>This is the first time we have heard about financial persecution for defending internet freedom in the Tor community.
But they don't know that. Paypal refuses to give details. He describes a second recipent, the hosting company, and there could be more. Paypal's fraud and crime detection is pitiful*, and their silence can cover both incompetence and malice.
Whoever made this call must have been pretty inebriated. All of the bad actors here are willing to pay for their Tor nodes with crypto, which really only sabotages the legitimate users on the platform.
I don't understand how it's legal for PayPal to hold his money for 180 days because they don't like the nature of his transactions. Kick him off their platform, sure...that's their prerogative. But why do they get to hold the money hostage?
Interesting. I wonder if a small claims court (assuming the balance wasn't too large) would help.
Edit: found the text in the TOS:
"Holds based on PayPal's risk decisions
We may place a hold on payments sent to your PayPal account if, in our sole discretion, we believe that there may be a high level of risk associated with you, your PayPal account, or your transactions or that placing such a hold is necessary to comply with state or federal regulatory requirements...
Risk-based holds generally remain in place for up to 21 days from the date the payment was received into your PayPal account. We may release the hold earlier under certain circumstances ..., but any earlier release is at our sole discretion. The hold may last longer than 21 days if the payment is challenged as a payment that should be invalidated and reversed based on a disputed transaction as discussed in the following paragraph below. In this case, we'll hold the payment in your PayPal account until the matter is resolved (but no longer than 180 days)."
In general it might be there to ensure no fraud is happening - when my account was flagged for being under 18 (at the time), they held my money for the 180 days before letting me take it out. I imagine they do (or used to) experience fraud from people signing up for accounts using the identities of children.
Uh - because he may be ripping people off or people may file claims for a refund, and if they give it to the scammer it's hard to give get it back to make folks who got ripped off whole?
This is 101 stuff. Credit card companies do this routinely as well. I'm hearing fyre festivals will be harder to get immediate payout on.
Travel does this when businesses are near bust - credit card companies will hold funds.
It's a 20 year old account, and this activity doesn't seem to be new, or associated with fraud, etc. What aspect of what he's doing seems similar to Fyre? I don't understand the flippant tone.
The tech companies are not analyzing things at this level. They close a number of accounts each month. A certain number of those were engaged in fraud and will generate chargeback activity. Others were legit but accepting payments in advance. Once the business is out of business those too will generate chargeback activity. Some are legit but had bad service, lost key employees resulting in complaints. Once the account is shut those also often generate chargebacks.
So they sit on the money for 180 days, it doesn't cost them anything and saves them a big pain in trying to claw money back from any of these folks who may not look at them that fondly after being cutoff for what may have a been a silly reason.
The problem here is that is sounds like he was SENDING money not RECIEVING money,
They can trace where the money came from, if I put money into the account so I could pay someone they find objectionable and then shut me down they should not be able to hold that money because it is not a fraud issue, i did not receive from a 3rd party, it is 100% my money
> because he may be ripping people off or people may file claims for a refund
This is a reasonable argument in general, but it falls apart here because there was a human in the loop who knows why the account was disabled, and knows that it wasn’t for suspicion of scammy behavior, nor for suspicion of insufficient funds.
"We don't like what you are doing, and are going to hold your money for six months. I hope you don't subsist on it, or have any business obligations to attend to. We'll call you."
This should be illegal for Paypal to do, period. Absolutely illegal.
And if it is on behalf of a government or banking/fraud regulations, then the person should be referred to relevant agencies.
Let's be clear and drop the pretense: They are confiscating his property.
Are you sure it is being confiscated? He will have a claim then.
What can happen is when your credit card / other payment providers cuts you off is that you go out of business. You might fail to provide services to users - so they do a chargeback / ask for a refund from payment provider.
So when a payment provider is shutting you down, they usually want to hold onto some money to be able to handle those refund requests. Very common in travel situations as well.
So PayPal is holding onto his money in case he incurs expenses as a result of going out of business due to PayPal cutting him off? And this seems normal and good to you?
This is the way many providers that offer recourse settlements handle things.
They have data showing when they cut off a business from processing credit cards etc they may receive claims from customers who have already paid whose money they are either holding or have forwarded.
If they are holding it they refund that customer, and business can ask for payment using another method.
If they are not holding funds, they run into an issue of asking merchant for money (which is difficult to collect).
So most providers of this type when making a decision to end a business relationship hold onto the funds for a while to let everything settle. This is not unique to paypal.
Some providers don't hold funds if payor has no recourse. You usually need to be settling with what are called "good funds" for that to be the case, then merchant is paid out usually within 1 day under all circumstances. A fair number of B2B wire type clearing operations work like this.
I'm just explaining what happens. They don't generally closely evaluate the reasons or likely outcomes of account closures, and there is enough fraud and profit motive / cost cutting in system that the rules tilt pretty heavily against merchant.
That said, if OP is not lying and they really do confiscate the funds there will be an issue for them. Especially individuals, they'll send the unclaimed funds to the state generally even if not claimed by the person.
Where did you think the money comes from when a consumer complains to their bank about a charge on their credit card and the bank credits the consumer?
It sure as heck ain't the consumer's bank that pays for that.
Nor is it Visa or Mastercard or whichever company owns the card network the card is part of.
No, it is the merchant bank that processed the charge. To be allowed to process charges through Visa, MC, etc, the merchant bank has to agree to cover all credits the issuing bank gives when consumers successfully dispute charges if the merchant cannot cover them.
Merchants that want to accept credit cards have to get an account with a merchant bank. It acts as an interface between the merchant and the credit card system, submitting charges and collecting the payments from the issuing banks, and depositing them in the merchant's regular business bank.
Merchant banks hold back some of those payments to maintain a buffer to cover their potential obligations in the case of disputed charges. How much they hold back and how long they hold it for varies depending on things like changes in your sales volume, how risky your line of business is, how often you've been getting chargebacks, and probably a ton of other factors their actuaries have identified.
PayPal doesn't look like a traditional merchant bank from the merchant point of view, but if people are able to use credit cards to buy your stuff there is a traditional merchant bank or something else with the same obligations as a traditional merchant bank somewhere in there, and that means that for a merchant using PayPal they are going to have someone holding back a reserve.
When you use a traditional merchant bank and are directly exposed to all that you know it is going to happen, and quickly realize that the whole damn credit card system is designed to make sure that if anything goes wrong anywhere in the chain it is the merchant that is going to eat it.
With these services that try to do it all in one and make it easy to accept payments, such as PayPal, it is easy to not realize that credit cards work that way and so you get surprised when PayPal won't let you take all your money out right away.
Exactly. One difference having used both services.
Your merchant bank will know you, there is a relationship manager who wants the rest of your business, they may have lent you money etc etc. In short, someone spends more than 5 seconds dealing with you. And they do charge more for sure.
PayPal - no one there cares at all about you. They offer something convenient, but that's it. You are SOL when things go wrong.
PayPal has been doing this for more than a decade now. I wouldn't be surprised if its part of their business model to hold funds indefinitely and to collect interest on them.
>IIRC it says they keep customer funds in interest free accounts
exercise for the one's imagination - you come to a banker and say "i'm thinking about keeping with you an N billions of dollars, interest free. Any ideas?" (in mid-199x i did some work around large Russian municipal funds to be kept in banks, and what i saw helped develop my imagination :)
Way back in 2011 they did this to me. My marketing agency had been running most of our customer payments through PayPal for several months, and we were growing fast. At some point they took the $50K we had in the account and froze it for 180 days with no recourse, claiming it was to protect against charge backs (despite us never having a single chargeback).
