People don't want to run their own bank | Hacker News Reader

People don't want to run their own bank

shkspr.mobi

234 pointsM2Ys4U447 comments

This article is biased and fails to acknowledge many advantages that cash has over credit/debit cards:

* Transactions are private. There is no middleman between you and the merchant to censor your transaction or to sell your purchasing habits to advertising companies.

* Transactions are final. The merchant has no risk of chargebacks.

* Transactions are bounded. Once you walk away, the merchant cannot take more money from you. Whereas with credit cards, they could store your number and charge you again at a later date, without your knowledge.

* The amount transferred is known to you. Whereas with credit cards, the merchant terminal could lie and show you an incorrect amount, and you could approve the fraudulent transaction.

* The maximum amount you can lose is limited by the amount of cash in your wallet (let's say $100), not by your credit limit (let's say $3000).

* It's easy to understand - you have physical tokens with numbers on them. There are no accounts, statements, minimum payments, interest, fees, reward points, customer service phone numbers, etc.

Cash obeys the principle of least privilege much better than cards do. Though, I think electronic payments can be a lot safer if we had a culture of push payments ("I send $123 to Amazon to purchase widgets") instead of pull payments ("here's my credit card number, have fun").

> * Transactions are final. The merchant has no risk of chargebacks. > * Transactions are bounded. Once you walk away, the merchant cannot take more money from you. Whereas with credit cards, they could store your number and charge you again at a later date, without your knowledge.

> * The amount transferred is known to you. Whereas with credit cards, the merchant terminal could lie and show you an incorrect amount, and you could approve the fraudulent transaction.

> * The maximum amount you can lose is limited by the amount of cash in your wallet (let's say $100), not by your credit limit (let's say $3000).

To be fair, all of these are American oddities. In Europe where people mostly use debit cards and neither chargebacks nor returns for functional goods bought in store exist, all of these are true for card transactions. Only the privacy point remains.

Keep in mind that privacy doesn't apply to cash transactions when either party reports the income or uses the expenditure as a tax deduction.

When individuals report income, they don't report the person that gave them that money.

Example, as a teenager mowing lawns for your neighbors, you just told the IRS you made $x,xxx mowing lawns for the fiscal year. Not that your neighbor named Susan at 1234 fake street paid you $xxx/month to mow her lawn 4 times a month, or that Joe from 4321 real street purchased the upcharged package that includes managing his compost bin.

Cash is the undisputed champion of privacy for financial transactions.

Hmm, I believe it does. Not in all cases, but in a substantial number of them.

I can use cash to buy groceries or a soda at the corner store each day, and while I suppose I'm not entirely anonymous to those parties I may as well be. The grocery store is certainly reporting my cash transaction to the appropriate authorities.

Sure, this doesn't apply for all use cases. However, it applies for a lot of things that currently are tracked by using electronic forms of payment. These spending patterns were simply not tracked on an individual basis until the advent of the shopping club cards, which eventually became redundant due to the use of electronic forms of payment.

The level of tracking from "I take out $400 in cash every payday from the ATM" vs. "I spend it in $10 increments on the following items" is wildy more invasive.

The merchant will probably report gross income for tax purposes and will only reveal details at an invoice level if an audit is triggered. Even then most likely only a sampling of the transactions will be analyzed.

However since the transactions are cash, no identifying information will be shown, so it's anonymous.

As the buyer I have the CHOICE to declare it as a deduction or not. So it is also anonymous at my discretion.

> To be fair, all of these are American oddities. In Europe where people mostly use debit cards and neither chargebacks nor returns for functional goods bought in store exist, all of these are true for card transactions. Only the privacy point remains.

Are they? I can't speak for Europe, but in Australia we have a chargeback system. If I don't recognise a transaction on my credit or debit card, I can request a chargeback via the bank.

It would surprise me if none of the 40+ countries in Europe offered this. What do you do if there's a transaction you don't recognise?

There is a chargeback process. It's a very rarely used exception I believe, and also incurs substantial follow up (usually some form of legal proceedings).

Debit cards are different from credit cards in the US as well.

So if someone steals or clones your debit card and pin in Europe, you are just out that money? What if a store charges you more than you were told?

Your can disable the card through the website or the app. Maybe by phone but I would have to check. You can of course do it in person too. The store HAS TO give you the receipt and all transactions are sent to the tax administration. If they were to take more, and somehow do it in a way where you wouldn't notice it by the time you've left the store, your can still take legal action and the bank can revert the transaction.

In speaking for how it is in Slovenia, it might be different in other EU countries.

In Vietnam, you're out. Good luck getting any response from the banks there.

I think you mean these are credit card oddities. We have debit cards here as well, and I assume Europeans have credit cards

>* Transactions are final. The merchant has no risk of chargebacks.

You realise that's a bad thing, right?

>* Transactions are bounded. Once you walk away, the merchant cannot take more money from you. Whereas with credit cards, they could store your number and charge you again at a later date, without your knowledge.

And if they do that you can... issue a chargeback.

> > Transactions are final. The merchant has no risk of chargebacks.

> You realise that's a bad thing, right?

Frauds where people ask for payment via Venmo or Paypal for Craigslist transactions are incredibly common. Craigslist recommends using cash to avoid getting defrauded, because transactions being final is a feature for in-person transactions, and a good one at that.

> And if they do that you can... issue a chargeback.

This is not remotely a guaranteed thing. It works until the credit card issuer says nope.

Chargebacks are 100% at the pleasure of your issuing bank, they are not your choice in the end. Most consumer banks will more or less have an internal credit score where they allow you a small number before they start pushing back. Depends on how much profit you make the bank.

Chargebacks against small vendors are mostly guaranteed, but once you go up against a large party the tables very quickly turn against you.

> You realise that's a bad thing, right?

I'm sure you also realise that chargebacks can be abused by these users right?

The merchants can get their (PayPal, Stripe, etc) accounts locked or shutdown and their money withheld for months due to the payment processors locking the money and they always side with the bank, which they have zero context whether if the chargeback is fraudulent or not.

It all depends on circumstances and your position in the transaction. If you're a business, you probably want to handle customer complaints and refunds yourself, not be subject to the whims of emotional customers.

> Though, I think electronic payments can be a lot safer if we had a culture of push payments ("I send $123 to Amazon to purchase widgets") instead of pull payments ("here's my credit card number, have fun").

Only recently I've learned that in the USA people don't pay through bank transfers.

In Europe it's main mode of payment to give you bank account number and amount and expecting you'll make the transfer. Either directly by interacting with your bank or through payment processor which has integrations with various banks and will prepare the transfer for you and redirect you to your bank's authorization gateway.

Most of these are pretty solid positives.

"Transactions are final. The merchant has no risk of chargebacks." Is this a plus all the time?

What if I buy something and the vendor just takes my money and does not send me my purchase? I have no recourse.

Look at it from the merchant's perspective: If chargebacks are easy and the middleman (PayPal, etc.) tends to side with the buyer, would you take the risk of putting up your goods for sale? There is a tradeoff here.

This is a large reason why many cryptocurrency vendors online require you to use irreversible payments (cash, wire transfer) to buy crypto, in order to match the finality of crypto transactions.

> If chargebacks are easy and the middleman (PayPal, etc.) tends to side with the buyer, would you take the risk of putting up your goods for sale?

The answer is yes for almost all businesses I've seen.

At least you have the choice to do a non-standard transaction where you give the cash without having received the product. Standard cash transactions involve receiving the product at the same time as the payment, or before.

Cash transactions are generally in person. If they're not, then you have to worry about the courier, also.

Can be all valid points, but then who would want to run around with $20k in their pocket on a vacation, for example (paperwork for crossing borders aside)?

How frequent are these types of frauds, e.g., by merchants/terminals? Doesn't seem to be a thing around where I live - is it a US thing?

Me. I've been on vacation with [ redacted ] in my pocket in a country where the average wage was $3500/yr, so about [ redacted ] years wages. And no I wasn't in some upper-class compound, I was hanging out in slums where $20 is worth killing someone. The equivalent to carrying [ redacted ] or so in US. It made me feel great that some asshole in government couldn't cowardly seize my account or block a transaction, instead they'd have to personally kill me to take the money.

>f frauds, e.g., by merchants/terminals?

Pretty common. Virtually everyone I know has been defrauded by CC or debit card at least once. When it happened to me my bank dragged me through a months long process after which they refused to refund the fraud, essentially accusing me myself of lying, and ultimately they even shut down my checking account. For this reason I've basically divested from keeping cash in banks, now that I've learned the fraud protection is a farce and the fed is going to inflate it to hell anyway.

"they'd have to personally kill me to take the money" I mean the cops could just pull you over and take it. Unless you were willing to make the cops kill you over $9,800?

I think you are confusing state sponsored violence and street violence. The state can always get you, unfortunately. Crypto does try and address this, to varying degrees of success.

So you felt good about someone in the streets potentially killing you for the money but the government would need too? Maybe I am just not worried enough about my government.

Never have obligations (loans, credit cards, etc.) and assets at the same institution.

Neither side can resist the temptation to use the other side to "resolve" disputes.

First four are solid, the last one though forgets that you can call your CC company and have the transaction canceled. So the upside of finality with cash is a downside here, be it damage/loss/theft all your cash you had ($10-$10,0000) is gone.

Once the transaction goes through (i.e. not preemptively blocked), you are at the mercy of the bank. Most of the time it works, but I have friends' stories of losing several thousand dollars on a chequing account due to fraud and being unable to convince their bank that they deserve their money back.

That's assuming that you notice the fraudulent transaction, meaning you have to monitor your account regularly and carefully look at each transaction to verify it's legitimate.

That's a decent amount of extra work.

Its a decent amount of work if you are upper middle class. If you are scraping by with less than $400 for emergencies like 40% of America, losing $25 is probably a flashing red light.

Similarly, "Be your own bank" gets construed with "run your own checking account". Banking is much more than a checking account. Banking is interest, loans, credit, investments, and other systems that are far more complex.

You just fully described cryptocurrency transactions. Crypto having the additional benefit of applying to online transactions as well vs in-person only transactions with cash

But most crypto is anonymous, not private. It's usually worse than even banks since anyone can look up your transaction history given your wallet address. All it takes is one place where your wallet links to your identity and you have even less privacy than with banks.

If you can't find a way to use crypto privately, then it might not be ready for you yet. But you can guarantee that this will change, much like early HTTP had no TLS.

You can find any number of shortcomings, but the point is crypto _does_ solve many of this problems.

Surely ”It's easy to understand” does not describe cryptocurrency transactions.

I would repeat the same thing as I said here: https://news.ycombinator.com/item?id=30209760

And to your point and from my perspective, I would disagree as there are many cryptocurrency experiences where "understanding it" is reduced to similar UX as using zelle or paypal. More than likely, you've (or whomever you're describing) already made your (their) opinion and aren't interested in understanding.

Most of these are either invented scenarios or not really advantages.

- Transactions are final. The merchant has no risk of chargebacks

So as a consumer, if I pay for something and the merchant stiffs me, I have no recourse? That's supposed to be a selling point?

- The amount transferred is known to you. Whereas with credit cards, the merchant terminal could lie and show you an incorrect amount, and you could approve the fraudulent transaction

Do you have any evidence of that actually happening? Even anecdotal evidence? I've never experienced nor heard of anyone experiencing a situation where a point-of-sale terminal showed one price and they were charged another. I have heard of merchants (airlines, especially) tacking on "hidden" fees, but those hidden fees become quite visible when you get to the final checkout page for and you see that the price you're about to pay is x dollars or euros more than the price in bold letters on the listing for the price. I have never once seen a merchant (online or off) display a price on the checkout step and then have a different amount charged show up on my credit card statement.

