Comment by skybrian | Hacker News Reader

Comment by skybrian | Hacker News Reader

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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.

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