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One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact (with the only exception being costly forks of the entire ledge

One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact (with the only exception being costly forks of the entire ledger), and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me. If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. If I purchase something and don't get what I paid for, I can contest it with customer service or my credit card company. With crypto, a software flaw used to steal crypto can kill an entire company. They're largely powerless to stop it once the transaction has gone through. With crypto, a xss attack or a misplaced password can cost me all of my coins. With crypto, I have to triple check the address I'm sending coins to because I can't undo it. With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete. I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation (and I suppose illegal purchases on the darknet). I'll wait for crypto 2.0.

charcircuit 5y ago
The same flaw applies to cash. If you give someone $5 there is no way to revoke that transaction. You only can ask them to make a new transaction and give you the $5 back. Just like how additional layers were built on top of cash,new layers will be built on top of cryptocurrencies leading way to the "crypto 2.0" you are waiting for.
- deleted 5y ago
  [deleted]
- anonporridge 5y ago
  Or gold. Or any other property. Bitcoin is simply digital property. And like real world property, you can mess up and lose it irrevocably. If you give your gold to the wrong person or drop it to the bottom of the sea, you're probably not getting it back. If you under fund your military, and someone else comes in and takes control of your land, you're probably not getting it back. If you send your bitcoin to the wrong address, or mismanage your private keys such that they are stolen, you're probably not getting it back.
  - babypuncher 5y ago
    But bitcoin isn't being billed as a value-store like gold, it's being sold more as a replacement for payment systems like credit cards, ACH transfers, or PayPal. There is a reason nobody goes around trading tiny bits of gold for goods and services. It is useful to have an abstraction that makes transactions easier and helps mitigate risk.
    - anonporridge 5y ago
      You're exactly wrong in my experience. Maybe some people were hyping it as a PayPal replacement back in the pre-2017 days, but that narrative has largely failed to gain followers and is now very out of favor. The digital gold narrative and layer one of the new global, open, permisionless, and fair financial system narrative have been big and growing ever since I got involved in 2015ish. In fact, it was only the emergence of the lightning network that proved the layered system approach that has made me consistently bullish for these past 7 years. If we had to scale payments on the base blockchain's 7tps limit, it would absolutely be an absurd, silly speculative bubble doomed to collapse. Luckily, the layered approach is proving itself and winning.
    - goldcd 5y ago
      I don't think that's true. Credit cards, paypal and all the rest existed before bitcoin. I mean it's nifty that I can do it without a single intermediary authority, but it's not that special. I think the lack of revocation available to bitcoin is a (and I had myself for saying this) 'a feature'. If somebody sends me payment in bitcoin, I definitely know it can't be charged-back for example. It's like sending cash in the mail. Now that comes with the flip side, that they are putting all their trust in me.
      - ryanbrunner 5y ago
        As a consumer though, chargebacks and disputes are an important feature for me, particularly when exploits and bugs exist and I can't and shouldn't have perfect trust that bitcoins will only leave my wallet when I intend for them to.
- jmcgough 5y ago
  It's not quite the same. With cash, I have to meet them in person. I probably know their name or where to find them again. I can file a lawsuit, a police report. They have incentive to make things right for me because it can have real life repercussions for them. I'm not saying that it's an impossible problem to solve, but our society and legal system aren't structured in a way that makes it easy.
  - Jommi 5y ago
    You're starting a fight you can't win here Your base assumption of knowing or finding them is not strong Crypto means you will always know who has your money and where it goes. We can build systems around repercussions for crypto too.
    - jmcgough 5y ago
      > You're starting a fight you can't win here I'm not starting a fight, I'm having a discussion, which I think is the point of HN. > Crypto means you will always know who has your money and where it goes. If a stranger in another country steals $500 from me I'm going to have a really hard time doing anything about it. And knowing their wallet doesn't mean I know who they actually are, as those aren't tied to an identity. What about exit scams? How many people have gotten their money back in those situations, or had any justice? You can make the argument that these people are investing in something that may not pan out, but we have a ton of legal regulations around that with fiat - lawsuits, criminal charges. Elizabeth Holmes is going to jail for misrepresenting what people were investing in. Institutional investing is limited to high-net-worth individuals or accredited investors to keep uneducated people from getting fleeced.
      - Jommi 5y ago
        >If a stranger in another country steals $500 from me I'm going to have a really hard time doing anything about it. And knowing their wallet doesn't mean I know who they actually are, as those aren't tied to an identity. So how is this different from Cash? Except you actually have an idea of where the money is going and can track it, e.g. if it goes to a CEX. This is way better than cash. Which exit scam?
- babypuncher 5y ago
  I don't usually mail physical cash to online retailers when I make a purchase. The context of your typical cash purchase precludes most of the outlined scenarios where being able to undo a transaction is a desirable feature.
  - exdsq 5y ago
    I learned the other day that this is how the first international payment was made on Amazon - money sent inside a floppy disk sent to Bezos :)
whatshisface 5y ago
If you want revokable transactions, you could invent a smart contract that releases money to either the bearer or the originator on the basis of your decision. Then the contracts could be traded on the basis of people's predictions about what your decisions would be.
throw0101a 5y ago
> One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact (with the only exception being costly forks of the entire ledger), and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me. I believe this is viewed as a feature in the blockchain / cryptocurrency world.
- babypuncher 5y ago
  They view it as a feature, but for all the reasons this poster pointed out, the rest of us view it as an anti-feature.
