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A class of risks that the normal financial system doesn’t have. My bank doesn’t expose me to “double spend” attacks.

aey 7y ago
At the cost of 2 trillion a year. Or 1 trillion if if you only count service fees and not liquidity. https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/tracking%20the%20sources%20of%20robust%20payments%20growth%20mckinsey%20global%20payments%20map/mck-2019-global-payments-report.ashx https://www.mckinsey.com/~/media/mckinsey/industries/financi...
- spookthesunset 7y ago
  Care to actually quote where the banks are spending $2 trillion a year to stop double spends?
  - aey 7y ago
    The world is. There is no engineering reason why it’s so expensive to move numbers around in a bank. In comparison the search engine market is 170 billion. If a google sized company or decentralized network could reduce the 2 trillion global spend on payments to 170b, that would be fantastic regardless of how much it spends on preventing double spends.
    - spookthesunset 7y ago
      Dude. That $2 trillion is all of finance. Finance is a hell of a lot more than preventing double spends (which don’t exist outside of bitcoin). On a per transaction and even global domestic product basis, the cost of our financial system is tiny. By comparison the cost of bitcoins financial system by any metric is astronomical.
      - aey 7y ago
        Read the report, it's 2 trillion of revenue for payments only, not all of finance. That report doesn't cover trading, derivatives, mortgages, etc... 1 trillion of payments revenue comes from credit lines, about 1 trillion is fees moving money around. Bitcoin is just one settlement layer. There is no reason for my day to day transactions to settle there. My day to day payments can be settlement on a chain with much higher throughput and faster finality and different security assumptions. There is also no reason why I can't lend my funds to 100m user credit cards directly without a middleman through software either. So whats the cost comparison of moving $100,000 out of China into the the US via bitcoin vs the traditional banking system?
limomium 7y ago
I don't know. My bank "double spent" a hundred bucks the other day, that took them half a month to return. There was some error with the debit card system where it wouldn't accept my card, then when the cashier rebooted the device, it informed me that my account balance was insufficient. Sure enough, checking my balance I see that somehow the first try "stuck" into the system as a 'pre-authorization' -- inexplicably unusable money. The bank just shrugged, it would fix itself in two weeks. I stopped paying with plastic. Fear the day the ATM fails to produce the bills yet drains my account.
cwkoss 7y ago
Fraud is absolutely a big deal in banking.
- spookthesunset 7y ago
  Thankfully many types of fraud can be reversed in our modern financial system. With bitcoin, virtually any form of fraud leaves you completely fucked with absolutely no recourse. Which makes bitcoin an even bigger joke because on a per transaction basis (one that includes miner subsidies) bitcoin costs several orders of magnitude more and cannot even deliver the same basic features that mainstream fiat offers.
  - cwkoss 7y ago
    You're discounting the costs of maintaining system which allows fiat to keep it's value: 20% of the value of human productivity is spent maintaining the financial system. Saying that you can transact fiat cheaply is a silly comparison: bitcoin can be transacted for free as well. It is flawed to compare the fractional expense of maintaining the entire system for Bitcoin against any value but the fractional cost of maintaining the entire financial sector: comparing against the cost to consumer without accounting for the system maintenance costs is fallacious.
  - Erlich_Bachman 7y ago
    > can be reversed in our modern financial system It's not like it is free to have a system like that!
Geee 7y ago
Yes they absolutely do. Someone buys something from you and then they reverse the payment. They go on and buy something else with the same money. Reversible payments are a huge issue for online merchants.

aey 7y ago

At the cost of 2 trillion a year. Or 1 trillion if if you only count service fees and not liquidity. https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/tracking%20the%20sources%20of%20robust%20payments%20growth%20mckinsey%20global%20payments%20map/mck-2019-global-payments-report.ashx https://www.mckinsey.com/~/media/mckinsey/industries/financi...

spookthesunset 7y ago
Care to actually quote where the banks are spending $2 trillion a year to stop double spends?
- aey 7y ago
  The world is. There is no engineering reason why it’s so expensive to move numbers around in a bank. In comparison the search engine market is 170 billion. If a google sized company or decentralized network could reduce the 2 trillion global spend on payments to 170b, that would be fantastic regardless of how much it spends on preventing double spends.
  - spookthesunset 7y ago
    Dude. That $2 trillion is all of finance. Finance is a hell of a lot more than preventing double spends (which don’t exist outside of bitcoin). On a per transaction and even global domestic product basis, the cost of our financial system is tiny. By comparison the cost of bitcoins financial system by any metric is astronomical.
    - aey 7y ago
      Read the report, it's 2 trillion of revenue for payments only, not all of finance. That report doesn't cover trading, derivatives, mortgages, etc... 1 trillion of payments revenue comes from credit lines, about 1 trillion is fees moving money around. Bitcoin is just one settlement layer. There is no reason for my day to day transactions to settle there. My day to day payments can be settlement on a chain with much higher throughput and faster finality and different security assumptions. There is also no reason why I can't lend my funds to 100m user credit cards directly without a middleman through software either. So whats the cost comparison of moving $100,000 out of China into the the US via bitcoin vs the traditional banking system?

limomium 7y ago

I don't know. My bank "double spent" a hundred bucks the other day, that took them half a month to return. There was some error with the debit card system where it wouldn't accept my card, then when the cashier rebooted the device, it informed me that my account balance was insufficient. Sure enough, checking my balance I see that somehow the first try "stuck" into the system as a 'pre-authorization' -- inexplicably unusable money. The bank just shrugged, it would fix itself in two weeks. I stopped paying with plastic. Fear the day the ATM fails to produce the bills yet drains my account.

cwkoss 7y ago

Fraud is absolutely a big deal in banking.

spookthesunset 7y ago
Thankfully many types of fraud can be reversed in our modern financial system. With bitcoin, virtually any form of fraud leaves you completely fucked with absolutely no recourse. Which makes bitcoin an even bigger joke because on a per transaction basis (one that includes miner subsidies) bitcoin costs several orders of magnitude more and cannot even deliver the same basic features that mainstream fiat offers.
- cwkoss 7y ago
  You're discounting the costs of maintaining system which allows fiat to keep it's value: 20% of the value of human productivity is spent maintaining the financial system. Saying that you can transact fiat cheaply is a silly comparison: bitcoin can be transacted for free as well. It is flawed to compare the fractional expense of maintaining the entire system for Bitcoin against any value but the fractional cost of maintaining the entire financial sector: comparing against the cost to consumer without accounting for the system maintenance costs is fallacious.
- Erlich_Bachman 7y ago
  > can be reversed in our modern financial system It's not like it is free to have a system like that!

Geee 7y ago

Yes they absolutely do. Someone buys something from you and then they reverse the payment. They go on and buy something else with the same money. Reversible payments are a huge issue for online merchants.