The advantage of crypto over cash is that you can keep redundant copies, or keep portions of a key in different places so there's no single point of failure. It'd be pretty silly not to have backups.
For most people, a friendlier ideal is probably social recovery wallets, as advocated by Vitalik. You can restore access much like centralized services can, except instead of relying on a big company you're relying on your circle of friends and family. You can also include a company or two, if you want, without the company being a single point of failure.
Reversing charges is a different point, which could be accomplished pretty simply with 2-of-3 sigs if there's market demand for it. At the moment, scaling issues have kept crypto from being used much for retail payments anyway (though that's gradually getting fixed).
As for freezing cards, that's something we have to do a lot because we hand over full account credentials to everyone we pay and just trust them to keep those details safe and not abuse them. I've replaced two credit cards due to fraud, and it was a hassle. It boggles my mind that we've had public key cryptography for fifty years and we're still not using it for payments. Never mind blockchains, just upgrading the banking system to use public keys would be a huge improvement.
The central point is that crypto has features most people don’t want (decentralisation, shared public ledger, trustless) which actively sabotage things most people do want - speed, security, privacy, trust etc.
This is a fundamental design error.
Stop comparing crypto to cash, the competitor is centralised electronic bank accounts and credit cards.
Banks use lots of cryptography to secure and sign transactions, including public key cryptography. Some banks now issue numberless cards.
Every single one of these factors is significantly better in Bitcoin than in the legacy payments system. Your proposed tradeoff is not based on reality.
The only one of these things that might plausibly be called "better" for legacy payments is speed, but A) this is no longer plausible at all with lightning and B) any comparable appearance of speed in a legacy payments system is fictitious. The fiction holds up only if you are a "casual" user of the system, transacting in small amounts of money in non-complicated transactions. The costs even of this fictitious speed are high, but they are hidden from casual users.
Bitcoin can handle 7 transactions per second, on average. VISA can handle 1,700.
> Security
Your bank account is secured with a password. If compromised, you can prove your identity in person at a bank with government documents and obviously physical appearance. Bitcoin has one method of authentication, the signing key, and once you lose it, you have lost your account.
> Privacy
Every transaction you make as well as your balance is public on a blockchain. Your bank account is private only to you and the bank itself.
> Trust
This one is more subjective and I won’t really comment if I trust Chase or Coinbase more, but I will say this is somewhat ironic on a post about how Coinbase is selling IP data to ICE.
Look up Lightning. To be honest, saying this is a pretty reliable reverse-shibboleth that you have no idea what you're on about.
> Your bank account is secured with a password.
secp256k1 is a lot stronger than a shitty bank website.
> the signing key, and once you lose it, you have lost your account
Good thing we have invented backups. Even multisig if you wan to get fancy.
> Every transaction you make as well as your balance is public on a blockchain.
On a pseudonymous address that's difficult to impossible to correlate with an individual, and effectively impossible when using lightning.
> Your bank account is private only to you and the bank itself.
And the state comptroller, and the police, and the bank's advertising partners, and any number of federal agencies, and anyone who looks at frequent bank data leaks, and...
> This one is more subjective and I won’t really comment if I trust Chase or Coinbase more
Do I need to explain why it's not accurate to conflate coinbase with bitcoin, or was this just for rhetorical effect?
> Bitcoin can handle 7 transactions per second, on average. VISA can handle 1,700.
You're not comparing the same thing.
A Bitcoin transaction that makes its way into a block is settled within ~10 minutes and irreversible in ~60 minutes.
A VISA transaction is an IOU between the customer, VISA and the merchant. The merchant won't have settled funds for up to 90 days. VISA settles with the customer anywhere between a day or week, but these transactions are reversible for up to 90 days. VISA settles between bank accounts at best daily.
If we are comparing like for like, use of the Bitcoin Lightning network is far closer to the service offers of VISA, and the lightning network scales the Bitcoin network far beyond 7 tps.
>I won’t really comment if I trust Chase or Coinbase
Bitcoin gives you the option to trust nobody. You are able to interact with the Bitcoin ledger without trusting any intermediary, even if the majority of people will choose not to. This is not an option with the existing financial system.
Bitcoin has Lightning network which is peer-to-peer and is quite fast.
>Security
It is up to you on how to generate your keys. You can use your passport number combined with whatever, you can split your secret between notaries (which would require your ID just like banks), etc.