  - StanislavPetrov 5y ago
    That's the beauty of the concept of freedom. In a free society, we'd all be able to choose our own poison. Unfortunately, many who view it as an anti-feature seek to prevent those who view it as a feature from making their own choice, either through regulation or outright bans.
    - Tijdreiziger 5y ago
      If you take this argument to its logical conclusion, anarchism is the only form of free government. All laws and regulations necessarily take freedom away. That is the basis of the social contract: you aren’t free to harm others.
      - StanislavPetrov 5y ago
        If you take this argument to its logical conclusion all laws and regulations are good and freedom does not exist. In reality the definition of "harm" and the laws and regulations that are necessary and desirable to mitigate these harms are very much up for debate. It is nakedly authoritarian for the government to restrict, at the point of a gun, consenting adults from choosing their own method of transaction.
dist1ll 5y ago
> One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact You can transfer money to an escrow smart contract that reverts the transaction if a third party confirms malicious activity. > They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. Certain DLTs allow you to secure your account with SSI/DPKI methods. You can create complex multi signature authorization and revocation schemes. > With crypto, I have to triple check the address I'm sending coins to because I can't undo it. With time the UX of wallets and wallet integrations will improve. Many wallets already offer address books, where you give addresses names. Also, decentralized name service is being worked on (but still an unsolved problem). > With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete. Crypto isn't Bitcoin or Ethereum, crypto is much larger. The field is constantly evolving, and things like txn costs are non-issues for sophisticated architectures. > I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation. I'll wait for crypto 2.0. 100% agree. This field is full of speculation. The version 2.0 however will absolutely find impact.
- saghm 5y ago
  >> One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact (with the only exception being costly forks of the entire ledger), and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me. >> With crypto, a software flaw used to steal crypto can kill an entire company. They're largely powerless to stop it once the transaction has gone through. >> With crypto, a xss attack or a misplaced password can cost me all of my coins. >> With crypto, I have to triple check the address I'm sending coins to because I can't undo it. >> With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete. > You can transfer money to an escrow smart contract that reverts the transaction if a third party confirms malicious activity. In practice, who would you trust with such significant transactions as a company though? If you want to get anywhere close to the level of protection that you'd get in the "old" system, you'd need to thoroughly vet both the smart contract and the third party to be sure that there are no additional bugs in the contract (after all, it's just software like anything else, so there can be exploitable bugs) and that the third party won't screw you over. Some sort of neutral third party that both the buyer and seller can trust due to being known for such trusted transactions...like a bank. How is this any different than what we have, just with extra steps?
mattwilsonn888 5y ago
The beauty of crypto is that those tools are exposed and not required, and that the underlying rules are universal. Banks and custodial services built off of shared liability, insurance, reversions, any useful thing a bank does are still possible with crypto - in fact they aren't even that complicated. The difference is that while allowing a (properly set up) crypto bank to transfer funds you may also at any point and for any reason take full custody over your coins. The private key which enables that should not be used for anything other than emergency (minimize attack surface) and keeping such a key secure is not all that difficult. With this combination you get all the benefits of a normal bank yet they are powerless without express authorization to do anything with your funds. You can withdraw at any point for any reason. Services and practices securing your private key will need to be widespread before adoption seriously takes off. Storing a seed phrase in your sock drawer is not acceptable: Vitalik Buterin secured his billions via two physical pieces of paper which summed to his private key; surely a step in the right direction. An n of m scheme with each n being held by parties unlikely to collaborate is another solution. This is all not even mentioning massive private banking and its relationship to the economy and bias towards the wealthy. Crypto is FOSS finance, it works for the people as stated and expected. As I said, you are correct - using your layer 1 sovereign access for everyday use is a security blunder - you now know where progress points.
- Tijdreiziger 5y ago
  > Crypto is FOSS finance, it works for the people as stated and expected. A laughable statement in the face of crypto’s negative externalities. We’ll wreck the planet we all share, but at least we’ll have FOSS finance!
  - mattwilsonn888 5y ago
    If you're going to indiscriminately start beheading technology which uses energy why not start with vehicles, video games, machine learning, or anything at all? Its because in order to ask whether something should use energy you must first ask whether its worth it, and your sophistication when it comes to crypto-currencies, finance, and economics is too weak to have that conversation: ergo, you resort to zero value, which is hilariously inept.
gonehome 5y ago
Banks won’t protect you from wire fraud either. I’ve written this elsewhere when this topic routinely comes up and crypto is dismissed, but the capability of self-custody is the thing to pay attention to. Nothing else has this capability to the same extent. Today we store most of our wealth in assets (market index funds, stocks, real estate, etc.) and some (typically very little, and rarely outside of a bank account) in cash. Most of this is not actually controlled by you. With BTC (and cryptocurrency more generally) you have the capability of having your private key in a hardware wallet under your control and retain the capability to transact independently of other institutions. If you keep some percentage of your wealth here you retain certain advantages that you can't get elsewhere. The closest alternative would be having cash (in cash form), but it's hard to have that much, hard to travel with it (you can memorize your wallet seed words and recreate your wallet on the other side of a border), and cash is vulnerable to government stupidity (see: Russia). I'm not sympathetic to the Canadian truck protests, but whether or not you care about what they're protesting - it's the capability wielded by the Canadian government over their private finances that's alarming. All this is to say the focus on what crypto is worse at is kind of missing the forest for the trees. The capability of a global self-custody capable store of value that can be trivially moved anywhere is a big deal and puts power back in the hands of individuals. I don't pretend there are no risks with cryptocurrency. The security requirements are obviously harder, the UX is bad and even technical users fuck it up. Some of this will be improved by tooling, some of it is just what's required for self-custody. Still, the capability it provides is new and gives individuals more power even with these tradeoffs. That capability is valuable and shouldn't be dismissed imo. It's a lever against authoritarian control and increasing centralization of power.
