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Bank wires let you send money to the wrong place and are largely irreversible. The solution is for your bank to double check your transaction and refuse to send

Bank wires let you send money to the wrong place and are largely irreversible. The solution is for your bank to double check your transaction and refuse to send a wire with a typo'd destination. Likewise, the solution for crypto is for your wallet software to check your transaction and refuse to send it if it has an exorbitant transaction fee.

toomuchtodo 6y ago
I trust my bank and the legal framework more than wallet software and a loose band of SWEs running a blockchain or DLT. If funds are wired to the wrong person in your jurisdiction, you can sue to recover it if the sending and receiving institutions can't claw it back. With crypto, you're SOL. Technology doesn't fix trust and legal issues, and a judge is going to laugh an immutable ledger out of a courtroom (or hold you in contempt). https://www.youtube.com/watch?v=15RTC22Z2xI https://www.youtube.com/watch?v=15RTC22Z2xI [HBR: Blockchains Are a Bad Idea (James Mickens)]
- anamexis 6y ago
  Why couldn't you sue to recover the crypto?
  - toomuchtodo 6y ago
    Lack of KYC (Know Your Customer [1]) and AML (Anti Money Laundering processes [2]) makes it more difficult to know who to pursue legally. Your US bank account or brokerage account is tied to your social security number and other PII. Who and where to process serve is much more accessible. [1] https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer [2] https://en.wikipedia.org/wiki/Anti-money_laundering_software https://en.wikipedia.org/wiki/Anti-money_laundering_software
    - camjohnson26 6y ago
      Why would you send currency to an address if you haven’t verified its identity. The tools are young, if there aren’t enough controls for you yet then don’t use them. I don’t, but I respect the power of the technology and it’s future potential.
      - olliej 6y ago
        Because there is no meaningful proof of identity for a bitcoin address? If someone on twitter says “here’s my bitcoin address for donations” they may have been hacked, or they could claim that they were hacked, and you can’t find who controls the recipient account. By design.
- EGreg 6y ago
  What if they are wired to the wrong person outside your jurisdiction?
  - camjohnson26 6y ago
    Don’t do that. If you don’t trust yourself not to make a mistake, use a third party with better controls. If none exist yet, wait. The fact that those controls haven’t been built yet doesn’t mean the whole idea is flawed.
  - olliej 6y ago
    An international wire transfer requires even more checks than a domestic one, and you can always sue in the recipients jurisdiction.
- camjohnson26 6y ago
  This is a ridiculous take. There’s plenty of problems with crypto but this isn’t one of them. The payment protocol has no reason to be irreversible, why would you ever want that. Reverse transactions should be handled by institutions, and institutions should use the protocol. If they make a mistake while using the protocol, they work together with the other institutions to fix it, exactly as happens with bank transfers. Yes it’s stupid to use a crypto currency network to send personal raw transactions, but the tech is still young and a lot of people do it. Eventually that won’t happen. Yes you can burn currency by sending it to an invalid address. You can also burn cash. Build controls so that people won’t do it. The closest example is modern databases. If you let users run sql directly they could drop their own database. That’s an irreversible transaction. The solution is to abstract that power away so that it’s extremely hard to do extremely dangerous things.
  - toomuchtodo 6y ago
    If institutions are going to run the network, and the transactions will be reversible, and you're not going to run your own wallet, why crypto? It's a solution for a problem that doesn't exist. The database works just fine.
    - camjohnson26 6y ago
      Anyone can join the network and start a new institution. Good luck starting a bank
      - toomuchtodo 6y ago
        You're not an institution unless you have a banking or money transmittal license, crypto or not. The nation state still makes the laws, a DLT node doesn't change the law. I entirely agree it's hard to start a bank, but your problem won't be solved through technology, only through policy and regulation updates. https://www.npr.org/sections/money/2017/02/10/514577243/episode-753-blockchain-gang https://www.npr.org/sections/money/2017/02/10/514577243/epis... (Planet Money: Blockchain Gang) https://cointelegraph.com/news/charges-reduced-charlie-shrem-agrees-to-plea-deal https://cointelegraph.com/news/charges-reduced-charlie-shrem... (Charges Reduced: Charlie Shrem Agrees to Plea Deal) > Before getting locked up, Shrem had run the company BitInstant. BitInstant made buying Bitcoin as easy as purchasing a money order. By the time he was 22, Shrem had hired dozens of employees, found a brand new office in Manhattan, and was processing a million dollars a day. > Shrem though ended up helping some of the wrong people trade dollars for Bitcoin: buyers and sellers of illegal drugs on the website Silk Road. As he was getting off a plane from Europe to New York, Shrem was arrested. He was convicted of aiding and abetting an unlicensed money transmitter, and sentenced to two years in federal prison.
FalconSensei 6y ago
This wouldn't happen with a bank wire, because you don't set the fee. You choose where to send, and how much to send. And that's it. Yes, you can send to the wrong place, but for example, in Brazil, to transfer to another person, you have to specify: - Name - bank - bank branch - bank account - CPF (government national ID) if anything doesn't match, the transaction doesn't go through.
m3kw9 6y ago
Is a bit harder to wire a large amount As bank make it a bit different than sending etransfers, in crypto, there is no limit, all transfer for any amount goes through the same interface.
olliej 6y ago
With a wire transfer you have to provide a swift or such routing number a bank name, an account holder name, and an account#. All of which have to match. Then there is a processing period during which it can still be cancelled. Finally the dispute resolution process (the law) can force the transaction to be reversed - taking money back from the recipient account. None of that exists in bitcoin. Especially given you can’t necessarily identify the miner or recipient to contact to reverse the transaction, even if they wanted to. We’ll just ignore crypto transactions taking $$$s per transaction, taking minutes to hours to complete, and consume more power than some countries.

