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Comment by gridlockd | Hacker News Reader

This is a bunch of nonsense. Actual banks are corporations like Facebook and they're far scarier.

Our banking system certainly leaves a lot to be desired but I’d take Bank of America over Facebook pretending to be a bank 100% of the time. And I have never said a nice thing about BoA in my life.

What’s scarier to me is that Facebook is deliberately and admittedly targeting the unbanked - the people most in need of a bank but also the people most at risk of being taken advantage of. I’m afraid this will be the silicon valley version of a prepaid debit card/check cashing business run by Facebook instead of Wal-Mart.

It's a whole new avenue for predatory lending practices such as payday loans, too.

I was just thinking exactly that: this is a check-cashing "bank" that preys on the poor and disenfranchised especially.

Yeah, we should totally leave that business to the payday loan shacks, right?

Right, and let Facebook do it _at scale._ What could possibly go wrong?

I would stake Bank of America through the heart, bind it with chains until sunrise, vitrify the dust, and then dump the evil slag into an ocean trench, and I'd still bank there long before trusting Zuckerberg's Facebook with my money.

> Our banking system certainly leaves a lot to be desired but I’d take Bank of America over Facebook pretending to be a bank 100% of the time

Facebook isn't pretending to be bank. Facebook is pretending to be a payment processor. What's the big deal?

Nobody is telling you to put all your savings into a centralized cryptocurrency, especially considering you're a US citizen with access to relatively good banking system.

Name one payment processor that (1) doesn’t require users link a bank account, (2) takes deposits, and (3) issues a token in their own denomination based on those deposits that’s pegged to a mystery “diversified global currency reserve” to be invented at a later date/altered to suit Facebook’s needs.

It kind of sounds like it’s a money market account to me. Minus all the pesky regulation, of course. Like the required banking license to offer those in the US.

Banks are heavily regulated [1]. Facebook is not.

EDIT: If Facebook wants to come to the finance party, I welcome them accepting the regulatory burden imposed by federal regulators and the finance industry itself.

Disclaimer: I work in financial services, specifically interfacing with regulatory bodies.

[1] https://www.fdic.gov/regulations/laws/rules/ (Example FDIC Laws, Regulations, and Acts, none of which currently apply to silicon valley corporations, but all of which apply to banking institutions)

Among many other great crimes, U.S. banks have stolen hundreds of billions of dollars from the poorest people through overdraft and bounced check fees. The banks own the regulators.

If regular people can just have a safe place to keep their money, without being actively exploited, that would be a huge improvement.

You will need to construct a more targeted argument than, "All banks bad, all banks hurt people". The majority of Americans store their money in banks safely (and while the unbanked and underbanked is a huge problem, it is out of scope for this comment), protected either by FDIC insurance (banks) or NCUSIF (credit unions). The majority of banks behave responsibly (I don't work at BoA, Wells, JPMC, or someone else who has committed fraud). You don't even have to use a bank! That is what your local credit union is for [1].

Some banks have behaved badly. All cryptocurrency is a scam (see: SEC ICO determinations, outright ICO/token fraud, etc).

With fiat, you have recourse with regulators and the legal system. With crypto, you have none ("oops! someone cloned your SIM and you've lost your entire nest egg. better luck next time!"). Your arguments don't make the case for cryptocurrencies; you make the case for more regulation and oversight of the banking and financial services industry (which I agree with entirely, not because it's my job, but to keep the hard earned assets of banking customers of all income and asset brackets safe).

[1] https://www.mycreditunion.gov/about-credit-unions/credit-uni...

You will need to construct a more targeted argument than, “All cryptocurrency is a scam” if you want others to construct more targeted arguments than “all banks bad” (the difference being you had to paraphrase GP, while I got to directly quote you).

Cryptocurrency is infrastructure, while you are arguing against it as a replacement for all players in the current financial system. I would argue that's a shortsighted and under-informed perspective.

https://www.wired.com/story/theres-no-good-reason-to-trust-b... (Bruce Schneier: There Is No Good Reason To Trust Blockchain Technology)

https://www.dailycal.org/2018/03/09/father-internet-vint-cer... (Vint Cerf: "In addition to discussing the history and advancement of internet technology, Cerf talked about cryptocurrency. When asked about bitcoin, Cerf said his first response was to “run the other way.” On the topic of blockchain, he struck a more moderate tone but cautioned about its applications.")

https://www.cnbc.com/2019/03/25/bank-of-america-skeptical-on... (Bank of America tech chief is skeptical on blockchain even though BofA has the most patents for it)

https://www.fnlondon.com/articles/breaking-the-blockchain-ma... (Breaking the blockchain: Major projects shelved as hype fades)

https://www.bloomberg.com/news/articles/2019-05-29/blockchai... (Bundesbank: Blockchain Settlement Was Slow, Costly in Trial, Weidmann Says: “The blockchain solutions did not fare better in every way: the process took a bit longer and resulted in relatively high computational costs,” Weidmann said in Frankfurt on Wednesday. “Similar experiences have been made elsewhere in the financial sector. Despite numerous tests of blockchain-based prototypes, a real breakthrough in application is missing so far.”)

Distributed ledgers, blockchain, and cryptocurrency are solutions looking for a problem, overly complicated and underperformant infrastructure. They attempt to solve for trust with technology solutions in a world governed by human regulation and legal frameworks (which always take precedence). A database will work just fine. Everything else is snake oil.