- UncleMeat 5y ago
  > Banks won’t protect you from wire fraud. They will if you didn't initiate the wire. If you typed the wrong account number then you are SOL, but that's true of BTC too.
  - gonehome 5y ago
    Yeah, the similarity there was more of my point. Wire Fraud theft often happens by scammers that have hacked title companies and send emails with fraudulent account numbers to people expecting them. Frankly banks also rarely help people scammed via other means (Venmo, Apple Pay, Zelle, etc.)
StanislavPetrov 5y ago
>If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. The credit card company can also unilaterally decide to block your purchases if it thinks you have become a bad credit risk or if you donate to a frowned upon political cause or any other reason they arbitrarily decide.
q-big 5y ago
This is a problem (if you consider it as such) that smart contracts intend to solve. For example, in the smart contract introduce some authorities that are allowed to block and revoke transactions for some time (if the block chain has no support for certified timestamps, use "number of new blocks mined and appended to the blockchain" as substitute). Let the market decide what kind of protection stakeholders prefer.
- marginalia_nu 5y ago
  This hinges on the contracts actually working as intended, which is something they often do not. Code in general rarely does poorly in that regard. It's really hard to consider every contingency beforehand. Unknown unknowns and all that.
  - hedora 5y ago
    In fairness, they picked JavaScript as the language to write the transactions in. People keep losing money making coding mistakes that even "gcc -Wall -Werror" would refuse to compile. Examples: type errors like L1 vs L2 (whatever that even means, not a crypto person), wrong number of function parameters causing some sort of currying, allowing that massive ETH heist a few weeks back. I'm sure there are hundreds of other similar horror stories. "-Wextra -pedantic" would protect against even more bugs. (I'm not saying C is a reasonable choice, just that JavaScript was a laughably bad choice.)
    - DennisP 5y ago
      Contracts are mostly written in Solidity. Despite common rhetoric, it doesn't have much in common with Javascript besides curly braces. Solidity is statically typed, has class-based inheritance, and all numbers are integers. Javascript is dynamically typed, has prototype-based inheritance, and all numbers are floats.
    - marginalia_nu 5y ago
      Honestly, the language doesn't matter. Most bugs are logic errors or requirements oversights.
ThomPete 5y ago
you mean like any other physical asset?
narrator 5y ago
People have recovered stolen crypto, especially lately, because the FBI will get involved in tracking down the thieves and making them return crypto, but only for large amounts. For example: https://www.msn.com/en-us/money/companies/feds-seize-dollar36-billion-in-bitcoin-stolen-from-bitfinex-hack/ar-AATCpU6 https://www.msn.com/en-us/money/companies/feds-seize-dollar3...
voobster 5y ago
>One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact Yes that is a major double-edged sword but it is ultimately a feature of blockchains (at least the base layer), not a bug. Everyone who has ever been a victim of fraudulent chargebacks can vouch for that. If you want reversibility you are free to create a smart contract which allows that using its own token. Frankly I wouldn't want to use a blockchain where someone can acquire my personal info and then social engineer their way into stealing my money, as commonly happens within the traditional financial system.
randomhodler84 5y ago
Sorry, that is explicitly an anti feature. Protect your keys. Use a hardware wallet — this is significantly safer than a credit card. A credit card gives all the data to the remote peer!! The shop or anyone watching can charge your card. Cryptocurrency does not work this way. You are in control — you transfer the rights to spend coin to another, you do not have coin debited from your account. There is no crypto 2.0
grog454 5y ago
> If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. Can we, just for a moment, think critically about whether or not this is a good* thing? As a consumer / client of the credit card company it seems great at first glance. I get scammed? No problem, I'll get my money back. But where does that money come from? Certainly not from the thief. My hypothesis (I'm not an expert in this field) is that it actually comes from you, the consumer, albeit very indirectly and in two main ways: 1) Credit cards companies charge businesses that allow consumers to use them a fee. Business often pass this fee on to the consumer, sometimes even explicitly. For example gas stations usually publish separate prices for gas w/ or w/o credit card. That fee is the main revenue source for the credit card company, and fraud reimbursement is one of their expenses. Expenses go up? Fees go up. In this way businesses (and less directly you) are paying an insurance premium on top of the credit card company's operating costs and profit margin. 2) Credit card companies most likely write fraud reimbursement off when filing taxes. So taxes that they would otherwise pay vanish. If the taxing entity wants a minimum tax revenue, that means increased rates elsewhere (and quite possibly for individuals). So what's an alternative? Putting more effort in to the prevention of theft/fraud in the first place. * "Good thing" meaning net benefit to society.
- andrewzah 5y ago
  Yes, it categorically is a good thing. People make mistakes. Our society should not be an unforgiving one that heavily punishes mistakes or can’t handle basic situations like fraudulent transactions. Prevention of fraud is a cat and mouse game.
- godelski 5y ago
  Credit card companies often actually get the money back. They do a clawback/charge back. Which btw, some cryptocurrencies offer this too and there's also credit card like functionality, just not widely adopted because there's few places that accept cryptocurriencies. But yeah, I do think clawbacks are a good thing.
- onion2k 5y ago
tippytippytango 5y ago
People won't transact on chain. Paypal et. al. will allow people to make bitcoin denominated transactions and will settle with other payment processors on chain. That gives the average consumer access to the kinds of protections they are used to.
