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10 sats \ 8 replies \ @satoshisat OP 11 Apr 2023 \ parent \ on: How do you foresee the layman keeping their bitcoin secure? bitcoin
Yeah, no. If personal responsibility is what you're going to tell someone when they've lost all of their life savings because they made a mistake then Bitcoin will never take off. The rate of people losing their savings will eclipse any other benefit.
Let's not be naive here. There is a benefit to the fiat system and that is the protections it has in place against scams and theft. I know that if someone steals my credit card info and uses it, I will not lose any money.
What I want to try and figure out is if it's possible for Bitcoin to have some sort of similar protection. Maybe it's not something that exists today but something that is being worked on or can be worked on in the future?
Maybe the answer is that these two things are mutually exclusive. Maybe Bitcoin can't be Bitcoin without it being unforgiving. I hope that's not the case because if it is then I really can't truthfully see a future for Bitcoin.
There will likely be insured custodial "banks" that offer financial services. Those deposits would probably come with a monthly fee to cover the insurance costs, rather than bearing interest like today's bank deposits.
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So I was thinking that as well but then what stops Bitcoin from following in the path of fiat once you introduce "banks" into the equation? Would the bank hold your private key or would they hold one key of a multisig? I guess if its the latter, then this would prevent the bank from falling into the fractional reserve trap that fiat banks are in.
So maybe that's the answer. Bitcoin banks that hold one key of your multisig wallet and charge a fee to cover insurance. One problem I see with this approach is that the fee would have to be pretty high to be able to cover the potentially massive losses that some people may incur. Hmm...
Another approach could be a bank that sends funds in time locked fashion to allow the owner to cancel the transaction if fraud is detected. The only problem with this is how long would the time lock be and then this would slow transactions down considerably.
Is anyone in the Bitcoin community working on this problem? Are there any promising solutions?
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I think what might stop the old gold-fiat-collapse type pattern is the inability to confiscate Bitcoin. There probably will be credit bubbles built on top of a Bitcoin standard, but since people can always opt to manage their own Bitcoin accounts the whole system won't turn into a house of cards.
As far as specifically how these institutions will be set up, I don't know, all of the above probably. Whatever is possible on Bitcoin and meets some consumer preferences will be done.
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This is a good point but I would argue that any type of "bank" would have the ability to confiscate bitcoin. For example, if the bank possesses one key of a 2 of 2 multisig account then they can just refuse to provide the key to the customer if so coerced by a group or government. If the bank possesses only one key of a 2 of 3 multisig account and the customer possesses 2 keys then the bank only serves as a backup in case of a lost key and doesn't solve the problem of the customer having to be very careful not to get scammed out of their keys and bitcoin.
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Well, banks now can confiscate people's money and almost no one cares, so I don't see why that arrangement wouldn't continue.
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Exactly so why would a lay man switch to Bitcoin as opposed to staying with fiat? You cannot implement methods in Bitcoin that have the same consequences as fiat otherwise you remove any incentive for people to make the move.
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I'm imagining a scenario where fiat has collapsed and major institutions have made the switch to Bitcoin.
However, Bitcoin has many advantages beyond self custody, so there are other reasons this could come about.
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Honestly, I see the collapse of fiat to be extremely unlikely and if it did come about, lead would become the currency of choice if you catch my drift. So that's not something I believe to be a good catalyst for Bitcoin to succeed nor is it something I would wish for.
The other reasons are what I would consider as more likely and why I posed this question to begin with. These "other" reasons need to be compelling enough for the masses to really adopt Bitcoin and I don't think all of these "other" reasons combined will matter if the lay man can lose everything in the blink of an eye due to a simple mistake.