I explained to them that if they didn't release the funds they would most certainly have charge backs because we'd be out of business and thus unable to deliver on the work promised for the money.
Nothing we said did any good. That is until I looked up the laws in Washington State about money transmitters. Turns out based on the specific license they had in Washington State at the time, it was illegal for them to hold funds for longer than 7 days.
Me telling them this did nothing at all, but when I sent a letter to my state governor explaining my predicament and someone from that office sent a letter to the folks at PayPal, suddenly my funds were released and a note was placed on my account to never withhold funds on that account ever again. Been smooth sailing ever since :-D
The funds you deposit with PayPal are held on their balance sheet. They are no longer your property, and in return you receive some rights according to the contract you signed at account opening.
If you want to reduce liquidity risk, store your funds in an escrow account. The funds in an escrow account are legally your property, and the custodian is legally required to follow your orders (simplified).
That's odd, since every merchant account (credit card processing) agreement from any bank I've ever read has the same 180 day period written into it for holds and reserve accounts. It covers any chargebacks that may come in after the account is suspended.
I haven't trusted PayPal for years - but I still use them.
My business does ~$100-250k monthly revenue, and probably 1/3 of transactions are via PayPal. I'd never not have them - it helps conversions too much.
But, I made sure to call their support and enable the "auto-sweep" feature, so that I can withdraw everything above a balance that I set into my bank daily.
This way, I never need to worry about too many funds getting frozen should anything go wrong.
Holding the money hostage for half a year on a 20 year old account? Not surprising. Paypal and their other entities like Ebay are pretty shit when it comes to nuance and their impact on others.
Had a 15 year old Paypal business account (parent started it and I took it over ~7 years ago) and last year they shut it down because I, as the new owner, was not 18 when the account was created. Nothing from the support but "computer said you bad, nothing we can do".
In Ebays case I sold an item, got the regular email from Ebay (DMARK/SPF/IP verified) that they had received payment and was holding it until the item had been delivered. Then a week later I got another email from them saying they had blocked the buyer for abuse (i.e. a fraudulent transaction to them) and that I shouldn't ship the item they told me to ship a week ago. After 2 months of trying to get through to the support they just claimed that someone spoofed their DMARK, SPF, and servers IP. After explaining how impossible that would be their 'proof' that it was 'spoofed' was that there should be a copy of the message in the Ebay inbox where, after the reply, all messages about the auction ever existing were suddenly gone.
The cost to seller is mostly the same. eBay is now taking the cuts (the cut they have always taken plus the cut that used to be taken by PayPal) themselves instead.
This is what caused me to let me eBay seller account die - they demanded Social Security Number (SSN) to continue selling. Call me crazy but giving my SSN to a company where the C-suite thugs sent live cockroaches to bloggers for negative articles seems like a bad idea.
I did get my PayPal account back by doing this, after I sent out an eBay order so fast they decided I was a scammer because the tracking info already said it arrived when I added it to the invoice.
Ironically, the CFPB exerts the regulatory pressure that causes payment processors to close accounts. I'm not sure who you're reporting to who at the link above.
Essentially, banks find CFPB claims so annoying that they will usually fix the issue just to make you go away. Btw, I just did this a few months ago so the system shouldn't have fallen apart since then.
I know that's mean of them but is it possible the account still had your parent's identity attached to it? You certainly shouldn't be access an account as if you're someone else. For example, did you provided Paypal with all the identification documentation to prove you're your real self and not still your parent?
I registered my PayPal account myself at 17, no sharing. Had it permanently blocked and prohibited from ever opening a new one 10 years later. Completely out of the blue and registering as underage was the stated reason.
I sold a gun on Gunbroker, they have a PayPal button as an option for some inexplicable reason. I wasn’t thinking about terms of service and clicked it. Buyer clicks it on his end, but there was an issue with his dealer and I refunded him, sale fell through. PayPal bans me three months later without saying why.
I explain it was an accident to click the PayPal button and it didn’t go through.
Banned for life :D PayPal can join the rest of the former tech giants anytime.
I work in "online payments for guns" and it's amazing how many innocent people get banned by PayPal over guns. I talk to at least one per week. In almost every case, these people simply weren't aware that PayPal prohibits firearm transactions. Although PayPal doesn't provide much warning, it is actually following an industry-wide practice. All the payment platforms prohibit guns [1].
A while ago I used paypal for transactions and I left some in the account so there was 100 grand. Six months later I tried to take some of it out and they froze the account despite no other recent activity. They said they'd keep it six months. Eight months or so after that, I asked about it, and they said they needed to freeze it for another six months. So soon we'll be at basically 18 months after the funds were earned.
The whole thing is dumb though, so I honestly don't even attribute malice. It's a ~17 year old account and I've processed millions(?) of dollars through it. The killing they earned on the transaction fees dwarfs the interest they earn on the float over the period of time they are holding it. The only way this wouldn't be the case is if a lot of people just give up and never get their money out, which, frankly, sounds possible. So either they do this intentionally because people give up, or they think I'll never sell stuff online again (I sell stuff online, right now), or they're just kindof dumb and have an overactive suppression team.
$100k frozen for six months? It must be strange for that to be the kind of money you can leave lost behind the sofa and not do anything to pursue. I think I'd have been at legal action after a month.
I am the treasurer of a small European non-profit organisation. We got our PayPal account restricted (no money could be withdrawn) for no reason, only because we suddenly had more donations than usual.
It took three months to resolve the issue. I'm not saying that we had to _wait_ three months: we discussed almost every day with the support, for three months.
The process was a mix of infuriating exchanges, bugs on the PayPal site preventing to send documents (so serious that even the support was aware), and at the end we were wondering if this was on purpose or because of a total lack of intelligence/skills and process from PayPal.
Each day we would have a different support people on the chat, with the dialog summarized:
- Paypal Human Bot: How can we help you ?
- Me: Our account is restricted and we don't really understand why. Would you mind telling us how to solve the issue ?
( Skip long re-explaining everything from the beginning; PayPal has no history of previous exchanges apparently)
- Paypal Human Bot: You are not registered as a 501(c)(3) non-profit organization, can you send us the papers ?
- Me: Indeed, we are outside the US, we can't do that. However we can send you the official papers from Europe
- Paypal Human Bot: Okay, so you need to be registered as a commercial entity, please send us your commercial ID
- Me: We are not a commercial entity, we are a small non-profit organisations, and we don't have such ID
- Paypal Human Bot: Okay, so please send us the papers that prove you are a 501(c)(3) non-profit organization
- ...
We probably sent dozen of various official papers, etc. in the meantime. We had to guess what were the probable causes, as (once again) the PayPal site is riddled with bugs that may (or not) display warnings, ask for fields but that are read-only, etc.
If this was a bank, they would have been sanctioned by banking regulations.
And I am still unsure if this wasn't some kind of twisted social experiment made by some psychopath.
I remember having my PayPal account locked for no specified reason, and they said because too much time had passed since it had been locked they would only reopen it if I physically mailed them a check with my bank information. Of course I refused such a ridiculous request and vowed never to use PayPal again.
