[HN Gopher] Finality does not exist in payments
___________________________________________________________________
Finality does not exist in payments
Author : smitop
Score : 75 points
Date : 2022-02-15 18:25 UTC (4 hours ago)
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| louloulou wrote:
| What ridiculous framing. The transaction wasn't reversed. Some
| people stole some bitcoin from Bitfinex in 2016, and then the US
| gov stole it from them in 2022. What exactly got reversed?
| eternityforest wrote:
| Finality may exist in transactions, but I'd rather it didn't, or
| at least, that it was easier to opt out of.
|
| In fact, I wish banks had an option to require an extra
| authentication factor for any transactions that isn't easy to
| trace and reverse, like ATMs or crypto purchases.
| nradov wrote:
| ATMs already have two factor authentication (card plus PIN).
| What more do you want? Many banks will reimburse customers for
| losses if their ATM card is stolen, and modern ATMs even have
| surveillance cameras to assist with investigations. There's
| also a daily withdrawal limit (typically under $1000) which
| mitigates the damage.
| FredPret wrote:
| "Technosociolegal"
| aeturnum wrote:
| I think the important part of this discussion is that the
| finality of payments sit outside of the mechanics of the
| financial system. For instance - when a wire transfer is
| "reversed" that is accomplished with another wire transfer (or
| some other series of administratively triggered actions). For
| both cryptocurrency and normal currency the system is a series of
| transactions that are treated as valid for a particular period of
| time. The decision to consider a transaction final or not exists
| outside of that accounting system.
|
| The fatal flaw of crypto currencies (edit: in this regard!) is
| they have comparably high fees built into the mechanics of their
| accounting systems. What a bank can do for "free" (really just
| very low cost) in fiat would compete for scarce transaction slots
| in crypto.
| dmurray wrote:
| > What a bank can do for "free" (really just very low cost) in
| fiat would compete for scarce transaction slots in crypto.
|
| This doesn't seem to be the problem. If 1% of transactions need
| a second transaction to reverse them, we can amortize this cost
| over all transactions and say reversibility adds on average 1%
| to transaction costs - hardly significant when choosing a
| payment mechanism.
|
| Reversing significantly more transactions than that isn't
| normal. If you try to reverse 10% of your credit card payments,
| you'll soon need a new credit card issuer.
| janandonly wrote:
| There is a misleading, or more correctly put, wrong, statement
| here about bitcoin transactions not being final.
|
| They are final.
|
| https://bitcoin.stackexchange.com/questions/88289/what-is-tr...
| zaphar wrote:
| There has been at least one fork that reversed bitcoin
| transactions. They are in no way final in practice even if the
| "spec" claims that they are.
| kobieyc wrote:
| Yeah, major wtf by this author. Clearly didn't do their
| homework.
| [deleted]
| Qworg wrote:
| If you saw the "technosociolegal" position at the top, you'd
| appreciate a broader perspective.
|
| Why is the couple who held the bitcoin from the hack being
| prosecuted? How were those funds being unwound if the
| transaction is final? If all of the exchanges were to denylist
| coins from a hack, do they actually exist or have they been
| taken away?
| DennisP wrote:
| Nothing was "unwound." The government found the criminals'
| private key, which they were unwisely storing in an online
| account. That allowed the government to make a new
| transaction, moving the funds wherever they liked. From the
| link in the article:
|
| > special agents obtained access to files within an online
| account controlled by Lichtenstein. Those files contained the
| private keys required to access the digital wallet that
| directly received the funds stolen from Bitfinex
|
| https://www.justice.gov/opa/pr/two-arrested-alleged-
| conspira...
| lxgr wrote:
| > Nothing was "unwound." The government found the
| criminals' private key, which they were unwisely storing in
| an online account. That allowed the government to make a
| new transaction, moving the funds wherever they liked.
|
| This is how "unwinding" works in almost all payment
| systems: Creating a second transaction to (partially or
| fully) offset the effects of the original one.
| DennisP wrote:
| Fine, but the government has no special power over
| Bitcoin in this regard. If they hadn't found the key,
| they wouldn't have been able to issue that transaction,
| and any common thief who found the key could have done
| what they did.
| lxgr wrote:
| The relevant meta-point here is that the government is
| uniquely positioned to come into possession of most keys
| that it wants (or more indirectly, render them useless by
| including them on sanction/embargo lists).
| tshaddox wrote:
| Yes, this is how normal everyday commerce works. My
| employer transfers some USD into my bank account. I then
| transfer some of those USD to my landlord's bank account.
| This is in no sense a reversal of an earlier transaction
| or an indication that an earlier transaction was "not
| finalized."
| zaphar wrote:
| Yeah, So the federal government unwound the transaction
| whether they wanted it unwound or not. Which is in fact how
| it works in banking institutions too. A reverse of the
| transaction is issued that in effect unwinds it. In the
| real world sense which is the context of the article the
| transaction has been unwound or reversed.
| Qworg wrote:
| Yes. In a narrow technological definition of "final",
| you're right. However, not in the societal or legal sense.
| woah wrote:
| The definition of finality used by you and the author of
| the piece is so vague and all-encompassing as to be
| meaningless. There isn't really anything to debate other
| than semantics.
|
| You could just as easily say that cash payments aren't
| final because you could lose your wallet after you put
| the cash in it, but using the example of Bitcoin and the
| federal government is going to get more clicks.
| ska wrote:
| > There isn't really anything to debate other than
| semantics.
|
| Wasn't the point that a certain amount of ambiguity
| around finality is the usual (and natural) state of
| payment systems?
| panqueque wrote:
| I guess so. It's just plain old consensus or lack
| thereof. In the real/legal world, we see radical regime
| changes that nullify asset ownership through
| nationalization and in the crypto sphere we see
| blockchain forking having the same effect. If a majority
| of nodes/people can be persuaded/coerced to say that
| something happened, it happened.
| tsatsawayy wrote:
| I think that's the point that the author is trying to make. If
| the federal government disagrees with the bitcoin blockchain,
| then the blockchain is wrong.
|
| It doesn't really matter what the code says, or what bits are
| inscribed somewhere. Finance and ownership are ultimately
| enforced by armies, not computer programs.
