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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 s

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.)
- cco 5y ago
  That isn't true in my experience at a, "lot of money" scale. They will help you set up the transaction, confirm the receiving party, test and prove the transfer, execute it. There are also courts etc to get involved, if someone sends you a million dollar wire and you keep it (for no services rendered), courts generally don't let you just have it (cross border caveats etc).
  - gonehome 5y ago
    Courts can also get involved in the BTC case too - it’s just an expensive and slow option in both cases (with uncertain outcomes).
    - katbyte 5y ago
      Assuming you can actually track down who owns the wallet.. banks know who is responsible for each account.
- neatze 5y ago
  I am a person who wired ~15K to wrong bank account outside US, I only realized after got notification that money was not received it was days later, reversing wire was straight forward and took if not mistaken a week to process, while requesting to reverse transaction branch manager warned me that on another end bank might refuse to reverse transaction and then this money would be lost forever.
  - rvz 5y ago
    Reminds me of [0] but this time it is by the bank itself accidentally depositing into rival bank accounts. Oh dear. [0] https://www.bbc.co.uk/news/business-59826345 https://www.bbc.co.uk/news/business-59826345
  - hedora 5y ago
    That's a pretty good outcome. I've found that when I wire a large amount of money to a new account, humans sanity check the transaction at both banks. Also, I once did something weird (wire to same escrow firm a few days apart), and got a call of the form "What's going on? Did you buy two houses or something?"
  - gonehome 5y ago
    You were lucky, I’ve heard similar stories where the money ended up lost (good faith deposit for a mortgage wired to fraudster).
- quickthrower2 5y ago
  They also might be able to help if you were conned into sending the money. The money might be freezable.
lern_too_spel 5y ago
As Warren's bill shows, Bitcoin won't protect the truckers from sanctions either. If whatever you have custody of can be demonetized, does the custody even matter?
- Valakas_ 5y ago
  Monero would would like to have words.
- gonehome 5y ago
  I don’t know the content of the bill, but it’s a matter of degree. It’s harder to control your transactions when you have self-custody. It requires a higher level of coordination.
  - Nextgrid 5y ago
    You just need to control the onramps and offramps. Bitcoin is of no use if you can't exchange it for anything tangible.
    - gonehome 5y ago
      That’s only true if you must transact in fiat. It’s mostly true today, may be less true in a future with this kind of restriction on on-ramps and off-ramps. Even so, it’d have to be a global restriction on all exchanges which is more challenging to coordinate.
      - lern_too_spel 5y ago
        If your tokens become valueless to other Canadians, other Canadians won't accept them. Non-Canadians who trade with Canadians won't accept them because they can't trade them with Canadians. The value goes to zero by induction.
        gonehome 5y ago
        Yeah, a lot of this assumes you get out of Canada at that point. Just like the people fleeing Russia or Ukraine. The thing crypto gives you is the capability to get your wealth out intact (at least whatever you had moved into self-custody). If you have fiat in banks frozen by the Canadian government your wealth is trapped. You’re right if Canada banned Bitcoin it could influence the value of the coin. Similar to governments refusing transactions in rubles. The difference in capability is in the ability to move your wealth and that short of global coordination a global store of value (controlled supply, non-government etc.) is more resilient. The fiat comparison would be having the entirety of your wealth in cash in your house - obviously not viable (and good luck trying to cross a border with it). Crypto is also more resilient to government meddling in currency production (this is often over-stressed in US, but is a real problem in developing countries where kleptocrats devalue the currency to steal the wealth). It’s more similar to buying gold and having it on you, but with crypto you don’t have to keep it on your person to maintain direct control of it. You just need to know the seed words.
jmull 5y ago
This is typical crypto-hype. Notice that although many points are raised, it doesn’t address the direct objections of the previous post. Obfuscate, misdirect, and confuse the marks.
- slewis 5y ago
  The parent comment does address the points, by saying that while they are downsides, the new properties of crypto _might_ outweigh them. It is nuanced, unlike the comment I am replying to.
- i_like_waiting 5y ago
  Thats because nobody refutes those points. Yes, transactions in crypto are irreversible. It might be bad for those number of factors. But even given those cons we see benefits in things mentioned above. E.g. my colleague can send bitcoin to his brother in russia. Tell me what other options to transfer value there are at the moment between west and russia. Very similar for ukraine.
  - cycrutchfield 5y ago
    Circumventing sanctions is a _killer_ use case
    - i_like_waiting 5y ago
      There are tons of cases when it's morally ethical and positive thing to do. Goverments have option to do just blanket ban, but not consider individual cases. E.g. you want to support independent reporters in Russia. What can you do? Support your family? Maybe even foreign students there?
  - thr0wawayf00 5y ago
    > Banks won’t protect you from wire fraud either. This is half-true. A wire transfer can't be reversed due to end-user error, which can be abused by fraudsters. However, Incorrect input on the bank's behalf does warrant a reversal. I'd compare my bank screwing up vs a crypto exchange screwing up (Like getting hacked). I'm still not protected if the exchange gets hacked and my coin is exfiltrated. I am protected if my bank fatfingers a wire transfer. Also, banks are insured by the FDIC against financial catastrophes. Savings accounts held in FDIC-regulated banks are insured up to $250k if the bank fails for some reason. I get no such protection holding crypto with an exchange. The FDIC turns around an audits banks to make sure they're compliant with liquidity requirements, loan quality measures, etc. Nobody in crypto is watching anyone else in crypto to make sure everything is kosher because that is fundamentally impossible in a system that is meant to be decentralized. Scammers are everywhere and not nearly enough is being done to address it. It's not even clear whether it's possible or not to even address crypto scams.
