If you saw the "technosociolegal" position at the top, you'd appreciate a broader perspective.
Why is the couple who held the bitcoin from the hack being prosecuted? How were those funds being unwound if the transaction is final? If all of the exchanges were to denylist coins from a hack, do they actually exist or have they been taken away?
Nothing was "unwound." The government found the criminals' private key, which they were unwisely storing in an online account. That allowed the government to make a new transaction, moving the funds wherever they liked. From the link in the article:
> special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex
> Nothing was "unwound." The government found the criminals' private key, which they were unwisely storing in an online account. That allowed the government to make a new transaction, moving the funds wherever they liked.
This is how "unwinding" works in almost all payment systems: Creating a second transaction to (partially or fully) offset the effects of the original one.
Fine, but the government has no special power over Bitcoin in this regard. If they hadn't found the key, they wouldn't have been able to issue that transaction, and any common thief who found the key could have done what they did.
The relevant meta-point here is that the government is uniquely positioned to come into possession of most keys that it wants (or more indirectly, render them useless by including them on sanction/embargo lists).
Yes, this is how normal everyday commerce works. My employer transfers some USD into my bank account. I then transfer some of those USD to my landlord's bank account. This is in no sense a reversal of an earlier transaction or an indication that an earlier transaction was "not finalized."
Yeah, So the federal government unwound the transaction whether they wanted it unwound or not. Which is in fact how it works in banking institutions too. A reverse of the transaction is issued that in effect unwinds it. In the real world sense which is the context of the article the transaction has been unwound or reversed.
The definition of finality used by you and the author of the piece is so vague and all-encompassing as to be meaningless. There isn't really anything to debate other than semantics.
You could just as easily say that cash payments aren't final because you could lose your wallet after you put the cash in it, but using the example of Bitcoin and the federal government is going to get more clicks.
I think that's the point that the author is trying to make. If the federal government disagrees with the bitcoin blockchain, then the blockchain is wrong.
It doesn't really matter what the code says, or what bits are inscribed somewhere. Finance and ownership are ultimately enforced by armies, not computer programs.
This is one reason why some people think that cryptocurrencies are playing with fire. It's also why major exchanges won't make it easy to cash out laundered bitcoins to USD.
I don't think you understand how the Blockchain works or what the proper concept of a finalized payment is.
The government cannot undo a Bitcoin transaction. If the keys are accessible, they can seize the coin and create a new transaction to redistribute according to the law.
If the keys are not accessible, then they are totally powerless to do anything at all.
The government submits to the blockchain's rules the same way everyone else does. That's kind of the point.
This becomes obvious when you consider that the government auctions the coins they seize. They either have to give the keys to the buyer or create a new transaction on the chain.
The interesting thing in this whole conversation is assuming the person holding the key is the custodian of the funds, when it is more the key itself that is the custodian. The keys hold the funds, the person holding the keys can change but that is entirely outside the system but so is getting robbed on the side of the street of the cash in your pocket.
I think you need to elaborate on this. Law enforcement can enforce the things they have power over, like putting someone in jail. But they do not have power over the blockchain and they cannot reverse a transaction.
Governments can put a blockchain account/UTXO on a sanctions list and make it a crime to accept payments directly or indirectly funded from that account.
To my knowledge, this hasn't happened yet, but I strongly suspect that it's only a question of time. Embargoes/sanction lists are one of the most powerful mechanisms of law enforcement for governments – I doubt that they will continue to let cryptocurrencies undermine that for too long.
It's a tool, but not a silver bullet. Mixers exist, for example. But that's not even the main point. The key holder has the ultimate power to simply throw away the key. There is no recourse for that.
You can make the same point about cash, but it's not very interesting.
The point the article was making is that transactions can and will be deemed illegitimate, both in the sense that mistakes are made, and in the sense that the legal framework will decide you have to reverse the payment. If you've buried cash and refuse to tell people where it is, you are in roughly the same place as refusing to reveal keys. You can be held accountable of course, in various ways.
I think the article was more making the point that any payment system that doesn't recognize this reality will have inherently limited uptake, which is probably true.
It's true for cash, but not for cards. If a merchant incorrectly gets my $1000, and I charge him back, I will get my money, even if he spent $1000 on coke and hookers.
You'll get different cash back, sure. Which was sort of the point; it's part of what makes CC useful.
I was noting that there is nothing fundamentally different between say you accepting a payment in bitcoin and refusing to cough up the key when told to reverse it, or accepting a payment in cash and burying it then refusing to tell police where.
Fundamentally there are mechanisms to reverse this, or punish/constrain you for obstructing the process. Some payment systems have them built in at a very low level (CC chargebacks), some rely on professional standard (hold harmelss), etc. Some rely on court systems. That's a trade off of convenience vs. risk, but doesn't change the fundamental point that a payment system without a standard reversal mechanism is going to have limited use.
> There is nothing fundamentally different between say ... bitcoin ... and ... cash ...
Agreed.
> That's a trade off of convenience vs. risk, but doesn't change the fundamentals.
There is. The ones that rely on court mechanisms aren't the payment mechanism being reversible, it's something else (the storage) that gives first.
It's true that if you keep it in your bank account, all transactions are reversible. But that's a statement about property rights, not about finality. If I have a solid means of "storing" my money, such as by burying it in my back yard, then the payment itself is irreversible. That's not true for cards, which are reversible even if your storage is 100% robust.
> the payment mechanism being reversible, it's something else (the storage) that gives
I'm not sure we agree on this being fundamental. At least you can define it as a categorical difference (sure) but not really a practical difference.
I think the articles points were twofold:
1) Property rights, or more generally the legal & regulatory systems, trump any rules imposed or agreed in your system of payments
2) Most payments systems feature reversal processes for necessary reasons (but if they don't, see (1) as fallback position)
Both of these seem important to understand if you want to understand how a payment system works or could work in the future, and also to understand your exposure/risk in using them.
People mostly understand the trade offs and limitations of cash; mostly probably don't understand them well for lots of payment systems.
I don't think the first point is accurate. You have to study the entire system, which is made up of two parts:
1. Storage
2. Payment rail
If your storage is solid (e.g. keys in brain wallet, account in crooked bank, money in shoebox) and the payment rail is solid (e.g. gold, cryptocurrency, cash), you're good. (To clarify, "solid" here means "beyond the legal-regulatory system", which means the rules aren't trumped.) Otherwise, you aren't.
I say that Bitcoin has "finality," because it does the job of payment rail with 100% irreversibility.
Grant that Bitcoin is a mediocre storage (1). But the payment rail (2) truly is irreversible. The combined system of two disjoint parts, built out of bitcoin-as-storage and bitcoin-as-payment-rail, is not.
I think it is a mistake to believe this is a thing. You can be allowed to operate in gray areas for a bunch of reasons, or you can be small enough not to be too bothered about (e.g. shutting you down not deemed worth the effort); but this is a choice of those same systems, not in your control really.
Although to be fair, I guess this stuff really varies by jurisdiction. Otoh, where the gray areas get bigger, your chances of having that go against you are bigger also.
It's certainly a thing for the payment rail - Bitcoin qua payment rail is entirely irreversible. So as a category in the real world, it is trivially a thing.
Whether such storage exists is a much better question. I think it depends on what you want to do with it. For example, if the Bitfinex guys were ideologically motivated, they could've spent all the money on, I don't know, political ads or whatever. More generally, I think you can certainly come up with storage that is outside the reach of a given threat actor in pursuit of a given goal.
> > So as a category in the real world, it is trivially a thing.
I'm not saying bitcoin isn't a thing in the world; I was saying that I don't think that makes it "beyond the legal-regulatory system", or that that is really even a helpful/useful concept. I mean we can talk about various shadow economies, but they are just that - and not really in scope for OP article.
Yeah, there's a certain irony to the fact that crypto currencies will remain subordinate to the powers that be until they themselves become the powers that be (at which point, of course, any elements of crypto-anarchy and cypherpunk would be long gone).
> An extreme example which proves the point: the cryptocurrency enthusiast community largely believes that code is law, “not your keys, not your coins”, etc. Many crypto enthusiasts would say that the Bitcoin protocol does not prohibit reversing transactions but provides a security guarantee which suggests that the likelihood of a reversal after an hour is infinitesimal.
> And yet: someone sent $70 million worth of Bitcoin in 2016, and that transaction was partially voided, with the reversal being worth slightly more than $70 million due to Bitcoin volatility. This didn’t happen an hour later; it happened in 2022. How?
> The answer is nowhere in the Bitcoin whitepaper or any codebase. A full recounting of it is outside the scope of this anecdote, but it rhymes with “If you and the United States federal government disagree whether a transaction is final, you are wrong.” That is true for notorious Bitcoin thefts, but also true for wire transfers, conveyances of real estate, credit card payments, and graverobbing. “Possession is nine-tenths of the law,” so the saying goes, but the state can conjure as many tenths as required if it is motivated to.
"How" is easy: they were storing their private key in an online account and the government found it. Nothing in Bitcoin was reversed. The government confiscated their funds in the same way that criminals steal any other bitcoins with poorly-secured keys.
Just follow the link in the TFA if you want to verify that.
That's exactly the point. If you define the universe to include only Bitcoin, then yes, transactions are final. But if you define the universe to include the real world, then the answer is no, not really -- governments will almost always find a way to reverse the transaction, whether it's seizing your private key, or holding you in contempt of court until you divulge it.