- The maximum amount you can lose is limited by the amount of cash in your wallet (let's say $100), not by your credit limit (let's say $3000).

Incorrect. The Fair Credit Billing Act (in the US, not sure what the equivalent EU legislation is) gives consumers 60 days from the statement date to dispute transactions. If the consumer files a dispute, the financial institution has 90 days to correct the charge, or give a written explanation as to why they think the charge was valid. If the transaction is fraudulent, the consumer's liability is limited to $50. I have way more safety against fraudulent transactions on my credit card than I do with cash or check.

- It's easy to understand - you have physical tokens with numbers on them. There are no accounts, statements, minimum payments, interest, fees, reward points, customer service phone numbers, etc.

Only if you're storing your cash at home, under your mattress. If you're using a bank account, you most assuredly have to deal with accounts, statements, interest and fees.

The only valid advantage of cash (and crypto) that you've cited is:

- Transactions are private. There is no middleman between you and the merchant to censor your transaction or to sell your purchasing habits to advertising companies.

That is why I have a crypto balance. That is why I have a certain amount of cash in my wallet. If Visa, Mastercard, etc. get into a dispute with my merchant, or if the centralized payment infrastructure goes down (i.e. due to a storm knocking out power), I still want to be able to pay people. But would I want to use cash for most transactions? Absolutely not.

> Only if you're storing your cash at home, under your mattress. If you're using a bank account, you most assuredly have to deal with accounts, statements, interest and fees.

I know people who prefer cash, because they are not tech-savvy and all the digital stuff including cards gives them anxiety. There is a difference between just having a bank account and using all the digital services that come with it.

Increasingly there isn't as banks, always looking to cut costs, pare back the number of branches they have, the number of staff at those branches, and make the phone experience worse in order to drive customers to their websites.

It wouldn't be a web article if there wasn't some hyperbole in the title, like speaking for everybody :)

But ignoring the title, here is how I see it working out long-term between "Running your own bank" VS "Using someone else's bank":

It's true that most people don't want to run their own bank, it comes with lots of issues. But there is a section of people who do want to run their own bank. That the cryptocurrency space exists in the first place is the evidence of this.

So can we solve for both things? Yes, I do believe we can. The primitives that support the whole system can be "Running your own bank" while allowing entities above that layer to offer "Use my bank if you want to instead, with insurance and all that", so we get the best of two worlds. The opposite cannot be true, we cannot offer people to run their own banks, on top of a set of entities being the only ones running their banks.

In other words, you can build centralization on top of decentralization, but the opposite is not true. So by having the base being decentralized (and dangerous for the common human), we can still have centralized parties on top of that (less dangerous for the common human), that offers the traditional security people are used to, for the ones who want it.

Decentralization at the core gives people more options, which I think in the long-term leads to a better world, compared to the alternative. Not because it is decentralized, but because it gives more options to the ones who need it.

Author here. I broadly sympathise with what you're saying. But I think I disagree with:

> In other words, you can build centralization on top of decentralization, but the opposite is not true.

In the UK, we now have "Open Banking". Which means my bank offers an API which I can plug into. It also means that loads of 3rd parties can now offer banking services on top of the "centralised" core.

So, in a way, a decentralised system is being built on top of a centralised system.

I'll also note that - in my opinion - Blockchains aren't really decentralised. There's no way you can do an "Off-Chain" transaction. Everything has to be recorded on a single ledger.

> In the UK, we now have "Open Banking". Which means my bank offers an API which I can plug into. It also means that loads of 3rd parties can now offer banking services on top of the "centralised" core. > So, in a way, a decentralised system is being built on top of a centralised system.

Why would offering an API mean that the service is decentralised? It doesn't - it just lets you get some data in or out. You are still beholden to a single party that can cut you off at a moments notice.

> I'll also note that - in my opinion - Blockchains aren't really decentralised. There's no way you can do an "Off-Chain" transaction. Everything has to be recorded on a single ledger.

Not true at all. Bitcoin has a Layer 2 solution where transactions are done off-chain in a non-custodial manner. Those don't need to be recorded on the ledger, only the settlement is (if you decide you do not wish to participate any longer).

You are still beholden to a single party that can cut you off at a moments notice.

Not in the UK, nor in Europe. Don't project your (presumably US) failed institutions onto the rest of us.

Any particulate service agreement isn't decentralized necessarily (I am still using one central bank), but the market is (I can change providers if I choose).

A _standardized_ API would allow providers and consumers a choice, which distributes the power to some degree and can encourage the parties to make choices that support the entire ecosystem rather than just their own ends.

I don't think you can though, not without passing an expensive certification process, right?

I mention this because as a German, the EU Open Banking initiative made my life worse. Banks are phasing out actually open FinTS standard, for which their are a pletora of Open Source libraries, and many apps by independent developers that were able to connect to any bank. /I/ was actually able to start up a shell and pull data from my bank accounts. This does not seem to be the case with Open Banking, where I have to pay a service provider that has passed certification to allow me to access my bank data.

This is an important aspect of crypto currencies - the goal is to be permissionless. The decentralization is merely a requirement to achieve this.

Standardizing an API by a central authority means more centralization, not less.

It is not difficult to sympathize with people who do not fully trust banks, especially if you grew up in a third world country with corrupt institutions. There have been times in history where you could trust banks and times in history when you could not. I'm not sure the past 70 years of grand prosperity for the west is a good way to gauge the trustworthiness of institutions owned and operated by others, since in the full scope of history the outcomes have been mixed.

That doesn't mean decentralized web3 cryptocurrency stuff is the one-size-fits-all answer, but I am sure to some people it is. And people should be free to choose the way to protect their assets and hedge bets against different local and global outcomes as they choose. Governments are the same way, with their large stockpiles of real physical goods like weapons and gold.

> Standardizing an API by a central authority means more centralization, not less.

No. Standards and protocols are the essence of decentralisation and collaboration.

> So, in a way, a decentralised system is being built on top of a centralised system.

Is this not still fundamentally a centralized system?

No, the financial sector is not a centralised system. There are multiple providers of financial services that compete in the market for customers. So it's fundamentally decentralised.

Yes. But cryptocurrencies are decentralised, and have coalesced around a few centralised entities.

I imagine it won't be long before Coinbase, for example, will warn you against transferring to wallets which aren't held by one of the big providers.

I would advise you to look at the Lightning protocol which allows you to do transactions off chain via credit lines for as long as you like. You only pay a fee to record to the blockchain ledger for eventual settlement.

Lightning is only safe if you constantly monitor the blockchain, otherwise your transactions aren't safe (as in double spending is still possible).

Opening and closing Lightning channels is an operation that requires a transaction on the blockchain - no real win there.

Due to the restriction just mentioned, most L2 transactions will take place via intermediaries who you need to trust and who can take arbitrary fees for their service as well (the whole routing business).

Lightning might be ok for regular payments (subscriptions, etc.), but at the same time it offers not a single advantage over traditional banking and credit cards other than explicitly not being either.

It might alleviate the transaction time and energy problems of the blockchain, but it does nothing to tackle any of the other problems mentioned by the author.

I'm sorry, but Lightning is a mess and it would be irresponsible to suggest that it's safe.

1. Unpredictable fees make usage for small amounts almost require a long-lived channel to be worthwhile.

2. UX around Lightning channels are painful. You can't receive BTC in a channel unless you put BTC in as collateral. You can't spend more than the channel allows. Routing is unpredictable and fickle causing transactions to fail just as often (if not worse) as complete successfully. (Perfect for one-off transactions /s) All Lightning wallets (with the exception of one or two) are custodial and if they aren't, they cost a lot of energy to run on your phone because they're constantly chatting with the network.

3. The whole point of cryptocurrency is diversify the control across the network. The design of Lightning motivates large hub and spoke connections between users which consolidate control to a few individuals.

4. The complexity for any business to integration Lightning into their purchase flow is expensive due to the many states your channel can exist in and need to considered as part of your integration. Not to mention the added costs of monitoring the BTC network to protect your channels. Or you find a merchant provider you have to trust with your processing...at which point, you're just using credit cards by another name.

5. And due to the complexity of Lightning's design, there are systemic bugs which expose users to more risk than if they just used a gift card or credit card in the first place. (One case in particular, a channel which is mostly settled on side B (versus side A) such that A's value on their side of the channel is less than the dust limit of the BTC network (which is often given the highly fluctuating fees) will allow B to force the close of the channel causing A to lose their value in the channel (because A will need to spend more than their side of the channel is worth and will be a worse outcome than if channel A just ate the loss from the channel being maliciously closed)).

Some good points, but missing the most important understanding of what cryptocurrency actually is at it's core. Once you understand this, you will see that although humans are treating the technology idiotically as they do everything, fundamentally it's a basic and critical advance. And arguing against it is holding back society.

Cryptocurrency is just the best contemporary approach we have for applying computer science to money. That involves cryptography and blockchains because they are the most relevant technologies for accounting.

The typical alternative is a database from the 1970s or 80s running on something like a private mainframe, that can be modified at whim by those who control it. The biggest problem with this is that when so many have a chance to cheat, some will. But the core failing of the concept is that it's a private database with no mechanism for external (or even necessarily internal) verification. The core thing that people such as yourself will eventually learn about is that cryptography and blockchains are the best approach we have for solving these problems. It's just the basic application of computer science to accounting.

Many of these systems were built before cryptography was well known, and some run on hardware that may not even be capable of current cryptographic standards.

Fundamentally, arguing against cryptocurrency is like arguing against calculus in the 17th century.

You can "kind" of do off-chain with blockchain, simply trade the private keys in a back alley somewhere.

No you can't. Because you need to check those keys on the blockchain. And you have no idea if those keys are being traded in a hundred other back alleys simultaneously.

But if the vast majority of people want the convenient feature-rich centralised version, why pay for the immense inefficiencies that a decentralised infrastructure incurs?

Just one example: If everyone on earth used Bitcoin, there'd just be enough capacity for everyone to get in around one or two transactions in their lifetime.

Decentralization at the core is a massive waste, while providing almost no benefit except to a very few.

If you build with centralization on top you can ignore most of the inefficiencies by doing the majority of operations outside of the base Blockchain and only integrate and settle just enough on-chain to be able to integrate with the rest.

Arguing against cryptocurrency by using bitcoin as an example is like arguing against aviation by citing an early Wright crash.

The vast majority into crypto today do not care about the fundamentals. It's barely used as a currency and mostly traded as a commodity. Nobody cares about crypto being decentralized. They care if their crypto 'lottery ticket' wins.

If all crypto does is give people more options, there are a lot more efficient ways to do that.

This is so f’ing stupid, and in that way perfectly epitomizes what’s so broken about crypto.

Nobody wants to run their own bank, which ALSO means nobody wants to use Jim’s shady internet bank or their buddy’s bank or their mom’s bank or or or…

Like, nobody in crypto seems to think for one second about how the world actually works or what people not brainwashed by crypto might want.

It’s a tech that has thoroughly, definitively lost the argument. It’s as clear a dead end as the metaverse, or pivots to video (let alone Meta/FB’s pivot to video)

Ironically your response is the tone-deaf and stupid one here.

The person you're replying to isn't arguing for people to be using "Jim's shady internet bank" or a random buddys bank, they are discussing the ability of current trusted actors to act as custodians and insurers for cryptocurrency-wallets, hiding the scary and difficult aspects of cryptocurrency, while operating on top of an open-source, trust-less, publicly auditable, open base-layer like a blockchain.

They are saying it's possible to regard cryptocurrency as a base-layer for economic transactions, and that without it it's basically not possible today to leave the traditional banking world behind if one wants to maintain a digital presence. Don't you think it should be? Why should an individual be forced to have someone else be custodian for their wealth?