nl 5y ago
I'm entirely unconvinced that self custody is an advantage for anyone except extremely sophisticated people (sophisticated in both the technical and financial sense). I've been doing blockchain on and off since 2008. Recently I lost a few thousand dollars by sending crypto to a L1 address when I was on a L2. I work on self-soverign identity in my day job. I've written smart contracts. I'm a careful person. Basically I think if I'm dumb enough to do this what chance do most people have of getting this right?
- exdsq 5y ago
  You've been doing blockchain on-and-off since before the genesis of Bitcoin? What were you doing?
  - deleted 5y ago
    [deleted]
  - dijksterhuis 5y ago
    bitcoin.org site went live in 2008. white paper also published in 2008. > Nakamoto stated that work on the writing of the code for bitcoin began in 2007. On 18 August 2008, he or a colleague registered the domain name bitcoin.org, and created a web site at that address. On 31 October, Nakamoto published a white paper on the cryptography mailing list at metzdowd.com describing a digital cryptocurrency, titled "Bitcoin: A Peer-to-Peer Electronic Cash System". https://en.wikipedia.org/wiki/Satoshi_Nakamoto https://en.wikipedia.org/wiki/Satoshi_Nakamoto
    - exdsq 5y ago
      A white paper was sent to a small group of people in 2008, yes. But the group that acted on that is a subset of those people, that consists of maybe Hal Finney, Craig White, whoever Satoshi is, and a couple others. It's an extraordinarily small group of people.
  - nl 5y ago
    Well, AI mostly. Let's just say I thought it was interesting but not worth pursuing. I just re-checked. It was actually 2009 sorry.
Nextgrid 5y ago
> you can memorize your wallet seed words and recreate your wallet on the other side of a border Governments can trivially prevent this if they wanted to. Bringing your wallet along will be of no use if nobody dares to transact with you because they themselves will then need to explain the source of their newfound wealth. The current ability of crypto to (sometimes) escape government oversight is temporary and only exists because it's currently a rounding error in the grand scheme of things, but I can guarantee you it will be cracked down on.
- gonehome 5y ago
  A United world government could non-trivially prevent this (though enforcement would still be difficult at the individual level). We don’t have that though, and in practice today it’s useful in order to escape authoritarian dictatorships. The specific case I read about was someone escaping the Russian occupied areas of Ukraine this way: https://www.forbes.com/sites/tatianakoffman/2020/06/13/why-bitcoin-is-a-silent-protest-against-corrupt-governments-everywhere/?sh=7bc9777c3542#188214803542 https://www.forbes.com/sites/tatianakoffman/2020/06/13/why-b... It’s also more common in countries with bad currencies and limited access to USD (Venezuela). You’re right it’s not perfect, but it gives more power to individuals than the alternatives. It’s also possible something like Zcash could allow individuals to transact despite an all seeing panopticon, but I don’t know how that works well enough to have a strong opinion.
  - TomSwirly 5y ago
    > in practice today it’s useful in order to escape authoritarian dictatorships. Or in fact, any financial law by any government. And yet if you say a major application of crypto is crime everyone gets all hurt...
    - derangedHorse 5y ago
      Crime is relative so to say a major application of crypto is "crime" isn't necessarily a bad thing. I've seen a Russian commentator in another thread claiming to commit the "crime" of donating Bitcoin to Ukraine (while still being in Russia). I'm sure those of us in the Western world wouldn't have any big moral objections to that. That being said, most studies point to the conclusion that the major application of Bitcoin at least is not crime: https://www.forbes.com/sites/haileylennon/2021/01/19/the-false-narrative-of-bitcoins-role-in-illicit-activity https://www.forbes.com/sites/haileylennon/2021/01/19/the-fal... https://cryptoforinnovation.org/resources/Analysis_of_Bitcoin_in_Illicit_Finance.pdf https://cryptoforinnovation.org/resources/Analysis_of_Bitcoi... (by Michael Morell, former Acting Director, Deputy Director and Director of Intelligence at the Central Intelligence Agency (CIA))
shadowgovt 5y ago
> some of it is just what's required for self-custody. I think this will forever be the sticking point for crypto for a lot of potential users. It boils down to trust. And the relevant question is: for an average person, do they trust FDIC insurance more than they trust their own ability to understand the crypto infrastructure and protect themselves from rogue or compromised transaction facilitators (because for Bitcoin at least, it's fundamentally impractical to transact for most things without a facilitator; the time it takes for the transaction to get buried into the chain alone is enough to take most day-to-day uses off the table). And personally, I think for most people the risk model is that trusting FDIC insurance is a superior option.
- gonehome 5y ago
  I agree with you. The capability added by crypto doesn’t mean everything else can’t exist or isn’t preferable a lot of the time for most people. I do think there’s a lot of room for the current tooling to continue to improve though which may make it more of an option for more people.
deleted 5y ago
[deleted]
throwaway290 5y ago
> The closest alternative would be having cash [...] and cash is vulnerable to government stupidity (see: Russia) For the record, The Current Thing at the moment is to recommend citizens hurting from their government's stupidity to overthrow said government (and if you are averse to dying, then it's only fair that you suffer). I'm being facetious, but there's a grain of truth in that notion. If your government robs you with its economic policies you could, of course, invest in croins or other hard to sanction assets -- or you could instead take action to make your government better, more transparent and reliable.