It is not "reversing the transaction", it is just seizure. If you have spent the Bitcoin on a lamborghini, government will confiscate the lambo. Criminals however typically spend the stolen money on hookers and drugs. Seizure or confiscation has nothing to do with "reversing the transaction", calling it that is just stupid, mixing terms unnecessarily is just unnecessary and confusing here.
The transaction was final though, in the real world. The fact that the government can physically find your private key (or physically compel you to give it to them) and use it to make new transactions is irrelevant. All you're pointing out is that after you receive money in a transaction you can later participate in a different transaction using that same money.
To the entity holding the coins, whether it is a single Bitcoin transaction as per the protocol of Bitcoin, or multiple transactions, makes no difference... ultimately they will or wont be holding a certain number of Bitcoins. To then say, "well technically that was _two_ transactions" seems irrelevant, since to the entity (no longer) holding the coins, things have been effectively reversed. I think may just be highlighting a disconnect between the writer of the article using the term transaction as understood by a layperson, and people who want to use the term transaction as per specific meaning of a particular protocol.
> To the entity holding the coins, whether it is a single Bitcoin transaction as per the protocol of Bitcoin, or multiple transactions, makes no difference... ultimately they will or wont be holding a certain number of Bitcoins.
But to the entity who received the coins, it also doesn't matter where the coins went after someone took them by force. If you get paid for a day's work in cash and a robber steals it on your way home, you wouldn't say that your work payment transaction was reversed or that it hadn't been finalized up to the point of the robbery.
I think that example breaks down for the laymen understanding of a transaction, since the robber is a different party than who gave the coins in the first place.
What if an employer paid you in coins, so you take your coins and go home, then tomorrow your employer decides to take back the coins they gave you since they were not happy with your work (or they're just jerks)? I think that would fit the layman understanding of "this was undone!" (i.e. the transaction wasn't final). If in this case, the underlying financial engines used two, none, or one transaction (as specifically defined by that engine), probably wouldn't matter to the one who no longer has their coins.
> I think that example breaks down for the laymen understanding of a transaction, since the robber is a different party than who gave the coins in the first place.
The government is certainly a different party that wasn't involved in the original transaction, right?
> What if an employer paid you in coins, so you take your coins and go home, then tomorrow your employer decides to take back the coins they gave you since they were not happy with your work (or they're just jerks)?
This can definitely happen, at least with checking accounts. It has happened to me once because an employer accidentally double-paid everyone, and they were able to withdraw one of the payments from our accounts. I'm not sure exactly how that works. It could just be that your employer essentially has full access to your checking account since you gave them your account and routing number. Incidentally, I was always curious what would have happened if I had moved everything out of my checking account before they make the correction. But regardless of how it is actually implemented in the banking system, it's pretty clear if your employer erroneously removed funds from your bank account, or if you cashed out the accidental second payment then quit your job, it would again just come down to the legal system.
If you make a Bitcoin address, memorize the private key, and never write it down ever, then the only way for anyone to "reverse" transactions is to force you to physically say or write down the private key. This transaction finality seems to be orders of magnitude more final than a credit card transaction or a bank transaction.
So sure - it's technically reversible. But is this really a practical argument? It's like saying nobody is safe in public because you can be a victim of a terrorist attack any any moment. It's alarmist and practically wrong even if technically true.
Actually the non-bitcoin fork is the one that didn't reverse the transactions. Bitcoin proper is the one that did reverse them if memory serves. I'll grant that sometimes memory does not serve though and I'm just too lazy to grab the citation right now.
In that case, ~9 hours of transaction history were reversed because of a transaction that resulted in an overflow in the main (and I think only at the time) Bitcoin client allowing the creation of unlimited Bitcoin.
I wish he would have delved into the cost of finality or reversals - this is a core driver of the cost of an entire system, either in time or in money.
Both sides are expensive. Early finality can create costs, and ability to reverse also means effort.
I think, most legal systems are setup to make reaching finality on material things pretty expensive (but also very difficult/impossible to challenge once it reaches finality). Overall, societies seem to work well that way given the pretty long track record.
I'm surprised the writing did not mention cash. Was the first thing I thought of. Digital transactions can be toyed with, but cash has no record, and no automated means to reclaim it.
No automated means, but if you get a receipt then you could actually try to reverse it (depending on local laws etc.). So even there little finality in a lot of everyday situations.
Yeah, this bothered me, too. His choice of definition for payments is unclear because it leaves out that very obvious and pervasive method.
He also describes a Bitcoin transaction as not being "final" because it was seized by the government. This isn't really what most people mean by finality.
So you never really know what he means throughout the article due to imprecision and it comes off as not compelling.
When I get paid by credit credit card it's "final", because that transaction can't be cancelled, only a new transaction can be created to undo it without my consent.
Patrick loves to write coyly, but his point is simple: If the government can find the money they can take it back from you.
What he misses is that it only works if they can find the keys (or the next best thing -- your body).
Are you intending to say that there is a transitive property of rhyming? And that if that if A does not rhyme with B then there may not exist a word C that rhymes with both A and B?
If so, your ideas are intriguing to me, and I wish to subscribe to your newsletter.
I think the issue is that English rhyme requires a near-match of the last stressed vowel and of all following sounds until the end of the word. So you can sometimes just match the last syllable and get a rhyme, but not always, depending on where the stress falls.
For example, "example" rhymes with "sample" but not with "people" because the stress is on the second-to-last syllable.
But "redact" and "exact" rhyme, despite only agreeing in the last syllable, because that's the last syllable that's stressed.
"Takesies" and "backsies" are both stressed on their first syllables, so they would need to match from that vowel on in order to be perceived as a natural English rhyme, and they don't.
> partially voided, with the reversal being worth slightly more than $70 million due to Bitcoin volatility. This didn’t happen an hour later; it happened in 2022. How?
> The answer is nowhere in the Bitcoin whitepaper or any codebase. A full recounting of it is outside the scope of this anecdote, but it rhymes with “If you and the United States federal government disagree whether a transaction is final, you are wrong.”
Following the link in that quote, that didn't happen because Bitcoin wasn't final after all, just because the government "disagreed." It happened because the government found the criminals' private keys, and made a new transaction.
Back to the first article, it continues with this:
> That is true for notorious Bitcoin thefts, but also true for wire transfers
I'm wondering how it is then that theft by wire fraud is a serious problem these days.
I mean by sending someone fraudulent wire instructions. It's been a problem in real estate transactions, mainly with consumers receiving instructions by email. Also, businesses have been hit in social engineering attacks that end up with instructions to send a wire.
These situations can be reversed if discovered fast enough, but after a few hours the funds are moved internationally and you're very unlikely to get your money back.
It depends on how well the fraud is executed, how long time has been passed since the fraud happened and also on the amounts and people/organisations involved.
Technically kalzumeus might be right, however practically it almost always makes sense to think that wire transfer is final, and treat it that way. If a con man tricks you into wiring funds to a wrong address, it is quite likely gone. However with credit card payments you can be more relaxed, and so on.
> I'm wondering how it is then that theft by wire fraud is a serious problem these days.
The article touches briefly on that. Some wire transfers can be reversed. It becomes more difficult when money starts moving around jurisdictions, but at least it's possible. Essentially no crypto transactions can be reversed.
If this is the case, how was North Korea able to wire fraud $81 million USD from the Bank of Bangladesh [1] ?
Why was this wire transaction not reversed? Apparently, they were about to get away with $1 billion USD but the hacker entered the global SWIFT code incorrectly by 1 character and so it was caught.
The fact that North Korea made off with $81 million USD, however, is rather unsettling, and even more so the fact that this was not reversed / caught.
They did of course not wire the money directly to North Korea. It was a multi-step process of money laundering, involving currency exchanges, cash and casinos, in several jurisdictions.
Every authority along the way must be on board with the reversal. When the chain is broken, as when cash is laundered at a casino, somebody will be left holding the bag. You can't reverse the cash back out of thin air.
Had all the money been found still sitting pretty in an account, I assume things would have eventually been all settled.
> Essentially no crypto transactions can be reversed.
Bitcoin transactions are hard to reverse (not strictly impossible, as shown by the recent example, and a few others of the same vein, but it requires to arrest the key owner and seize the key, which is obviously kind of hard) but practically all other cryptocurrencies are centralized enough to allow for transaction reversal (The ethereum hard fork after the DAO hack is the practical example of this). And I'm not even talking about weak chains for which an attacker can even reverse transaction against everybody else's will[1]…
> centralized enough to allow for transaction reversal
You can argue that the developers held outsized influence over the consensus mechanism early in Ethereum's lifecycle. You can also debate their recommendation & push to hard fork to a new ledger that undid the hack. But to argue that it is anywhere close to 'centralized' today is disingenuous at best.
It should be impossible for any one agent to change the record, but it is the nature of blockchains that consensus holds as "accepted fact". In the event a blockchain is ever relied upon for anything of social importance, the ability for consensus mechanisms to fork away from "systemic ruin" is a desirable trait.
I'm one of the few that argue the DAO Hack was a proof of concept for an ultimately 'required' capability for any critically important blockchain systems.
> But to argue that it is anywhere close to 'centralized' today is disingenuous at best.
Ethereum devs have absolute power on ethereum. Things like EIP 1559, or Ethereum 2 illustrate this point really clearly: miners have zero power, neither do full nodes.
No matter what the algorithms (which can be patched anytime anyways) say, power is a social thing and in the case of Ethereum, the devs have literally complete power over it.
The storage is decentralized, the computation is decentralized, but power clearly isn't (and with PoS, it will become more centralized even on an algorithm point of view).
