[guard-of-terra]

> how superior centralized systems are

Tell us? Because around here, I saw a huge number of bank fraud basically unpunished. "Yes those guys duplicated your SIM and stole all your funds. Too bad for you since we're not going to even try to catch them."

Centralized systems might be efficient but the rule is, they don't care about you, so it's not your problems that they're going to solve. At least I can have some faith in the code, which is the final law.

[brilliantcode]

For one, a theft on banks is extremely hard and rest of the system hums along. Mt Gox and DAO however resulted in catastrophic failure where everyone was collectively punished.

On a personal level, there are good channels to get your money back where in a decentralized market, there's zero chance. It's better to have other humans keeping check on each other than code watching other code because it will not take into account the "spirit of contract".

[mrb]

"a theft on banks is extremely hard and rest of the system hums along. Mt Gox and DAO however resulted in catastrophic failure where everyone was collectively punished."

Not "everyone" was punished. Only users of Mt Gox. And only investors of the DAO. Also both Bitcoin and Ethereum survived these incidents very well.

With legacy financial systems (banks, cash) there are plenty of scenarios where you may never get your money back, eg.: lose your wallet/cash, 2016 Bangladesh Bank SWIFT hack where $60M was never recovered, etc.

[guard-of-terra]

In a centralized system, sometimes people can help you get your money back, but it is also possible that they'll help taking money away from you.

"Spirit of contract" is usually taking money from less well-connected and awarding it to more well-connected. Have zero faith in it in XXI century.

[rtpg]

wait a sec.

Someone steals my credit card, and if I notice within 2 months, I can get everything back. Another advantage is that it doesn't take several hours (and huge amounts of wasted electricity) for a transaction to go through. My bank hasn't been siphoning my funds either. I wouldn't trust any cryptocurrency exchange with holding even 10% of my monthly salary.

Sure, governments can get my bank records. But my bank records aren't literally inscribed on a public ledger! I don't have to make a bunch of fake bank accounts to protect my privacy from the random data scientist with the blockchain, because if I use my main account and my identity gets leaked from some random service I used, then now everyone knows who I am.

It doesn't matter if they don't care about me. Nobody cares about me. But the incentives are partially aligned: systems with higher trust require less friction. And things like credit cards prove that you can build protections.

And "code is law" is not really extendable across society. We have contracts, of course. But almost all contracts include a "Use common sense"-style clause, which is the whole point lawyers and judges exist in the first place.

How can you build "force majeur" clauses into code without some third party arbitrator?

Of course, having a decentralized backbone is neat. A long time ago, anyone could make gold coins! It wasn't like some evil cabal was like "Oh, we shall unify all the currencies and CONTROL EVERYTHING!" Centralization happened because it was kinda useful.

Half of cryptocurrency stories are "techies discover why banks do the things they do". For example: I imagine more and more exchanges will partner up to do off-chain transactions. At one point, a lot of stuff will happen off-chain. Question: what do you think Visa does?

I do not see a decentralized currency ever becoming big enough to be a real fraction of economic transactions without it becoming what most of what we have. Competition is good! But I think some cryptocurrency enthusiasts are in for disappointment if they want critical mass

[nickodell]

>And "code is law" is not really extendable across society. We have contracts, of course. But almost all contracts include a "Use common sense"-style clause, which is the whole point lawyers and judges exist in the first place.

I would characterize the development of law and contracts as something meant to protect parties from common sense. If all we needed was common sense, every contract would just say (a la Raikoth)

>In all situations, the parties will take the normatively correct action.

...and nothing else. Law is essentially shaping common sense into something predictable and useful. So, why wouldn't it be possible to take something deterministic, and shape that into something predictable and useful? It doesn't need to be perfect - it just needs to be better than what already exists.

[mrb]

"Someone steals my credit card, and if I notice within 2 months, I can get everything back."

No. You may still be liable for $500 if you fail to report it within 48 HOURS: http://consumer.findlaw.com/credit-banking-finance/are-you-l...

