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by chidog12 1309 days ago
Traditional Finance solved this problem hundreds of years ago...
4 comments

Really?

https://www.theguardian.com/money/2014/nov/08/transfer-money...

https://www.theguardian.com/money/2019/dec/07/i-lost-my-1930...

Should I post more examples? Because I can assure you that there are plenty more.

I am as happy as the next person to take pot shots at crypto currencies and their ilk. But how about we stay honest about the fact that traditional finance is far from benign and more than happy to use and abuse us customers to their liking?

Last year, Citi accidentally sent Revlon $500m who kept it even though Citi immediately asked for it back:

https://arstechnica.com/tech-policy/2021/02/citibank-just-go...

It was later reversed on appeal.

It's important to note that they didn't just send it to some random company, but rather to creditors.

> Under New York law, someone who sends out an erroneous wire transfer—for example, sending a payment to the wrong account—is entitled to get the money back.

> But the law makes an exception when a debtor accidentally wires money to a creditor. In that case, if the creditor doesn't have prior knowledge the payment was a mistake, it's free to treat it as a repayment of the loan.

How? People send money to the wrong account all of the time in traditional finance. It is not a solved problem.
The ability, through various means, of reversing the transaction or otherwise redirecting funds to the correct recipient, is what's been solved.
This solution is also a major source of chargeback fraud, FWIW. The people who get screwed from that aren't financial institutions, it's merchants - often small mom and pop shops that lack the resources of predatory multinational corporations to challenge this type of activity.

From their perspective, protection from chargebacks is protection from fraud.

Well, show me these mom and pop shops (that aren't dark web drug dealers or porn sellers) that won't accept credit cards and will only accept crypto payments. Despite the chargeback fraud (an entirely different problem than what this thread was discussing, by the way) basically nobody has abandoned credit cards and gone crypto-only.
Which is what happened here. I imagine traditionally one bank asks the other bank to reverse the transaction. Here one exchange asks the other exchange to reverse the transaction.
From the link:

> Recap:

> - cryptodotcom sent 320k ETH to Gate

> - Gate sends 285k back

They can almost always claw it back.
Citibank won on appeal: https://www.reuters.com/markets/us/citigroup-wins-appeal-ove...

Citigroup Inc is entitled to recoup about $500 million of its own money that it accidentally wired Revlon Inc lenders three years early, a U.S. appeals court said on Thursday. Reversing a lower court ruling, the 2nd U.S. Circuit Court of Appeals in Manhattan said it was improper to give the lenders a "huge windfall" by letting them keep Citigroup's money, and that they had been on notice the wiring was a mistake.

It comes at the cost of having inflationary currency that punishes you for saving rather than spending, unlike non-inflationary currencies.

Some people care more about the property of being non-inflationary than they do about the property of transaction reversibility.

Edit: Why the downvote? You caring more about reversibility doesn't mean it's a universally shared value.

It’s hard not to complain about downvotes, but worthwhile. The goal is to write for an audience, and to foster curious conversation. Sometimes votes reflect that, sometimes not, but we always have control of what we ourselves write.

In this case, it may be the snark. I recently fell victim to this myself a couple months ago. It’s very easy to be snarky without really meaning to; doubly so about topics you care deeply about. The “low, low cost” bit is hard to read as anything else. (It’s what kept me from giving your comment a deserved upvote, because you’re right. But the conversational quality supersedes merely being right.)

Thank you for the good faith feedback, I appreciate it and will try to avoid the snark moving forward.
Instead of having an inflationary currency, you have inflation in the number of currencies.
Sure, but you are not forced to use shitcoins. There will naturally be some cryptocurrencies that are worse than others, just as there are FIAT currencies worse than others (e.g. Venezuelan Bolivar vs the Swiss Franc). Consumers being given a greater choice offers opportunity for them to choose to use currencies with superior qualities than the ones they would otherwise have access to. Like with other choices in life generally, the consumer has a responsibility to make an informed choice. While failing to do so has adverse effects for the consumer, it is not the fault of the currency that the consumer made an uninformed or poor choice, no?