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Comment by fsh | Hacker News Reader

Indeed, most societies ended up inventing a mandatory trusted third party escrow called a "legal system" as part of a "state". They usually issue hard-to-copy tokens, solving the double spending problem.

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They also confiscate those hard-to-copy tokens if you acquire a sufficiently large quantity and attempt to leave the country with them.

I see a lot of hand wringing about this; but for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things.

Yes it is possible for the state to inflict violence on you, and if the state wants to, it probably will do so. Putting your money into internet tokens instead of state backed money will probably just get you tortured more until you give up the keys, or die. Crypto isn't some "one weird trick" to prevent the state from taking your property and possessions.

> for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things.

Let's go through these. To begin with, "fraudulent transactions" is redundant because that's either someone stealing your credit card number or someone you paid not doing what they said. So let's consider those two:

> people stealing their credit card number

This is the problem caused by the existing system, which is designed with such poor security that breaching a merchant allows the attackers to make charges to their innocent customers' cards at a different merchant. They get zero credit for providing a mitigation to the problem they created themselves.

> businesses charging them and not delivering goods

This gets sold as a benefit, but it's also a cost, because then it becomes a mechanism to commit fraud. People go to a business that does deliver the goods and issue a fraudulent chargeback. The merchants then have to pass the cost of that onto everyone else, which means that it's also a fraud against every other customer.

Meanwhile we have other solutions to that problem that don't do that. Established businesses don't want to ruin their reputation. If someone rips you off you can sue them. Sometimes you're just paying someone for something they're already delivered.

And most importantly, there instances when you would trust someone to deliver the goods independent of the payment system, and other instances when you wouldn't. Which is why you want both payment systems to be available instead of just the second one, so you don't have to pay for the chargeback fraud when you don't need to buy your trust from the payment system.

Very similar arguments were made for slavery. Giving up freedom for a promise of safety rarely the right choice.

While it is possible for the state to inflict violence, it's relatively difficult to scale. The state can freeze your USD accounts with the stroke of a key (as they did for Russian accounts recently). Whereas rounding up and torturing all those account-holders is just obviously infeasible.

And put people in jail they catch making and using fake ones.

Putting absolute trust and surrendering too much agency to the state has been proven a mistake many times throughout history. Citizens need fallbacks when the state fails them. Concrete example where crypto achieves this: many trans people in places with an inadequate medical system or hostile government turn to buying gray-market DIY hormones online, facilitated by crypto.

Sure, but approximately zero of the actual crypto space/hype was built around facilitating this kind of thing. In fact for that use case, it would’ve been better if Bitcoin never got nearly as big as it has (since that lead to much more government scrutiny, all over the world). Ideally it would’ve gotten large enough that there were enough reputable-ish exchanges that you could move fiat in and out, and then stopped there. Like some sort of digital Hawala.

I also use crypto to bypass government prohibition on unprescribed self-medication. Is it still noble if I'm buying cocaine?

Is it necessarily the case that it isn't? Suppose you can't afford health insurance and you have a condition for which a controlled substance would be prescribed, if you had access to the healthcare system, but you don't. If you then buy it over the internet, is the system being wronged by you or are you being wronged by the system?

The war on drugs is a scam. Cocaine prohibition is a pretext to oppress indigenous peoples of the Andes. https://filtermag.org/world-health-organization-coca-prohibi...

The war on drugs is a scam, but pretty sure if the primary goal was to oppress indigenous people in another country the US government could’ve found a cheaper way (both fiscally and politically).

Yeah, it's more of a cherry on top than a primary goal.

I don’t think Nixon cared about indigenous people in South America. Not because he was a great guy, just because they didn’t matter to him even slightly. He definitely cared about communist militias though.

Most states still haven't created digital versions of these hard-to-copy tokens meaning that there needs to be an alternate provided by a 3rd party which is where cryptocurrency comes in.

The Fed has had a wire service (Fedwire) for banks, allowing them to transfer their balances on the Fed’s balance sheet to another bank during settlement, since before the dollar moved off the gold standard. It was initially done with literal telegraphs - not sure at what point it became digital.

It obviously has no pseudo anonymity, is literally the least democratized banking system in existence, and is subject to the government’s whims in a whole host of ways. But it is a digital ledger of massive sums of real dollars (the banks can ask for it in cash if need be), and you couldn’t really steal the money even if you managed to create an unauthorized transfer on some bank’s master account.

So why don't any businesses let me Fedwire them money? It turns out unlike the physical version of cash, this "digital version" has hefty transaction fees and a poor UI meaning no business will take it, unlike how almost all physical businesses will take cash.

That’s not a technical problem - this kind of system can scale out just fine and has in other jurisdictions. SEPA is far from perfect, but is better than Bitcoin for everything but evading governments (justified or otherwise). We’ll see what Fednow looks like in a few years - the banks are definitely dragging their feet and it’s hard to tell what the UX will look like in the end.

> the banks can ask for it in cash if need be

Ehhh, can they? I suspect any bank that tried would pretty soon find that it actually couldn't.

They couldn’t get their whole balance in cash I’m sure. But the Fed is the one that handles retiring old paper currency and giving banks fresh currency to give to ATMs and tellers, and I doubt the inflows and outflows are perfectly even for each bank.

I think we’re talking about bank reserves, which is a fraction (in the order of 1%) of the total amount of money held in the customers’ transaction accounts. Reserves are convertible into cash. Not that any bank would suddenly want to do that, unless there’s a bank run, in which case it’s the customers who want the entirety of their accounts (100x the reserves) converted into cash, which is impossible not because the fed refuses to convert the money, but because the bank doesn’t have enough reserves.

The Fed manages printed currency - they’d be irritated, but they literally do provide the physical dollars people need now, and if they felt it was appropriate, they’d produce them as needed.

Just like those airplanes of bills shipped to Iraq, etc. in the past.

Most states have in fact invented bank transfers for that purpose.

The decentralized nature of banks makes it hard to offer a good payment experience to consumers and businesses.

Only in America. The rest of the world figured it out.

To be fair, this is because the US figured this stuff out way earlier through credit cards, and now there's a bunch of stakeholders and legacy changes which get in the way of making the services better.

Indeed, and there are some good reasons, too: US regulators want to prop up smaller regional banks and avoid large national monopolies (for what is essentially a natural monopoly).

The externalities of the crappy US banking system are so vast though. Musk, crypto, ...

Inside the same country, really? We have the aptly-named Faster Payments in the UK and it's instant. The company I work for is virtually built upon it.

https://en.wikipedia.org/wiki/Faster_Payment_System_%28Unite...

SEPA is among the most stable & robust payment areas globally with a lot of interesting features which a lot of other regions are jealous about :-) And there are additional layers built on top, so at least we have N=1, while I have to admit that convenience could & should be improved

The states (or rather the national banks of said states) are usually the ones running the central clearing system. That's the place where all the different banks report their net change in relation to all the other banks, and settle that change on their account with the central bank.

Believe it or not, banks don't ferry around cash to each other. It's all just numbers in a computer.

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