> Privacy
Bitcoin has Lightning network which is offchain.
> Trust
Here you equate Coinbase with Bitcoin. I think it is wrong to do that, on the brink of logical fallacy.
2. Security - Money guaranteed by banks and governments vs do your own security or trust a dodgy exchange
3. Private transactions vs public ledger
4. Trust - counter-parties from merchants to banks are known and have a stake in the system
5. Fees - free instant transfers vs $1-2 per tx
6. Taxes…
You’re right there is no comparison but it’s not the current payments system which is left eating dust, it’s bitcoin.
The speed you decry as fictitious is there because of trusted counterparties and is very real.
And there’s always a promise of new technology to fix bitcoin but the world has moved on and the only ones left are the moonbois and hodlers, and none of them even care about the currency except as a fairytale to sell it on.
This is a clear indicator that you aren't at all familiar with the payments industry, and probably not familiar with Bitcoin either. There is no extant fiat payment system that settles in 1 second. You are the "Casual user" I was talking about who doesn't know how e.g. credit cards work behind the scenes.
If you want any semblance of payment finality in a fiat system, it's going to take days to months. Bitcoin is ~10 minutes on chain, <1s on Lightning.
> Security - Money guaranteed by banks and governments vs do your own security or trust a dodgy exchange
"Guaranteed" is pulling a lot of weight here. What, exactly, do you think "guaranteed" means?
> Private transactions vs public ledger
"Private" transaction visible to any government agency, the bank's data/ad partners, in any of the abundantly available financial data leaks, vs a public ledger with strong pseudonymity or a totally opaque mesh network on Lightning.
> Trust - counter-parties from merchants to banks are known and have a stake in the system
I trust asymmetric key crypto more than I trust HSBC.
> Fees - free instant transfers vs $1-2 per tx
Fiat transfers are neither 'free' nor 'instant', in any meaningful capacity. Do some research on e.g. credit card settlement cycles. "Months" is more accurate. Credit card (along with most other widely used fiat payment gateways) charge usually something like 25 cents + 2.5%. Bitcoin is (on-chain) a few cents + 0%. Lightning is something like 0.01 cents + 0%.
It only looks cheaper because the details of what's actually going on have been (intentionally, for marketing purposes) hidden from casual users.
> The speed you decry as fictitious is there because of trusted counterparties and is very real.
Again, look up how payment settlement cycles work. You are the type of person I was describing who believes in the fiction. I don't blame you; unless you are a "power user" of the fiat system or have done a lot of research, it's not clear why you would notice.
I transferred money for free in less than 1 second today using ‘legacy’ payments.
The currency I used to do so also didn’t decline or rise in value by 5% in a day, which would have been awkward.
It doesn’t matter to me if banks exchange csv files at midnight to settle that, or what other archaic processes they use, because the verified identities and trust allow that to seamlessly happen behind the scenes without involving customers. The end user experience is all that matters here.
Seems strange to trust your assets with a centralized entity, one of which that can turn you away for any reason when accessing your funds, that charges you for withdrawing at a different bank’s ATM. Further, an asset that has been insanely inflated over the past decade and suddenly raised in value by a central government through mandated interest rate hikes. Yikes!
I use gold, my gold is always worth the same amount of gold. No dumb fluctuation and I have no problem in finding people who will take it. One second to transact? My handing the gold to anyone I choose is instantaneous and can be done in private. Gold solves all these problems, anyone not using it must be naive.
> I transferred money for free in less than 1 second today using ‘legacy’ payments.
As I've already explained multiple times, it's neither meaningfully free nor instant. If you didn't understand that when I explained it in the last post, I'm not sure how I can make it more clear.
As I explained already, it's free and instant to me, that's what people actually care about.
But I think you're also wrong about:
The cost - it really is free, there are no hidden charges on the bank account or for any party involved.
The transaction time - it really is settled that quickly between banks in the UK at least with faster payments. It leave my account and appears in the other one within seconds, sometimes within 1 second.
> There is no extant fiat payment system that settles in 1 second.
In Europe all banks now offer instant wire transfers. (A regulation pushed by the European Commission to counter VISA…)
It’s still often not free (0.75 euros at my bank I think), when 24h/48h wire transfers most often are, but I think I read the goal is for instant wire transfers to eventually be free (by regulation)
It’s really instant! Across any European (IBAN) account.