Yet I was still forced to use PayPal for another retailer because the retailer's credit card processing was broken, so I had to create a new account. It's frustrating when you have to go through a middleman or external company that treats you like garbage instead of being able to use an established payment system that works.
I wonder where all the people that complain about cryptocurrency’s energy consumption went.
It may be a problem, but it’s a hell of a lot better than situations like this. Cryptocurrency was created precisely for this reason - giving financial freedom back to the individual in a censorship-resistant manner, because it was obvious as day to the cypherpunks that created it, that governments and corporations would abuse our financial freedom where possible.
I've been burned by Paypal a number of times. But until recently I hadn't yet been held hostage. Now I have. I wish I'd listened to people on the internet. DO NOT USE PAYPAL.
The systems are ruining themselves. Time and time again, “conventional financial institutes” have abused their positions of power wherever possible.
It’s no surprise that people are looking towards crypto, which was created explicitly for the purpose of taking power back from these institutes. People finally have another option.
It isn't really clear what happened here, and that is a significant part of the problem. I think we are well past the time that we pass a law mandating the companies that provide public services do what the EFF has suggested:
> Provide meaningful notice to users. If PayPal is choosing to shut down someone’s account, they should provide detailed guidance about what aspect of PayPal’s terms were violated or why the account was shut down, unless forbidden from doing so by a legal prohibition or in cases of suspected account takeover. This is a powerful mechanism for holding companies back from over-reliance on automated account suspensions.
> Adopt a meaningful appeal process. If a user’s PayPal account is shut down, they should have an opportunity to appeal to a person that was not involved in the initial decision to shut down the account.
PayPal doesn't care about Tor. An intelligence service probably wanted to force this shutting down of Tor enter/exit nodes, so the percent of Tor enter/exit nodes were mostly the intelligence service. (For the best Doxing)
>An intelligence service probably wanted to force this shutting down of Tor enter/exit nodes, so the percent of Tor enter/exit nodes were mostly the intelligence service. (For the best Doxing)
It's a nice conspiracy, although I'm not going to believe it unless there's more evidence corroborating it (ie. mass reports of people getting their paypal banned or increased churn in tor relay nodes).
But that's an increase in known-malicious relays and exits and doesn't speak to churn in existing, non-malicious nodes. The attribution efforts made in that article also suggest a different motive, though if I was a three-letterer attacking Tor I'd probably also try to look as if I was a Russian criminal bad at hiding my tracks.
My thinking was, if a friend confide in me about their use of PayPal for online payments, then it's a moral obligation to inform them of the risks their taking and treatments available such as alternative providers.
I know I'm preaching to the choir as everyone here is aware of how terrible PayPal is, but I too have been burned by them. They shut down access to my personal account with no warning and no option for recourse.
Thankfully I didn't have any funds stored there, but it was inconvenient and ruined any trust I previously had in them.
We turned off PayPal for certain countries, because the "buyer protection" found too often in an obviously fraudster favour. (reinjection of label into UPS network, forged label for return address etc. PayPal doesn't care as long as there is a tracking number... who cares where it goes to right?).
Anyone who has ever had anything to do with PayPal as a Seller will tell you the same thing, as a buyer, always order with PayPal, and you'll always win.
Everyone is locked-in to PayPal at this point. Buyers have their credit cards on it and get buyer protection. Sellers have to support it since buyer's use PayPal as the default and don't trust companies with their credit card info.
I dont actually know anyone who uses ebay or paypal today. I looked at ebay for a used book ($$$$) a while back and they weren't competitive with used book dealers, especially once shipping was factored in.
I've had poor experiences with PayPal as a buyer as well. Tried to cancel an auto-renewed subscription, PayPal sided with the seller until I got my bank to reverse the transaction.
Monero + Distributed Exchanges will go a long way to fix these kinds of online payment problems.
Unfortunately, at least near term you'll still need fiat-tether "on ramps" to convert your local currency back and forth to tether before you move them to a distributed (or at least a non-KYC) exchange to Monero, then sending to your local wallet, then use online.
Yup. It’s worth checking out LocalMonero [1] and the Haveno DEX [2]. The former already works and lets you buy Monero without relying on a KYC exchange.
Yeah, Haveno is a WIP fork of Bisq for Monero that doesn't require BTC as a middleman and will have a much better UI/UX for newbies. Bisq doesn't even work on my M1 Mac, and the interface is kind of a nightmare.
Businesses are legally obligated to deliver your goods, so they will do that anyways, just like if you pay in cash today and go back to the store asking for a refund.
> At least cryptocurrency prevents censorship when sending funds, unlike centralized solutions.
right now, because it's not widely used.
If it ever gets mainstream, people will give governments whatever power they need to censor and try to stop things like child pornography. And once they can censor that, they can censor other stuff as well.
And I am sure you can come up with technical reasons why monero can't be censored. But i remember when China started their big firewall of china, people where laughing how trivially easy it was to bypass. And that their strategy will never work. Now 15-20 years later, nobody is laughing anymore. In fact a lot of countries seem to be moving into same direction.
The Great Firewall is bypassed by getoutline.com (self-hosted, open source), getlantern.io (once open source), and psiphon.ca (open source). There are also several other efforts that bundle multiple strategies like V2Ray.
Why Monero specifically though, with all the options in crypto available?
If you want privacy there are also Zcash shielded transactions. Or if all you want to do is eliminate central parties then why not just Bitcoin?
My understanding with Monero is if you don't run your own node there's not that much privacy guarantee anyway (otherwise you have to trust the third party node you point to). Someone please correct me if I'm mistaken about that.
The issue with Zcash shielded transactions is that something like 14% of transactions are shielded, but only 1% are truly private. Optionally shielded transactions make chain analysis much easier and immediately make said transaction suspect. So you cannot comfortably use Zcash for private transactions. See the report by Chainalysis [1]:
> 14% of the ZCash transactions use a so-called "shielded pool", but in only 6% of all cases both the sender, recipient and the number of transactions are fully encrypted. The report states: “So even if the concealment on Zcash is stronger due to the zk-SNARK encryption, Chainalysis can still provide the transaction value and at least one address for over 99% of the ZEC activities.”
Clearly, optional privacy is not privacy at all. It needs to be on by default, which is the philosophy behind Monero.
Re. Monero nodes - if you’re using a remote node you can just use Tor, which I believe is soon to be baked in by default. Otherwise, Monero is still quite private. Your transaction history, transaction amounts etc are not revealed to nodes. Some metadata like restore height is, but that’s not a big deal.
Arrr or Pirate is Zcash, but with always on privacy BTW. I like it a lot, but it's relatively new.
Also, the ZKSnark method that provides the privacy requires that the devs threw away their initial PKs. If you trust they did, then it's a great option.
You can analyze the dust spend in transactions to deanonymize Monero users. You need to be processing a lot of transactions to do this, or have the ability to spy on the processing of a lot of transactions.
Even if someone could _see_ the transaction and identify the user behind the wallets, at least a crypto still prevents fund holding and transaction blocking.
Jailing people would generate backlash far quicker than transaction blocking and fund holding. As a tool of control it can't be used as liberally, so I'd still argue crypto is a net benefit here.
I'm not saying privacy isn't great, just that even without it, crypto is still useful. Privacy is absolutely an amazing force for freedom.
Not sure about that. People are generally fine with the imprisonment of people labelled as tax cheats, regardless of whether the label is accurate. The war on drugs has taken decades to reverse.