- 30367286 5y ago
  So the average consumer is back to trusting a central authority (PayPal)? Then what’s the point, for the end user, of the blockchain in the first place?
  - ThinBold 5y ago
    You get to choose between out-sourcing the liability or naked-running. You can even linearly-interpolate between the two extremes. In case of banking, you already payed the hidden fee (banks get bailout using government money, aka your money)
    - 30367286 5y ago
      The number of consumers trying to buy a coffee who will “linearly interpolate between the two extremes” will be limited to a vanishingly small group of consumers who enjoy that kind of thing. The two responses to my very simple question prove to me that crypto is a fad that will fade into the background. Maybe a few big players will use it as their protocol, but the average consumer is never going to think about it.
  - tippytippytango 5y ago
    It's just another choice people can make. If it suits them to denominate their transactions and stores of currency in bitcoin they can, if they wish. If they don't trust pay pal there will be countless other payment processors with varying levels of decentralization to suit whatever needs they have. If they don't like bitcoin they can use dollars, euros, doge whatever.
paperwallet 5y ago
> With crypto, a software flaw used to steal crypto can kill an entire company. This is mainly with Smart Contracts or Hot Wallet Storage specifically. A bug in a Smart Contract can be detrimental considering that it's code is immutable. A Hot Wallet could be misconfigured or exploited by a remote attacker. This is why it's important to use cold storage methods for larger amounts of funds, typically using a paper wallet, or even memorizing the seed phrase as a last resort. If you're an institution, then you should be employing institutional level security (though, I don't really see this happening as often as it should). You can even employ segregated witness to divy the funds amongst contract holders. > They're largely powerless to stop it once the transaction has gone through That's pretty much the entire point. This isn't a bug. It's a feature. It's up to the end user to determine the execution of the transfer of value from one to another on the ledger. The ledger can only ever be written to; making it immutable. > With crypto, a xss attack or a misplaced password can cost me all of my coins. I mean, this can happen anyways, even with the current system. If you get phished, click on a redirect, execute a payload locally, or whatever. Not really sure how this is even considered a cryptocurrency specific issue; It's a fairly universal issue as it is already. Also, you're more likely to see something like this with anything utilizing a Smart Contract. > With crypto, I have to triple check the address I'm sending coins to because I can't undo it. Well, not if you're using QR Codes. Remember those? They've been around for awhile. I would do this with my Account and Routing numbers if I'm wiring money or setting up a direct deposit regardless. I find my self checking the numbers to make sure I get paid. Even though the bank can reverse it, it would still be a pain. Knowing I can't reverse a crypto tx makes me a bit on edge, yes. It's, again, a feature... not a bug. If you have that much doubt with a transaction, then you should be using QR Codes instead. I personally find them to be convenient. Otherwise, I'm putting the public address in my clipboard and pasting it and then checking the first 6 and last 6 hex symbols. If they match, I'm happy. > With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete. The more congested the base layer of the network becomes, the more likely the fees are to be driven up. Bitcoin has a side-chain called the Lightening Network to mitigate this while focusing on processing micro-transactions. You can basically send 10 Sats for the cost of 1 sat. Some tx are basically free because of how the network is setup. With Ethereum, the base layer can process upto about 15 tx/s. Bitcoin is about 7 tx/s. Lightening can process up to 100k+ tx/s. That's 4 times the speed of either Visa or Mastercard. If you're executing a smart contract on the Eth network, then things can get expensive because you're using gwei as gas to execute the smart contract which is used to deter bad actors from abusing the EVM. Solana can process a 50 tx in about 500 ms which is impressive to be honest. > I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation (and I suppose illegal purchases on the darknet). I'll wait for crypto 2.0. Less than 2% of crpyto is used for criminal activity and that's mainly because you can get caught using it. A lot of people believe that it's completely anonymous when it's not. You're usually KYC'd somewhere and the only way to avoid this is to do direct p2p transaction without having it linking back to something that's tracable. Bitcoin is a criminals worst nightmare simply because it's a public ledger which anyone can audit. > their usage as currency will be limited unless the inefficiency problem is solved. This is common point that's brought up as well and was in the article. In PoW, this inefficiency is not a problem. It's Bitcoins network security to maintain it's own decentralization. It's the base layer and you can build on top of it to address the transaction speed as well as the network congestion; Lightning Network being a prime example of this as a potential Layer 1 solution to Bitcoins Layer 0 solution. I feel like alot of people are missing the forest for the trees. I've done my research. Have you?
tromp 5y ago
> With crypto, I have to triple check the address I'm sending coins to because I can't undo it. This not much of an issue in pure Mimblewimble based blockchains, where sender and receiver interact to construct a transaction, and the receiver essentially has to prove the ability to spend received funds before the transaction can happen.
xtracto 5y ago
>One of the biggest drawbacks for CASH is that transactions can't be revoked after the fact, and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me. Snark aside, my 70yo dad fell into a very stupid fraud where someone called him and convinced him to send money from his bank account to some other (this is using Mexican Gov digital money transfer network SPEI). After he did and realized it was a scam, he called his bank and they basically told him that they couldn't reverse it, nor do anything. So, bank transactions are not as revocable as they want you to think, for the lay person at least.
- rvz 5y ago
  > So, bank transactions are not as revocable as they want you to think, for the lay person at least. Santander [0] agrees with you. [0] https://www.bbc.com/news/business-59826345 https://www.bbc.com/news/business-59826345
dorgo 5y ago
Recently, german bank accounts of citizens of russia living in germany were silently blocked from receiving funds. It is all but impossible to block a crypto wallet from receiving funds. There are pros and cons everywhere.

