> Using as much energy in a day as the US central bank system uses in a year.
Source? I know you are wrong, but I just want to see you talk your way out this...
> A decentralized payment system might be a good idea, but Bitcoin isn't a viable implementation.
Try maybe realizing Bitcoiners, and other alt users have been in trying to circumvent the many issues these legacy systems created in Colorado [0] alone for some time, I know and met a few in the meetups we had in Boulder and some from the early days in Denver that spearheaded lots of these initiatives that would have proven that the election results in Biden's favour were valid. Instead we got this system and people died when idiots stormed the capital.
I think before you even try to make that claim you should consider coming and meeting some of us Bitcoiners in person that have already actually changed legislation and Industry before you say such blatantly wrong things like that behind a keyboard.
Just look at the malaise and the suffering the unemployment debacle has cost our economy and added to the homelessness especially in Denver where it's horrific and has only made a mental health crisis that much worse; and all of this could have been solved with DLT and token system in less than a week if they spent even a fraction in proper work to get all those records in order. Not including the countless amount of money that was lost in fraud...
You want to talk? My fee is $250/hour with 3 hour minimum paid up front, discount available if paid in Bitcoin.
The person you responded to didn’t say Bitcoin and may have been referring to one of many other decentralized payment systems that don’t use proof of work.
Disclosure: very large eth miner, using hydro electricity that would have otherwise gone to waste. Generated power is very expensive to transmit. I prefer gpus to asics because at least ethash is constrained to a more widely available piece of re-useable hardware and doesn't require the latest release in order to have the best roi.
There are other ways to validate transactions besides proof of work, which is what Bitcoin uses, that can prove that a transaction is valid without using extreme amounts of compute power. Proof of stake is a good example.
Except when the creators want to rerverse all txs and exit scam people that is, hence Ethereum/Classic/DAO BS saga...
Proof of stake is like saying 'a square tire works, sometimes...'
As an environmentalist and a Bitcoiner: I agree Bitcoins energy use is significant, but it's carbon footprint is the detail that is being ignored as most of its energy sources are renewable and Jack Dorsey, the guy whose company just bought another 150 million, has also put a bounty on making it even more clean.
Whereas nothing in the alt space comes close doing what Bitcoin did back in 2013 when China started to move its miners to mainly hydro and to Iceland that use geo-thermal, despite these alts absurd overly valued market cap and valuations that make no sense to anyone given it's lack of utility.
We may be on 'Team crypto,' but PoS is so absurd for security that it should be made clear to the non-initiated the many pitflls of centralized system, eg the Foundation and founders like Vitalik, that we all fought so hard to solve with this tech only to see so many projects revert to the same legacy model.
It's a common misconception that the energy consumed by Bitcoin is proportional to the number of transactions -- it's not. Energy is proportional to price.
Hashpower is used to stamp a proof-of-work onto the merkle root of each block in the blockchain. That merkle root is the same size no matter how many transactions are in the block. It takes just as much hashpower to stamp an enormous block as a tiny block.
The only thing that leads to an increasing amount of energy used in mining over time is the increasing reward that miners get from mining blocks. This reward is almost entirely from the block reward created by new blocks, which is currently 6.25 Bitcoins per block, or $306,000 at today's price. Since blocks come out every 10 minutes, that equates to $1,837,000/hr spent on electricity at every hour of the day.
As the value of Bitcoin goes up, this block reward goes up, and the amount of money people spend on electricity goes up. The number of transactions processed contributes very little to the incentive, especially when using a Bitcoin fork like BCH without an arbitrary constraint on the number of transactions per second. If you increase the number of transactions the chain can handle, then you decrease the fee for each transaction, and this lowers the block reward to miners, which lowers the amount of energy that is spent on mining.
I don’t see how that part follows from the rest. It makes sense that electricity consumed per time overall converges on the block reward plus tx fees per time. Since the reward is so much larger, energy consumption per time scales with price. Checks out.
But doesn’t the same apply to BCH? If the tx fees are even lower isn’t the block reward even more dominant, and so energy consumption should track price even more closely for that chain?
Also, showing my lack of knowledge about the specifics of the protocol - is the amount of work done to compute each hash really constant in the number of transactions in the block? Or just negligibly different at current tx volumes?
Sorry dang. I am getting lazy. I appreciate your moderation and will refrain from making bad comments in the future, if it means making your job easier.
No matter how slow bitcoin gets it never goes down. Absolute worst case scenario is a steep difficulty curve that takes awhile to fall back down, only slowing block production.
Edit: in order for it to get "so slow its stopped" more than half of the miners would need to go offline and not rejoin for hours.
It takes days to a week to clear a Bitcoin transaction unless you want to pay a much higher fee than you would for a small or medium sized ACH. And that’s with still very few Bitcoin transactions (single digit transactions per second). If everyone started trying to use base Bitcoin, transaction fees would skyrocket but transaction rate would remain just 7/second.
ACH costs $0.20 for next-BD settlement, or a little more for same-BD settlement.
Bitcoin costs 50-100x that: $10-15-20 for "small number hours" settlement.
A Bitcoin transaction with a fee of $0.20, might settle after several days, but would more likely expire from the mempool before confirmation. And the really fun part is the unpredictability!
ACH isn't perfect. But Bitcoin is completely inappropriate for the common ACH use case.
> After a certain threshold "slow" and "down" are effectively the same thing though.
Except when you realize the mempool has a complete record of every pending tx, unlike the central bank whose system is completely down and cannot and will not have a record of any of these transactions and it's services cannot be reached.
A part of me wants to be elated, but another part realizes that the end of US empire may allow the CCP to continue unabated, and that has incredibly horrible consequences given all the sabre rattling and their focus on Taiwan after illegally annexing Hong Kong and enslaving Xianjing.
The West will continue, and the lack of the US hegemony may allow it to prosper in other ways, but this will be an incredibly rough patch as it loses its status on sole Super Power, I don't think the CCP's China qualifies as a super power as it cannot unilaterally impose the world to operate on its own standard in anything but trade reliance, something it can and should lose. As creditor it cannot really do much except in a close sphere of emerging African countries, of which Bitcoin is actually flourishing, or the Russia/Iran block, and Iran is a hotbed of Bitcoin influence with state sponsored miners.
I hope the US takes the lead once more without the need for overt militaristic, police-state tactics as the petro-dollar loses its gravitas, I just don't want to be here when it happens.
There was a plausible scenario in the earlier days that an ill-timed crackdown of Chinese miners could effectively cripple the Bitcoin network. If one of the big mining pools went down early in the "2 week" cycle, it could potentially be months before the difficulty readjusted and in the mean time, the Tx throughput would crater and the unconfirmed transactions would just pile up. I assume that's less possible now, but trouble can come from surprising places even in robust systems.
Call me stupid, but I am curious to know if Bitcoin or distributed ledgers became large enough and large banks decided to spend big $$ in purchasing mining rigs could they not hold a significant amount of that particular coin.
Also, how does borrowing and interest work with something like Bitcoin or other distributed ledgers?
I imagine borrowing and interest would work exactly the same way they currently work with regular currency.
You sign some legally binding agreement, they send you the bitcoin, you pay it back in the agreed intervals + interest over time. If you don't, the legal system gets involved.
I can imagine you could build a cryptocurrency system that handles debts automatically via eg smart contracts, but you'd still have to involve the legal system if the debtors account was empty.
"They" being an institution which holds a significant amount of Bitcoin (for example sake) as capital in order to be allowed to issue loans?
I'm wondering if there is a smarter way to issue loans through something like smart contracts as another comment mentioned. Where we perhaps remove the need for large single institutions to hold large amounts of capital for the purpose of loans. Otherwise we would then be entering in a very similar structure of what we have today and the inherent drawbacks.
Big institutions make the loans because small ones can’t bear the risk. A small investor might only have the capital to make a handful of mortgages, and so have a much higher variance in her outcome. A single default might eat all her return and then some. So the small investor might instead contribute to a much larger pool and earn a lower return with a much lower variance.
We could imagine mediating that transaction through blockchain something something, but degree of risk pooling - centralization - is the essential feature of the transaction
Agreed regarding the reasons behind big institutions with large amounts of capital to bear the risk associated with lending compared to a small investor.
So if someone wanted a loan for say 300k, other small investors may choose to lend/service a portion or as much of that loan as they wish with interest?
I suppose small investors could realize the same diversification by lending in very small amounts to a very large number of borrowers, such that only a small fraction of their wealth is exposed to any individual borrower.