This is a marketing term without actual meaning. There's a system with some anonymity. Then there's the external world. There's no 'optional' anonymity. The error lies in incorrectly comparing monero to zcash as a whole, instead of shielded transactions themselves. Names themselves are irrelevant. Depositing xmr to an exchange is equivalent to withdrawing from the anonymity pool.
From the design perspective, the mixin model is vulnerable to an active adversary that has spent output data from exchanges and spams the chain to generate recent known outputs when the target makes transactions. Full zk-snark anonymity is fully resistant to this.
A problem of both xmr and zcash is that they have no other use than anonymity, making it easier to ban and impractical for larger amounts and forcing commerce to hedge price risk, generating deanonymizing metadata. For actual commerce anonymous dollar is the ideal, for as long as dollar remains the main unit of account in the world.
https://zk.money supports dai, although it's still in alpha with a limit of $1000 per external deposit.
But if it were just crypto, nobody would be able to hold your funds. I don't think transferring the power to an even more inscrutable bureaucracy makes this problem any better.
Most people already acknowledge that the little guy doesn't have the funds to hire the lawyers for a protracted court case.
Decentralised currencies just open up a whole new can of worms.
How do you reverse fraudulent transactions? What happens if your wallet is stolen? Who do you speak to when you need help setting up an account? On a macroeconomic level, it prevents the government from setting certain types of monetary policy that benefit the economy as a whole (although I may be biased there, as the Australian government bailed out the economy as a whole through economic stimulus in 2008 and prevented the spread of the GFC to here).
This is all assuming it's pegged to a stable asset like the USD. Bitcoin's average annual inflation over the past 5 years is around 3,000%. For comparison, Zimbabwe's inflation rate in the early 00's was around 500%.
How do you reverse paying someone with cash? You don't. You can ask for a refund and hope they give it to you. If you're transacting with a trusted business, you can expect them to adhere to the law and reverse the payment.
In this sense, crypto transactions are no different than how humans have transacted for thousands of years. Chargebacks and reversals are a convenience - they are not necessary.
> What happens if your wallet is stolen?
What happens when your wallet is stolen in real life? You lose the cash inside. So you keep most money secure in a cold wallet, airgapped and password-protected, and some money secure in a hot wallet, PIN-protected. Usually losing a hardware wallet isn't a big deal anyways, since they wipe themselves after a few PIN tries.
The UX around securing wallets will get better over time, but if you pick up a Ledger X today it's actually already quite easy to use.
> Who do you speak to when you need help setting up an account?
Just like using a wallet with cash in a secure manner took time to become cultural knowledge, using a hardware wallet with cryptocurrency will to. Obviously, there are places where it could become easier to use, but using a Ledger these days is already pretty damn easy. You just connect it to your phone via Bluetooth and you're ready to go.
> it prevents the government from setting certain types of monetary policy that benefit the economy as a whole
For some, lowering government control over your finances is a pro, not a con, but I can understand that this is up for debate.
> This is all assuming it's pegged to a stable asset like the USD.
I can agree with this, I think currently the price of cryptocurrency is volatile due to rampant speculation. Eventually it will settle into something stable, and if it doesn't, we can just use alogrithmic stablecoins like DAI that track the value of the dollar to within +/-1% and don't need to be backed by a central institution.
>How do you reverse paying someone with cash? You don't.
Exactly, that's why centralised systems with moneyback guarantees (PayPal, Stripe) exist for online payments where you can't see the goods in person - online fraud is still a concern in 2021.
>So you keep most money secure in a cold wallet, airgapped and password-protected, and some money secure in a hot wallet, PIN-protected.
I'll admit I'm not super familiar with crypto technology, but this cold wallet basically sounds similar to stashing your life savings under your mattress (or, at least, in a safe in your house). Nobody in their right mind would do this.
>Just like using a wallet with cash in a secure manner took time to become cultural knowledge, using a hardware wallet with cryptocurrency will to
Makes sense, honestly. Everyone understands credit cards/WeChat.
Regardless of the individual arguments, though, I think the overall point is whether or not the risk of being screwed over by the machinations of a giant corporation outweighs the risk of being screwed over in the "wild west" world of crypto. For the average person, I think (well-regulated) central institutions are the lesser of the two evils.
Sure, but this is why you transact with trusted people and businesses, just like you would when using cash.
To be honest, I don't know a single person that relies on PayPal's protection when making a purchase online from an individual or business. Every single person I know that uses PayPal does their due diligence on the seller before buying. None of them assume that PayPal disputes will actually work.
The same would be true with crypto. You'd do your due diligence before buying, just like you do today, if you're buying from a random.
> this cold wallet basically sounds similar to stashing your life savings under your mattress (or, at least, in a safe in your house).
You would use a social recovery wallet, in which, say, your trusted family members could secure your life savings as a group. Vitalik Buterin, the founder of Ethereum, has a great article [1] on this.
Even if you don't trust a multisig/social-recovery wallet, you can store your money on an insured exchange. It still comes out ahead of banks and PayPal in that your transactions themselves are private and cannot be censored.
> I think the overall point is whether or not the risk of being screwed over by the machinations of a giant corporation outweighs the risk of being screwed over in the "wild west" world of crypto.
Just like online payments and credit cards had their "wild west" period, crypto has its own. I don't see a big deal here. This is a field in its infancy with staggeringly rapid development. Over time the UX will get better. I'm not expecting your average Joe to move their savings to Monero tomorrow, but I wouldn't be surprised if they did (to whatever Monero-equivalent exists) 10, 20 years down the road, when social recovery wallets are easy to use and crypto prices have algorithmically stabilized itself (ala DAI) or have naturally fallen into an equilibrium.
The problem is that in reality there are (a) small businesses whose trust is difficult to verify and stability may not be guaranteed and (b) large companies who have a proportion of incidents of very bad customer service. For many services there may only be (b).
> do your due diligence before buying
How much do you do exactly? How long does it take, what does it cost (do you pull company financial reports?) and shouldn't the extra time it takes to do this be counted as a transaction fee?
> Just like online payments and credit cards had their "wild west" period
Not really? It's been the same customer-not-present process since the days of export-restricted SSL. In fact that's kind of the problem, it's the same insecure process designed for paper and card transactions. There was certainly never anything comparable to "exchange absconds with customer funds" that happens every few years in crypto.
The "large company payment database was compromised and now all their customers are being defrauded" problem does seem to have improved recently.
I feel like you make a better argument against using cash rather than for using crypto. I don’t use cash anymore because I do want transaction reversibility and fraud/theft/loss protection. You say it isn’t “necessary” but in the same vein nothing that crypto offers is “necessary.”
I am just not willing to give up my privacy and financial freedom for a tiny bit of purchase protection that I have literally never needed. I know I’m not the only one. Cash is still pretty commonly used, anyways.
I think this misses the nuance that makes BTC so great. BTC has a limited supply. It's designed to hold value. Zimbabwe's currency was used to print it's way out of debts.
With BTC you don't have to worry about someone siphoning value from your currency. It's not just coincidence that BTC increases in value YOY. Bitcoiners call this 'number go up' technology.
When all central banks are tripping over themselves to devalue their currencies, BTC's value rises.
> Australian government bailed out the economy as a whole through economic stimulus in 2008 and prevented the spread of the GFC to here
How was this bailout done? In the US, the bailout was done primarily by giving funds to over leveraged banks that had every right to collapse. CEOs took home record bonuses, and everyday citizen's lost their homes.
