5 ms·

Well I guess when you are receiving you want irreversibility, when you are sending you prefer reversibility...

Nursie 8y ago
> Well I guess when you are receiving you want irreversibility I think that's a little simplistic. Without reversibility you're not going to receive as much. People are far less likely to trust smaller or newer merchants without these sorts of features. You probably also want your customers to be able to rectify mistakes, such as sending money to the wrong place. I guess we could say when you are receiving you want irreversibility if you're planning to rip off your customers or otherwise not fulfil your contract with them
- logfromblammo 8y ago
  With old money, reversibility is handled by return policies, merchant account charge-backs, liens, and civil lawsuits. If you hand a bearer instrument like a bank note to someone, that transaction is technically irreversible. They put it in their pocket, and you can't recover it without a physical assault. You have to trust them to provide the goods or services that you just paid for. Or you have to trust the justice system that it will allow you to (eventually) recover your payment if the other party reneged. These remedies are often not available with cryptocurrency. You may be unaware of the counterparty's physical location or true identity, and even if you did, they may be in a different legal jurisdiction altogether. You can't round up a posse to go get the money back. If you pay with a finance system account, you can dispute the charge with the payments processor, and your payment may be reversed by them, even after the cash balances have already been altered, by withholding payment from a future transaction through that processor. Criteria for reversal may vary between processors. If consumers trust the reversal policy of the processor, the merchants get more money, because consumers don't have to trust them or the formal justice system. They can get refunded now, and let the processor and the merchant argue over the details. This remedy is available to cryptocurrencies. While individual transactions are irreversible, it is possible to redirect future transactions through a trusted intermediary or a smart contract. Basically, everyone wants an escrow mechanism of some sort built in to the system, so that if a customer doesn't get the goods or services, the merchant doesn't get their money; and if a merchant doesn't get paid, the customer doesn't get goods or services. As long as the transactions are irreversible, someone can get ripped off, and they have to go out-of-band for a remedy. As long as transactions are trivially reversible, someone can get ripped off, and they have to go out-of-band for a remedy. Conveyance of money and delivery of goods or services are each half-trades. We don't like those half-trades. They're too much like gifts, in that there is too little ability to enforce reciprocity without a preexisting social link. If you conduct business in half-trades, you still have to trust, and people can still get ripped off. So far, cryptocurrencies only technologically validate the money-conveyance half-trade. What it needs is a way to validate the other half-trade, for goods or services, and bundle them both into an atomic whole-trade that either reverses or becomes permanent as a single unit. Trade chains would be nice, too, but atomic transactions are what people need to trust the system instead of trusting each other.
  - zrm 8y ago
    You can't have atomic transactions when one half of the transaction isn't electronic. If I pay someone for a laptop and instead of a laptop I receive a box of rocks, I can claim they didn't send the laptop and they can claim they did. There is no way for a third party to know who is lying. The recipient could be lying to get a refund when they received the laptop, the sender could be lying to get paid when they sent a box of rocks. Maybe neither of us is lying and the delivery driver swapped the package contents. This is not a problem alternative payment methods solve, nor one they created. See Amazon. The solution is some kind of insurance, which can be layered on top of any payment method -- you buy through Amazon using whatever payment method you like, they take a cut in exchange for eating the returns when sellers send the wrong stuff. Then crappy traders are the intermediary's problem and whether they kick them out or eat the losses themselves is their own choice. But you don't want that kind of system built into the payment method itself, because it has overhead, and not all transactions require it. Sometimes the thing you're paying for has already happened and you're just settling your account, in which case a proof of payment is all you need out of the transaction. Sometimes you are buying something in person or can otherwise verify the goods yourself before making payment. Sometimes the seller is known and trustworthy enough that you're willing to buy without insurance. In all of these cases mandatory insurance is costly dead weight overhead, and they represent a significant proportion of transactions. Meanwhile if you're buying from someone you don't trust and can't verify, you have the option of using an intermediary or escrow service or buying insurance. But that doesn't mean it needs to be mandatory in all cases.