|
| This is one reason why some people think that cryptocurrencies
| are playing with fire. It's also why major exchanges won't make
| it easy to cash out laundered bitcoins to USD.
| outworlder wrote:
| Yes, but even the federal government has no power to move the
| -original amount- if you throw away the key.
|
| They can make you cough up an equivalent amount in fines, of
| course. But the original amount is gone.
| ska wrote:
| You can make the same point about cash, but it's not very
| interesting.
|
| The point the article was making is that transactions can
| and will be deemed illegitimate, both in the sense that
| mistakes are made, and in the sense that the legal
| framework will decide you have to reverse the payment. If
| you've buried cash and refuse to tell people where it is,
| you are in roughly the same place as refusing to reveal
| keys. You can be held accountable of course, in various
| ways.
|
| I think the article was more making the point that any
| payment system that doesn't recognize this reality will
| have inherently limited uptake, which is probably true.
| yanmaani wrote:
| It's true for cash, but not for cards. If a merchant
| incorrectly gets my $1000, and I charge him back, I will
| get my money, even if he spent $1000 on coke and hookers.
| ska wrote:
| You'll get different cash back, sure. Which was sort of
| the point; it's part of what makes CC useful.
|
| I was noting that there is nothing fundamentally
| different between say you accepting a payment in bitcoin
| and refusing to cough up the key when told to reverse it,
| or accepting a payment in cash and burying it then
| refusing to tell police where.
|
| Fundamentally there are mechanisms to reverse this, or
| punish/constrain you for obstructing the process. Some
| payment systems have them built in at a very low level
| (CC chargebacks), some rely on professional standard
| (hold harmelss), etc. Some rely on court systems. That's
| a trade off of convenience vs. risk, but doesn't change
| the fundamental point that a payment system without a
| standard reversal mechanism is going to have limited use.
| yanmaani wrote:
| > There is nothing fundamentally different between say
| ... bitcoin ... and ... cash ...
|
| Agreed.
|
| > That's a trade off of convenience vs. risk, but doesn't
| change the fundamentals.
|
| There is. The ones that rely on court mechanisms aren't
| the _payment mechanism_ being reversible, it 's something
| else (the storage) that gives first.
|
| It's true that if you keep it in your bank account, all
| transactions are reversible. But that's a statement about
| property rights, not about finality. If I have a solid
| means of "storing" my money, such as by burying it in my
| back yard, then the payment itself is irreversible.
| That's not true for cards, which are reversible even if
| your storage is 100% robust.
| ska wrote:
| > the payment mechanism being reversible, it's something
| else (the storage) that gives
|
| I'm not sure we agree on this being fundamental. At least
| you can define it as a categorical difference (sure) but
| not really a practical difference.
|
| I think the articles points were twofold: 1) Property
| rights, or more generally the legal & regulatory systems,
| trump any rules imposed or agreed in your system of
| payments 2) Most payments systems feature reversal
| processes for necessary reasons (but if they don't, see
| (1) as fallback position)
|
| Both of these seem important to understand if you want to
| understand how a payment system works or could work in
| the future, and also to understand your exposure/risk in
| using them.
|
| People mostly understand the trade offs and limitations
| of cash; mostly probably don't understand them well for
| lots of payment systems.
| yanmaani wrote:
| I don't think the first point is accurate. You have to
| study the entire system, which is made up of two parts:
|
| 1. Storage
|
| 2. Payment rail
|
| If your storage is solid (e.g. keys in brain wallet,
| account in crooked bank, money in shoebox) and the
| payment rail is solid (e.g. gold, cryptocurrency, cash),
| you're good. (To clarify, "solid" here means "beyond the
| legal-regulatory system", which means the rules aren't
| trumped.) Otherwise, you aren't.
|
| I say that Bitcoin has "finality," because it does the
| job of payment rail with 100% irreversibility.
|
| Grant that Bitcoin is a mediocre storage (1). But the
| payment rail (2) truly is irreversible. The combined
| system of two disjoint parts, built out of bitcoin-as-
| storage and bitcoin-as-payment-rail, is not.
| ska wrote:
| > "beyond the legal-regulatory system",
|
| I think it is a mistake to believe this is a thing. You
| can be allowed to operate in gray areas for a bunch of
| reasons, or you can be small enough not to be too
| bothered about (e.g. shutting you down not deemed worth
| the effort); but this is a choice of those same systems,
| not in your control really.
|
| Although to be fair, I guess this stuff really varies by
| jurisdiction. Otoh, where the gray areas get bigger, your
| chances of having that go against you are bigger also.
| yanmaani wrote:
| It's certainly a thing for the payment rail - Bitcoin
| _qua payment rail_ is entirely irreversible. So as a
| category in the real world, it is trivially a thing.
|
| Whether such storage exists is a much better question. I
| think it depends on what you want to do with it. For
| example, if the Bitfinex guys were ideologically
| motivated, they could've spent all the money on, I don't
| know, political ads or whatever. More generally, I think
| you can certainly come up with storage that is outside
| the reach of a given threat actor in pursuit of a given
| goal.
| ska wrote:
| > > So as a category in the real world, it is trivially a
| thing.
|
| I'm not saying bitcoin isn't a thing in the world; I was
| saying that I don't think that makes it "beyond the
| legal-regulatory system", or that that is really even a
| helpful/useful concept.
| beaned wrote:
| > If the federal government disagrees with the bitcoin
| blockchain, then the blockchain is wrong
|
| It isn't, though. The record is kept, and in fact the
| government needs to submit to the blockchain's laws to move
| any coin around.
| lxgr wrote:
| > The record is kept
|
| It is kept in the same sense that you can draft a contract
| declaring you the owner and supreme ruler of the moon.
|
| > in fact the government needs to submit to the
| blockchain's laws to move any coin around
|
| No, it's the opposite: Everybody moving around coins has to
| submit to applicable laws - or face the consequences of
| violating them.
| beaned wrote:
| I don't think you understand how the Blockchain works or
| what the proper concept of a finalized payment is.