They tried to spin the story in the US as saving the economy too, but most people didn't fall for the obvious wealthy get wealthier, poor get poorer trick.
This actually birthed the Occupy Wall Street movement.
Not an expert, but from what I recall it was a mix of direct stimulus (I think every adult got $900 and were encouraged to spend it) and a huge amount of public sector construction. There was also strong Chinese demand for our resources.
Our economy had one quarter of negative growth but we recovered almost immediately.
The banks didn't get bailed out at all - they didn't need to be because the financial sector had strict regulations that prevented them from engaging in the systemic risk that ruined Europe and the US.
I know this is a popular belief but it’s actually the exact opposite…
The reason PayPal holds funds is that a consumer is allowed to reverse a bank and credit card transaction for a few months after the transaction happened. This ability exists to protect consumers from fraudsters, scammers and bad businesses (ones that don’t provide service etc.) which is much more common than people realize.
With crypto, the ability to reverse a transaction disappears and with that the ability to protect consumers. Now who do you think will thrive in a world where a consumer has no protection? Scammers, bad businesses and criminals..
> With crypto, the ability to reverse a transaction disappears and with that the ability to protect consumers. Now who do you think will thrive in a world where a consumer has no protection?
For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system.
Too many times "protecting consumers" turns into "censoring transactions we don't like" and "restricting your financial freedom to maintain our brand image." (Case in point - sex work payments, even in countries where it is legal, can not be processed by any of the major payment processors. Brand image and all.)
Not to mention the privacy concerns that come with a central authority knowing all of your transactions - no thanks, I think I and many others would prefer an electronic cash-equivalent over PayPal.
> For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system.
That is simply not the case. Even in old ancient civilizations and feudal systems you usually had a way to reverse a transaction by going to court (in the old times literal court of the king, nowadays judge).
This was and is possible because when you pay in cash you know who you pay to, and authorities (king and/or police) can lay hand on them. So even if you pay cash in brick and mortar shop you can get refunds (usually :) ).
One of the reasons why a lot of people are comfortable buying online is easy refunds. And if crypto can't provide that, I don't ever see it catching on in mainstream.
And if you want refunds and you are marketplace like eBay , the easiest way to offer refunds is to keep money in escrow which is what is happening here.(Except that their home brew escrow algos seem to not be that great, but crypto won't change that either. )
Bottom line is, crypto either won't go mainstream or will be co-opted by mainstream and will have all of the same problems/features as current currencies.
And it's not because governments. It's because people want and expect their government to be able to protect them.
And government don't censor things because they don't have nothing better to do. At least in democracy's they start censoring, when enough people cry to them to start censoring. Don't expect that to ever change with or without crypto.
Whenever a solution pops up that has a negative impact on the finances of the richest 5%, like cryptocurrency, politics/laws will come up with a new method/law to suppress it.
This IT company bans are always like out of a Kafka novel.
We ban you for your wrongdoing, you can't do anything about it and we won't tell you what you did wrong.
I sell only small-time. I don't want to do Creditcard, no Stripe either (I don't have a registered company) and iDEAL is only working in the Netherlands. So what is the internet alternative for international selling. And, please, no crypto-currencies :)
why not a traditional bank? You can open the account on your name or the company (depends on the legal form). The advantage is, that you can reach them by phone or in an office. Cross country cash transfer are usually no problems and you can manage your account on an e-banking website or sometimes on an app.
I’d even say go one step better and join a credit union. Less to worry about when you’re a member-owner of an organization that is focused on its members and community over corporate shareholders.
So I can pay with crypto on Amazon? Etsy? Discogs?
I don’t understand why there are so many posts here saying ‘just use crypto’, like - PayPal is a scam and needs a replacement but the problem is until sites start accepting crypto as simply as PayPal works then things will stay the same.
What you’re saying to do in your comment - on most major online retailers - is not yet possible, and it will probably take a long time even if it can find critical mass.
Crypto is another currency - it’s not another payment processor and while those are starting to exist we are nowhere close.
I believe the laments here are more so related to PayPal’s dominance - for most websites it’s that or your credit card.
194 comments
[ 3.8 ms ] story [ 280 ms ] threadBut they don't know that. Paypal refuses to give details. He describes a second recipent, the hosting company, and there could be more. Paypal's fraud and crime detection is pitiful*, and their silence can cover both incompetence and malice.
[*] https://slate.com/technology/2020/02/paypal-venmo-iran-syria...
Isn't that already covered by
> first time we have heard about
But I guess that's too true for HN.
Edit: found the text in the TOS:
"Holds based on PayPal's risk decisions
We may place a hold on payments sent to your PayPal account if, in our sole discretion, we believe that there may be a high level of risk associated with you, your PayPal account, or your transactions or that placing such a hold is necessary to comply with state or federal regulatory requirements...
Risk-based holds generally remain in place for up to 21 days from the date the payment was received into your PayPal account. We may release the hold earlier under certain circumstances ..., but any earlier release is at our sole discretion. The hold may last longer than 21 days if the payment is challenged as a payment that should be invalidated and reversed based on a disputed transaction as discussed in the following paragraph below. In this case, we'll hold the payment in your PayPal account until the matter is resolved (but no longer than 180 days)."
https://www.paypal.com/us/webapps/mpp/ua/useragreement-full
This is 101 stuff. Credit card companies do this routinely as well. I'm hearing fyre festivals will be harder to get immediate payout on.
Travel does this when businesses are near bust - credit card companies will hold funds.
So they sit on the money for 180 days, it doesn't cost them anything and saves them a big pain in trying to claw money back from any of these folks who may not look at them that fondly after being cutoff for what may have a been a silly reason.
They can trace where the money came from, if I put money into the account so I could pay someone they find objectionable and then shut me down they should not be able to hold that money because it is not a fraud issue, i did not receive from a 3rd party, it is 100% my money
yet they also hold these funds for the 180 days
This is a reasonable argument in general, but it falls apart here because there was a human in the loop who knows why the account was disabled, and knows that it wasn’t for suspicion of scammy behavior, nor for suspicion of insufficient funds.
This should be illegal for Paypal to do, period. Absolutely illegal.
And if it is on behalf of a government or banking/fraud regulations, then the person should be referred to relevant agencies.
Let's be clear and drop the pretense: They are confiscating his property.
What can happen is when your credit card / other payment providers cuts you off is that you go out of business. You might fail to provide services to users - so they do a chargeback / ask for a refund from payment provider.
So when a payment provider is shutting you down, they usually want to hold onto some money to be able to handle those refund requests. Very common in travel situations as well.
They have data showing when they cut off a business from processing credit cards etc they may receive claims from customers who have already paid whose money they are either holding or have forwarded.
If they are holding it they refund that customer, and business can ask for payment using another method.
If they are not holding funds, they run into an issue of asking merchant for money (which is difficult to collect).
So most providers of this type when making a decision to end a business relationship hold onto the funds for a while to let everything settle. This is not unique to paypal.
Some providers don't hold funds if payor has no recourse. You usually need to be settling with what are called "good funds" for that to be the case, then merchant is paid out usually within 1 day under all circumstances. A fair number of B2B wire type clearing operations work like this.
I'm just explaining what happens. They don't generally closely evaluate the reasons or likely outcomes of account closures, and there is enough fraud and profit motive / cost cutting in system that the rules tilt pretty heavily against merchant.