Obviously given m lenders and n borrowers, a system would need to manage O(m*n) streams of payments vs O(m+n) for a centralized party. In a traditional finance/legal framework, the former is an overwhelming amount of overhead for all but the largest loans, which are syndicated across lenders. For realistic sizes of m and n though, it’s probably not unreasonable for a single smart contact (per borrower?) to manage them. That starts to look ‘centralized’ though, and a contract per borrower/lender probably starts to get expensive? I don’t have a good enough sense for the practicalities to know for sure.
It would weird to borrow a 300k $10 at time though, like you’re a BigCo borrowing $10m from each of 20 banks...
Obligatory “I can transfer money instantly and for free within the EU/UK and have been able to for years” comment.
Also what the hell is up with cheques and using your signature for card payments? I can only remember these from my early childhood. It’s so... backward. Why hasn’t it been improved? What’s been blocking progress for all these years?
American finance and regulators really like paper with ink signatures. I think it's perceived as a lower fraud risk, or easier to nail someone criminally because of the paper trail.
You can get free settlement on a check under certain thresholds in about a day if you deposit it via an ATM at your bank. You endorse it, stick in the machine, it images the check, does some OCR, and turns it into an electronic transfer. Banks often let you take a picture of it with your phone via an app. It's pretty common now.
So that's a lot of infrastructure to support something that seems pretty backwards, but anecdotally works well enough. Ink signatures are just really "sticky" in American commerce, I guess it gives regulators warm fuzzies.
As far CC, it's gone largely chip-pin, but signature is a backup if comms goes down.
Keep in mind that in the states there's a prevalence of credit vs. debit, and it's pretty lenient to dispute charges as a credit card user, merchants get the short end of the stick there. Cloned CC being used to make phony charges was never something that you were liable for. A bit of a pain to deal with, but not a financial risk. So there's little to drive adoption except merchants and the CCs who want to reduce fraud to increase overall profits.
It is fascinating to watch and so shortly after Yellen's tone-deaf speech about how btc is inefficient compared to traditional banking system. I almost spat out my coffee. Has she tried sending a wire outside of US lately?
edit: Almost makes you wonder if it was a targeted attack.
> Has she tried sending a wire outside of US lately?
Costs at most about $35 for any size wire, shows up in a corresponding bank within a day. If the corresponding bank is not the ultimate destination, takes whatever the amount of time it takes for the end transaction to complete. In event of a bank mess up on a transfer, the wire gets rejected/credited back. For banks that do "online" FedWire rather than batched, wires show up and are credited within seconds.
What, exactly, is the problem?
P.S. Non-immediate transfer is a feature and not a bug.
I don't want to presume, but what you are describing is a theory of how it is supposed to work. That theory holds up for a majority (~80%+ depending on an institution - I am not willing to make more specific statements ) of wires, but remaining 20% can be held up for a variety of reasons ranging from fraud investigation, AML, or OFAC. For those 20% the banking system as it is right now, is a problem.
edit:
"P.S. Non-immediate transfer is a feature and not a bug. "
That may have been true/acceptable before - back when time span between order and payment was greater. If it is a feature, it is a feature for the bank, not the user.
> but remaining 20% can held up for a variety of reasons ranging from fraud investigation, AML, or OFAC. For those 20% the banking system as it is right now, is a problem.
AML, OFAC will absolutely take time and no interbank transfer would bypass it in any US chartered bank as they are triggered during a match in the FedWire or any other system that uses the Fed.
KYC and fraud investigations are triggered by the originating bank, most likely because the account has been flagged. Until the account is cleared any transfers out of the account would trigger them and delay them.
KYC-type and fraud investigations could also be triggered by the receiving bank if the account is either flagged or the activity is matching certain parameters - it is less likely but possible. Should that happen, no matter what is the method that was used to credit the account is likely to trigger it.
> For those 20% the banking system as it is right now, is a problem.
That makes it 1 out of 5 wires. It is extremely unlikely to be the case.
> That may have been true/acceptable before, where time span between order and payment was greater. If it is a feature, it is a feature for the bank, not the user.
It absolutely is a feature to the user - it allows for an easy rollback of journaling mistakes.
1 in 5 seems like a high proportion to me. I will admit that I find it mildly aggravating that people wave away a genuine complaint with 'it only happens in 1 out of 5 cases'. Is it an acceptable ratio? Would we accept a plane that lands for non-routine issue 1 out of 5 times?
>> That makes it 1 out of 5 wires. It is extremely unlikely to be the case.
I don't think I could honestly qualify 1 out of 5 with adverb extremely. Even unlikely feels like a stretch. Let me give you an example, if you submitted your taxes online and before you submitted it, it gave you a chance percentage of an audit, would you roll the dice at 20%?
>> It absolutely is a feature to the user - it allows for an easy rollback of journaling mistakes.
Having dealt with those mistakes, I still maintain that it is there cover the bank.
> I don't think I could honestly qualify 1 out of 5 with adverb extremely. Even unlikely feels like a stretch. Let me give you an example, if you submitted your taxes online and before you submitted it, it gave you a chance percentage of an audit, would you roll the dice at 20%?
There's no such thing as 20% of international wires that get delayed. American brokers do hundreds of thousands of international wire transfers every day. If 20% of those were delayed, it would collapse the global financial system.
You statements appear to be taken from various institution's brochures ( ranging from $35 wire transfer cost - international, which is what we were discussing, wire average cost is higher ; "shows up in a corresponding bank within a day" - technically true, but virtually meaningless to a sender/recipient ). They are also very definitive, matter-of-fact and made with aura of conviction, but allow me to quote to you stating the following.
"P.S. Non-immediate transfer is a feature and not a bug. "
Since we are playing with words, non-immediate transfer is a delay and it is at odds at the other statement you have made:
"If 20% of those were delayed, it would collapse the global financial system. "
It wouldn't, because it didn't. But clearly that part doesn't matter, because entities and individuals affected tend not to be well-heeled and so unlikely to be able to force the bank to take some sort of action.
Over my life I have dealt with over a thousand wire transfers including international, both business and personal with over a dozen banks. So yes, I can pretty definitively say when something does not match the reality.
The delay in the international wires that are a feature ( 1-3 business days ) have nothing in common with the 20% arbitrary delay of unknown duration that you have promoted. That's the 20% delay that would collapse the world financial system.
If you need to send payments instantly, there are many other options out there, not the least of which is credit/debit card which is virtually instant and used... *everywhere*. What exactly do you want here?
What I want.. what I want is for people to stop accepting the world as it is just because it is in this set up in this particular configuration. I want people to realize that they can actually shape the world to fit their needs.
That is what I want.
And if you really tried to use credit/debit card for those purposes, you quickly understand their limitations ( amounts come to mind ).
What scenario do you need to instantly send more than a credit card limit? Sounds like you're talking big money, $10,000+ type of transfers.
This is very much so like the entire cargo/freight "Hyper-Loop" thing, or Rocketship cargo/freight, or even the Supersonic Aircraft thing... a solution in search of a problem.
There are very few scenarios were someone legitimately (and more importantly, frequently) requires sending a package to the other side of the world within minutes. Would it be nice? Perhaps... but just as Concord found out, after the novelty wears off, few actually want to drop $10K on a one way ticket.
With huge amounts of money being transferred, the delays are in fact a feature. It gives you time to cancel if there was a mistake... and it gives banks opportunity to sniff out fraud/laundering, that the money is in-fact real and not pending other transactions, etc.
I've just never heard of a scenario where someone needed $50k instantly sent anywhere for anything. When dealing with that amount of money, in a non-reversible/permanent system... being careful, deliberate and slow is pretty much what you want.
> I've just never heard of a scenario where someone needed $50k instantly sent anywhere for anything.
maybe not $50k, but "deposit paycheck on same day rent is due" is a fairly common problem that people have. the person has the money to pay rent, but it might not clear before their rent check bounces. there still exist landlords that only accept payment via check.
I agree in general. wires are fast enough for most truly large transfers of money, if only because the recipient is usually willing to be more flexible with such a large amount on the line.
It's been quite some time, but every landlord I had which required a check only required having the physical check in-hand by the 1st (or more commonly by the 5th if it was being mailed).
If you're bouncing rent checks because it took too long to clear, you have other issues and immediate withdrawal isn't going to save you anyway.
Besides, if you're cutting checks of the same amount every month, you can setup BillPay (free at most/all? banks) and let your bank handle writing/mailing the check on time.
