That is how cash still works to this day. It's not about fraud or not fraud: it's about settlement finality. If you hand over cash to someone for a transaction, you have no guarantees you'll ever get that cash back in the event of a dispute. This is how crypto works.
Which is why consumers enthusiastically abandoned them for credit the moment they could. Purposefully going backwards is both silly, and something you’ll never convince the average consumer to do.
Consumers didn't enthusiastically abandon cash. Credit cards were introduced in the 60s, it took several decades for credit cards to overtake cash and it only happened because of the convenience factor for credit vs carrying cash as well as alternative debit cards that work just like credit cards. Credit was regularly rejected by stores and businesses as recently as one decade ago.
I don't use dispute resolution unless someone actually stole my credit card number like when my card info was jacked at a gas pump one time. Credit cards are quite insecure and we still have to type in all our personal info online every single transaction which is dangerous and dumb and makes the whole system vulnerable to credit card fraud in a way that crypto isn't. When you use crypto you simply sign a transaction message, you don't have to give away your private keys to make the transaction occur.
Folks didn't 'enthusiastically abandon' sound money for credit (or even the early IOUs which were a sort of primitive cash) the moment they could. You're retconning a bit there. Folks were extremely reluctant for a long time on account of all the schemes and fraud. Sound familiar?
That's just what humans do to each other. New tech is always like this when there are gains to be made.
Some folks look at the trend that central banks have been on and the creep of financial surveillance and think purposefully going backward in some areas isn't silly at all.
In the end, it's software you don't have to use. Nobody is forcing anyone to opt in, right (you know, like the credit bureaus who in America force you to opt in if you intend to... I dunno, participate in the economy in a meaningful way)?
Consumers adopt the currency that is most convenient to them. The lack of adoption of bitcoin after 12 years of existence shows quite clearly that bitcoin doesn't have the properties that consumers want in a payments system. Until that changes, bitcoin stands no chance of becoming a medium of exchange. It might continue to be mildly popular as a get-rich-quick-for-free scheme for some time though.
You're still kinda waving that broad brush. For one, not every consumer is most concerned with primarily with convenience (lots of scams are convenient as hell), especially tech-savvy folks in 2021 who have begun to internalize the fact that conveniences always come at a cost. There are lots of super convenient services that I could use to move money around but which I don't use because I am not comfortable with the trade-offs (primarily financial surveillance and security concerns).
Second, adoption is way up and btc is only one cryptocurrency. It gets first-mover advantage in this market (unfairly, probably) and so continues to be a bellwether despite the fact that it is a relative dinosaur, technology wise. I'm fine with that, personally, despite the problems with the technology.
That you haven't adopted the tech doesn't mean that adoption is failing, you know. There are more users every year (this is difficult to pin down for obvious & good reasons, but the indicators are solid) and no technology with millions of users globally, including institutional adopters, can be said to be failing.
Further, to call any payments technology 'mildly popular' which safeguards USD 1.5-2.5 trillion (total cryptocurrency market cap, BTC accounting for over 760 billion alone, despite the recent corrections) in deflationary wealth undermines your argument to the point of bad faith. Is the cryptocurrency market overheated and full of nonsense? Of course. But let's do the analyses with level heads at least.
Bitcoin is just one crypto. But the fact that Paypal accepts crypto as of a couple months ago isn't enough to show you adoption is happening? Or that Visa is settling USDC payments on Ethereum? https://finance.yahoo.com/news/visa-settles-usdc-transaction...
Humans have been using credit systems for millennia. The implication that in the olden days people only walked around with bits of gold in their pockets is a bit of “retconning.”
I think my use of the word 'credit' was a distraction here and that's my bad, but folks absolutely walked around with valuable metals to use as a medium of exchange when moving other valuables was very difficult or impossible. And there were scams then, same as there are scams now. I don't want to type out of the whole history of money as I understand it (Jack Weatherford's book was pretty good), but suffice it to say that history repeats because humans-as-behavior-machines are repetitive.
Credit cards didn't exist 1000 years ago. We aren't debating about credit systems. And yes, people walked around with shiny pieces of metal in their pocket that they used for transactions for thousands of years. At some point after the printing press was invented, the move to paper currency occurred.