That said, if OP is not lying and they really do confiscate the funds there will be an issue for them. Especially individuals, they'll send the unclaimed funds to the state generally even if not claimed by the person.
It sure as heck ain't the consumer's bank that pays for that.
Nor is it Visa or Mastercard or whichever company owns the card network the card is part of.
No, it is the merchant bank that processed the charge. To be allowed to process charges through Visa, MC, etc, the merchant bank has to agree to cover all credits the issuing bank gives when consumers successfully dispute charges if the merchant cannot cover them.
Merchants that want to accept credit cards have to get an account with a merchant bank. It acts as an interface between the merchant and the credit card system, submitting charges and collecting the payments from the issuing banks, and depositing them in the merchant's regular business bank.
Merchant banks hold back some of those payments to maintain a buffer to cover their potential obligations in the case of disputed charges. How much they hold back and how long they hold it for varies depending on things like changes in your sales volume, how risky your line of business is, how often you've been getting chargebacks, and probably a ton of other factors their actuaries have identified.
PayPal doesn't look like a traditional merchant bank from the merchant point of view, but if people are able to use credit cards to buy your stuff there is a traditional merchant bank or something else with the same obligations as a traditional merchant bank somewhere in there, and that means that for a merchant using PayPal they are going to have someone holding back a reserve.
When you use a traditional merchant bank and are directly exposed to all that you know it is going to happen, and quickly realize that the whole damn credit card system is designed to make sure that if anything goes wrong anywhere in the chain it is the merchant that is going to eat it.
With these services that try to do it all in one and make it easy to accept payments, such as PayPal, it is easy to not realize that credit cards work that way and so you get surprised when PayPal won't let you take all your money out right away.
Your merchant bank will know you, there is a relationship manager who wants the rest of your business, they may have lent you money etc etc. In short, someone spends more than 5 seconds dealing with you. And they do charge more for sure.
PayPal - no one there cares at all about you. They offer something convenient, but that's it. You are SOL when things go wrong.
Besides, if that was their business it'd be in their S-1 and it isn't. (IIRC it says they keep customer funds in interest free accounts)
exercise for the one's imagination - you come to a banker and say "i'm thinking about keeping with you an N billions of dollars, interest free. Any ideas?" (in mid-199x i did some work around large Russian municipal funds to be kept in banks, and what i saw helped develop my imagination :)
I explained to them that if they didn't release the funds they would most certainly have charge backs because we'd be out of business and thus unable to deliver on the work promised for the money.
Nothing we said did any good. That is until I looked up the laws in Washington State about money transmitters. Turns out based on the specific license they had in Washington State at the time, it was illegal for them to hold funds for longer than 7 days.
Me telling them this did nothing at all, but when I sent a letter to my state governor explaining my predicament and someone from that office sent a letter to the folks at PayPal, suddenly my funds were released and a note was placed on my account to never withhold funds on that account ever again. Been smooth sailing ever since :-D
Did PayPal just tell you this or did you find out another way?
Did you stay with Paypal after that? I'd have run for the hills.
If you want to reduce liquidity risk, store your funds in an escrow account. The funds in an escrow account are legally your property, and the custodian is legally required to follow your orders (simplified).
In the US, it *is* illegal for any bank or other regulated financial company. But PayPal claims that they aren't that.
There are lots of other ways to send or receive money and most of them don't have the reputation that PayPal has.
My business does ~$100-250k monthly revenue, and probably 1/3 of transactions are via PayPal. I'd never not have them - it helps conversions too much.
But, I made sure to call their support and enable the "auto-sweep" feature, so that I can withdraw everything above a balance that I set into my bank daily.
This way, I never need to worry about too many funds getting frozen should anything go wrong.
Had a 15 year old Paypal business account (parent started it and I took it over ~7 years ago) and last year they shut it down because I, as the new owner, was not 18 when the account was created. Nothing from the support but "computer said you bad, nothing we can do".
In Ebays case I sold an item, got the regular email from Ebay (DMARK/SPF/IP verified) that they had received payment and was holding it until the item had been delivered. Then a week later I got another email from them saying they had blocked the buyer for abuse (i.e. a fraudulent transaction to them) and that I shouldn't ship the item they told me to ship a week ago. After 2 months of trying to get through to the support they just claimed that someone spoofed their DMARK, SPF, and servers IP. After explaining how impossible that would be their 'proof' that it was 'spoofed' was that there should be a copy of the message in the Ebay inbox where, after the reply, all messages about the auction ever existing were suddenly gone.
Was this before or after they had to force-reset everyone's account password because their user data was compromised?
https://fairshake.com/paypal/how-to-sue/
http://www.screw-paypal.com/resources/small_claims_court.htm...
I did get my PayPal account back by doing this, after I sent out an eBay order so fast they decided I was a scammer because the tracking info already said it arrived when I added it to the invoice.
https://cfpbactions.com/2021/03/24/cfpb-files-lawsuit-using-...
I explain it was an accident to click the PayPal button and it didn’t go through.
Banned for life :D PayPal can join the rest of the former tech giants anytime.
[1] https://www.guntab.com/payment-platform-firearm-policies
I know nothing about the industry you are in so far as payments go, but get the fees closer to 2% and you’ll own the market.
The whole thing is dumb though, so I honestly don't even attribute malice. It's a ~17 year old account and I've processed millions(?) of dollars through it. The killing they earned on the transaction fees dwarfs the interest they earn on the float over the period of time they are holding it. The only way this wouldn't be the case is if a lot of people just give up and never get their money out, which, frankly, sounds possible. So either they do this intentionally because people give up, or they think I'll never sell stuff online again (I sell stuff online, right now), or they're just kindof dumb and have an overactive suppression team.
It took three months to resolve the issue. I'm not saying that we had to _wait_ three months: we discussed almost every day with the support, for three months.
The process was a mix of infuriating exchanges, bugs on the PayPal site preventing to send documents (so serious that even the support was aware), and at the end we were wondering if this was on purpose or because of a total lack of intelligence/skills and process from PayPal.
Each day we would have a different support people on the chat, with the dialog summarized:
- Paypal Human Bot: How can we help you ? - Me: Our account is restricted and we don't really understand why. Would you mind telling us how to solve the issue ? ( Skip long re-explaining everything from the beginning; PayPal has no history of previous exchanges apparently) - Paypal Human Bot: You are not registered as a 501(c)(3) non-profit organization, can you send us the papers ? - Me: Indeed, we are outside the US, we can't do that. However we can send you the official papers from Europe - Paypal Human Bot: Okay, so you need to be registered as a commercial entity, please send us your commercial ID - Me: We are not a commercial entity, we are a small non-profit organisations, and we don't have such ID - Paypal Human Bot: Okay, so please send us the papers that prove you are a 501(c)(3) non-profit organization - ...
We probably sent dozen of various official papers, etc. in the meantime. We had to guess what were the probable causes, as (once again) the PayPal site is riddled with bugs that may (or not) display warnings, ask for fields but that are read-only, etc.
If this was a bank, they would have been sanctioned by banking regulations.
And I am still unsure if this wasn't some kind of twisted social experiment made by some psychopath.
Yet I was still forced to use PayPal for another retailer because the retailer's credit card processing was broken, so I had to create a new account. It's frustrating when you have to go through a middleman or external company that treats you like garbage instead of being able to use an established payment system that works.
