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March 23, 2015, 02:24:23 PM |
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Your wife is right to not just accept a more secure claim easily.
I guess the greatest point to make is that the banking system is also heavily dependent on software and involves a lot of use of completely opaque software-- even opaque to the bank itself-- where subtle backdoors could be introduced and fraud could, in theory, be conducted which is indistinguishable from your normal activity, meaning that the banks normal 'fix it after the fact' might not work. So I don't think it would be correct to say that traditional banking is necessarily in a superior position with respect to the particular attack vector of subtle software backdoors.
Bitcoin is completely open and transparent software updates to it are reviewed by a great many people. We have some evidence that critical intentional errors would be caught on the basis of the less serious accidental errors which have been caught. Going further, even if a bad version is released, nothing pushes that onto users systems but the users themselves. New versions take a fairly long time to become widely deployed which allows time for additional review and analysis.
You're also right to point out that if there were some catastrophic failure which everyone agreed was a failure the community of Bitcoin users wouldn't just say "oh well, we have to live with it". Actions external to the system could correct most things, though it's hard to reason about that because it's assuming the system failed and it'll be upto messy human politics to resolve things.
Ultimately I think the best description here would be to say that Bitcoin is differently strong from banks. It has different weaknesses-- it's believed to be more sensitive to software engineering and to end-user security, and it's believed to be less sensitive to political abuse, uncertain economic policy, and various kinds of uncasual fairness. In practice Bitcoin could be either more or less secure than traditional banks, depending on your own practices and exposures (e.g. if you make large cash transactions you are more exposed to random seizures with banks, if you get malware on your computer you are more exposed to Bitcoin theft); and unpredictable activity going on in the wider world (compare vulnerabilities in Bitcoin software to the cyprus banking haircut).
From the perspective of straight computer security banks generally have awful security, but because they have almost limitless power to seize funds and reverse transactions in practice their security is usually okay. But not always--, the same unlimited seizure and reversal power contributes to many of the awful stories of completely unjustified civil forfeiture (and other kinds of adverse action without due process), or just the huge cost and collateral harm when the bank does make an error give reason to think carefully about how you manage your funds. The traditional banking system also leaves you exposed to monetary policy, where inflation continually devalues your money to the benefit of powerful third parties... Today, Bitcoin has substantial volatility risks and risks related to it being new and niche, but these and other reasons are points that may make it ultimately a productive and widely used tool for society.
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