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Comment by idiotsecant | Hacker News Reader

I think the way you protect yourself is the same way people protected themselves before credit cards were widely used. By not spending your cash on things that are scams. Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.

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In the US, banking scams and crashes were very common before the various reforms enacted in the early 20th century. Wildcat banks in the west printed money with reckless abandon, which quickly became completely worthless. Bank runs were pretty common, due to a low overall confidence in the banking system. And a worker in 19th century America was lucky if they were paid in actual money, instead of a company scrip.

Thats not what he was talking about.

Commercial banking is four centuries old. https://en.wikipedia.org/wiki/Banca_Monte_dei_Paschi_di_Sien... ; the modern world is built around banking as much as it is around the limited liability corporation. The basic borrow short/lend long business of a bank is not going anywhere.

Mind you, it's worth noting that MPS had four centuries of independence before listing itself on the stockmarket and losing its independence comparatively shortly afterwards in the 2008 crisis.

Nope, because cryptocurrencies also removed all other protections.

- The scams are online, so I cannot knock on the scammer's door with an angry mob and ask for our money back.

- Pseudonymous identities means scammers have strong protections against being sued or prosecuted.

- Digital wallets, as opposed to cash in bank vaults, means that you can lose all your savings in one mistake.

- Complete lack of trusted third parties means there's no one to appeal to, or to raise alarms in suspicious cases.

The old protections were already pretty bad (scams and thievery very much did exist), and cryptocurrencies are lacking even those basic protections.

>- The scams are online, so I cannot knock on the scammer's door with an angry mob and ask for our money back.

>- Pseudonymous identities means scammers have strong protections against being sued or prosecuted.

>- Complete lack of trusted third parties means there's no one to appeal to, or to raise alarms in suspicious cases.

I think that all these things are not fundamental aspects of crypto, but rather how the user chooses to use crypto. If I wanted to I could use crypto only for buying eggs from the local market, or paying a plumber to do some work for me, etc. Scams have existed for decades that involve essentially mailing cash to people that fit the criteria you listed - it's not an issue with cash, but an issue with how people are transacting (with remote unidentified people).

>- Digital wallets, as opposed to cash in bank vaults, means that you can lose all your savings in one mistake.

This is no longer strictly true, at least for loss of wallet keys. There are all sorts of solutions out there (Argent, for example) that allow you to have 'fallback' key methods for if your main key is lost. Yes, if you mistakenly send all your money to the wrong address in crypto you lose it, but that was true of cash as well. Once you spend it it's gone.

One could, for example, create a smart contract that has protection mechanisms in place. At the end of the day, smart contracts are programmable, so you could code your own which has appeal mechanisms as consumers are used to. For example, one could create a highly insecure website for payments on the Internet. The problem is not the Internet, it is the insecure website.

> Somehow people managed to survive before banks offered their rent seeking / fraud protection and I think they'd be OK without them if push came to shove.

People routinely fell victim to fraud. Why else would the government have introduced bans for ponzi schemes or regulatory requirements to go public with stocks, if not to reduce the amount of fraud?

Just because an entity uses "crypto" instead of "US dollars" it should not be absolved from the requirements of established players, they were instantiated for damn good reasons.

There are other ways to protect payments than just (rent seeking) CCs. For eg, in India UPI equates to irreversible zero-cost instant bank transfers (and the irreversible part incentivizes scams) - the KYC/AML regulations make getting your money back a possibility (while not impossible, it's usually improbable, and depends on the amount)

> By not spending your cash on things that are scams.

So...by staying out of cryptocurrencies entirely, then?

Sounds good to me.

"I would simply protect myself by not spending cash on things that are scams"

Even professional investors have a hard time telling scams apart from legit operations. Just look at the Madoff scandal.

And when even the professionals fail to see scams, how is the general public supposed to do so?

Bernie Madoff's victims were mostly high net worth individuals (dumb money), not professional investors. While professional investors do occasionally get scammed that's much less common.

The list of Madoff investors is mostly institutions.

And sadly a lot of charities.

https://en.wikipedia.org/wiki/List_of_investors_in_Bernard_L...

Apparently I didn't make it clear enough that I wholeheartedly agree

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