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.)
cco 5y ago
That isn't true in my experience at a, "lot of money" scale. They will help you set up the transaction, confirm the receiving party, test and prove the transfer, execute it. There are also courts etc to get involved, if someone sends you a million dollar wire and you keep it (for no services rendered), courts generally don't let you just have it (cross border caveats etc).
- gonehome 5y ago
  Courts can also get involved in the BTC case too - it’s just an expensive and slow option in both cases (with uncertain outcomes).
  - katbyte 5y ago
    Assuming you can actually track down who owns the wallet.. banks know who is responsible for each account.
neatze 5y ago
I am a person who wired ~15K to wrong bank account outside US, I only realized after got notification that money was not received it was days later, reversing wire was straight forward and took if not mistaken a week to process, while requesting to reverse transaction branch manager warned me that on another end bank might refuse to reverse transaction and then this money would be lost forever.
- rvz 5y ago
  Reminds me of [0] but this time it is by the bank itself accidentally depositing into rival bank accounts. Oh dear. [0] https://www.bbc.co.uk/news/business-59826345 https://www.bbc.co.uk/news/business-59826345
- hedora 5y ago
  That's a pretty good outcome. I've found that when I wire a large amount of money to a new account, humans sanity check the transaction at both banks. Also, I once did something weird (wire to same escrow firm a few days apart), and got a call of the form "What's going on? Did you buy two houses or something?"
- gonehome 5y ago
  You were lucky, I’ve heard similar stories where the money ended up lost (good faith deposit for a mortgage wired to fraudster).
quickthrower2 5y ago
They also might be able to help if you were conned into sending the money. The money might be freezable.

lern_too_spel 5y ago

As Warren's bill shows, Bitcoin won't protect the truckers from sanctions either. If whatever you have custody of can be demonetized, does the custody even matter?

