7 ms·

Many folks shit on the modern financial system, with its centralization and Government-coupling, but things like this are actually trackable and reversible in t

Many folks shit on the modern financial system, with its centralization and Government-coupling, but things like this are actually trackable and reversible in that ecosystem. The safeguards have evolved over centuries. I am curious when crypto will get there. Maybe 10 years or so?

gota 6y ago
Honestly would like to know how you see it would "get there". In my mind, the 'fiat' part of 'fiat currency' and government-coupling are what gives the financial system the safeguards, so...? I mean, it is always the state, if you follow the string to the end, that oversees and enforce compensation, rollback and error correction. What kind of fully-distributed non-autoritative algorithm can do that?
- derefr 6y ago
  You can build a fiat currency system on top of crypto-holding smart contracts just as well as you can build one on top of gold-holding (or T-bond-holding) banks. The main difference between cryptocurrency and regular currency comes down to interoperability. The infrastructure that handles fiat cryptocurrencies could be built generically, such that a given "bank account" could hold a mix of fiat crypto-tokens, each associated with a given regulatory regime that would validate actions taken upon those tokens. With regular fiat currency, the currency is effectively a fiction local to a given regulatory regime; but that fiction can also take on other lives as other fictions, if "re-used" in other regimes. (I.e., some other country can use US dollars as "their" currency, with their own rules about how you can spend/exchange those US dollars while you're there.) Effectively, the value of the currency in each economy is independent, a separate fiat declaration of value by the economy that trades in the currency. And, if you want to "translate" the value of that currency into a different regulatory regime that doesn't "share" in the fiction of that currency, you (or the bank you're interacting with) must exchange it through a ForEx broker (which effectively recycles the source currency back into the regulatory regime it comes from) to attain a different fiat currency regulated by the destination regime. Cryptocurrency skips all that. You don't need ForEx. Anyone from anywhere can hold anything. It's less like current fiat, and more like commodities trading with each fiat currency being a country-unique export (e.g. an elemental metal only found there) traded on, and valued by, the global market as a whole. And yet, if someone were holding a hypothetical government-regulated USD token, every interaction that person does with that token would be done with under regulatory validation of the US government. There wouldn't be separate fictions of "the US dollar" in each economy it trades in (as happens in e.g. Venezuela); instead, it'd be more like everyone in Venezuela buying and selling everything by having implicit US bank accounts owned by proxy US citizens beholden to US law, and doing transfers between those accounts. Of course, at any point you could "cash out" of the fiat currency by exchanging it for some non-regulated token (if the regulatory regime that controls the regulated fiat token allows that exchange to happen.) Just like you can take cash out of a bank, and walk away. (Or more precisely, just like you can buy a non-controlled commodity like gold or oil using your chequing-account balance, and then walk away with the commodity.)
Barrin92 6y ago
the only way to get there is by reinventing the dreaded middlemen of governance, regulation and insurance that they attempted to replace, with the added feature of having produced a currency that burns the energy equivalent of a middle sized nation
seibelj 6y ago
98% of HN except for a vocal, small minority ever says anything positive about crypto or blockchain. The vast majority appreciate the benefits of the state apparatus being the conduit for financial services. So you posting this is not a surprising nor unique idea, you are representing 98% of HN commenters.
- bdcravens 6y ago
  I'd say 98% of the population. There's a very small percentage of the population that even understands what fiat is, and what problems cryptocurrency solves. For that matter, a sizable percentage of cryptocurrency advocates either don't know or care either; their only concern is how much fiat they can trade cryptocurrency for.
abakker 6y ago
probably never, honestly. Many people still feel that the guard rails are bugs, not features and imagine that things like this will never happen.
rabidrat 6y ago
It is impossible by design. Adding that 'feature' takes away the core principle of decentralized currency. Allowing government to reverse transactions will also allow them to seize assets. Then it is just a regular currency (for better and worse).
- Scoundreller 6y ago
  Didn’t ethereum fork to rollback a hack they didn’t like?
  - nyghtly 6y ago
    Do you mean this? https://www.bitdegree.org/tutorials/ethereum-vs-ethereum-classic/ https://www.bitdegree.org/tutorials/ethereum-vs-ethereum-cla...
    - Scoundreller 6y ago