> If you're bouncing rent checks because it took too long to clear, you have other issues and immediate withdrawal isn't going to save you anyway.
I'm talking about people who barely make enough money to cover their monthly expenses, so yeah that financial situation is hardly ideal. someone in this situation definitely does not want to set up autopay against their checking account.
it's a sort of death by a thousand cuts for people in this situation. you generally have to pay rent in advance (ie, you pay that month's rent on the first of the month). you get "paid" at the end of a two week period, but then it takes about a week for your employer to process payroll. if your employer doesn't do direct deposit, you now have a check in hand that takes about two days to clear. that two days isn't the bulk of the problem, but it can definitely be the straw that breaks the camel's back.
> but "deposit paycheck on same day rent is due" is a fairly common problem that people have. the person has the money to pay rent, but it might not clear before their rent check bounces. there still exist landlords that only accept payment via check.
Two things:
1. For paper checks, this has been addressed via Check21 which took effect at the end of 2004. It enforces funds availability for even for non-local checks and/or bank drafts.
2. Writing a check against an account that does not have available funds has all the characteristics of check kiting. Check kiting is illegal.
For non-checks ACH credits settle before ACH debits or any other debit transactions.
The EU now requires 15'000€ transfers in under 2 minutes and less than 1,50€ fees, and any other transfers in under 24 hours for free (for non-commercial customers).
What do they mean by "transfer"? I can transfer money to a friend for lunch instantly already, using a plethora of apps such as PayPal, Cash, Venmo, etc.
Or, if I write a check, and they deposit it on their bank's phone app, nearly always the funds are available immediately.
$15,000 Euros is a lot of money... I honestly wonder what problem was solved by mandating that amount of money must be transferred, cleared, and available for withdrawal within 2 minutes. It seems to me nobody has a legitimate reason for that, unless you're a Nigerian Prince.
What problem did it solve and why is it considered a good thing?
€15000 (we have a whole symbol for the Euro) isn't that much money. You definitely might buy a second hand car for that much, and I don't want to give you the keys until the money appears in my account, even if legally you'd have "stolen" it if your money wasn't good, that's a huge hassle.
And I've certainly sent somewhat smaller amounts for stuff like "Hey trip is on, we booked that holiday villa, €1000 for single rooms, €800 each if you're sharing, let me know if you can't pay this week".
I'm sure this rule would have been fine if it was €10 000 rather than €15 000 but how often do you want politicians to re-authorise? If it was €1000 by now people would be annoyed at the size limit already.
I don't have one on my keyboard unfortunately, otherwise I'd happily use it where appropriate!
> And I've certainly sent somewhat smaller amounts for stuff like "Hey trip is on, we booked that holiday villa, €1000 for single rooms, €800 each if you're sharing, let me know if you can't pay this week".
Your scenario doesn't seem to have been impacted by 2 minute mandatory transfer times in either direction.
> I'm sure this rule would have been fine if it was €10 000 rather than €15 000 but how often do you want politicians to re-authorise? If it was €1000 by now people would be annoyed at the size limit already.
Sure it's an arbitrary amount and they had to pick some amount I suppose. Even $10K is a lot for an ordinary person - potentially life changing if lost in some unfortunate instant transfer with the wrong number entered. That, of course, is a human problem (typing wrong number or whatever), but the delays we're talking about provide a safety cushion to cancel transactions in those scenarios.
Deliberately fooling people into giving the wrong account numbers for transactions they wanted to make, but to somebody else ("Push Fraud") was a thing in the UK. So, they told the banks to make the previously merely reference value for the recipient's name actually enforced.
If I try to give money to Victoria Smith 12-34-56 0123456789 then the backend will notice that's not Victoria Smith's account, and tell me I need to figure out what I did wrong. Maybe the problem is Victoria married, and is now Victoria Jones, you can clear that up. Maybe I got the number wrong. Maybe she's Victoria Smyth or Smithe and then it'll suggest this was just a typo using some heuristic. Or maybe it's the account of a scammer named Michael Black and the scam fails because the name doesn't match.
This was a bit awkward for my ISP because their name has an ampersand in it, and so of course this means some banks end up believing their name is "Andrews & Arnold" and similar stupidity. But it's been bedded down now a bit.
This approach leverages a reference for the payee that existed but was previously not checked, plus KYC checks already in place, it's hard these days to open accounts for names that aren't yours or with no apparent credit history for an organisation.
(a) using third party apps instead of the banking system itself is a workaround, not a solution. especially as those apps demand fees.
(b) cheques have been deprecated and stopped being accepted in the EU in 2004.
It solves the same issue as paypal, cash, venmo, etc, except the receiver can immediately use the money for any and all purposes, without fees, without yet another third party app.
This in turn allows new third party apps to be built on top of the new infrastructure.
When you are sending with a credit card, you are not sending it anywhere near "instantly". The receiving end pays a 2-3% fee, and doesn't actually get access to the funds for anywhere from a few days to a month later. And even once they receive the money, it can be clawed back if it's fraudulent, was done with a stolen card, etc.
> What I want.. what I want is for people to stop accepting the world as it is just because it is in this set up in this particular configuration. I want people to realize that they can actually shape the world to fit their needs.
The more I do that - the more I want to go off into a corner and plant shit in the ground and stay the hell away from people. They are super dangerous. And honestly, I can shape the world exactly the way I want by doing it that way.
In all other efforts where people are involved, trying that for 42 years and it hasn't worked well yet.
This is 10000% bullshit. Everyone on here says "oh yeah, it's easy to send a wire anywhere in the world", but as someone who's actually spent decades living abroad as a US citizen, this couldn't be further from the truth. International banking never works the way it's supposed to. Shit always inexplicably gets delayed, or canceled, or fails for some obscure reason that requires spending 9 hours on the phone with clueless customer support monkeys.
There have actually been a few times where non of my bank cards (chase, bofa, credit union) work for cash withdrawal and I've used a Bitcoin ATM to get cash until I could get something figured out.
> Everyone on here says "oh yeah, it's easy to send a wire anywhere in the world", but as someone who's actually spent decades living abroad as a US citizen, this couldn't be further from the truth.
That's simply not the case as someone who authorizes or validates wire transfers for the companies would be able to confirm.
> There have actually been a few times where non of my bank cards (chase, bofa, credit union) work for cash withdrawal and I've used a Bitcoin ATM to get cash until I could get something figured out.
There have been several orders of magnitude more cases where standard bank cards worked in the ATMs and bitcoin ATMs did not.
Well there's your problem. Where is that $35 heading? For a $35 transaction fee, I'd expect my money to arrive instantly and to work reliably. Sounds like that's pretty far from the truth.
I'm sure there are a hundred reasons why it's not that simple and it needs to cost a lot of money, but fundamentally, you're decrementing a number in one bank and incrementing a number in another. I can see why people would want that to be cheap, fast, and reliable given that it's a pretty simple thing to accomplish on the internet.
> Well there's your problem. Where is that $35 heading? For a $35 transaction fee, I'd expect my money to arrive instantly and to work reliably. Sounds like that's pretty far from the truth.
The bank charges the service fee. It ranges from $0.00 to about $35.00
> I can see why people would want that to be cheap, fast, and reliable given that it's a pretty simple thing to accomplish on the internet.
International wire transfer is, at most, a settlement service for payments, not a payment service.
As someone who has been living abroad for the better part of a decade, this is simply not consistently true, no matter how much you want to beat your chest about it.
If you are having a problem wiring from the US banks to the "abroad banks" while living abroad it is clear that you do not give a shit about it as if you are banking with the first tier foreign banks ( i.e. banks that have correspondent accounts with the US financial institutions such as JPM Chase, Bank of America, Citi, HSBS, Wells Fargo, etc ) it would be the case.
Maybe she meant it's inefficient in a way that for the government to track money it has to do a lot more work compared to the existing systems in place with the banks. Not lying seems to very important to government officials but equal level of misleading truths are totally acceptable [0].
I think you're noticing the autoimmune reaction of a corrupt central bank to the first real competition it has ever received. There are many private institutions in the US experiencing similar growing pains.
We could also think this just as a marketing trick for the digital dollar. And as we know, they need the digital dollar to be able to track movement of money, obsoleting financial privacy completely.
Compared to what? Public companies with thousands of employees, shareholders and interest in ensuring BTC remains a niche? Are you sure you are not arguing the way you do simply because status quo is preferable and predictable?