toomuchtodo 6y ago

I trust my bank and the legal framework more than wallet software and a loose band of SWEs running a blockchain or DLT. If funds are wired to the wrong person in your jurisdiction, you can sue to recover it if the sending and receiving institutions can't claw it back. With crypto, you're SOL. Technology doesn't fix trust and legal issues, and a judge is going to laugh an immutable ledger out of a courtroom (or hold you in contempt). https://www.youtube.com/watch?v=15RTC22Z2xI https://www.youtube.com/watch?v=15RTC22Z2xI [HBR: Blockchains Are a Bad Idea (James Mickens)]

anamexis 6y ago
Why couldn't you sue to recover the crypto?
- toomuchtodo 6y ago
  Lack of KYC (Know Your Customer [1]) and AML (Anti Money Laundering processes [2]) makes it more difficult to know who to pursue legally. Your US bank account or brokerage account is tied to your social security number and other PII. Who and where to process serve is much more accessible. [1] https://en.wikipedia.org/wiki/Know_your_customer https://en.wikipedia.org/wiki/Know_your_customer [2] https://en.wikipedia.org/wiki/Anti-money_laundering_software https://en.wikipedia.org/wiki/Anti-money_laundering_software
  - camjohnson26 6y ago
    Why would you send currency to an address if you haven’t verified its identity. The tools are young, if there aren’t enough controls for you yet then don’t use them. I don’t, but I respect the power of the technology and it’s future potential.
    - olliej 6y ago
      Because there is no meaningful proof of identity for a bitcoin address? If someone on twitter says “here’s my bitcoin address for donations” they may have been hacked, or they could claim that they were hacked, and you can’t find who controls the recipient account. By design.
EGreg 6y ago
What if they are wired to the wrong person outside your jurisdiction?
- camjohnson26 6y ago
  Don’t do that. If you don’t trust yourself not to make a mistake, use a third party with better controls. If none exist yet, wait. The fact that those controls haven’t been built yet doesn’t mean the whole idea is flawed.
- olliej 6y ago
  An international wire transfer requires even more checks than a domestic one, and you can always sue in the recipients jurisdiction.
camjohnson26 6y ago
This is a ridiculous take. There’s plenty of problems with crypto but this isn’t one of them. The payment protocol has no reason to be irreversible, why would you ever want that. Reverse transactions should be handled by institutions, and institutions should use the protocol. If they make a mistake while using the protocol, they work together with the other institutions to fix it, exactly as happens with bank transfers. Yes it’s stupid to use a crypto currency network to send personal raw transactions, but the tech is still young and a lot of people do it. Eventually that won’t happen. Yes you can burn currency by sending it to an invalid address. You can also burn cash. Build controls so that people won’t do it. The closest example is modern databases. If you let users run sql directly they could drop their own database. That’s an irreversible transaction. The solution is to abstract that power away so that it’s extremely hard to do extremely dangerous things.
- toomuchtodo 6y ago
  If institutions are going to run the network, and the transactions will be reversible, and you're not going to run your own wallet, why crypto? It's a solution for a problem that doesn't exist. The database works just fine.
  - camjohnson26 6y ago
    Anyone can join the network and start a new institution. Good luck starting a bank
    - toomuchtodo 6y ago
      You're not an institution unless you have a banking or money transmittal license, crypto or not. The nation state still makes the laws, a DLT node doesn't change the law. I entirely agree it's hard to start a bank, but your problem won't be solved through technology, only through policy and regulation updates. https://www.npr.org/sections/money/2017/02/10/514577243/episode-753-blockchain-gang https://www.npr.org/sections/money/2017/02/10/514577243/epis... (Planet Money: Blockchain Gang) https://cointelegraph.com/news/charges-reduced-charlie-shrem-agrees-to-plea-deal https://cointelegraph.com/news/charges-reduced-charlie-shrem... (Charges Reduced: Charlie Shrem Agrees to Plea Deal) > Before getting locked up, Shrem had run the company BitInstant. BitInstant made buying Bitcoin as easy as purchasing a money order. By the time he was 22, Shrem had hired dozens of employees, found a brand new office in Manhattan, and was processing a million dollars a day. > Shrem though ended up helping some of the wrong people trade dollars for Bitcoin: buyers and sellers of illegal drugs on the website Silk Road. As he was getting off a plane from Europe to New York, Shrem was arrested. He was convicted of aiding and abetting an unlicensed money transmitter, and sentenced to two years in federal prison.

FalconSensei 6y ago

This wouldn't happen with a bank wire, because you don't set the fee. You choose where to send, and how much to send. And that's it. Yes, you can send to the wrong place, but for example, in Brazil, to transfer to another person, you have to specify: - Name - bank - bank branch - bank account - CPF (government national ID) if anything doesn't match, the transaction doesn't go through.

m3kw9 6y ago

Is a bit harder to wire a large amount As bank make it a bit different than sending etransfers, in crypto, there is no limit, all transfer for any amount goes through the same interface.

olliej 6y ago

With a wire transfer you have to provide a swift or such routing number a bank name, an account holder name, and an account#. All of which have to match. Then there is a processing period during which it can still be cancelled. Finally the dispute resolution process (the law) can force the transaction to be reversed - taking money back from the recipient account. None of that exists in bitcoin. Especially given you can’t necessarily identify the miner or recipient to contact to reverse the transaction, even if they wanted to. We’ll just ignore crypto transactions taking $$$s per transaction, taking minutes to hours to complete, and consume more power than some countries.