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I know this is a popular belief but it’s actually the exact opposite… The reason PayPal holds funds is that a consumer is allowed to reverse a bank and credit

I know this is a popular belief but it’s actually the exact opposite… The reason PayPal holds funds is that a consumer is allowed to reverse a bank and credit card transaction for a few months after the transaction happened. This ability exists to protect consumers from fraudsters, scammers and bad businesses (ones that don’t provide service etc.) which is much more common than people realize. With crypto, the ability to reverse a transaction disappears and with that the ability to protect consumers. Now who do you think will thrive in a world where a consumer has no protection? Scammers, bad businesses and criminals..

xvector 5y ago
> With crypto, the ability to reverse a transaction disappears and with that the ability to protect consumers. Now who do you think will thrive in a world where a consumer has no protection? For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system. Too many times "protecting consumers" turns into "censoring transactions we don't like" and "restricting your financial freedom to maintain our brand image." (Case in point - sex work payments, even in countries where it is legal, can not be processed by any of the major payment processors. Brand image and all.) Not to mention the privacy concerns that come with a central authority knowing all of your transactions - no thanks, I think I and many others would prefer an electronic cash-equivalent over PayPal.
- unionpivo 5y ago
  > For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system. That is simply not the case. Even in old ancient civilizations and feudal systems you usually had a way to reverse a transaction by going to court (in the old times literal court of the king, nowadays judge). This was and is possible because when you pay in cash you know who you pay to, and authorities (king and/or police) can lay hand on them. So even if you pay cash in brick and mortar shop you can get refunds (usually :) ). One of the reasons why a lot of people are comfortable buying online is easy refunds. And if crypto can't provide that, I don't ever see it catching on in mainstream. And if you want refunds and you are marketplace like eBay , the easiest way to offer refunds is to keep money in escrow which is what is happening here.(Except that their home brew escrow algos seem to not be that great, but crypto won't change that either. ) Bottom line is, crypto either won't go mainstream or will be co-opted by mainstream and will have all of the same problems/features as current currencies. And it's not because governments. It's because people want and expect their government to be able to protect them. And government don't censor things because they don't have nothing better to do. At least in democracy's they start censoring, when enough people cry to them to start censoring. Don't expect that to ever change with or without crypto.

xvector 5y ago

> With crypto, the ability to reverse a transaction disappears and with that the ability to protect consumers. Now who do you think will thrive in a world where a consumer has no protection? For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system. Too many times "protecting consumers" turns into "censoring transactions we don't like" and "restricting your financial freedom to maintain our brand image." (Case in point - sex work payments, even in countries where it is legal, can not be processed by any of the major payment processors. Brand image and all.) Not to mention the privacy concerns that come with a central authority knowing all of your transactions - no thanks, I think I and many others would prefer an electronic cash-equivalent over PayPal.

unionpivo 5y ago
> For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system. That is simply not the case. Even in old ancient civilizations and feudal systems you usually had a way to reverse a transaction by going to court (in the old times literal court of the king, nowadays judge). This was and is possible because when you pay in cash you know who you pay to, and authorities (king and/or police) can lay hand on them. So even if you pay cash in brick and mortar shop you can get refunds (usually :) ). One of the reasons why a lot of people are comfortable buying online is easy refunds. And if crypto can't provide that, I don't ever see it catching on in mainstream. And if you want refunds and you are marketplace like eBay , the easiest way to offer refunds is to keep money in escrow which is what is happening here.(Except that their home brew escrow algos seem to not be that great, but crypto won't change that either. ) Bottom line is, crypto either won't go mainstream or will be co-opted by mainstream and will have all of the same problems/features as current currencies. And it's not because governments. It's because people want and expect their government to be able to protect them. And government don't censor things because they don't have nothing better to do. At least in democracy's they start censoring, when enough people cry to them to start censoring. Don't expect that to ever change with or without crypto.