"Another advantage is that it doesn't take several hours"

You hold a common misconception of how transactions work. Bitcoin transactions are transmitted/notified instantly (like credit cards). Transactions will be confirmed and spendable by the recipient within 10min on average (with CCs it takes 1-3 days until the merchant gets the money). Finally transactions are considered irreversible/definitely non-fraudulent after 6 blocks or 60min on average (with CCs it takes 60 days since charge backs are possible for 60 days).

So if you compares apples to apples, Bitcoin is always faster than credit cards.

"huge amounts of wasted electricity"

This is not wasteful: http://blog.zorinaq.com/bitcoin-mining-is-not-wasteful/

[rtpg]

that argument about bitcoin mining not being wasteful just shows it's not wasteful compared to other decentralized, trustless currencies. It still loses out to traditional payment methods.

"It will only use 1% of the world's electricity consumption". We can only do that for 100 things. Does "decentralisation of currency" belong in the top 100 things to devote electricity generation to?

EDIT: do you have a link to a fuller explanation about transaction speeds? I do not understand how transfers can happen so quickly without introducing a risk of double spend

[mrb]

Why would the argument be only valid when compared to other decentralized, trustless currencies? The benefits indirectly extracted from Bitcoin mining ($1B invested in 729 companies, thousands of jobs created, etc) exist precisely because Bitcoin has advantages over other traditional payment systems.

"Does "decentralisation of currency" belong in the top 100 things to devote electricity generation to?"

I think so. If (big if) Bitcoin ever becomes so successful that 1% of the energy is spent on it, think about the massive scale of positive social and economic changes it means it will have brought: freeing people from economic censorship and persecution, reducing international payment friction hence increasing economic trade, etc.

But I think neither you nor I can envision the scale of such potential social and economic changes. It is like asking a random person from the 1890s how much do they think automobiles will change the world, and almost nobody would have predicted automobiles are a major enabler of the economic expansion of the 20th century.

Transaction speeds: zero-conf txs are at risk of a double-spend, but in practice this happens extremely rarely.

[hueving]

>No. You may still be liable for $500 if you fail to report it within 48 HOURS

"may" is much different than "are". I've had it happen 3 different times and didn't realize until many days later and was never asked to pay for any of it.

Guess how much you lose if someone steals $50,000 of bitcoin from you and you don't notice for 48 hours?

>Transactions will be confirmed and spendable by the recipient within 10min on average

Almost nobody gives two shits about how long it takes for the recipient to be able to spend it in the majority of credit card transactions.

>Finally transactions are considered irreversible/definitely non-fraudulent after 6 blocks or 60min on average (with CCs it takes 60 days since charge backs are possible for 60 days).

Worse for the consumer, better for the merchant. But again, nobody cares about the merchant in these cases. Merchants already hate credit cards so you don't need to convince them. You need to convince consumers, who drove the credit card adoption in the first place.

[mrb]

""may" is much different than "are""

Which is why I corrected the poster who made it sound like credit cards "always" protect you, when it's not true. "Often" and "mostly", but not "always".

"Guess how much you lose if someone steals $50,000 of bitcoins"

Hardware wallets solve the theft problem. To date there have been no verifiable incidents of Bitcoins stolen from hardware wallets.

Credit cards as they are implemented will NEVER solve the theft problem without constant anti-fraud efforts. Bitcoin uses cryptography to authorize a specific transaction. Credit cards rely blindly on the merchant's good will and security to charge for the right amount and to prevent the CC info from being stolen. The more you transact the more merchants the CC info circulate through, and the higher the risk of fraud. Which is why CC fraud has been rising and rising for many years.

"Almost nobody gives two shits about how long it takes"

Listen, I was just pointing out people who say "CCs transactions are quicker than Bitcoin transactions" are wrong. Accepting a zero-conf Bitcoin transaction is similar ("as risky as") accepting a CC transaction after swiping/chip-and-pin. Therefore that's what should be compared, and both Bitcoin and CC transactions are just as fast as each other (seconds).