    - Sargos 8y ago
      This is also the problem that eBay faced in the 90s. It mostly solves it with social mechanisms like reputation scores and in general it does a pretty good job. I think we'll see a lot more solutions like that in the future.
    - logfromblammo 8y ago
      > You can't have atomic transactions when one half of the transaction isn't electronic. You either need to replicate the trust system that greases cash transactions, or make the "get stuff" half of the trade as easily verified as the "move money" half. The latter is the easier part of the problem, because part of the reason that money is money is the fungibility factor. Solving the former would eliminate counterfeiting, provide record of provenance, track supply chain, simplify customs clearance, and trivialize recalls in one stroke. But it is a truly massive undertaking. Solutions like insurance and charge-backs are several orders of magnitude cheaper to implement, and don't require an unbroken chain of cooperation from everyone in a supply chain from manufacturer to consumer. It doesn't exist. It won't exist without a lot of work. But that's what everyone wants. Right now, protecting yourself from scams in a caveat emptor marketplace is an externality that can be diffused away, such that it can be paid a little bit at a time, by everyone. If you eliminate the possibility of scamming, that's removing a cost, such that no one has to pay it any more. A payments system that cannot be scammed by anyone but a giant conspiracy of renegades, or a state-level actor, would likely be preferred by everyone. But a weak link like Amazon prevents this. They do not themselves know whether the goods in their warehouse are counterfeit, so if you buy something, receive genuine goods, and return a counterfeit to them for a refund, they don't even know that you were the one that scammed them instead of one of their "fulfilled by Amazon" sellers. If they eliminated the common binning, and were able to show that the goods shipped to you were verified as genuine, with a record of provenance going straight back to the factory, you wouldn't be able to do that. But Amazon would rather pay the scammers than pay someone to build a scam-resistant system. That's a reasonable business decision for one company to make. Society as a whole might prefer that the scammers get a smackdown instead of a payoff.
- stale2002 8y ago
  People already have multiple choices of reversible currencies. The point is that it is useful to both have reversible, and irreversible currencies existing in the world at the same time. That way people who want to use reversible currencies can use that, and people who instead prefer irreversible ones can use those.

> Well I guess when you are receiving you want irreversibility I think that's a little simplistic. Without reversibility you're not going to receive as much. People are far less likely to trust smaller or newer merchants without these sorts of features. You probably also want your customers to be able to rectify mistakes, such as sending money to the wrong place. I guess we could say when you are receiving you want irreversibility if you're planning to rip off your customers or otherwise not fulfil your contract with them

logfromblammo 8y ago
With old money, reversibility is handled by return policies, merchant account charge-backs, liens, and civil lawsuits. If you hand a bearer instrument like a bank note to someone, that transaction is technically irreversible. They put it in their pocket, and you can't recover it without a physical assault. You have to trust them to provide the goods or services that you just paid for. Or you have to trust the justice system that it will allow you to (eventually) recover your payment if the other party reneged. These remedies are often not available with cryptocurrency. You may be unaware of the counterparty's physical location or true identity, and even if you did, they may be in a different legal jurisdiction altogether. You can't round up a posse to go get the money back. If you pay with a finance system account, you can dispute the charge with the payments processor, and your payment may be reversed by them, even after the cash balances have already been altered, by withholding payment from a future transaction through that processor. Criteria for reversal may vary between processors. If consumers trust the reversal policy of the processor, the merchants get more money, because consumers don't have to trust them or the formal justice system. They can get refunded now, and let the processor and the merchant argue over the details. This remedy is available to cryptocurrencies. While individual transactions are irreversible, it is possible to redirect future transactions through a trusted intermediary or a smart contract. Basically, everyone wants an escrow mechanism of some sort built in to the system, so that if a customer doesn't get the goods or services, the merchant doesn't get their money; and if a merchant doesn't get paid, the customer doesn't get goods or services. As long as the transactions are irreversible, someone can get ripped off, and they have to go out-of-band for a remedy. As long as transactions are trivially reversible, someone can get ripped off, and they have to go out-of-band for a remedy. Conveyance of money and delivery of goods or services are each half-trades. We don't like those half-trades. They're too much like gifts, in that there is too little ability to enforce reciprocity without a preexisting social link. If you conduct business in half-trades, you still have to trust, and people can still get ripped off. So far, cryptocurrencies only technologically validate the money-conveyance half-trade. What it needs is a way to validate the other half-trade, for goods or services, and bundle them both into an atomic whole-trade that either reverses or becomes permanent as a single unit. Trade chains would be nice, too, but atomic transactions are what people need to trust the system instead of trusting each other.