Bitcoin holders are of course having a field day with this, especially after Yellen's comments. However, this is a false equivalency. For regular retail banking customers your deposits have FDIC protection, not a thing you can get with BTC. You can use Coinbase, which does offer insurance, but then you're back under a centralized system with the same single point of failure issues.
Indeed, FDIC is not something that you need in the case of BTC as it's fluid and is not locked to one "bank" / "exchange" / new future entities. It's interoperable between many systems today too.
That is good news for the users of Mt.Gox, Bitcoin7, Bitcoinica, Bitfloor, Vircurex, Inputs.io, Picostocks, Flexcoin, Poloniex, MintPal, Cryptsy, Bitstamp, BTER, KipCoin, Bitfinex, Gatecoin, Bitcurex, Yapizon, LocalBitcoins, Coincheck, BitGrail, Coinrail, Bithumb, Bancor, Zaif, MapleChange, Cryptopia, Coinbene, Bitrue, BITPoint, Upbit, Eterbase, KuCoin, Livecoin, and the DAO. Their money can never be lost because it is secured by logic itself.
EDIT: It appears I forgot to list a few dozen exchange hacks.
If you use an exchange/"bank" like Coinbase, then yeah. What do you mean with online wallet? It's either only you have the keys, or you don't/someone else also does.
If I have a soft wallet and I have automatic updates enabled on my OS, do only I have the keys or do Microsoft/Apple/Google/Samsung/Canonical have them as well?
EDIT: For clarity, I was referring to an actual online wallet, a wallet on a website, but it’s not too different to ask the same question about a software wallet on a computer-connected device that does automatic OS or wallet software updates.
Only you have the keys, otherwise it'd be like saying if you purchased and downloaded a movie, then Microsoft/Apple/Google/Samsung/Canonical have ownership of them as well.
If you’re not using a cold wallet and doing the transaction signing completely offline, then you’re trusting Microsoft/etc not to steal your keys. It’s not just you who could have access to the keys if your keys are stored on an Internet-connected device somewhere that can have its software updated.
Well in use Intel CPU their management engine could steal your keys from RAM as you are making a transaction. So unless you build your own computer you are trusting someome somewhere
What good will the management engine stealing my keys be to Intel or anyone if I never even put the computer I’m using to sign transactions or generate the public key online? The signed transaction can be transferred manually in hexadecimal to an internet-connected computer which broadcasts the transaction (but never sees the private key ever).
Secondly, you can use computer hardware from before even the invention of Bitcoin, and then code the software on that hardware, developing the libraries yourself.
Third, you can use computers simple enough that it’s not feasible to hide any management engine trickery in it.
Fourth, yes, you CAN actually build your own computer, which I’m trying to do. :)
But to further your point, I still haven’t proven to myself the argument that the elliptic curve used by Bitcoin hasn’t been intentionally compromised like the NIST curves were. I take the word of the Internet for granted there... But I suppose I could prove that myself.
Most bitcoin is not held on exchanges or in custody. "run on BTC" is not possible, because people already own their bitcoin. Also, exchange reserves aren't fractional, so there's no reason they would lockdown withdrawals.
Yes and no. You have a point about certain level of protection for customer, but it does not address ineffciency ( which is the accusation Yellen placed against crypto ). In other words, it is not false equivalency at all. When looking at the features that are compared, the analogy is more than apt.
Well, with different issues. FDIC insurance is probably better than whatever Coinbase has. You are also open to technical f-ups on Coinbase's end, which can move the price down if they are bad enough.
On the other hand, Coinbase cannot print BTC. This characteristic is what draws a lot of people to Bitcoin, beyond just "nobody can take my keys".
Agree it's a false equivalency, disagree that holding BTC in Coinbase defeats the purpose.
As someone who sends wires frequently for work... way to complicated and unnecessarily so as compared to moving cryptocurrency. I would MUCH rather enter an address and memo field (Eg. XLM-Stellar) to move USD -> EUR then go through the IBAN/SWIFT, etc. headache; let alone the fees.
I’m skeptical of Bitcoin as-is for any purpose (except Venezuelan digital gold) and cryptocurrencies generally as a “store of value”, but I can see the value cryptocurrencies could provide by offering some method of getting around the unnecessarily bad transaction systems we have in place today at least in the US.
You don‘t need cryptocurrencies for that. Many people in this thread have already mentioned SEPA – bulk retail payments have been a solved problem in Europe for years, and instant settlement is currently being rolled out.
As someone that listened to people harp about SEPA for a decade. I am not impressed by it.
The actual user experience of SEPA is 2-5 business days just like America's oh so antiquated ACH system.
There are some very specific edge cases where SEPA instant exist, and that edge case may work for a large number of people that live in that walled garden.
That garden seems to be same country to same country transfers, where both banks have SEPA instant.
But to make it seem like the Eurozone or SEPA participant network has this solved has been very disengenious.
FDIC protection being invoked will still have anyone holding US dollars to rush for the doors trying to put it into anything else. There's absolutely no guarantee of protecting the value of assets, simply the number of them.
What would happen if suddenly (on news from some exploit or a scheduled banning by the vast majority of governments) everyone tried to pull their Bitcoin and put it into anything else? The blockchain can only do 7 transactions per second regardless of demand.
That's correct, if the "into anything else" transaction required a cross through (any) blockchain.
And the clearing feerate, which correlates to mempool queue depth, incoming transaction velocity, and cohort feerates, would increase dramatically.
But if there was a run to convert BTC to USD, the exchanges would not be able to cover the USD required. They'd limit or suspend withdrawals immediately. At some point someone would have to start buying with fresh USD for the exchanges to be able to pay out the sellers. With big enough news, there could be tens of thousands of dollars gap between bid and ask, which would take a long time to ease.
Yup, and the transaction fee would be bid up by people desperate to make transactions. To say nothing of the bottom falling out of the value of Bitcoin ...
This is different that everyone withdrawing dollars from a bank. The equivalent would be exchanging dollars for something not dollars. FDIC doesn't help there.
> But on the other hand, check these FDIC folks out. They know what they're doing. And every week they get more experience. In the 10 weeks since the FDIC took over the Bank of Clark County, 18 more banks have failed. That brings us to a grand total of 20 since the start of this year — a number that will likely grow tomorrow.
You could actually have something similar with blockchains. It depends on the specifics, but you would essentially have FDIC-style insurance on one blockchain in the event it goes down, and this would need to be facilitated on a different (and more stable) blockchain. For example, when Ethereum does a major upgrade I could imagine some people wanting this kind of insurance it case it goes down.
Insurance potentially protects people from fuckups with the sending of the money, like "we sent $900M to the wrong person and they won't give it back". If the bank collapses, the individuals holding accounts at the bank are covered (to a point) by the FDIC.
Funny you should mention that. If the money is sent, and there is a clear record of it having been sent ( especially via wire ), I am not sure how easy would it be to claim it under FDIC umbrella if the bank collapsed. FDIC is for the money in the account.. although I am sure that is a fascinating question for a lawyer.
edit: The reason wire fraud is so popular is basically, because once the money leaves the account, the recipient has to agree to return it. You can imagine fraudster likely will not.
FDIC insures the individual deposit accounts up to some maximum per account type. Say Citibank only had 900M and they fat fingered their own 900M as principal payment on some loan they are administering, then it could lead to a collapse of Citibank. In the most recent case the judge let it stand so Citibank has to absorb it and now becomes the de facto lender to Revlon now I guess. I imagine there must be some contract stipulations to Revlon / Citi or Revlon needs to negotiate. If there aren't, then Revlon got a sweet deal but I imagine all new loan related documents got updated to reverse this kind of thing in the future. If Revlon acts like they got 900M in free money well then the company will go out of business because no bank will work with them again. I imagine they will get a nice interest rate though since they have leverage now.
For the average person, I wonder if this means that if your mortgage servicer or your say student loan servicer does the same thing and inadvertantly pays off your loans that they then can't come back at you.
Citibank did not fat finger. They have have made an appropriate transfer to an appropriate destination under an incorrect internal book keeping line item. That's why the case was not about a wire being reversed - rather it was the case if the under their agreement with a customer that not on schedule payment could have been used by the customer to complete a transaction.
FDIC does not protect you from sending money to the wrong person. It only protects you from a bank going insolvent because it lent out more money than it has. That can't happen in Bitcoin, because your wallet doesn't lend your money out to other people.
Bitcoin wallets don't lend your money out to other people because they aren't corporations trying to make a profit. They are just wallets, doing a service for you.