Cryptocurrencies also aren't really finished yet, there are a lot of improvements to be made before it is possible to replace the existing financial infrastructure and maintain its scale.

> Cryptocurrencies also aren't really finished yet

It’s been 14 years. When will they be “finished”? What does that look like? What are the goals?

It seems to me like the original goals failed (take over the world, everyone use Bitcoin like cash) and so the goalpost moving began (sidechains, PoW “soon”, NFTs, etc).

I’ve seen nothing of value produced out of 14 years if hype. Only wasted resources and what seems to be an accidental Ponzi scheme.

Remember this comment when in 10 years there's a bitcoin balance alongside your usd balance in your bank account.

> This is so f’ing stupid, and in that way perfectly epitomizes what’s so broken about crypto.

> nobody wants to run their own bank

It sure looks like A LOT of people do. The real question is why are you so mad about it?

> But there is a section of people who do want to run their own bank. That the cryptocurrency space exists in the first place is the evidence of this.

Most of the crypto-bros don't run their own banks either.

All of them depend on institutions that effectively act as banks somewhere down the line... first of all, the overwhelming majority of actual cryptocoin users doesn't run their own nodes (which, as "bookkeeping", is one of the core functions of running a bank), instead keeping their wallet at some sort of wallet service or transaction gateway, because running a node requires disk space and a continuously running machine. And then, almost everyone participating in any coin requires exchanges to turn the coins back into fiat money or vice versa - I've yet to see any actual real-world economy that does not use fiat money but instead handles everything with Bitcoins or whatever.

> Decentralization at the core gives people more options, which I think in the long-term leads to a better world, compared to the alternative. Not because it is decentralized, but because it gives more options to the ones who need it.

The only thing "decentralization" enables is a lot of elaborate, irreversible scams, hacks and thefts. A banking system without some sort of centralized entity to deal with disputes and prevent usage for criminal activity eventually will break down... there's a new exchange that got hacked, a "smart contract" drained via intentional or unintentional bugs, NFTs being doubly-sold (if I understand that recent OpenSea bug correctly) or rug-pull scams exposed almost every other week. That is not a trustworthy environment.

Not to mention that all cryptocurrencies to date have led to enormous waste of resources: electricity, CPUs, GPUs, ASIC fab capacity, RAM, HDD... literally everything that could be used to mine coins got used for that purpose and outright killed the market for these, because miners can always pay far greater sums for components than individual people can.

> In other words, you can build centralization on top of decentralization, but the opposite is not true. So by having the base being decentralized (and dangerous for the common human), we can still have centralized parties on top of that (less dangerous for the common human), that offers the traditional security people are used to, for the ones who want it.

What you're describing is basically how the IP protocol has been manifesting itself with something like Twitter vs Mastadon.

Here's the problem - if I can't get my weather alerts from my local city township from Mastadon, but have to use Twitter, then the point is moot. For example - https://twitter.com/TravisCountyTX/status/148934948869109350...

To bring this analog to bear - my local police department accepts credit cards online now for paying a ticket violation. What if they don't support <insert whatever crypto protocol I want to use>. I still need to use the "old" protocol (USD via Visa).

Your example of the police department is actually a reason why so many people are looking at crypto. Current fiat while being a means of exchange is also a method of enforcing government control. The governments enforcers of state sponsored violence are now allowing you to pay their arbitrary fines via a method that directly connects to your identity. At the same time the IRS is now requiring that centralized banks report all transactions of greater than $600 to them. This will allow them to more efficiently tax the poor and middle class, the rich probably dont care about $600. Get pulled over with a large amount of cash in the car and the police and seize it and then you have to engage in a costly legal battle to get it back by proving to them that you are not a criminal. That's if you can even afford an attorney. Today's centralized system is very much about enforcing government control over the individual on every level. For some crypto is just a last gasp at trying to get some control back and the pitfalls and complications are worth it.

100% agree. It's very hard for people of privilege who never had a negative interaction with the government to get this!

> Today's centralized system is very much about enforcing government control over the individual on every level.

You're totally right. So now explain to me in this crypto libertarian fantasy world how:

- People agree where internet cable lines get installed

- People agree on how roads should be laid out and

- People agree on who is going to bear arms and defend their sovereignty

Does a blockchain solve all of that?

>Here's the problem - if I can't get my weather alerts from my local city township from Mastadon, but have to use Twitter, then the point is moot. For example - https://twitter.com/TravisCountyTX/status/148934948869109350...

It's still better than if it was completely impossible to communicate to others without twitter.

Or in other words,one of the fundamental properties of money is actually being able to spend it.

Precisely. A concept called "medium of exchange".

It sounds like you are saying that the bank will use a blockchain type ledger instead of a SQL based ledger on the back end.

What problem does that solve? For people to want to switch to this type of bank there has to be a net benefit.

Duh, it solves the; other people are making money and not me part. But not for you of course, for the crypto scammers.

> What problem does that solve? For people to want to switch to this type of bank there has to be a net benefit.

Again, in my argument there are two choices at play. One of the choice allows the other, whereas the other doesn't. You can still have centralization if you want, on top of decentralization. But if you chose centralization for the core, you cannot have decentralization on top of that, even if you'd really want it.

What exactly does decentralization offer considering all governments are centralized?

The Holy Grail of crypto seems to be some sort of dream of a fully decentralized society without banks or governments.

What if that doesn't happen? There's no reason to assume that even if crypto wins, banks or governments go away. My personal bet is that governments (and probably banks, too) will be around long after cryptocurrencies go away.

What exactly are we winning? Practical stuff, not ideology.

What do we get? Why should I care?

So it isn't solving a problem that current bank customers are looking to solve, it is just adding a buzzword to the feature set of the bank.

Also, this setup means that the banks have to compete against people choosing not to use them. This shouldn't be hard (because most people don't want to run their own bank), but it does prevent rent-seeking. If people are able to bypass them, then that provides some downwards market pressure on their charges. Without that, there is none except for regulation.

What? Banks are already subject to competition from other banks. And a blockchain is inefficient by design, any bank using that would have to charge more, not less.

> Banks are already subject to competition from other banks.

They are also in a cartel with the other banks, the sense that you can't access the financial system at all without one of them. For example, charges to send payments internationally are often vastly more expensive than the actual cost to the banks. They can do this because they aren't competing in this kind of niche area.

But people often don't want to "run their own bank", they want to run something like a bank without the hassle of running a bank, i.e. way less regulations etc. (which is why it is happening in crypto space, not in real money space). Otherwise, why not create a little coop bank with like-minded people? For me, the option to "run your own bank" does actually exists for small-ish groups already.

While the current level of financial and banking regulation is certainly debatable, creating super lightweight version of banks might not necessarily the way forward.

Came here to say this. Credit unions are a thing, and it is increasingly easy to offer debit cards (via aggregators) through them. There's even open source software to help:

https://www.fineract.dev/

> Otherwise, why not create a little coop bank with like-minded people?

The problem isn't the bank organization itself: it's the money that you deal in. Regardless of your bank structure, whether it's some typical commercial bank or some kind of cooperative association, you're still left holding a fiat currency that is inflated on a whim.

The beauty of crypto (and especially Bitcoin) is that there's either a fixed amount, or at least the rate of change of the money supply (inflation) is at least perfectly transparent and mathematically provable.

If you believe the money is "wrong" then Bitcoin won't safe you, nothing will safe you totally, in fact. Whether or not the money supply is fixed or not doesn't matter, you can make one type of money worthless vs. another form of money (happened so many times in history, and not necessarily due to inflation).

And Bitcoin's hard cap is based on incentives and code, i.e. it could be changed (difficult to see in reality absent some really strong outside coercion, perhaps). Another attack on the value of Bitcoin could be from a state actor using nearly unlimited resources to take over most of the mining or validating and using it against it. I.e., there are ways to degrade it as a store of value (other than just arresting everyone found using, for example).

> That the cryptocurrency space exists in the first place is the evidence of this.

Maybe the existence of banks would be better evidence that 'some' people wanna run their own banks?

Yes, decentralization at the core creates a better environment for experimentation and competition at the 2nd level built upon it

Also fuels better competition and experimentation in the attack space - replay, dusting... novel ways to part people from their assets.

People say this but also complain like hell about gmail making up a huge portion of email or facebook making up a huge portion of web browsing.

That's OK, complaining helps the ecosystem improve. If gmail ends up being so bad that people start abandoning it (which I haven't seen yet in my friend-circle, most people are happy enough with it), it's possible to migrate to something else and still interact with people who use gmail.

Contrast that to Facebook Messenger. Either you're a user of it and can message others using it, or you're not and you can't interact with others using it. You have no choice, it's either in or out.

This is the difference between centralization and decentralization, the amount of options you have available.

How is it substantially different from the current centralized core where we can also 'run our own bank' if we choose. We can today keep stashes of cash, convert it to real estate, art, precious metals, whatever, as with crypto we can use different wallets, currencies, NFTs, etc. In fact, we can exchange between all these assets - exchange cash for crypto, for art, for real estate, for bank deposits... Just a variety of risk/reward profiles for various situations, with the core being either a government or a herd of developers, whales and miners...

> In other words, you can build centralization on top of decentralization, ...

We see that with Coinbase (a HN unicorn btw): lots of people are apparently not only fine leaving shitloads of coins on Coinbase, many are also totally fine using the USDC "token" which is (mostly) backed 1:1 with actual USD. I don't remember the stats but big "exchanges" hold a sizeable part of the circulating coin and it's not just people "trading": it's a lot of people simply holding to their coins and using Coinbase as, basically, a bank.

Heck, I think if they sell for USD (not USDC, don't know about USDC), their USD at Coinbase are even FDIC insured up to $250 K (for each american on Coinbase: it's not the same with Coinbase in the EU).

I'm not saying it's good or bad: I'm just saying that people leaving coins or USDC or USD on Coinbase are very far from "running their own bank".

> I'm not saying it's good or bad: I'm just saying that people leaving coins or USDC or USD on Coinbase are very far from "running their own bank".

Exactly. That's a big 'no thanks, and no deal' as it defeats the whole purpose if one leaves all their coins on an exchange for 'long term' holding.

Nothing wrong with downloading a crypto wallet app and sending and storing the USDC, USDP stablecoins on there. No need for Coinbase.

Job done. Your keys and your coins without the volatility.

You say that some people want to have their own bank. "That the cryptocurrency space exists in the first place is the evidence of this."

Sorry, but that's just not true. Crypto exists because people think they can win money with this Ponzi Scheme!! ONLY reason! Greed

I would also note that the benefits the author states about fiat can equally apply to crypto:

> There's an inherent fragility built into cryptocurrencies. If your physical bank notes are damaged, the bank will replace them. If you are defrauded, the bank will reimburse you. If your loved one dies, and you inherit their assets, the bank is legally obliged to give you access.

Damaging bank notes is probably covered by the fed. Fine. But fraud is a real expense. It's just not generally borne directly by the victim. Someone still pays it (normally the bank) but they make up for it by lending out your cash. As for handing over assets to someone that passed away, that's currently done through the legal process. Wouldn't it be great if there was a technical solution such that there is no ambiguity about what happens to your money? Seems like crypto would help there as well

> someone still pays it (normally the bank) but they make up for it by lending out your cash.

You're skipping over large parts of the things fiat can do and crypto can't. E.g. there are chargebacks for fraud. There's the legal process that can be used by the bank to recover money from the fraudster (maybe not always, but also not "never").

> Wouldn't it be great if there was a technical solution such that there is no ambiguity about what happens to your money?

