Bitcoin Forum

Hey All

This is my first post here (so please be gentle with me) I've been following these forums and the BTC community for a while now - I'm a developer and there's a niche market in BTC that no-one's yet built a service for, so I'm thinking of building it. However, in all my research there's been one question that seems to undermine the idea of the currency.

Is there no accountability?

For example, let's say that one day BTC is added as a payment option for eBay, currently with PayPal if you are defrauded out of money you can just go straight back to PayPal and say "Hey, sort this out! Someone ripped me off" - but with BTC, who would you go to?

Similarly, if some peice of malware ripped of hundreds/thousands of BTC followers and pocketed the BTC into their own anonymous wallet - then those thousands of BTC followers would be fundementally untrustworthy of the system from that point forward.

These scenarios are analogous as to how the average consumer might see the BTC network and have reason not to "trust" it, and therefore not to adopt it as a method of payment (i.e: if my credit card is stolen, I can just get it cancelled)

You'd be on your own :D

The fundamental flaw here is comparing BTC with credit cards, bitcoins are comparable to cash, not to credit cards

There seems to be about 5 standard answers to any and every bitcoin question that arises.

One is "think of bitcoins as cash".

No not really... not much accountability, actually none at all.

All this means is that websites/ebay sellers/etc will have to become akin to brick and mortar/tried and true/mom and pop type stores in the future. This will happen. Ratings sites are just getting started.

When I send a payment to newegg.com for example... I have no doubt that my order will be shipped with insurance and a tracking number, and if it's not here in 3-4 days I can call them and find out what's up within 5 minutes.

For the same reason that people don't frequent the new restaurant in your neighborhood, people will be scared to spend cash at a new web establishement on the internet. Thank fucking Christ! People will now actually begin to think twice about where they spend their money!!!

See some way too good to be true deal on a shady looking, 2 month old, .cn domained website? Pass it up.

Want to buy the same product from a store that all your friends rave about? Go for it.

Why not? You do so in public every day.

I see what you're saying (about BTC being just like "Cash"), but this is another thing the average consumer won't "get"

• It's virtual currency that can be traded over the internet
• But it could be lost, destroyed or stolen just as easily as cash
• BTC isn't like cash at all

Too many consumers this would seem like a backward step from regular money (why invest in BTC when my money's safer in my bank?) - i.e. the consumer doesn't have the choice of "Put this somewhere safe" or "Take it with me" - at the moment there is no "somewhere safe" and it's a little awkward to "Take it with me" - but still possible

I'm more concerned with the idea that a consumer should have the option to have their wallet hosted somewhere, and for it to be protected from attack, loss, corruption etc... I'm also interested to see if there's a system law-enforcement could adopt to track malicious/fraudulent BTC activity - having no point of "Accountability" is a big issue of those two points

@Gigabytecoin

There's a whole bunch of generalisations in what you're saying, and little room for edge-cases - for BTC to be considered as a "proper" currency, not a hobbyist/geeky thing, it needs to account for edge-cases in a concise way. Would you currently expect Goldman Sachs or any other big investment firm to invest in BTC in it's current form?

I wouldn't, for BTC to be taken seriously it needs a system of accountability - a process by which any serious real-world investor can be assured their investment is reasonably safe. I say "reasonably" because when I invest in the stock market I'm aware it could up/down just like BTC - I wouldn't expect that my investment could vanish because I happenned to install some dodgy malware

- Also, take any sample of people - and you can be assured that a percentage of them will always be stupid enough to buy from the dodgy ".cn" domain name ;)

Something like https://www.mybitcoin.com/ ?

You are free to design and implement such a system as a layer on top of Bitcoin. I would prefer not to pay fees for such a service and will take care of it myself.

If you think such things are free in the current financial system, you are mistaken.

For all that people complain about paypal and credit card fees the repudiation and dispute resolution they provide is very valuable and worth paying for when it may be necessary.

Well, Banks will sooner or later be etablished.
Anyone can be a Bank.

A Bank provides an enviroment to store BitCoins.

You provide trust.


All that is needed is a Website where you can register as User and a wallet which you can access remotely ( which is stored by the Bank, and actually also property of the Bank ) to perform transactions.


A Bank can gain trust by reputation or by legal backing.

@xlcus

Yeah that kinda goes part of the way, you'd need an option to upload/download your wallet - and (here's the biggy) - guarantee it's value in USD if it was lost or stolen

@rezin777

Yeah, that's where the niche is - a layer on top BTC that provides accountability and guarantees the safety of any BTC balance in BTC/USD/GBP/EUR if it is lost or stolen from the service provider

@Lilium

A bank is much more than what you describe, if the bank was robbed would you expect to lose your money?

If you use Bitcoin in its raw form, no, there is no accountabilily. But there is personal responsibility.

With Bitcoin, users are forced to think for themselves whether they trust the counterparty.  

There is no nanny to bail them out if they are gullible, careless, or irresponsible with their business dealings.

Of course, if you want a nanny to worry about those things for you, you can use an escrow service such as clearcoin (https://clearcoin.appspot.com/).  But you'll have to pay for the overhead this incurs out of your own pocket.

The point is, Bitcoin gives users this choice and Paypal doesn't.

this is an opportunity for people to build services on top of the bitcoin currency to protect against the things you mention.

for paper money you can get a fire proof safe, deposit in a bank etc. I'm sure there will be services offered for bitcoins that will secure them for you like banks do for paper money. indeed the mybitcoin online wallet already exists. I can see more of these type of services with more features and added security.

there is https://clearcoin.appspot.com/ (https://clearcoin.appspot.com/) escrow type service for payment protection.