charcircuit 5y ago

The same flaw applies to cash. If you give someone $5 there is no way to revoke that transaction. You only can ask them to make a new transaction and give you the $5 back. Just like how additional layers were built on top of cash,new layers will be built on top of cryptocurrencies leading way to the "crypto 2.0" you are waiting for.

deleted 5y ago
[deleted]
anonporridge 5y ago
Or gold. Or any other property. Bitcoin is simply digital property. And like real world property, you can mess up and lose it irrevocably. If you give your gold to the wrong person or drop it to the bottom of the sea, you're probably not getting it back. If you under fund your military, and someone else comes in and takes control of your land, you're probably not getting it back. If you send your bitcoin to the wrong address, or mismanage your private keys such that they are stolen, you're probably not getting it back.
- babypuncher 5y ago
  But bitcoin isn't being billed as a value-store like gold, it's being sold more as a replacement for payment systems like credit cards, ACH transfers, or PayPal. There is a reason nobody goes around trading tiny bits of gold for goods and services. It is useful to have an abstraction that makes transactions easier and helps mitigate risk.
  - anonporridge 5y ago
    You're exactly wrong in my experience. Maybe some people were hyping it as a PayPal replacement back in the pre-2017 days, but that narrative has largely failed to gain followers and is now very out of favor. The digital gold narrative and layer one of the new global, open, permisionless, and fair financial system narrative have been big and growing ever since I got involved in 2015ish. In fact, it was only the emergence of the lightning network that proved the layered system approach that has made me consistently bullish for these past 7 years. If we had to scale payments on the base blockchain's 7tps limit, it would absolutely be an absurd, silly speculative bubble doomed to collapse. Luckily, the layered approach is proving itself and winning.
  - goldcd 5y ago
    I don't think that's true. Credit cards, paypal and all the rest existed before bitcoin. I mean it's nifty that I can do it without a single intermediary authority, but it's not that special. I think the lack of revocation available to bitcoin is a (and I had myself for saying this) 'a feature'. If somebody sends me payment in bitcoin, I definitely know it can't be charged-back for example. It's like sending cash in the mail. Now that comes with the flip side, that they are putting all their trust in me.
    - ryanbrunner 5y ago
      As a consumer though, chargebacks and disputes are an important feature for me, particularly when exploits and bugs exist and I can't and shouldn't have perfect trust that bitcoins will only leave my wallet when I intend for them to.
jmcgough 5y ago
It's not quite the same. With cash, I have to meet them in person. I probably know their name or where to find them again. I can file a lawsuit, a police report. They have incentive to make things right for me because it can have real life repercussions for them. I'm not saying that it's an impossible problem to solve, but our society and legal system aren't structured in a way that makes it easy.
- Jommi 5y ago
  You're starting a fight you can't win here Your base assumption of knowing or finding them is not strong Crypto means you will always know who has your money and where it goes. We can build systems around repercussions for crypto too.
  - jmcgough 5y ago
    > You're starting a fight you can't win here I'm not starting a fight, I'm having a discussion, which I think is the point of HN. > Crypto means you will always know who has your money and where it goes. If a stranger in another country steals $500 from me I'm going to have a really hard time doing anything about it. And knowing their wallet doesn't mean I know who they actually are, as those aren't tied to an identity. What about exit scams? How many people have gotten their money back in those situations, or had any justice? You can make the argument that these people are investing in something that may not pan out, but we have a ton of legal regulations around that with fiat - lawsuits, criminal charges. Elizabeth Holmes is going to jail for misrepresenting what people were investing in. Institutional investing is limited to high-net-worth individuals or accredited investors to keep uneducated people from getting fleeced.
    - Jommi 5y ago
      >If a stranger in another country steals $500 from me I'm going to have a really hard time doing anything about it. And knowing their wallet doesn't mean I know who they actually are, as those aren't tied to an identity. So how is this different from Cash? Except you actually have an idea of where the money is going and can track it, e.g. if it goes to a CEX. This is way better than cash. Which exit scam?
babypuncher 5y ago
I don't usually mail physical cash to online retailers when I make a purchase. The context of your typical cash purchase precludes most of the outlined scenarios where being able to undo a transaction is a desirable feature.
- exdsq 5y ago
  I learned the other day that this is how the first international payment was made on Amazon - money sent inside a floppy disk sent to Bezos :)

whatshisface 5y ago

If you want revokable transactions, you could invent a smart contract that releases money to either the bearer or the originator on the basis of your decision. Then the contracts could be traded on the basis of people's predictions about what your decisions would be.

throw0101a 5y ago

> One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact (with the only exception being costly forks of the entire ledger), and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me. I believe this is viewed as a feature in the blockchain / cryptocurrency world.

babypuncher 5y ago
They view it as a feature, but for all the reasons this poster pointed out, the rest of us view it as an anti-feature.
- StanislavPetrov 5y ago
  That's the beauty of the concept of freedom. In a free society, we'd all be able to choose our own poison. Unfortunately, many who view it as an anti-feature seek to prevent those who view it as a feature from making their own choice, either through regulation or outright bans.
  - Tijdreiziger 5y ago
    If you take this argument to its logical conclusion, anarchism is the only form of free government. All laws and regulations necessarily take freedom away. That is the basis of the social contract: you aren’t free to harm others.
    - StanislavPetrov 5y ago
      If you take this argument to its logical conclusion all laws and regulations are good and freedom does not exist. In reality the definition of "harm" and the laws and regulations that are necessary and desirable to mitigate these harms are very much up for debate. It is nakedly authoritarian for the government to restrict, at the point of a gun, consenting adults from choosing their own method of transaction.