Valakas_ 5y ago
Monero would would like to have words.
gonehome 5y ago
I don’t know the content of the bill, but it’s a matter of degree. It’s harder to control your transactions when you have self-custody. It requires a higher level of coordination.
- Nextgrid 5y ago
  You just need to control the onramps and offramps. Bitcoin is of no use if you can't exchange it for anything tangible.
  - gonehome 5y ago
    That’s only true if you must transact in fiat. It’s mostly true today, may be less true in a future with this kind of restriction on on-ramps and off-ramps. Even so, it’d have to be a global restriction on all exchanges which is more challenging to coordinate.
    - lern_too_spel 5y ago
      If your tokens become valueless to other Canadians, other Canadians won't accept them. Non-Canadians who trade with Canadians won't accept them because they can't trade them with Canadians. The value goes to zero by induction.
      - gonehome 5y ago
        Yeah, a lot of this assumes you get out of Canada at that point. Just like the people fleeing Russia or Ukraine. The thing crypto gives you is the capability to get your wealth out intact (at least whatever you had moved into self-custody). If you have fiat in banks frozen by the Canadian government your wealth is trapped. You’re right if Canada banned Bitcoin it could influence the value of the coin. Similar to governments refusing transactions in rubles. The difference in capability is in the ability to move your wealth and that short of global coordination a global store of value (controlled supply, non-government etc.) is more resilient. The fiat comparison would be having the entirety of your wealth in cash in your house - obviously not viable (and good luck trying to cross a border with it). Crypto is also more resilient to government meddling in currency production (this is often over-stressed in US, but is a real problem in developing countries where kleptocrats devalue the currency to steal the wealth). It’s more similar to buying gold and having it on you, but with crypto you don’t have to keep it on your person to maintain direct control of it. You just need to know the seed words.

jmull 5y ago

This is typical crypto-hype. Notice that although many points are raised, it doesn’t address the direct objections of the previous post. Obfuscate, misdirect, and confuse the marks.

slewis 5y ago
The parent comment does address the points, by saying that while they are downsides, the new properties of crypto _might_ outweigh them. It is nuanced, unlike the comment I am replying to.
i_like_waiting 5y ago
Thats because nobody refutes those points. Yes, transactions in crypto are irreversible. It might be bad for those number of factors. But even given those cons we see benefits in things mentioned above. E.g. my colleague can send bitcoin to his brother in russia. Tell me what other options to transfer value there are at the moment between west and russia. Very similar for ukraine.
- cycrutchfield 5y ago
  Circumventing sanctions is a _killer_ use case
  - i_like_waiting 5y ago
    There are tons of cases when it's morally ethical and positive thing to do. Goverments have option to do just blanket ban, but not consider individual cases. E.g. you want to support independent reporters in Russia. What can you do? Support your family? Maybe even foreign students there?
- thr0wawayf00 5y ago
  > Banks won’t protect you from wire fraud either. This is half-true. A wire transfer can't be reversed due to end-user error, which can be abused by fraudsters. However, Incorrect input on the bank's behalf does warrant a reversal. I'd compare my bank screwing up vs a crypto exchange screwing up (Like getting hacked). I'm still not protected if the exchange gets hacked and my coin is exfiltrated. I am protected if my bank fatfingers a wire transfer. Also, banks are insured by the FDIC against financial catastrophes. Savings accounts held in FDIC-regulated banks are insured up to $250k if the bank fails for some reason. I get no such protection holding crypto with an exchange. The FDIC turns around an audits banks to make sure they're compliant with liquidity requirements, loan quality measures, etc. Nobody in crypto is watching anyone else in crypto to make sure everything is kosher because that is fundamentally impossible in a system that is meant to be decentralized. Scammers are everywhere and not nearly enough is being done to address it. It's not even clear whether it's possible or not to even address crypto scams.

nl 5y ago

I'm entirely unconvinced that self custody is an advantage for anyone except extremely sophisticated people (sophisticated in both the technical and financial sense). I've been doing blockchain on and off since 2008. Recently I lost a few thousand dollars by sending crypto to a L1 address when I was on a L2. I work on self-soverign identity in my day job. I've written smart contracts. I'm a careful person. Basically I think if I'm dumb enough to do this what chance do most people have of getting this right?

