Quoted from pezpunk:
sure, i understand that. as with physical security, in digital security, the only way to make something 100% secure is to do without it. but we are not talking about bitcoin in a void. we are talking about it in relation to physical currency, and the security risks associated with that.
Then I think we agree that the statement "unhackable" or "100% safe" isn't your best choice of words Especially in relation to physical currency. You can't take the physical currency out of my wallet. Electronic trading of that currency of course is riskier.. but if you are focusing on the digital wallet, its still inferior to physical assets in regard to remote risks. Of course, it adds extra access controls compared to other electronic formats... but as soon as we are talking about using bitcoin for convience transactions... all those layers of security will eventually be weakened in favor of access/speed. Like putting a wallet app on a smartphone, etc.
Quoted from pezpunk:
true. security itself is not enough to guarantee the coin itself will retain value. there are lots of other factors at work and nobody knows the future. my point about the wallets was just to point out that you don't keep all your money at Wal-Mart, you keep it somewhere relatively safe, and you bring it to the store when you're ready to buy something. i was trying to clarify wallets versus exchanges, because people were talking about exchanges getting hacked.
Yes, but unlike government backed currency, at least there is no regulation and backing in those exchanges. And much of the "value" of your coins is being determined by these non-regulated, unsecured agents. It's free market to the extreme... which isn't always good. While all the theory on the integrity of the bitcoin itself is all fine... people aren't actually buying/selling that. They are trading based on a market worth... a worth being established relative to other assets... by pseudo trusted entities. This is a benefit, but also a great risk. And given the entire model revolves around making money by moving almost imaginary things... the deck is stacked in favor of people ultimately trying to squeeze and maximize their personal gain.
The math behind mining and tracking transactions itself do not set a market value relative to other currencies. This is the side of the equation that relies on 3rd parties.. which are not incorruptible.