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by JumpCrisscross 1064 days ago
> think the bank failing risk is eliminated, if it fails the forwarded payment is unlocked so bankA gets their money back

Bank failing in this context would be the bridge (EDIT: contract) gets hacked. Hence mitigated, but not eliminated.
1 comments
csumtin 1064 days ago
If bankB is hacked, bankA still gets their money back or the payment is sent to bankC. So I still think the counterparty risk is eliminated between bankA and bankB
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JumpCrisscross 1064 days ago
> counterparty risk is eliminated between bankA and bankB

Correct, but in its place is a new systemic risk with a real-world nonzero probability: the contract itself getting hacked. There isn't analogy for this in modern banking since the equivalent issue would either (a) get rolled back or (b) fold into the bank failing envelope. (There is analogy in pre-modern banking, though it largely revolved around debasement and invasion.)

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csumtin 1064 days ago
True although I'm not talking about Ethereum smart contracts, I'm talking about Bitcoin ones which are very limited and not Turing complete. The lightning smart contract is like 20 lines and has been live since 2018, I feel the probability of the contract getting hacked is very low(famous last words!) https://github.com/lightning/bolts/blob/master/03-transactio...
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