With “the community” being the name for a bunch of online forums whose admins are… Ethereum devs. How surprising…
The foundational decentralization feature of a cryptocurrency is the fact that the blockchain is edited by a distributed network of competing people: yes I'm talking about the miners. If the miners have no power in your system, then their is no practical decentralization because mining is the only thing actually decentralized in a blockchain!
I’m not arguing that both systems (PoW and PoS) don’t have their issues with some measure of aggregated power, but it’s just a false narrative to say that staking and mining aren’t equally decentralized.
The migration to PoS isn’t some rug-pull on miners, they’ve known about it for years. If there was legitimate protest, they’d refuse to adopt new versions that incorporated the ETH kill switch. The reason they haven’t? They have no skin in the game - most are mercenaries for hire, operating through centralized pools, cashing out whatever they mine.
PoS is a superior system - more flexibility for decentralized participation (only benefit to pooling is convenience), and dramatically better for the environment at scale. Everyone who holds the asset (I.e. the people who should have the most say in platform operations) have invested in PoS, and want it. It’s widely supported.
Unwillingness to accept anything other than “bitcoin is the way” is just baseless faith in modern garb.
> Unwillingness to accept anything other than “bitcoin is the way” is just baseless faith in modern garb.
I've never said “bitcoin is the way”. Let me be clear, bitcoin is a giant CO2-emmiting turd invented by a libertarian who wanted to bring the gold standard back.
But, if you're doing PoS you're not in a permissionless blockchain anymore (since you need to buy staking power), that's it.
(And, BTW, if you don't need the sybil-resistance that permissionlessness implies, then you are in the realm of traditional distributed systems and using a blockchain is just path dependency at this point …)
You need to buy mining equipment too. To get the best returns on Bitcoin, you need the connections and scale to buy the latest ASIC hardware from the few manufacturers that make it.
You said: "if you're doing PoS you're not in a permissionless blockchain anymore (since you need to buy staking power)."
So my point was that having to buy stake doesn't make Ethereum's proof-of-stake any more permissioned than proof-of-work, where you have to buy mining equipment.
The forums do not ban people like r/bitcoin does. In fact, plenty of ETH-hating Bitcoiners show up on r/ethereum, and even get a few upvotes.
For the DAO fork at least there was controversy. There was a little bit of controversy on 1559, but it was mostly from miners or people who had clear misunderstandings about how it worked. It ended up improving the user experience and, according to Coinbase, saving users a little money. Proof of stake has no noticeable pushback except in the mining subreddits, and has been part of the plan since 2014. If it had no support then the beacon chain wouldn't have 9 million ETH deposited.
For the DAO fork, people made the same claim, that the visible community actually misrepresented people's real feelings. But in the end, both sides got a chain of their own, and oddly enough, the side that had appeared more popular before the fork ended up having vastly more market value.
Agreed, the Bitcoin transaction(s) which stole and moved the funds out of the exchange did have finality. The entire premise of crypto is that whoever knows the private key controls the account... So this is essentially a seizure of an account. The seizure of funds has nothing to do with finality and everything to do with laziness, complacency and neglect.
If the hacker had hidden their private keys in a secret location (or just memorized them), they could almost certainly have gotten away with it. The hackers were extremely neglectful. It's a testament to Bitcoin's security that it took so many years to be caught given this level of carelessness and the massive amount of money involved.
Some people in the Bitcoin community think the news is fake and intended to harm Bitcoin's reputation... We don't know what really happened behind the scenes. It's hard to believe that people can be so careless.
I don't see why it would harm Bitcoin's reputation. It's always been clear that you have to be careful with your keys, and extraordinarily careful if you want to protect them from the government.
Finality may exist in transactions, but I'd rather it didn't, or at least, that it was easier to opt out of.
In fact, I wish banks had an option to require an extra authentication factor for any transactions that isn't easy to trace and reverse, like ATMs or crypto purchases.
ATMs already have two factor authentication (card plus PIN). What more do you want? Many banks will reimburse customers for losses if their ATM card is stolen, and modern ATMs even have surveillance cameras to assist with investigations. There's also a daily withdrawal limit (typically under $1000) which mitigates the damage.
$1000 limits aren't much of a mitigation. That's a years savings that could be wiped out in minutes.
The cameras help a lot, and ATMs are somewhat OK, but nothing stops a person from using crypto to launder a stolen card.
If they bought gold, someone could track their address. If they bought it in person they'd be on camera. A way to restrict transactions that go outside of easy to track places would help a lot of people.
Of course, using 2FA for your Google account also stops most of that...
Let's swap "bitcoin" for "cash" here, since the mechanics remain the same but there's less emotional baggage.
If someone tried to make the argument to me that cash doesn't have finality because your shoebox-in-the-closet-full-of-cash can be stolen from you, I would say they're stretching the definition of "transaction finality" in order to make a banal point.
Isn't the point that you don't just get to decide whether or not the cash is legally yours? So you might have possession of the box of cash, but might not be the owner, for example.
Sure, but that money you stole buried in your backyard is still yours. The rightful owner cannot just steal it back. Similarly if it wasn't yours, you wouldn't have to pay taxes on it and the IRS still expects taxes on stolen property
Not a lawyer, but I think in a lot of jurisdictions the money still belongs to person it was stolen from, i.e., you only have possession, but don't own it - so not yours.
It's “your” the same way an Ikea shop is all “your” if you manage to get lock-in during the night[1]. Sure you have it, but if the authorities ever know that you have it you're screwed: you don't own it.
Btw, the IRS rule you're referring is just a hack to be able to at least charge people for tax fraud if the police cannot prove that you were involved in criminal activities. (Like how Al Capone got eventually caught for tax fraud).
> Sure, but that money you stole buried in your backyard is still yours.
In what sense?
> The rightful owner cannot just steal it back.
The rightful owner doesn't get any special rights, so they can't trespass to get their property back. A policeman could get it back for them, though. If it's just lying there they can take it back themselves. I've heard stories where people find their stolen property on Craigslist, meet with the thief, and steal it back without using force. That's fine.
> Similarly if it wasn't yours, you wouldn't have to pay taxes on it
Ownership is a tricky concept. There are many rights and responsibilities associated with ownership. Owning a bike carries a different set of rights and responsibilities from owning a house. Paying taxes on something is an obligation typically associated with ownership, but since stealing something does not create many of the other legal rights associated with ownership I don't think it's sufficient to say that it demonstrates that it's "yours." Also, of course, no one actually pays the taxes.
> Florida’s theft laws make it clear that theft of any type is illegal, but recently one Florida court has put a different spin on the situation. In the case of T.D.W. v. State, 42 So. 3d 959 (Fla. 4th DCA 2010), the juvenile defendant (FYI, juvenile names are always abbreviated) was convicted of Robbery because he forcefully approached a victim to retrieve his cell phone. T.D.W. testified at trial that he had a good faith belief that the victim possessed his cell phone, so he was going to take it back. At this point, it’s important to note that, technically speaking, a theft charge arises out of an ‘intent to deprive an owner of property’. So, how could a theft occur if the victim of the robbery wasn’t actually the ‘owner’ of the cell phone? The court in T.D.W. threw out T.D.W.’s conviction, reasoning that “a well-founded belief in one’s right to the allegedly stolen property constitutes a complete defense to a charge of theft”, as per a prior court ruling in Thomas v. State, 526 So. 2d 183 (Fla. 3d DCA 1988).
Ok so then why even have cash? Why not just write IOU's and let the legal system decide? If I'm accepting cash there's no difference, as I don't know whether or not you legally own the cash.
Obviously, the answer is that cash is a good "first layer". The legal system is there to resolve disputes, not facilitate transactions.
Reversibility on a technical level and legal ownership are totally different things, it seems like many folks conflate them.
Depending on where you are, the legal system might already block or complicate larger cash transactions, i.e., legal system already intervening on the transactions level.
Complicate how though? Can they backdoor the transfer to reverse it (or can another party do this for them)? Or only try to force the receiver to send the funds back with threats of punishment / physically take the funds?
My point is that those two things are fundamentally different.
You might need to establish ID, source of funds, etc., or beyond a certain limit cash transactions might just not be legal. Failure to comply might then lead to all sorts of unpleasantness.
My point was that the legal system is not just there for disputes but it also expresses things about what/how transactions should be done, i.e. it facilitates some and blocks others.
Oh got it, yeah I agree that the scope of the legal system is more than just resolving disputes, I was thinking of the legal system's role in finality specifically.
> The legal system is there to resolve disputes, not facilitate transactions.
Disputes without transactions don’t mean much. The legal system (at least the civil portion of it) exists solely to facilitate transactions, it’s just that normally those transactions are formalised in contracts.
Providing an adjudication service who decisions can be enforced with state violence, makes it much easier for people to have confidence in the value of contracts, and thus perform more complex transactions. The civil courts provide exactly this service, for the pure purposes of making transactions between private individuals easier and more enforceable without individuals resorting to vigilante justice.
Cash is a bearer instrument, but your duties as a custodian of someone else’s cash is another matter.
If I leave a box with cash in your care and you steal it or are negligent, I can seek relief in the courts. If I win and you refuse to pay, the sheriff will seize assets and sell them to satisfy the order of the court.
Still, that's not the point. Everyone knows that it's possible to physically move items from one place to another even if the legal owner of the item does not consent. Sometimes this is even legal, as in the case of civil asset forfeiture.
