Answering your original question another way, (why compared to the dollar)  the dollar has had a HUGE headstart on bitcoin

People now accept/love dollars, so bitcoins have to somewhat acknowledge that. It would be silly not to. That doesn't mean that can't change.

Sure, profit is one thing, but not the only thing. There are many bitcoiners that do find it convenient to buy things with BTC, and I'm not only talking about drugs. There was a thread here I can't find where users listed different ways they use BTC. It was a decent length, and that will only increase.

Bitcoins are a better payment mechanism than current pay options for different reasons. That's what really drives this.

Hey, opentoe, I'm actually trying to explain Bitcoin on another forum and a similar question came up. I'll re-post my answer:

I say a scalability problem may not exist.

The fact is transactions on the core Bitcoin network are NOT ideal. Such transactions are slow to confirm, and are not user friendly for more mainstream use.

What makes far more sense is eWallet/PayPal-esque transactions. Pay or receive amounts to/from anyone with an email address. The transaction is instant, and the experience as user-friendly as you like.

The majority of Bitcoin transactions should be rows updated in databases of such services. Typical transactions are not going to be large, so such services don't need to act as banks and store big Bitcoin balances. They are instead streamlined to be transactional. I estimate 70% of all Bitcoin transactions could and would be better serviced this way.

People can still store the majority of their coins offline, or however they like, and deposit/withdraw from the eWallets (infrequently) as necessary.

No, but I might keep some there; and some in my backyard behind the doghouse of my 130 pound, foaming-at-the mouth rotweiller, and some hidden in my attic with booby-trapped access, and some in my fireproof safe, and some in a bank safe deposit box, and some in the bank, and some...

Automatic withdrawal to a bitcoin address is not a good idea. What if the user has lost the private key or had it stolen by malware?

Wait, are you saying you will eventually get to the U.S. market with the BCC cards? And how long will that take?

If so, does that mean people in the U.S. can get the BCC card and use it for credit card purchases or withdrawing cash at ATMs?

I agree 100% with everything except the size. I think the size should be the same as fiat bills. For one thing it will sell people on transitioning to their use (hey, paper bills... I recognize this!), and another is physical benefits of a standard size note. People can keep up with them better, for example, knowing the feeling of them still in their pocket etc. Smaller equals slightly easier to lose/locate, and then there is the unfounded but very real instinct that bigger always means higher value.

Remember credit card sized things are usually hard/rigid which helps handling, but these will likely be printed on regular paper (or otherwise be more of a pain to manufacture).

Very true.

Nice! Thanks for being proactive and remaining a positive Bitcoin force.

Please also make it unmistakably obvious to users what security practices and settings are recommended.

But Mt.Gox is not a bank, and doesn't solicit deposits. They are an exchange. People don't have to store their funds there. If they want interest for their money, or don't want it invested don't store funds there. The only reason people store funds there is because it's convenient and (currently) free.


Why would you think not?

http://money.cnn.com/2011/09/26/pf/bank_fees/index.htm


And that's talking about dollars. You know, those paper things that can be put under your mattress and next to a shotgun - low tech storage, in other words. Bitcoins are a lot harder to understand and know how to secure.


People need to learn to take responsibility for their own actions and stop expecting their hand to be held. Bitcoins are not useless because of scammers and theft. Bitcoins allow people to send millions or more worth of value around the world at little or no cost, and without permission. That won't change.

As far as services go people should have a right to expect that services will do everything they can to protect assets and the trust given to them for doing that. Of course there are safe ways to buy, sell, and store bitcoins. For example, face to face purchases remain an option, and bitcoinarmory.com is IMO the safest way to cold store bitcoins in existence.

How so?

I've talked about a few things Bitcoin needs infrastructure wise before becoming more mainstream. They include:

1. A simple person-to-person pay service (sort of a PayPal of Bitcoin)
2. A Bitcoin bank

The person-to-person pay service is beginning to take form in the shape of eWallets like WalletBit, and things that act like eWallets like Mt.Gox. However, I specified that such service is NOT a bank, and should perhaps cap stored balances at say 1K bitcoins. It's precisely because of the added risk and responsibility of storing funds that I said that.

A proper Bitcoin Bank (like flexcoin), on the other hand, is different. Such an entity is designed to store funds. Accordingly, they should stipulate in clear terms to their customers what their liability is for stored funds. If none, that's fine, but say so clearly. Otherwise, say how responsibility plays out and charge account fees if necessary to cover it all. Clients would gladly pay it.

The ultimate responsibility of someone's money lies with them and what they do with it.

The API key was used as a password to LastPass, which in turn had the password to log into Mt.Gox.

If I'm not mistaken Mt.Gox lets users apply two factor authentication if they want it.

I don't like the idea of mandating actions (it seems a bit opposite of Bitcoin free market theme), but I do like the idea of delayed withdrawals. That would be good if users could choose the option.

Of course, Mt. Gox, or anybody else, is free to apply whatever procedures they wish. I think a recommended security setting notice and warning would be good too.

I meant people seem to think hot wallets are the reason bitcoins are vulnerable, but wallets are only one potential vulnerability. This latest theft was due to sloppy password handling, and 40K USD was stolen in addition to 40K BTC.

Hey all,

Theft is not all Bitcoin:


http://finance.yahoo.com/news/ceo-troubled-iowa-brokerage-arrested-174838082.html

Yes, but you have to live with yourself.

It depends on amount of volume. A site like MtGox having the majority of bitcoin exchange probably does, because manually processing transactions would be labor intensive.

But remember it's possible to secure a hot wallet, and this latest theft had nothing to do with a hot wallet all.

Awesome, thanks! Glad to see things continue to move forward for Bitcoin.

While scams and thefts are unfortunate setbacks one group (and their mistakes) is not equal to the entire Bitcoin community.