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Comment by Aqueous | Hacker News Reader

The excuses Coinbase uses are ludicrous. As far as I can tell, deposits on Coinbase are not directly on-chain. And transfers out aren’t blockchain-only transactions either - they are mediated by Coinbase. So the wallet you see on Coinbase is a not a blockchain wallet - it's a Coinbase wallet, effectively a bank account.

Blockchain transactions are irreversible, but that has nothing to do with why they won't reverse these thefts. They don’t reverse these transactions because it would cost money to insure people’s deposits. Not because blockchain transactions are irreversible.

I'd be curious to hear a lawyer's take on this - whether something that is effectively a bank can get away with not being called a bank in order to avoid insuring deposits.

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One could argue crypto is a corruption of proper money, since transactions can't be reversed. Imagine the scenario where you wanted to metaphorically 'burn' 1M dollars. Say you hand Coinbase $1M in exchange for Bitcoin, then purposefully delete your wallet.dat and made it irrecoverable. The $1M is still there in Coinbase's account. It didn't get absorbed into the BTC blockchain. If you could think of money as a form of speech - then crypto just tramples all over that notion.

This whole comment seems a little off to me. Could you elaborate?

> crypto is a corruption of proper money, since transactions can't be reversed

Is cash also a corruption of proper money?

> The $1M is still there in Coinbase's account

How is that different from physical cash exactly?

(1) You send $1M in electronic dollars to Coinbase/Bank

(2) Coinbase/Bank sends $1M in BTC/Cash to you

(3) You burn the BTC/Cash

In all cases some institution has $1M in electronic USD from you, some institution is missing $1M in some asset, and that asset is missing from the world.

Is the conclusion that _both_ crypto and cash have some undesirable property, or is there an additional nuance or distinction those examples were supposed to illustrate?

Sorry if I confused you. In simpler terms imagine this scenario:

You burn $1M dollars, but beforehand you take note of the serial numbers on each note. Then you tell your bank those specific notes got burned, and ask the bank to re-issue you the notes, with the assumption you will not burn them again.

Cryptocurrency is different. If your wallet.dat's password is forgotten, or the wallet.dat gets irrecoverably deleted, then you have no recourse. Banknotes are simply that: Notes saying you own a certain store of value.

Coinbase still retains your money even though they issued you with the equivalent BTC. If you burned the BTC assets, that's on you. Coinbase gets to keep the banknotes you gave them, however, and there is no mechanism to burn those assets, in line with your crypto assets being burned.

I'm trying to say that Bitcoin transactions should be reversible like cash, since cash can be recovered if it was burned by accident due to serial numbers, and that cash is just a fancy IOU note.

What? What bank lets you provide a list of serial numbers and will replace them? Am I being too literal?

Cash transit vans hold cash in special boxes where if they're being stolen, they automatically taint / dye the notes a dark red color. The notes can be swapped out with fresh notes, and the tainted notes discarded. Cash is a note saying you own a store of value. They are not the intrinsic value itself.

>Cash is a note saying you own a store of value

It used to be a note redeemable for a certain amount of gold.

Hasn't been true since 1971, I believe.

https://en.wikipedia.org/wiki/Nixon_shock

That seems too prone to abuse (money duplication, stealing other people's cash remotely, ...). Is that really how the world works?

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