I don't think it's worth reiterating, at least not in the context of attempting to argue that "finality does not exist in payments," because it involves using a contrived definition of "finality" that no is ever using when they consider whether finality exists in payments.
At the time that such an acquisition took place, it would have been heavily premised on FB feed injection, and if such a thing were to be realistic, I would have heard about it.
This is utter hearsay, unreliable watercooler baseball, but it’s not one person who said that he was in Thailand chilling for most of the vest.
I am still unsure how this pertains to seizure of assets? Seems like there was some startup spun out of justin.tv that then got acquired… was the spin out shady? The acquisition?
I’m in a tough spot because I threw that off in an offhand way, but I didn’t really think it through and now I’m in danger of presenting substantial, but nonetheless circumstantial and anecdotal evidence of a phenomenon that is real and harmful (which is good) but attaching it to a specific person (which is bad in general and mega bad for me personally).
But I kind of have to cough up now: the rumor mill, and it was exactly that, has made credible claims that Socialcam was a dead end that got pimped to Autodesk as their path towards social media relevance, including some influential angel back-scatter, and then the principles promptly fucked off to Thailand and rested their vest until they got big jobs at YC on the back of building…Socialcam.
Twitch is a name everyone knows, AMZN got their money’s worth. The other highly YC-connected justin.tv stuff? Yeah, not a big splash.
The failed justin.tv-spin-off folks don’t care though, they never had any real competition because people who don’t have a locked-in outcome can’t afford to pursue impoverished, transient markets.
I wouldn’t shed too many tears though: no one from that crowd is doing badly. Bad companies failing and burning up the cap table is for the plebs.
So a good reason to do YC? I am confused... Plenty of YC companies fail but part of being in YC is the network so you can start another company, work at another YC or work for YC. That basically de-risks startups immeasurably.
Being backed by YC is one of the best indicators that a startup will succeed. I’d advise almost anyone doing a startup to seek funding from YC.
I tend to get pretty cranky (as you can see) about the old-boys network that’s emerged around it, but that in no way diminishes the value to a founder of being in that network.
End of the day, the sovereign state possesses ultimate power. For awhile some people felt that Bitcoin, et al made them immune to the authority of the state.
The reality is, unless you’re in a particular situation, like a Russia-based criminal who kicks the big up the chain, you’re not out of reach of the law.
> End of the day, the sovereign state possesses ultimate power. For awhile some people felt that Bitcoin, et al made them immune to the authority of the state.
Well, one could argue that we, the people, want the sovereign state where there is some degree of social contract going on, to have that ultimate power.
Putting that power into a system that was designed by humans and almost by design can't be democratic and at best is meritocratic, is a very likely path to a Kafkaesque world.
A sovereign state possesses unlimited authority - but that doesn't automatically translate to power. It's one thing to pass a law that tried to regulate cryptocurrency transaction. Trying to actually enforce it is a whole different story.
The sovereign state is a concept. It's not even a real thing and it has no physical power.
> immune to the authority of the state
They definitively are, comparatively. If you are moving across borders, it is much safer to hold $10m in crypto than cash. Actually, you'll need to be legit, pay a bribe or use violence to move that much cash through borders. But anyone can do it with crypto as long as there are no other tips on him.
It's hardly a banal point for certain uses of cash. It doesn't matter for me buying a 6-pack of beer at the corner store. But if, say, one of your employees has walked off with the day's cash, the reversibility of the transaction becomes extremely important to you.
Given that the relative advantage of cryptocurrencies is strongest for a variety of financial crime, I think the distinction matters even more. As the Bitfinex thieves are learning, cryptocurrency transactions are not as final as they would like.
But the transactions were final, just as it would be if your employee stole the day's cash and escaped somewhere you couldn't find them. Reversible would mean you could press a few buttons on the cash register and poof, the money's back in it and not the pocket of the thief.
Tracking down said thief and taking the bag of money back in this metaphor constitutes a new transaction. As is subpoenaing Dropbox and gaining access to the poorly encrypted list of private keys from these Bitfinex rapper/hackers.
I don't think that's true from the perspective of the employer with the stolen money. The employee took the cash. The employer just wants to hit undo on that. They don't see it as a new transaction, but the reversal of the old one.
Of course, this is all a bit arbitrary. So I don't think we'd have much to disagree if cryptocurrency proponents were open about that. But what we get is a lot of them talking about 100% irreversible transactions. That may be true in the technical jargon of a particular system, but is definitely not always true in the broader social context or in casual uses of the term.
This is, incidentally, a good time to bring up the fact that when Citi accidentally wired $900m to various lenders for Revlon, Inc., many recipients opted to hold onto the money and take the matter to court. They won principally because New York law entitled them to keep the money, because it was effectively a repayment on a loan. Normally, the "hold harmless" part is true and wires are reversed, but that only happens if there isn't a very good reason (like a law that errs in your favor and a large sum of money) on the table. See: https://www.bloomberg.com/opinion/articles/2021-02-17/citi-c..., and the opinion directly: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rrBrQQPB...
I think the important part of this discussion is that the finality of payments sit outside of the mechanics of the financial system. For instance - when a wire transfer is "reversed" that is accomplished with another wire transfer (or some other series of administratively triggered actions). For both cryptocurrency and normal currency the system is a series of transactions that are treated as valid for a particular period of time. The decision to consider a transaction final or not exists outside of that accounting system.
The fatal flaw of crypto currencies (edit: in this regard!) is they have comparably high fees built into the mechanics of their accounting systems. What a bank can do for "free" (really just very low cost) in fiat would compete for scarce transaction slots in crypto.
> What a bank can do for "free" (really just very low cost) in fiat would compete for scarce transaction slots in crypto.
This doesn't seem to be the problem. If 1% of transactions need a second transaction to reverse them, we can amortize this cost over all transactions and say reversibility adds on average 1% to transaction costs - hardly significant when choosing a payment mechanism.
Reversing significantly more transactions than that isn't normal. If you try to reverse 10% of your credit card payments, you'll soon need a new credit card issuer.
I think I want to disagree with the central point of the article here: As a payment mechanism, Bitcoin is final. As a store of value, it isn't unseizable. But from a technical PoV, they still had to make a new transaction in order to reverse the effects of the old one.
I want to clarify that this isn't just a technical point: if I have $100 in account A, and I use a card processor to move it to account B, and then the holder of that account withdraws it, then the card processor can still reverse the transaction, leading B with a debt of $100.
(This is actually a common scam: you send someone $1000 with a 'soft' payment method, like a check, then you have them buy gift cards and send the codes. Once the check bounces, you split.)
If I do the same thing in Bitcoin, that's not possible. If Bitfinex hackers had used Bitcoin qua payment processor to move $70MM, then exchanged the Bitcoin into something else, the Bitcoin transaction could never have been reversed. Only the custody, which is a different thing.
The distinction is certainly one worth making (reversibility within the ledger vs. "meta-reversibility" in the context of the social/legal system that ledger is embedded), and not just at an academic level as underlined by your example.
In my view, both matter when trying to understand a payment system.
I don't understand - how is the custody even part of the payment system, though?
For example, if I keep all my money in the bank, then cash is only as reversible as my bank account is solid. But "cash as a payment method is reversible, if you store the proceeds in a bank account" is not a statement that tells you anything about cash, it's a statement about my bank account.
It would be a solid article if it attempted to argue the point it proves, which is that "there is no such thing as unseizable". But it doesn't, so it isn't.
You're right about the technical distinction, but I think you're incorrect that Bitcoin is truly final. Bitcoin may not have reversed a transaction yet, but it's technically feasible. Note that Ethereum did it: https://futurism.com/the-dao-heist-undone-97-of-eth-holders-...
Bitcoin mining is very concentrated, so if one or more of the major miners is robbed, it's entirely plausible that similarly situated entities would collaborate and just undo the transaction.
Is it that concentrated? People used to criticize that it was concentrated in China, and then that changed basically overnight when mining was shut down the. Now people still say this but how much is it true?
But as the article notes this was actually a hard fork off the chain known up to that time at Ethereum. It’s really just semantics that the old chain became known as Ethereum Classic and the hard-forked chain maintained the name of “Ethereum” due to the active developers and most of the community choosing to use the hard fork.
The payment was still never actually reversed on Ethereum Classic. And that blockchain exists to this day. Sure, the amount of the not-actually-reversed transaction has lost value in $ at mark-to-market but it’s still the same amount of ether on the same blockchain as it’s always been.
In that sense a better term is that the payment was rejected by the community, or routed around, rather than reversed IMO.
That Ethereum Classic never reversed is true but largely meaningless; what matters, as you say, is that "the not-actually-reversed transaction has lost value in $ at mark-to-market." That loss in value represents the reversal. If that hadn't happened, the original and fork could be double-spent.
The difference in value of ETH classic and ETH grew over time though. It hasn’t always been so stark. I don’t care enough about the specifics of the “bad” txs to check when/if the funds were sent out of the receiving wallets but they might have recovered the same or similar amount of value in $.
Anyway, I just find this a really bad example in general because it’s 1 an exceptional case, most other hard forks haven’t been done just for transactions 2 it required almost the entire community to choose to follow the hard fork (which is the only thing that actually destroys value). Yes, it does show that you can do something like a payment reversal in crypto but it’s very hard and unlikely. In this case the exception proves the rule
I don't think it's possible to draw any conclusions about what would happen to Bitcoin, you're running into the fundamental limits of the problem of induction here.
