Ask HN: How do we secure our current system of 'electronic money'
I'm a bitcoin fanatic and I've even started to use the blockchain for non-bitcoin purposes. It's s fantastic ledger for financial transactions and it's exciting to see a multitude of companies investigating ways to use it with our real currency.
My questions is simple. If only a couple percent of our currency exists as cash what (if anything) is stopping a hacker or unethical banker from just adding $1,000,000 to their the database entry for their account? The government isn't keeping logs of total balances are they? If not, who is? If I've learned anything in this world it's that if you aren't watching, someone will be exploiting...
2 comments
[ 0.19 ms ] story [ 13.9 ms ] threadDouble-entry bookkeeping, distributed financial controls, routine accounting audits, and the certainty of a long stint in jail once that is discovered.
Double-entry bookkeeping is a technology which should fascinate anybody whose buttons Bitcoin-qua-ledger pushes. It enables a 1920s grocery store to detect a quarter missing from the till at the end of the day. The key insight is that "all money came from somewhere and all money goes somewhere; those two transactions should exactly balance; if money ever spontaneously appears or disappears then mistake or malfeasance is afoot."
The government does not routinely directly keep logs of the accounts of businesses, but requires that they do in a variety of circumstances. Companies which do not keep adequate logs face a variety of sanctions, including e.g. punitive tax rates, fines, and criminal prosecution. This keeps the average level of accounting competency at most businesses in the real economy rather north of that at e.g. a typical Bitcoin exchange.