      This one: https://www.coindesk.com/ethereum-executes-blockchain-hard-fork-return-dao-investor-funds https://www.coindesk.com/ethereum-executes-blockchain-hard-f...
- nyghtly 6y ago
  It becomes a regular currency... that consumes huge amounts of electricity for no reason whatsoever. https://www.vox.com/2019/6/18/18642645/bitcoin-energy-price-renewable-china https://www.vox.com/2019/6/18/18642645/bitcoin-energy-price-...
bdcravens 6y ago
Cash transactions aren't reversible or easily tracked.
- knorker 6y ago
  Which is why it's not used for important purchases. Except illegal ones.
  - tialaramex 6y ago
    And it's why you'll notice that bill denominations didn't follow inflation. If no legitimate transactions need $100M in cash, it follows there is no need to make it practical to actually move $100M in cash. For a while there was a workaround, it lasted a long time in the United States and after it ended Hollywood kept it around (in fiction) partly by using plots that were written when it was real and partly just because it looks cooler even though it's not possible. Bearer Bonds. You'll notice that's what they're stealing in Die Hard. When it was made, and when it was set, Bearer Bonds weren't a thing (adverse tax treatment ensured they had basically ceased to exist) but when the novel the screenplay is based on was written it is reasonable that a wealthy multinational might possess large sums of Bearer Bonds in a vault. Bearer Bonds were bonds (duh) but they weren't registered anywhere, the owner of the bond was whoever was holding it, just like cash, except a briefcase full of bonds could be worth tens of millions of dollars.
    - knorker 6y ago
      That's a really good point. I recently transferred a few hundred k. It's a little bit of a hassle, but you know what, the system SHOULD look at that more closely. And it can, because that scales. What we need is scalable micropayments, not ability to more easily lose $100M one transaction. The people who do need to move $100M it's ok if we have a separate system for.
knorker 6y ago
They first have to understand that reversibility is a feature. One of their core beliefs is that's it's a bug.
zajio1am 6y ago
> but things like this are actually trackable and reversible in that ecosystem I do not know about US, but in EU bank transfers are generally not reversible (except forced by courts). If you send money to wrong bank number, you cannot cancel the transaction in bank, you need to ask the owner of that account to send them back. Compared to BTC, there are two differences - it is possible to identify an account holder and justice system can effectively force bank transfers.
- knorker 6y ago
  It's not THAT hard to reverse transactions between EU banks. E.g. when that pirate bay founder hacked a bank's mainframe and transferred money out internationally the banks sorted it out, sending it back, without a court. Maybe you're thinking something specific about "reversing a transaction", but the main point here is that yes if needed a court can just make that reversing happen. Not the case for cryptocurrency. And no matter what the coiners say, irreversibility is very much a bug that society doesn't want.
ballenf 6y ago
Wire transfers are not reversible after about an hour - as I mentioned the other day a good friend lost a house down payment due to fraud. But I generally agree with the advice that the service banks and fiat currency provide is probably worth the cost for almost everyone.
- iJohnDoe 6y ago
  Could you share some general details about the friend that lost their down payment? I’ve heard of this happening to others and have argued that the money is lost and cannot be recovered. People think it’s crazy the money is lost and cannot be recovered. From what I’ve heard it cannot be recovered. Is your friend able to recover the funds? How did it happen? Did the instructions for transfer get altered by someone? Thanks.
  - fluffything 6y ago
    Typical scam is: hack into a real state agency, observe all emails with customers, send email to customer to deposit some funds on some account on the day of the downpayment, 4-5 hours before the real state agency worker would have done the same. Collect 1 day worth of downpayments, and run.
    - mianos 6y ago
      The well publiced Pexa fraud is an example. The money was wired off-shore and lost. https://www.propertyobserver.com.au/forward-planning/advice-and-hot-topics/85862-pexa-warning-as-conveyancing-fraud-funds-end-up-in-thailand.html https://www.propertyobserver.com.au/forward-planning/advice-...
tutfbhuf 6y ago
It should be somehow made possible to reverse transactions (like theft) with some sort of distributed consensus.
mianos 6y ago
While this is largely true, it is pretty common for large amounts of money to be irreversibly lost in an untraceable manner. Wirecard comes to mind this week but a simple search for 'financial fraud' will bring up typical losses much larger this guys lost 14k BTC at least once a month.
moltar 6y ago
Tell that to North Koreans. https://www.nytimes.com/interactive/2018/05/03/magazine/money-issue-bangladesh-billion-dollar-bank-heist.html https://www.nytimes.com/interactive/2018/05/03/magazine/mone...

