alt Hacker NewsBanks and payment providers (Visa Mastercard AMX) provide services beyond simply a store of wealth and a mechanism to transfer it.
Actually 2FA, hardware biometrics, behaviour based fraud prevention and personal confirmation of suspicious transactions. If you’re using credit they can refund fraudulent transactions, and there is the chargeback mechanism. This is probably banking system dependent, but in AUS there is a refund mechanism for mistaken/fraudulent traditional bank transactions.
BTC has effectively none of the safety net, and humans are fallible. We need the safety net. It’s the hugest barrier to adoption. Exchanges do a far better job of managing the risks than trusting your wealth to a hardware wallet.
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I have worked for and/or audited the majority of exchanges, that mostly white-label a much smaller number of players.
I have yet to see a single one, not one, that had a system of custody that did not allow any one of hundreds of people, most not even employees, to walk away with all of the funds.
There are no standards for security that apply to crypto custodians and the mostly fail to do the bare minimums.
If you use even a top ten custodian, operate under the assumption that the funds are in multi billion dollar plaintext wallets sitting on AWS servers the whole team has ssh access to from the same laptops they "npm install" random shit to all day.
Honestly if you do not feel confident custodying crypto yourself, you should probably not own any.
The safety net makes you less secure against the U.S. government, but more secure against everyone else. That's the right choice for almost all users, but I still think it's at least kind of good that people have a choice.
In financial systems with a basis in law, no transaction is ever final. It doesn't matter what the protocol says or what the technology is capable of, if the judge says that the transaction must be reversed, you get it reversed, even if that means delivering cash in briefcases or something like that.
In systems with a basis in technology, final means final. If the North Koreans take your money, your money is taken.
This piece from Patrick mcKenzie explains this well https://www.complexsystemspodcast.com/episodes/the-900m-wire...