We've come to rely on using banks when we want to send money to other people because USD alone doesn't know how to send itself to other people online. So banks have stepped in to fill that role. Now we can't even pay for things without a for-profit bank existing in the middle of the transaction. And that bank tries to make money by lending out your money to other people, and that gives it a risk of going insolvent, and so FDIC was created so that the government takes the risk of banks going insolvent.
If you send money to the wrong person, a bank may or may not be able to get your money back. It depends on the bank, and how well they know the other person, and what method they used to send the money, and how strong the threat of lawsuits is between the two parties. None of this has anything to do with FDIC, which becomes totally irrelevant when you use Bitcoin.
> For regular retail banking customers your deposits have FDIC protection, not a thing you can get with BTC.
I'm not sure how to even understand this comparison.
FDIC protection ensures that if your bank fails, your money isn't lost; you can move it to another bank. This vulnerability doesn't exist with Bitcoin, so there's no need to protect against it (though obviously it has other risks that are mitigated by the presence of a bank in the first place, like loss of access due to poor secret handling).
> For regular retail banking customers your deposits have FDIC protection, not a thing you can get with BTC.
If you use Bitcoin, then you remove the bank, and you don't need FDIC.
FDIC is there to protect bank customers from a bank going insolvent. Banks go insolvent if they lend too much money out, and then all customers demand their money back at once.
Your Bitcoin wallet doesn't lend your money out. It can't go insolvent. You don't need FDIC for it.
Exactly! Op seems to be saying the FDIC protects users from loss of funds. Not the case, FDIC protects users from Banks, something Bitcoin (Cash) does far better.
Parent is saying that the lack of FDIC protection is bad for Bitcoin because your wallet can get hacked. I'm just pointing out that the FDIC has nothing to do with preventing anyone from getting hacked. Adding FDIC protection to Bitcoin would not change anything about whether or not your wallet could get hacked.
Bitcoin is more like having a pile of cash. The FDIC doesn't protect you against a pile of cash in your house getting stolen. Keeping a large amount of cash has advantages and disadvantages and risks. If you aren't willing to understand and mitigate those risks, then don't do it.
Having some form of insurance would be great for bitcoin holders, and for bitcoin in general. You're right that having a bitcoin wallet is like having a pile of cash: it's an all-around terrible financial plan. I can't think of any advantages to it unless you're operating a criminal enterprise.
Yea, because no Bitcoin exchange or online wallet service has ever gone bankrupt, been hacked, and/or had employees disappear with everyone's money, leaving all of their customers high and dry. Nope, that's never happened...
The idea only works if you keep your private keys. If you use an online Bitcoin “bank”, then you do have to worry about them disappearing. cough Mt Gox cough
You can avoid having to deal with a fiat bank going insolvent by personally managing your money as cash stored under your mattress, too. But there are plenty of reasons you wouldn't want to do that.
Well that's a hell of an analogy. It's like I would receive one coin for each BTC and now had to somehow hide them in a closet lol. The real beauty about crypto currencies is that I can hide ANY amount, no matter how much with a single passphrase that I remember in my head or store somewhere in an encrypted form, or on hardware wallets. Whatever you prefer. But ultimately, you own the keys to the kingdom.
Yes. I’m not saying it’s a solution. Just saying that there is a way to avoid the exchanges/“banks” going bankrupt. Reading it over, it does feel like a “technically correct” answer and not a good one.
> Banks go insolvent if they lend too much money out,
Banks don't go insolvent because they lend "too much" money out. They go insolvent because the collateral on those loans is less valuable than they estimated. E.g. the assets are lower than the liabilities. That is the only possible way that any business can go insolvent.
So when you take a loan on a house, the house is the asset the money lent is the liability. Housing prices drop enough, people walk away from the loan, the bank goes insolvent. That is true if it has a big balance sheet or a small balance sheet as these numbers just scale out.
> and then all customers demand their money back at once.
That is applicable to the era portrayed in the Mary Poppins movie, but not in a modern banking system. Even in the early twentieth century "bank runs" was something people would talk about when what was really going on was asset deterioration and breakdowns in the capital market.
But Hollywood preferred the more intuitive story and also the story in which the survival of the bank was in the hands of common people's choices rather than in the hands of the capital markets, where it truly lives. Thus you get It's a wonderful life where a stirring speech to not withdraw money can actually effect the P&L margin of a bank rather than the less exciting story of whether the bank's cost of funding exceeds its cost of borrowing.
Today banks borrow at a low rate and lend at a higher rate.
This includes borrowing whatever cash they need to meet outflows. In fact some banks don't even accept deposits at all, they just borrow from capital markets and don't even deal with depositors. Most big banks are depository institutions and tap both depositors and short term funding markets.
All that matters is that the interest received from inflows is less than the interest paid on borrowing to satisfy outflows. It is all about making money on that spread. When banks can no longer make money on the spread, they go insolvent even if no one makes a withdrawal. If banks are making money on the spread, then withdrawals are not a concern to the bank.
> That is applicable to the era portrayed in the Mary Poppins movie, but not in a modern banking system. Even in the early twentieth century "bank runs" was something people would talk about when what was really going on was asset deterioration and breakdowns in the capital market.
Not quite. Yes, bank runs nowadays are very rare, but they can still happen, as exemplified by Northern Rock in 2007[1]
"On 14 September 2007, the bank sought and received a liquidity support facility from the Bank of England, to replace funds it was unable to raise from the money market. Reporting of this complex scenario led to panic among individual depositors, who feared that their savings might not be available should Northern Rock go into receivership. The result was a bank run – the UK's first in 150 years – where depositors lined up outside the bank to withdraw all of their savings as quickly as possible, particularly since many others were doing the same."
As the DeFi ecosystem develops over the next 10 years and likely governments get involved, something like FDIC insurance will emerge in those systems—probably both centralized and algorithmic versions. Rudimentary versions of many financial instruments already exist, including insurance. Bitcoin will become a piece of a much bigger puzzle.
My suspicion is the "SolarWinds" hack, which is of course more than just that piece of software now, has infected practically every noteworthy computer system in the nation.
Also, Bitcoin could drop a transaction if a fork occurs and you were tracking the one that fizzled out; that is why people wait for roughly 5 confirmation blocks before proceeding and that takes roughly 1 hour.
The trade cost is different for both, as you can tell from your comment and sister comments that show how BTC trades cost much more than BCH. Given that they said 'bitcoin' and not 'bitcoin cash', and that BCH's low trading fee isn't seen as a negative, chances are they were referring to the one with a high fee.
That's a little pedantic, there's enough text there to see that "next day" and "same day" are there typical promises. While it may be often instantaneous, that's not promised.
I'm not sure I agree that that's pedantic, or understand what you're referring to. The only reference to "next" or "same" on that page is for offline instructions (i.e. talking to a human), which cannot be instantaneous for obvious reasons.
I'm not personally aware of the exact details of Fedwire SLAs, but I understand it to be near instantaneous, and that page doesn't suggest otherwise.
You're right in that it doesn't specifically state an SLA, but there's plenty of context there, like a cutoff time for originating transfers that's several hours before the end of "operating hours". So, same day if before cutoff, next day if not.
I was suggesting using cryptocurrency (such as Ethereum or PolkaDOT) to implement the centrally-controlled functions of the Federal Reserve currently being handled by simplistic queues or whatever it is.
But more fundamentally, currency and money IS a technology. It's use is to distribute power and express trust. But fundamentally it is a technology used for that purpose.
Cryptocurrency is ultimately about putting power in the hands of the people and trust in mathematics rather than central authorities.
Eventually the central banks and banking institutions as they exist now will be phased out and replaced with different paradigms that have some similar functions but more sophisticated technology.
191 comments
[ 4.5 ms ] story [ 241 ms ] threadA decentralized payment system might be a good idea, but Bitcoin isn't a viable implementation.
Source? I know you are wrong, but I just want to see you talk your way out this...
> A decentralized payment system might be a good idea, but Bitcoin isn't a viable implementation.
Try maybe realizing Bitcoiners, and other alt users have been in trying to circumvent the many issues these legacy systems created in Colorado [0] alone for some time, I know and met a few in the meetups we had in Boulder and some from the early days in Denver that spearheaded lots of these initiatives that would have proven that the election results in Biden's favour were valid. Instead we got this system and people died when idiots stormed the capital.
I think before you even try to make that claim you should consider coming and meeting some of us Bitcoiners in person that have already actually changed legislation and Industry before you say such blatantly wrong things like that behind a keyboard.
