[tajen]

In the book "Founders at work", there is a chapter about Paypal's founder and half his interview is about how banks told them they'd be crushed by fraud, then how fraud was probably eating up 10-30% of their transfers, then how they built such an incredible alrogithm against fraud that they had to build a room around the server to protect their trade secret.

[ethanbond]

Actually the key differentiator of PayPal, at least according to Thiel, is it wasn't an algorithm. It was a method to abstract the transactions enough to allow a fraud analyst (not a computer, or even a computer/data scientist), to interpret the patterns.

It had some cute name that I can't recall right now. Hugo or something? It was spun out into a separate company to use the same philosophy to fight terrorism. That company is Palantir and seems to be Thiel's opus magnum.