|
| The government cannot undo a Bitcoin transaction. _If_
| the keys are accessible, they can seize the coin and
| create a new transaction to redistribute according to the
| law.
|
| If the keys are not accessible, then they are totally
| powerless to do anything at all.
|
| The government submits to the blockchain's rules the same
| way everyone else does. That's kind of the point.
| lxgr wrote:
| > If the keys are not accessible, then they are totally
| powerless to do anything at all.
|
| If you truly believe that, I don't think you understand
| how law enforcement works.
| vageli wrote:
| This becomes obvious when you consider that the
| government auctions the coins they seize. They either
| have to give the keys to the buyer or create a new
| transaction on the chain.
|
| The interesting thing in this whole conversation is
| assuming the person holding the key is the custodian of
| the funds, when it is more the key itself that is the
| custodian. The keys hold the funds, the person holding
| the keys can change but that is entirely outside the
| system but so is getting robbed on the side of the street
| of the cash in your pocket.
| [deleted]
| topher200 wrote:
| From the beginning of TFA:
|
| > An extreme example which proves the point: the cryptocurrency
| enthusiast community largely believes that code is law, "not
| your keys, not your coins", etc. Many crypto enthusiasts would
| say that the Bitcoin protocol does not prohibit reversing
| transactions but provides a security guarantee which suggests
| that the likelihood of a reversal after an hour is
| infinitesimal.
|
| > And yet: someone sent $70 million worth of Bitcoin in 2016,
| and that transaction was partially voided, with the reversal
| being worth slightly more than $70 million due to Bitcoin
| volatility. This didn't happen an hour later; it happened in
| 2022. How?
|
| > The answer is nowhere in the Bitcoin whitepaper or any
| codebase. A full recounting of it is outside the scope of this
| anecdote, but it rhymes with "If you and the United States
| federal government disagree whether a transaction is final, you
| are wrong." That is true for notorious Bitcoin thefts, but also
| true for wire transfers, conveyances of real estate, credit
| card payments, and graverobbing. "Possession is nine-tenths of
| the law," so the saying goes, but the state can conjure as many
| tenths as required if it is motivated to.
| DennisP wrote:
| "How" is easy: they were storing their private key in an
| online account and the government found it. Nothing in
| Bitcoin was reversed. The government confiscated their funds
| in the same way that criminals steal any other bitcoins with
| poorly-secured keys.
|
| Just follow the link in the TFA if you want to verify that.
| jonas21 wrote:
| That's exactly the point. If you define the universe to
| include only Bitcoin, then yes, transactions are final. But
| if you define the universe to include the real world, then
| the answer is no, not really -- governments will almost
| always find a way to reverse the transaction, whether it's
| seizing your private key, or holding you in contempt of
| court until you divulge it.
| repomies69 wrote:
| It is not "reversing the transaction", it is just
| seizure. If you have spent the Bitcoin on a lamborghini,
| government will confiscate the lambo. Criminals however
| typically spend the stolen money on hookers and drugs.
| Seizure or confiscation has nothing to do with "reversing
| the transaction", calling it that is just stupid, mixing
| terms unnecessarily is just unnecessary and confusing
| here.
| tshaddox wrote:
| The transaction was final though, in the real world. The
| fact that the government can physically find your private
| key (or physically compel you to give it to them) and use
| it to make _new_ transactions is irrelevant. All you 're
| pointing out is that after you receive money in a
| transaction you can later participate in a different
| transaction using that same money.
| wewtyflakes wrote:
| To the entity holding the coins, whether it is a single
| Bitcoin transaction as per the protocol of Bitcoin, or
| multiple transactions, makes no difference... ultimately
| they will or wont be holding a certain number of
| Bitcoins. To then say, "well technically that was _two_
| transactions" seems irrelevant, since to the entity (no
| longer) holding the coins, things have been effectively
| reversed. I think may just be highlighting a disconnect
| between the writer of the article using the term
| transaction as understood by a layperson, and people who
| want to use the term transaction as per specific meaning
| of a particular protocol.
| marcell wrote:
| The author posted a full throated and mocking anti-bitcoin
| article in 2014 [1] when the bitcoin price was $300. Since then,
| bitcoin has thrived, and so has cryptocurrency in general. BTC is
| up 100x since Peter posted his original article.
|
| A lot of anti-bitcoin crowd gets ego invested in their
| opposition, and the result is articles like this, which
| misunderstand the fundamentals of bitcoin.
|
| [1] https://www.kalzumeus.com/2014/08/05/harry-potter-and-the-
| cr...
| lxgr wrote:
| In what way would you say that the current article is
| misunderstanding the fundamentals of Bitcoin? I'd argue that it
| merely contextualizes in-system (technical) finality in the
| larger context of "social/legal finality".
| marcell wrote:
| See another reply above mine: transactions never got reversed
| on blockchain. Outside chain activities, like seizing private
| keys, are fundamentally different in bitcoin.
| lxgr wrote:
| Yes, as a system, Bitcoin does not offer an "undo button"
| in the way that other payment systems do.
|
| What I'm getting out of the article is that this is less
| relevant than people generally assume.
| stickfigure wrote:
| I'm not sure this is so different from "reversing" charges
| in the traditional banking system. It's not like someone
| issues a DELETE FROM to remove the original transfer; they
| just create a new transfer that puts the money back. Just
| like bitcoin.
| AlexandrB wrote:
| > Since then, bitcoin has thrived, and so has cryptocurrency in
| general. BTC is up 100x since Peter posted his original
| article.
|
| This kind of argument shows up a lot, but is a classic example
| of "appeal to popularity". Whether bitcoin goes to $0 or
| $1,000,000 is mostly irrelevant when discussing technological
| and practical merits of bitcoin.
|
| Where the price of bitcoin _is_ relevant is when discussing it
| as a speculative investment. So what tends to happen is a
| conversation that was supposed to be about blockchain
| _technology_ turns into one about blockchain speculative
| investing. This and appeals to greed /FOMO ("have fun staying
| poor") tend to drive me nuts about a lot of blockchain
| discussions.
|
| > A lot of anti-bitcoin crowd gets ego invested in their
| opposition, and the result is articles like this, which
| misunderstand the fundamentals of bitcoin.
