11 ms·

The advantage of crypto over cash is that you can keep redundant copies, or keep portions of a key in different places so there's no single point of failure. It

The advantage of crypto over cash is that you can keep redundant copies, or keep portions of a key in different places so there's no single point of failure. It'd be pretty silly not to have backups. For most people, a friendlier ideal is probably social recovery wallets, as advocated by Vitalik. You can restore access much like centralized services can, except instead of relying on a big company you're relying on your circle of friends and family. You can also include a company or two, if you want, without the company being a single point of failure. https://vitalik.ca/general/2021/01/11/recovery.html https://vitalik.ca/general/2021/01/11/recovery.html Reversing charges is a different point, which could be accomplished pretty simply with 2-of-3 sigs if there's market demand for it. At the moment, scaling issues have kept crypto from being used much for retail payments anyway (though that's gradually getting fixed). As for freezing cards, that's something we have to do a lot because we hand over full account credentials to everyone we pay and just trust them to keep those details safe and not abuse them. I've replaced two credit cards due to fraud, and it was a hassle. It boggles my mind that we've had public key cryptography for fifty years and we're still not using it for payments. Never mind blockchains, just upgrading the banking system to use public keys would be a huge improvement.

jakelazaroff 4y ago
Probably the most common vector for crypto theft is phishing people to sign malevolent transactions. So I have a hard time believing that there’s a technical solution to this problem at all — much less with current blockchain technologies.
- cowtools 4y ago
  Having separate "hot" and "cold" wallets is a good start.
  - arcticbull 4y ago
    Or have no wallets, which solves that problem completely.
    - cowtools 4y ago
      Cryptocurrency is more secure than cash or credit cards in this regard, so who is being made the fool here?
      - arcticbull 4y ago
        Crypto is way less secure than a credit card of course, since with a credit card I'm not liable for any fraud, loss or theft. I don't even have to front the charge until the issuer resolves it. As the issuer itself is liable (not me) they are incentivized to detect and stop as much fraud as possible. I can even take advantage of chargebacks to ensure merchants give me what I paid for. Chargebacks are incredibly customer-friendly - but of course they're good for businesses too as it affords folks a degree of confidence at unfamiliar merchants. And I get various kinds of insurance - they'll even reimburse me if I drop and smash what I bought 90 days after I bought it.
        cowtools 4y ago
        Credit cards need those systems in place precisely because they are insecure in the first place. I can even use chargebacks to commit fraud against merchants. P.S. You think you're so smart for using paypal or something, wait until you set up a business and adversaries falsely accuse you of fraud. No system can completely prevent fraud, but the credit card system is insecure by design and blind to the externalities of fraud.
        arcticbull 4y ago
        Really? Are you sure? Give it a go and see what happens. All you're doing is moving the fraud potential from the customer to the merchant. Without the network and with instant finality, you've left them with no recourse. Both credit cards and crypto as a payment primitive in isolation are secure. However, that's a very myopic view of a transaction. A transaction extends beyond simply the payment rails. You're leaving customers significantly worse off by forcing them into no-recourse payments with instant finality. Merchants, being businesses, are significantly better able to protect themselves - as they are able to insure against these losses - and the ability to charge back transactions increases the transaction volume at the store because it gives customers confidence in the payment. [edit] I already have :) Have what? Committed fraud? Bold statement. How much did you steal and how often? There's zero basis to believe that crypto reduces the incidence of fraud. Citation needed.
williamtwild 4y ago
Average Joe and Sally in midwest america going to do any of that ? Not bloody likely.
- DennisP 4y ago
  I'm friends with an elementary school teacher in Kansas who does it. Average people aren't as dumb as HN denizens seem to think.
formerkrogemp 4y ago
> The advantage of crypto over cash. Let me stop you there. There is no advantage. Cryptocurrency is a scam. I've been burned. Many others have been burned recently. Go back to the drawing board and come back in a few years with a valid use and tell me it's still useful for something other than skirting the financial regulations and scams.
- int_19h 4y ago
  If you invested in crypto, yeah, that was absolutely a scam. Don't scoff at "something other than skirting the regulations" tho. Especially if you live in a comfortable First World country with rule of law and all that.