In particular, Bitcoin mining is concentrated into a small number of pools, but the amount of actual power they hold is very questionable. Because nobody censors transactions, we can't know if miners would flee or not if they began to.
English banknotes are printed by De La Rue plc, but it's not like they have a stranglehold on the English economy. If they began to act up, their 'power' would dry up very quickly.
Also, even with 100% of miners cooperating, reversing a two week old transaction would still take two weeks. There are some technical issues with this, since new transaction would grind to a halt and it would generally be a mess.
Note how Ethereum wasn't miners collaborating (soft fork), it was a hard fork, which required no miner cooperation at all.
A hard fork of Bitcoin in this way is indeed possible, but would require the consent of a lot of entities. Ethereum is much more 'socially' centralized in terms of its governance process, and it was very obvious that if they didn't go along with it, then the big, centralized entity that held all the proceeds from the ICO would stop paying the developers, and the PR goons, and and and...
I'm not going to draw any conclusions about the future based on this, but we can observe that big players (Binance) have lost money, publicly considered 51% attacks, then backed down. We can also observe the fate of Marathon's OFAC pool - he didn't fly so good, who wants to try next?
I didn't make any claims about what would happen. Just that patio11 is correct that no transaction is truly final, because a Bitcoin transaction reversal is unlikely but not impossible.
Actually the transaction wasn't reversed, a distinct cryptocurrency was created (a "fork") which reversed the transaction. The new cryptocurrency adopted the name Ethereum and it became way more popular than the original, so the original had to rebrand to "Ethereum Classic" to avoid confusion. The new cryptocurrency was successful largely thanks to Ethereum founder Vitalik Buterin endorsing it. Similar "attacks" were attempted on Bitcoin multiple times (e.g. Bitcoin Cash) but they never quite succeeded and are unlikely to succeed thanks to Bitcoin lacking some sort of active founder/leader. For a Bitcoin hard fork to succeed, there would need to be a large consensus not only among miners, but among users, merchants, exchanges, etc.
So it sounds like we agree: It's unlikely but impossible, and so patio11 is correct to say that finality does not exist, and that it's just a probability distribution for each channel.
I disagree that the Ethereum fork confirms the idea that the transaction wasn't final. It was final and still is.
That being said, I do think patio11 is technically correct, given his unconventionally strict definition of "finality".
Probability is at the core of Bitcoin's proof of work security mechanism. There is a non zero probability that I could rewrite the whole Bitcoin transaction history in the next 15 minutes, if my miner gets really, really, really lucky. The chances of that happening are of course abysmally small and not worth considering. For all practical purposes, Bitcoin transactions are final past a few confirmations.
I think you are using a very technical definition of "final". Both the purpose and the real-world effect of the fork was to make an apparently final transaction no longer final. That it is still "final" in at best a distraction to the general-audience meaning of "final".
I estimate the probability of a similar Bitcoin action to be small, but much larger than the "miner gets really, really, really lucky" scenario you propose. Do you disagree?
I wouldn't say it's just technical. The Ethereum Classic chain, where the transaction lives on, still exists and is now worth ~3x more than it was at the time of the hack. If the hacker kept their ETC (not sure if they did) they would still have 118M$ USD today. And regardless, the probability that any one transaction will be reversed by a fork of the Bitcoin blockchain are vastly smaller. There have been tons of hacks in Bitcoin's history already and no transactions were reversed. Bitcoin doesn't have a clear head.
> I estimate the probability of a similar Bitcoin action to be small, but much larger than the "miner gets really, really, really lucky" scenario you propose. Do you disagree?
Of course, I agree. That being said, I'd still put the probability in the vanishingly small category, especially for any individual transaction that isn't an exploit, and not worth considering in the context of "finality", as the term is commonly used (and not as patio11 defines it).
That's not a hard fork. A hard fork makes a previously invalid transaction valid; this made a previously valid transaction invalid, e.g. a soft fork. Bitcoin has had many soft forks.
I think the sentiment of the article was that all of these technical details and nuances are ultimately irrelevant to governments that control armies. Those government can even legislate ridiculous things (https://en.wikipedia.org/wiki/Nix_v._Hedden).
It can be, with a memorized seed phrase and some willpower. I'm still amazed that the technically inclined Bitfinex hackers managed to get their wallet seized.
What's the xkcd... Something something, $15 dollar wrench? The application here is this:
We (the US govt) know you (the hackers) did it. Cough up the cash and go to prison for a long time or don't and go for much much longer.
Suddenly, the money is seized.
That said, there are arguments to be made about that money as a bargaining chip if you keep the wallets 'unseizable' (until you cough it up for an offer).
I specifically included "some willpower" because I knew someone would bring that up. Technically, if you stand your ground and go to prison for a long time (or are going to prison for a long time regardless), the money won't be seized. Similarly, if you forget your passphrase or die, the money won't be seized. Or if you have a multisig wallet setup and your accomplices don't get caught, the money won't be seized. I believe there are multiple actual instances of the FBI not being able to seize rather large Bitcoin wallets.
The author posted a full throated and mocking anti-bitcoin article in 2014 [1] when the bitcoin price was $300. Since then, bitcoin has thrived, and so has cryptocurrency in general. BTC is up 100x since Peter posted his original article.
A lot of anti-bitcoin crowd gets ego invested in their opposition, and the result is articles like this, which misunderstand the fundamentals of bitcoin.
In what way would you say that the current article is misunderstanding the fundamentals of Bitcoin? I'd argue that it merely contextualizes in-system (technical) finality in the larger context of "social/legal finality".
See another reply above mine: transactions never got reversed on blockchain. Outside chain activities, like seizing private keys, are fundamentally different in bitcoin.
I'm not sure this is so different from "reversing" charges in the traditional banking system. It's not like someone issues a DELETE FROM to remove the original transfer; they just create a new transfer that puts the money back. Just like bitcoin.
> Since then, bitcoin has thrived, and so has cryptocurrency in general. BTC is up 100x since Peter posted his original article.
This kind of argument shows up a lot, but is a classic example of "appeal to popularity". Whether bitcoin goes to $0 or $1,000,000 is mostly irrelevant when discussing technological and practical merits of bitcoin.
Where the price of bitcoin is relevant is when discussing it as a speculative investment. So what tends to happen is a conversation that was supposed to be about blockchain technology turns into one about blockchain speculative investing. This and appeals to greed/FOMO ("have fun staying poor") tend to drive me nuts about a lot of blockchain discussions.
> A lot of anti-bitcoin crowd gets ego invested in their opposition, and the result is articles like this, which misunderstand the fundamentals of bitcoin.
If a "no-coiner" has high ego investment in their position, what level of ego investment does someone holding cryptocurrency have? And what specifically does this article misunderstand about the fundamentals of bitcoin? Just stating that the article misunderstands something is not a very strong argument or rebuttal.
The article claims that bitcoin transactions are reversible, which they are not. He substitues the feds seizing the private keys and making new transactions as reversals.
Sure, that is what the article literally says ("the Feds can move your Bitcoin without your private keys!"), but I think the point he's trying to make is more along the lines of "in-system transaction finality isn't everything".
Finality does exist in the payments. It may not exist in consumer (fiat currency) payments, but it definitely exists.
The EU has a directive Settlement finality - Directive 98/26/EC that address this problem specifically. If there were no finality, markets would need to price in more risk in every transaction.
> WHAT DOES THIS DIRECTIVE DO?
> It guarantees that financial product transfer and payment orders can be finalised, mainly by mitigating problems arising from a participant’s insolvency.
What ridiculous framing. The transaction wasn't reversed. Some people stole some bitcoin from Bitfinex in 2016, and then the US gov stole it from them in 2022. What exactly got reversed?
How do people simultaneously misunderstand what the bitcoin community believes and how the code works?
This person, and many others, believe that the US government undermined “code is law” by doing the exact thing that the code is law people believe. Uh… what? There are literally so many people that think something omniscient happened. Good marketing by the US government?
If you have the keys you have the coin. The government obtained the keys because they were in plain text after brute forcing a zip file, and moved the coin. Its not even clear they were looking for that.
Everyone is on the same footing here.
I dont understand this article. What a long winded essay for these misunderstandings.
Thought experiment: What would have happened if the hackers had distributed the funds among millions of wallets held by regular people - including wallets owned by police officers, judges and other government officials? Would it be possible/feasible to confiscate the illicitly acquired funds? Would people even want that after receiving a bribe they couldn't technically refuse?
Finality is a mundane occurrence within the world: destruction of a physical asset - not a financial instrument - is definitely final. And crypto does have a notion of "burning" tokens(by sending them to a random place, rendering them inaccessible to all parties) that has proven to be useful as an equivalent finalization.
What isn't final about crypto is rather the entirety of the system. When using it you consent to the inner part of it - the on-chain record - being final, while the overall framework is not and can be reformed with hardforks, protocol upgrades etc.
TradFi does the inverse: the overarching framework of international finance is taken to be final, ultimately enforced through political and military power - while the day-to-day details of the system are negotiable.
The underlying utilitarian proposition of introducing crypto - irrespective of the ideological - is that making an entire financial system open, fungible and mutable is net beneficial towards the goal of economic coordination, even if some aspects like consumer payments may remain traditional in nature.
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[ 4.4 ms ] story [ 263 ms ] threadThey are final.
https://bitcoin.stackexchange.com/questions/88289/what-is-tr...
Why is the couple who held the bitcoin from the hack being prosecuted? How were those funds being unwound if the transaction is final? If all of the exchanges were to denylist coins from a hack, do they actually exist or have they been taken away?
