Hacker News Reader

Comment by mylons | Hacker News Reader

try to reverse a wire transfer

Apparently, it's done by having professionals in the loop who will usually send the money back. (There are exceptions.)

<https://bam.kalzumeus.com/archive/no-payments-are-final/>

> Of course wires are reversible. They were not designed by children, but by professionals who live in a society which has systemically important institutions, and in the event of malfeasance or mistakes society does not tolerate a bank failing or a state missing payroll simply because someone said “no takesies-backsies” fast enough.

> Mistakes happen! By, conservatively, the hundreds of thousands daily across all payments systems, millions depending on your definition of mistake. Wire transfers, like almost all payment systems, explicitly contemplate them and have a sociolegal ritual to quickly reverse them.

> The ritual is called “hold harmless” and comes from a soft guarantee about the wire transfer ecosystem, which is that transactions are largely between sophisticated counterparties acting in good faith, intermediated by institutions whose probity is almost sacrosanct. Importantly, wires are in expectation worth having a human in the loop for; that is very not true of most payments.

This seems to be a description of how coordinating counterparties can reverse transactions made over any medium, with a bit of argument alchemy to shift the discussion from individuals to banks representing them.

> It took the combined forces of several agencies of the federal government more than five years to reverse ~$4.5 billion in Bitcoin transaction

Unlike the Bangladesh Bank hack, for example, which they were unable to reverse.

Yes, I think it's pushing back on the overly binary idea that transactions are always/never reversible but it does it by being overly binary in the opposite direction.

A better summary might be "transactions are reversible in more cases than you would expect."

Also, transactions that aren't reversible at a low level are often reversible at a higher level in the stack.

The Bangladesh hack was unable to be reversed because the attackers exploited holidays in multiple countries to create a multi-day window where they could be reasonably sure that people wouldn't be auditing the transaction.

And of that hack, I think something like 90% of the transactions for stolen money were reversed, but a significant portion got through because of the timing.

edit- and IIRC the whole thing was caught because of a typo?

You're only illustrating the fact that given an honest error in crypto, reversibility tends to be the exception, not a rule. While in traditional finance it's the reverse.

Taking any one scenario where it didn't work out that way is highly selective cherry picking. There is not functional equivalence between "almost always impossible" and "almost always possible".

It's a counterexample, not an attempt to prove equivalence. Banks-as-middlemen allow reversing just about anything on the basis of firm handshakes, with little regard to the wishes of the parties they stand in for. Taking "reverse" to mean "do it again in the other direction" and "reversible" to mean "untrusted parties delegate control to intermediaries who trust each other", both of which are true here, means it's perfectly compatible with crypto. It does render any advantages moot, but avoiding the latter is typically the goal, and this linguistic sleight of hand obscures it.

For the actual topic, I don't have any respect for these ICOs/mints/[newest renaming], they're shameless cash grabs with 98% marketing and 2% upwork-tier code. However, you can burn a million quid; I don't think it's a big deal that you can burn 34 million in digital currency due to extreme negligence.

> However, you can burn a million quid

KLF much?

counterexample, not an attempt to prove equivalence.

That's fair, I just see lots of discussions where single examples are used to (often literally) say "that's no different from other finance".

And I agree reversibility can be built for crypto, it's just that right now that is not the norm, and defi probably won't see wide adoption until that changes a bit.

It’s only the rule in normal banking if you restrict your domain to large, powerful banks. Anyone else is on their own.

Elaboration: https://news.ycombinator.com/item?id=31139114

Correct, if you have two powerful participants, who can hold mutually assured destruction over each other, then — stars above! — they play nice.

Now try the same scenario when you’re an ordinary Schmoe who wired money to an obvious scammer, and then tell me whether you still believe Patrick’s model of the banking system as a giant kumbaya circle run on gentlemen’s agreements to Do The Right Thing.

Linus from LTT recently reversed a $90k wire he was tricked into sending after a contractor was hacked. It's not like the destination of a fraudulent wire is an anonymous blackhole. In this case it was a wire to another Canadian bank. The money was frozen during an investigation and then returned a week or two later.

That only worked because the funds didn’t bounce somewhere else first. Wire transfers are final.

The wire transfer transaction may be final, but that’s not the end of the story. A court can subsequently compel the receiving bank or party to send the funds back to the sender.

That’s true, but depending on the path, funds might end up in various jurisdictions, complicating the recovery story.

The same thing applies to crypto.

Do you always know who you’re trading with in crypto? How do you identify the counterparty to make the demand from? This isn’t a problem with ordinary transactions, where the two parties have regulated organizations making the trade on their respective behalf. Even in stock trades, where the counterparties are anonymous, there is a mechanism for reversing trades because the system was designed for it.

Until the two banks agree that it isn't. Errors happen all the time.

https://bam.kalzumeus.com/archive/no-payments-are-final/

“The finality of wires is path dependent” is a statement that I would agree with.

Linus heavily implied that he had an "in" at a senior level that could make an investigation happen and get the funds frozen before they were moved. I don't know about you, but I certainly don't have that level of power.

The destination of a fraudulent wire will be known, but that money is practically unrecoverable if it takes another hop or gets withdrawn.

Ah, but you can go an entire lifetime without doing a wire transfer, and even if you don't the risks are well known at this point.

You’re right but I find it funny that before this thread I was reading this one https://news.ycombinator.com/item?id=31133963

In Europe you have SEPA transfers where the reversibility after a transfer is comparable to a wire transfer. You can't really avoid them because they are the standard way of transferring money (if you don't pay by card or use direct debit).

In Europe you can't, wire transfers are the main way of transferring money.

That, vs this situation, is the difference between "difficult, maybe costly (legals bills) & time constrained" vs "impossible"

I don't want the later for anything I consider a large financial transaction.

Welp, at least, the wire transfer process itself delivered the money to the correct recipient.

Now, imagine this: an error in a transfer contract locks away funds, not only from victims, but also from phishers. What a beautiful world to live in.

Reply on news.ycombinator.com