_the_inflator 4y ago
> The advantage of crypto over cash is that you can keep redundant copies, or keep portions of a key in different places so there's no single point of failure. It'd be pretty silly not to have backups. I believe that this looks simple on paper, but does not really work. And then: this is called service. Coinbase offered a service, that just deals with all the hassle you are describing.
- cowtools 4y ago
  coinbase offers a service which is completely orthogonal to what he is describing. How difficult is it to set up a wallet, then use the same seed phrase when setting up a wallet on another device? If one of your devices gets stolen, make a new wallet and transfer the funds with your other device before they extract your keys.
  - atlasunshrugged 4y ago
    For the audience that reads HN? Probably not that difficult. For the average person who is comparing this to the alternative of a bank where they can just talk to a human who manages all this for them and also get benefits like a credit card with rewards, built a credit score, and have a throat to choke when there's an issue... it doesn't seem like that good of a tradeoff
    - jollybean 4y ago
      For the 'audience that reads HN' it's plausible, but still rife with risk. Which is the problem. We can all learn to 'press a button'. But it's that time we accidentally 'double click' because we were not paying attention, that is the problem.
    - cowtools 4y ago
      What is an "average person"? An average person in a first world country who has access to "trustworthy" financial system? Centralized systems work great... until they don't. P.S. Our grandchildren will wonder why we allowed the free world to export the means of surveillance to the third world. The financial system is a huge part of that.
bendtheblock 4y ago
your last point isn't true - EMV cards with a chip (modern credit cards) use public key cryptography and don't reveal more than they need to to the merchant. Typing in the card numbers (or swiping it) will slowly stop in the US, as it has in most other developed countries by now. I disagree with the rest also - mainly on the grounds that for a normal person, there isn't any benefit and as the OP says, the status quo is preferable
- DennisP 4y ago
  Is there any solution in the works for online purchases?
  - jhugo 4y ago
    Apple Pay is one. Also, in Asia it's very common for a website to display a QR code which you scan with your phone to make a payment, either with your bank's app or with a separate payment platform app. These don't reveal any secret data to the merchant. Even when using traditional card numbers, many banks offer you the ability to instantly mint as many cards as you like, so you can just generate a card for the specific website. Often you can even lock the card number to that merchant after the first payment.
  - bendtheblock 4y ago
    not cryptographically no (and would be nice to see, but crypto is not the answer). But as a consumer when I shop online I never worry - if I am defrauded the (centralised) bank will give me the money back, that's the solution and it works for everyone
    - DennisP 4y ago
      And that's how I ended up having to change my card numbers on file with a bunch of businesses, and why every couple months a purchase fails until I respond to a fraud email. It's a hassle and it's unnecessary, especially when phones have secure enclaves for private key storage. I'm not even arguing for blockchains now, just for using public keys in online purchases.
jollybean 4y ago
Cool. Or you can put the cash in a 'bank' where you don't have to worry about 'multiple copies'. The 'friction' of Bitcoin is that it little to no sense as a currency, and only from a certain fairly narrow perspective might have some advantages. Nice experiment, but not very useful. Maybe one day the crypto folks will figure something out. I'm sure something in there is useful.
grey-area 4y ago
The central point is that crypto has features most people don’t want (decentralisation, shared public ledger, trustless) which actively sabotage things most people do want - speed, security, privacy, trust etc. This is a fundamental design error. Stop comparing crypto to cash, the competitor is centralised electronic bank accounts and credit cards. Banks use lots of cryptography to secure and sign transactions, including public key cryptography. Some banks now issue numberless cards.
- Hoasi 4y ago
  > Stop comparing crypto to cash, the competitor is centralised electronic bank accounts and credit cards. Meanwhile, centralized electronic bank accounts and credit cards steadily work to undermine cash itself.
- wyager 4y ago
  > speed, security, privacy, trust Every single one of these factors is significantly better in Bitcoin than in the legacy payments system. Your proposed tradeoff is not based on reality. The only one of these things that might plausibly be called "better" for legacy payments is speed, but A) this is no longer plausible at all with lightning and B) any comparable appearance of speed in a legacy payments system is fictitious. The fiction holds up only if you are a "casual" user of the system, transacting in small amounts of money in non-complicated transactions. The costs even of this fictitious speed are high, but they are hidden from casual users.
