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Neither will cash. Thats what a third party escrow is for. You get that as part of what you pay for a credit card. Not trying to come down on either side of thi

Neither will cash. Thats what a third party escrow is for. You get that as part of what you pay for a credit card. Not trying to come down on either side of this i personally hold near zero crypto, your statement was just wrong.

fsh 10mo ago
Indeed, most societies ended up inventing a mandatory trusted third party escrow called a "legal system" as part of a "state". They usually issue hard-to-copy tokens, solving the double spending problem.
- charcircuit 10mo ago
  Most states still haven't created digital versions of these hard-to-copy tokens meaning that there needs to be an alternate provided by a 3rd party which is where cryptocurrency comes in.
  - bawolff 10mo ago
    Most states have in fact invented bank transfers for that purpose.
    - charcircuit 10mo ago
      The decentralized nature of banks makes it hard to offer a good payment experience to consumers and businesses.
      - walthamstow 10mo ago
        Inside the same country, really? We have the aptly-named Faster Payments in the UK and it's instant. The company I work for is virtually built upon it. https://en.wikipedia.org/wiki/Faster_Payment_System_%28United_Kingdom https://en.wikipedia.org/wiki/Faster_Payment_System_%28Unite...
      - bawolff 10mo ago
        Only in America. The rest of the world figured it out.
        disgruntledphd2 10mo ago
        To be fair, this is because the US figured this stuff out way earlier through credit cards, and now there's a bunch of stakeholders and legacy changes which get in the way of making the services better.
        FabHK 10mo ago
        Indeed, and there are some good reasons, too: US regulators want to prop up smaller regional banks and avoid large national monopolies (for what is essentially a natural monopoly). The externalities of the crappy US banking system are so vast though. Musk, crypto, ...
      - KellyCriterion 10mo ago
        SEPA is among the most stable & robust payment areas globally with a lot of interesting features which a lot of other regions are jealous about :-) And there are additional layers built on top, so at least we have N=1, while I have to admit that convenience could & should be improved
  - delusional 10mo ago
    The states (or rather the national banks of said states) are usually the ones running the central clearing system. That's the place where all the different banks report their net change in relation to all the other banks, and settle that change on their account with the central bank. Believe it or not, banks don't ferry around cash to each other. It's all just numbers in a computer.
  - johncolanduoni 10mo ago
    The Fed has had a wire service (Fedwire) for banks, allowing them to transfer their balances on the Fed’s balance sheet to another bank during settlement, since before the dollar moved off the gold standard. It was initially done with literal telegraphs - not sure at what point it became digital. It obviously has no pseudo anonymity, is literally the least democratized banking system in existence, and is subject to the government’s whims in a whole host of ways. But it is a digital ledger of massive sums of real dollars (the banks can ask for it in cash if need be), and you couldn’t really steal the money even if you managed to create an unauthorized transfer on some bank’s master account.
    - lmm 10mo ago
      > the banks can ask for it in cash if need be Ehhh, can they? I suspect any bank that tried would pretty soon find that it actually couldn't.
      - johncolanduoni 10mo ago
        They couldn’t get their whole balance in cash I’m sure. But the Fed is the one that handles retiring old paper currency and giving banks fresh currency to give to ATMs and tellers, and I doubt the inflows and outflows are perfectly even for each bank.
      - lazide 10mo ago
        The Fed manages printed currency - they’d be irritated, but they literally do provide the physical dollars people need now, and if they felt it was appropriate, they’d produce them as needed. Just like those airplanes of bills shipped to Iraq, etc. in the past.
      - squillion 10mo ago
        I think we’re talking about bank reserves, which is a fraction (in the order of 1%) of the total amount of money held in the customers’ transaction accounts. Reserves are convertible into cash. Not that any bank would suddenly want to do that, unless there’s a bank run, in which case it’s the customers who want the entirety of their accounts (100x the reserves) converted into cash, which is impossible not because the fed refuses to convert the money, but because the bank doesn’t have enough reserves.
- njarboe 10mo ago
  And put people in jail they catch making and using fake ones.
- jimmaswell 10mo ago
  Putting absolute trust and surrendering too much agency to the state has been proven a mistake many times throughout history. Citizens need fallbacks when the state fails them. Concrete example where crypto achieves this: many trans people in places with an inadequate medical system or hostile government turn to buying gray-market DIY hormones online, facilitated by crypto.
  - johncolanduoni 10mo ago
    Sure, but approximately zero of the actual crypto space/hype was built around facilitating this kind of thing. In fact for that use case, it would’ve been better if Bitcoin never got nearly as big as it has (since that lead to much more government scrutiny, all over the world). Ideally it would’ve gotten large enough that there were enough reputable-ish exchanges that you could move fiat in and out, and then stopped there. Like some sort of digital Hawala.
  - walthamstow 10mo ago
    I also use crypto to bypass government prohibition on unprescribed self-medication. Is it still noble if I'm buying cocaine?
    - AnthonyMouse 10mo ago