> special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex
https://www.justice.gov/opa/pr/two-arrested-alleged-conspira...
This is how "unwinding" works in almost all payment systems: Creating a second transaction to (partially or fully) offset the effects of the original one.
You could just as easily say that cash payments aren't final because you could lose your wallet after you put the cash in it, but using the example of Bitcoin and the federal government is going to get more clicks.
Wasn't the point that a certain amount of ambiguity around finality is the usual (and natural) state of payment systems?
It doesn't really matter what the code says, or what bits are inscribed somewhere. Finance and ownership are ultimately enforced by armies, not computer programs.
This is one reason why some people think that cryptocurrencies are playing with fire. It's also why major exchanges won't make it easy to cash out laundered bitcoins to USD.
It isn't, though. The record is kept, and in fact the government needs to submit to the blockchain's laws to move any coin around.
It is kept in the same sense that you can draft a contract declaring you the owner and supreme ruler of the moon.
> in fact the government needs to submit to the blockchain's laws to move any coin around
No, it's the opposite: Everybody moving around coins has to submit to applicable laws – or face the consequences of violating them.
The government cannot undo a Bitcoin transaction. If the keys are accessible, they can seize the coin and create a new transaction to redistribute according to the law.
If the keys are not accessible, then they are totally powerless to do anything at all.
The government submits to the blockchain's rules the same way everyone else does. That's kind of the point.
The interesting thing in this whole conversation is assuming the person holding the key is the custodian of the funds, when it is more the key itself that is the custodian. The keys hold the funds, the person holding the keys can change but that is entirely outside the system but so is getting robbed on the side of the street of the cash in your pocket.
If you truly believe that, I don't think you understand how law enforcement works.
To my knowledge, this hasn't happened yet, but I strongly suspect that it's only a question of time. Embargoes/sanction lists are one of the most powerful mechanisms of law enforcement for governments – I doubt that they will continue to let cryptocurrencies undermine that for too long.
Definitely, but I don't think that mixers would be considered an acceptable "excuse" for dubious coin origin.
> The key holder has the ultimate power to simply throw away the key. There is no recourse for that.
True, but what is the utility of that?
I suppose the point is to not have something seized from you which you do not want taken.
Anyway, these questions are now outside of/unrelated to common sense understanding of what a "finalized" payment is.
They can make you cough up an equivalent amount in fines, of course. But the original amount is gone.
The point the article was making is that transactions can and will be deemed illegitimate, both in the sense that mistakes are made, and in the sense that the legal framework will decide you have to reverse the payment. If you've buried cash and refuse to tell people where it is, you are in roughly the same place as refusing to reveal keys. You can be held accountable of course, in various ways.
I think the article was more making the point that any payment system that doesn't recognize this reality will have inherently limited uptake, which is probably true.
I was noting that there is nothing fundamentally different between say you accepting a payment in bitcoin and refusing to cough up the key when told to reverse it, or accepting a payment in cash and burying it then refusing to tell police where.
Fundamentally there are mechanisms to reverse this, or punish/constrain you for obstructing the process. Some payment systems have them built in at a very low level (CC chargebacks), some rely on professional standard (hold harmelss), etc. Some rely on court systems. That's a trade off of convenience vs. risk, but doesn't change the fundamental point that a payment system without a standard reversal mechanism is going to have limited use.
Agreed.
> That's a trade off of convenience vs. risk, but doesn't change the fundamentals.
There is. The ones that rely on court mechanisms aren't the payment mechanism being reversible, it's something else (the storage) that gives first.
It's true that if you keep it in your bank account, all transactions are reversible. But that's a statement about property rights, not about finality. If I have a solid means of "storing" my money, such as by burying it in my back yard, then the payment itself is irreversible. That's not true for cards, which are reversible even if your storage is 100% robust.
I'm not sure we agree on this being fundamental. At least you can define it as a categorical difference (sure) but not really a practical difference.
I think the articles points were twofold: 1) Property rights, or more generally the legal & regulatory systems, trump any rules imposed or agreed in your system of payments 2) Most payments systems feature reversal processes for necessary reasons (but if they don't, see (1) as fallback position)
Both of these seem important to understand if you want to understand how a payment system works or could work in the future, and also to understand your exposure/risk in using them.
People mostly understand the trade offs and limitations of cash; mostly probably don't understand them well for lots of payment systems.
1. Storage
2. Payment rail
If your storage is solid (e.g. keys in brain wallet, account in crooked bank, money in shoebox) and the payment rail is solid (e.g. gold, cryptocurrency, cash), you're good. (To clarify, "solid" here means "beyond the legal-regulatory system", which means the rules aren't trumped.) Otherwise, you aren't.
I say that Bitcoin has "finality," because it does the job of payment rail with 100% irreversibility.
Grant that Bitcoin is a mediocre storage (1). But the payment rail (2) truly is irreversible. The combined system of two disjoint parts, built out of bitcoin-as-storage and bitcoin-as-payment-rail, is not.
I think it is a mistake to believe this is a thing. You can be allowed to operate in gray areas for a bunch of reasons, or you can be small enough not to be too bothered about (e.g. shutting you down not deemed worth the effort); but this is a choice of those same systems, not in your control really.
Although to be fair, I guess this stuff really varies by jurisdiction. Otoh, where the gray areas get bigger, your chances of having that go against you are bigger also.
Whether such storage exists is a much better question. I think it depends on what you want to do with it. For example, if the Bitfinex guys were ideologically motivated, they could've spent all the money on, I don't know, political ads or whatever. More generally, I think you can certainly come up with storage that is outside the reach of a given threat actor in pursuit of a given goal.
I'm not saying bitcoin isn't a thing in the world; I was saying that I don't think that makes it "beyond the legal-regulatory system", or that that is really even a helpful/useful concept. I mean we can talk about various shadow economies, but they are just that - and not really in scope for OP article.
> An extreme example which proves the point: the cryptocurrency enthusiast community largely believes that code is law, “not your keys, not your coins”, etc. Many crypto enthusiasts would say that the Bitcoin protocol does not prohibit reversing transactions but provides a security guarantee which suggests that the likelihood of a reversal after an hour is infinitesimal.
> And yet: someone sent $70 million worth of Bitcoin in 2016, and that transaction was partially voided, with the reversal being worth slightly more than $70 million due to Bitcoin volatility. This didn’t happen an hour later; it happened in 2022. How?
> The answer is nowhere in the Bitcoin whitepaper or any codebase. A full recounting of it is outside the scope of this anecdote, but it rhymes with “If you and the United States federal government disagree whether a transaction is final, you are wrong.” That is true for notorious Bitcoin thefts, but also true for wire transfers, conveyances of real estate, credit card payments, and graverobbing. “Possession is nine-tenths of the law,” so the saying goes, but the state can conjure as many tenths as required if it is motivated to.
Just follow the link in the TFA if you want to verify that.
But to the entity who received the coins, it also doesn't matter where the coins went after someone took them by force. If you get paid for a day's work in cash and a robber steals it on your way home, you wouldn't say that your work payment transaction was reversed or that it hadn't been finalized up to the point of the robbery.
What if an employer paid you in coins, so you take your coins and go home, then tomorrow your employer decides to take back the coins they gave you since they were not happy with your work (or they're just jerks)? I think that would fit the layman understanding of "this was undone!" (i.e. the transaction wasn't final). If in this case, the underlying financial engines used two, none, or one transaction (as specifically defined by that engine), probably wouldn't matter to the one who no longer has their coins.
The government is certainly a different party that wasn't involved in the original transaction, right?
> What if an employer paid you in coins, so you take your coins and go home, then tomorrow your employer decides to take back the coins they gave you since they were not happy with your work (or they're just jerks)?
This can definitely happen, at least with checking accounts. It has happened to me once because an employer accidentally double-paid everyone, and they were able to withdraw one of the payments from our accounts. I'm not sure exactly how that works. It could just be that your employer essentially has full access to your checking account since you gave them your account and routing number. Incidentally, I was always curious what would have happened if I had moved everything out of my checking account before they make the correction. But regardless of how it is actually implemented in the banking system, it's pretty clear if your employer erroneously removed funds from your bank account, or if you cashed out the accidental second payment then quit your job, it would again just come down to the legal system.
So sure - it's technically reversible. But is this really a practical argument? It's like saying nobody is safe in public because you can be a victim of a terrorist attack any any moment. It's alarmist and practically wrong even if technically true.
In that case, ~9 hours of transaction history were reversed because of a transaction that resulted in an overflow in the main (and I think only at the time) Bitcoin client allowing the creation of unlimited Bitcoin.
I think, most legal systems are setup to make reaching finality on material things pretty expensive (but also very difficult/impossible to challenge once it reaches finality). Overall, societies seem to work well that way given the pretty long track record.
"Payments" perhaps means "Digital Payments"?
Store puts up a 'No returns' sign, you have finality.
For example if they knowingly sell you defective stuff or if medicine is tainted, etc., there are laws that override such a policy.
He also describes a Bitcoin transaction as not being "final" because it was seized by the government. This isn't really what most people mean by finality.
So you never really know what he means throughout the article due to imprecision and it comes off as not compelling.
When I get paid by credit credit card it's "final", because that transaction can't be cancelled, only a new transaction can be created to undo it without my consent.
Patrick loves to write coyly, but his point is simple: If the government can find the money they can take it back from you.
What he misses is that it only works if they can find the keys (or the next best thing -- your body).
It doesn't rhyme.