No, it wouldn't be great, it would be horrible. Real world is messy and hard to encode in a "smart contract". What if the will says something but the law invalidates it? Going through the legal process is a feature not a bug... remember how people complain about e.g. automatic bans that are handled and appealed by robots? How your Google account can be disabled with no recourse, and no explanation from a human? Yeah, that can happen to your grandma's crypto - it doesn't go to the family, and there's no way to appeal that or even find out "why".

The legal system still exists though, and people can still be forced to do things. That leaves the non-automatable work to humans and takes away the automatable things rather than forcing everything through humans to manage edge cases where you need them.

For my will I literally enter into a form what I want to happen, but then when I die it'll be down to another human to go through it and manually carry out my instructions.

Chargebacks can be opt-in and escrow is a tutorial for smart contracts. I don't need chargebacks on a cup of coffee, and I've been unable to make a payment due to high chargeback risk - despite me being entirely willing to take on the risk of non-fulfillment.

Have you ever dealt with an estate, or a disputed estate? I have, and I can tell you that technical processes would probably not accomplish very much. I have seen people go to court over whether or not a person was mentally competent when they wrote their will. What is the technical process for resolving that? If anything, a technical solution would make things worse in cases where an elderly person really was taken advantage of when they were planning their estate by leaving less room for a dispute.

The fact of the matter is that we have had the ability to create a technical process for executing a will for a long time. Banks allow you to designate a beneficiary who receives your assets after you pass away and that is executed automatically. We do not have to allow people to dispute that, and cryptocurrency does not really add much over such a system -- but we do not want that system because some objections are legitimate and disputes need to be resolved.

A technical solution could be implemented by a bank as well, but I'm not sure it is even legal in most jurisdictions. Same goes for any solution on the block chain.

I'm not even sure we want it to be legal.

There's a reason we still talk about Kafka almost 100 years after his death.

> Decentralization at the core gives people more options, which I think in the long-term leads to a better world, compared to the alternative.

So microservices are a better idea than monolithic core?

It adds a lot of extra complexity and failure points? Fits.

Where the analogy falls apart is in the low transaction capacity of most existing blockchain-based currencies. Microservices' greatest asset is that of scaling in a way monolithic structures can't.

Very well said. The more centralized "layers of abstraction" will be built, no question about that. Smaller, more specialized, more efficient institutions. For example, the US has a long tradition of small Credit Unions – that's fairly similar in principle to some of the DAOs popping up these days.

I disagree that anything crypto-related is similar to https://en.wikipedia.org/wiki/Credit_union (or even useful, for that matter), but yeah, if you want to run your own bank, credit union is IMHO as decentralized as it can ever be.

This essay is too simplistic about the motivations of some crypto holders. For many people, the more complete sentiment is this: People don't want to run their own bank but they'd rather deal with that extra hassle instead of letting the government erode their purchasing power or confiscate their savings.

How much of a reality that is to particular person depends their economic environment. A Venezuelan living with hyperinflation thinks about the fragility of their savings differently than an American.

Likewise, many don't really want to run their own electric generator because it's noisy and keeping diesel fuel on hand is extra work. However, they'd rather deal with that than have no electricity when the power company issues rolling blackouts.

So, an option can be framed as a "bad choice" but it must also be compared to other bad choices that may be worse. Which bad choice do people prefer? A noisy diesel power generator they have to babysit or a no power at all?

Writing a hypothetical essay titled "People Don't Want to Run Their Own Diesel Generators" -- will not actually educate readers on what's happening.

Yes, crypto POW uses too much energy. But how do you get people to prioritize the environmental impact over their fears of government manipulation?

Author here. I broadly agree with you. I run my own power generation. They're solar panels on my roof and require zero maintenance.

People don't want to run generators. They want stable electricity. There are a variety of ways we can give it to them.

Similarly, people in a hyper-inflation environment don't want crypto - they want stability.

But there's nothing inherent in crypto which prevents hyperinflation. Yes, I've read the original bitcoin paper. That talks about monetary supply - it doesn't do anything if a cartel decides to raise prices.

This article seems like it could have been written in 2009 at the launch of Bitcoin. It has no real world examples or data. There are so many disaster stories. Is there a reason you chose to write such a high level article now?

One of the things that made Moxie's piece a hit was it had real examples of his experiences trying to do things.

But this article has none of these examples or experience.

For example, your article misses people who are indeed using cryotocurrencies as banks [1]. It misses the current conversation around social management of keys. The rise of automated exchanges like Uniswap.

Lots of room for critiques on these items. That the only examples of people using crypto for real banking are in collapsing currencies. That if there's such a problem managing keys that social management will still fail. But you seem to have missed all of them which really undercuts your article to me. Again, this seems like it could have been written in 2010 based on the concept of crypto rather than real world experience. Just curious about your motivations for such a piece. It certainly has attracted commenting here.

Disclosure: I own crypto

[1] Reporting of LocalBitcoin use in Venezuela. Certainly room to use these examples of why cryptocurrencies will never scale, but not mentioned in the article: https://www.reddit.com/r/Bitcoin/comments/s5i64l/24_btc_were...

I am currently studying for an MSc which has a semester on Blockchain. You can see my current thoughts at https://shkspr.mobi/blog/tag/certified-blockchain-profession...

> but they'd rather deal with that extra hassle instead of letting the government erode their purchasing power or confiscate their savings.

Crypto doesn't protect you from either of those things

Bitcoin does. The math is simple. No government in the world can debase the value of Bitcoin whose total supply is < 21 million and no central bank can print more.

Sure they can, they could ban its use, if the US banned using bitcoin im confident its value would drop

Since the value of bitcoin is based on fiat, it's relatively easy for the government to debase it. By banning the conversion of fiat to bitcoin, it removes the value. You can still pass coins around on the bitcoin network, but if no one accepts them, and you can't turn them into usable currency, then what's the value?

> No government in the world can debase the value of Bitcoin

A government can't, but a cartel of miners can and they do every time they mint bitcoins via mining rewards and they won't stop at 21 million.

Absolutely right, the essay writes from a comfortable UK perspective and ignores large amounts of the world where well-regulated, trustworthy financial institutions aren't available. And even UK banks aren't immune from failure or just mistakes which can freeze people's savings and put them in terrible situations that take months to resolve.

To add to your counterpoint, the OP's praise of going cashless as opposed to the problems of cash is another fine example. It's certainly more convenient to use your card everywhere, but if everyone did it then just a handful of payment processors would gain immense power, with the ability to track, monitor, and censor all transactions. Plenty of dystopian fiction like The Handmaid's Tale covers what can happen when this infrastructure is abused. Cash may have problems but it plays an important role in an open society, and redundancy when a major payment network goes down (as Visa did across Europe on 1st June 2018, causing retail chaos). But many vendors no longer accept cash and this will only accelerate as more people never use it. In praising going cashless as protecting ourselves from being our own banks, the OP misses the forest for the trees.

Fully agree. I'm heavily in crypto but keep saying the same - people will demand banks, will demand regulation, will demand insurance.

One recent example: a few days ago there was a big movement in crypto market. Due to huge traffic spike that went with that, one unnamed chain practically ground to a halt. The only thing that continued working normally was liquidation bots...

So tons of people got liquidated coz they couldn't adjust their positions. And now obviously they all are calling for compensation. But in the decentralized world of de-humanized smart contracts with no legal framework, there's obviously nobody responsible, hence nobody to pay any compensation.

> one unnamed chain practically ground to a halt.

What chain? Any links to stories on this?

The chain is Solana. I've no idea why the other commenter is so adamant on not naming it.

https://www.bloomberg.com/news/articles/2022-02-03/solana-po...

I believe it's Solana based on this Bloomberg article: https://www.bloomberg.com/news/articles/2022-02-03/solana-po...

I don't want to spread FUD here. For the point I wanted to convey it's not relevant. Feel free to look it up, but please don't write it here, coz it will turn to flame war.

It's not FUD - it either halted or it didn't.

Are you talking about Solana?

So you hold a lot of SOL then ? ;)

It's a breath of fresh air to read some level-headed (and realistic) response in this topic. I find it usually when btc is in a downswing, it's easier to have a meaningful conversation about it.

I don’t want regulations while being aware I’m at my own risk to take care about my money.

The problem with crypto is that since the price goes up people rationalize everything.

If the price went down 10% year after year forever I guarantee people would shut up about it even though none of the underlying reasons for supporting it should have changed.

I mean that notion right there sums up everything about it: the "price" of crypto - as related to USD. That's what people care about. No one's treating it as a currency.

This is also not true and is just a "wide brush" principle. Many people are dollar cost averaging into Bitcoin and buying weekly/monthly regardless of the price, saving up in a secondary store of value. Just because you see a few cryptobros shilling some altcoins on Twitter/Reddit or wherever doesn't mean your assumptions apply to everyone, or even a vast majority.

Many real life folks I know buy little chunks of Bitcoin on a consistent base regardless of the price as a form of savings.

I don't understand the point that you are trying to make.

This is what it looks to me: "the problem with gravity is that since the objects fall down people rationalize everything (e.g. give explanations why they should fall down). If the objects went up year after year forever I guarantee people would shout up about it even though none of the underlying reasons for supporting it should have changed"

You’re comparing cryptocurrency with… gravity?

The point is pretty obvious - the usefulness and popularity of crypto shouldn’t be related to its value in relation to fiat, yet here we are.

The point is not in comparing cryptocurrency with anything, but showing, that the the structure of your argument admits absurd consequences thus showing that the argument is invalid.

> the usefulness and popularity of crypto shouldn’t be related to its value in relation to fiat

Are you sure that the usefulness and popularity of crypto are related to its value beyond some reasonable correlation?

The true underlying reason for supporting it is "stonks go up." They call it deflationary, but that's the same thing.

the problem is that unless the transaction costs are high, anyone can hack it

If your problem is the government might go crazy, the solution is to be part of society and stop that happening, not run away and hide in your cave

This is also why I don't believe in "Smart Contracts" and the term "code is law", ultimately people want people to be answerable to people. We have courts specifically to address contract and financial disputes, they are essential and provide a level of insurance over business and financial operations.

With smart contracts you have none of this as well as the risk of a bug or backdoor in the code. No one is going to be auditing all smart contracts. They want to be able to use the legal system to address a problem after the fact if it goes wrong.

Admittedly I am no expert, but those concerns have kept me away from ever considering exploring them.

> This is also why I don't believe in "Smart Contracts" and the term "code is law", ultimately people want people to be answerable to people. We have courts specifically to address contract and financial disputes, they are essential and provide a level of insurance over business and financial operations.

This is exactly wrong. Some people ultimately want people to be answerable to people. There are plenty of people however, who want to be answerable to code instead. Unlike with other people, you can potentially verify that the code you trust in is neither irrational, nor cruel.

That’s obviously true. And once you accept that then the whole premise behind crypto is gone - if centralization is the only way to make it work, then traditional banking is preferred. All that’s left are use cases that are in the gambling and money laundering category.

Huh? Crypto is great as a transfer of value network and store of value among other things. You can still use a bankequivalent like Coinbase.

I mine ETH. I have flexpool.io configured to pay me out after I accumulate 0.05 ETH which is about $140 right now.

They pay me out to my MEW wallet and the transfer costs me about $7.

I then have to transfer from my MEW wallet to my Coinbase wallet which costs me about $5 since I choose the MEW turtle speed which takes longer.

I then sell the ETH immediately because I realize how useless this crypto crap is for transactions or store of value. That costs me about $2.50.

So about $15 in fees to get my $140. You call that a great transfer of value network? I’ve mine cryptocurrency since you could use a GPU for BTC. There is no legitimate use for cryptocurrency today and I doubt there ever will be. It is structurally flawed in numerous ways.

