Comment by merrywhether | Hacker News Reader

Comment by merrywhether | Hacker News Reader

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Fraud is a huge problem in current mainstream finance and government money programs, so why would crypto be any different? The US’ Payroll Protection Program covid response paid out tons of money to fake businesses because a similar “proof of legit business-hood” was not easy to determine in a timely manner. And stories like that do a lot of damage to the enthusiasm for such social programs, even if the program was still mostly effective; I’m not sure where PPP falls on the spectrum, but people would focus on a 10% fraud rate over a 90% success rate for instance.

I think crypto is still a solution looking for a problem, but let’s not pretend that fraud wasn’t a massive pre-existing problem for humanity.

Businesses do not map to people. Much easier to spin up a shell business than a personal bank account that does not map to a real person, at least in the US.

I can go further: a political environment where people are concerned about "fraud" in rescue money being distributed is not one with the political will to enable UBI at any meaningful scale. The two perspectives are largely incompatible.

In any case, I'm not sure crypto would be my first stop for fraud prevention.

As the saying sort-of goes: choose two, cheap, fast and free from fraud.

Governments could have prevented fraud but it would have been at the expense of speed, or it would have come at huge cost. Governments chose fraud as the cost of operating a fast and cheap system for distributing money to people in need.

We should consider a more traditional social security program as a point of reference for fraud levels, and for those, the most cyclical estimates of fraud in most western countries are a few percentage points — and that fraud is traditionally misrepresentation of circumstance… not identity fraud.

> paid out tons of money to fake businesses

It did not.

> I’m not sure where PPP falls on the spectrum,

You should not use it as an example especially if you don't know how efficient it was.

> similar “proof of legit business-hood” was not easy to determine in a timely manner

Source? I find it hard to believe.

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