dist1ll 5y ago

> One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact You can transfer money to an escrow smart contract that reverts the transaction if a third party confirms malicious activity. > They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. Certain DLTs allow you to secure your account with SSI/DPKI methods. You can create complex multi signature authorization and revocation schemes. > With crypto, I have to triple check the address I'm sending coins to because I can't undo it. With time the UX of wallets and wallet integrations will improve. Many wallets already offer address books, where you give addresses names. Also, decentralized name service is being worked on (but still an unsolved problem). > With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete. Crypto isn't Bitcoin or Ethereum, crypto is much larger. The field is constantly evolving, and things like txn costs are non-issues for sophisticated architectures. > I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation. I'll wait for crypto 2.0. 100% agree. This field is full of speculation. The version 2.0 however will absolutely find impact.

saghm 5y ago
>> One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact (with the only exception being costly forks of the entire ledger), and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me. >> With crypto, a software flaw used to steal crypto can kill an entire company. They're largely powerless to stop it once the transaction has gone through. >> With crypto, a xss attack or a misplaced password can cost me all of my coins. >> With crypto, I have to triple check the address I'm sending coins to because I can't undo it. >> With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete. > You can transfer money to an escrow smart contract that reverts the transaction if a third party confirms malicious activity. In practice, who would you trust with such significant transactions as a company though? If you want to get anywhere close to the level of protection that you'd get in the "old" system, you'd need to thoroughly vet both the smart contract and the third party to be sure that there are no additional bugs in the contract (after all, it's just software like anything else, so there can be exploitable bugs) and that the third party won't screw you over. Some sort of neutral third party that both the buyer and seller can trust due to being known for such trusted transactions...like a bank. How is this any different than what we have, just with extra steps?

mattwilsonn888 5y ago

The beauty of crypto is that those tools are exposed and not required, and that the underlying rules are universal. Banks and custodial services built off of shared liability, insurance, reversions, any useful thing a bank does are still possible with crypto - in fact they aren't even that complicated. The difference is that while allowing a (properly set up) crypto bank to transfer funds you may also at any point and for any reason take full custody over your coins. The private key which enables that should not be used for anything other than emergency (minimize attack surface) and keeping such a key secure is not all that difficult. With this combination you get all the benefits of a normal bank yet they are powerless without express authorization to do anything with your funds. You can withdraw at any point for any reason. Services and practices securing your private key will need to be widespread before adoption seriously takes off. Storing a seed phrase in your sock drawer is not acceptable: Vitalik Buterin secured his billions via two physical pieces of paper which summed to his private key; surely a step in the right direction. An n of m scheme with each n being held by parties unlikely to collaborate is another solution. This is all not even mentioning massive private banking and its relationship to the economy and bias towards the wealthy. Crypto is FOSS finance, it works for the people as stated and expected. As I said, you are correct - using your layer 1 sovereign access for everyday use is a security blunder - you now know where progress points.

Tijdreiziger 5y ago
> Crypto is FOSS finance, it works for the people as stated and expected. A laughable statement in the face of crypto’s negative externalities. We’ll wreck the planet we all share, but at least we’ll have FOSS finance!
- mattwilsonn888 5y ago
  If you're going to indiscriminately start beheading technology which uses energy why not start with vehicles, video games, machine learning, or anything at all? Its because in order to ask whether something should use energy you must first ask whether its worth it, and your sophistication when it comes to crypto-currencies, finance, and economics is too weak to have that conversation: ergo, you resort to zero value, which is hilariously inept.

gonehome 5y ago

Banks won’t protect you from wire fraud either. I’ve written this elsewhere when this topic routinely comes up and crypto is dismissed, but the capability of self-custody is the thing to pay attention to. Nothing else has this capability to the same extent. Today we store most of our wealth in assets (market index funds, stocks, real estate, etc.) and some (typically very little, and rarely outside of a bank account) in cash. Most of this is not actually controlled by you. With BTC (and cryptocurrency more generally) you have the capability of having your private key in a hardware wallet under your control and retain the capability to transact independently of other institutions. If you keep some percentage of your wealth here you retain certain advantages that you can't get elsewhere. The closest alternative would be having cash (in cash form), but it's hard to have that much, hard to travel with it (you can memorize your wallet seed words and recreate your wallet on the other side of a border), and cash is vulnerable to government stupidity (see: Russia). I'm not sympathetic to the Canadian truck protests, but whether or not you care about what they're protesting - it's the capability wielded by the Canadian government over their private finances that's alarming. All this is to say the focus on what crypto is worse at is kind of missing the forest for the trees. The capability of a global self-custody capable store of value that can be trivially moved anywhere is a big deal and puts power back in the hands of individuals. I don't pretend there are no risks with cryptocurrency. The security requirements are obviously harder, the UX is bad and even technical users fuck it up. Some of this will be improved by tooling, some of it is just what's required for self-custody. Still, the capability it provides is new and gives individuals more power even with these tradeoffs. That capability is valuable and shouldn't be dismissed imo. It's a lever against authoritarian control and increasing centralization of power.

UncleMeat 5y ago
> Banks won’t protect you from wire fraud. They will if you didn't initiate the wire. If you typed the wrong account number then you are SOL, but that's true of BTC too.
- gonehome 5y ago
  Yeah, the similarity there was more of my point. Wire Fraud theft often happens by scammers that have hacked title companies and send emails with fraudulent account numbers to people expecting them. Frankly banks also rarely help people scammed via other means (Venmo, Apple Pay, Zelle, etc.)