  - uncomputation 4y ago
    > Speed Bitcoin can handle 7 transactions per second, on average. VISA can handle 1,700. > Security Your bank account is secured with a password. If compromised, you can prove your identity in person at a bank with government documents and obviously physical appearance. Bitcoin has one method of authentication, the signing key, and once you lose it, you have lost your account. > Privacy Every transaction you make as well as your balance is public on a blockchain. Your bank account is private only to you and the bank itself. > Trust This one is more subjective and I won’t really comment if I trust Chase or Coinbase more, but I will say this is somewhat ironic on a post about how Coinbase is selling IP data to ICE.
ultra_chad 4y ago
And it only uses about 500,000 times as much energy per transaction as credit cards do. Nice!
ineedasername 4y ago
That's an advantage of crypto over cash. In the US, and probably similar trends in many places, only about 20% of transactions are in cash. Merely being better than cash isn't much of a selling feature, especially when it's worse than cash in some ways as well: keep your crypto in an exchange and it might get hacked. Keep it offline in a local wallet(s) and it stops being useful as a medium of exchange in most places you'd use cash. I'm not saying these problems are insurmountable, but if they are then there's still a very long road ahead to get there.
300bps 4y ago
The Bitcoin Whitepaper was published almost 13 years ago. It still hasn't solved basic use cases that have been solved in traditional finance for many decades. Illegal uses of cryptocurrency are the only real use case that makes any sense. Pyramid schemes, ransomware, illicit purchases, money laundering, asset hiding, tax evasion. That's what has kept cryptocurrency alive, for now.
uncomputation 4y ago
> It boggles my mind that we've had public key cryptography for fifty years and we're still not using it for payments. Never mind blockchains, just upgrading the banking system to use public keys would be a huge improvement. This ignores the number one lesson of PGP - key management is hard, up there with naming things and cache invalidation. I honestly don’t see how public keys, which are vastly more complicated to use and store than passwords, would be an improvement for the general, non-technical public when getting them to use long, unique passwords is already a challenge. You have to copy over or update your public key with each new computer you get, assuming the account owner even has a permanent computer. What about accessing your account on someone else’s computer in a quick pinch, or on your phone? Coupled with the fact that keypairs would be unable to be force reset (assuming you want to use them to their full potential) unlike passwords, and it would be a disaster. I will say that minimizing the sensitive information sent for payment with crypto is a huge plus, as the merchant no longer needs to handle the card information to send to the payment processor, but can just accept the transaction hash (with some sort of signature of course). This also doesn’t really address the issue that Coinbase will still send your info to ICE, of course. Not that banks are any better. But cash is!
- heretogetout 4y ago
  In addition to all that you said about key management -- if you do manage to leak your keys and you chose a bad passphrase good luck proving to anyone that any correctly signed transactions were fraudulent/performed by someone else.
uncomputation 4y ago
> Reversing charges is a different point, which could be accomplished pretty simply with 2-of-3 sigs if there's market demand for it. You can’t reverse transactions. Once validated and included in a block, the transactions are forever, which is of course one of the main appeals of cryptocurrency in the first place. You would have to get the fraudster to send the money back (potentially covering gas fees) or else there is literally no other way without their signing key (also one of the key appeals of cryptocurrency).
- tylersmith 4y ago
  Blockchain transactions are really just messages that can optionally include payments. A logical retail transaction that can be reversed can be modeled on top as a series of messages, very similar to how credit card clearing works.
  - uncomputation 4y ago
    > messages that can optionally include payments This is a weird way to put it. Transactions include state transitions which modify the state of the global blockchain permanently. Miners (in the case of bitcoin) validate these transitions and publish the block to the chain. If there is a reversal, it must come from the merchant’s account, because only they can produce a valid state transition to “return” (ie send back) your money.
    - tylersmith 4y ago
      A message can be handled many ways, and a reversal payment protocol wouldn't put the customers funds directly in control of the merchant until the reversibility period is over.