There’s also a growing use of a standardized QR code for IBAN account numbers, making the scan and instant transfer UX at least possible (but I never saw anyone do that yet)
> The fiction holds up only if you are a "casual" user of the system, transacting in small amounts of money in non-complicated transactions. The costs even of this fictitious speed are high, but they are hidden from casual users.
To be clear, what sort of transactions are you referring to here? If you mean things like buying a bagel, or clothes, or groceries — the vast majority of transactions, for which the system should be optimized — then the existing centralized system is extremely successful.
Yes, no argument from me that the fiat system is adequate for buying a bagel.
If all you're ever doing is engaging in small-scale consumption, there's not a ton of reason you personally would care about or even notice a transition away from fiat payment systems.
Realistically, the UX of payments and money management will not change for 90% of people (who aren't doing anything interesting with money and don't have a lot of it). This is fine; we're talking about swapping out the back-end for people who actually have to deal with it.
The issue, with regard to people who have a lot of money or want to do “interesting” things with it, is that many of us do not trust those people.
So when you say “hey, everything will be the same for you, but it’ll make things easier for those people”, I instantly become suspicious of the change you’re trying to effect. Because, when those people try to get cute with the economy, the upside for “casual users” (aka most people) is low to nonexistent — and the potential downside is very high.
We're giving the keys to our financial system to crypto-bros who we're supposed to 'trust' because they claim to 'understand' how crypto works. Yet their investment advice is to buy and hold, while they pump and dump their ICOs in order to afford their lambos.
> The advantage of crypto over cash is that you can keep redundant copies, or keep portions of a key in different places so there's no single point of failure. It'd be pretty silly not to have backups.
I believe that this looks simple on paper, but does not really work. And then: this is called service. Coinbase offered a service, that just deals with all the hassle you are describing.
Right, and dropbox could be recreated with rsync and some python in a weekend. Just because _we_ can, and have the interest and inclination to do so, doesn't mean it's easy for everyone else.
That's a drastic exaggeration of the effort required. The backup is to write down 24 words. For more redundancy, write them down again on another piece of paper. Put them somewhere safe enough considering the amount you have stored, and you're good. I know people with crypto who are not especially technical, but have no trouble with this.
(Or, follow Vitalik's recommendation to use social recovery wallets, which are available for phones and I think have decent UI.)
I admit I missed that. But backing up your self-hosted wallet is way less technical than rolling your own Dropbox, so I don't think it changes my argument.
I have family members who paid for computer service because Microsoft was so nice to call them after detecting an issue with their computer. But lets get them all cold wallets to hold their money.
I'm not trying to ban people from becoming bakers. You do you.
I'm saying they should temper their expectations, if they think that secretly everyone wants to be a baker, and in the future a meaningful fraction will be.
Most people, when they go to a baker and ask for a bagel, will not want the answer "great, so just buy this oven from amazon. I'll show you how to use it when it arrives'.
Cryptocurrency advocates are wrong about what other people want, or will want. They can LARP if they want, but that doesn't mean that it's value to other people.
Yes. The internet is broken, and a lot of these companies are based on selling "solutions" to these artificial problems.
Another example is Cloudflare. If the internet was designed properly, you wouldn't have DDoS attacks in the first place. There would be no one to sell DDoS protection to, no one to rent out botnets to.
You wouldn't even need most web/file "hosting" in the traditional sense if you could just share static files with bittorrent/IPFS.
Right. I'll bite, how is Dropbox not a _real_ solution to a _real_ problem of "I want to share this file with someone else or somewhere else"? Hate to say it but I feel like the answer is going to involve "web3 fixes this".
Peer-to-peer file transfers will always be faster than having an intermediary. Why not use bittorrent or IPFS?
P.S. The problem dropbox "fixes" is that there is no decent file transfer protocol that is IP agnostic. Using something like bittorrent's or IPFS' DHT fixes this. Dropbox "fixes" this by making file transfer into a paid service
> Peer-to-peer file transfers will always be faster than having an intermediary. Why not use bittorrent
One reason is that such a scenario relies on one of my computers with bittorrent-dropbox to be online for me to access my files elsewhere. Syncing it in the cloud means they are available reliably.
Okay, cool, the majority of Dropbox users I know do not use the product because of speed or because of any IP agnosticism. It's a shame all these users are so stupid and don't use IPFS or bittorrent instead, amirite?
The last time I used IPFS it took four hours before I could access the file just using the hash or even the public gateway after pushing it to several major pinning services.
