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Reply to David Orban: Creatività, passione e innovazione in Finanza, Banche e Diritto

Thanks David for your lecture. It’s a very interesting set of considerations for somebody who, like me, has a background that doesn’t overlap with the subjects of macro-economics and global finance. Listening your words I can feel the ethics and vision that entail your enthusiasm on the topic.

Regarding the micro-economic and daily use of Bitcoin I see a big problem connected to the safety of John Doe’s savings, and I don’t know how that could be addressed with the currect technical implementation.

The issue is the lack of insurance. In the past we build a protection mechanism where bigger institutions, directed by the corpus iuris, guaranteed and protected your money deposit from some type of threats. This happen with bank accounts under one hundred thousand euros in Italy against a bank crack. This happen with hijacked credit card transactions to maintain an high customer trust in the system itself, an important surveillance and revenue stream in nowadays economy. This happen thanks to insurance policies if your property get destroyed.

Our current money can be simply reprinted or recreated or adjusted in case of a faulty banking IT system.

With Bitcoins or any crypto-currency the safety of the deposit is all on the shoulders of the wallet owner, that must be connected to inherently vulnerable systems like personal computers, notebooks and smart-phones.

We have already seen large-scale attacks against wallets and most of computer trojans now include a bitcoin wallet stealing functionality alongside the old web banking ones. Exchangers themselves have been hacked and have an amateur level of computer security and general hijack resiliency.

Additionally if a user lose the private key or the wallet itself there is no way to recreate that coins.

How can a deflationary, fixed-size-pool, uninsured, global currency like Bitcoin work on the long term? Theoretically, over time, all the created coins could vanish in vapor :)

— Francesco Ongaro

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