Can UK bank protocols protect Bitcoin users?
David Gilson over at CoinDesk tries to offer a balanced perspective on traditional banking and the safeguards they implement for security.
David Gilson over at CoinDesk tries to offer a balanced perspective on traditional banking and the safeguards they implement for security. These he contrasts with the safeguards Bitcoin lacks and suggests that some improvements could be made to the digital currency.
First, he suggests that the UK’s financial institutions’ safeguards against fraud and retail disputes offer a level of security that Bitcoin does not.
Next, he discusses savings accounts and how government guarantees protect against losses of up to 85,000 GBP per customer, per institution. So, if a bank goes bankrupt, the government will cover savings up to that threshold for each customer. As we’ve seen in Bitcoin, those protections do not exist, and if a shady exchange or black market goes offline with your Bitcoins in their wallets, sorry for your luck.
Then, he cites the chargeback feature of debit cards, which allow UK consumers 120 days to challenge and reverse a transaction. Bitcoin has no chargebacks possible within the currency. Credit cards are protected under the same UK legislation, and PayPal operates much in the same way, though not as a result of legal compulsion.
Finally, UK rules stipulate that merchants must play fair, more or less, although rules such as the Consumer Protection from Unfair Trading Regulations 2008 do not directly address currency trading.
Bitcoin’s decentralization and the fact that “trust has to be earned” among adopters are weaknesses, he writes, that the above regulations account for in fiat currencies.
I’m afraid if Mr. Gilson is throwing around terms such as “trust” in critiquing Bitcoin, though, he has fundamentally misunderstood something.
CoinDesk commenters were having none of it, as well. Said regular commenter SpottedMarley: “Bitcoin needs absolutely nothing of the sort to be successful. Automobiles didn't need saddles and water troughs when they replaced horses.”