It may be a problem, but it’s a hell of a lot better than situations like this. Cryptocurrency was created precisely for this reason - giving financial freedom back to the individual in a censorship-resistant manner, because it was obvious as day to the cypherpunks that created it, that governments and corporations would abuse our financial freedom where possible.
It’s no surprise that people are looking towards crypto, which was created explicitly for the purpose of taking power back from these institutes. People finally have another option.
> Provide meaningful notice to users. If PayPal is choosing to shut down someone’s account, they should provide detailed guidance about what aspect of PayPal’s terms were violated or why the account was shut down, unless forbidden from doing so by a legal prohibition or in cases of suspected account takeover. This is a powerful mechanism for holding companies back from over-reliance on automated account suspensions.
> Adopt a meaningful appeal process. If a user’s PayPal account is shut down, they should have an opportunity to appeal to a person that was not involved in the initial decision to shut down the account.
It's a nice conspiracy, although I'm not going to believe it unless there's more evidence corroborating it (ie. mass reports of people getting their paypal banned or increased churn in tor relay nodes).
There actually was something kinda close to that recently: https://nusenu.medium.com/tracking-one-year-of-malicious-tor...
But that's an increase in known-malicious relays and exits and doesn't speak to churn in existing, non-malicious nodes. The attribution efforts made in that article also suggest a different motive, though if I was a three-letterer attacking Tor I'd probably also try to look as if I was a Russian criminal bad at hiding my tracks.
My thinking was, if a friend confide in me about their use of PayPal for online payments, then it's a moral obligation to inform them of the risks their taking and treatments available such as alternative providers.
Thankfully I didn't have any funds stored there, but it was inconvenient and ruined any trust I previously had in them.
Overall a terrible experience.
Perhaps someone can kindly check if this is a quiet reincarnation of Operation Choke Point?
https://en.m.wikipedia.org/wiki/Operation_Choke_Point
Anyone who has ever had anything to do with PayPal as a Seller will tell you the same thing, as a buyer, always order with PayPal, and you'll always win.
It’s proof (not that we needed any) that centralized finance does not have your best interests at heart, and they can and will abuse their power.
Unfortunately, at least near term you'll still need fiat-tether "on ramps" to convert your local currency back and forth to tether before you move them to a distributed (or at least a non-KYC) exchange to Monero, then sending to your local wallet, then use online.
[1] https://localmonero.co/
[2] https://github.com/haveno-dex/haveno
https://bisq.network/
Nothing stops an exchange refusing to do business with you.
Ideally, in the long run, cryptocurrency takes on a value of its own, reducing the need to use exchanges.
right now, because it's not widely used. If it ever gets mainstream, people will give governments whatever power they need to censor and try to stop things like child pornography. And once they can censor that, they can censor other stuff as well.
And I am sure you can come up with technical reasons why monero can't be censored. But i remember when China started their big firewall of china, people where laughing how trivially easy it was to bypass. And that their strategy will never work. Now 15-20 years later, nobody is laughing anymore. In fact a lot of countries seem to be moving into same direction.
See also: https://geneva.cs.umd.edu/
If you want privacy there are also Zcash shielded transactions. Or if all you want to do is eliminate central parties then why not just Bitcoin?
My understanding with Monero is if you don't run your own node there's not that much privacy guarantee anyway (otherwise you have to trust the third party node you point to). Someone please correct me if I'm mistaken about that.
The issue with Zcash shielded transactions is that something like 14% of transactions are shielded, but only 1% are truly private. Optionally shielded transactions make chain analysis much easier and immediately make said transaction suspect. So you cannot comfortably use Zcash for private transactions. See the report by Chainalysis [1]:
> 14% of the ZCash transactions use a so-called "shielded pool", but in only 6% of all cases both the sender, recipient and the number of transactions are fully encrypted. The report states: “So even if the concealment on Zcash is stronger due to the zk-SNARK encryption, Chainalysis can still provide the transaction value and at least one address for over 99% of the ZEC activities.”
Clearly, optional privacy is not privacy at all. It needs to be on by default, which is the philosophy behind Monero.
Re. Monero nodes - if you’re using a remote node you can just use Tor, which I believe is soon to be baked in by default. Otherwise, Monero is still quite private. Your transaction history, transaction amounts etc are not revealed to nodes. Some metadata like restore height is, but that’s not a big deal.
[1]: https://www.kryptokumpel.de/en/kryptowaehrungen/chainalysis-...
Also, the ZKSnark method that provides the privacy requires that the devs threw away their initial PKs. If you trust they did, then it's a great option.
https://news.ycombinator.com/item?id=25752042
I'm not saying privacy isn't great, just that even without it, crypto is still useful. Privacy is absolutely an amazing force for freedom.
This is a marketing term without actual meaning. There's a system with some anonymity. Then there's the external world. There's no 'optional' anonymity. The error lies in incorrectly comparing monero to zcash as a whole, instead of shielded transactions themselves. Names themselves are irrelevant. Depositing xmr to an exchange is equivalent to withdrawing from the anonymity pool.
From the design perspective, the mixin model is vulnerable to an active adversary that has spent output data from exchanges and spams the chain to generate recent known outputs when the target makes transactions. Full zk-snark anonymity is fully resistant to this.
A problem of both xmr and zcash is that they have no other use than anonymity, making it easier to ban and impractical for larger amounts and forcing commerce to hedge price risk, generating deanonymizing metadata. For actual commerce anonymous dollar is the ideal, for as long as dollar remains the main unit of account in the world.
https://zk.money supports dai, although it's still in alpha with a limit of $1000 per external deposit.
https://aztec.network/index.html
Most people already acknowledge that the little guy doesn't have the funds to hire the lawyers for a protracted court case.
How do you reverse fraudulent transactions? What happens if your wallet is stolen? Who do you speak to when you need help setting up an account? On a macroeconomic level, it prevents the government from setting certain types of monetary policy that benefit the economy as a whole (although I may be biased there, as the Australian government bailed out the economy as a whole through economic stimulus in 2008 and prevented the spread of the GFC to here).
This is all assuming it's pegged to a stable asset like the USD. Bitcoin's average annual inflation over the past 5 years is around 3,000%. For comparison, Zimbabwe's inflation rate in the early 00's was around 500%.
How do you reverse paying someone with cash? You don't. You can ask for a refund and hope they give it to you. If you're transacting with a trusted business, you can expect them to adhere to the law and reverse the payment.
In this sense, crypto transactions are no different than how humans have transacted for thousands of years. Chargebacks and reversals are a convenience - they are not necessary.
> What happens if your wallet is stolen?
What happens when your wallet is stolen in real life? You lose the cash inside. So you keep most money secure in a cold wallet, airgapped and password-protected, and some money secure in a hot wallet, PIN-protected. Usually losing a hardware wallet isn't a big deal anyways, since they wipe themselves after a few PIN tries.
The UX around securing wallets will get better over time, but if you pick up a Ledger X today it's actually already quite easy to use.
> Who do you speak to when you need help setting up an account?
Just like using a wallet with cash in a secure manner took time to become cultural knowledge, using a hardware wallet with cryptocurrency will to. Obviously, there are places where it could become easier to use, but using a Ledger these days is already pretty damn easy. You just connect it to your phone via Bluetooth and you're ready to go.
