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The recurring comparison to crypto is ironic here. The central purpose of crypto is that, when used correctly, it makes exactly this type of fraud impossible. These stories show the fundamental problem with checks is that using them correctly exposes you to the fraud risk.

I'm not pro-crypto or anything. The bar to use it "correctly" is too high to be practical. I'm only highlighting the irony of this particular comparison.

Yeah, to me one of the central problems with both checks and credit cards is you have to expose your private keys (your routing num, acct num, address, etc) to make the transaction. In an era of elliptical curve signatures and other cryptography methods, this sort of practice should be done away with altogether, even for non-blockchain tech.

Great analogy. Agreed, checks are insecure and obsolete technology for the reasons you stated.

It does seem, however, that modern digital payment systems (mainstream, non-crypto) have largely caught up with the times. Your bank password is essentially a private key. It's not foolproof, but the challenge of keeping your password private is no different than keeping your private key private. From an OPSEC standpoint it's a level playfield.

Of course these systems are still vulnerable to social engineering attacks, credential theft, outright fraud etc. These kinds of human problems can't be solved with technology.

The old security holes still exist (check fraud, credit card fraud) as the system continues to support ancient/deprecated payment methods. Eventually they'll be obsoleted. I read a report stating that check use has been declining steadily. In 2000 there were 42.6b check payments, in 2018 there were only 14.5b. I'd say we're getting there. The younger generation embraces the new tech, it's only a matter of time.

If this was 15 years ago, I'd say crypto was providing a solution to a problem. But since then bank systems have caught up, and have additional protections of FDIC, regulations, etc. I'd say that modern digital finance is already largely meeting the promises made by crypto enthusiasts, with none of the downsides.

Put another way, if crypto matures and doesn't die in flames, it will basically look like one more competing digital payment system to those already offered by TradFi.

People get caught up in the tech, but at the end of the day all that matters is you can use a password to digitally move money. We can do that now. Crypto is ubiquitous / crypto is irrelevant.

> It's not foolproof, but the challenge of keeping your password private is no different than keeping your private key private.

It's very different. A private cryptographic key doesn't need to be transmitted or published online over the wire at all, and that makes all the difference. A signature that can be verified to a known public key has many nice features. It can be cancelable, it can be limited in scope, it can have price data embedded in it, it can be assigned to the destination entity's public key to make sure funds don't get routed anywhere else, etc. Very fundamental differences.

Banking systems haven't "caught up". Public-private key encryption is far older than Blockchain and it's still pretty rare to have something like a Yubikey or ECDSA signature involved in banking transactions (which would help tremendously to avoid fraud).

Identity thefts are at all time highs: https://www.fool.com/the-ascent/research/identity-theft-cred...

Bank fraud was up 39% in 2021. Credit card fraud has 10xed in the past 10 years. Please avoid handwavey statements until you understand the scope.

Not trying to be handwavy, there are major technology differences to be sure. But I don't see those as being important to the argument, as the differences can be overcome with technology. The problems trying to be solved are essentially the same. How do I authenticate access to my funds? At some point the technology becomes irrelevant and your primary problem just becomes OPSEC. PC or Macintosh? iOS or Android? No one cares anymore.

And yes fraud continues to be a problem. It will always be a problem where there are humans transacting with each other. It's a never ending arms race unfortunately.

This isn't unique to TradFi, it's just that fraud in TradFi is structured different than fraud in crypto due to differences. TradFi attracts so much fraud because the dollar has much more utility than crypto. At the end of the day criminals want to turn their BTC into $$$, not nearly as many trying to turn $$$ into BTC. This point is lost on many. It's not about crypto at all, it's about $$$.

Fraud and identity theft are worse lately because of all the new attack vectors (and attack surfaces) the internet provides. The internet started out as a curiosity, began disrupting things, and now is well into disrupting TradFi. Identity theft is a relatively new thing, and the real world has some catching up to do. I have no doubt TradFi will survive the disruption as long as there is money to be made along the way.

I do think that some sort of permanent digital identity that follows you around is inevitable at some point. It's the one piece of the puzzle in the real world that is missing from the digital world.

TradFi might attract more fraud, but has evolved well to deal with it. I lost confidence in crypto after my experience dealing with $6,500 in bad checks in the real world. I deeply appreciated the fact I could actually claw my money back with relatively little hassle. In fact, I had little doubt it would be clawed back. Sure it took three months, which was annoying, but I wasn't sweating the money being gone forever.

TradFi simply needs to catch up to modern technology, and the blueprint is already there. But crypto needs to catch up to modern regulations (the human end of things) which in my mind is much harder to pull off.

It's easier to bolt technology onto an evolved trust/accountability system than it is to bolt trust/accountability onto pure technology.

I’m always surprised it isn’t standard practice to issue credit cards with no numbers and no mag stripe, for use at restaurants and other card-present transactions.

Apple did part of this with their card - no numbers for waitstaff to copy - and for that reason it’s my main “handing it over to anyone” card*.

I’ve thought about degaussing its magstripe to make it truly compromise-proof, but I haven’t gone that far yet.

*well, except when it’s 5% restaurant cash back season at Discover.

But why do Americans insist on handing over their card instead of paying at the table? That's weird.

In the rest of the world this issue has been completely solved by apple pay.

>I’ve thought about degaussing its magstripe to make it truly compromise-proof, but I haven’t gone that far yet.

You know you can just scrape it off, right?

America had many many years of accepting credit cards before it was feasible to bring the readers to the table, and by then it was ingrained. My impression is that Europe it was much more common to pay at a counter before wireless card readers came about in the late 90s/early 2000s.

It's becoming more common to bring readers to tables in America now, because Visa and MasterCard have realized the security benefits and are encouraging it, but there's literally 50 years of habit.

Even in countries with Apple Pay, not every bank supports it or other mobile solutions.

In which countries is it genuinely difficult to switch banks?

> I told him it's terrifying when your bank manager tells you not to use checks on the checking account his bank offers.

It might be terrifying, but it's good honest advice, which is always worth it weight in gold.

The man is an expert. I would take his advice.

As far as I can tell, from reading sites like this, one of the most common uses of checks in America seems to be for paying rent? Other than that I'm kinda curious where you'd use a check at all?

When I was a student, in the UK, cheques were only their way out. I remember once or twice paying for mail-order items with cheques, and paying for groceries at a supermarket with a cheque. (Back then our bank-cards would have "Cheque Guarantee £50", or similar on them, and you had to show the card as proof the cheque would be honoured even if there were insufficient funds.)

In the UK, and here in Finland where I now live, people tend to pay rent/morgtages via automatic fund-transfers scheduled to run once a month, or direct-debit, so the idea of mailing a cheque for rent seems particularly archaic.

Vendors who don’t want to pay a processing fee. Handyman example rings true, up through some bigger renovations I had done. Zelle is becoming more common though.

> as they're not allowed to discuss details with me.

That would not be true if they actually investigated. This is code for "we don't care"; there was simply a miscommunication here when you did not recognize the euphemism.

Check fraud is a federal crime. I think an investigation did occur.

It's in the banks/police's best interest to withhold details regarding an active investigation, because what if you go tell the suspect the details?