gota 6y ago

Honestly would like to know how you see it would "get there". In my mind, the 'fiat' part of 'fiat currency' and government-coupling are what gives the financial system the safeguards, so...? I mean, it is always the state, if you follow the string to the end, that oversees and enforce compensation, rollback and error correction. What kind of fully-distributed non-autoritative algorithm can do that?

derefr 6y ago
You can build a fiat currency system on top of crypto-holding smart contracts just as well as you can build one on top of gold-holding (or T-bond-holding) banks. The main difference between cryptocurrency and regular currency comes down to interoperability. The infrastructure that handles fiat cryptocurrencies could be built generically, such that a given "bank account" could hold a mix of fiat crypto-tokens, each associated with a given regulatory regime that would validate actions taken upon those tokens. With regular fiat currency, the currency is effectively a fiction local to a given regulatory regime; but that fiction can also take on other lives as other fictions, if "re-used" in other regimes. (I.e., some other country can use US dollars as "their" currency, with their own rules about how you can spend/exchange those US dollars while you're there.) Effectively, the value of the currency in each economy is independent, a separate fiat declaration of value by the economy that trades in the currency. And, if you want to "translate" the value of that currency into a different regulatory regime that doesn't "share" in the fiction of that currency, you (or the bank you're interacting with) must exchange it through a ForEx broker (which effectively recycles the source currency back into the regulatory regime it comes from) to attain a different fiat currency regulated by the destination regime. Cryptocurrency skips all that. You don't need ForEx. Anyone from anywhere can hold anything. It's less like current fiat, and more like commodities trading with each fiat currency being a country-unique export (e.g. an elemental metal only found there) traded on, and valued by, the global market as a whole. And yet, if someone were holding a hypothetical government-regulated USD token, every interaction that person does with that token would be done with under regulatory validation of the US government. There wouldn't be separate fictions of "the US dollar" in each economy it trades in (as happens in e.g. Venezuela); instead, it'd be more like everyone in Venezuela buying and selling everything by having implicit US bank accounts owned by proxy US citizens beholden to US law, and doing transfers between those accounts. Of course, at any point you could "cash out" of the fiat currency by exchanging it for some non-regulated token (if the regulatory regime that controls the regulated fiat token allows that exchange to happen.) Just like you can take cash out of a bank, and walk away. (Or more precisely, just like you can buy a non-controlled commodity like gold or oil using your chequing-account balance, and then walk away with the commodity.)

Barrin92 6y ago

the only way to get there is by reinventing the dreaded middlemen of governance, regulation and insurance that they attempted to replace, with the added feature of having produced a currency that burns the energy equivalent of a middle sized nation

seibelj 6y ago

98% of HN except for a vocal, small minority ever says anything positive about crypto or blockchain. The vast majority appreciate the benefits of the state apparatus being the conduit for financial services. So you posting this is not a surprising nor unique idea, you are representing 98% of HN commenters.

bdcravens 6y ago
I'd say 98% of the population. There's a very small percentage of the population that even understands what fiat is, and what problems cryptocurrency solves. For that matter, a sizable percentage of cryptocurrency advocates either don't know or care either; their only concern is how much fiat they can trade cryptocurrency for.

abakker 6y ago

probably never, honestly. Many people still feel that the guard rails are bugs, not features and imagine that things like this will never happen.

rabidrat 6y ago

It is impossible by design. Adding that 'feature' takes away the core principle of decentralized currency. Allowing government to reverse transactions will also allow them to seize assets. Then it is just a regular currency (for better and worse).

