Comment by kkielhofner | Hacker News Reader

Comment by kkielhofner | Hacker News Reader

Parent Full thread

Credit card fees include reward systems (points), zero liability fraud protection, extended warranties, car rental protection, dispute resolution/chargeback systems, customer service, support for tens of thousands of transactions per second, airline lounge access, priority entertainment tickets, airline miles - the list goes on and on.

Whether you need any of these is debatable of course but it’s extremely disingenuous to consider it an apples to apples comparison seeing as blockchain provides literally none of these things.

For large transfers (a billion dollars) the banking transfer fee is likely zero. I don’t pay for wires with no limit and my status/relationship with banks is nowhere near where it would be for a billion dollar transfer.

Oh and wire transfers provide quite a bit of protection too. I recently had an international wire transfer where the recipient provided the wrong account number. For $10 the funds were returned. With blockchain they would’ve gone up in smoke and lost forever.

People make mistakes. Payment information gets compromised. Fraud happens. As long as blockchain is based on ignoring these fundamental truths it will never achieve any meaningful adoption.

You don't pay for the fees...the vendor does. Not to mention all of the other fees they rake in.

You can have other ways of making sure payments are safeguarded...actually one of the smartest ways to do this was setup on the dark web illegal markets where there was a middle man that didn't have custody of the money (at least in the best multisig ones) but was able to complete or reverse transactions if needed. Basically an escrow account...

https://darknetone.com/understanding-multisig-vs-escrow-vs-f...

We all pay for the fees but IMO it's more than worth it considering all of the things I mentioned and more.

The other fees they rake in (I'm assuming you mean interest) are from issuing unsecured loans. That's another topic entirely.

Escrow is many thousands of years old and certainly exists in many forms in the financial system today. It's just that because of all of the other things I mentioned the average person uses it maybe a few times in their lives for very large and complicated transactions.

The suggestion to use escrow or some other kind of really convoluted system for extremely small payments when I can swipe a card anywhere in the world with all of the benefits mentioned above and more for relatively tiny fees is frankly ridiculous. Of course it makes sense for marketplaces where every single actor in the marketplace is breaking the law in the first place.

I've been involved in crypto since 2017 and I'm STILL waiting for a reasonable use case or application where it results in a net benefit for the average person.

How about real estate transactions. What fees are the average buyer and seller having to pay along with how many third party people have worked themselves into the fold to get their piece of the action? Why would you need title insurance when the blockchain holds all the information?

Why would sellers need to pay up to 6% to a realtor and buyers pay thousands in closing costs...because there is a disparity in access to information. Crypto/Blockchains can change that.

Oh...and wire transfers can take up to 7 days before they are finalized. Crypto transfers it's generally considered settled in a few minutes.

You're absolutely correct in that real estate is a mess and blockchain could clean up and streamline a few aspects of a real estate transaction. Problem is the existing systems have a lot of catching up to do. There was a story of a house being sold as an NFT... Purely promotional gimmick as the only thing that mattered (transfer of deed, etc) had nothing to do with the blockchain and the NFT representing the property has no legal meaning whatsoever.

Wire transfers can take several days, I suppose depending on mechanism/method. That said anyone who's participated in a real estate closing, funding round, etc knows you receive bank confirmation of the wire in minutes-hours and it's a done deal. In funding companies, for example, I've personally experienced this with wires in the tens of millions of dollars.

>That said anyone who's participated in a real estate closing, funding round, etc knows you receive bank confirmation of the wire in minutes-hours and it's a done deal. In funding companies, for example, I've personally experienced this with wires in the tens of millions of dollars.

You are correct...but again this is something the average Joe doesn't have access to. With crypto/blockchain everyone has the same access (more or less) at their fingertips.

It's not a perfect system yet for sure...there is a long way to go, but it is a huge leap forward in leveling the playing field for financial usage for everyone (I mean just looking at western union in 2021 they had $5B in revenue...that's about 5% of the transaction amount with an average transaction size of $300).

The blockchain ownership may be flawed, just like the current paper one. That's why you'd still need title insurance.

Sellers and buyers don't need agents right now. Thanks to Zillow, the price disparity is moot. I knew more than my past real estate agent when I purchased my current house (it was a corporate move or I wouldn't have used one.)

Wire transfers should be instant and irreversible, that's why scammers use them. Where have you seen one that takes 7 days?

The receiving bank often takes holds on the funds until they are specifically cleared from the originator bank or a fixed holding period. In that time, you can still deduct the money if you had the cash previously available or maybe if you're in good standing with the bank (not entirely sure on this part, probably different per bank).

The money is often frozen completely then returned to the defrauded party if caught quickly enough. Sometimes banks try to screw over people who are found to be victims of fraudulent transfers after the money has been pulled from the receiving bank.

The receiving bank can have a 7 day hold but that's not by design like a check (DDA) where there's a holding period and you can cancel payment.

I’ve seen commercial banks reverse wire transfers within the first 30 days.

When you are moving large sums of money between well known institutions the money is very illiquid, mostly to prevent mistakes, fraud, etc. It’s why most fraud that you hear about involves movement of money overseas or into another type of asset or more liquid form, e.g bills, physical goods etc.

No one sits their stolen funds at chase bank… Makes blockchain and NFTs the perfect gateway for fraud.

Why didn't Citi reverse this wire?

https://www.bloomberg.com/opinion/articles/2021-02-17/citi-c...

The article explains why.

They asked the Hedge Fund to transfer the money back. Citi is a bank but couldn't reverse this mistaken transaction and had to go to court.

If this was done by check, Citi could have simply cancelled the check.

There's a bit more nuance here than merely Citi wants to reverse a wire transaction. The article explains they were servicing debt and accidentally paid the loan off early (rough summary). The debtors could argue they had no reason to suspect error and viewed the payment as settling the loan.

New payments contracts now include "revlon clawback" clause. The blockchain analogy is a buggy smart contract that gets fixed.

The structural fees (title transfer, taxes etc.. as mandated by local laws) for real estate won't be eliminated by going Bitcoin, and if you don't want to use a real estate broker then seel your house without one. State ahead of time that you won't pay buyer broker fees. The real estate game (in most if not all jurisdictions) is not restricted, the odds are just more stacked against you if you want to sell directly.

Even worse, because Bitcoin is no recourse, if you find out that there was legitimate fraud (seller doesn't own the deed, house has leans, etc..) you have some possible recourse while Bitcoin doesn't give you anything.

> Why would sellers need to pay up to 6% to a realtor and buyers pay thousands in closing costs...because there is a disparity in access to information.

None of the type of information disparity that realtors help with are going to be solved by blockchains. Perhaps you could eventually build a better title system, but title-related expenses are a tiny portion of closing costs and there are reasons for the complexity.

The biggest portions of the closing costs that aren't directly related to the lender's pricing or real estate commissions-- title insurance-- can't go away anytime soon because the claims they protect against can be decades old. So even if you had a perfect title system today (which seems really hard) and everyone moved to it instantly, we'd still be stuck with those costs.

Reply on news.ycombinator.com