Topic: Is the trend broken? (Read 952 times)

Sometimes CC fraud is due to insecure computer systems.  Keyloggers can capture your card number when you buy something in your out of date IE.  Your distinction is correct though, with CC the loss is absorbed by the CC or passed on to the merchant and with Bitcoin there is no middleman to take their "protection" money from every transaction.

As JohnOliver has been trying to say, this fraud is _not_ because their computer systems are highly insecure -- feel free to disprove that, I'd be very interested in any reports to the contrary.

The situation with current credit cards and bitcoin as we know it is totally different from user security POV: In the former users (rightfully or not) feel fairly safe because the "system" is essentially controlled by someone else and someone else is going to cover "system failures" (fraud, basically). In the latter the "system"  includes users own computer and if the admin (user herself usually) forgets to update IE... poof goes the wallet when user clicks the wrong link.

 

Maybe not billions of dollars a day, but as far as my limited information goes, credit card fraud is widespread. The credit card companies just accept it and pay for it out of their lucrative profit, which they take from their customers who accept credit card payments. 5% are not unheard of.

We're not talking transaction fraud here. hgmichna claimed that credit card companies have terrible computer security. I'm just asking for some facts to back that claim up.

Credit card companies can reverse the charges and put the cost of fraud on merchants.  Bitcoin is irreversible.

[citation needed]

I don't see how you can have a "highly insecure system" without a lot of intrusions. And I don't see how you can have a lot of intrusions without losing billions of dollars every day.

Problems are there to be solved. Every problem is an opportunity. Let's look at the two problems.

Computer security, or the lack of it, is also my biggest worry. But we can work on that. Look at the credit card companies. They are running a highly insecure system, but it still somehow works. And there is bitcoin banking, as already mentioned.

Now to the other problem, the one of paying for some good, then not receiving it.

One solution to this is that the money goes to a trusted third party. Once the buyer has received his goods, he signals to the trusted third party that the money can now be released to the seller.

Of course this system needs some further refinement, but I think it can be made to work.

Unfortunately, your first point is accurate.  The sheer number of infected machines is massive.  As much as I would like Bitcoin to obtain widespread adoption among the masses, the threat of malware at the moment makes it impossible due to the number of computer illiterate people.  While the average user is slowly becoming more security aware, there is still an alarming number of people that will type the same password on every website, provide details to every phishing email, etc.

Of course, the obvious solution to that is Bitcoin Banking, so the responsibility of securing their money is removed from individuals, just like most other currencies.  The only problem with Bitcoin Banking is that it starts creating the risk of undermining other selling points of Bitcoin.

The biggest threat I see for bitcoin is fear of losing money. If bitcoin gains any significant traction, you can be sure a huge wave of malware targeting wallet file and exchange websites will follow. Just too easy and profitable for scumbags to pass on this opportunity. Heck, that's even what rogue government could do, no need for massive investment for 51% attacks, regulations or new laws. Typical user is too clueless to keep his computer secure. After wave of successful breaches general population will associate bitcoin with money loss. Even easier, just setup fraudulent web shop and run with people's money. Transaction is irreversible, hard to trace and non-punishable (I think, can you press charges for stealing bitcoin?).   

In my eyes, above makes hard for bitcoin to gain bigger significance than micropayment solution, and we need more than that.

Even then, consumers love chargebacks. What good gives 3% price reduce if I have a chance I won't see my shipment ever and couldn't do anything about it? Whole system had to be based on trust, reviews and others feedback, too easy to gamble. Merchants of course hate chargebacks and payment processors and would love to see it go, but in the end they will use what pours them money.

Hope I am wrong.



 

Week after week we have seen bitcoin going down after the bubble burst at $30+. At its recent, lowest spot the exchange rate to the dollar went down to about $2. How far further down can it go?

To tell the truth, it can go down to zero or thereabouts. That can happen after a technical failure, like somebody cracking the encryption, or perhaps after a concerted effort of governments trying to destroy bitcoin. But even the latter seems quite unlikely today.

So the question is, how far down will it go if none of these catastrophic events happen? In my personal view, not far. If you compare the bitcoin price curve with similar bubbles and crashes, like the stock exchange crash in 1929, you can see some amazing similarities. The main difference is that everything goes much faster with bitcoin. What normally happens over years takes only weeks with bitcoins.

The recommendation of one famed banker, asked when to start buying again, was, "When the blood flows in the streets."

The value of a bitcoin today is not determined much by what you can actually do with it (buy Alpaca socks), but by what you will be able to do with it in a couple of years. In other words, we are speculating on the bases of bitcoin's potential, not any actual functional value.

Therefore it is not out of the question that bitcoin experiences another bout of price decay, but I personally have a hard time imagining it going down to $1 again. Why? Because every estimate I can do of a functioning bitcoin sub-economy requires a very much higher value, more like $100 per bitcoin at the least.

Trying to be a chartist, I sense that the volume on Mt. Gox has increased markedly during the last few weeks. Now take it that every time a bitcoin changes "hands", it goes from a bitcoin pessimist to a bitcoin optimist. Get the idea?

Anyway I wish for a stable, slow-moving dollar/bitcoin exchange rate, and with the rise and fall of the speculators this is also going to happen gradually. A successful speculator has to buy low and sell high, which means that he stabilizes the exchange rate. The clueless speculators who did just the opposite and destabilized bitcoin are being thrown out by getting bankrupt. Things can only get better.

So what is my outlook for the near future? I don't think that bitcoin will soon fall below $2, but even if it did, that would only be an excellent opportunity to buy more, because they will not stay below $3 for long. Remember, you have read it here first!