|
| If a "no-coiner" has high ego investment in their position,
| what level of ego investment does someone holding
| cryptocurrency have? And what _specifically_ does this article
| misunderstand about the fundamentals of bitcoin? Just stating
| that the article misunderstands _something_ is not a very
| strong argument or rebuttal.
| audleman wrote:
| The article claims that bitcoin transactions are reversible,
| which they are not. He substitues the feds seizing the
| private keys and making new transactions as reversals.
| lxgr wrote:
| Sure, that is what the article literally says ("the Feds
| can move your Bitcoin without your private keys!"), but I
| think the point he's trying to make is more along the lines
| of "in-system transaction finality isn't everything".
| Qworg wrote:
| I wish he would have delved into the cost of finality or
| reversals - this is a core driver of the cost of an entire
| system, either in time or in money.
| RandomLensman wrote:
| Both sides are expensive. Early finality can create costs, and
| ability to reverse also means effort.
|
| I think, most legal systems are setup to make reaching finality
| on material things pretty expensive (but also very
| difficult/impossible to challenge once it reaches finality).
| Overall, societies seem to work well that way given the pretty
| long track record.
| eatbitseveryday wrote:
| I'm surprised the writing did not mention cash. Was the first
| thing I thought of. Digital transactions can be toyed with, but
| cash has no record, and no automated means to reclaim it.
|
| "Payments" perhaps means "Digital Payments"?
| beaned wrote:
| Yeah, this bothered me, too. His choice of definition for
| payments is unclear because it leaves out that very obvious and
| pervasive method.
|
| He also describes a Bitcoin transaction as not being "final"
| because it was seized by the government. This isn't really what
| most people mean by finality.
|
| So you never really know what he means throughout the article
| due to imprecision and it comes off as not compelling.
| e_y_ wrote:
| In other news, death is not really final due to
| resuscitation, cloning, and ultimately, the theoretical
| reversability of time
| alisonkisk wrote:
| What does finality mean?
|
| When I get paid by credit credit card it's "final", because
| that transaction can't be cancelled, only a new transaction
| can be created to undo it without my consent.
|
| Patrick loves to write coyly, but his point is simple: If the
| government can find the money they can take it back from you.
|
| What he misses is that it only works if they can find the
| keys (or the next best thing -- your body).
| RandomLensman wrote:
| No automated means, but if you get a receipt then you could
| actually try to reverse it (depending on local laws etc.). So
| even there little finality in a lot of everyday situations.
| audleman wrote:
| > if you get a receipt then you could actually try to reverse
| it
|
| Store puts up a 'No returns' sign, you have finality.
| oblio wrote:
| In many places that's not enough.
|
| For example if they knowingly sell you defective stuff or
| if medicine is tainted, etc., there are laws that override
| such a policy.
| andi999 wrote:
| In what sense are international money transfers with western
| union supposed not to be final?
| cool_dude85 wrote:
| >some times and places, is "no takesies-backsies." Like much of
| the child law, it both rhymes
|
| It doesn't rhyme.
| BurritoAlPastor wrote:
| You're saying "takesies" does not rhyme with "backsies"? As a
| counterexample, what would be a word that would rhyme with one
| but not the other?
| cool_dude85 wrote:
| Fakesies to rhyme with takesies and cracksies to rhyme with
| backsies. Is there a dialect of English commonly spoken where
| "fake" and "back" rhyme?
| jcranmer wrote:
| Would the Northern Cities Vowel Shift do it?
| jordanekay wrote:
| No.
| spatley wrote:
| Are you intending to say that there is a transitive property
| of rhyming? And that if that if A does not rhyme with B then
| there may not exist a word C that rhymes with both A and B?
| If so, your ideas are intriguing to me, and I wish to
| subscribe to your newsletter.
| schoen wrote:
| I think the issue is that English rhyme requires a near-match
| of the last stressed vowel and of all following sounds until
| the end of the word. So you can sometimes just match the last
| syllable and get a rhyme, but not always, depending on where
| the stress falls.
|
| For example, "example" rhymes with "sample" but not with
| "people" because the stress is on the second-to-last
| syllable.
|
| But "redact" and "exact" rhyme, despite only agreeing in the
| last syllable, because that's the last syllable that's
| stressed.
|
| "Takesies" and "backsies" are both stressed on their first
| syllables, so they would need to match from that vowel on in
| order to be perceived as a natural English rhyme, and they
| don't.
| oblio wrote:
| Doesn't "backsies" rhyme with "taxis"?
| mediocregopher wrote:
| Let's swap "bitcoin" for "cash" here, since the mechanics remain
| the same but there's less emotional baggage.
|
| If someone tried to make the argument to me that cash doesn't
| have finality because your shoebox-in-the-closet-full-of-cash can
| be stolen from you, I would say they're stretching the definition
| of "transaction finality" in order to make a banal point.
| tantalor wrote:
| https://en.wikipedia.org/wiki/Civil_asset_forfeiture
| tshaddox wrote:
| Still, that's not the point. Everyone knows that it's
| possible to physically move items from one place to another
| even if the legal owner of the item does not consent.
| Sometimes this is even legal, as in the case of civil asset
| forfeiture.
| lxgr wrote:
| > Everyone knows that it's possible to physically move
| items from one place to another even if the legal owner of
| the item does not consent.
|
| Maybe everybody knows it, but it certainly is worth
| reiterating. I find the notion of transaction finality as a
| spectrum very useful.
| tshaddox wrote:
| I don't think it's worth reiterating, at least not in the
| context of attempting to argue that "finality does not
| exist in payments," because it involves using a contrived
| definition of "finality" that no is ever using when they
| consider whether finality exists in payments.
| benreesman wrote:
| I mean, Siebel took Autodesk for God knows how much and he's
| doing pretty well.
|
| P(seizure-of-assets) scales sharply up as one goes from none to
| some, and then sharply down as the number gets high.
| ivalm wrote:
| What's the story there, link?
| benreesman wrote:
| First hit on Google is:
| https://techcrunch.com/2012/07/17/socialcam-
| autodesk-60-mill...
