[Cryptography] Bounties

[Nico Williams]

On Thu, Mar 6, 2014 at 6:41 PM,  <dan at geer.org> wrote:
> So, Jim (et al.), you say "thief" w.r.t. Bitcoin.
>
> What odds do you give that the theft was a state-level op to
> derail the Bitcoin economy, i.e., that making money was not the
> object, rather, let's imagine, that this op hedges the vulnerability
> of fiat currency to disintermediation.

IMO: slim to none.

Why wouldn't criminals want to make off with this bounty, if they
thought they could?  What are the odds no criminals thought to look
and see?  For that matter, what are the odds that insiders at the
exchanges in question weren't involved?  Insiders are generally the
biggest threat!

Occam's razor and all that.

Consider the incompetence displayed by the various exchanges.
Something bad was bound to happen.

And if it was a covert state op, well, so much the better: better the
crisis come sooner (so we can limit the damage) than later.  Why
aren't we celebrating these failures?

There's a common misconception that fiat currencies are the worst
currencies, or that non-fiat currencies won't be subject to money
creation via fractional reserve lending, or that maturity matching
will solve all our problems w.r.t. systemic banking crises.  Or that
somehow cryptocurrencies can blunt Leviathan (spoiler: it can't,
because Leviathan has a de facto monopoly on the use of force).  This
is a mistake.  Currencies get their value from others' willingness (in
the near and far future) to take money from you and give you services
and products in exchange, and this depends on there being people in
the future to trade with.  Today's global financial crisis is really a
demographic crisis -there are not enough young people to trade with,
to invest in-, not a crisis of fiat currencies.  Those who think fiat
currencies are teh worst are likely to see conspiracy theories in the
failures of alternatives.  I just think that fiat currencies, coupled
with a constitutional democracy, are the worst currencies, except for
all the others.

We will end up having cryptocurrencies in widespread use, of this I'm
sure.  I'm not sure that they won't be fiat cryptocurrencies (I don't
think that need be an oxymoron) or that we won't still have fractional
reserve lending.

We'll need to think about using multiple devices to execute
transactions: for escrow purposes, and to mitigate local security
issues.  This business of having "hot wallets" at exchanges is rather
scary to me.  Yes, I know, online banking and payment with fiat
currencies is no better.  We're still at square #1 when it comes to
online payment security.  Heck, we're still at square #1 when it comes
to plain old paper checks.

If only smartcards for payments were a viable option...

Nico
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