I'm curious, why you don't just have the pool payout straight to your Coinbase wallet, especially since that is your consistent destination, so at least some of the transfer fees are avoided?

I could theoretically do that. But Coinbase says not to. And every single time I transfer ETH to Coinbase they give me a different wallet address to send the ETH to.

Bottom line, they say not to do it and I personally can't guarantee I'm sending the ETH to my Coinbase account with an old ETH address that I've remembered.

Eh so is runescape items.

I disagree. I believe there's a lot of areas where crypto can bring much more efficiency and transparency into financial markets, and that's a good thing. I agree the point is not to replace banks, but perhaps evolve them, bring about new types of financial institutions, products and instruments.

While I expect there are important new types of financial institutions, products and instruments that may be evolved by cryptocurrency experimentation, I would be extremely surprised if normal people could do a coherent analysis of the pros and cons of them, and expect they would not be able to distinguish the good ideas from the scams. I mean, look at how many people think literal lotteries are a good investment, or who are furious about the existence of inflation, or whose mind is blown when they first learn about fractional reserve banking.

I don’t know what you mean about efficiency, as there are multiple different ways to count this. Energy efficiency clearly isn’t a selling point, so can you expand on what you do mean?

I’m furious about the existence of inflation. I think it should really be called monetary debasement instead of inflation. Satoshi Nakamoto created Bitcoin in part to provide an alternative inflation free money option.

Why am I being naive or foolish to be furious about the existence of inflation? Is it a good thing that I simply misunderstand?

I am genuinely curious. Please help me understand.

I believe the accurate answer here is twofold: - money is perpetually not supposed to be a great perpetual store of value relative to goods and services. Government policy aims for some inflation, fears too much and fears too little. Why? Because a bit of inflation is an incentive to use your money on more productive asset - eg don’t hold on to it but instead invest in a startup or go use someone’s services or goods (go to a restaurant!). The issues happen when inflation is so high that the money melts away before you have time to figure out how to use it productively. Deflation is also bad because then people stop spending on services, stop investing - and just hold onto money. (“No I don’t want to invest in this startup! I have the best investment I need, just holding onto my cash!”) That slows down the economy. - either way Bitcoin doesn’t solve inflation in any way. It’s just another asset - that can go up or down or whatever, and happens to have gone up for a long time (just like Facebook stock) and then dropped a lot. Just like any stock or any asset, Bitcoin can have higher-than-inflation real returns or lower-than-inflation. And more recent returns have definitely been lower. What will happen in the future? Who knows. Same answer applies to the S&P500 and to Gold and to the new condo in my neighborhood.

Curiously, I was just thinking how I personally am often wrong about inflation right before logging back in to see what responses I’ve had to this comment.

One of the important things I tend to forget, is that effective rate of inflation is different for different people within the same economy.

For example, the official rate of inflation in the U.K. right now is 5.4%, but if you’re poor, you’re likely to be constrained by fuel prices (which just went up ten times that: https://www.msn.com/en-us/news/world/uk-faces-record-rise-in...) and food (which has done worse, but unevenly and over the whole year: https://twitter.com/BootstrapCook/status/1483778776697909252).

This is because inflation isn’t just caused by just governments printing money, it’s also caused by a reduction in the availability of things to spend that money on and even the rate at which money changes hands (https://en.wikipedia.org/wiki/Velocity_of_money).

There’s also a totally unrelated argument that I can follow but not adequately repeat about the impact of various levels of inflation on consumer spending and the feedback that has on employment etc., but that’s not an argument that I expect to do anything at all to reduce anger.

> I think it should really be called monetary debasement instead of inflation.

That suggests that you don't know what inflation is.

> I am genuinely curious. Please help me understand.

You say this too much. You can't understand from fly-by comments on the internet, which is why you're in the state that you're in.

If you're actually as genuinely curious as you pretend to be three times a day, go to the library and read a book.

All you're doing is chattering on the web. You will never understand anything this way.

well, that has nothing to do with crypto, right? that's the case with current state of affairs already.

Current state of affairs is regulated to prevent most normal people from getting into serious trouble most of the time, crypto not so much.

What kind of efficiency are you talking about? It's far, far from clear -- at best -- that crypto can be more energy-efficient than traditional banking.

Transparency? Really? For whom? Do you want your taxes on the blockchain for everyone to see?

I am not an expert in crypto at all, but what I would love to see maybe, is some type of stablecoin supported by the USPS. USPS used to be in the banking business and are now looking into it again. Is there an opportunity for the USPS to support USDC, to replace money orders to help serve the underbanked?

I dunno.

https://executivegov.com/2021/10/usps-launches-pilot-banking...

Why wouldn't the USPS just be a bank, with accounts with the Fed and FDIC insurance though? The USPS not providing banking services is because Congress won't let it.

The whole premise behind crypto isn't gone. You can build centralized custody wallets on the blockchain and you still get programmable money, no middle-men for transactions and lower barrier to entry for innovation in financial services (and of course self-managed wallets for powerusers)

> programmable money

Where there's code, there are bugs. I don't want that in my money, thanks.

> no middle-men for transactions

At what cost? Most people don't care about censorship resistance, they want free/cheap/fast payments and transfers.

> lower barrier to entry for innovation in financial services

There's plenty of innovation in finance given the proper legal framework. See the number of fintech startups popping up every year. The only innovation we see in the cryptocurrency space is the recycling of old scams that are impossible in modern finance.

> Where there's code, there are bugs. I don't want that in my money, thanks.

Yeah, money should be data, dumb configuration, not code.

Add another, completely separate layer on top of that, for the code.

Data is still controlled by code and is just as easily affected by bugs.

But none of that is true... transactions still require middle-men, and decentralised finance is fundamentally incompatible with financing. So we are left with "programmable money"... whatever that means.

Many people underestimate how hard is to store securely and reliably a crypto wallet key on long period.

I think it is a lot easier than reliably storing say, gold, and yet it is considered not unusual for people to keep some gold or other physical assets of value in personal home vaults. Unlike physical assets, you can make redundant copies of digital assets giving anyone not lazy a huge durability advantage.

For readily accessible warm wallets not storing kidnapping-worthy amounts, this airgapped pattern can work well for the modestly technical https://github.com/hashbang/airgap/blob/master/docs/HD-Crypt...

Anyone that wants to learn reliable self custody hit me up.

My job is teaching self custody to major fintech companies but anyone asking questions for personal use in public in places like #!:matrix.org I will help for free as I have time.

The difference between storing gold and crypto, is the range of people that can attack it.

With Gold someone has to physically come to the location I've stored it in, that necessarily limits my attacker set.

With crypto, if I use a hot wallet the whole world can attack me. And I know you can use a cold wallets and air-gapping, but now you need to get into managing those well. This is possible but inherently not easy for the average lay-person.

And yep you can duplicate them, and again I look at how many relatively savvy people have DR incidents where they don't test their backups and restores regulaly and get a nasty surprise when they try a restore and realise they got corruption.

All to say, it's possible sure, but I'm not sure for non-specialists I'd say it's a lot easier than gold.

Any non technical person can learn to use a cold hardware wallet like a Trezor or Ledger these days. Anyone that can put a combination into a home vault can use one.

I am not aware of anyone who has tried a modern hardware wallet that still argues that crypto self custody is above the abilities of anyone technical enough to use traditional online banking.

Once they use a pen to write down the 24 word backup then they can simply write it down a second time, or a third. Store a copy in a safety deposit box or anywhere resistant to theft or fire. Easy.

Anyone that can store paper stock certificates can do this only with these the copies are valid.

People don't want to store gold and valuable at home without insurance. There are businesses that will store your gold for you. And yes home robberies do occur along with disasters from flood, quakes, and weather.

Just in that list of commands, there are a dozen different pieces of software that a user has to trust not to steal their keys or make some sort of error. I have more faith in the legal system than software I haven't personally audited. So now I have to audit whatever btchip_setup is, ndeftool, and a bunch of other software if I really want technical security. Oh, and if I really want to do it right, I've got to audit the chip designs and inspect the chips to make sure they are to spec and don't have secret cred-stealing hardware.

Then you have to trust the hardware storing the data not to fail. But every physical storage medium will fail eventually, so now you need a system by which you create backups and test your backups. And now you have to secure your backups separate in case of fire or technical theft too. It starts to become a part time job very quickly...

The end result is storing 24 english words. You can store them on paper, on a CD, an NFC tag, a stone tablet. Storing words long term is a well understood problem.

Do not trust any or this software to generate those words truly randomly? No problem. Use bip39 diceware to literally generate your words with dice.

When it comes to not trusting software to convert those words to a keypair deterministically, use NASA dual path tactics.

Use two unrelated software suites to convert those words to keypairs and sign a transaction and ensure the final signed payload output from both unrelated toolchains is identical. Bip39 has been implemented in many programming languages.

Now you can form strong confidence in your entire supply chain from key generation entropy to a final transaction with perhaps a couple hours of effort. If you are moving millions in value and worried about supply chain attacks the extra effort may be worth it.

For most a Trezor or a Ledger used as the instructions that come with it advise will be in fine shape.

This +10 (if I could).

And that ("Many people underestimate...") is before you factor in all the extremely talented people who are looking for ways to remotely steal crypto wallet data.

Having a small amount of money on-chain can work as a hedge in many scenarios. Risk of losing, sure it is high, but the failure mode is very different from anything else you own, so the overall risk is lowered.

So when society collapses you'll be fine because you'll have a small amount of money... that only exists on the internet.

There are other possibilities than full collapse of society. A simple one is that your possesions are siezed.

This article is an example of a person speaking from the perspective of massive financial privilege.

Does the author realize how much people in the third world have been screwed over by banks and why they wouldn't want to trust one? The author's opinion would be vastly different if the author were a resident of Turkey or Lebanon or Nigeria right now.

I see this pro crypto argument by disfuctional states a lot. But is there sufficient infrastructure to use crypto in disfuctional state? If you want to be cashless you need a lot of infrastructure around you...

> But is there sufficient infrastructure to use crypto in disfuctional state?

No, but it's better than the infrastructure in their countries.

And you quite very likely need to be willing to break the law, as most countries only recognize/accept payments in local currencies.

What infrastructure? The sender and receiver need smartphones.

The same argument can be made here. "You're speaking from a place of infrastructure privilege. Not everyone can afford smartphones. Not everyone has reliable access to electricity. Not everyone has reliable access to internet."

(I'd like to clarify I'm pointing out that this argument can be made, I'm not actually claiming to be familiar with anyone's circumstances or privileges.)

That's true. I'm not an expert, my guess though would be that more people have access to smartphones with a network connection than have access to a good banking system with stable currency.

A smartphone is no longer a privilege.

> In 2022, the number of smartphone users in the world today is 6.648 Billion, which translates to 83.89% of the world's population owning a smartphone. In total, the number of people that own a smart and feature phone is 7.26 Billion, making up 91.62% of the world's population.

What would you do as a resident of Turkey or Lebanon or Nigeria?

Would you use cryptocurrency for currency or for savings?

One tends to save in crypto and convert to spend in local fiat or USD as late as possible in order to maximize their protection from debasement of the fiat currency.

How does that get reconciled with the huge swings in crypto value? Some of them are worse than inflation in unstable countries.

It's not a step backwards, it's a tradeoff. Crypto is a tool, just like a bank is a tool. It has different pros, it has different cons. Personally I greatly enjoy sending any amount to any country without the possibility of a hold or embargo because "MuH TeRrOrIsM, tHiNk Of ThE cHiLdReN and WaR oN DrUgZ" which is in reality just about governments always wanting more power since all three of those are routinely found to be enabled by and participated in by big banks anyways.