Well, the parent post was saying that people were initially hesitant to move to credit systems, so I'm confused. :)
If we're talking specifically about credit cards, the credit card went from new invention to ubiquity in a couple of decades. But I think that's too narrow a scope to look at, to be honest.
Early credit systems did not depend upon the printing press; think of the widespread use of tally sticks in medieval Europe to enable illiterate low-technology credit systems.
It's really hard to approach this anthropologically, IMO, because so many other variables change. Less complex economies do fine with "local communism" and person-to-person debt, but it's hard to imagine using such a thing to order from Amazon. Conversely, coinage historically was useful if you had to exchange with someone with whom you didn't have a personal relationship (say, you're traveling to a faraway land and you can't just provide an IOU), but that's somewhat obsolete now.
I guess my conclusion would be that these historical analogies don't shed a lot of light.
I'm actually really interested in learning more about historic transitions between different system of currency. I've found lots of information on Wikipedia about the steady states, but less on the transitions. Any sources you can recommend?
Jack Weatherford's book on the history of money was pretty good. Lots of tracing the transitional periods as valuables give way to abstractions give way to further abstractions on the abstraction-- and documenting where they chafe (reliably, they do).
I don't know where you're sitting right now. I'm sitting in Europe, and credit card transactions are quite common where I live. Europe is a big place. Even within the EU there is plenty of room for difference.
A generalisation like this is no better than the frequent occurrence of HNers posting articles headlined with "the nation" which mean "the USA".
Oracle problem; the ETH blockchain can only speak authoritatively to things on its own chain, for anything else you need to trust a central authority to feed in information about the outside world, ruining the point. This is why a lot of what happens on that chain is just creating ICO tokens and placing bets on various on-chain things, rather than any meaningful off chain financial transactions.
Eventually it should be a sensible choice. The goal is for crypto (not bitcoin) to be more economically sensible to run credit card style infrastructure. Clearly, this is not currently true but I expect it will improve to the point where most services use some aspect of crypto because it makes sense economically.
No, it will not be a sensible choice. There are some pretty deep, social problems in the crypto space that make this an extremely unlikely outcome.
The fundamental issue is that creating scalable, cheap credit infrastructure for mass economic activity is fundamentally in opposition with creating an investment that will continually gain in value. You see this really clearly in Ethereum, where’s gas fees can be exceptionally high compared to traditional financial institutions.
Ethereum's gas fees have nothing to do with the price of the base asset: it has to do with limited block size availability. When the network is congested, block size is limited and this causes transactions to be bid up in an auction format to get in first.
This is one of the costs of decentralization. However, recent advances in Zero Knowledge Proof cryptography has paved a path for Ethereum to take to get to VISA scale and beyond and be able to process 200K transactions per second (at pennies or less per tx): see https://zksync.io/ and https://starkware.co/.
I think you're mistaken. Cryptocurrencies are anarcho-capitalist money. They're not economical or user friendly because that would mean they cannot be decentralised. Anarcho-capitalists are okay with that because for them their ideology is more important than practicality but the general public will never adopt a payments system that is more expensive and less practical than the alternatives.
I'm not expecting the average person to adopt a crypto payments system any time soon. Currency is only one aspect. B2B will come first.
There are already a large number of crypto projects partnering with existing businesses to address real problems. I don't see a minority ideology standing in the way of this.
They have been trying to sell blockchain technology to businesses for a long time. Nothing has come out of it despite millions spent in r&d and marketing.
Visa is a business and they used the Ethereum chain to settle a payment in the form of the USDC ERC20 token. Now, they're just getting started. But from my perspective, I've seen virtually every function that I enjoy from my bank replaced by smart contracts in the past year. And the only thing that's really holding me back from closing my bank account altogether is the legacy integrations that exist. And that will fade with time.
Sure, but they aren't using a blockchain themselves, they're simply letting their clients settle some transactions on the ethereum blockchain. It's not really an example of a business using blockchain technology to its advantage. If they had deployed a blockchain and used that to process transactions, that would be more convincing, but so far I don't think they've done that.
No, they are literally using it, providing resources for it (in the case of Deutsch Telecom), and settling transactions on it. Why would you deploy your own blockchain when you can use a public blockchain like Ethereum and plug into the rich ecosystem that already exists?
