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Reversing transactions is massive problem in finance in general. It causes losses for merchants in both physical shops and online sellers because there's no obj

Reversing transactions is massive problem in finance in general. It causes losses for merchants in both physical shops and online sellers because there's no objective measure of whether a transaction was a mistake or not so it's begging to be abused for fraud. Even if a court decides, somebody still loses when both parties had different expectations. People have overpaid wages or social welfare payments taken back from them after they already assumed it was correct and spent it, and are now in a big debt. People accidentally sign contracts that require them to pay more than they expected. There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item. Here's an example of traditional finance screwing someone over for making an obvious mistake. Where's this ability to reverse transactions when you need it? https://www.livemint.com/opinion/online-views/a-fascinating-case-about-paying-a-900-million-debt-by-mistake-11607602031675.html https://www.livemint.com/opinion/online-views/a-fascinating-... You're assuming there's some benevolent God who can arbitrate who's right and who's wrong. In reality, people get screwed by bad payment reversal decisions all the time and there's no objective way to decide in every case.

midev 5y ago
> You're assuming there's some benevolent God who can arbitrate who's right and who's wrong Literally nobody assumes this. Please don't invent strawmen. The point is, even with all the failings of the courts, different interpretations of language, and every other flaw, it's still better than having no recourse at all. > There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item. And of course, the blockchain solves none of this. It just makes rectifying the problem far more difficult.
- exporectomy 5y ago
  How would any reversals be decided without a benevolent God? I've shown that traditional finance can't do it "correctly". Apparently smart contracts can't either. Courts can't because the law is sometimes ambiguous and unknown before it's tested in court. Traditional contracts can't because people get tricked by not reading the fine print. I think nobody can except an imaginary benevolent God. If you just call the boss of reversals and say "sorry I made a terrible mistake, please reverse the payment", how can he trust that you're not the fraudster yourself? Even in the case in this article, how can any 3rd party truly know that it was a mistake and not just someone pretending it was a mistake so they can get it back? Blockchain solves the problem of chargeback fraud. It's one specific class of fraud but it's solved by that technology even if other classes of fraud are created.
- Sargos 5y ago
  > > There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item. > And of course, the blockchain solves none of this. It just makes rectifying the problem far more difficult. Web3 stores would use an escrow service for physical goods where the buyer's money goes into the escrow contract and gets released to the seller when the buyer receives the item. In the case of a dispute it would summon a Kleros jury of say 30 jurors who would look at the presented evidence and come to consensus on an outcome. A lot of these problems have already been solved in a decentralized way but it's still early days so higher complexity projects take a while to come to fruition.
p4bl0 5y ago
Not in every case, for sure. But many cases are pretty easy to arbitrate. This one for example: when the transaction fees 230× greater than the transaction amount, it is fair to assume that is was not meant to be that way. If I loose my credit card and/or it gets stolen, and someone uses it in the time between when I declare I lost it and when it is blocked, my bank is required by law to refund me (and I guess my bank attempts to get their money back too, but that's not really my problem). Also: > There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item. A blockchain can't solve that kind of problems. And it never will. It is not because something is written on a blockchain that it is true, except for cryptocurrencies because that is how they define truth. But as soon as you have something happen in the real-world (in your example, an item sent in exchange for a payment), then a blockchain is useless, or at least, it is not any more useful than any type of ledger.
- exporectomy 5y ago
  Everyday credit card users who rely on the bank to protect them from fraud should not be using cryptocurrency directly. They also should not carry their money around in cash, yet cash still exists and people can take personal responsibility for the risk of loss if they choose. A blockchain can solve "didn't receive the item" fraud because the merchant has the payment before they send the item and can refuse to refund it. Of course it creates a new kind of risk for the buyer, but that's not what we're talking about here.
roca 5y ago
It's inevitable that transactions made in error cause problems for the sender or receiver or both, but it is still better to have a human judge scrutinize the case with the ability to impose a more reasonable outcome than the status quo, than to have no such recourse. The position of defi fans that it is better to have no such recourse is ludicrous. Your example is a good one: that particular case was carefully scrutinized by the court and the judge decided that the outcome was reasonable, mainly because the creditors who received the money were owed the money. If the outcome was obviously unreasonable, e.g. Citibank had simply sent $1B to some random address, of course the judge would have reversed it.
yyyk 5y ago
>Here's an example of traditional finance screwing someone over for making an obvious mistake. Where's this ability to reverse transactions when you need it? It still exists, and note that the case did reach a court. It just happens that the beneficieries were also owed that money, and that allowed them to win the subsequent lawsuit: https://clsbluesky.law.columbia.edu/2021/02/24/how-the-litigious-bird-caught-the-banque-worm/ https://clsbluesky.law.columbia.edu/2021/02/24/how-the-litig...
colechristensen 5y ago
If you’re in the financial transaction business, a big chunk of the service you provide is dispute handling, people tend not to realize this. It isn’t a simple cost of business or side service, it’s a primary competence of anybody responsible for handling money.
- exporectomy 5y ago
  Yes, that's why it's a big problem. They also often make the wrong decision and leave people screwed over. Just look at all the complaints from Ebay sellers who got ripped off by Ebay siding with the fraudulent customer. There are cases where the seller can't trust the buyer and the authorities that are supposed to be arbitrating disputes can't be bothered doing their job because it's too hard. That's where crypto's non-reversibility is useful.