      Is it necessarily the case that it isn't? Suppose you can't afford health insurance and you have a condition for which a controlled substance would be prescribed, if you had access to the healthcare system, but you don't. If you then buy it over the internet, is the system being wronged by you or are you being wronged by the system?
    - krispyfi 10mo ago
      The war on drugs is a scam. Cocaine prohibition is a pretext to oppress indigenous peoples of the Andes. https://filtermag.org/world-health-organization-coca-prohibition/amp/ https://filtermag.org/world-health-organization-coca-prohibi...
      - 10mo ago
- aeternum 10mo ago
  They also confiscate those hard-to-copy tokens if you acquire a sufficiently large quantity and attempt to leave the country with them.
  - blackjack_ 10mo ago
    I see a lot of hand wringing about this; but for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Yes it is possible for the state to inflict violence on you, and if the state wants to, it probably will do so. Putting your money into internet tokens instead of state backed money will probably just get you tortured more until you give up the keys, or die. Crypto isn't some "one weird trick" to prevent the state from taking your property and possessions.
    - idkfasayer 10mo ago
      [dead]
    - AnthonyMouse 10mo ago
      > for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Let's go through these. To begin with, "fraudulent transactions" is redundant because that's either someone stealing your credit card number or someone you paid not doing what they said. So let's consider those two: > people stealing their credit card number This is the problem caused by the existing system, which is designed with such poor security that breaching a merchant allows the attackers to make charges to their innocent customers' cards at a different merchant. They get zero credit for providing a mitigation to the problem they created themselves. > businesses charging them and not delivering goods This gets sold as a benefit, but it's also a cost, because then it becomes a mechanism to commit fraud. People go to a business that does deliver the goods and issue a fraudulent chargeback. The merchants then have to pass the cost of that onto everyone else, which means that it's also a fraud against every other customer. Meanwhile we have other solutions to that problem that don't do that. Established businesses don't want to ruin their reputation. If someone rips you off you can sue them. Sometimes you're just paying someone for something they're already delivered. And most importantly, there instances when you would trust someone to deliver the goods independent of the payment system, and other instances when you wouldn't. Which is why you want both payment systems to be available instead of just the second one, so you don't have to pay for the chargeback fraud when you don't need to buy your trust from the payment system.
bawolff 10mo ago
> Not trying to come down on either side of this i personally hold near zero crypto, your statement was just wrong. Umm, you are agreeing with the person you are responding to.
NickNaraghi 10mo ago
I love watching the HN comment hivemind speedrun the history of blockchain innovation every time this comes up. You just reinvented smart contracts on Ethereum, keep going :-)
- gavinsyancey 10mo ago
  No amount of smart contracts can solve the situation where one party says "I shipped you the widgets you ordered; pay me" and the other says "I received a box with a brick in it" -- you need some trusted third party to decide based on reasonable heuristics who is trying to commit fraud, based on e.g. is this the first or the tenth time this has happened.
  - pyrolistical 10mo ago
    That’s just a bad contract. Now consider one that mints you an NFT
    - bhickey 10mo ago
      I can't actually tell if you're touting monkey jpegs or making a really funny joke.
      - forgotpwd16 10mo ago
        They agree with your statement in another reply under this submission. So a joke on crypto hype culture, where you either put aside problems and move to next craze or next craze is shoved to everything.
  - OneDeuxTriSeiGo 10mo ago
    That's exactly the point of smart contracts. The contract can hold the money in escrow such that it can only be sent either to the seller or returned to buyer. The seller and buyer can then both walk the contract through a state machine on agreement (i.e. confirm shipping, confirm delivery, potentially also confirmation for a return process) and when the buyer and seller come to a disagreement (ex: seller attests they've shipped the product and it should be delivered but the buyer asserts they havent/the tracking on shipping is invalid) or one of the participants is non-responsive for a certain amount of time then the contract moves into arbitration. In arbitration one or more third parties then step in to serve as arbiters/oracles that decide in the favor of one party or the other and commit those decisions to the contract and the contract then derives consensus from those decisions and proceeds to the corresponding state/action of the contract (i.e. refund vs close). Now your arbiters/oracles/third parties have reputations and you can reason about how trustworthy they are before you enter into the contract. This means all parties can evaluate their risk tolerance and trust levels before entering the contract/on agreement. ------- TLDR: Trust is inherent to any system reliant on the physical world. The point of smart contracts, etc is to formally encode those trust assumptions and the procedures of the contract in as trustless of a way as possible and to allow distribution of that trust across parties with most of the coordination overhead being automated/abstracted away. And importantly smart contracts provide an extremely low friction happy path. In the happy path where all parties are satisfied, it's extremely efficient and responsive. But in every other path, the conflicts, incentives, and resolution procedures are clearly defined for all parties involved.

