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Comment by dangerlibrary | Hacker News Reader

As a consumer spending money from a checking account or credit card, the only reasons a bank would stop a payment or freeze a balance are because they suspect fraud or illegal activity. In the first case, it's a service they are providing you - peace of mind as a result of extensive fraud protection measures. In the second case - then mostly_harmless is correct. If the only benefit of bitcoin is "no fraud protection and the freedom to use for illegal transactions" how is mostly_harmless wrong?

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I've had a number of transactions blocked because my bank must've suspected fraud. I can count on zero hands the number of times it wasn't actually a transaction I wanted to go through. It's pretty awkward when I'm in the checkout line trying to pay for something or if it means some order gets delayed. I'm really thankful I have multiple credit cards which don't seem to all use the same fraud protection algorithms so I usually can just cycle to the next card, but it makes me a little uncomfortable that my solution is essentially just trusting the next service doesn't fuck up.

>In the first case, it's a service they are providing you

I like knowing that I have some money that I control myself, not through some service I have to worry about locking me out at inopportune times, though I admit it's mostly an ideological position than an economic one.

Same. Every single time my bank has killed my card for "suspected fraudulent use", it's been legitimate. The one time I was actually hit by a fraudulent use, they didn't even notice and I had to catch it myself and notify them. Even normal things like buying gas often get my card shut down and I have to call them and go through a long verification process to get access to my money again.

Strange - no one in the game has any interest in you not conducting your business.

Note that in cryptocurrency, there is no bank to call when your crypto "coins" are gone. Then it's gone harder than anything else that ever went, ever:

- you can't explain to your family or friends what happened

- law enforcement will hardly consider it a crime and in any case can't do anything about it

- the community will berate you for not watching out better for yourself and somehow call your loss "a good thing"

- if it's anything like Ethereum's DAO hack the fraud will not even be considered any wrongdoing at all

- everyone in the game has already made their money by pre-mining or getting in early and nobody has your interest in mind

> if it's anything like Ethereum's DAO hack the fraud will not even be considered any wrongdoing at all

I would not use the word "fraud" here, regardless of which side of the Eth fork you sit on.

Heh, yeah? What would you call it?

Either way, this confirms my point - Your cryptomoney is GONE and no one would even acknowledge ANY wrongdoing whatsoever. Hilariously you losing money is absolutely part of the pseudo-libertarian crypto worldview and not worrying anybody. But at the same time crypto currencies should replace real money?

"DAO-Hacker just executed code as intended". "Of course you lose your money if a) your PC is hacked (easy) b) the wallet software is in beta (always is) c) your coins are not in a cold wallet (complicated) d) you are using the 3rd party providers/exchanges (which are hyped by the community) e) your password is weak etc. etc."

I'm having a laugh but then again I haven't lost any money in this.

That's no more appropriate for every transaction than TCP is for every packet.

If you want that service, buy it. Transfer your crypto-backed currency with a "trusted" party who will rollback certain transactions. Do this with a well-capitalized service in a country you can sue them in.

But as we've seen with Paypal (and now Upwork), etc, that can be just as disastrous. They're un-sueable because of their size, and have draconian and arbitrary policies. Many people have had money confiscated or indefinitely frozen because of this misplaced trust.

Isn't that exactly what Operation Chokepoint [1] was doing? Using the banks to interfere with people conducting legal business?

[1] https://en.wikipedia.org/wiki/Operation_Choke_Point

I've had both experiences. A few where somehow my card got leaked and other times I had to authorize a charge via a text message (which of course I did not notice until after I had decided to use a different card to replace the "declined" one.

Having a transaction occasionally declined is a small price to pay for the amazing benefit of having zero liability for fraud. If someone steals your credit card and goes on a shopping spree, you can call up your credit card company and five minutes later any fraudulent charges are reversed. With Bitcoin that money would be gone forever.

On the other hand, it's much easier to protect your Bitcoin keys than your credit card number. Credit cards basically require you to share your password with anyone you want to buy from, which is a pretty ridiculous security model.

If you really want to get paranoid, you can buy something like a Trezor[0] or other hardware wallet. I'm pretty sure it would cost more than my net worth for someone to figure out how to compromise it, given the lengths[1] they've gone to to secure it. There's no equivalent option for credit cards.

[0] http://bitcointrezor.com [1] http://doc.satoshilabs.com/trezor-faq/software.html

One reason PayPal is so popular is that it means you don't have to give our your card number to merchants. Hopefully more online merchants will also accept Apple Pay which has the same benefit.

" I'm really thankful I have multiple credit cards which don't seem to all use the same fraud protection algorithms so I usually can just cycle to the next card"

That's actually a great observation that might fit into security advice on this issue somehow. Keep track of which banks freak out about which things. Get cards from more diverse-thinking ones. Reduce odds of unnecessary freezes or rejections. Now how to do the assessment itself...