StanislavPetrov 5y ago

>If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. The credit card company can also unilaterally decide to block your purchases if it thinks you have become a bad credit risk or if you donate to a frowned upon political cause or any other reason they arbitrarily decide.

q-big 5y ago

This is a problem (if you consider it as such) that smart contracts intend to solve. For example, in the smart contract introduce some authorities that are allowed to block and revoke transactions for some time (if the block chain has no support for certified timestamps, use "number of new blocks mined and appended to the blockchain" as substitute). Let the market decide what kind of protection stakeholders prefer.

marginalia_nu 5y ago
This hinges on the contracts actually working as intended, which is something they often do not. Code in general rarely does poorly in that regard. It's really hard to consider every contingency beforehand. Unknown unknowns and all that.
- hedora 5y ago
  In fairness, they picked JavaScript as the language to write the transactions in. People keep losing money making coding mistakes that even "gcc -Wall -Werror" would refuse to compile. Examples: type errors like L1 vs L2 (whatever that even means, not a crypto person), wrong number of function parameters causing some sort of currying, allowing that massive ETH heist a few weeks back. I'm sure there are hundreds of other similar horror stories. "-Wextra -pedantic" would protect against even more bugs. (I'm not saying C is a reasonable choice, just that JavaScript was a laughably bad choice.)
  - DennisP 5y ago
    Contracts are mostly written in Solidity. Despite common rhetoric, it doesn't have much in common with Javascript besides curly braces. Solidity is statically typed, has class-based inheritance, and all numbers are integers. Javascript is dynamically typed, has prototype-based inheritance, and all numbers are floats.
  - marginalia_nu 5y ago
    Honestly, the language doesn't matter. Most bugs are logic errors or requirements oversights.

ThomPete 5y ago

you mean like any other physical asset?

narrator 5y ago

People have recovered stolen crypto, especially lately, because the FBI will get involved in tracking down the thieves and making them return crypto, but only for large amounts. For example: https://www.msn.com/en-us/money/companies/feds-seize-dollar36-billion-in-bitcoin-stolen-from-bitfinex-hack/ar-AATCpU6 https://www.msn.com/en-us/money/companies/feds-seize-dollar3...

voobster 5y ago

>One of the biggest drawbacks for blockchain is that transactions can't be revoked after the fact Yes that is a major double-edged sword but it is ultimately a feature of blockchains (at least the base layer), not a bug. Everyone who has ever been a victim of fraudulent chargebacks can vouch for that. If you want reversibility you are free to create a smart contract which allows that using its own token. Frankly I wouldn't want to use a blockchain where someone can acquire my personal info and then social engineer their way into stealing my money, as commonly happens within the traditional financial system.

randomhodler84 5y ago

Sorry, that is explicitly an anti feature. Protect your keys. Use a hardware wallet — this is significantly safer than a credit card. A credit card gives all the data to the remote peer!! The shop or anyone watching can charge your card. Cryptocurrency does not work this way. You are in control — you transfer the rights to spend coin to another, you do not have coin debited from your account. There is no crypto 2.0

grog454 5y ago

> If someone steals my credit card, I have my credit card company to give me some level of protection. They can block transactions if they think it's stolen, and if I report it as stolen I can claw back money from fraudulent purchases. Can we, just for a moment, think critically about whether or not this is a good* thing? As a consumer / client of the credit card company it seems great at first glance. I get scammed? No problem, I'll get my money back. But where does that money come from? Certainly not from the thief. My hypothesis (I'm not an expert in this field) is that it actually comes from you, the consumer, albeit very indirectly and in two main ways: 1) Credit cards companies charge businesses that allow consumers to use them a fee. Business often pass this fee on to the consumer, sometimes even explicitly. For example gas stations usually publish separate prices for gas w/ or w/o credit card. That fee is the main revenue source for the credit card company, and fraud reimbursement is one of their expenses. Expenses go up? Fees go up. In this way businesses (and less directly you) are paying an insurance premium on top of the credit card company's operating costs and profit margin. 2) Credit card companies most likely write fraud reimbursement off when filing taxes. So taxes that they would otherwise pay vanish. If the taxing entity wants a minimum tax revenue, that means increased rates elsewhere (and quite possibly for individuals). So what's an alternative? Putting more effort in to the prevention of theft/fraud in the first place. * "Good thing" meaning net benefit to society.

andrewzah 5y ago
Yes, it categorically is a good thing. People make mistakes. Our society should not be an unforgiving one that heavily punishes mistakes or can’t handle basic situations like fraudulent transactions. Prevention of fraud is a cat and mouse game.
godelski 5y ago
Credit card companies often actually get the money back. They do a clawback/charge back. Which btw, some cryptocurrencies offer this too and there's also credit card like functionality, just not widely adopted because there's few places that accept cryptocurriencies. But yeah, I do think clawbacks are a good thing.
onion2k 5y ago

tippytippytango 5y ago

People won't transact on chain. Paypal et. al. will allow people to make bitcoin denominated transactions and will settle with other payment processors on chain. That gives the average consumer access to the kinds of protections they are used to.