jakelazaroff 4y ago

Probably the most common vector for crypto theft is phishing people to sign malevolent transactions. So I have a hard time believing that there’s a technical solution to this problem at all — much less with current blockchain technologies.

cowtools 4y ago
Having separate "hot" and "cold" wallets is a good start.
- arcticbull 4y ago
  Or have no wallets, which solves that problem completely.
  - cowtools 4y ago
    Cryptocurrency is more secure than cash or credit cards in this regard, so who is being made the fool here?
    - arcticbull 4y ago
      Crypto is way less secure than a credit card of course, since with a credit card I'm not liable for any fraud, loss or theft. I don't even have to front the charge until the issuer resolves it. As the issuer itself is liable (not me) they are incentivized to detect and stop as much fraud as possible. I can even take advantage of chargebacks to ensure merchants give me what I paid for. Chargebacks are incredibly customer-friendly - but of course they're good for businesses too as it affords folks a degree of confidence at unfamiliar merchants. And I get various kinds of insurance - they'll even reimburse me if I drop and smash what I bought 90 days after I bought it.
      - cowtools 4y ago
        Credit cards need those systems in place precisely because they are insecure in the first place. I can even use chargebacks to commit fraud against merchants. P.S. You think you're so smart for using paypal or something, wait until you set up a business and adversaries falsely accuse you of fraud. No system can completely prevent fraud, but the credit card system is insecure by design and blind to the externalities of fraud.
        arcticbull 4y ago
        Really? Are you sure? Give it a go and see what happens. All you're doing is moving the fraud potential from the customer to the merchant. Without the network and with instant finality, you've left them with no recourse. Both credit cards and crypto as a payment primitive in isolation are secure. However, that's a very myopic view of a transaction. A transaction extends beyond simply the payment rails. You're leaving customers significantly worse off by forcing them into no-recourse payments with instant finality. Merchants, being businesses, are significantly better able to protect themselves - as they are able to insure against these losses - and the ability to charge back transactions increases the transaction volume at the store because it gives customers confidence in the payment. [edit] I already have :) Have what? Committed fraud? Bold statement. How much did you steal and how often? There's zero basis to believe that crypto reduces the incidence of fraud. Citation needed.

williamtwild 4y ago

Average Joe and Sally in midwest america going to do any of that ? Not bloody likely.

DennisP 4y ago
I'm friends with an elementary school teacher in Kansas who does it. Average people aren't as dumb as HN denizens seem to think.

formerkrogemp 4y ago

> The advantage of crypto over cash. Let me stop you there. There is no advantage. Cryptocurrency is a scam. I've been burned. Many others have been burned recently. Go back to the drawing board and come back in a few years with a valid use and tell me it's still useful for something other than skirting the financial regulations and scams.

int_19h 4y ago
If you invested in crypto, yeah, that was absolutely a scam. Don't scoff at "something other than skirting the regulations" tho. Especially if you live in a comfortable First World country with rule of law and all that.