| ivalm wrote:
| I am still unsure how this pertains to seizure of assets?
| Seems like there was some startup spun out of justin.tv
| that then got acquired... was the spin out shady? The
| acquisition?
| benreesman wrote:
| I'm in a tough spot because I threw that off in an
| offhand way, but I didn't really think it through and now
| I'm in danger of presenting substantial, but nonetheless
| circumstantial and anecdotal evidence of a phenomenon
| that is real and harmful (which is good) but attaching it
| to a specific person (which is bad in general and mega
| bad for me personally).
|
| But I kind of have to cough up now: the rumor mill, and
| it was exactly that, has made credible claims that
| Socialcam was a dead end that got pimped to Autodesk as
| their path towards social media relevance, including some
| influential angel back-scatter, and then the principles
| promptly fucked off to Thailand and rested their vest
| until they got big jobs at YC on the back of
| building...Socialcam.
|
| Twitch is a name everyone knows, AMZN got their money's
| worth. The other highly YC-connected justin.tv stuff?
| Yeah, not a big splash.
| sjg007 wrote:
| Socialcam, viddy, vine.. all precursors to TikTok.
| benreesman wrote:
| Yes and no, but sure.
|
| The failed justin.tv-spin-off folks don't care though,
| they never had any real competition because people who
| don't have a locked-in outcome can't afford to pursue
| impoverished, transient markets.
|
| I wouldn't shed too many tears though: no one from that
| crowd is doing badly. Bad companies failing and burning
| up the cap table is for the plebs.
| benreesman wrote:
| At the time that such an acquisition took place, it would
| have been heavily premised on FB feed injection, and if
| such a thing were to be realistic, I would have heard
| about it.
|
| This is utter hearsay, unreliable watercooler baseball,
| but it's not one person who said that he was in Thailand
| chilling for most of the vest.
| Spooky23 wrote:
| End of the day, the sovereign state possesses ultimate power.
| For awhile some people felt that Bitcoin, et al made them
| immune to the authority of the state.
|
| The reality is, unless you're in a particular situation, like a
| Russia-based criminal who kicks the big up the chain, you're
| not out of reach of the law.
| oblio wrote:
| > End of the day, the sovereign state possesses ultimate
| power. For awhile some people felt that Bitcoin, et al made
| them immune to the authority of the state.
|
| Well, one could argue that we, the people, want the sovereign
| state where there is some degree of social contract going on,
| to have that ultimate power.
|
| Putting that power into a system that was designed by humans
| and almost by design can't be democratic and at best is
| meritocratic, is a very likely path to a Kafkaesque world.
| wpietri wrote:
| It's hardly a banal point for certain uses of cash. It doesn't
| matter for me buying a 6-pack of beer at the corner store. But
| if, say, one of your employees has walked off with the day's
| cash, the reversibility of the transaction becomes extremely
| important to you.
|
| Given that the relative advantage of cryptocurrencies is
| strongest for a variety of financial crime, I think the
| distinction matters even more. As the Bitfinex thieves are
| learning, cryptocurrency transactions are not as final as they
| would like.
| audleman wrote:
| But the transactions were final, just as it would be if your
| employee stole the day's cash and escaped somewhere you
| couldn't find them. Reversible would mean you could press a
| few buttons on the cash register and _poof_ , the money's
| back in it and not the pocket of the thief.
|
| Tracking down said thief and taking the bag of money back in
| this metaphor constitutes a new transaction. As is
| subpoenaing Dropbox and gaining access to the poorly
| encrypted list of private keys from these Bitfinex
| rapper/hackers.
| wpietri wrote:
| I don't think that's true from the perspective of the
| employer with the stolen money. The employee took the cash.
| The employer just wants to hit undo on that. They don't see
| it as a new transaction, but the reversal of the old one.
|
| Of course, this is all a bit arbitrary. So I don't think
| we'd have much to disagree if cryptocurrency proponents
| were open about that. But what we get is a lot of them
| talking about 100% irreversible transactions. That may be
| true in the technical jargon of a particular system, but is
| definitely not always true in the broader social context or
| in casual uses of the term.
| notriddle wrote:
| This is why so many people absolutely refuse to carry more than
| a thousand dollar's worth of cash on their person.
| RandomLensman wrote:
| Isn't the point that you don't just get to decide whether or
| not the cash is legally yours? So you might have possession of
| the box of cash, but might not be the owner, for example.
| bko wrote:
| Sure, but that money you stole buried in your backyard is
| still yours. The rightful owner cannot just steal it back.
| Similarly if it wasn't yours, you wouldn't have to pay taxes
| on it and the IRS still expects taxes on stolen property
|
| https://www.snopes.com/fact-check/irs-taxpayers-stolen-
| items...
| littlestymaar wrote:
| It's "your" the same way an Ikea shop is all "your" if you
| manage to get lock-in during the night[1]. Sure you have
| it, but if the authorities ever know that you have it
| you're screwed: you don't own it.
|
| Btw, the IRS rule you're referring is just a hack to be
| able to at least charge people for tax fraud if the police
| cannot prove that you were involved in criminal activities.
| (Like how Al Capone got eventually caught for tax fraud).
|
| [1]: https://7news.com.au/technology/tiktok/tiktok-video-
| of-logan...
| yellowstuff wrote:
| > Sure, but that money you stole buried in your backyard is
| still yours.
|
| In what sense?
|
| > The rightful owner cannot just steal it back.
|
| The rightful owner doesn't get any special rights, so they
| can't trespass to get their property back. A policeman
| could get it back for them, though. If it's just lying
| there they can take it back themselves. I've heard stories
| where people find their stolen property on Craigslist, meet
| with the thief, and steal it back without using force.
| That's fine.
|
| > Similarly if it wasn't yours, you wouldn't have to pay
| taxes on it
|
| Ownership is a tricky concept. There are many rights and
| responsibilities associated with ownership. Owning a bike
| carries a different set of rights and responsibilities from
| owning a house. Paying taxes on something is an obligation
| typically associated with ownership, but since stealing
| something does not create many of the other legal rights
| associated with ownership I don't think it's sufficient to
| say that it demonstrates that it's "yours." Also, of
| course, no one actually pays the taxes.