I've had files sitting on Google Drive for longer than IPFS has existed. Let's not pretend that IPFS/etc is a solution to relying on services that are far older than it.
I don't know if I would jump straight to a grift, it comes down to use case. If people are just dumping random documents, sure. And selling people that they need to back up every picture they have taken on their phone that they will probably not look at again is a bit grifty. However keeping digital copies of important documents is not a bad idea, like a house burnt down situation. Ideally, you maybe have family you can trust to keep a USB with those documents, but that is not always an option for some people.
Dropbox is a useful service. The comment about 'bit torrent' makes little sense. Having cloud storage 24/7 high availability has utility. (Yes, if the interent were designed a bit different, that config might be slightly different, but there'd be some value in Dropbox in there somehow).
Bitcoin has no utility.
It has the 'promise' of utility, which is the current utility it rests upon, making the underlying value quite difficult to determine.
If BTC were to dissapear, the world wouldn't skip a beat, and we would have no need to 'reinvent' BTC.
We would likely to continue to think about and experiment with other things, but as it stands so far, BTC isn't the solution to anything.
> If BTC were to dissapear, the world wouldn't skip a beat, and we would have no need to 'reinvent' BTC.
There would be no need to 'reinvent' Dropbox, either. People would do so for both regardless of necessity (and indeed have done so for both, ad nauseam) because they find them and the concepts thereof useful or interesting, contrary to what you or I might assert.
This is so obviously wrong ... I don't know what to say.
Dropbox (Box, Google Drive, etc.) are imminently useful services, almost all of us use them.
If my cloud drive we vaporized, even if I had backups, I'd be livid, as would maybe more than a billion people would be as well.
People pay for cloud storage because it's immensely useful. I share documents with clients every day.
BTC is some surplus money changing hands, bouncing around between owners trading magic numbers, willy nilly. There's no need for it to exist. Even unproductive things like 'gambling' serve the purpose of entertainment at least.
> Dropbox (Box, Google Drive, etc.) are imminently useful services, almost all of us use them.
And meanwhile there are migrant workers, refugees, and the like who depend on cryptocurrencies like Bitcoin for basic economic participation. If Bitcoin vanished overnight, they'd be back to being at the mercy of a legacy financial system that shuns them at best and actively exploits them at worst.
There are no migrant groups workers who depend on Bitcoin as a means of banking, it's completely (ridiculously) unsuited to that purpose.
Migrant workers use of innumerable financial services offered to them by banks at home, in their country of work, or one of the myriad of financial services apps made available to them via app stores etc..
> There are no migrant groups workers who depend on Bitcoin as a means of banking,
There's more to economic participation than just banking (even assuming that what you wrote wasn't a blatant falsehood).
> Migrant workers use of innumerable financial services offered to them by banks at home, in their country of work, or one of the myriad of financial services apps made available to them via app stores etc..
Previously, yes, with predatory fees that make even Bitcoin (let alone any of the umpteen million iterations on its design) affordable by comparison. The working poor lack the bargaining power to meaningfully demand fair treatment from the legacy financial system; for them, a cryptocurrency like Bitcoin provides that fairness.
That doesn't even make sense. Dropbox and BitTorrent are not providing the same service. Maybe you're trying to compare to Resilio Sync but still wrong.
Non-technical people need things like Dropbox. You not liking Dropbox doesn't change that.
The fact that companies like Celsius, Gemini, even Coinbase and other "cryptobanks" exist, and that people are using them at far higher rates than relatively simple (to us techies) wallets.
And when Celsius suddenly halts withdrawals to a huge portion of the cryptocoin community, the only answer is "oh, you shouldn't have been using that" or "not your keys, not your wallet" and other such "Advice". Its a fundamentally hostile environment.
A large reason people use these services is due to them paying ridiculous and unsustainable interest rates for custody of the crypto atm. That won't last forever.
and when it stops the vast majority of people will have no reason to use cryptocurrency at all and it will go back to being a niche thing for libertarian nerds
This is like the PGP debate in the security community back in the day, where they generally agreed that while this all works great in theory it’s actually a lot of work to do it correctly and mistakes at any stage are incredibly costly so despite the fact that it technically works, it’s never going to be a good solution for regular people.
coinbase offers a service which is completely orthogonal to what he is describing.
