Why is the stock exchange also the bank? Just a newbie with some thoughts.
I really think BTC needs to utilize a centralized computing model for storing people's wallets. It is ridiculous that someone can gain access to my PC and steal all of my money because they stole my wallet file.
What am I talking about?
I had my wallet stolen from me two months ago while attending a concert my wife was in. I phoned the bank as soon as I realized I lost my wallet. A week later it turned up 2 miles across town under a toilet tank in the men's washroom of a city market. By that time I had canceled my credit cards and my debit cards and I had nothing to worry about.
Your wallet should not be storing all of your coins. As the old saying goes "Don't put all your eggs in one basket." This saying couldn't be more accurate in the world of bitcoins. Everytime that I hear of someone having their wallets stolen I cringe because in the real world we have developed security mechanisms to help us with managing our money. I realize that the liberal folks that like the anonymous nature of bitcoin will argue that you can not achieve this. I really think that you are a bit misguided because bitcoins are easily tracked or rather the user using those coins is as well. This is clearly evident from the hack fest hitting the community recently.
I do not understand why the stock exchange is being treated like a bank. The stock exchange is not a bank and should not be considered a bank. Let me explain a little bit more. The average person has a bank account which they store their money. They usually have a chequing and savings account. The chequing account gives them access to immediate funds that they may need during the day. Usually the bank imposes a LIMIT on the account for two reasons 1.) Security measures to prevent someone from draining your account and 2.) Investment power. The bank typically invests using your money and sometimes banks will actually give their users a cut of the money that they are making off of the investment. Furthermore, banks offer insurance to their clients for incidents where their accounts may have been compromised. There is a certain level of security completely void from bitcoin. I want a safe place to store my coins. I want to pay for that level of security and assurance.
I've seen many people say that what has happened with the community is because "Banks don't do business online" and I have to say that this is the most ridiculous comment I have seen anyone post. All of those bank tellers you see serving people have direct access to the internet nowadays and usually use the same online banking system that you do from home to manage your money. Sure they have access to secure terminals for things like SWIFT transfers but for the most part their internal management is happening over online systems as well.
I am thinking a two part approach to the wallet issue:
1.) The wallet you have sitting on your hard drive is akin to the wallet sitting your pocket. Sure it can contain all of your money if you want it to but eventually that wallet becomes too big to manage in your pocket and you need to store the money somewhere else. So for the first point you can keep your wallet and continue to do things as we were.
2.) The bitcoin client has an option which allows the user to store most of their coins in a virtual bank which charges a revolving fee to store and secure your money for you. At any time you can withdraw more coins and fill your wallet up if you like.
How would such a system work?
I believe the server infrastructure for the bank needs to at some point have an offline system which can not be hacked into over the internet. I am thinking that literally a server in a vault which is communicated to only via 256bit encrypted blue tooth by an agent standing on the other side of the vault. Essentially, the virtual bank is housed on this server. Any transactions that happen over a certain limit on your chequing account would require immediate approval by you via email or SMS text. In terms of insurance the virtual bank would actually allow clients to insure their account and if something bad happens then the insurance would give clients uneasy about using the system a level of assurance that simply isn't here right now with bitcoin. The server would literally be housed inside of a safe that would be equal to any safe being used by the banks today. The entire operation would be secured with real security.
It is ridiculous that some guy working out of Japan from a virtual office stored passwords using MD5 with $17 million hinging on a rubber band and a paper clip. Talk about vulnerability.