At the end of the day, you relinquish control for a false sense of security. Everyone storing their money in banks in Venezuela found this lesson out the hard way: you don't have any money. The government allows you to store and pass around notes for debt, which are commonly agreed upon as valuable and so our economy spins onward. You know what they say about those willing to give up freedom for security.

Realistically, use your head please. Full tradfi and full defi are equally unwise. It's risk management 101. And yes, some very unsavory things going down in any country are always a risk if you are planning a resilient infrastructure for your estate spanning generations. Usually this has taken the form of multinational diversification, but now we have the extra option to secure long-term wealth without all the legal expenses. Don't dismiss it.

A non-material agreed upon medium of value transfer completely outside of control of governments is unprecedented. You can go to any country, and get someone to give you their paper currency, for a digital one you possess - without ANY restrictions or moratoriums. I'm not sure how that can possibly be called a step backwards. It's a valuable tool even if most of HNs audience has no use for it. Control comes with risks and responsibilities. This is true for being your own bank, running your own infrastructure, and everything else. Literally nothing about this tradeoff is new or shocking, except that it's now available for currency as well.

It's true. But the world is moving away from cash, and soon the type of privacy and freedom it affords will be gone.

People who need that sort of privacy and freedom need an alternative. Fortunately, the alternatives available are 100% opt-in and can be ignored and avoided if you don't like them - a stark contrast to retail banking in the USA, which we are all forced to use even if we don't want to.

Who are these people who need "privacy and freedom" that can't be had with regular banking?

I mean, it's not like your account balance is public on regular banks..

I struggle to come up with an example which does not involve shady business, and if that's what we want, it seems like a better solution to just legalise those businesses...

The banks in the US can point-and-click freeze your assets and ability to transact even in the absence of any burden of proof of reasonable suspicion of a crime. They frequently do this upon request from the government well prior to a conviction or even charges.

They did this to Wikileaks, for example, long before any charges against Assange were made public.

It's, to borrow a phrase, "turnkey tyranny", ready for abuse at all times. Those it is wielded against can't then afford representation to get it fixed, as they can't send or receive any payments.

For one, people who live under oppressive regimes.

And people living in oppressive regimes have access to free network infrastructure? That's news to me.

An oppressive regime will just make crypto illegal if they want to, make even possessing cryptographic keys punishable, etc. And crypto transactions make it easier to trace spending to you anyway, especially when the regime can unabashedly MITM any traffic within or into/out of their country, etc...

Legal Cannabis stores

I agree with you and the article. I believe that crypto currencies solve if you need privacy with your money use case. What I think is that governments are interested in seeing we’re every penny goes so they can tax you properly. Centralized banks are somehow governments agents, they report were every penny goes. With regards to the money you had in your wallet, it was never your full assets, but the money you got to spend on something you don’t care and you do not want people to know what it was. This is your crypto wallet.

The blockchain is public and immutable. There is no privacy. Every transaction of every coin everywhere is completely visible. Even if you run BTC through a tumbler...the overall flow of BTC is going to be moving towards whichever wallet holds it at the end of the chain when a physical transaction takes place.

At which point if the physical transaction is picked up, the entire chain unrolls back to every initial source.

> People who need that sort of privacy and freedom need an alternative.

Crypto currencies don't afford privacy, do they.

I think this very short-sighted. People don't want to run their own banks now because the UX behind Crypto sucks. But the space is moving like a rocket and who knows what the future holds.

Anecdote: I am a fairly technical person but stayed away from the whole self-custody stuff because no way anyone in my family can figure it out and if something happens to me, its all gone.

Two days ago, my wife (non-tech as you can get) got a muun wallet and was very happy about the experience. She got the point of being able to send money to her relatives in the middle east without the normal shadiness that goes on over there.

(getting USD or any hard currency in and out of some middle eastern countries is a nightmare)

> got a muun wallet and was very happy about the experience.

Developed by a centralised developer that you trust not to screw up your money transfers.

> But the space is moving like a rocket and who knows what the future holds.

We know. All the crypto bros will slowly and inefficiently learn why regulations and centralisation exist

It's a self-custody wallet. Money moves over the Bitcoin network or the lighting network. Developer has no control. (literally, can't be evil vs. won't be evil is the whole point). Are you sure you know how Bitcoin and self-custody wallets work?

> Developer has no control.

Developer literally created the software you use.

Wait until your non-tech wife accidentally sends ETH to a BTC address. Or her hard drive dies. Or a million other things that can happen.

And the one “legitimate” use case you list is to use cryptocurrency to bypass US controls on money transfers to monitored countries.

How long do you think that hole will remain open?

I think you are being disingenuous and emotional about it. Previously, the UX was terrible and didn't protect non-technical users at all, so these scenarios could happen.

Newer tech with better UX does a wonderful job protecting users and is improving at rocket speed. The example I used protects the user from all these scenarios you mentioned.

Also, the US doesn't care about moving USD in and out of most countries (Iran, NK excluded). It's these countries themselves that want that level of control.

The example I used protects the user from all these scenarios you mentioned.

How does it protect against hardware failure? How does it protect against sending Coin X to a wallet meant for Coin Y?

Also, the US doesn't care about moving USD in and out of most countries

That's funny. And even if what you said were true, other countries will eventually control what appears to not be controllable today.

We're at a point where you can have your coins on a hardware wallet, and have a simple route into an proper exchange with the possibility to pay fiat to your bank account. Documenting this and updating it yearly is not that much extra work if you really believe in it. Every year, practice the process with your wife/sibling/whoever and 10$ so they are accustomed to it.

It's work, but you are running your own bank.

Why not both? Making use of "crypto banks" but still be able to freely interact with the underlying financial network whenever I wish to? That's pretty hard today without relying on middlemen such as Stripe et. al. thanks to the fact that most banks do not provide any useful APIs.

I am surprised no one mentioned social recovery, Vitalik even wrote about it https://vitalik.ca/general/2021/01/11/recovery.html

Why not both? You can use crypto if you want to "run your own bank", or you can use a bank. The existence of one does not preclude the possibility of also using the other. I use crypto, I am aware of the risks it entails and allocated capital accordingly, the rest held in a bank or safer "centralized" store of values (stocks, etfs, etc). Some people go full crypto with no bank, some people want nothing to do with crypto and will just use a bank as usual. None of this should concern anyone but the person making this decision.

That said, this article is simply the rationalization of the author's choice about why he won't use crypto, raising basic concerns that anyone that knows about crypto should be aware of, but of course it reached the front page based solely on the fact that it's anti-crypto.

However, I want to address the closing quote.

>Would you carry around your life savings in your wallet? Would you store everything of value in your home in a safe? Would you want to run your own banking infrastructure?

You don't have to carry all your life savings in a single wallet that you carry around. You can split everything in multiple wallets, distributed in a safe way so that you don't lose everything if your house burns down, or you are held at gunpoint, or you become amnesiac, or you die, or whatever. How you do that is your responsibility. You don't want that responsibility? Then just use a bank. Also, I didn't know I had to run my own banking infrastructure to use crypto, up until now I just used a wallet.

As long as the people who go full crypto act under the same rules as banks for KYC, sanction compliance when moving money etc. (i.e. like for like) - why not? If we can atomize things to that level, I would expect the banking landscape to also look somewhat different - but might not be a bad place to be.

> I don't have the time, energy, or skill to securely run important servers all by my self.

But some other people do.

> I give an institution my money and, due to a combination of their size, insurance, and regulators, I'm confident that my money will still be there tomorrow. They are unlikely to give me fake notes, and they can refund me if I've been defrauded. I trust them.

Good luck! Your trust in them is not a guarantee that you are able to get your money back from them at any point [1] [2] [3] [4]

[1] https://www.reddit.com/r/UKPersonalFinance/comments/aqxz5n/h...

[2] https://www.reddit.com/r/UKPersonalFinance/comments/ryc8i4/b...

[3] https://www.reddit.com/r/UKPersonalFinance/comments/l4tps5/h...

[4] https://www.reddit.com/r/UKPersonalFinance/comments/cbpxit/h...

Your first example was caught up in a government mandated anti money laundering investigation.

If the government is after you, crypto isn’t going to protect you. It might make the cost to go after your money a little higher if you’re willing to violate court orders and live as a fugitive.

"the government is after you" is a spectrum. The fact that you're under suspicion for money laundering doesn't mean they'll send seal team six after you. Using crypto raises the barrier for seizing your money, just like having cash on hand means that you can still pay for necessities when your accounts are "caught up in a government mandated anti money laundering investigation".

In the US at least, the method for seizing crypto is the same as for seizing money in a bank account. The only difference is that the warrant is served on the person who owns the crypto wallet instead of a bank.

That’s what I meant when I said the cost to seize your money goes up if you’re willing to defy a warrant.

However, if using crypto as a currency becomes mainstream, governments will crack down.

Crypto might be decentralized, but governments could easily require registering wallets, and force businesses to only transact with people who are registered.

No, but it sure is easier to deal with day-to-day expenses if you don't have an empty account.

You can co-operate with an investigation whilst also not handing over complete control of ~all of your assets for the interim.

Not if the investigation includes a warrant to seize your crypto assets. Which a money laundering investigation certainly could.

The purpose of cryptocurrency is to be digital cash.

Not everyone wants to use cash. That's fine. For those of us that do, there is now a solution.

I think most people generally agree that most of the world aren't going to be using Bitcoin Core with a wallet.dat.

They don't need to, though.

Maybe 3% of us use desktop Linux. If it or something like it didn't exist, we'd still have to create it.

well, one could argue that one of the use cases that cryptocurrencies are not good for is "digital cash". transactions are quite slow and expensive, so vast majority of cryptocurrencies are unusable for e.g. buying a coffee in starbucks.

Lightning offers fast, cheap, anonymous transactions with Visa-like transaction throughput as well as instant final settlement. Why do people assume there have been no new technical developments since Satoshi’s invention in 2009?

Lightning Payments would allow you to buy a coffee at Starbucks instantly while avoiding the 2-3% in payment processor fees.

I disagree and believe that Lightning is not yet safe or easy for users. Here are my primary talking points if you'd like to discuss further: https://news.ycombinator.com/item?id=30210023

I read through your talking points on Lightning and for the record I agree for the most part with all of them. Lightning is a newish technology and like most of the cryptocurrency space, the UX is not great. However, I didn’t see any talking points in your list that could not be addressed by building solutions to improve UX. In fact, I am working on solutions for many of these issues and I encourage others to do the same.

It’s similar to how Linux on the desktop isn’t as easy as simply buying a Mac. There is real value in alternative solutions such as Bitcoin and Linux even though it may be harder to use these technologies today.

> Why do people assume there have been no new technical developments since Satoshi’s invention in 2009?

Not sure where this came from, but certainly from me. Lightning is a joke, we have ~20 better solutions already. Still they have some way to go to fulfill Sathoshi's vision.

Lightning is working for an entire nation in El Salvador. Why is Lightning a Joke? I commented below that the UX for Lightning needs work but I would consider that par for the course for an emerging technology.

What are some of the ~20 better solutions and how do they compare in terms of programmatic inflation policy, security budget, decentralization etc? Or are you just trying to equate Lightning to Nano or Visa since they all have low fees and fast transactions?

Disagree. Slow and expensive might apply to Bitcoin but there are plenty where it doesn't apply. (For example, Bitcoin Cash which solves these problems. But there are plenty of others which work quickly and cheaply.)

You mean like how desktop Linux is unusable by my grandma?

I use it as digital cash all the time. Not every cash transaction is for trivial amounts, and as you say, not every blockchain is expensive.

