It's an issue - no doubt. With the likes of Fidelity now doing custody, the hope would be that this can be improved on.But Bitcoin owners have lost out a few times due to exchanges going bust or being defrauded. So there is a significant difference.
Bitcoin hates regulation when it remains decentralised. i.e. if you or I are moving it about - and take responsibility for custody, then any loss is through our own incompetence.Bitcoin hates regulation - but bank customers benefit from it when things go wrong.
With the likes of Fidelity now doing custody, the hope would be that this can be improved on.
Yup, I used Fidelity as an example. There are more established guys coming into the market who will do custody at a retail level also.Fidelity will only provide custody services to the institutional players and will be charging for that service, so while likely very secure once there, you'll still face risk with multiple steps required to pass your holdings through the exchanges to to one of the participating institutions, who will in turn transfer to Fidelity. You will have to reverse those steps then if you want to spend your holdings.
So you do see crypto achieving zero price in line with its value.The problem will be fixed when there won’t be any need to sell crypto into fiat
Yeah, these thefts aren't attacking a weakness in bitcoin itself, but the mechanisms for moving and storing them....
Are the mechanisms not a feature rather than a flaw of Bitcoin. They are built into the fundamental design.
Relying on a third party to "hold" your Bitcoin is a compromise in itself - really the only secure way is to hold your own wallet. But that can have it's own risks.
If you were aiming to transform the world of financial transactions, I don't think making it difficult to impossible to deal with fraud would be high up the must-have feature list.
Keep dreaming your Dukeness. Crypto is here to stay - it isn't going anywhere.So you do see crypto achieving zero price in line with its value.
In no way is it a good thing for a decentralised crypto to move away from being immutable. If that is facilitated, then we can forget the whole idea (when it comes to a crypto like Bitcoin at least). People can custody their own crypto. It will take a completely different mindset as we've become conditioned to having wealth stored for us. Funds can be split between cold storage and hot wallets.however, in the case of fraudulent transactions, if you're the one losing out, it's quite a bad thing. If you were aiming to transform the world of financial transactions, I don't think making it difficult to impossible to deal with fraud would be high up the must-have feature list.
Remember, a few nation states are pushing for key recovery mechanisms for surveillance purposes, and crypto advocates tend to push in the opposite direction.
In no way is it a good thing for a decentralised crypto to move away from being immutable.
Other than that, if you're talking about centralised exchanges, then they should be regulated like any other centralised entity. There's also no reason why consumer guarantees can't be built in (in the same way as bank guarantees). That's just for those that want someone else to custody their funds. People have the option to go either way.
Be aware also that in the U.S. alone, merchants are losing $190 billion in credit card fraud. Having 90% of the info needed to steal funds written on a credit card is far from a secure system.
For sure. It's a case of prevention being paramount rather than cure. If anyone gets their mits on crypto, more than likely they will have the where with all to spirit it away after that.Agreed, that would defeat a key purpose of Bitcoin. But to achieve that you need to accept that such a feature almost completely limits the ability to detect and respond to fraud.
It depends what you mean by control. When it comes to centralised exchanges, that to me is little different than the conventional world of banks, etc. In that instance, I'm quite happy that they should be regulated to the same extent. I guess that could take many forms. Auditing and reporting to ensure that they have a certain standard of system in place to counter hacking and the same when it comes to liquidity, etc. If you mean control over the crypto's themselves, that can't happen. If it does, crypto is compromised and we might as well call it a day. Just like the point about immutability, key to decentralised crypto is the fact that governments can't tamper with it.The challenge I see there is that to facilitate such guarantee schemes and regulatory oversight would mean giving governments agencies some degree of control where many crypto advocates very much want to keep them out of the picture completely.
I don't think we should conflate fraud at POS with that within inter-agency systems like SWIFT I mentioned above. But at the consumer point, low level / small volume (less and 0.1%) fraud is an accepted price to be paid for the credit card model, ease of use, scale in the order of 10s of thousands that of Bitcoin, instant, almost universally accepted, low cost transactions, purchase insurance, etc. Even then, the protections offered by the providers mean the consumer very rarely loses out in any of these cases, even where they have been careless themselves. In many cases fraudulent transactions are reversed before the fraudsters can take money out of the system.
... As a percentage of overall volume, credit card fraud runs at 7% - so it's not an insignificant amount.
It depends what you mean by control. When it comes to centralised exchanges, that to me is little different than the conventional world of banks, etc. In that instance, I'm quite happy that they should be regulated to the same extent.
Accepting all that to be the case, I just wanted to remind people that fraud does happen in systems we are all completely familiar with - in this example, credit card fraud. As a percentage of overall volume, credit card fraud runs at 7% - so it's not an insignificant amount.
Leo not sure you have your decimal points in the right place here. I think 7 bps is .07% as per EmmDee. Credit Card fraud in UK in 2007 (Wiki) was £535m so I presume in US it is in the $billions.Where are you getting 7%? Industry monitors such as the Nilson Report have documented losses of 7 basis points in the past, but that's 0.007%. The 2018 report pointed to 0.01% losses in the US market. 7% would be more than $420B in the US market alone where the number is around $6.5M.
Edit: EmmDee, thinking the same here
Yup, you're quite right. Have edited my post to reflect thatI think that's 7bp i.e. 0.07%
Do you mean what exchanges can and can't do with crypto? ...in terms of their systems? I've no problem with that. That would be between the exchanges and the relevant authorities. However, any demands to change a cryptocurrency itself - that would never end well - and defeats the purpose of going down this road ten years ago.And that's where I believe the challenge lays. In order to employ similar regulation, then governments are going to have to introduce legislation on what you can and cannot do with crypto, how transactions are managed and overseen. The level of governance and oversight required goes against what many crypto advocates really want.
Leo not sure you have your decimal points in the right place here. I think 7 bps is .07% as per EmmDee. Credit Card fraud in UK in 2007 (Wiki) was £535m so I presume in US it is in the $billions.
Do you mean what exchanges can and can't do with crypto? ...in terms of their systems? I've no problem with that. That would be between the exchanges and the relevant authorities. However, any demands to change a cryptocurrency itself - that would never end well - and defeats the purpose of going down this road ten years ago.
I have no issue (to a large extent) with regulation of centralised points such as exchanges. However, I'm not sure how they would stop transactions. They can force exchanges to lock up peoples funds - but I certainly won't be part of that nonsense. I had a bank account closed without notice last year - and they wouldn't even give me a reason why. I'm pretty sure of the reason (because I had the audacity to transfer in funds that came from a crypto exchange) - but wanted them to spell it out. Not a word from them - and it caused me no end of problems. If this is the banking model we have going on, I certainly want things in a way that they can't pull This post will be deleted if not edited to remove bad language with my own money.Maybe I'm just cynical, but I think once governments start meddling with regulation in this area, they'll immediately go beyond just ensuring exchanges have appropriate security measures in place to protect against hacking or compromise of the exchange itself and like FIAT impose rules around who can transact with who, etc. that will go against the crypto ethos.
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