midev 5y ago

> You're assuming there's some benevolent God who can arbitrate who's right and who's wrong Literally nobody assumes this. Please don't invent strawmen. The point is, even with all the failings of the courts, different interpretations of language, and every other flaw, it's still better than having no recourse at all. > There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item. And of course, the blockchain solves none of this. It just makes rectifying the problem far more difficult.

exporectomy 5y ago
How would any reversals be decided without a benevolent God? I've shown that traditional finance can't do it "correctly". Apparently smart contracts can't either. Courts can't because the law is sometimes ambiguous and unknown before it's tested in court. Traditional contracts can't because people get tricked by not reading the fine print. I think nobody can except an imaginary benevolent God. If you just call the boss of reversals and say "sorry I made a terrible mistake, please reverse the payment", how can he trust that you're not the fraudster yourself? Even in the case in this article, how can any 3rd party truly know that it was a mistake and not just someone pretending it was a mistake so they can get it back? Blockchain solves the problem of chargeback fraud. It's one specific class of fraud but it's solved by that technology even if other classes of fraud are created.
Sargos 5y ago
> > There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item. > And of course, the blockchain solves none of this. It just makes rectifying the problem far more difficult. Web3 stores would use an escrow service for physical goods where the buyer's money goes into the escrow contract and gets released to the seller when the buyer receives the item. In the case of a dispute it would summon a Kleros jury of say 30 jurors who would look at the presented evidence and come to consensus on an outcome. A lot of these problems have already been solved in a decentralized way but it's still early days so higher complexity projects take a while to come to fruition.

p4bl0 5y ago

Not in every case, for sure. But many cases are pretty easy to arbitrate. This one for example: when the transaction fees 230× greater than the transaction amount, it is fair to assume that is was not meant to be that way. If I loose my credit card and/or it gets stolen, and someone uses it in the time between when I declare I lost it and when it is blocked, my bank is required by law to refund me (and I guess my bank attempts to get their money back too, but that's not really my problem). Also: > There's fraud where people buy an item online, then claim they never received it and get their payment refunded while keeping the item. A blockchain can't solve that kind of problems. And it never will. It is not because something is written on a blockchain that it is true, except for cryptocurrencies because that is how they define truth. But as soon as you have something happen in the real-world (in your example, an item sent in exchange for a payment), then a blockchain is useless, or at least, it is not any more useful than any type of ledger.

exporectomy 5y ago
Everyday credit card users who rely on the bank to protect them from fraud should not be using cryptocurrency directly. They also should not carry their money around in cash, yet cash still exists and people can take personal responsibility for the risk of loss if they choose. A blockchain can solve "didn't receive the item" fraud because the merchant has the payment before they send the item and can refuse to refund it. Of course it creates a new kind of risk for the buyer, but that's not what we're talking about here.

roca 5y ago

It's inevitable that transactions made in error cause problems for the sender or receiver or both, but it is still better to have a human judge scrutinize the case with the ability to impose a more reasonable outcome than the status quo, than to have no such recourse. The position of defi fans that it is better to have no such recourse is ludicrous. Your example is a good one: that particular case was carefully scrutinized by the court and the judge decided that the outcome was reasonable, mainly because the creditors who received the money were owed the money. If the outcome was obviously unreasonable, e.g. Citibank had simply sent $1B to some random address, of course the judge would have reversed it.

yyyk 5y ago

>Here's an example of traditional finance screwing someone over for making an obvious mistake. Where's this ability to reverse transactions when you need it? It still exists, and note that the case did reach a court. It just happens that the beneficieries were also owed that money, and that allowed them to win the subsequent lawsuit: https://clsbluesky.law.columbia.edu/2021/02/24/how-the-litigious-bird-caught-the-banque-worm/ https://clsbluesky.law.columbia.edu/2021/02/24/how-the-litig...

colechristensen 5y ago

If you’re in the financial transaction business, a big chunk of the service you provide is dispute handling, people tend not to realize this. It isn’t a simple cost of business or side service, it’s a primary competence of anybody responsible for handling money.

exporectomy 5y ago
Yes, that's why it's a big problem. They also often make the wrong decision and leave people screwed over. Just look at all the complaints from Ebay sellers who got ripped off by Ebay siding with the fraudulent customer. There are cases where the seller can't trust the buyer and the authorities that are supposed to be arbitrating disputes can't be bothered doing their job because it's too hard. That's where crypto's non-reversibility is useful.