Scoundreller 6y ago
Didn’t ethereum fork to rollback a hack they didn’t like?
- nyghtly 6y ago
  Do you mean this? https://www.bitdegree.org/tutorials/ethereum-vs-ethereum-classic/ https://www.bitdegree.org/tutorials/ethereum-vs-ethereum-cla...
  - Scoundreller 6y ago
    This one: https://www.coindesk.com/ethereum-executes-blockchain-hard-fork-return-dao-investor-funds https://www.coindesk.com/ethereum-executes-blockchain-hard-f...
nyghtly 6y ago
It becomes a regular currency... that consumes huge amounts of electricity for no reason whatsoever. https://www.vox.com/2019/6/18/18642645/bitcoin-energy-price-renewable-china https://www.vox.com/2019/6/18/18642645/bitcoin-energy-price-...

bdcravens 6y ago

Cash transactions aren't reversible or easily tracked.

knorker 6y ago
Which is why it's not used for important purchases. Except illegal ones.
- tialaramex 6y ago
  And it's why you'll notice that bill denominations didn't follow inflation. If no legitimate transactions need $100M in cash, it follows there is no need to make it practical to actually move $100M in cash. For a while there was a workaround, it lasted a long time in the United States and after it ended Hollywood kept it around (in fiction) partly by using plots that were written when it was real and partly just because it looks cooler even though it's not possible. Bearer Bonds. You'll notice that's what they're stealing in Die Hard. When it was made, and when it was set, Bearer Bonds weren't a thing (adverse tax treatment ensured they had basically ceased to exist) but when the novel the screenplay is based on was written it is reasonable that a wealthy multinational might possess large sums of Bearer Bonds in a vault. Bearer Bonds were bonds (duh) but they weren't registered anywhere, the owner of the bond was whoever was holding it, just like cash, except a briefcase full of bonds could be worth tens of millions of dollars.
  - knorker 6y ago
    That's a really good point. I recently transferred a few hundred k. It's a little bit of a hassle, but you know what, the system SHOULD look at that more closely. And it can, because that scales. What we need is scalable micropayments, not ability to more easily lose $100M one transaction. The people who do need to move $100M it's ok if we have a separate system for.

knorker 6y ago

They first have to understand that reversibility is a feature. One of their core beliefs is that's it's a bug.

zajio1am 6y ago

> but things like this are actually trackable and reversible in that ecosystem I do not know about US, but in EU bank transfers are generally not reversible (except forced by courts). If you send money to wrong bank number, you cannot cancel the transaction in bank, you need to ask the owner of that account to send them back. Compared to BTC, there are two differences - it is possible to identify an account holder and justice system can effectively force bank transfers.

knorker 6y ago
It's not THAT hard to reverse transactions between EU banks. E.g. when that pirate bay founder hacked a bank's mainframe and transferred money out internationally the banks sorted it out, sending it back, without a court. Maybe you're thinking something specific about "reversing a transaction", but the main point here is that yes if needed a court can just make that reversing happen. Not the case for cryptocurrency. And no matter what the coiners say, irreversibility is very much a bug that society doesn't want.

ballenf 6y ago

Wire transfers are not reversible after about an hour - as I mentioned the other day a good friend lost a house down payment due to fraud. But I generally agree with the advice that the service banks and fiat currency provide is probably worth the cost for almost everyone.

iJohnDoe 6y ago
Could you share some general details about the friend that lost their down payment? I’ve heard of this happening to others and have argued that the money is lost and cannot be recovered. People think it’s crazy the money is lost and cannot be recovered. From what I’ve heard it cannot be recovered. Is your friend able to recover the funds? How did it happen? Did the instructions for transfer get altered by someone? Thanks.
- fluffything 6y ago
  Typical scam is: hack into a real state agency, observe all emails with customers, send email to customer to deposit some funds on some account on the day of the downpayment, 4-5 hours before the real state agency worker would have done the same. Collect 1 day worth of downpayments, and run.
  - mianos 6y ago
    The well publiced Pexa fraud is an example. The money was wired off-shore and lost. https://www.propertyobserver.com.au/forward-planning/advice-and-hot-topics/85862-pexa-warning-as-conveyancing-fraud-funds-end-up-in-thailand.html https://www.propertyobserver.com.au/forward-planning/advice-...

tutfbhuf 6y ago

It should be somehow made possible to reverse transactions (like theft) with some sort of distributed consensus.

mianos 6y ago

While this is largely true, it is pretty common for large amounts of money to be irreversibly lost in an untraceable manner. Wirecard comes to mind this week but a simple search for 'financial fraud' will bring up typical losses much larger this guys lost 14k BTC at least once a month.

moltar 6y ago

Tell that to North Koreans. https://www.nytimes.com/interactive/2018/05/03/magazine/money-issue-bangladesh-billion-dollar-bank-heist.html https://www.nytimes.com/interactive/2018/05/03/magazine/mone...