The security design of bitcoin transactions already made the new Goldman Sachs and Apple credit card obsolete before it even came out.
Tripp Mickle, Liz Hoffman, and Peter Rudegeair reported for the Wall Street Journal Thursday:
“Apple Inc. and Goldman Sachs Group Inc. plan to start issuing this spring a joint credit card paired with new iPhone features that will help users manage their money.
“The card will be rolled out to employees for testing in the next few weeks and officially launch later this year, according to people familiar with the matter.”
The Verge’s Jon Porter writes:
“The main selling point of the card is expected to be deeper integration with the Apple Wallet app, which will allow users to manage balances and set spending goals.”
Credit cards are stupid.
I’ve always marveled that we hand our credit card or debit card to teenagers at restaurants to disappear with for a few minutes, with all the information on it to spend your money.
We tell total strangers over the phone our name, credit card number, its expiration date, and the super special three number security code on the back to have a pizza delivered.
This is insane.
It does show how trustworthy the people in our society generally are that a financial payment system whose security design is so broken hangs together as well as it does.
But this is a big planet, and there are a lot of people. Not all of them are honorable or trustworthy. Companies like Equifax and Target have had millions of Americans’ credit cards stolen.
With credit cards, you are giving the secret keys to spend your money to a long chain of custody in the hands of third-party intermediaries starting with the merchant.
People say bitcoin uses too much energy. How much energy and muscle does the financial system have to put behind protecting your private keys through the chain of custody?
If that information is compromised at any point in transmission, it can be stolen, and then someone can spend your money. With cryptocurrency, you don’t have to share this sensitive information to send and receive money.
With bitcoin, you don’t give out the secret key to anybody.
You can keep your secret keys in a secure bitcoin wallet (maybe like the one in the Samsung Galaxy S10) that only you can access.
You give out a signed authorization to spend the money, and it is possible for the cryptocurrency’s network to verify that only the one with the secret key signed that authorization.
There is nothing compromising about this information.
This information is so uncompromising that you don’t have to send it through highly secured private channels maintained by the institutional banks as you do with your credit card.
If the information you send to make your transaction with bitcoin was “stolen,” all the thief would know is the account number of the bitcoin you sent, the account number that received it, the amount of bitcoin, and they would be able to independently verify that the person who holds the private key authorized the payment – all without knowing the private key.
That’s why the word “stolen” in the paragraph above is in scare quotes. Your transaction information can’t be stolen because you’re not even trying to hide it. You don’t have to.
When spending bitcoin, you broadcast the transaction and authorization to all the “miners.”
(Should we start calling them bookkeepers?)
And they make updates to the accounts on their books to finalize your transaction.
Here’s a good talk about the security flaws intrinsic to credit cards, and by contrast how cryptocurrencies like bitcoin are far more secure financial payment networks:
Featured Image from AP Photo / Andy Wong
Last modified: July 2, 2020 7:31 PM UTC