They are not. They're offering a pre-paid card that users can top up with their crypto.com wallets. [1]
The Crypto.com Visa Card is a prepaid card. Broadly speaking, prepaid cards are the same as debit cards. The difference is that debit cards are linked to your bank account, but prepaid cards need to be topped up. In our case, you can top up using bank account transfers, other credit/debit cards, or cryptocurrency.
And Deutsch Telecom isn't using a blockchain either. They're selling data to a company that then puts the data on a blockchain. That's not using a blockchain.
Deutsch Telecom operates Chainlink nodes, which are a decentralized method of writing data to the chain. They are paid in LINK for providing this service.
And Visa clearly said: that Anchorage will be its “digital asset settlement agent” and that it will “integrate [its] treasury systems with Anchorage.”
“After further testing and additional conversations with clients, partners and members of the regulatory community, we hope to launch this capability for other partners in the year ahead,” Visa said in a blog post about the news.
Sorry, man, nowhere in this press release it says Visa is settling transactions on the ethereum blockchain. It says it "plans to offer USDC settlement capability" in the future. And in the footnote they specifically say that this "does not refer to the movement of funds from individual consumer accounts". Deutsch Telecom hasn't even done a press release, so we don't know what their alleged involvement with Chainlink entails other than presumably selling them some data. If this is the best evidence of a supposed trend of blockchain technology adoption in the business world, it strongly suggests that such a trend does not exist at all.
I observe the exact opposite: people do not like accepting the risk of payments that can be reversed because the buyer does a chargeback scam, or used a hacked paypal account.
Multisig escrow is also better in every way if people want to involve a third party in case of a dispute
Right, the thing is if I want to involve a third party (and I definitely want that), I wouldn't use a decentralised system to begin with, because decentralised means inherently inefficient and therefore expensive.
Correct, you have to trust the extra signer to make a good faith representation of what happened in reality. That makes the transaction inherently trustful.
You can build a system of reversible transactions on bitcoin or any other currency (people already have). It’s impossible to do the inverse in a non reversible system.
We have non reversible payments already. It's called wiring money. People generally avoid using it unless absolutely necessary, because it's expensive (much like bitcoin) and most of the time, it's not what you want.
Wiring money isn’t a great analogy. In the US it’s expensive for consumers just because banks can charge a lot for it, but ACH isn’t really more or less reversible (I.e., both are, to a degree) and is free. Conversely, in SEPA, wire transfers are free/inexpensive and in my experience people routinely use them for consumer payments.
The depository institutions themselves don't actually pay much at all - FedWires are about $0.033 to the DI. Some DIs offer domestic wires free of charge like my bank does.
SWIFT international wires do cost the DI more, but not several orders of magnitude more. I don't happen to know that number off hand.
Some retail banks charge a lot for wires because they can - people don't use them frequently (as to your point its not what people want most of the time) and usually only for bigger purchases so the fee matters less.
However, if this is something you do more often, banks offer steep, steep discounts over sticker.
Its called "settlement" when its final. You probably dont need that ever or dont even know there is a difference between a payment and settlement but financial systems do know the difference very well. They just hide it from the end user. Settlement is the actually difficult part the rest is just moving numbers around. After all fiat is mostly digital.
And BTW no we dont need bitcoin for this at all its depreciated tech. But other DLT can be very usefully.
There is a reason CBDCs are a huge topic in global finance.
| It's bad now, but in the future it might be great?
Not be able to reverse transaction is not a feature, it's a fundamental flaw. There is absolutely no advantage to the consumer or the producer to have all transactions immediately permanent.
The rest of your comment reveals your bias: You don't really care about it working technologically, you just wish you had made money on it.
Except that transactions are not final, your scenario is exactly what crypto is great at, there are many ways you can set up an escrow for any transaction to protect multiple parties, for example by using a multisig wallet (1).
I get the feeling that the underpinnings of your argument points are based on not being very familiar or well read with the technology around Bitcoin and other cryptocurrencies, especially Ethereum. Your coming at it from an end user or armchair quarterback point of view, not someone who actually does development in that space; if you did, you'd know that one of the reasons Ethereum was created was to provide a digital escrow mechanism, and has been around for over 5 years. So no, your example isn't based on reality.
For a payments system, the fact that all transactions are final is pretty bad. I'd say this, by itself, makes the system unusable in the real world.