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I work in finance. Our systems are as shitty as any other industry, security problems are there, and social engineering is a problem. However, there is one sim

I work in finance. Our systems are as shitty as any other industry, security problems are there, and social engineering is a problem. However, there is one simple rule which allows us to worry less about possible hacks, and when this rule is broken for some reason, shit usually hits the fan (like in the case of Bangladesh heist). The rule is: it always should be possible to manually reverse the transaction. Ethereum got it right. Welcome to the real finance.

repomies691 10y ago
> Ethereum got it right. Welcome to the real finance. Well, ethereum classic fork seems to be still alive, and many exchanges are considering adding it. So, it was reversable, but the work and the after-effects were pretty big. The reversability in older systems is pretty much easier.
- eximius 10y ago
  That seems like an awful idea. If that happens, I'll just dump my currency on whichever one I don't want to live. Others will do the same.
amelius 10y ago
> The rule is: it always should be possible to manually reverse the transaction. In a financial transaction there are two parties, and both must agree to a reversal. Especially if you want to reverse thousands of transactions. Unless there are special circumstances. But in no way will it always be possible to manually reverse a transaction.
- clentaminator 10y ago
  Even if one of those parties is out to commit fraud and would never agree to a reversal?
- JumpCrisscross 10y ago
  There are lots of parties to any financial transaction. Transfer agents, exchanges, clearing houses, regulators, central banks, et cetera. Various combinations of the above, along with banks and the "buyer" and the "seller", can reverse transactions.
  - amelius 10y ago
    s/can/could in some cases/
riprowan 10y ago
Ethereum did not reverse the transaction because the transaction was fraudulent. If that was the case, thousands or millions of crypto transactions would probably need reversing. Ethereum reversed the transaction because of a TBTF situation. The DAO (a Layer 2 system built on Ethereum) accumulated too much of the entire market cap of the underlying Ethereum network, making it a threat to the underlying network. THEN the DAO failed, threatening the entire underlying Layer 1 network (the blockchain and its ecosystem of miners). Were it not for the possibility of existential threat (TBTF) then no fork would have been possible, regardless of how much fraud it enabled or how many bugs were found. The problem is that the crypto community is choosing to not see this for what it is: the inherent systemic vulnerability of a L2 system running on an L1 blockchain. If another DAO - or Lightning Network - or any "L2" system running on top of a crypto garners enough capital from the underlying network, then the L2 system is a weapon that can be used to damage the L1 network. Crypto enthusiasts should take this as a grim warning: L2 applications can hijack the L1 network and damage it. For this reason, we should be skeptical of any L2 network with excess capitalization. We should be even more skeptical of any group of devs trying to foist an L2 solution on the community as a one-size-fits-all solution (to distributed apps, to transaction scaling, etc).
busterarm 10y ago
Used to work in IT in finance. Can't tell you how many offices and server closets I walked into and had to ask the question "Hey, what's this machine do?" or "Hey, what's this laptop plugged in for?" Also lots of "This network is wired in a way that totally doesn't match the spec/use case/documentation." The construction and cleaning contractors we had had full access to our most secure rooms as well as anyone in the IT department. The potential for insider and socially-engineered grift is huge.
- norea-armozel 10y ago
  Sounds like my job, scary.
  - busterarm 10y ago
    Also that circa-1993 desktop connected to the T1 line is the payroll system. Do not touch it!
    - norea-armozel 10y ago
      Hah, they put the servers here in a closet only accessible via the single use restroom. I don't know who designed this building but they didn't understand layout well.

repomies691 10y ago

> Ethereum got it right. Welcome to the real finance. Well, ethereum classic fork seems to be still alive, and many exchanges are considering adding it. So, it was reversable, but the work and the after-effects were pretty big. The reversability in older systems is pretty much easier.

eximius 10y ago
That seems like an awful idea. If that happens, I'll just dump my currency on whichever one I don't want to live. Others will do the same.

amelius 10y ago

> The rule is: it always should be possible to manually reverse the transaction. In a financial transaction there are two parties, and both must agree to a reversal. Especially if you want to reverse thousands of transactions. Unless there are special circumstances. But in no way will it always be possible to manually reverse a transaction.

clentaminator 10y ago
Even if one of those parties is out to commit fraud and would never agree to a reversal?
JumpCrisscross 10y ago
There are lots of parties to any financial transaction. Transfer agents, exchanges, clearing houses, regulators, central banks, et cetera. Various combinations of the above, along with banks and the "buyer" and the "seller", can reverse transactions.
- amelius 10y ago
  s/can/could in some cases/

riprowan 10y ago

Ethereum did not reverse the transaction because the transaction was fraudulent. If that was the case, thousands or millions of crypto transactions would probably need reversing. Ethereum reversed the transaction because of a TBTF situation. The DAO (a Layer 2 system built on Ethereum) accumulated too much of the entire market cap of the underlying Ethereum network, making it a threat to the underlying network. THEN the DAO failed, threatening the entire underlying Layer 1 network (the blockchain and its ecosystem of miners). Were it not for the possibility of existential threat (TBTF) then no fork would have been possible, regardless of how much fraud it enabled or how many bugs were found. The problem is that the crypto community is choosing to not see this for what it is: the inherent systemic vulnerability of a L2 system running on an L1 blockchain. If another DAO - or Lightning Network - or any "L2" system running on top of a crypto garners enough capital from the underlying network, then the L2 system is a weapon that can be used to damage the L1 network. Crypto enthusiasts should take this as a grim warning: L2 applications can hijack the L1 network and damage it. For this reason, we should be skeptical of any L2 network with excess capitalization. We should be even more skeptical of any group of devs trying to foist an L2 solution on the community as a one-size-fits-all solution (to distributed apps, to transaction scaling, etc).

busterarm 10y ago

Used to work in IT in finance. Can't tell you how many offices and server closets I walked into and had to ask the question "Hey, what's this machine do?" or "Hey, what's this laptop plugged in for?" Also lots of "This network is wired in a way that totally doesn't match the spec/use case/documentation." The construction and cleaning contractors we had had full access to our most secure rooms as well as anyone in the IT department. The potential for insider and socially-engineered grift is huge.

norea-armozel 10y ago
Sounds like my job, scary.
- busterarm 10y ago
  Also that circa-1993 desktop connected to the T1 line is the payroll system. Do not touch it!
  - norea-armozel 10y ago
    Hah, they put the servers here in a closet only accessible via the single use restroom. I don't know who designed this building but they didn't understand layout well.