* rich western people

The rest of the world is desperate for banking without gatekeepers, ridiculous wire fees, corrupt inflation, etc.

Tech like bitcoin will liberate millions who only own a cellphone and are either denies banking alltogether, milked dry with 30% plus fees, or whose nearest bank is hours away.

Let banks compete.

Once upon a time I became convinced I wanted to create the first 100% virtual bank of my country.

Not having the faintest idea of how to do such a thing I set out to at least collect a roadmap of the paperwork needed to do that, so I could glean some knowledge in the process.

Ended up consulting with a lawyer and gathering a grand total of 1700 distinct bits of paperwork I needed to fill and complete as a random person. Every one of those things would have to be accompanied by documentation, most of which had to be presented in person at least back then. Would have taken me about 5 years if I managed to file a paper a day every day. To this day I still have no idea how on earth do banks just pop up one day.

Parallel processing and experience. It also helps if the people on the charter have run a bank before

It doesn't matter if people want to run their own bank. This is about freedom and principle. If you'd like to deposit your money into some bank, you're free to do so. However, nothing in society should require a bank for anything.

For example, a paycheck should be deposited directly into a worker's cryptocurrency wallet. Anyone who wants their payments to go into their bank account can simply provide the address of their bank wallet instead of their personal wallet. This way nobody is forced to create some bank account just to get paid their salary.

All of this would be nice if we didn't stumble into negative interest rates territory for a while. Having to pay to hold a depreciating asset is going to make the choice much less evident.

People don't want to run their own bank, but they also don't want to depend an unbelievably opaque, complex systems that periodically crash, with no real accountability.

The important thing that crypto brings is optionality. Without crypto, what option do we have if not to trust the handful of BofAs, Itaús, Deutsche Banks, Santanders and the Goldmans out there? Decentralization is a spectrum [0].

The Finance/Banking system is getting ever more centralized, more faceless, more intractable to individuals. Community banks and credit cooperatives are getting extinct. My dream goal for Hub20 [1] is that it allows us to bring community banks back. So those that do want to go through all the work of "being their own bank", can do so, but those that are simply looking for an alternative to the big banks, can go look for a more local, human-scale "bank" which can be powered by Hub20.

[0]: https://twitter.com/rlullis/status/1307420668372430848

[1]: https://blog.hub20.io/decentralization-costs-and-tradeoffs/

> The important thing that crypto brings is optionality. Without crypto, what option do we have if not to trust the handful of BofAs, Itaús, Deutsche Banks, Santanders and the Goldmans out there?

You can keep nonmonetary stores of value (gold bars, fine art, silos of harvested wheat) and then convert them to cash as needed. If you find the right counterparty, you can even skip the conversion and barter directly.

> Decentralization is a spectrum

We're on this spectrum now. There is no world currency; anybody is free to make their own (the hard part is getting others to accept it). The existence of cryptocurrency is proof of this.

Can you participate in the global economy by holding gold bars, wheat and fine art?

Normal people trust people in suits more than an anonymous group talking in terms they don't understand. That's not going to change. My view is cryptos are/will be the 'new cash', as in cash is now used for mostly illegal purposes anyway. Nobody withdraws 100 dollars to buy groceries.

> Normal people trust people in suits more than an anonymous group

Who said anything about "anonymous groups"?

What happened with the idea of family-owned businesses, local communities, cooperatives? Have millennials become that alienated from their immediate environment?

Is it so hard to conceive of a world where a small-medium business can "run their own bank" so that any of its employees/contractors/suppliers have accounts at their local "crypto bank" to get paid? Or a farmers cooperative that providers sales/distribution services to its members and uses a Hub20 instance to manage payouts, or provide mutual insurance services?

Why would anyone want that though? From a SME perspective, there's nothing wrong with banks. They are not in the business of banking, why would they bother 'running their bank'. Cryptos make little sense from a layman's perspective, let alone in a boardroom setting. Banking loves SME's and vice versa, they have hundreds of years of trust, not mentioning underwriting, lending, risk scoring etc.

Let someone else do all your thinking for you and you'll lose the ability to think for yourself. Let someone else do all your banking transactions for you and you'll lose the ability to do your own too.

CBDC's are directly aimed at controlling how people are allowed to spend their money. I'm sure most people will be fine with that as there will be a lot of grooming beforehand to normalize what we're allowed to spend our money on in the name of checks current state of emergency - climate change. "We're sorry, it was decided there's too much housing in the region you want to build that house, we're denying all of your purchases related to housing in this geographic area".

I know it sounds over the top, it will certainly be denied until CBDC's are here and in use, only then will it start happening. But only in a few cases, and "we're ok with how monetary control is being decided in the cases that made the news so far, it's being blown out of proportion".

https://headlineusa.com/bank-of-international-settlements-ch...

Hmm. Well my first answer didn't even garner a response. So I'll risk getting my hand slapped and try again.

I know for a fact that this is not true. YCombinator knows this is not true. How?

YC invests in P2P companies. Those folks already run some form of their own bank. In particular the lending function. Why do they choose to do so...because they don't want to earn 0% (or less) on their own funds. They lend them to others at rates they like, generally 8% and up. People who invest in tax liens (some of those reach 16% interest) also run a lending function. Currently, neither run these operations on the blockchain. But that could change and I think it will be easier for them once they do. The reporting costs should go down and ease of any legal ramifications should go up. The same is true for anyone who handles personal investing (the trust function) or stock trading (the investing function). Many of you do both...you just call it something else.

The main problem though is all these articles by rich, white guys that ignores 99% of the World...and tells us all what we want to do or not do.

Please please stop.

I don't think it's so much about running your own bank as having an open interface to finance and be able to hook in new services into it.

Or just being able to do what you want with your money.

> Holding on to cash is like running your own bank. You have to check that the money you're given isn't counterfeit, store it safely, insure against loss, protect against theft, project future needs, etc. It is a massive faff.

The author is trusting banks too much.

-> counterfeiting: It's impossible to check that your bank is not counterfeiting money by cooking books. There are strict measures but not all countries have these. Also, your government can "counterfeit" your currency and neither cash or a bank account will help against that.

-> store it safely: You need to store safely your online access codes and your credit/debit cards.

-> insure against loss: Banks lose money but it's socialized on all customers (or multiple banks). Theoretically, you should compare people loss vs bank loss of money; but insurance gives you protection against a single accident and it's difficult to get such insurance as an individual.

-> protect against theft: Banks do help in modern countries but it's far from a 100% guarantee.

-> project future needs: don't even know what this means?

> So people use banks. In the UK, they're mostly free. I give an institution my money and, due to a combination of their size, insurance, and regulators, I'm confident that my money will still be there tomorrow. They are unlikely to give me fake notes, and they can refund me if I've been defrauded. I trust them.

Fair enough. 2008 was 14 years ago. I guess that's the average person's memory?

> So people will gather around big institutions. Those which have the funds, insurance, and regulatory oversight to provide a reasonable degree of trust.

So that's Coinbase & co but with the extra feature that you can take matters on your own hands. How is that worse than a fully closed system?

> But don't come running to *me*

Sorry but this dude is full of himself and I don't think he understands cryptocurrencies

Around here, if one half of a married couple dies, the surviver can't access the shared account until the state gives its OK. Which can take up to 6 months.

Imagine living without money for 6 months while having to pay a funeral. I saw it happen to an elder woman. She had to loan from friends and family because of this.

Now I heard the law has been updated to avoid the most egregious excesses, but the basic principle still stands.

I know of a few people who keep 1 or 2 months worth of money at home, just in case. Can't blame them.

Banks are generally good at what they do, but don't put all your eggs in 1 basket. Someone will make a mistake at your expense, better be prepared and have some buffer.

I'd wager that "oh fuck, my partner died and I have no idea how to access their private key" is considerably more likely than "my partner died and I cannot access their traditional bank account but it's all good because I've got their private key to access emergency funds stored in BTC."

Yes if they didn’t already have a joint bank account why would crypto magically change this

and of course they couple could have shared access to each other's bank accounts

This does not work. When married, all your and his/her accounts are locked, as they are considered shared property, no matter the name on the account. The legal proces after death is to decide who owns what as this decides what share the state gets.

Also not advocating for crypto, just saying you should be able to live a while without access to a bank.

If I die, a quorum of friends around the world can verify this fact independently and when satisfied can provide those I will my funds to pieces of a private key that when assembled can recover all funds without my help.

Schemes like that are not easily possible with physical assets or fiat currency.

> Schemes like that are not easily possible with physical assets or fiat currency.

Of course they are. It's called last will and testament.

You can easily set this up, choose a lawyer to hold it and your friends don't even need to know.

If you have substantial assets it's even much safer that way, because using your method you'd actually put them in danger as criminals might pay them a visit one by one whether you're still alive or not. Not to mention the fact that your friends could also just get together and cash out early...

SSS is one of those things that remains highly un-ergonomic. We'll see how it works out, but I suspect that a lot of people are going to be in for interesting surprises when they chose not to use k-of-n and one of their friends lost a key part. A lot of tech people become very attracted to fun ideas (I definitely remember people falling in love with SSS decades ago). But building foolproof systems is not just about cryptography. Heck, the very first "Why Johnny Can't..." was precisely about a solid cryptographic system nonetheless leading to people fucking up all the time.

And you absolutely could publish an encrypted password and distribute key parts in precisely the same manner, enabling your quorum of friends to access your bank accounts or whatever.

That's nice that you trust your bank. I wouldn't be so trusting. Nevertheless, if you want someone else to handle your funds for you, there are lots of reputable services that can hold your cryptocurrency with all of the guarantees you are desiring. I'm keeping my keys though.

I haven't heard of a single case where a German bank customer lost his or her money because the bank did something fishy.

Fortunately, there are more countries than Germany, and some of them have a very fragile banking ecosystem that many people would like to avoid taking a part of. Just as one example, remember the Greece bank run some years ago? The banks ended up implementing limits on how much you could withdraw each month, which frustrated many people. I'd say that's pretty fishy when the banks give the impression that the money you put into the bank, you'll for sure be able to get out whenever you want.

Yeah that Greek incident wasn't great. Still a lot better than when the biggest crypto exchange of Turkey just left with all the money that one time. That was catastrophic for many customers!

Well, right, banks generally work as intended. It's just they blow up sometimes. The oldest bank up until the 80's was Baring Brothers and they were so respectable, just so respectable, and then they collapsed by doing fishy things. The worse thing is, conditions can change very rapidly and you may no longer be able to withdraw your money for a few months while the currency is being devalued (like Argentina), or all the banks might start blowing up at the same time (United States, Chile in the 80s), or you might get invaded (will the bank's security save the day?), or the bankers might not be cut out to be bankers (I know a bank with 4-digit passwords).

It's good that we're getting alternatives, but they'll have to be regulated.

And once we do that, cryptocurrencies doesn't gain us much compared to traditional banking.

I do appreciate the optimism, though!

> all of the guarantees

Insurance? Regulatory oversight? Which services?

> here are lots of reputable services that can hold your cryptocurrency

Next step would be: "which are those services" and "by saying reputable, who vouches for their reputation".

And the answer will invariably be silence or "just google it".

Here's three:

- https://www.sofi.com/invest/buy-cryptocurrency/

- https://gemini.com/

- https://coinlist.co/

These business have been around for quite a while (in technology terms) and each are trusted by many with managing cryptocurrency valued at billions of dollars.

And your answer will invariably be some new threshold to move the "trust" goalpost to next.

> And your answer will invariably be some new threshold to move the "trust" goalpost to next.

It won't.

The only "goalpost" I have is: congrats, you've invented banks, with none of the safety nets.

Meanwhile I grow tired of Visa and others logging my transaction history and travel patterns to sell changes in my behavior as a service. I am seeking to minimize this.