@gringofyx

A bank is nothing more.

If your money was stolen ( to be fair the loss would have to be distributed by all users evenly based on the amount of money they paid in ) it is gone.

Period.

I probably expect my money to be fully returned, but that is just one of the things I compromise into my trust. If that trust is breached the Bank will most likely have a loss in reputation, thus probably customers.


If a Bank goes bankrupt I probably expect my Money back, but I most likely won't get any.



A Bank makes Money by having Money to spend ( donated by the Users ), so mainetaining a good level of trustworthyness is the most important thing for a Bank.
So paying refunds for stolen Money is something a Bank should heavily take into consideration.
But is by no means a law, unless it is somehow legally backed.

I hear you, "clearcoin" and "mybitcoin" look like good services.

Hypothetically, let's say I had a service like those two - let's also say it was a massive service - then let's hypothesize it got hacked and 2100000 BTC were stolen.

I worry about the following scenarios

• If they couldn't be reimbursed, then BTC would lose massive trust - value of BTC may fall
• If they could be reimbursed in BTC - would this dilate the value of BTC?
• If they could be reimbursed in any another currency - the remaining 90% of BTC's would be more valuable - users affected by the theft couldn't get back into the BTC market for the same price their BTC were worth at the time of loss
• Would the police investigate?

Is there another solution that could provide accountability and not result in skewing the BTC network value? (i.e: could the coins be recovered, or flagged as "stolen" in the block-chain?)

@Lilium

A banks money is insured, they pay for that insurance - either to another company or to themselves - if the loss is too substantial, they get a loan to repay it, or go into administration, or get a goverment to bail them out. The trust they're after securing is not Joe Public, it's corporate accounts - and hundreds of years of banking practice and regulation ensures they don't lose money and there is a system of accountability.

Also, it is an impossibility to assume that if some Bandit rolled into my town and raided my bank - that the bank even has the option of reducing my balance - afterall, the Bandit raided the bank, not me - there are government enforced rules to make sure I (an individual or corporate entity) am a financially seperate entity from the bank.

Also, when I choose a bank - "trust" is not at the forefront of my mind - what is at the forefront are the facilities provided

If 21 Million tons of gold were "hacked" and stolen from Fort Knox, would that mean a massive loss of trust in gold?

No, it would mean a massive loss of trust in Fort Knox.

What eBay/PayPal/CC issuers provide is a form of dispute resolution that is (essentially) mandatory for all trades on the platform. Today, there are no professional dispute mediators in the BitCoin economy but there are escrow services like ClearCoin which come close.

The concern over big escrow/mediator services getting hacked is legitimate and I described how to solve it here:

    http://forum.bitcoin.org/index.php?topic=8821.0

It's possible to build a dispute mediator that doesn't actually have the ability to spend the coins used in the escrow transaction, thanks to the flexibility of the Bitcoin protocol. It's not implemented today, but it could be done by anyone who is interested and sufficiently skilled.

I'm not sure I'd say banks "don't lose money". They attempt to limit their own liability or push it onto others (ie, merchants) whenever possible. For example in Europe the rollout of Chip-and-PIN put liability for losses back on to the consumer. If your PIN number and card are stolen, the bank won't cover the losses. Another example: good banks have robust security systems in place like 2-factor signing of wire transfers. Less good banks don't and the result is stories like these:

   http://krebsonsecurity.com/2011/04/fbi-20m-in-fraudulent-wire-transfers-to-china/

That's ignoring the cases where they systematically gamble with their own customers money and rely on bail-outs to recover.

I think the way we market Bitcoin is slowly maturing. The watchword is "flexibility". Current banking and electronic payment systems are rigid and inflexible. They improve at a glacial pace because the system is rife with conflicts of interest, and as a result has a heavy regulatory burden making it hard for newcomers to enter the market.

Bitcoin offers people tremendous flexibility: they can use a model much like conventional banking where they store all their wealth with a third party and rely on the facilities they provide for security. They can use trading platforms like eBay which will act as dispute mediators for you. Or they can take matters into their own hands and rely on their own pre-existing trust relationships and security technologies. They can even opt to become such a third party themselves.

stored somewhere?
store them at mybitcoin.com for example
system-wide enforcement?so what if somebody comes to this 'enforcement organization' and says ' user xxx is not thinking of children(/of $Nation Best Interest/of our IP creatores' - make them thing again about it!!!. And there is arleady P2P rating system for bitcoin

It is technically possible.
If a high profile enough theft occurred it could be returned to the previous owner if enough nodes in the network agreed.
It would require hard coding the theft transaction and return transaction into the client.

All you have to realize is that the free market is the strictest, harshest and the most cruel regulator of them all.

Maybe you can't get the money back if you got defrauded but what we can have is an identification system in place such as the gpg id system for example coupled with a reputation system. And in such an environment the biggest punishment is if you get bad reviews and lose credibility because then no one will trust you and do business with you ever again. And this type of punishment does not only work as a retribution but also as a deterrent because legitimate businesses will have a huge incentive not to ever get any bad reviews if they want to succeed and grow.

So yes there can be accountability, just probably not the way it works in today's corporatist fascist government run system.

@forever-d
The difference between BTC and Gold and so enumerable... where do I start... perhaps the biggest flaw in your analogy is that Gold doesn't have a hard-coded limit

@Mike Hearn
Excellent response, excellent comments and definately well though out response - I'm curious about this sentence


I'll have to take a further look at the protocol, but if it's acheivable then I'd do it

@just_someguy
Does it really just take "enough votes" to get the money sent back? If this is true, then the accountability doesn't just rest with one authority.... the block chain is the source of accountability? is that right?