| bko wrote:
| > A policeman could get it back for them, though.
|
| What cop do you know would just steal property back for
| you? This a matter for courts.
|
| > I've heard stories where people find their stolen
| property on Craigslist, meet with the thief, and steal it
| back without using force. That's fine.
|
| What happens on Craigslist encounters is not exactly
| common law.
| vageli wrote:
| > Florida's theft laws make it clear that theft of any
| type is illegal, but recently one Florida court has put a
| different spin on the situation. In the case of T.D.W. v.
| State, 42 So. 3d 959 (Fla. 4th DCA 2010), the juvenile
| defendant (FYI, juvenile names are always abbreviated)
| was convicted of Robbery because he forcefully approached
| a victim to retrieve his cell phone. T.D.W. testified at
| trial that he had a good faith belief that the victim
| possessed his cell phone, so he was going to take it
| back. At this point, it's important to note that,
| technically speaking, a theft charge arises out of an
| 'intent to deprive an owner of property'. So, how could a
| theft occur if the victim of the robbery wasn't actually
| the 'owner' of the cell phone? The court in T.D.W. threw
| out T.D.W.'s conviction, reasoning that "a well-founded
| belief in one's right to the allegedly stolen property
| constitutes a complete defense to a charge of theft", as
| per a prior court ruling in Thomas v. State, 526 So. 2d
| 183 (Fla. 3d DCA 1988).
|
| https://jgcrimlaw.com/blog/someone-stole-my-stuff-and-im-
| gon...
| RandomLensman wrote:
| Not a lawyer, but I think in a lot of jurisdictions the
| money still belongs to person it was stolen from, i.e., you
| only have possession, but don't own it - so not yours.
| polynomial wrote:
| And yet you still have to pay taxes on it.
| yanmaani wrote:
| Yes, and the point the parent is making is that it isn't a
| very good one.
| Spooky23 wrote:
| Cash is a bearer instrument, but your duties as a custodian
| of someone else's cash is another matter.
|
| If I leave a box with cash in your care and you steal it or
| are negligent, I can seek relief in the courts. If I win and
| you refuse to pay, the sheriff will seize assets and sell
| them to satisfy the order of the court.
| thebean11 wrote:
| Ok so then why even have cash? Why not just write IOU's and
| let the legal system decide? If I'm accepting cash there's no
| difference, as I don't know whether or not you legally own
| the cash.
|
| Obviously, the answer is that cash is a good "first layer".
| The legal system is there to resolve disputes, not facilitate
| transactions.
|
| Reversibility on a technical level and legal ownership are
| totally different things, it seems like many folks conflate
| them.
| RandomLensman wrote:
| Depending on where you are, the legal system might already
| block or complicate larger cash transactions, i.e., legal
| system already intervening on the transactions level.
| thebean11 wrote:
| Complicate how though? Can they backdoor the transfer to
| reverse it (or can another party do this for them)? Or
| only try to force the receiver to send the funds back
| with threats of punishment / physically take the funds?
|
| My point is that those two things are fundamentally
| different.
| RandomLensman wrote:
| You might need to establish ID, source of funds, etc., or
| beyond a certain limit cash transactions might just not
| be legal. Failure to comply might then lead to all sorts
| of unpleasantness.
| thebean11 wrote:
| Yup of course, what's your point though? I don't think
| this conflicts with what I'm saying.
| RandomLensman wrote:
| My point was that the legal system is not just there for
| disputes but it also expresses things about what/how
| transactions should be done, i.e. it facilitates some and
| blocks others.
| thebean11 wrote:
| Oh got it, yeah I agree that the scope of the legal
| system is more than just resolving disputes, I was
| thinking of the legal system's role in finality
| specifically.
| avianlyric wrote:
| > The legal system is there to resolve disputes, not
| facilitate transactions.
|
| Disputes without transactions don't mean much. The legal
| system (at least the civil portion of it) exists solely to
| facilitate transactions, it's just that normally those
| transactions are formalised in contracts.
|
| Providing an adjudication service who decisions can be
| enforced with state violence, makes it much easier for
| people to have confidence in the value of contracts, and
| thus perform more complex transactions. The civil courts
| provide exactly this service, for the pure purposes of
| making transactions between private individuals easier and
| more enforceable without individuals resorting to vigilante
| justice.
| tantalor wrote:
| > low and behold
|
| _lo_ and behold
|
| https://getproofed.com/writing-tips/idiom-tips-lo-and-behold...
| miohtama wrote:
| Finality does exist in the payments. It may not exist in consumer
| (fiat currency) payments, but it definitely exists.
|
| The EU has a directive Settlement finality - Directive 98/26/EC
| that address this problem specifically. If there were no
| finality, markets would need to price in more risk in every
| transaction.
|
| > WHAT DOES THIS DIRECTIVE DO?
|
| > It guarantees that financial product transfer and payment
| orders can be finalised, mainly by mitigating problems arising
| from a participant's insolvency.
|
| https://ec.europa.eu/info/law/settlement-finality-directive-...
|
| https://eur-lex.europa.eu/legal-content/EN/LSU/?uri=CELEX:31...
| DennisP wrote:
| > partially voided, with the reversal being worth slightly more
| than $70 million due to Bitcoin volatility. This didn't happen an
| hour later; it happened in 2022. How?
|
| > The answer is nowhere in the Bitcoin whitepaper or any
| codebase. A full recounting of it is outside the scope of this
| anecdote, but it rhymes with "If you and the United States
| federal government disagree whether a transaction is final, you
| are wrong."
|
| Following the link in that quote, that didn't happen because
| Bitcoin wasn't final after all, just because the government
| "disagreed." It happened because the government found the
| criminals' private keys, and made a new transaction.
|
| Back to the first article, it continues with this:
|
| > That is true for notorious Bitcoin thefts, but also true for
| wire transfers
|
| I'm wondering how it is then that theft by wire fraud is a
| serious problem these days.
| outworlder wrote:
| > I'm wondering how it is then that theft by wire fraud is a
| serious problem these days.