Just look at the malaise and the suffering the unemployment debacle has cost our economy and added to the homelessness especially in Denver where it's horrific and has only made a mental health crisis that much worse; and all of this could have been solved with DLT and token system in less than a week if they spent even a fraction in proper work to get all those records in order. Not including the countless amount of money that was lost in fraud...
You want to talk? My fee is $250/hour with 3 hour minimum paid up front, discount available if paid in Bitcoin.
0: https://coingeek.com/denver-to-apply-blockchain-technology-i...
Take him up on this offer, I don't price match. ;)
https://twitter.com/danheld/status/1351235080103096331
Disclosure: very large eth miner, using hydro electricity that would have otherwise gone to waste. Generated power is very expensive to transmit. I prefer gpus to asics because at least ethash is constrained to a more widely available piece of re-useable hardware and doesn't require the latest release in order to have the best roi.
Except when the creators want to rerverse all txs and exit scam people that is, hence Ethereum/Classic/DAO BS saga...
Proof of stake is like saying 'a square tire works, sometimes...'
As an environmentalist and a Bitcoiner: I agree Bitcoins energy use is significant, but it's carbon footprint is the detail that is being ignored as most of its energy sources are renewable and Jack Dorsey, the guy whose company just bought another 150 million, has also put a bounty on making it even more clean.
Whereas nothing in the alt space comes close doing what Bitcoin did back in 2013 when China started to move its miners to mainly hydro and to Iceland that use geo-thermal, despite these alts absurd overly valued market cap and valuations that make no sense to anyone given it's lack of utility.
We may be on 'Team crypto,' but PoS is so absurd for security that it should be made clear to the non-initiated the many pitflls of centralized system, eg the Foundation and founders like Vitalik, that we all fought so hard to solve with this tech only to see so many projects revert to the same legacy model.
Hashpower is used to stamp a proof-of-work onto the merkle root of each block in the blockchain. That merkle root is the same size no matter how many transactions are in the block. It takes just as much hashpower to stamp an enormous block as a tiny block.
The only thing that leads to an increasing amount of energy used in mining over time is the increasing reward that miners get from mining blocks. This reward is almost entirely from the block reward created by new blocks, which is currently 6.25 Bitcoins per block, or $306,000 at today's price. Since blocks come out every 10 minutes, that equates to $1,837,000/hr spent on electricity at every hour of the day.
As the value of Bitcoin goes up, this block reward goes up, and the amount of money people spend on electricity goes up. The number of transactions processed contributes very little to the incentive, especially when using a Bitcoin fork like BCH without an arbitrary constraint on the number of transactions per second. If you increase the number of transactions the chain can handle, then you decrease the fee for each transaction, and this lowers the block reward to miners, which lowers the amount of energy that is spent on mining.
Source: myself. I'm a Bitcoin miner: https://toom.im
I don’t see how that part follows from the rest. It makes sense that electricity consumed per time overall converges on the block reward plus tx fees per time. Since the reward is so much larger, energy consumption per time scales with price. Checks out.
But doesn’t the same apply to BCH? If the tx fees are even lower isn’t the block reward even more dominant, and so energy consumption should track price even more closely for that chain?
Also, showing my lack of knowledge about the specifics of the protocol - is the amount of work done to compute each hash really constant in the number of transactions in the block? Or just negligibly different at current tx volumes?
https://news.ycombinator.com/newsguidelines.html
Edit: in order for it to get "so slow its stopped" more than half of the miners would need to go offline and not rejoin for hours.
Bitcoin costs 50-100x that: $10-15-20 for "small number hours" settlement.
A Bitcoin transaction with a fee of $0.20, might settle after several days, but would more likely expire from the mempool before confirmation. And the really fun part is the unpredictability!
ACH isn't perfect. But Bitcoin is completely inappropriate for the common ACH use case.
Except when you realize the mempool has a complete record of every pending tx, unlike the central bank whose system is completely down and cannot and will not have a record of any of these transactions and it's services cannot be reached.
A part of me wants to be elated, but another part realizes that the end of US empire may allow the CCP to continue unabated, and that has incredibly horrible consequences given all the sabre rattling and their focus on Taiwan after illegally annexing Hong Kong and enslaving Xianjing.
The West will continue, and the lack of the US hegemony may allow it to prosper in other ways, but this will be an incredibly rough patch as it loses its status on sole Super Power, I don't think the CCP's China qualifies as a super power as it cannot unilaterally impose the world to operate on its own standard in anything but trade reliance, something it can and should lose. As creditor it cannot really do much except in a close sphere of emerging African countries, of which Bitcoin is actually flourishing, or the Russia/Iran block, and Iran is a hotbed of Bitcoin influence with state sponsored miners.
I hope the US takes the lead once more without the need for overt militaristic, police-state tactics as the petro-dollar loses its gravitas, I just don't want to be here when it happens.
Also, how does borrowing and interest work with something like Bitcoin or other distributed ledgers?
You sign some legally binding agreement, they send you the bitcoin, you pay it back in the agreed intervals + interest over time. If you don't, the legal system gets involved.
I'm wondering if there is a smarter way to issue loans through something like smart contracts as another comment mentioned. Where we perhaps remove the need for large single institutions to hold large amounts of capital for the purpose of loans. Otherwise we would then be entering in a very similar structure of what we have today and the inherent drawbacks.
We could imagine mediating that transaction through blockchain something something, but degree of risk pooling - centralization - is the essential feature of the transaction
So if someone wanted a loan for say 300k, other small investors may choose to lend/service a portion or as much of that loan as they wish with interest?
Obviously given m lenders and n borrowers, a system would need to manage O(m*n) streams of payments vs O(m+n) for a centralized party. In a traditional finance/legal framework, the former is an overwhelming amount of overhead for all but the largest loans, which are syndicated across lenders. For realistic sizes of m and n though, it’s probably not unreasonable for a single smart contact (per borrower?) to manage them. That starts to look ‘centralized’ though, and a contract per borrower/lender probably starts to get expensive? I don’t have a good enough sense for the practicalities to know for sure.
It would weird to borrow a 300k $10 at time though, like you’re a BigCo borrowing $10m from each of 20 banks...
Also what the hell is up with cheques and using your signature for card payments? I can only remember these from my early childhood. It’s so... backward. Why hasn’t it been improved? What’s been blocking progress for all these years?
Killer flaw of overly binary thinking.
You can get free settlement on a check under certain thresholds in about a day if you deposit it via an ATM at your bank. You endorse it, stick in the machine, it images the check, does some OCR, and turns it into an electronic transfer. Banks often let you take a picture of it with your phone via an app. It's pretty common now.
So that's a lot of infrastructure to support something that seems pretty backwards, but anecdotally works well enough. Ink signatures are just really "sticky" in American commerce, I guess it gives regulators warm fuzzies.
As far CC, it's gone largely chip-pin, but signature is a backup if comms goes down.
Keep in mind that in the states there's a prevalence of credit vs. debit, and it's pretty lenient to dispute charges as a credit card user, merchants get the short end of the stick there. Cloned CC being used to make phony charges was never something that you were liable for. A bit of a pain to deal with, but not a financial risk. So there's little to drive adoption except merchants and the CCs who want to reduce fraud to increase overall profits.
edit: Almost makes you wonder if it was a targeted attack.
coincidence?
Costs at most about $35 for any size wire, shows up in a corresponding bank within a day. If the corresponding bank is not the ultimate destination, takes whatever the amount of time it takes for the end transaction to complete. In event of a bank mess up on a transfer, the wire gets rejected/credited back. For banks that do "online" FedWire rather than batched, wires show up and are credited within seconds.
What, exactly, is the problem?
P.S. Non-immediate transfer is a feature and not a bug.
edit:
"P.S. Non-immediate transfer is a feature and not a bug. "
That may have been true/acceptable before - back when time span between order and payment was greater. If it is a feature, it is a feature for the bank, not the user.
AML, OFAC will absolutely take time and no interbank transfer would bypass it in any US chartered bank as they are triggered during a match in the FedWire or any other system that uses the Fed.
KYC and fraud investigations are triggered by the originating bank, most likely because the account has been flagged. Until the account is cleared any transfers out of the account would trigger them and delay them.
KYC-type and fraud investigations could also be triggered by the receiving bank if the account is either flagged or the activity is matching certain parameters - it is less likely but possible. Should that happen, no matter what is the method that was used to credit the account is likely to trigger it.
> For those 20% the banking system as it is right now, is a problem.
That makes it 1 out of 5 wires. It is extremely unlikely to be the case.