For example, "example" rhymes with "sample" but not with "people" because the stress is on the second-to-last syllable.
But "redact" and "exact" rhyme, despite only agreeing in the last syllable, because that's the last syllable that's stressed.
"Takesies" and "backsies" are both stressed on their first syllables, so they would need to match from that vowel on in order to be perceived as a natural English rhyme, and they don't.
> The answer is nowhere in the Bitcoin whitepaper or any codebase. A full recounting of it is outside the scope of this anecdote, but it rhymes with “If you and the United States federal government disagree whether a transaction is final, you are wrong.”
Following the link in that quote, that didn't happen because Bitcoin wasn't final after all, just because the government "disagreed." It happened because the government found the criminals' private keys, and made a new transaction.
Back to the first article, it continues with this:
> That is true for notorious Bitcoin thefts, but also true for wire transfers
I'm wondering how it is then that theft by wire fraud is a serious problem these days.
These situations can be reversed if discovered fast enough, but after a few hours the funds are moved internationally and you're very unlikely to get your money back.
Technically kalzumeus might be right, however practically it almost always makes sense to think that wire transfer is final, and treat it that way. If a con man tricks you into wiring funds to a wrong address, it is quite likely gone. However with credit card payments you can be more relaxed, and so on.
The article touches briefly on that. Some wire transfers can be reversed. It becomes more difficult when money starts moving around jurisdictions, but at least it's possible. Essentially no crypto transactions can be reversed.
Why was this wire transaction not reversed? Apparently, they were about to get away with $1 billion USD but the hacker entered the global SWIFT code incorrectly by 1 character and so it was caught.
The fact that North Korea made off with $81 million USD, however, is rather unsettling, and even more so the fact that this was not reversed / caught.
[1] https://www.bbc.com/news/stories-57520169
Every authority along the way must be on board with the reversal. When the chain is broken, as when cash is laundered at a casino, somebody will be left holding the bag. You can't reverse the cash back out of thin air.
Had all the money been found still sitting pretty in an account, I assume things would have eventually been all settled.
Bitcoin transactions are hard to reverse (not strictly impossible, as shown by the recent example, and a few others of the same vein, but it requires to arrest the key owner and seize the key, which is obviously kind of hard) but practically all other cryptocurrencies are centralized enough to allow for transaction reversal (The ethereum hard fork after the DAO hack is the practical example of this). And I'm not even talking about weak chains for which an attacker can even reverse transaction against everybody else's will[1]…
[1]: https://www.coindesk.com/markets/2020/08/29/ethereum-classic...
> centralized enough to allow for transaction reversal
You can argue that the developers held outsized influence over the consensus mechanism early in Ethereum's lifecycle. You can also debate their recommendation & push to hard fork to a new ledger that undid the hack. But to argue that it is anywhere close to 'centralized' today is disingenuous at best.
It should be impossible for any one agent to change the record, but it is the nature of blockchains that consensus holds as "accepted fact". In the event a blockchain is ever relied upon for anything of social importance, the ability for consensus mechanisms to fork away from "systemic ruin" is a desirable trait.
I'm one of the few that argue the DAO Hack was a proof of concept for an ultimately 'required' capability for any critically important blockchain systems.
Ethereum devs have absolute power on ethereum. Things like EIP 1559, or Ethereum 2 illustrate this point really clearly: miners have zero power, neither do full nodes.
No matter what the algorithms (which can be patched anytime anyways) say, power is a social thing and in the case of Ethereum, the devs have literally complete power over it.
The storage is decentralized, the computation is decentralized, but power clearly isn't (and with PoS, it will become more centralized even on an algorithm point of view).
The foundational decentralization feature of a cryptocurrency is the fact that the blockchain is edited by a distributed network of competing people: yes I'm talking about the miners. If the miners have no power in your system, then their is no practical decentralization because mining is the only thing actually decentralized in a blockchain!
The migration to PoS isn’t some rug-pull on miners, they’ve known about it for years. If there was legitimate protest, they’d refuse to adopt new versions that incorporated the ETH kill switch. The reason they haven’t? They have no skin in the game - most are mercenaries for hire, operating through centralized pools, cashing out whatever they mine.
PoS is a superior system - more flexibility for decentralized participation (only benefit to pooling is convenience), and dramatically better for the environment at scale. Everyone who holds the asset (I.e. the people who should have the most say in platform operations) have invested in PoS, and want it. It’s widely supported.
Unwillingness to accept anything other than “bitcoin is the way” is just baseless faith in modern garb.
I've never said “bitcoin is the way”. Let me be clear, bitcoin is a giant CO2-emmiting turd invented by a libertarian who wanted to bring the gold standard back.
But, if you're doing PoS you're not in a permissionless blockchain anymore (since you need to buy staking power), that's it.
(And, BTW, if you don't need the sybil-resistance that permissionlessness implies, then you are in the realm of traditional distributed systems and using a blockchain is just path dependency at this point …)
So my point was that having to buy stake doesn't make Ethereum's proof-of-stake any more permissioned than proof-of-work, where you have to buy mining equipment.
For the DAO fork at least there was controversy. There was a little bit of controversy on 1559, but it was mostly from miners or people who had clear misunderstandings about how it worked. It ended up improving the user experience and, according to Coinbase, saving users a little money. Proof of stake has no noticeable pushback except in the mining subreddits, and has been part of the plan since 2014. If it had no support then the beacon chain wouldn't have 9 million ETH deposited.
For the DAO fork, people made the same claim, that the visible community actually misrepresented people's real feelings. But in the end, both sides got a chain of their own, and oddly enough, the side that had appeared more popular before the fork ended up having vastly more market value.
If the hacker had hidden their private keys in a secret location (or just memorized them), they could almost certainly have gotten away with it. The hackers were extremely neglectful. It's a testament to Bitcoin's security that it took so many years to be caught given this level of carelessness and the massive amount of money involved.
Some people in the Bitcoin community think the news is fake and intended to harm Bitcoin's reputation... We don't know what really happened behind the scenes. It's hard to believe that people can be so careless.
In fact, I wish banks had an option to require an extra authentication factor for any transactions that isn't easy to trace and reverse, like ATMs or crypto purchases.
The cameras help a lot, and ATMs are somewhat OK, but nothing stops a person from using crypto to launder a stolen card.
If they bought gold, someone could track their address. If they bought it in person they'd be on camera. A way to restrict transactions that go outside of easy to track places would help a lot of people.
Of course, using 2FA for your Google account also stops most of that...
If someone tried to make the argument to me that cash doesn't have finality because your shoebox-in-the-closet-full-of-cash can be stolen from you, I would say they're stretching the definition of "transaction finality" in order to make a banal point.
https://www.snopes.com/fact-check/irs-taxpayers-stolen-items...
Btw, the IRS rule you're referring is just a hack to be able to at least charge people for tax fraud if the police cannot prove that you were involved in criminal activities. (Like how Al Capone got eventually caught for tax fraud).
[1]: https://7news.com.au/technology/tiktok/tiktok-video-of-logan...
In what sense?
> The rightful owner cannot just steal it back.
The rightful owner doesn't get any special rights, so they can't trespass to get their property back. A policeman could get it back for them, though. If it's just lying there they can take it back themselves. I've heard stories where people find their stolen property on Craigslist, meet with the thief, and steal it back without using force. That's fine.
> Similarly if it wasn't yours, you wouldn't have to pay taxes on it
Ownership is a tricky concept. There are many rights and responsibilities associated with ownership. Owning a bike carries a different set of rights and responsibilities from owning a house. Paying taxes on something is an obligation typically associated with ownership, but since stealing something does not create many of the other legal rights associated with ownership I don't think it's sufficient to say that it demonstrates that it's "yours." Also, of course, no one actually pays the taxes.
What cop do you know would just steal property back for you? This a matter for courts.
> I've heard stories where people find their stolen property on Craigslist, meet with the thief, and steal it back without using force. That's fine.
What happens on Craigslist encounters is not exactly common law.
https://jgcrimlaw.com/blog/someone-stole-my-stuff-and-im-gon...
Obviously, the answer is that cash is a good "first layer". The legal system is there to resolve disputes, not facilitate transactions.
Reversibility on a technical level and legal ownership are totally different things, it seems like many folks conflate them.
My point is that those two things are fundamentally different.
Disputes without transactions don’t mean much. The legal system (at least the civil portion of it) exists solely to facilitate transactions, it’s just that normally those transactions are formalised in contracts.
Providing an adjudication service who decisions can be enforced with state violence, makes it much easier for people to have confidence in the value of contracts, and thus perform more complex transactions. The civil courts provide exactly this service, for the pure purposes of making transactions between private individuals easier and more enforceable without individuals resorting to vigilante justice.
If I leave a box with cash in your care and you steal it or are negligent, I can seek relief in the courts. If I win and you refuse to pay, the sheriff will seize assets and sell them to satisfy the order of the court.
Maybe everybody knows it, but it certainly is worth reiterating. I find the notion of transaction finality as a spectrum very useful.
P(seizure-of-assets) scales sharply up as one goes from none to some, and then sharply down as the number gets high.
This is utter hearsay, unreliable watercooler baseball, but it’s not one person who said that he was in Thailand chilling for most of the vest.
But I kind of have to cough up now: the rumor mill, and it was exactly that, has made credible claims that Socialcam was a dead end that got pimped to Autodesk as their path towards social media relevance, including some influential angel back-scatter, and then the principles promptly fucked off to Thailand and rested their vest until they got big jobs at YC on the back of building…Socialcam.