How difficult is it to set up a wallet, then use the same seed phrase when setting up a wallet on another device? If one of your devices gets stolen, make a new wallet and transfer the funds with your other device before they extract your keys.
The number one reason for using a credit-card is that your losses are contractually limited. Not only that, they perform automated fraud
detection for you.
And now you want me to give that up, and take on the responsibility myself?
Cattle have all their needs taken care of them by the farmer: they are well fed, they have good shelter, and they are "safe" from predators. It is easy to make arguments for how the cow is better off than his ancestors; In every measurable aspect its life is "better" than that of a wild animal. It all comes at the low, low price of his complete autonomy and freedom.
Is it better to be cow or a wildebeest? The answer is simple: is life greater than the sum of its individual (hedonistic) parts?
I take it you live Thoreau-style, in a cabin in the wilderness completely off-grid? You farm and hunt your own food and do not rely on civilization for any of your needs?
Please just do a little Google/Wikipedia on Adam Smith.
Everyone trying to do 'their own stuff' is basically, stupid.
We gain immensely by the division of labour: the cobbler makes the shoes, the farmer grows food, the banker manages money. Were you to try to 'make your own iPhone in your back yard' you would fail.
We are 'rich' because of this.
Otherwise, we'd be literally feral monkeys.
Bitcoin has little to do with 'control or surveillance'.
You do not need to 'hold' USD in order to live. You just need to use USD in a 'current account' for purposes of transaction. In that context, monetary policy should not matter that much to you - or even frankly anything the Fed does.
If you only buy dollars when you need the to do something else, then frankly, everything about the USD should be basically irrelevant.
And you can still do most things in cash, if you really want. You can put your USDs under your bed, in the closet if you want.
For the audience that reads HN? Probably not that difficult. For the average person who is comparing this to the alternative of a bank where they can just talk to a human who manages all this for them and also get benefits like a credit card with rewards, built a credit score, and have a throat to choke when there's an issue... it doesn't seem like that good of a tradeoff
I keep seeing the argument repeated ad nauseam about how a bank protects from X and Y you and can reverse fraudulent charges and so on.
But as a customer of several national US banks and having gone through the dispute process dozens of times in my life, in reality, I find that to be completely nonsense. I’ve had to deal with numerous incidents where someone stole my card, and the bank blames me (the customer) and then asks me to prove the money was stolen, only to have them make an arbitrary denial months later. It’s the same bogus argument people make for all kinds of insurance, until you go to make a claim, get denied for some obscure legal text in the policy and find out you were just being ripped off the whole time.
I have a lot of friends in the crypto space, and only one of them has lost any to theft. In that case, it was a SIM-swap for funds he had stored on a centralized exchange, rather than an attack on his own wallet.
Meanwhile, my own credit card numbers were stolen twice.
This is surprising to hear, as I have had the opposite experience.
I have had many fraudulent transactions or unauthorized charges on various accounts, such as:
* Random charges appearing for no reason
* Clear case of stolen card with a series of unusual transactions.
* Scam websites where I bought a product and never received it.
* One egregious case where someone from a IP geolocated in China brute forced my VNC server password in the middle of the night and used my saved browser credentials to PayPal themselves over $10,000 from my linked chequing account.
In all cases I have filed a dispute with the relevant institution and was fully and promptly reimbursed. In the latter case I had my money back in under a week.
Transaction reversibility is a feature, not a bug!
What is an "average person"? An average person in a first world country who has access to "trustworthy" financial system?
Centralized systems work great... until they don't.
P.S. Our grandchildren will wonder why we allowed the free world to export the means of surveillance to the third world. The financial system is a huge part of that.
Even developing countries have access to useful financial networks. I did a few projects in Kenya and Cameroon and traveled around Uganda last year, the traditional banking sector isn't great but telco's have filled the gap and it's easy to use mobile money instead (and in a way that doesn't chew up data). Not sure about exporting the means of surveillance, I think it's much more useful as a geoeconomic tool to enforce things like sanctions for a country like the U.S. than it is to spy on the average person.
> P.S. Our grandchildren will wonder why we allowed the free world to export the means of surveillance to the third world. The financial system is a huge part of that.
While I agree with the sentiment, this won't happen. Did the Banana Wars and using the military might to control South America prevent all the American wars in the middle east? Nope. Just as those are forgotten about, we Americans will conveniently forget anything else that puts a bad spot on our record.