exdsq 5y ago
You've been doing blockchain on-and-off since before the genesis of Bitcoin? What were you doing?
- deleted 5y ago
  [deleted]
- dijksterhuis 5y ago
  bitcoin.org site went live in 2008. white paper also published in 2008. > Nakamoto stated that work on the writing of the code for bitcoin began in 2007. On 18 August 2008, he or a colleague registered the domain name bitcoin.org, and created a web site at that address. On 31 October, Nakamoto published a white paper on the cryptography mailing list at metzdowd.com describing a digital cryptocurrency, titled "Bitcoin: A Peer-to-Peer Electronic Cash System". https://en.wikipedia.org/wiki/Satoshi_Nakamoto https://en.wikipedia.org/wiki/Satoshi_Nakamoto
  - exdsq 5y ago
    A white paper was sent to a small group of people in 2008, yes. But the group that acted on that is a subset of those people, that consists of maybe Hal Finney, Craig White, whoever Satoshi is, and a couple others. It's an extraordinarily small group of people.
- nl 5y ago
  Well, AI mostly. Let's just say I thought it was interesting but not worth pursuing. I just re-checked. It was actually 2009 sorry.

Nextgrid 5y ago

> you can memorize your wallet seed words and recreate your wallet on the other side of a border Governments can trivially prevent this if they wanted to. Bringing your wallet along will be of no use if nobody dares to transact with you because they themselves will then need to explain the source of their newfound wealth. The current ability of crypto to (sometimes) escape government oversight is temporary and only exists because it's currently a rounding error in the grand scheme of things, but I can guarantee you it will be cracked down on.

gonehome 5y ago
A United world government could non-trivially prevent this (though enforcement would still be difficult at the individual level). We don’t have that though, and in practice today it’s useful in order to escape authoritarian dictatorships. The specific case I read about was someone escaping the Russian occupied areas of Ukraine this way: https://www.forbes.com/sites/tatianakoffman/2020/06/13/why-bitcoin-is-a-silent-protest-against-corrupt-governments-everywhere/?sh=7bc9777c3542#188214803542 https://www.forbes.com/sites/tatianakoffman/2020/06/13/why-b... It’s also more common in countries with bad currencies and limited access to USD (Venezuela). You’re right it’s not perfect, but it gives more power to individuals than the alternatives. It’s also possible something like Zcash could allow individuals to transact despite an all seeing panopticon, but I don’t know how that works well enough to have a strong opinion.
- TomSwirly 5y ago
  > in practice today it’s useful in order to escape authoritarian dictatorships. Or in fact, any financial law by any government. And yet if you say a major application of crypto is crime everyone gets all hurt...
  - derangedHorse 5y ago
    Crime is relative so to say a major application of crypto is "crime" isn't necessarily a bad thing. I've seen a Russian commentator in another thread claiming to commit the "crime" of donating Bitcoin to Ukraine (while still being in Russia). I'm sure those of us in the Western world wouldn't have any big moral objections to that. That being said, most studies point to the conclusion that the major application of Bitcoin at least is not crime: https://www.forbes.com/sites/haileylennon/2021/01/19/the-false-narrative-of-bitcoins-role-in-illicit-activity https://www.forbes.com/sites/haileylennon/2021/01/19/the-fal... https://cryptoforinnovation.org/resources/Analysis_of_Bitcoin_in_Illicit_Finance.pdf https://cryptoforinnovation.org/resources/Analysis_of_Bitcoi... (by Michael Morell, former Acting Director, Deputy Director and Director of Intelligence at the Central Intelligence Agency (CIA))

shadowgovt 5y ago

> some of it is just what's required for self-custody. I think this will forever be the sticking point for crypto for a lot of potential users. It boils down to trust. And the relevant question is: for an average person, do they trust FDIC insurance more than they trust their own ability to understand the crypto infrastructure and protect themselves from rogue or compromised transaction facilitators (because for Bitcoin at least, it's fundamentally impractical to transact for most things without a facilitator; the time it takes for the transaction to get buried into the chain alone is enough to take most day-to-day uses off the table). And personally, I think for most people the risk model is that trusting FDIC insurance is a superior option.

gonehome 5y ago
I agree with you. The capability added by crypto doesn’t mean everything else can’t exist or isn’t preferable a lot of the time for most people. I do think there’s a lot of room for the current tooling to continue to improve though which may make it more of an option for more people.

deleted 5y ago

[deleted]

throwaway290 5y ago

> The closest alternative would be having cash [...] and cash is vulnerable to government stupidity (see: Russia) For the record, The Current Thing at the moment is to recommend citizens hurting from their government's stupidity to overthrow said government (and if you are averse to dying, then it's only fair that you suffer). I'm being facetious, but there's a grain of truth in that notion. If your government robs you with its economic policies you could, of course, invest in croins or other hard to sanction assets -- or you could instead take action to make your government better, more transparent and reliable.