Twitch is a name everyone knows, AMZN got their money’s worth. The other highly YC-connected justin.tv stuff? Yeah, not a big splash.
The failed justin.tv-spin-off folks don’t care though, they never had any real competition because people who don’t have a locked-in outcome can’t afford to pursue impoverished, transient markets.
I wouldn’t shed too many tears though: no one from that crowd is doing badly. Bad companies failing and burning up the cap table is for the plebs.
I tend to get pretty cranky (as you can see) about the old-boys network that’s emerged around it, but that in no way diminishes the value to a founder of being in that network.
The reality is, unless you’re in a particular situation, like a Russia-based criminal who kicks the big up the chain, you’re not out of reach of the law.
Well, one could argue that we, the people, want the sovereign state where there is some degree of social contract going on, to have that ultimate power.
Putting that power into a system that was designed by humans and almost by design can't be democratic and at best is meritocratic, is a very likely path to a Kafkaesque world.
The sovereign state is a concept. It's not even a real thing and it has no physical power.
> immune to the authority of the state
They definitively are, comparatively. If you are moving across borders, it is much safer to hold $10m in crypto than cash. Actually, you'll need to be legit, pay a bribe or use violence to move that much cash through borders. But anyone can do it with crypto as long as there are no other tips on him.
Given that the relative advantage of cryptocurrencies is strongest for a variety of financial crime, I think the distinction matters even more. As the Bitfinex thieves are learning, cryptocurrency transactions are not as final as they would like.
Tracking down said thief and taking the bag of money back in this metaphor constitutes a new transaction. As is subpoenaing Dropbox and gaining access to the poorly encrypted list of private keys from these Bitfinex rapper/hackers.
Of course, this is all a bit arbitrary. So I don't think we'd have much to disagree if cryptocurrency proponents were open about that. But what we get is a lot of them talking about 100% irreversible transactions. That may be true in the technical jargon of a particular system, but is definitely not always true in the broader social context or in casual uses of the term.
lo and behold
https://getproofed.com/writing-tips/idiom-tips-lo-and-behold...
The fatal flaw of crypto currencies (edit: in this regard!) is they have comparably high fees built into the mechanics of their accounting systems. What a bank can do for "free" (really just very low cost) in fiat would compete for scarce transaction slots in crypto.
This doesn't seem to be the problem. If 1% of transactions need a second transaction to reverse them, we can amortize this cost over all transactions and say reversibility adds on average 1% to transaction costs - hardly significant when choosing a payment mechanism.
Reversing significantly more transactions than that isn't normal. If you try to reverse 10% of your credit card payments, you'll soon need a new credit card issuer.
I want to clarify that this isn't just a technical point: if I have $100 in account A, and I use a card processor to move it to account B, and then the holder of that account withdraws it, then the card processor can still reverse the transaction, leading B with a debt of $100.
(This is actually a common scam: you send someone $1000 with a 'soft' payment method, like a check, then you have them buy gift cards and send the codes. Once the check bounces, you split.)
If I do the same thing in Bitcoin, that's not possible. If Bitfinex hackers had used Bitcoin qua payment processor to move $70MM, then exchanged the Bitcoin into something else, the Bitcoin transaction could never have been reversed. Only the custody, which is a different thing.
In my view, both matter when trying to understand a payment system.
For example, if I keep all my money in the bank, then cash is only as reversible as my bank account is solid. But "cash as a payment method is reversible, if you store the proceeds in a bank account" is not a statement that tells you anything about cash, it's a statement about my bank account.
It would be a solid article if it attempted to argue the point it proves, which is that "there is no such thing as unseizable". But it doesn't, so it isn't.
Bitcoin mining is very concentrated, so if one or more of the major miners is robbed, it's entirely plausible that similarly situated entities would collaborate and just undo the transaction.
The payment was still never actually reversed on Ethereum Classic. And that blockchain exists to this day. Sure, the amount of the not-actually-reversed transaction has lost value in $ at mark-to-market but it’s still the same amount of ether on the same blockchain as it’s always been.
In that sense a better term is that the payment was rejected by the community, or routed around, rather than reversed IMO.
Anyway, I just find this a really bad example in general because it’s 1 an exceptional case, most other hard forks haven’t been done just for transactions 2 it required almost the entire community to choose to follow the hard fork (which is the only thing that actually destroys value). Yes, it does show that you can do something like a payment reversal in crypto but it’s very hard and unlikely. In this case the exception proves the rule
In particular, Bitcoin mining is concentrated into a small number of pools, but the amount of actual power they hold is very questionable. Because nobody censors transactions, we can't know if miners would flee or not if they began to.
English banknotes are printed by De La Rue plc, but it's not like they have a stranglehold on the English economy. If they began to act up, their 'power' would dry up very quickly.
Also, even with 100% of miners cooperating, reversing a two week old transaction would still take two weeks. There are some technical issues with this, since new transaction would grind to a halt and it would generally be a mess.
Note how Ethereum wasn't miners collaborating (soft fork), it was a hard fork, which required no miner cooperation at all.
A hard fork of Bitcoin in this way is indeed possible, but would require the consent of a lot of entities. Ethereum is much more 'socially' centralized in terms of its governance process, and it was very obvious that if they didn't go along with it, then the big, centralized entity that held all the proceeds from the ICO would stop paying the developers, and the PR goons, and and and...
I'm not going to draw any conclusions about the future based on this, but we can observe that big players (Binance) have lost money, publicly considered 51% attacks, then backed down. We can also observe the fate of Marathon's OFAC pool - he didn't fly so good, who wants to try next?
That being said, I do think patio11 is technically correct, given his unconventionally strict definition of "finality".
Probability is at the core of Bitcoin's proof of work security mechanism. There is a non zero probability that I could rewrite the whole Bitcoin transaction history in the next 15 minutes, if my miner gets really, really, really lucky. The chances of that happening are of course abysmally small and not worth considering. For all practical purposes, Bitcoin transactions are final past a few confirmations.
I estimate the probability of a similar Bitcoin action to be small, but much larger than the "miner gets really, really, really lucky" scenario you propose. Do you disagree?
> I estimate the probability of a similar Bitcoin action to be small, but much larger than the "miner gets really, really, really lucky" scenario you propose. Do you disagree?
Of course, I agree. That being said, I'd still put the probability in the vanishingly small category, especially for any individual transaction that isn't an exploit, and not worth considering in the context of "finality", as the term is commonly used (and not as patio11 defines it).
https://bitcointalk.org/index.php?topic=823.0
It can be, with a memorized seed phrase and some willpower. I'm still amazed that the technically inclined Bitfinex hackers managed to get their wallet seized.
We (the US govt) know you (the hackers) did it. Cough up the cash and go to prison for a long time or don't and go for much much longer.
Suddenly, the money is seized.
That said, there are arguments to be made about that money as a bargaining chip if you keep the wallets 'unseizable' (until you cough it up for an offer).
A lot of anti-bitcoin crowd gets ego invested in their opposition, and the result is articles like this, which misunderstand the fundamentals of bitcoin.
[1] https://www.kalzumeus.com/2014/08/05/harry-potter-and-the-cr...
What I'm getting out of the article is that this is less relevant than people generally assume.
This kind of argument shows up a lot, but is a classic example of "appeal to popularity". Whether bitcoin goes to $0 or $1,000,000 is mostly irrelevant when discussing technological and practical merits of bitcoin.
Where the price of bitcoin is relevant is when discussing it as a speculative investment. So what tends to happen is a conversation that was supposed to be about blockchain technology turns into one about blockchain speculative investing. This and appeals to greed/FOMO ("have fun staying poor") tend to drive me nuts about a lot of blockchain discussions.
> A lot of anti-bitcoin crowd gets ego invested in their opposition, and the result is articles like this, which misunderstand the fundamentals of bitcoin.
If a "no-coiner" has high ego investment in their position, what level of ego investment does someone holding cryptocurrency have? And what specifically does this article misunderstand about the fundamentals of bitcoin? Just stating that the article misunderstands something is not a very strong argument or rebuttal.
The EU has a directive Settlement finality - Directive 98/26/EC that address this problem specifically. If there were no finality, markets would need to price in more risk in every transaction.
> WHAT DOES THIS DIRECTIVE DO?
> It guarantees that financial product transfer and payment orders can be finalised, mainly by mitigating problems arising from a participant’s insolvency.
https://ec.europa.eu/info/law/settlement-finality-directive-...
https://eur-lex.europa.eu/legal-content/EN/LSU/?uri=CELEX:31...
This person, and many others, believe that the US government undermined “code is law” by doing the exact thing that the code is law people believe. Uh… what? There are literally so many people that think something omniscient happened. Good marketing by the US government?
If you have the keys you have the coin. The government obtained the keys because they were in plain text after brute forcing a zip file, and moved the coin. Its not even clear they were looking for that.
Everyone is on the same footing here.
I dont understand this article. What a long winded essay for these misunderstandings.
What isn't final about crypto is rather the entirety of the system. When using it you consent to the inner part of it - the on-chain record - being final, while the overall framework is not and can be reformed with hardforks, protocol upgrades etc.
TradFi does the inverse: the overarching framework of international finance is taken to be final, ultimately enforced through political and military power - while the day-to-day details of the system are negotiable.
The underlying utilitarian proposition of introducing crypto - irrespective of the ideological - is that making an entire financial system open, fungible and mutable is net beneficial towards the goal of economic coordination, even if some aspects like consumer payments may remain traditional in nature.