Thursday, September 6, 2012

Why the Bitcoin community needs standards

It seems like nary a week goes by without us hearing about the latest 'Bitcoin hack' story.  Bitcoin, a form of anonymous digital cash developed a few years ago, is hot and valuable and digital thieves want their slice of it. What the thieves don't realize though is that, by hacking sites related to Bitcoin, they are helping to shake the public's trust in the currency and costing themselves money by devaluing it.

So the question on everyone's mind now is 'how do we protect Bitcoin'?   But I don't believe this is the question we should be asking. When a bank is robbed, do we see endless stories about "US Dollar Hacked!" or questions about "How do we protect the US Dollar" (or whatever regional currency is in use)? Of course not! People don't lose faith in a currency when a bank is robbed because they realize the problem isn't with the currency but, rather, with the bank 

It's the same with Bitcoin. When an exchange like MtGox is hacked or a scam happens, it doesn't show a flaw with the currency. It shows a flaw in the security model of the organization that was hacked. And these are flaws that have been seen before and addressed. Banks dealt with these issues long before Bitcoin existed and they have good practices in place to handle them.

So how do we protect Bitcoin? First, we realize that the problem lies not with the currency but with the community. The community trusts people and there is currently no real way to validate that trust besides reputation on the BitcoinTalk forum. We need more. Much more.

What we need is for a group of trusted community members to come together and develop standards of security that anyone wanting to accept or store Bitcoins should follow. Then, we need the community to refuse to do business with anyone who doesn't follow those standards.  These practices could easily be patterned after those the banking industry uses and the problem would be mostly solved. It's really not that hard.

Next, we need public education. The fact that any of us hear 'did you hear Bitcoin was hacked" every now and then shows public ignorance that needs to be addressed. Every time we hear this we need to use it as a means of education. Explain to the person that Bitcoin was not hacked and is safe. Instead, a bank was robbed or a store that had Bitcoins was robbed. Put it in ways they can understand. It's the only way to start breaking through some of the fear and stigma surrounding Bitcoin and it's our duty as the community to do it.

Bitcoin is safe and reletively unhackable. The problem lies in the community. Thankfully, it's a problem we can fix. Indeed, it has already been fixed by a sister industry. Now, we just need to copy it.

1 comment:

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