> it prevents the government from setting certain types of monetary policy that benefit the economy as a whole
For some, lowering government control over your finances is a pro, not a con, but I can understand that this is up for debate.
> This is all assuming it's pegged to a stable asset like the USD.
I can agree with this, I think currently the price of cryptocurrency is volatile due to rampant speculation. Eventually it will settle into something stable, and if it doesn't, we can just use alogrithmic stablecoins like DAI that track the value of the dollar to within +/-1% and don't need to be backed by a central institution.
Exactly, that's why centralised systems with moneyback guarantees (PayPal, Stripe) exist for online payments where you can't see the goods in person - online fraud is still a concern in 2021.
>So you keep most money secure in a cold wallet, airgapped and password-protected, and some money secure in a hot wallet, PIN-protected.
I'll admit I'm not super familiar with crypto technology, but this cold wallet basically sounds similar to stashing your life savings under your mattress (or, at least, in a safe in your house). Nobody in their right mind would do this.
>Just like using a wallet with cash in a secure manner took time to become cultural knowledge, using a hardware wallet with cryptocurrency will to
Makes sense, honestly. Everyone understands credit cards/WeChat.
Regardless of the individual arguments, though, I think the overall point is whether or not the risk of being screwed over by the machinations of a giant corporation outweighs the risk of being screwed over in the "wild west" world of crypto. For the average person, I think (well-regulated) central institutions are the lesser of the two evils.
Sure, but this is why you transact with trusted people and businesses, just like you would when using cash.
To be honest, I don't know a single person that relies on PayPal's protection when making a purchase online from an individual or business. Every single person I know that uses PayPal does their due diligence on the seller before buying. None of them assume that PayPal disputes will actually work.
The same would be true with crypto. You'd do your due diligence before buying, just like you do today, if you're buying from a random.
> this cold wallet basically sounds similar to stashing your life savings under your mattress (or, at least, in a safe in your house).
You would use a social recovery wallet, in which, say, your trusted family members could secure your life savings as a group. Vitalik Buterin, the founder of Ethereum, has a great article [1] on this.
Even if you don't trust a multisig/social-recovery wallet, you can store your money on an insured exchange. It still comes out ahead of banks and PayPal in that your transactions themselves are private and cannot be censored.
> I think the overall point is whether or not the risk of being screwed over by the machinations of a giant corporation outweighs the risk of being screwed over in the "wild west" world of crypto.
Just like online payments and credit cards had their "wild west" period, crypto has its own. I don't see a big deal here. This is a field in its infancy with staggeringly rapid development. Over time the UX will get better. I'm not expecting your average Joe to move their savings to Monero tomorrow, but I wouldn't be surprised if they did (to whatever Monero-equivalent exists) 10, 20 years down the road, when social recovery wallets are easy to use and crypto prices have algorithmically stabilized itself (ala DAI) or have naturally fallen into an equilibrium.
[1]: https://vitalik.ca/general/2021/01/11/recovery.html
What, like paypal and ebay?
The problem is that in reality there are (a) small businesses whose trust is difficult to verify and stability may not be guaranteed and (b) large companies who have a proportion of incidents of very bad customer service. For many services there may only be (b).
> do your due diligence before buying
How much do you do exactly? How long does it take, what does it cost (do you pull company financial reports?) and shouldn't the extra time it takes to do this be counted as a transaction fee?
> Just like online payments and credit cards had their "wild west" period
Not really? It's been the same customer-not-present process since the days of export-restricted SSL. In fact that's kind of the problem, it's the same insecure process designed for paper and card transactions. There was certainly never anything comparable to "exchange absconds with customer funds" that happens every few years in crypto.
The "large company payment database was compromised and now all their customers are being defrauded" problem does seem to have improved recently.
With BTC you don't have to worry about someone siphoning value from your currency. It's not just coincidence that BTC increases in value YOY. Bitcoiners call this 'number go up' technology.
When all central banks are tripping over themselves to devalue their currencies, BTC's value rises.
I think you meant deflation?
If you held Zimbabwe's currency then you became poor.
If you held BTC over the past 5 years you became rich.
These are two _very_ different scenarios.
How was this bailout done? In the US, the bailout was done primarily by giving funds to over leveraged banks that had every right to collapse. CEOs took home record bonuses, and everyday citizen's lost their homes.
They tried to spin the story in the US as saving the economy too, but most people didn't fall for the obvious wealthy get wealthier, poor get poorer trick.
This actually birthed the Occupy Wall Street movement.
Our economy had one quarter of negative growth but we recovered almost immediately.
The banks didn't get bailed out at all - they didn't need to be because the financial sector had strict regulations that prevented them from engaging in the systemic risk that ruined Europe and the US.
The reason PayPal holds funds is that a consumer is allowed to reverse a bank and credit card transaction for a few months after the transaction happened. This ability exists to protect consumers from fraudsters, scammers and bad businesses (ones that don’t provide service etc.) which is much more common than people realize.
With crypto, the ability to reverse a transaction disappears and with that the ability to protect consumers. Now who do you think will thrive in a world where a consumer has no protection? Scammers, bad businesses and criminals..
For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system.
Too many times "protecting consumers" turns into "censoring transactions we don't like" and "restricting your financial freedom to maintain our brand image." (Case in point - sex work payments, even in countries where it is legal, can not be processed by any of the major payment processors. Brand image and all.)
Not to mention the privacy concerns that come with a central authority knowing all of your transactions - no thanks, I think I and many others would prefer an electronic cash-equivalent over PayPal.
That is simply not the case. Even in old ancient civilizations and feudal systems you usually had a way to reverse a transaction by going to court (in the old times literal court of the king, nowadays judge). This was and is possible because when you pay in cash you know who you pay to, and authorities (king and/or police) can lay hand on them. So even if you pay cash in brick and mortar shop you can get refunds (usually :) ).
One of the reasons why a lot of people are comfortable buying online is easy refunds. And if crypto can't provide that, I don't ever see it catching on in mainstream.
And if you want refunds and you are marketplace like eBay , the easiest way to offer refunds is to keep money in escrow which is what is happening here.(Except that their home brew escrow algos seem to not be that great, but crypto won't change that either. )
Bottom line is, crypto either won't go mainstream or will be co-opted by mainstream and will have all of the same problems/features as current currencies.
And it's not because governments. It's because people want and expect their government to be able to protect them.
And government don't censor things because they don't have nothing better to do. At least in democracy's they start censoring, when enough people cry to them to start censoring. Don't expect that to ever change with or without crypto.
Whenever a solution pops up that has a negative impact on the finances of the richest 5%, like cryptocurrency, politics/laws will come up with a new method/law to suppress it.
I sell only small-time. I don't want to do Creditcard, no Stripe either (I don't have a registered company) and iDEAL is only working in the Netherlands. So what is the internet alternative for international selling. And, please, no crypto-currencies :)
I am off to sleep, see you tomorrow.
I don’t understand why there are so many posts here saying ‘just use crypto’, like - PayPal is a scam and needs a replacement but the problem is until sites start accepting crypto as simply as PayPal works then things will stay the same.
What you’re saying to do in your comment - on most major online retailers - is not yet possible, and it will probably take a long time even if it can find critical mass.
Crypto is another currency - it’s not another payment processor and while those are starting to exist we are nowhere close.
I believe the laments here are more so related to PayPal’s dominance - for most websites it’s that or your credit card.