> peace of mind as a result of extensive fraud protection measures

I don't want "peace of mind". I (a Canadian) want to be able to buy something online from a US supplier and have it shipped to me in Thailand. This is just not possible with any kind of chargeback-enabling payment method.

Just because you haven't been in a situation where the "fraud protection" is impacting your life (or your sales) doesn't mean those situations don't come up for others.

Sure, but it also doesn't mean we're under any pressure to revolutionise a centuries-old system just to enable those others' extremely niche use case.

This is not "niche." Every person living outside of the states has this problem. Next time you need something even remotely specific or customized, head on over to amazon.ca and see if you can find the item you're looking for. Then when you can't, think of other countries that aren't directly beside the most consumer friendly country on earth.

> Every person living outside of the states has this problem.

WTF are you saying?

Cross border electronic payments are a pain because many US companies won't ship internationally because merchants are the ones that are liable in cases of fraud.

For a very large number of people, these aren't "extremely niche use cases."

Something more comparable to Bitcoin than regular banking would be Western Union; they make 5 billion dollars a year in revenue transferring money. And they charge vastly higher rates than the Bitcoin network does, charging in the 5-10% range for for transactions, which is a pretty hefty overhead.

Not the same since it's on the mining, not the transactions, but here we have the founders taking 20% of the value of the network for the first four years. That's a decent overhead, too.

> I don't want "peace of mind". I (a Canadian) want to be able to buy something online from a US supplier and have it shipped to me in Thailand.

So does anyone else with access to your information. How sure are you that your account info is absolutely secure enough to prevent that AND will remain so for the lifetime of your use of a specific cryptocurrency?

> How sure are you that your account info is absolutely secure enough to prevent that AND will remain so for the lifetime of your use of a specific cryptocurrency?

I'm not, and it's irrelevant because I only have a tiny fraction of my net worth in easily-accessible Bitcoin at any given time.

I'm not advocating replacing bank accounts with Bitcoin, I'm just showing that Bitcoin does solve real problems that traditional payment processors cannot or will not solve.

Perhaps I am naive. My understanding is that in general, debit cards do not enable charge backs. Further, I've never had a fraud alert on my card (even when traveling internationally) that I couldn't resolve with a phone call to the bank. Does a debit card not solve your problem?

It's not the bank that's blocking me, it's the merchant. Since merchants are the ones on the hook for card-not-present fraud, they refuse to ship items anywhere but the address registered with the credit card.

I don't know which debit cards you're referring to but I'm almost 100% sure that the cardholders are not liable for fraud. Meaning someone else along the chain is liable and is monitoring/blocking transactions to reduce that liability.

My bank prevented me from making a purchase at Ikea last weekend because it incorrectly identified the purchase as "fraud." Since it was Saturday I couldn't resolve that day and had to return on Monday to complete the purchase... which meant tremendous inconvenience as I still haven't had time to assemble all that stuff.

Even if a bank has the right intention, poor implementation can be a huge headache.

switch banks?

When my bank does that, they have a number i can call 24 hours a day. I also believe the last time it happened they called me.

I should, yes. I need to find a good credit union out here in SF, I just came here from Texas.

Strange - my bank immediately calls me in such situations and asks me if the transaction was correct, immediately restoring the card if so. They've even started e-mailing recently.

It's a Texas-based tiny credit union. I really should switch but I'm still settling in to my new job out here in SF.

I agree - it should work like that.

Fraud protection doesn't necessarily protect you -- there was a campaign to fund the open source drivers Nouveau and in the developer's bank account balance was frozen because there was a large volume of international deposits. It's difficult to see how this protects the consumer from fraud, but fairly easy to see how it protects the bank.

Or because they were imposed to.. like, Visa/MasterCard/PayPal to Wikileaks. Cryptocurrency is the way to avoid this kind of power and censorship.

There are a lot of reasons a consumer wouldn't get a bank account in the first place.

Aside from not having enough money to start one (which blocks out a whole lot of other opportunities), I'm having trouble coming up with any.

A person I met a few years ago told me rather proudly that he refuses to use banks because the courts can use the money in his account to pay his child support when he doesn't want to.

This is probably a huge market given the number of those people I have run into in small towns. Another is tax BS with the IRS where they try to garnish but person can't afford a lawyer to show it's bogus. They seem to have trouble doing it with things other than regular, bank accounts. People getting payed on cards often have no trouble.

Privacy. No need for any transaction details to be given to my bank. Just use BTC to buy cash, exchange for prepaid cards, for instance. (Or direct BTC->cards.)

Since it's hard to use BTC anonymously, Z Cash allows nice insertions of hard privacy points.

Freedom to use for illegal transactions can be a pretty big deal, when you consider the kinds of transactions that some countries consider illegal.

I fail to see how a bank is providing a service to me, when they're the ones liable for fraudulent charges (credit card).

Fraud systems are there for the bank, not for you. Don't ever think otherwise.

No conviction needed in civil forfeiture.

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