Who are these people who are well educated and live in first world countries, competent enough to do these tasks, but also are in a position to benefit from crypto? To me the only (incidental, not at all fundamental) benefit of crypto is if you live in a country with sanctions and you need to get money in/out.
> Centralized systems work great... until they don't.
There has yet to be a decentralized cryptocurrency. We can't even say things like "decentralized systems work great until they don't" because so far they don't exist, and what does has been less than "great".
> Our grandchildren will wonder why we allowed the free world to export the means of surveillance to the third world.
I don't even know what you're going for here? Crypto solves surveillance now? The global, distributed ledger that everyone can fundamentally access because that's the whole point?
I'm not sure what you even mean by that statement that there has never been a functioning decentralized cryptocurrency. I would need you to explain what your bar is for decentralization, and why it's so high.
As for privacy, the technology has come a long way in the last decade due to the development of Zero-Knowlege Proofs. I can share a few links if you are interested.
> I would need you to explain what your bar is for decentralization, and why it's so high.
A single entity being capable of significant or total disruption of the network.
> As for privacy, the technology has come a long way in the last decade due to the development of Zero-Knowlege Proofs. I can share a few links if you are interested.
I am interested. I'm aware of some progress being made here theoretically, but I have not seen implementations (I do not follow closely at this point).
> It boggles my mind that we've had public key cryptography for fifty years and we're still not using it for payments. Never mind blockchains, just upgrading the banking system to use public keys would be a huge improvement.
This ignores the number one lesson of PGP - key management is hard, up there with naming things and cache invalidation. I honestly don’t see how public keys, which are vastly more complicated to use and store than passwords, would be an improvement for the general, non-technical public when getting them to use long, unique passwords is already a challenge. You have to copy over or update your public key with each new computer you get, assuming the account owner even has a permanent computer. What about accessing your account on someone else’s computer in a quick pinch, or on your phone? Coupled with the fact that keypairs would be unable to be force reset (assuming you want to use them to their full potential) unlike passwords, and it would be a disaster.
I will say that minimizing the sensitive information sent for payment with crypto is a huge plus, as the merchant no longer needs to handle the card information to send to the payment processor, but can just accept the transaction hash (with some sort of signature of course).
This also doesn’t really address the issue that Coinbase will still send your info to ICE, of course. Not that banks are any better. But cash is!
In addition to all that you said about key management -- if you do manage to leak your keys and you chose a bad passphrase good luck proving to anyone that any correctly signed transactions were fraudulent/performed by someone else.
Probably the most common vector for crypto theft is phishing people to sign malevolent transactions. So I have a hard time believing that there’s a technical solution to this problem at all — much less with current blockchain technologies.
Crypto is way less secure than a credit card of course, since with a credit card I'm not liable for any fraud, loss or theft. I don't even have to front the charge until the issuer resolves it. As the issuer itself is liable (not me) they are incentivized to detect and stop as much fraud as possible.
I can even take advantage of chargebacks to ensure merchants give me what I paid for. Chargebacks are incredibly customer-friendly - but of course they're good for businesses too as it affords folks a degree of confidence at unfamiliar merchants. And I get various kinds of insurance - they'll even reimburse me if I drop and smash what I bought 90 days after I bought it.
Credit cards need those systems in place precisely because they are insecure in the first place.
I can even use chargebacks to commit fraud against merchants.
P.S. You think you're so smart for using paypal or something, wait until you set up a business and adversaries falsely accuse you of fraud. No system can completely prevent fraud, but the credit card system is insecure by design and blind to the externalities of fraud.
You seem to be suggesting "systems requiring regulation don't work without regulation" which is true. What you are maybe missing is that cryptocurrencies today, regardless of how much people want it not to require regulation, still do require it to function effectively instead of the pain and suffering we see now. The sooner the zealots admit this to themselves, the sooner we can have productive conversations about moving forward.
Moving forward could also mean "designing better decentralized systems that don't require regulation" but that would mean that they would have to acknowledge that the thing they've been throwing their money and voice behind is a faulty prototype not destined for mass scale.
I believe cryptocurrencies are self regulating. If you want to convince me otherwise, you have to do better than just stating the opposite is true.
I'll admit that some (many even!) cryptocurrencies make claims about decentralization and security that are not based in evidence. That is fine. I don't believe that cryptocurrency itself is sufficient for freedom/decentralization/security, but that it is necessary. Not all cryptocurrencies will meet my critera, and it's even possible that none do.