I actually agree that the immutability of a Bitcoin transaction is a negative for the consumer. (But I don't think it is a cons big enough to seriously hamper Bitcoin's adoption.)

[hueving]

>Which is why I corrected the poster who made it sound like credit cards "always" protect you, when it's not true. "Often" and "mostly", but not "always".

This is a distinction irrelevant in the real world where the status quo (at least in the US) is that companies protect you. Bitcoin has to compete with what exists, not a potential strawman based on what the laws say.

>Hardware wallets solve the theft problem. To date there have been no verifiable incidents of Bitcoins stolen from hardware wallets.

Can hardware wallets be stolen? If so, you just lost $50k regardless of the attacker gaining access to it. If not, it means you have keys backed up somewhere that can be stolen.

>>"Almost nobody gives two shits about how long it takes"

>Listen, I was just pointing out people who say "CCs transactions are quicker than Bitcoin transactions" are wrong.

Don't quote out of context. The rest of my sentence clearly shows I'm referring to the speed for the consumer. From a consumer perspective, the transaction is done right when the credit card machine returns (a.k.a within seconds).

>Accepting a zero-conf Bitcoin transaction is similar ("as risky as") accepting a CC transaction after swiping/chip-and-pin.

No it's not. A zero-conf transaction someone can double-spend against and the merchant has no recourse and the consumer has no risk. Merchants will be forced to wait for confirmation unless they have other leverage against the consumer to use on bad behavior.

In CC transactions, the risk to the merchant is a chargeback. A consumer can only lie about these a few times in their life before they get caught by a combination of the credit card company and a merchant and they will be arrested for credit card fraud.

Until the government steps in and writes laws making double-spending fraud, CC will be safe than zero-conf transactions.

[guard-of-terra]

Someone steals the control of your banking account, they take everything and there's no way of getting those money back.

Credit cards are peculiar in this regard.

[rtpg]

I am not 100% sure, but my understanding is that the bank is liable for those losses unless they can prove gross negligence on your part. I've heard that legal argument, at least. [0]

Though this is not worse from your cryptocurrency. If they get a hold of your private keys, you lose everything. At least in the classical banking system you have some legal recourse.

[0]: I might just be thinking of this comedy sketch though: https://www.youtube.com/watch?v=CS9ptA3Ya9E

[mrb]

"they get a hold of your private keys, you lose everything."

Hardware wallets solve this (Trezor, Keepkey, etc.) This makes Bitcoin more secure than cash. Most people accept the (imperfect) level of security of cash, so they would be OK with the higher level of security of hw wallets.

[hueving]

They would be okay with higher security, but not higher risk of it breaking. Cash doesn't rely on advanced circuitry so I don't have to risk losing $50,000 because of some static electricity.

[mrb]

Hardware wallets can be backed up. You can even have 2 hardware wallets using the same cryptographic seed and both able to spend the same BTC. You won't lose any BTC if a wallet gets destroyed.

[rtpg]

Serious question: if you're using a hardware wallet, can people accept payment from you without worrying about double spends?

[guard-of-terra]

How is it any different compared to software wallet?

[guard-of-terra]

Your private keys have limited attack surface, especially if they're in cold storage.

However, your banking account has unlimited attack surface. It's on some remote information system that you do not control and never will. As I already said, I'm not a big believer in "legal recourse", it's as well to be used to take money from you as to return them back.

[theamk]

Maybe if you have a business account, but not if you are a regular person. Regulation E https://en.wikipedia.org/wiki/Electronic_Fund_Transfer_Act requires banks to refund "EFT errors" and fraudulent transactions.

[mark_edward]

Code is law until well connected people need a bailout

[guard-of-terra]

Law is code until well connected people need a bailout.

[obstinate]

At least in the US, you cannot lose much money because of fraudulent electronic funds transfers, unless you ignore the fraud for more than sixty days. https://www.federalreserve.gov/boarddocs/supmanual/cch/efta.... See section V "Consumer Liability and Error Resolution."