_the_inflator 4y ago

> The advantage of crypto over cash is that you can keep redundant copies, or keep portions of a key in different places so there's no single point of failure. It'd be pretty silly not to have backups. I believe that this looks simple on paper, but does not really work. And then: this is called service. Coinbase offered a service, that just deals with all the hassle you are describing.

cowtools 4y ago
coinbase offers a service which is completely orthogonal to what he is describing. How difficult is it to set up a wallet, then use the same seed phrase when setting up a wallet on another device? If one of your devices gets stolen, make a new wallet and transfer the funds with your other device before they extract your keys.
- atlasunshrugged 4y ago
  For the audience that reads HN? Probably not that difficult. For the average person who is comparing this to the alternative of a bank where they can just talk to a human who manages all this for them and also get benefits like a credit card with rewards, built a credit score, and have a throat to choke when there's an issue... it doesn't seem like that good of a tradeoff
  - jollybean 4y ago
    For the 'audience that reads HN' it's plausible, but still rife with risk. Which is the problem. We can all learn to 'press a button'. But it's that time we accidentally 'double click' because we were not paying attention, that is the problem.
  - cowtools 4y ago
    What is an "average person"? An average person in a first world country who has access to "trustworthy" financial system? Centralized systems work great... until they don't. P.S. Our grandchildren will wonder why we allowed the free world to export the means of surveillance to the third world. The financial system is a huge part of that.

bendtheblock 4y ago

your last point isn't true - EMV cards with a chip (modern credit cards) use public key cryptography and don't reveal more than they need to to the merchant. Typing in the card numbers (or swiping it) will slowly stop in the US, as it has in most other developed countries by now. I disagree with the rest also - mainly on the grounds that for a normal person, there isn't any benefit and as the OP says, the status quo is preferable

DennisP 4y ago
Is there any solution in the works for online purchases?
- jhugo 4y ago
  Apple Pay is one. Also, in Asia it's very common for a website to display a QR code which you scan with your phone to make a payment, either with your bank's app or with a separate payment platform app. These don't reveal any secret data to the merchant. Even when using traditional card numbers, many banks offer you the ability to instantly mint as many cards as you like, so you can just generate a card for the specific website. Often you can even lock the card number to that merchant after the first payment.
- bendtheblock 4y ago
  not cryptographically no (and would be nice to see, but crypto is not the answer). But as a consumer when I shop online I never worry - if I am defrauded the (centralised) bank will give me the money back, that's the solution and it works for everyone
  - DennisP 4y ago
    And that's how I ended up having to change my card numbers on file with a bunch of businesses, and why every couple months a purchase fails until I respond to a fraud email. It's a hassle and it's unnecessary, especially when phones have secure enclaves for private key storage. I'm not even arguing for blockchains now, just for using public keys in online purchases.

jollybean 4y ago

Cool. Or you can put the cash in a 'bank' where you don't have to worry about 'multiple copies'. The 'friction' of Bitcoin is that it little to no sense as a currency, and only from a certain fairly narrow perspective might have some advantages. Nice experiment, but not very useful. Maybe one day the crypto folks will figure something out. I'm sure something in there is useful.

grey-area 4y ago

The central point is that crypto has features most people don’t want (decentralisation, shared public ledger, trustless) which actively sabotage things most people do want - speed, security, privacy, trust etc. This is a fundamental design error. Stop comparing crypto to cash, the competitor is centralised electronic bank accounts and credit cards. Banks use lots of cryptography to secure and sign transactions, including public key cryptography. Some banks now issue numberless cards.

Hoasi 4y ago
> Stop comparing crypto to cash, the competitor is centralised electronic bank accounts and credit cards. Meanwhile, centralized electronic bank accounts and credit cards steadily work to undermine cash itself.
wyager 4y ago
> speed, security, privacy, trust Every single one of these factors is significantly better in Bitcoin than in the legacy payments system. Your proposed tradeoff is not based on reality. The only one of these things that might plausibly be called "better" for legacy payments is speed, but A) this is no longer plausible at all with lightning and B) any comparable appearance of speed in a legacy payments system is fictitious. The fiction holds up only if you are a "casual" user of the system, transacting in small amounts of money in non-complicated transactions. The costs even of this fictitious speed are high, but they are hidden from casual users.
- uncomputation 4y ago
  > Speed Bitcoin can handle 7 transactions per second, on average. VISA can handle 1,700. > Security Your bank account is secured with a password. If compromised, you can prove your identity in person at a bank with government documents and obviously physical appearance. Bitcoin has one method of authentication, the signing key, and once you lose it, you have lost your account. > Privacy Every transaction you make as well as your balance is public on a blockchain. Your bank account is private only to you and the bank itself. > Trust This one is more subjective and I won’t really comment if I trust Chase or Coinbase more, but I will say this is somewhat ironic on a post about how Coinbase is selling IP data to ICE.