fsh 10mo ago

Indeed, most societies ended up inventing a mandatory trusted third party escrow called a "legal system" as part of a "state". They usually issue hard-to-copy tokens, solving the double spending problem.

charcircuit 10mo ago
Most states still haven't created digital versions of these hard-to-copy tokens meaning that there needs to be an alternate provided by a 3rd party which is where cryptocurrency comes in.
- bawolff 10mo ago
  Most states have in fact invented bank transfers for that purpose.
  - charcircuit 10mo ago
    The decentralized nature of banks makes it hard to offer a good payment experience to consumers and businesses.
    - walthamstow 10mo ago
      Inside the same country, really? We have the aptly-named Faster Payments in the UK and it's instant. The company I work for is virtually built upon it. https://en.wikipedia.org/wiki/Faster_Payment_System_%28United_Kingdom https://en.wikipedia.org/wiki/Faster_Payment_System_%28Unite...
    - bawolff 10mo ago
      Only in America. The rest of the world figured it out.
      - disgruntledphd2 10mo ago
        To be fair, this is because the US figured this stuff out way earlier through credit cards, and now there's a bunch of stakeholders and legacy changes which get in the way of making the services better.
        FabHK 10mo ago
        Indeed, and there are some good reasons, too: US regulators want to prop up smaller regional banks and avoid large national monopolies (for what is essentially a natural monopoly). The externalities of the crappy US banking system are so vast though. Musk, crypto, ...
    - KellyCriterion 10mo ago
      SEPA is among the most stable & robust payment areas globally with a lot of interesting features which a lot of other regions are jealous about :-) And there are additional layers built on top, so at least we have N=1, while I have to admit that convenience could & should be improved
- delusional 10mo ago
  The states (or rather the national banks of said states) are usually the ones running the central clearing system. That's the place where all the different banks report their net change in relation to all the other banks, and settle that change on their account with the central bank. Believe it or not, banks don't ferry around cash to each other. It's all just numbers in a computer.
- johncolanduoni 10mo ago
  The Fed has had a wire service (Fedwire) for banks, allowing them to transfer their balances on the Fed’s balance sheet to another bank during settlement, since before the dollar moved off the gold standard. It was initially done with literal telegraphs - not sure at what point it became digital. It obviously has no pseudo anonymity, is literally the least democratized banking system in existence, and is subject to the government’s whims in a whole host of ways. But it is a digital ledger of massive sums of real dollars (the banks can ask for it in cash if need be), and you couldn’t really steal the money even if you managed to create an unauthorized transfer on some bank’s master account.
  - lmm 10mo ago
    > the banks can ask for it in cash if need be Ehhh, can they? I suspect any bank that tried would pretty soon find that it actually couldn't.
    - johncolanduoni 10mo ago
      They couldn’t get their whole balance in cash I’m sure. But the Fed is the one that handles retiring old paper currency and giving banks fresh currency to give to ATMs and tellers, and I doubt the inflows and outflows are perfectly even for each bank.
    - lazide 10mo ago
      The Fed manages printed currency - they’d be irritated, but they literally do provide the physical dollars people need now, and if they felt it was appropriate, they’d produce them as needed. Just like those airplanes of bills shipped to Iraq, etc. in the past.
    - squillion 10mo ago
      I think we’re talking about bank reserves, which is a fraction (in the order of 1%) of the total amount of money held in the customers’ transaction accounts. Reserves are convertible into cash. Not that any bank would suddenly want to do that, unless there’s a bank run, in which case it’s the customers who want the entirety of their accounts (100x the reserves) converted into cash, which is impossible not because the fed refuses to convert the money, but because the bank doesn’t have enough reserves.
njarboe 10mo ago
And put people in jail they catch making and using fake ones.
jimmaswell 10mo ago
Putting absolute trust and surrendering too much agency to the state has been proven a mistake many times throughout history. Citizens need fallbacks when the state fails them. Concrete example where crypto achieves this: many trans people in places with an inadequate medical system or hostile government turn to buying gray-market DIY hormones online, facilitated by crypto.
- johncolanduoni 10mo ago
  Sure, but approximately zero of the actual crypto space/hype was built around facilitating this kind of thing. In fact for that use case, it would’ve been better if Bitcoin never got nearly as big as it has (since that lead to much more government scrutiny, all over the world). Ideally it would’ve gotten large enough that there were enough reputable-ish exchanges that you could move fiat in and out, and then stopped there. Like some sort of digital Hawala.
- walthamstow 10mo ago
  I also use crypto to bypass government prohibition on unprescribed self-medication. Is it still noble if I'm buying cocaine?
  - AnthonyMouse 10mo ago
    Is it necessarily the case that it isn't? Suppose you can't afford health insurance and you have a condition for which a controlled substance would be prescribed, if you had access to the healthcare system, but you don't. If you then buy it over the internet, is the system being wronged by you or are you being wronged by the system?
  - krispyfi 10mo ago
    The war on drugs is a scam. Cocaine prohibition is a pretext to oppress indigenous peoples of the Andes. https://filtermag.org/world-health-organization-coca-prohibition/amp/ https://filtermag.org/world-health-organization-coca-prohibi...
    - 10mo ago
aeternum 10mo ago
They also confiscate those hard-to-copy tokens if you acquire a sufficiently large quantity and attempt to leave the country with them.
- blackjack_ 10mo ago
  I see a lot of hand wringing about this; but for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Yes it is possible for the state to inflict violence on you, and if the state wants to, it probably will do so. Putting your money into internet tokens instead of state backed money will probably just get you tortured more until you give up the keys, or die. Crypto isn't some "one weird trick" to prevent the state from taking your property and possessions.
  - idkfasayer 10mo ago
    [dead]
  - AnthonyMouse 10mo ago
    > for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Let's go through these. To begin with, "fraudulent transactions" is redundant because that's either someone stealing your credit card number or someone you paid not doing what they said. So let's consider those two: > people stealing their credit card number This is the problem caused by the existing system, which is designed with such poor security that breaching a merchant allows the attackers to make charges to their innocent customers' cards at a different merchant. They get zero credit for providing a mitigation to the problem they created themselves. > businesses charging them and not delivering goods This gets sold as a benefit, but it's also a cost, because then it becomes a mechanism to commit fraud. People go to a business that does deliver the goods and issue a fraudulent chargeback. The merchants then have to pass the cost of that onto everyone else, which means that it's also a fraud against every other customer. Meanwhile we have other solutions to that problem that don't do that. Established businesses don't want to ruin their reputation. If someone rips you off you can sue them. Sometimes you're just paying someone for something they're already delivered. And most importantly, there instances when you would trust someone to deliver the goods independent of the payment system, and other instances when you wouldn't. Which is why you want both payment systems to be available instead of just the second one, so you don't have to pay for the chargeback fraud when you don't need to buy your trust from the payment system.