30367286 5y ago
So the average consumer is back to trusting a central authority (PayPal)? Then what’s the point, for the end user, of the blockchain in the first place?
- ThinBold 5y ago
  You get to choose between out-sourcing the liability or naked-running. You can even linearly-interpolate between the two extremes. In case of banking, you already payed the hidden fee (banks get bailout using government money, aka your money)
  - 30367286 5y ago
    The number of consumers trying to buy a coffee who will “linearly interpolate between the two extremes” will be limited to a vanishingly small group of consumers who enjoy that kind of thing. The two responses to my very simple question prove to me that crypto is a fad that will fade into the background. Maybe a few big players will use it as their protocol, but the average consumer is never going to think about it.
- tippytippytango 5y ago
  It's just another choice people can make. If it suits them to denominate their transactions and stores of currency in bitcoin they can, if they wish. If they don't trust pay pal there will be countless other payment processors with varying levels of decentralization to suit whatever needs they have. If they don't like bitcoin they can use dollars, euros, doge whatever.

paperwallet 5y ago

> With crypto, a software flaw used to steal crypto can kill an entire company. This is mainly with Smart Contracts or Hot Wallet Storage specifically. A bug in a Smart Contract can be detrimental considering that it's code is immutable. A Hot Wallet could be misconfigured or exploited by a remote attacker. This is why it's important to use cold storage methods for larger amounts of funds, typically using a paper wallet, or even memorizing the seed phrase as a last resort. If you're an institution, then you should be employing institutional level security (though, I don't really see this happening as often as it should). You can even employ segregated witness to divy the funds amongst contract holders. > They're largely powerless to stop it once the transaction has gone through That's pretty much the entire point. This isn't a bug. It's a feature. It's up to the end user to determine the execution of the transfer of value from one to another on the ledger. The ledger can only ever be written to; making it immutable. > With crypto, a xss attack or a misplaced password can cost me all of my coins. I mean, this can happen anyways, even with the current system. If you get phished, click on a redirect, execute a payload locally, or whatever. Not really sure how this is even considered a cryptocurrency specific issue; It's a fairly universal issue as it is already. Also, you're more likely to see something like this with anything utilizing a Smart Contract. > With crypto, I have to triple check the address I'm sending coins to because I can't undo it. Well, not if you're using QR Codes. Remember those? They've been around for awhile. I would do this with my Account and Routing numbers if I'm wiring money or setting up a direct deposit regardless. I find my self checking the numbers to make sure I get paid. Even though the bank can reverse it, it would still be a pain. Knowing I can't reverse a crypto tx makes me a bit on edge, yes. It's, again, a feature... not a bug. If you have that much doubt with a transaction, then you should be using QR Codes instead. I personally find them to be convenient. Otherwise, I'm putting the public address in my clipboard and pasting it and then checking the first 6 and last 6 hex symbols. If they match, I'm happy. > With crypto, I have to spend what's sometimes a significant amount of money just to complete a transaction, and transactions can take minutes or hours to complete. The more congested the base layer of the network becomes, the more likely the fees are to be driven up. Bitcoin has a side-chain called the Lightening Network to mitigate this while focusing on processing micro-transactions. You can basically send 10 Sats for the cost of 1 sat. Some tx are basically free because of how the network is setup. With Ethereum, the base layer can process upto about 15 tx/s. Bitcoin is about 7 tx/s. Lightening can process up to 100k+ tx/s. That's 4 times the speed of either Visa or Mastercard. If you're executing a smart contract on the Eth network, then things can get expensive because you're using gwei as gas to execute the smart contract which is used to deter bad actors from abusing the EVM. Solana can process a 50 tx in about 500 ms which is impressive to be honest. > I think there's a future in crypto but we're in the dotcom boom days of it where most of the value is in speculation (and I suppose illegal purchases on the darknet). I'll wait for crypto 2.0. Less than 2% of crpyto is used for criminal activity and that's mainly because you can get caught using it. A lot of people believe that it's completely anonymous when it's not. You're usually KYC'd somewhere and the only way to avoid this is to do direct p2p transaction without having it linking back to something that's tracable. Bitcoin is a criminals worst nightmare simply because it's a public ledger which anyone can audit. > their usage as currency will be limited unless the inefficiency problem is solved. This is common point that's brought up as well and was in the article. In PoW, this inefficiency is not a problem. It's Bitcoins network security to maintain it's own decentralization. It's the base layer and you can build on top of it to address the transaction speed as well as the network congestion; Lightning Network being a prime example of this as a potential Layer 1 solution to Bitcoins Layer 0 solution. I feel like alot of people are missing the forest for the trees. I've done my research. Have you?

tromp 5y ago

> With crypto, I have to triple check the address I'm sending coins to because I can't undo it. This not much of an issue in pure Mimblewimble based blockchains, where sender and receiver interact to construct a transaction, and the receiver essentially has to prove the ability to spend received funds before the transaction can happen.

xtracto 5y ago

>One of the biggest drawbacks for CASH is that transactions can't be revoked after the fact, and there's no additional human oversight (like I'd get when sending a large amount of money through a bank) to protect me. Snark aside, my 70yo dad fell into a very stupid fraud where someone called him and convinced him to send money from his bank account to some other (this is using Mexican Gov digital money transfer network SPEI). After he did and realized it was a scam, he called his bank and they basically told him that they couldn't reverse it, nor do anything. So, bank transactions are not as revocable as they want you to think, for the lay person at least.

rvz 5y ago
> So, bank transactions are not as revocable as they want you to think, for the lay person at least. Santander [0] agrees with you. [0] https://www.bbc.com/news/business-59826345 https://www.bbc.com/news/business-59826345

dorgo 5y ago

Recently, german bank accounts of citizens of russia living in germany were silently blocked from receiving funds. It is all but impossible to block a crypto wallet from receiving funds. There are pros and cons everywhere.