> That may have been true/acceptable before, where time span between order and payment was greater. If it is a feature, it is a feature for the bank, not the user.
It absolutely is a feature to the user - it allows for an easy rollback of journaling mistakes.
>> That makes it 1 out of 5 wires. It is extremely unlikely to be the case.
I don't think I could honestly qualify 1 out of 5 with adverb extremely. Even unlikely feels like a stretch. Let me give you an example, if you submitted your taxes online and before you submitted it, it gave you a chance percentage of an audit, would you roll the dice at 20%?
>> It absolutely is a feature to the user - it allows for an easy rollback of journaling mistakes.
Having dealt with those mistakes, I still maintain that it is there cover the bank.
There's no such thing as 20% of international wires that get delayed. American brokers do hundreds of thousands of international wire transfers every day. If 20% of those were delayed, it would collapse the global financial system.
"P.S. Non-immediate transfer is a feature and not a bug. "
Since we are playing with words, non-immediate transfer is a delay and it is at odds at the other statement you have made:
"If 20% of those were delayed, it would collapse the global financial system. "
It wouldn't, because it didn't. But clearly that part doesn't matter, because entities and individuals affected tend not to be well-heeled and so unlikely to be able to force the bank to take some sort of action.
All that said, I am done discussing this.
The delay in the international wires that are a feature ( 1-3 business days ) have nothing in common with the 20% arbitrary delay of unknown duration that you have promoted. That's the 20% delay that would collapse the world financial system.
That is what I want.
And if you really tried to use credit/debit card for those purposes, you quickly understand their limitations ( amounts come to mind ).
This is very much so like the entire cargo/freight "Hyper-Loop" thing, or Rocketship cargo/freight, or even the Supersonic Aircraft thing... a solution in search of a problem.
There are very few scenarios were someone legitimately (and more importantly, frequently) requires sending a package to the other side of the world within minutes. Would it be nice? Perhaps... but just as Concord found out, after the novelty wears off, few actually want to drop $10K on a one way ticket.
With huge amounts of money being transferred, the delays are in fact a feature. It gives you time to cancel if there was a mistake... and it gives banks opportunity to sniff out fraud/laundering, that the money is in-fact real and not pending other transactions, etc.
I've just never heard of a scenario where someone needed $50k instantly sent anywhere for anything. When dealing with that amount of money, in a non-reversible/permanent system... being careful, deliberate and slow is pretty much what you want.
Even Bitcoin transfers are not instant...
maybe not $50k, but "deposit paycheck on same day rent is due" is a fairly common problem that people have. the person has the money to pay rent, but it might not clear before their rent check bounces. there still exist landlords that only accept payment via check.
I agree in general. wires are fast enough for most truly large transfers of money, if only because the recipient is usually willing to be more flexible with such a large amount on the line.
If you're bouncing rent checks because it took too long to clear, you have other issues and immediate withdrawal isn't going to save you anyway.
Besides, if you're cutting checks of the same amount every month, you can setup BillPay (free at most/all? banks) and let your bank handle writing/mailing the check on time.
I'm talking about people who barely make enough money to cover their monthly expenses, so yeah that financial situation is hardly ideal. someone in this situation definitely does not want to set up autopay against their checking account.
it's a sort of death by a thousand cuts for people in this situation. you generally have to pay rent in advance (ie, you pay that month's rent on the first of the month). you get "paid" at the end of a two week period, but then it takes about a week for your employer to process payroll. if your employer doesn't do direct deposit, you now have a check in hand that takes about two days to clear. that two days isn't the bulk of the problem, but it can definitely be the straw that breaks the camel's back.
Two things:
1. For paper checks, this has been addressed via Check21 which took effect at the end of 2004. It enforces funds availability for even for non-local checks and/or bank drafts.
2. Writing a check against an account that does not have available funds has all the characteristics of check kiting. Check kiting is illegal.
For non-checks ACH credits settle before ACH debits or any other debit transactions.
Or, if I write a check, and they deposit it on their bank's phone app, nearly always the funds are available immediately.
$15,000 Euros is a lot of money... I honestly wonder what problem was solved by mandating that amount of money must be transferred, cleared, and available for withdrawal within 2 minutes. It seems to me nobody has a legitimate reason for that, unless you're a Nigerian Prince.
What problem did it solve and why is it considered a good thing?
And I've certainly sent somewhat smaller amounts for stuff like "Hey trip is on, we booked that holiday villa, €1000 for single rooms, €800 each if you're sharing, let me know if you can't pay this week".
I'm sure this rule would have been fine if it was €10 000 rather than €15 000 but how often do you want politicians to re-authorise? If it was €1000 by now people would be annoyed at the size limit already.
I don't have one on my keyboard unfortunately, otherwise I'd happily use it where appropriate!
> And I've certainly sent somewhat smaller amounts for stuff like "Hey trip is on, we booked that holiday villa, €1000 for single rooms, €800 each if you're sharing, let me know if you can't pay this week".
Your scenario doesn't seem to have been impacted by 2 minute mandatory transfer times in either direction.
> I'm sure this rule would have been fine if it was €10 000 rather than €15 000 but how often do you want politicians to re-authorise? If it was €1000 by now people would be annoyed at the size limit already.
Sure it's an arbitrary amount and they had to pick some amount I suppose. Even $10K is a lot for an ordinary person - potentially life changing if lost in some unfortunate instant transfer with the wrong number entered. That, of course, is a human problem (typing wrong number or whatever), but the delays we're talking about provide a safety cushion to cancel transactions in those scenarios.
If I try to give money to Victoria Smith 12-34-56 0123456789 then the backend will notice that's not Victoria Smith's account, and tell me I need to figure out what I did wrong. Maybe the problem is Victoria married, and is now Victoria Jones, you can clear that up. Maybe I got the number wrong. Maybe she's Victoria Smyth or Smithe and then it'll suggest this was just a typo using some heuristic. Or maybe it's the account of a scammer named Michael Black and the scam fails because the name doesn't match.
This was a bit awkward for my ISP because their name has an ampersand in it, and so of course this means some banks end up believing their name is "Andrews & Arnold" and similar stupidity. But it's been bedded down now a bit.
This approach leverages a reference for the payee that existed but was previously not checked, plus KYC checks already in place, it's hard these days to open accounts for names that aren't yours or with no apparent credit history for an organisation.
(b) cheques have been deprecated and stopped being accepted in the EU in 2004.
It solves the same issue as paypal, cash, venmo, etc, except the receiver can immediately use the money for any and all purposes, without fees, without yet another third party app.
This in turn allows new third party apps to be built on top of the new infrastructure.
I get a few transfers in the EU per month and sometimes I am lucky if it is same day (if done in the morning) but in most cases I get it the next day.
Heck, in same country, I have two bank accounts and transfer between them have never been faster than 4-6 hours. (Same bank is seconds though)
If your bank doesn't support it yet, the old 24h limit applies.
The more I do that - the more I want to go off into a corner and plant shit in the ground and stay the hell away from people. They are super dangerous. And honestly, I can shape the world exactly the way I want by doing it that way.
In all other efforts where people are involved, trying that for 42 years and it hasn't worked well yet.
There have actually been a few times where non of my bank cards (chase, bofa, credit union) work for cash withdrawal and I've used a Bitcoin ATM to get cash until I could get something figured out.
That's simply not the case as someone who authorizes or validates wire transfers for the companies would be able to confirm.
> There have actually been a few times where non of my bank cards (chase, bofa, credit union) work for cash withdrawal and I've used a Bitcoin ATM to get cash until I could get something figured out.
There have been several orders of magnitude more cases where standard bank cards worked in the ATMs and bitcoin ATMs did not.
I’ve never had a Bitcoin ATM fail, but I’ve had normal ATMs fail all the time even in first world countries like Japan, HK, Singapore.
Well there's your problem. Where is that $35 heading? For a $35 transaction fee, I'd expect my money to arrive instantly and to work reliably. Sounds like that's pretty far from the truth.
I'm sure there are a hundred reasons why it's not that simple and it needs to cost a lot of money, but fundamentally, you're decrementing a number in one bank and incrementing a number in another. I can see why people would want that to be cheap, fast, and reliable given that it's a pretty simple thing to accomplish on the internet.
The bank charges the service fee. It ranges from $0.00 to about $35.00
> I can see why people would want that to be cheap, fast, and reliable given that it's a pretty simple thing to accomplish on the internet.
International wire transfer is, at most, a settlement service for payments, not a payment service.