bawolff 10mo ago

> Not trying to come down on either side of this i personally hold near zero crypto, your statement was just wrong. Umm, you are agreeing with the person you are responding to.

NickNaraghi 10mo ago

I love watching the HN comment hivemind speedrun the history of blockchain innovation every time this comes up. You just reinvented smart contracts on Ethereum, keep going :-)

gavinsyancey 10mo ago
No amount of smart contracts can solve the situation where one party says "I shipped you the widgets you ordered; pay me" and the other says "I received a box with a brick in it" -- you need some trusted third party to decide based on reasonable heuristics who is trying to commit fraud, based on e.g. is this the first or the tenth time this has happened.
- pyrolistical 10mo ago
  That’s just a bad contract. Now consider one that mints you an NFT
  - bhickey 10mo ago
    I can't actually tell if you're touting monkey jpegs or making a really funny joke.
    - forgotpwd16 10mo ago
      They agree with your statement in another reply under this submission. So a joke on crypto hype culture, where you either put aside problems and move to next craze or next craze is shoved to everything.
- OneDeuxTriSeiGo 10mo ago
  That's exactly the point of smart contracts. The contract can hold the money in escrow such that it can only be sent either to the seller or returned to buyer. The seller and buyer can then both walk the contract through a state machine on agreement (i.e. confirm shipping, confirm delivery, potentially also confirmation for a return process) and when the buyer and seller come to a disagreement (ex: seller attests they've shipped the product and it should be delivered but the buyer asserts they havent/the tracking on shipping is invalid) or one of the participants is non-responsive for a certain amount of time then the contract moves into arbitration. In arbitration one or more third parties then step in to serve as arbiters/oracles that decide in the favor of one party or the other and commit those decisions to the contract and the contract then derives consensus from those decisions and proceeds to the corresponding state/action of the contract (i.e. refund vs close). Now your arbiters/oracles/third parties have reputations and you can reason about how trustworthy they are before you enter into the contract. This means all parties can evaluate their risk tolerance and trust levels before entering the contract/on agreement. ------- TLDR: Trust is inherent to any system reliant on the physical world. The point of smart contracts, etc is to formally encode those trust assumptions and the procedures of the contract in as trustless of a way as possible and to allow distribution of that trust across parties with most of the coordination overhead being automated/abstracted away. And importantly smart contracts provide an extremely low friction happy path. In the happy path where all parties are satisfied, it's extremely efficient and responsive. But in every other path, the conflicts, incentives, and resolution procedures are clearly defined for all parties involved.