Without specifying the implementation, this statement is less than useless. Really, I use the word "zealot" literally, this claim of yours seems to be entirely faith-based.
Occam's razor states that a reasonable default assumption is that they are not self-regulating, and they should be proven so before being described so. It's not enough to want to be self-regulating, it should actually perform that function. How does it do that, today? We speak here of general trends so one-off examples do not suffice...
Really? Are you sure? Give it a go and see what happens.
All you're doing is moving the fraud potential from the customer to the merchant. Without the network and with instant finality, you've left them with no recourse.
Both credit cards and crypto as a payment primitive in isolation are secure. However, that's a very myopic view of a transaction. A transaction extends beyond simply the payment rails. You're leaving customers significantly worse off by forcing them into no-recourse payments with instant finality. Merchants, being businesses, are significantly better able to protect themselves - as they are able to insure against these losses - and the ability to charge back transactions increases the transaction volume at the store because it gives customers confidence in the payment.
[edit] I already have :)
Have what? Committed fraud? Bold statement. How much did you steal and how often?
There's zero basis to believe that crypto reduces the incidence of fraud. Citation needed.
P.S. all transactions rely on some basis of trust between the merchant and the customer. Cryptocurrency doesn't prevent fraud altogether, but it does severely limit the extent and direction of fraud.
P.P.S. (response to your edit)
>Both credit cards and crypto as a payment primitive in isolation are secure. However, that's a very myopic view of a transaction. A transaction extends beyond simply the payment rails. You're leaving customers significantly worse off by forcing them into no-recourse payments with instant finality. Merchants, being businesses, are significantly better able to protect themselves - as they are able to insure against these losses
No, the credit card payment system is insecure because the information you need to authorize a payment is the same as the information you need to receive a payment (give or take a 4-digit PIN). In cryptocurrency (or even non-cryptocurrency, cryptographic payment systems like GNU Taler or DigiCash) there is the distinction between the public/private key.
Also, on what basis are you supposing that all recipients of a payment are merchants? I don't agree with that assumption.
>the ability to charge back transactions increases the transaction volume at the store because it gives customers confidence in the payment.
Cryptocurrencies are (ideally) designed for payments between low-trust parties, like a drug transaction or a donation to a pseudo-anonymous party. Senders are expected to have the same vigilance that they do with cash payments in an alleyway.
P.P.P.S.
>There's zero basis to believe that crypto reduces the incidence of fraud. Citation needed.
Cryptocurrency makes identity theft attacks impossible by having payments signed by the payee (e.g. rather than requiring proof of open source, personally identifiable information)
Cryptocurrency makes chargeback fraud impossible insofar as the attacker cannot conduct a 51% attack or a finney attack.
As for merchant fraud, users are expected to establish business relationships with trustworthy vendors and hold them accountable themselves. If these trust networks work for the DN and private trackers, then it's secure enough for me. You learn about the trustworthiness of vendors directly through the reviews of your peers, and you limit your risk accordingly.
> As for merchant fraud, users are expected to establish business relationships with trustworthy vendors
That might work for large transactions, or repeated small transactions with the same vendor (assuming there isn't a major regression of trust), but it utterly collapses at scale and diversity of buyers and sellers who can't possibly vet each other for trust (AKA any modern economy). It also would balkanize/silo trade.
> and hold them accountable themselves.
Sounds a lot like the old "break some kneecaps" approach. There's a reason such accountability mechanisms tend to be utilized in criminal enterprises.
>Cryptocurrency makes chargeback fraud impossible insofar as the attacker cannot conduct a 51% attack or a finney attack.
>As for merchant fraud, users are expected to establish business relationships with trustworthy vendors and hold them accountable themselves. If these trust networks work for the DN and private trackers, then it's secure enough for me.
My brother-in-Christ, how are you supposed to achieve mass adoption when you list *as a benefit* that you are stacking the deck in favour of the merchant?
> As for merchant fraud, users are expected to establish business relationships with trustworthy vendors and hold them accountable themselves.
I’d just like to point out that a huge part of the reason credit cards are successful is that I can pay untrusted merchants with relatively low risk to myself. You are describing a massive drawback, bordering on deal breaker.
your last point isn't true - EMV cards with a chip (modern credit cards) use public key cryptography and don't reveal more than they need to to the merchant. Typing in the card numbers (or swiping it) will slowly stop in the US, as it has in most other developed countries by now.