[0] https://www.bbc.com/news/magazine-34912959
Tone deaf in what sense? What tone should she strike? BTC is comically inefficient.
Crypto will have to grow all these other encumberances before it can become something ordinary people can use instead of a normal bank.
EDIT: It appears I forgot to list a few dozen exchange hacks.
EDIT: For clarity, I was referring to an actual online wallet, a wallet on a website, but it’s not too different to ask the same question about a software wallet on a computer-connected device that does automatic OS or wallet software updates.
Secondly, you can use computer hardware from before even the invention of Bitcoin, and then code the software on that hardware, developing the libraries yourself.
Third, you can use computers simple enough that it’s not feasible to hide any management engine trickery in it.
Fourth, yes, you CAN actually build your own computer, which I’m trying to do. :)
But to further your point, I still haven’t proven to myself the argument that the elliptic curve used by Bitcoin hasn’t been intentionally compromised like the NIST curves were. I take the word of the Internet for granted there... But I suppose I could prove that myself.
You can track the bitcoin reserves on exchanges here: https://cryptoquant.com/overview/full/247?window=day
Well, with different issues. FDIC insurance is probably better than whatever Coinbase has. You are also open to technical f-ups on Coinbase's end, which can move the price down if they are bad enough.
On the other hand, Coinbase cannot print BTC. This characteristic is what draws a lot of people to Bitcoin, beyond just "nobody can take my keys".
Agree it's a false equivalency, disagree that holding BTC in Coinbase defeats the purpose.
The value of cryptocurrency is inversely proportional to how functional the regular digital banking system is.
The actual user experience of SEPA is 2-5 business days just like America's oh so antiquated ACH system.
There are some very specific edge cases where SEPA instant exist, and that edge case may work for a large number of people that live in that walled garden.
That garden seems to be same country to same country transfers, where both banks have SEPA instant.
But to make it seem like the Eurozone or SEPA participant network has this solved has been very disengenious.
I frequently sent money to foreign countries and never experienced taking it longer than one day.
Oh, and it's free too.
So they are saying you might accedently paste in another address that belongs to someone else but you don't know who?
I'm pretty sure the people worried about Bitcoin have never used Bitcoin
This happens. Both are (most of the time) reversible in standard banking.
Fortunately the sum was trivial, but nevertheless ...
And the clearing feerate, which correlates to mempool queue depth, incoming transaction velocity, and cohort feerates, would increase dramatically.
But if there was a run to convert BTC to USD, the exchanges would not be able to cover the USD required. They'd limit or suspend withdrawals immediately. At some point someone would have to start buying with fresh USD for the exchanges to be able to pay out the sellers. With big enough news, there could be tens of thousands of dollars gap between bid and ask, which would take a long time to ease.
https://www.npr.org/templates/story/story.php?storyId=102384...
> But on the other hand, check these FDIC folks out. They know what they're doing. And every week they get more experience. In the 10 weeks since the FDIC took over the Bank of Clark County, 18 more banks have failed. That brings us to a grand total of 20 since the start of this year — a number that will likely grow tomorrow.
edit: The reason wire fraud is so popular is basically, because once the money leaves the account, the recipient has to agree to return it. You can imagine fraudster likely will not.
For the average person, I wonder if this means that if your mortgage servicer or your say student loan servicer does the same thing and inadvertantly pays off your loans that they then can't come back at you.
FDIC does not protect you from sending money to the wrong person. It only protects you from a bank going insolvent because it lent out more money than it has. That can't happen in Bitcoin, because your wallet doesn't lend your money out to other people.
Bitcoin wallets don't lend your money out to other people because they aren't corporations trying to make a profit. They are just wallets, doing a service for you.
We've come to rely on using banks when we want to send money to other people because USD alone doesn't know how to send itself to other people online. So banks have stepped in to fill that role. Now we can't even pay for things without a for-profit bank existing in the middle of the transaction. And that bank tries to make money by lending out your money to other people, and that gives it a risk of going insolvent, and so FDIC was created so that the government takes the risk of banks going insolvent.
If you send money to the wrong person, a bank may or may not be able to get your money back. It depends on the bank, and how well they know the other person, and what method they used to send the money, and how strong the threat of lawsuits is between the two parties. None of this has anything to do with FDIC, which becomes totally irrelevant when you use Bitcoin.
I'm not sure how to even understand this comparison.
FDIC protection ensures that if your bank fails, your money isn't lost; you can move it to another bank. This vulnerability doesn't exist with Bitcoin, so there's no need to protect against it (though obviously it has other risks that are mitigated by the presence of a bank in the first place, like loss of access due to poor secret handling).
If you use Bitcoin, then you remove the bank, and you don't need FDIC.
FDIC is there to protect bank customers from a bank going insolvent. Banks go insolvent if they lend too much money out, and then all customers demand their money back at once.
Your Bitcoin wallet doesn't lend your money out. It can't go insolvent. You don't need FDIC for it.
Here's a clear example of why lacking this is Bad For Bitcoin: https://www.google.com/search?q=hacked+site%3Ahttp%3A%2F%2Fr...
Bitcoin is more like having a pile of cash. The FDIC doesn't protect you against a pile of cash in your house getting stolen. Keeping a large amount of cash has advantages and disadvantages and risks. If you aren't willing to understand and mitigate those risks, then don't do it.
Banks don't go insolvent because they lend "too much" money out. They go insolvent because the collateral on those loans is less valuable than they estimated. E.g. the assets are lower than the liabilities. That is the only possible way that any business can go insolvent.
So when you take a loan on a house, the house is the asset the money lent is the liability. Housing prices drop enough, people walk away from the loan, the bank goes insolvent. That is true if it has a big balance sheet or a small balance sheet as these numbers just scale out.
> and then all customers demand their money back at once.
That is applicable to the era portrayed in the Mary Poppins movie, but not in a modern banking system. Even in the early twentieth century "bank runs" was something people would talk about when what was really going on was asset deterioration and breakdowns in the capital market.
But Hollywood preferred the more intuitive story and also the story in which the survival of the bank was in the hands of common people's choices rather than in the hands of the capital markets, where it truly lives. Thus you get It's a wonderful life where a stirring speech to not withdraw money can actually effect the P&L margin of a bank rather than the less exciting story of whether the bank's cost of funding exceeds its cost of borrowing.
Today banks borrow at a low rate and lend at a higher rate.
This includes borrowing whatever cash they need to meet outflows. In fact some banks don't even accept deposits at all, they just borrow from capital markets and don't even deal with depositors. Most big banks are depository institutions and tap both depositors and short term funding markets.
All that matters is that the interest received from inflows is less than the interest paid on borrowing to satisfy outflows. It is all about making money on that spread. When banks can no longer make money on the spread, they go insolvent even if no one makes a withdrawal. If banks are making money on the spread, then withdrawals are not a concern to the bank.
Not quite. Yes, bank runs nowadays are very rare, but they can still happen, as exemplified by Northern Rock in 2007[1]
"On 14 September 2007, the bank sought and received a liquidity support facility from the Bank of England, to replace funds it was unable to raise from the money market. Reporting of this complex scenario led to panic among individual depositors, who feared that their savings might not be available should Northern Rock go into receivership. The result was a bank run – the UK's first in 150 years – where depositors lined up outside the bank to withdraw all of their savings as quickly as possible, particularly since many others were doing the same."
[1] https://en.wikipedia.org/wiki/Northern_Rock#2007_crisis_and_...
Also, Bitcoin could drop a transaction if a fork occurs and you were tracking the one that fizzled out; that is why people wait for roughly 5 confirmation blocks before proceeding and that takes roughly 1 hour.
At currently network congestion, a high priority tx (next block) is 102 sat/vB ($6.95). A low priority tx is: 53 sat/vB ($3.61)
Fees depends on network congestion, check mempool.space for current estimated fees and survey of recent block fees.
https://bitinfocharts.com/comparison/bitcoin%20cash-transact...
GP's question was ambiguous about which fork he was referring to.
I'm not personally aware of the exact details of Fedwire SLAs, but I understand it to be near instantaneous, and that page doesn't suggest otherwise.
Source: Am Korean who has lived in the US and UK
But more fundamentally, currency and money IS a technology. It's use is to distribute power and express trust. But fundamentally it is a technology used for that purpose.
Cryptocurrency is ultimately about putting power in the hands of the people and trust in mathematics rather than central authorities.
Eventually the central banks and banking institutions as they exist now will be phased out and replaced with different paradigms that have some similar functions but more sophisticated technology.