ultra_chad 4y ago

And it only uses about 500,000 times as much energy per transaction as credit cards do. Nice!

ineedasername 4y ago

That's an advantage of crypto over cash. In the US, and probably similar trends in many places, only about 20% of transactions are in cash. Merely being better than cash isn't much of a selling feature, especially when it's worse than cash in some ways as well: keep your crypto in an exchange and it might get hacked. Keep it offline in a local wallet(s) and it stops being useful as a medium of exchange in most places you'd use cash. I'm not saying these problems are insurmountable, but if they are then there's still a very long road ahead to get there.

300bps 4y ago

The Bitcoin Whitepaper was published almost 13 years ago. It still hasn't solved basic use cases that have been solved in traditional finance for many decades. Illegal uses of cryptocurrency are the only real use case that makes any sense. Pyramid schemes, ransomware, illicit purchases, money laundering, asset hiding, tax evasion. That's what has kept cryptocurrency alive, for now.

uncomputation 4y ago

> It boggles my mind that we've had public key cryptography for fifty years and we're still not using it for payments. Never mind blockchains, just upgrading the banking system to use public keys would be a huge improvement. This ignores the number one lesson of PGP - key management is hard, up there with naming things and cache invalidation. I honestly don’t see how public keys, which are vastly more complicated to use and store than passwords, would be an improvement for the general, non-technical public when getting them to use long, unique passwords is already a challenge. You have to copy over or update your public key with each new computer you get, assuming the account owner even has a permanent computer. What about accessing your account on someone else’s computer in a quick pinch, or on your phone? Coupled with the fact that keypairs would be unable to be force reset (assuming you want to use them to their full potential) unlike passwords, and it would be a disaster. I will say that minimizing the sensitive information sent for payment with crypto is a huge plus, as the merchant no longer needs to handle the card information to send to the payment processor, but can just accept the transaction hash (with some sort of signature of course). This also doesn’t really address the issue that Coinbase will still send your info to ICE, of course. Not that banks are any better. But cash is!

heretogetout 4y ago
In addition to all that you said about key management -- if you do manage to leak your keys and you chose a bad passphrase good luck proving to anyone that any correctly signed transactions were fraudulent/performed by someone else.

uncomputation 4y ago

> Reversing charges is a different point, which could be accomplished pretty simply with 2-of-3 sigs if there's market demand for it. You can’t reverse transactions. Once validated and included in a block, the transactions are forever, which is of course one of the main appeals of cryptocurrency in the first place. You would have to get the fraudster to send the money back (potentially covering gas fees) or else there is literally no other way without their signing key (also one of the key appeals of cryptocurrency).

tylersmith 4y ago
Blockchain transactions are really just messages that can optionally include payments. A logical retail transaction that can be reversed can be modeled on top as a series of messages, very similar to how credit card clearing works.
- uncomputation 4y ago
  > messages that can optionally include payments This is a weird way to put it. Transactions include state transitions which modify the state of the global blockchain permanently. Miners (in the case of bitcoin) validate these transitions and publish the block to the chain. If there is a reversal, it must come from the merchant’s account, because only they can produce a valid state transition to “return” (ie send back) your money.
  - tylersmith 4y ago
    A message can be handled many ways, and a reversal payment protocol wouldn't put the customers funds directly in control of the merchant until the reversibility period is over.