|
| The article touches briefly on that. Some wire transfers can be
| reversed. It becomes more difficult when money starts moving
| around jurisdictions, but at least it's possible. Essentially
| no crypto transactions can be reversed.
| gzer0 wrote:
| If this is the case, how was North Korea able to wire fraud
| $81 million USD from the Bank of Bangladesh [1] ?
|
| Why was this wire transaction not reversed? Apparently, they
| were about to get away with $1 billion USD but the hacker
| entered the global SWIFT code incorrectly by 1 character and
| so it was caught.
|
| The fact that North Korea made off with $81 million USD,
| however, is rather unsettling, and even more so the fact that
| this was not reversed / caught.
|
| [1] https://www.bbc.com/news/stories-57520169
| roywiggins wrote:
| They recovered $18m of that by grabbing one of the accounts
| it got sent to in the Philippines, so it was actually
| partially reversed.
| littlestymaar wrote:
| > Essentially no crypto transactions can be reversed.
|
| Bitcoin transactions are hard to reverse (not strictly
| impossible, as shown by the recent example, and a few others
| of the same vein, but it requires to arrest the key owner and
| seize the key, which is obviously kind of hard) but
| practically all other cryptocurrencies are centralized enough
| to allow for transaction reversal (The ethereum hard fork
| after the DAO hack is the practical example of this). And I'm
| not even talking about weak chains for which an attacker can
| even reverse transaction against everybody else's will[1]...
|
| [1]: https://www.coindesk.com/markets/2020/08/29/ethereum-
| classic...
| sophrocyne wrote:
| I'll bite.
|
| > centralized enough to allow for transaction reversal
|
| You can argue that the developers held outsized influence
| over the consensus mechanism early in Ethereum's lifecycle.
| You can also debate their recommendation & push to hard
| fork to a new ledger that undid the hack. But to argue that
| it is anywhere close to 'centralized' today is disingenuous
| at best.
|
| It should be impossible for any one agent to change the
| record, but it is the nature of blockchains that consensus
| holds as "accepted fact". In the event a blockchain is ever
| relied upon for anything of social importance, the ability
| for consensus mechanisms to fork away from "systemic ruin"
| is a desirable trait.
|
| I'm one of the few that argue the DAO Hack was a proof of
| concept for an ultimately 'required' capability for any
| critically important blockchain systems.
| alisonkisk wrote:
| lxgr wrote:
| What do you mean by "theft by wire fraud"? As far as I
| understand, "wire fraud" has almost nothing to do with wire
| transfers.
| DennisP wrote:
| I mean by sending someone fraudulent wire instructions. It's
| been a problem in real estate transactions, mainly with
| consumers receiving instructions by email. Also, businesses
| have been hit in social engineering attacks that end up with
| instructions to send a wire.
|
| These situations can be reversed if discovered fast enough,
| but after a few hours the funds are moved internationally and
| you're very unlikely to get your money back.
| repomies69 wrote:
| It depends on how well the fraud is executed, how long time
| has been passed since the fraud happened and also on the
| amounts and people/organisations involved.
|
| Technically kalzumeus might be right, however practically
| it almost always makes sense to think that wire transfer is
| final, and treat it that way. If a con man tricks you into
| wiring funds to a wrong address, it is quite likely gone.
| However with credit card payments you can be more relaxed,
| and so on.
| cryptica wrote:
| Agreed, the Bitcoin transaction(s) which stole and moved the
| funds out of the exchange did have finality. The entire premise
| of crypto is that whoever knows the private key controls the
| account... So this is essentially a seizure of an account. The
| seizure of funds has nothing to do with finality and everything
| to do with laziness, complacency and neglect.
|
| If the hacker had hidden their private keys in a secret
| location (or just memorized them), they could almost certainly
| have gotten away with it. The hackers were extremely
| neglectful. It's a testament to Bitcoin's security that it took
| so many years to be caught given this level of carelessness and
| the massive amount of money involved.
|
| Some people in the Bitcoin community think the news is fake and
| intended to harm Bitcoin's reputation... We don't know what
| really happened behind the scenes. It's hard to believe that
| people can be so careless.
| yanmaani wrote:
| I think I want to disagree with the central point of the article
| here: As a _payment mechanism_ , Bitcoin is final. As a store of
| value, it isn't unseizable. But from a technical PoV, they still
| had to make a new transaction in order to reverse the effects of
| the old one.
|
| I want to clarify that this isn't just a technical point: if I
| have $100 in account A, and I use a card processor to move it to
| account B, and then the holder of that account withdraws it, then
| the card processor can still reverse the transaction, leading B
| with a debt of $100.
|
| (This is actually a common scam: you send someone $1000 with a
| 'soft' payment method, like a check, then you have them buy gift
| cards and send the codes. Once the check bounces, you split.)
|
| If I do the same thing in Bitcoin, that's not possible. If
| Bitfinex hackers had used Bitcoin _qua payment processor_ to move
| $70MM, then exchanged the Bitcoin into something else, the
| Bitcoin transaction could never have been reversed. Only the
| custody, which is a different thing.
| lxgr wrote:
| The distinction is certainly one worth making (reversibility
| within the ledger vs. "meta-reversibility" in the context of
| the social/legal system that ledger is embedded), and not just
| at an academic level as underlined by your example.
|
| In my view, both matter when trying to understand a payment
| system.
| yanmaani wrote:
| I don't understand - how is the custody even part of the
| payment system, though?
|
| For example, if I keep all my money in the bank, then cash is
| only as reversible as my bank account is solid. But "cash _as
| a payment method_ is reversible, if you store the proceeds in
| a bank account " is not a statement that tells you anything
| about cash, it's a statement about my bank account.
|
| It would be a solid article if it attempted to argue the
| point it proves, which is that "there is no such thing as
| unseizable". But it doesn't, so it isn't.
| wpietri wrote:
| You're right about the technical distinction, but I think
| you're incorrect that Bitcoin is truly final. Bitcoin may not
| have reversed a transaction yet, but it's technically feasible.
| Note that Ethereum did it: https://futurism.com/the-dao-heist-
| undone-97-of-eth-holders-...