I disagree with the rest also - mainly on the grounds that for a normal person, there isn't any benefit and as the OP says, the status quo is preferable
Apple Pay is one. Also, in Asia it's very common for a website to display a QR code which you scan with your phone to make a payment, either with your bank's app or with a separate payment platform app. These don't reveal any secret data to the merchant.
Even when using traditional card numbers, many banks offer you the ability to instantly mint as many cards as you like, so you can just generate a card for the specific website. Often you can even lock the card number to that merchant after the first payment.
not cryptographically no (and would be nice to see, but crypto is not the answer). But as a consumer when I shop online I never worry - if I am defrauded the (centralised) bank will give me the money back, that's the solution and it works for everyone
And that's how I ended up having to change my card numbers on file with a bunch of businesses, and why every couple months a purchase fails until I respond to a fraud email. It's a hassle and it's unnecessary, especially when phones have secure enclaves for private key storage. I'm not even arguing for blockchains now, just for using public keys in online purchases.
> Crucially, iOS itself cannot directly access data stored in the secure enclave, so even if malware could make its way onto an iPhone, it would have no access to the data.
Even if it's not a perfect solution, it's better than handing full account credentials to every online merchant I use. A dedicated FIDO fob would be even better but the phone is something most people already have.
The Bitcoin Whitepaper was published almost 13 years ago.
It still hasn't solved basic use cases that have been solved in traditional finance for many decades.
Illegal uses of cryptocurrency are the only real use case that makes any sense. Pyramid schemes, ransomware, illicit purchases, money laundering, asset hiding, tax evasion. That's what has kept cryptocurrency alive, for now.
That's an advantage of crypto over cash. In the US, and probably similar trends in many places, only about 20% of transactions are in cash.
Merely being better than cash isn't much of a selling feature, especially when it's worse than cash in some ways as well: keep your crypto in an exchange and it might get hacked. Keep it offline in a local wallet(s) and it stops being useful as a medium of exchange in most places you'd use cash.
I'm not saying these problems are insurmountable, but if they are then there's still a very long road ahead to get there.
Let me stop you there. There is no advantage. Cryptocurrency is a scam. I've been burned. Many others have been burned recently. Go back to the drawing board and come back in a few years with a valid use and tell me it's still useful for something other than skirting the financial regulations and scams.
If you invested in crypto, yeah, that was absolutely a scam.
Don't scoff at "something other than skirting the regulations" tho. Especially if you live in a comfortable First World country with rule of law and all that.
> Reversing charges is a different point, which could be accomplished pretty simply with 2-of-3 sigs if there's market demand for it.
You can’t reverse transactions. Once validated and included in a block, the transactions are forever, which is of course one of the main appeals of cryptocurrency in the first place. You would have to get the fraudster to send the money back (potentially covering gas fees) or else there is literally no other way without their signing key (also one of the key appeals of cryptocurrency).
Blockchain transactions are really just messages that can optionally include payments. A logical retail transaction that can be reversed can be modeled on top as a series of messages, very similar to how credit card clearing works.
This is a weird way to put it. Transactions include state transitions which modify the state of the global blockchain permanently. Miners (in the case of bitcoin) validate these transitions and publish the block to the chain. If there is a reversal, it must come from the merchant’s account, because only they can produce a valid state transition to “return” (ie send back) your money.
A message can be handled many ways, and a reversal payment protocol wouldn't put the customers funds directly in control of the merchant until the reversibility period is over.
For most people, a friendlier ideal is probably social recovery wallets, as advocated by Vitalik. You can restore access much like centralized services can, except instead of relying on a big company you're relying on your circle of friends and family. You can also include a company or two, if you want, without the company being a single point of failure.
https://vitalik.ca/general/2021/01/11/recovery.html
Reversing charges is a different point, which could be accomplished pretty simply with 2-of-3 sigs if there's market demand for it. At the moment, scaling issues have kept crypto from being used much for retail payments anyway (though that's gradually getting fixed).
As for freezing cards, that's something we have to do a lot because we hand over full account credentials to everyone we pay and just trust them to keep those details safe and not abuse them. I've replaced two credit cards due to fraud, and it was a hassle. It boggles my mind that we've had public key cryptography for fifty years and we're still not using it for payments. Never mind blockchains, just upgrading the banking system to use public keys would be a huge improvement.