- zrm 8y ago
  You can't have atomic transactions when one half of the transaction isn't electronic. If I pay someone for a laptop and instead of a laptop I receive a box of rocks, I can claim they didn't send the laptop and they can claim they did. There is no way for a third party to know who is lying. The recipient could be lying to get a refund when they received the laptop, the sender could be lying to get paid when they sent a box of rocks. Maybe neither of us is lying and the delivery driver swapped the package contents. This is not a problem alternative payment methods solve, nor one they created. See Amazon. The solution is some kind of insurance, which can be layered on top of any payment method -- you buy through Amazon using whatever payment method you like, they take a cut in exchange for eating the returns when sellers send the wrong stuff. Then crappy traders are the intermediary's problem and whether they kick them out or eat the losses themselves is their own choice. But you don't want that kind of system built into the payment method itself, because it has overhead, and not all transactions require it. Sometimes the thing you're paying for has already happened and you're just settling your account, in which case a proof of payment is all you need out of the transaction. Sometimes you are buying something in person or can otherwise verify the goods yourself before making payment. Sometimes the seller is known and trustworthy enough that you're willing to buy without insurance. In all of these cases mandatory insurance is costly dead weight overhead, and they represent a significant proportion of transactions. Meanwhile if you're buying from someone you don't trust and can't verify, you have the option of using an intermediary or escrow service or buying insurance. But that doesn't mean it needs to be mandatory in all cases.
  - Sargos 8y ago
    This is also the problem that eBay faced in the 90s. It mostly solves it with social mechanisms like reputation scores and in general it does a pretty good job. I think we'll see a lot more solutions like that in the future.
  - logfromblammo 8y ago
    > You can't have atomic transactions when one half of the transaction isn't electronic. You either need to replicate the trust system that greases cash transactions, or make the "get stuff" half of the trade as easily verified as the "move money" half. The latter is the easier part of the problem, because part of the reason that money is money is the fungibility factor. Solving the former would eliminate counterfeiting, provide record of provenance, track supply chain, simplify customs clearance, and trivialize recalls in one stroke. But it is a truly massive undertaking. Solutions like insurance and charge-backs are several orders of magnitude cheaper to implement, and don't require an unbroken chain of cooperation from everyone in a supply chain from manufacturer to consumer. It doesn't exist. It won't exist without a lot of work. But that's what everyone wants. Right now, protecting yourself from scams in a caveat emptor marketplace is an externality that can be diffused away, such that it can be paid a little bit at a time, by everyone. If you eliminate the possibility of scamming, that's removing a cost, such that no one has to pay it any more. A payments system that cannot be scammed by anyone but a giant conspiracy of renegades, or a state-level actor, would likely be preferred by everyone. But a weak link like Amazon prevents this. They do not themselves know whether the goods in their warehouse are counterfeit, so if you buy something, receive genuine goods, and return a counterfeit to them for a refund, they don't even know that you were the one that scammed them instead of one of their "fulfilled by Amazon" sellers. If they eliminated the common binning, and were able to show that the goods shipped to you were verified as genuine, with a record of provenance going straight back to the factory, you wouldn't be able to do that. But Amazon would rather pay the scammers than pay someone to build a scam-resistant system. That's a reasonable business decision for one company to make. Society as a whole might prefer that the scammers get a smackdown instead of a payoff.
stale2002 8y ago
People already have multiple choices of reversible currencies. The point is that it is useful to both have reversible, and irreversible currencies existing in the world at the same time. That way people who want to use reversible currencies can use that, and people who instead prefer irreversible ones can use those.