I still have bank accounts for clients that really want to pay via ACH. I keep enough USD in the account for a few bills and a little cash on hand for purchases IRL and recently adopting prepaid debt cards since some stores refuse cash. The rest is sold for Bitcoin and other crypto-assets to hardware wallet devices backed by cold wallets managed offline that can be recovered via a quorum of people I trust spread across several countries. No one government or individuals would have any legal or even practical means of seizing my cold wallet assets. I pay my taxes but the rest is mine and free from inflation long term.

Meanwhile I have friends that have had their accounts frozen over (eventually proven bogus) legal claims filed by individuals, stolen by randos social engineering bank tellers, and my own account frozen multiple times over them thinking my own small purchases were fraud... and deleted once because I had a PO Box on file as my street address. Nevermind the fact I was homeless for years and the homeless do not have street addresses and are thus deemed unworthy of bank account unless they get creative with street addresses.

The security, availability, and stability of bank accounts is greatly oversold. I have done subcontracting work for major banks and I can confirm at least one still uses ie6 and activex as recently as a few years ago to touch your personal data. Big banks like Chase do not even allow you to have even last gen poor security hardware 2FA unless you maintain a balance over $100k with $500k in yearly deposits. Security is a feature they sell to those too rich to care about inflation eating their lunch with large USD balances.

Online I use Bitcoin anywhere possible and a Coinbase visa as a fallback I can send Bitcoin to in order to proxy to USD on the fly.

I also am one of those crazy people that hosts their own online web services in a closet server rack. I would like to see the UX of flows like this become easy enough that anyone can do it with minimal risk of shooting themselves in the foot.

Some of us do care about personal privacy, security, and sovereignty... these days more than ever. The political future of any country is never certain.

> Meanwhile I grow tired of Visa and others logging my transaction history and travel patterns to sell changes in my behavior as a service. I am seeking to minimize this.

Your alternative is to write all your transaction history to a public ledger?

Unlike the visa transaction history, the history on blockchains does not have easily identifiable recipients and I send from addresses not connected with my name each time from funds clients personally paid me in for services.

A store publishing a public log of all cash transactions wont alone identify if any of them are mine.

No central marketing firm has a chance of working out which transactions on chain are mine and who is involved in them. They can at best determine what major exchanges are involved.

> No central marketing firm has a chance of working out which transactions on chain are mine and who is involved in them. They can at best determine what major exchanges are involved.

In this explanation, clearly the exchanges themselves have done KYC and have your entire history on-chain. They can sell this to any marketing agency…

For example, Coinbase:

Blockchain Data: We may analyze public blockchain data to ensure parties utilizing our Services are not engaged in illegal or prohibited activity under our Terms, and to analyze transaction trends for research and development purposes.

https://www.coinbase.com/legal/privacy

I definitely want to run my own bank. But I'm not all people.

People don't want to run their own bank but they want the option to do it. People don't want to store their own cash but they want the option to do it.

Why is this so hard to understand? “I don’t like crypto”. Ok, don’t use it.

This anti-crypto cult has been rehashing the same arguments for years while the crypto space continues to build new applications and innovate.

Well, I think it's been obvious for many years that convenience is the most important factor (to me) for how I choose to pay for things.

Do it online or write and mail a check?

One card and very little thought, or fumble with bills and receive useless coins?

Just wave my phone like a magic wand? OK.

So if I can pay with crypto as easily as I can pay with my credit card (with or without the phone), then we're in business. I'm sure I'm not the only one.

This article is total nonsense.

You don't store all of your money in ONE private key. You must have backups and plans for a spouse or family member to access funds. Just as with cash, nobody stores ALL of their cash in one wallet or location.

If you don't want to use Bitcoin then just continue to do whatever it is you are doing and stop writing nonsense articles that make zero sense.

This is kind of like saying people don’t want to run their own grocery store. Clearly it’s false. The bad assumption is that owning Bitcoin == Running Bitcoin. Running Bitcoin (nodes and miners) == Running Bitcoin, and people want to do it for obvious reasons - the beauty of the protocol is how little power those people running it actually have.

This isn’t a black and white issue. I think the future is one in which most people that simply want better returns on their stables, play games or collect nfts, the key management is obfuscated by a centralized service while a minority that want to be on the cutting edge manage their keys, deal with bridging, etc themselves

What's the point of these crypto hit pieces? Obviously crypto is not the answer for everything, but it has it's uses and probably more uses undiscovered in it's future.

The vast amounts of money gained and lost in such a short time seems to have clouded many peoples views, either through greed or jealousy.

It's called a multisig wallet. There are companies that do this as a service for you and ensure if you lose your phone or wallet you can recover your funds. This will be a standard feature that Google, Apple, Microsoft, etc provide in the future. You'll see.

Why would they?

Google & co. could have implemented a Web Payment API in the last 20 years, they didn't.

Instead we got Google Pay & co.

It's not going to make them (enough) money, so, again, why would they? Why not build a proprietary thing or even a proprietary blockchain, if we're that adamant it has to be crypto?

Lol. As if Banks will give you back your money if they lose it due to incompetence or malicious behavior? No. You have the bring in the news media at the very least and have the resources to pressure them. There was an article about this on HN literally yesterday.

More so than wanting to run their own bank, I think many people just want to have the possibility to do so.

It's just like running your own server: hard to do, many won't, but the fact that it is achievable using a reasonable amount of resources is a good thing on its own.

Depends on who you ask, during 2010 - 2012 so many people were enthusiastic about running their own bitcoind node. Every other day I see a new reddit post of a cute little node running on a rPI with an external SSD and a tiny e-ink display.

Also people in countries facing hyperinflation or corrupt banking system (Venezuela, Zimbabwe, Argentina, Turkey, Lebanon etc ) might be forced to run their own crypto piggy banking infrastructure, as inconvenient it might be.

> Also people in countries facing hyperinflation ... might be forced to

use the currency that is as volatile as their own? Why?

...or they just do what was always historically done and use a neighbour's stable currency, or simply USD or EUR.

Switching from an inflationary currency to a stable one is already tough, switching to a volatile deflationary currency would be a nightmare.

the problem is when shtf, USD and EUR are the first to be controlled by the government and banks.

Well, I can understand being enthusiastic about storing a 2-4GB blockchain, but today we're already at 390GB, growing by about 60 GB a year. And that's just bitcoin, Ethereum is another 350 GB (up 100 GB last year).

Just the cost of hardware, download and energy makes this prohibitively expensive for "banking the unbanked" at least.

Using multisig keys distributed around trusted family members makes most of these problems invalid. There are many ways you can structure a Multisig wallet (this is how many crypto foundations and NFPs manage their assets)

No one can genuinely rebut crypto without directly addressing this:

https://fred.stlouisfed.org/series/M1SL

This is by far the dumbest ever HN post that has made it to #1. Too many fallacies to bother taking apart but the worst one must be "banks are free that means they're preferable".

When the author's PayPal, Square Cash, Amazon Smile, Ko-Fi and Flattr accounts all get shutdown, for no reason whatsoever, they will crawl back to using cryptocurrencies and stablecoins for donations.

This obviously sucks, but how common is that? 0.0001% of cases?

Have there even been moderate - not even large - scale protests against banks freezing accounts?

Regular banking is slow and cumbersome, but it does work for most people.

There was just this [0] right here, which is directly related to [1]. Regular banking is useless for both of these users. Maybe they and the problem don't matter since they are 0.0001% of cases, even when the banks have the ability to do that.

Platform-wise, I won't be surprised if they do same thing as GoFundMe [2].

[0] https://news.ycombinator.com/item?id=30213365

[1] https://theintercept.com/2022/01/19/crypto-afghanistan-sanct...

[2] https://news.ycombinator.com/item?id=30187172

"Run your own bank" is just too crude of a statement.

Cryptography is a technology that will increasingly be interwoven into all systems. So you might still be using a traditional bank account. But you will be protected from identity theft. If someone impersonates you and claims you have lost your credentials, the bank will say "Ok, we can unlock your funds with our master key. But that will take 7 days from the moment we write the recovery message to the blockchain".

Then the real you can see that message and intervene.

I might not want to run my own bank. But I totally want to be protected from my banks incompetency.

And from the incompetency of my domain registrar, land registry, phone provider etc.

> I might not want to run my own bank. But I totally want to be protected from my banks incompetency.

And odd statement, banks generally seem more competent than any given crypto operation.

> Then the real you can see that message and intervene.

How does one “see” this message? In fiat, my bank just calls/emails me.

> But I totally want to be protected from my banks incompetency

In your example, what if you’re “incompetent” and lose your keys, or get kidnapped and keys are stolen - how would a message on the blockchain help mitigate this?

People don't want to run anything on their own. FTFY.

I highly recommend watching the talk "Thinking Through Law and Code, Again - Lawrence Lessig" to everyone interested in this topic.

If you can't are unwilling to manage a few private keys, you definitely should not be near crypto. Or computers for that matter.

- People don't want to run their own email / FTP server -> Their data and conversations are being watched and analyzed.

- People don't want to run their own IoT server -> Their device/subscription stops working if the company goes out of business or changes the ToS.

- People don't want to create their own subscription feed -> They are being manipulated by the algorithm and misinformation.

- People don't want to run their own bank -> ...

There are lots of good reasons to run your own infra and we should strive to make it easier to do for everybody

I do.

OA (original author), does this mean I'm not a person?

STFU

> The world is moving away from cash. Just before the pandemic, I went a year without using cash. Since then, I haven't withdrawn any notes.

I have used cash my entire life, and this hasn't changed with COVID (no I have never got COVID. yes I go outside every day, usually to buy ingredients for whatever I'm cooking).

> Holding on to cash is like running your own bank.

I carried $20K in my pocket for years and told nobody. Never had a problem.

> So people use banks.

A bank I use requires Chrome to login, it literally will not work with anything else. This is the worst fucking UX in existence and is not some special nerd concern. They are telling you they have a webapp, as in, a thing you can use with a browser, but it's really just like a normal program but gimped because you need to install a dependency to use it (and you have to figure this out for yourself or call them at which point they'll suggest using Chrome after an hour). And the ATM is some half working garbage on top Windows. The phone banking doesn't work either and is deprecated as it requires real staff.

I also use cash for public transit. Wheras convenience idiots end up wasting hours of time navigating half working websites trying to load new funds into their account, getting interrupted by website updates, Windows OS updates, etc.

> As Moxie wrote a few weeks ago that most people don't want to run their own servers.

Moxie is observing how the current state of software is trash and concluding that normal people don't want to deal with trash (which is frankly written by low intelligence programmers who believe things like "C is more secure than Java").

> If your hardware wallet or keys are destroyed, you've lost everything.

Who cares? Use a bank if this is your concern. They will happily give your money away to whoever claims they lost it. No seriously, this is such a dipshit article. It lies on this idea that corpos just solve everything for you, including identifying you, which they don't, because they don't have a real human to establish a relationship with you. This entire idea that a corpo can authenticate you because they have some special hocus pocus[1] is a myth.

1. This could include things like, a government provided attestation channel, ID cards, knowing where you spent money from a card, being an Authority (TM) and therfore having big boy know how

> If your loved one dies and didn't give you access, you've lost everything.

You are a muppet. The smallest concern I have in the world is what happens to my parent's money when they die. And you use this as 1/3rd of the reason why "cryptocurrency bad" (the real reason they're bad is because they're centralized).

Special Chrome login? Each time I call my bank and speak to someone they make me go through 2-factor authentication, and this is right after already verifying my identity with the previous representative they put me on hold with. Protect me from my money? Nonsense, take my money and lend it out charging others 10x interest.

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