So a bank who wants to patent blockchain for themselves and a bunch of people who don't get it. Not very convincing.

If you're not convinced based on evidence there is no practical, production use distributed ledger or cryptocurrency besides bitcoin (which works very, very poorly), that's not on me to address. Prove it works and is needed.

I mean… I could also post articles on Fidelity and Ernst & Young investing in the technology, Stripe, Square, obviously Facebook and a whole host of other companies in this announcement, etc, but it feels very much like you've decided your conclusion and are simply feeding it with whatever journalism confirms it.

Regardless, you asked for a more targeted argument, I asked you for the same, and your response was 5 different articles on 5 different things. That's not targeted, it's the literal opposite. The problem with not being targeted is you have to pick a thing that you're disagreeing with. Here you seem to be disagreeing with “people think blockchain is useful”. But… There's plenty of evidence that isn't true in the general case, even if specific groups certainly don't think it's useful. Alternatively, we'll take your opening statement of “All cryptocurrency is a scam”---which is both not targeted (‘all’ is the operative word there) and not really supported by your articles since they're all about specific people or specific attempts.

It's fine to be a skeptic, by the way! I take no issue with you not particularly believing in the hype; my own take on the hype is considerably more skeptical than the louder folks. Just… Maybe don't put down other people's arguments unless you're willing to put in the time to make a better one?

To your other points: (a) you can have a mostly-technological solution in a world whose final resolution mechanism is human and legal; (b) there are plenty of companies in the cryptocurrency space still operating with SEC approval, including teams that did ICOs; (c) cryptocurrency, even the completely public/trustless type, isn't mutually incompatible with banks as a concept, though it could eliminate certain aspects of banks that require direct human intervention in the long term.

None of these things are here yet. Technology takes time, and the difficulty with technology that's built in the open is that it's in the public eye long before it's fully ready for prime time, so the debates about it happen in the public eye. A classic example is the Tanenbaum-Torvalds debate[1], except cryptocurrencies are being developed in a world that is 1000 times more connected than the Linux kernel was, and they are ostensibly applicable to considerably more people.

[1] https://en.wikipedia.org/wiki/Tanenbaum–Torvalds_debate

>Among many other great crimes, U.S. banks have stolen hundreds of billions of dollars from the poorest people through overdraft and bounced check fees.

I can agree with the fact that some of the bank fees for such services are ridiculous, but how is a customer using their overdraft or bouncing a check the bank's fault? How is it "stealing"?

In the case of overdraft fees, over 30 banks were ordering transactions in a punitive way, charging up to six overdraft fees per day, and not providing a way to decline charges when an overdraft (and related fee) would result. It also resulted in the Federal Reserve instituting overdraft protection regulations in 2010. It was predatory, plain and simple, and hundreds of millions of dollars in collective fines were paid.

https://www.seattletimes.com/business/chase-reaches-settleme...

Ordering transactions from large to small so you are hit with the maximum number of penalties. It can easily end up costing you many multiples more than ordering chronologically.

Do a Google search for Wells Fargo and overdrafts.

Facebook is not even a safe place for your cat pictures. Why would they do a better job when it comes to your money ?

At best regulations act as a moat keeping competition away the entrenched banks. As soon as the government comes up with rules the smart people at the banks find a way to get around it and make money. Startups don’t have the legal expertise and can’t compete.

If that's the case, why do banks consistently push to loosen regulations? Can you point to an instance of banks lobbying for increased oversight and restrictions?

Making a bank should be hard. I don't want some unknown startup to come in to "move fast and break things", because "things" in this case means "people's savings".

Well there’s the CEO of Bank of America saying “Dodd-Frank is fine, None of us are trying to touch it”. The big banks could push a lot harder against regulation than they do.

https://www.economicclub.org/sites/default/files/MoynihanExc...

Regulations can raise barriers to entry. But "at best", banks haven't just gambled away all the deposits leaving customers with no recourse lately.

Wells Fargo has been defrauding a lot of people, but at least they're paying billions in fines for it. It's not enough to keep them from doing it I guess, but I'd argue that fewer regulations would probably make that situation worse and not better.

How do you know that regulations are why the banks haven’t gambled away all the money? There’s no law against me gambling away my savings but that doesn’t mean I’ll do it. There’s other incentives in the system, for example the desire to avoid an angry mob of depositors burning your bank to the ground.

Some regulations are good but the ones we have are overburdensome. Even huge startups like Robinhood can’t get it right and the laws around what constitutes a security for ICO offerings are so vague that no one actually knows if they’re breaking the law or not.

This has been my experience as someone who started a fintech company and has friends in compliance departments at banks. Highly bureaucratic on both the bank and regulator side. Compliance reviews are mostly an expensive song and dance by the banks. People jump from bank to regulator and vice versa all the time so there is rampant cronyism. Combine the cost of this song and dance with the cronyism and it becomes nearly impossible for a startup without a ton of funding.

Facebook also isn't becoming a bank. If anything, Facebook is becoming a payment processor (not really, but close enough).

Why trust your money with Paypal, but not Facebook?

When given the choice between a monolithic corporation and some kind of cryto-based federation, why choose the former?

How is any of this worse than what we already have?

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