Comment by lesuorac | Hacker News Reader

Comment by lesuorac | Hacker News Reader

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> The banks are usually unwilling to do them, and an individual may not be able to force them to in practice, but it's still possible in a way it's not possible with crypto.

Generally they're unwilling to do that because it involves losing money for them.

Transfers work in a multi-step process to ensure money isn't created.

You tell Bank A to transfer money to person X at Bank B.

Bank A tells an intermediary bank C to move funds from Bank A's account to Bank B's account. (This step is unnecessary if either A or B are large enough to be an intermediary)

Bank C lets Bank B know that it's gained funds

Bank B moves funds internally from Bank C to customer X.

If you want your money back and Bank C says it's already been withdrawn then somebody in A,B,C is going to take a loss. Personally I think we should have an easy way to pay in a 7d settlement or something. Who really cares if somebody sends a 7d settlement when buying a house as long as its done 7d before closing.

Right. Still, the whole thing is plugged into society at large, including court system, so ultimately the courts have the power to force anyone in the chain to give money back and eat the loss or argue to take it from elsewhere.

To the unending dismay of crypto fans, the same is true about cryptocurrency - but its design fundamentally gives the law less leverage and actual points an intervention could be made. That, plus the whole thing is very new. But that's just a transient state; this kind of immutability is not compatible with society or real life, so the only cryptocurrency-based systems that'll survive long term will be the ones that give up on the whole cryptoanarchy thing.

If Bank C is forced to take the loss, it'll be more careful in opening accounts for scammers to withdraw money. If Bank C is in a country that doesn't care to enforce such losses, then Bank B (or A if A is big enough) will think twice about deciding to do business with Bank B. Moving the cost of the scams onto the banks will strongly incentivize them to prevent the scams.

> Moving the cost of the scams onto the banks will strongly incentivize them to prevent the scams.

And then less people have bank accounts.

The scammer isn't necessarily the person with the final bank account. Its often somebody who was told they're managing payroll for some made-up company and they're going to get a 2k transfer and to keep 500 of it and withdrawal 1.5k of it as cash to do payroll.

While you may think that now only people who aren't scammers won't get bank accounts what actually is happening is that anybody that can be fooled doesn't get one.

https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...

Doesn't that already happen? I've read stories from people in the US who are fooled, and as such, are marked as high risk and have their accounts closed. The rate it happens might be greater, but the total increase in harm from fewer people having bank accounts due to risk of scams might be less than the harm reduced by fewer people getting scammed. If scams are reduced enough, the number of people having bank accounts might go up because less people are losing them after being scammed.

There's some kind of circular reasoning going on here.

Banks are more careful, and that's why they don't deal with certain kinds of transactions. And that's where crypto comes in to "disrupt banks" and "democratize finance".

Long term, crypto will be no different than regular currency and finance because people don't like getting ripped off and defrauded. We'll have a period of time with people pulling old scams but with crypto, and eventually it'll be regulated just like normal finance.

The problem is that crypto is designed to evade regulation. You can put lipstick on a pig and regulate the centralized intermediaries (which, remember, crypto aimed to disintermediate): exchanges, custodians, ETF providers, ...

The dilemma is that you can either escape those regulations by going to unhosted wallets (self-custody) and transacting on the blockchain, or you keep everything (by regulation) entirely within the regulated intermediaries, but then there's no need to waste 1% of world electricity on some slow "decentralized" database.

How is it designed so? You pass a law that puts anyone running a node 10 years in prison and anyone accepting or paying through it as well. You see, easy.

For this to not be possible it would have to be widely in use and government-backed.

Apologies for the delayed response.

In my previous post, I was considering the cases that currently involve a bank, not those involving crypto. When someone goes to crypto to bypass the existing systems (safety or otherwise), I think that fairly switches them to a fully buyer beware process.

But you know who customer X is and if he obtained the money fraudulently then the bank (or police, courts, etc) can go after him to recover it. It might not happen but it's possible.

Same statement could be said about you no?

You're the one that was defrauded. The bank processed the transfer exactly as you told them to. So therefore, if person X isn't providing the service you expected then you should have to go to the courts to get it back?

The general problem is that it takes a lot of leg work. Often Customer X was being defrauded through some payroll scam (they take out ~500 and forward the remaining 1500). So now you have to recover $500 from them and then trace the 1500 again. Possibly through multiple countries and their courts (who may see this as beneficial for their country; jury nullification goes both ways).

Correct, but there are possibilities and established processes (however unlikely or inconvenient) to get the money back.

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