That this was Bitcoin was of no consequence. The hack was of a web site that happens to provide an exchange for Bitcoin, not the Bitcoin network. It could have been an exchange for anything.
Probably. I regret each time i comment here, but I attribute this to the cultural differences between California based NH-users and the rest of the world.
It's not cultural differences between California and the rest of the world. It's simply that your statements indicate you're commenting without an understanding the subject matter.
This incident occurred because (a) people with large amounts of bitcoin do not always store them securely, and (b) the bitcoin market is very small, and therefore can be destabilised by relatively small amounts of money (a few million dollars, for instance).
I should say it again: This monetary system have no authority behind it and as such is going to nowhere. Disclaimer: I work as financial analytic and at least have some knowledge of how money work.
Let me explain what I mean: "Real" money are just a tokens, transferring the "Trust" between one market participant to authority and other market participant to authority. By "trust" I mean that every participants believe that Rules in the market will be followed. When you have N market participants you have N*(N-1)/2 ways to exchange "trust". If I understand correctly Bitcoin is N to N system. When you have Authority there are only N ways to exchange it - Each participant to Authority. N^2 is not scalable at least. And N^2 monetary system might work in theory only when there are no problems like this security problem.
Trust that the participants in the market will behave in accordance with established rules on penalty of punishment of human administered centralised authority is one thing, trust that mathematical truths governing how cryptography works is completely another. If the latter does not hold, the financial institutions which you claim to be employed by are in a lot more hot water than they would be if it does and bitcoin flourishes because of it.
It will take a long time for normal people to understand the implications of the cryptographic backing of bitcoins. Even quite a few people here don't "get it"
You always need governing authority to enforce the rules, just because the cryptography protocol can not handle all the possible situations of human interactions and because money have no intrinsic value. Value is determined by the level of trust to Authority transferred by different communication channels and protocols (encrypted messages, paper with special printings etc.) In the case of Bitcoin it is not necessary to be Government Authority.
This is precisely what I mean by people do not grasp the entire concept of a mathematical law and how it relates to public key cryptography. There are man made laws which are invariably prescriptive, and natural laws (not in the legal sense) which are invariably descriptive, and fallible only to the extent that this is not the case.
There is no authority needed to enforce these natural laws just as there is no authority needed to enforce gravity, it is a force of nature, public key cryptography relies upon mathematics which is also a force of nature. If the math is incorrect the system is insecure, failing that no authority is required to uphold the mathematical dogma of public key cryptography lest faith in the system be compromised. You're working from a set of premises and assumptions that simply do not apply here.
These laws do not require enforcement by an authority;
I pretty well understand both laws of science (PhD in physics) and what PK cryptography is, but you still don't get my point. There is something outside the protocols implementation, that are secure and do the job they are are developed for.
The rules in Bitcoin are enforced by cryptography and the CPU-majority. So long as public key encryption works, and the majority of Bitcoin mining power is put to honest use, the system is trustworthy.
I pretty well understand that there are rules that are technically implemented to be enforced (protocols, cryptography etc) but when there is some problem in the system (hacking, fraud etc.) there is no one to enforce fairness. The value of given currency is not based only on technical implementations but on trust. In this case the trust and Authority is the technical implementation of this protocol (all bitcoin markets participating). The technical implementation cannot self improve. You can only trust that technical implementation (cryptography, protocols etc) are implemented as specified.
If someone hacks into your computer and steals bitcoins, you report them to the computer crimes division of the police. It is not the job of the currency itself to enforce fairness. If someone steals $100 from me, it's not the Federal Reserve that gets involved.
No more than I expect them to return stolen property. If I had a large amount of bitcoins, I'd probably want to insure them, or at least keep the private key in a secure location, such as in a security deposit box.
The police act as a deterrent, and make it more difficult to offload stolen bitcoins without being caught.