|
| Bitcoin mining is very concentrated, so if one or more of the
| major miners is robbed, it's entirely plausible that similarly
| situated entities would collaborate and just undo the
| transaction.
| olalonde wrote:
| Actually the transaction wasn't reversed, a distinct
| cryptocurrency was created (a "fork") which reversed the
| transaction. The new cryptocurrency adopted the name Ethereum
| and it became way more popular than the original, so the
| original had to rebrand to "Ethereum Classic" to avoid
| confusion. The new cryptocurrency was successful largely
| thanks to Ethereum founder Vitalik Buterin endorsing it.
| Similar "attacks" were attempted on Bitcoin multiple times
| (e.g. Bitcoin Cash) but they never quite succeeded and are
| unlikely to succeed thanks to Bitcoin lacking some sort of
| active founder/leader. For a Bitcoin hard fork to succeed,
| there would need to be a large consensus not only among
| miners, but among users, merchants, exchanges, etc.
| wpietri wrote:
| So it sounds like we agree: It's unlikely but impossible,
| and so patio11 is correct to say that finality does not
| exist, and that it's just a probability distribution for
| each channel.
| olalonde wrote:
| I disagree that the Ethereum fork confirms the idea that
| the transaction wasn't final. It was final and still is.
|
| That being said, I do think patio11 is technically
| correct, given his unconventionally strict definition of
| "finality".
|
| Probability is at the core of Bitcoin's proof of work
| security mechanism. There is a non zero probability that
| I could rewrite the whole Bitcoin transaction history in
| the next 15 minutes, if my miner gets really, really,
| really lucky. The chances of that happening are of course
| abysmally small and not worth considering. For all
| practical purposes, Bitcoin transactions are final past a
| few confirmations.
| beaned wrote:
| Is it that concentrated? People used to criticize that it was
| concentrated in China, and then that changed basically
| overnight when mining was shut down the. Now people still say
| this but how much is it true?
| opportune wrote:
| But as the article notes this was actually a hard fork off
| the chain known up to that time at Ethereum. It's really just
| semantics that the old chain became known as Ethereum Classic
| and the hard-forked chain maintained the name of "Ethereum"
| due to the active developers and most of the community
| choosing to use the hard fork.
|
| The payment was still never actually reversed on Ethereum
| Classic. And that blockchain exists to this day. Sure, the
| amount of the not-actually-reversed transaction has lost
| value in $ at mark-to-market but it's still the same amount
| of ether on the same blockchain as it's always been.
|
| In that sense a better term is that the payment was rejected
| by the community, or routed around, rather than reversed IMO.
| mLuby wrote:
| That Ethereum Classic never reversed is true but largely
| meaningless; what matters, as you say, is that "the not-
| actually-reversed transaction has lost value in $ at mark-
| to-market." That loss in value represents the reversal. If
| that _hadn 't_ happened, the original and fork could be
| double-spent.
| opportune wrote:
| The difference in value of ETH classic and ETH grew over
| time though. It hasn't always been so stark. I don't care
| enough about the specifics of the "bad" txs to check
| when/if the funds were sent out of the receiving wallets
| but they might have recovered the same or similar amount
| of value in $.
|
| Anyway, I just find this a really bad example in general
| because it's 1 an exceptional case, most other hard forks
| haven't been done just for transactions 2 it required
| almost the entire community to choose to follow the hard
| fork (which is the only thing that actually destroys
| value). Yes, it does show that you can do something like
| a payment reversal in crypto but it's very hard and
| unlikely. In this case the exception proves the rule
| yanmaani wrote:
| I don't think it's possible to draw any conclusions about
| what would happen to Bitcoin, you're running into the
| fundamental limits of the problem of induction here.
|
| In particular, Bitcoin mining is concentrated into a small
| number of pools, but the amount of actual power they hold is
| very questionable. Because nobody censors transactions, we
| can't know if miners would flee or not if they began to.
|
| English banknotes are printed by De La Rue plc, but it's not
| like they have a stranglehold on the English economy. If they
| began to act up, their 'power' would dry up very quickly.
|
| Also, even with 100% of miners cooperating, reversing a two
| week old transaction would still take two weeks. There are
| some technical issues with this, since new transaction would
| grind to a halt and it would generally be a mess.
|
| Note how Ethereum wasn't miners collaborating (soft fork), it
| was a hard fork, which required no miner cooperation at all.
|
| A hard fork of Bitcoin in this way is indeed possible, but
| would require the consent of a lot of entities. Ethereum is
| much more 'socially' centralized in terms of its governance
| process, and it was very obvious that if they didn't go along
| with it, then the big, centralized entity that held all the
| proceeds from the ICO would stop paying the developers, and
| the PR goons, and and and...
|
| I'm not going to draw any conclusions about the future based
| on this, but we can observe that big players (Binance) have
| lost money, publicly considered 51% attacks, then backed
| down. We can also observe the fate of Marathon's OFAC pool -
| he didn't fly so good, who wants to try next?
| wpietri wrote:
| I didn't make any claims about what would happen. Just that
| patio11 is correct that no transaction is truly final,
| because a Bitcoin transaction reversal is unlikely but not
| impossible.
| [deleted]
| wewtyflakes wrote:
| I think the sentiment of the article was that all of these
| technical details and nuances are ultimately irrelevant to
| governments that control armies. Those government can even
| legislate ridiculous things
| (https://en.wikipedia.org/wiki/Nix_v._Hedden).
| gojomo wrote:
| Indeed, ~patio11 has glossed over the distinction between
| 'definitely reversible' & 'possibly recoverable' here - which
| can be a salient difference.
| Shank wrote:
| This is, incidentally, a good time to bring up the fact that when
| Citi accidentally wired $900m to various lenders for Revlon,
| Inc., many recipients opted to hold onto the money and take the
| matter to court. They won principally because New York law
| entitled them to keep the money, because it was effectively a
| repayment on a loan. Normally, the "hold harmless" part is true
| and wires are reversed, but that only happens if there isn't a
| very good reason (like a law that errs in your favor and a large
| sum of money) on the table. See:
| https://www.bloomberg.com/opinion/articles/2021-02-17/citi-c...,
| and the opinion directly:
| https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rrBrQQPB...
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