a hacker or from internal theft. 

Currently cash and banks don't suffer to the same extent from these problems.  They use the same internet we do, so it can't be just technology.  Your checking account balance doesn't disappear overnight with no paper trail as has happened time and again to customers of various bitcoin services and exchanges.  Banking is so heavily regulated, the money leaves a trail wherever it goes.  Where did all of the Flexcoin funds go?


 

you just need a public key, you can print it out if you like ... anyone can go to the blockchain and say .. yep I can see you go it .. do you have a private key? then you just need to sign a message with a private key to prove that you control the bitcoins  ..

And yes the system is strong because sha and elliptic curve has proved it already (not only to bitcoin, a very good implementation) but on almost any financial cryptography standers .. if you can break it... you are the most powerful man in the world ... ( you'll also be able to crack almost any traditional bank system too )

In time, there will be businesses in BTC world offering some level of insurance and trust for a price (both monetary price and price in losing of some freedom for security).

My point is bitcoin doesn't exist on paper.  It exists as bits inside a machine.  Without that machine we cannot transact business to even write to the blockchain.

Cash can be transacted hand to hand.  Bitcoin can't.

Focusing only on the math and not the machines and implementation is missing half the equation.  

Bitcoin the currency and protocol has never been attacked.  I mean it is like saying I saw a 7-11 get robbed so obviously there is a critical flaw in the dollar.  People like to point out that banks are insured however the cash in your wallet isn't insured.   The dollars you give to a ponzi operator aren't insured either (dollar based ponzi schemes defrauded investors of $50B last year).  

MFGlobal defrauded investors of roughly the same amount as MTGox.  Both were bad companies where depositors misplaced their trust.  Don't put your Bitcoins in the hands of someone else and then be surprised when they "disappear".

The solution isn't in an improved protocol because the problem isn't with the protocol.  The problem is human both bad humans and humans who make bad (risky) decisions.   The solution is in better education and users demanding more from service providers and merchants.

As for your grandma ... give it twenty years.  

Bitcoin's cryptographic trust model seems to place too much trust in cryptography and too little acceptance of reality.  Network and user security is a virtual wild west and likely forever will be.  The moment a device is connected to a network, it is vulnerable to intrusion.  That in itself is where the breakdown in trust starts.  Black and white hat hackers have been playing leapfrog for state-of-the-art since the beginning. As we continue to pour more of our lives into the ether this will go on.

The problem we keep seeing may not be with the protocol itself, but the implementations.  Bad code interfacing with the protocol (ie. at an exchange), lax security update procedures, known OS holes, theft/'insolvency'... these all are real world barriers to the widespread acceptance of bitcoin.

A major drawback to the decentralized nature of bitcoin is that some very critical tasks (ie. security) are largely left up to the end user.  Today this includes trolling these boards to stay on top of security issues, which exchanges/services/merchants are legit/solvent, keeping wallets up to date, etc.  Mainstream Anytown, Anywhere doesn't have time for this.  It's just money, we're used to taking these things for granted (and paying for it).

Will bitcoin ever get to the point where I can trust my grandma with her pension?