I trust my bank and the legal framework more than wallet software and a loose band of SWEs running a blockchain or DLT.

If funds are wired to the wrong person in your jurisdiction, you can sue to recover it if the sending and receiving institutions can't claw it back. With crypto, you're SOL. Technology doesn't fix trust and legal issues, and a judge is going to laugh an immutable ledger out of a courtroom (or hold you in contempt).

https://www.youtube.com/watch?v=15RTC22Z2xI [HBR: Blockchains Are a Bad Idea (James Mickens)]

This is a ridiculous take. There’s plenty of problems with crypto but this isn’t one of them. The payment protocol has no reason to be irreversible, why would you ever want that. Reverse transactions should be handled by institutions, and institutions should use the protocol. If they make a mistake while using the protocol, they work together with the other institutions to fix it, exactly as happens with bank transfers.

Yes it’s stupid to use a crypto currency network to send personal raw transactions, but the tech is still young and a lot of people do it. Eventually that won’t happen.

Yes you can burn currency by sending it to an invalid address. You can also burn cash. Build controls so that people won’t do it.

The closest example is modern databases. If you let users run sql directly they could drop their own database. That’s an irreversible transaction. The solution is to abstract that power away so that it’s extremely hard to do extremely dangerous things.

If institutions are going to run the network, and the transactions will be reversible, and you're not going to run your own wallet, why crypto? It's a solution for a problem that doesn't exist. The database works just fine.

Anyone can join the network and start a new institution. Good luck starting a bank

You're not an institution unless you have a banking or money transmittal license, crypto or not. The nation state still makes the laws, a DLT node doesn't change the law.

I entirely agree it's hard to start a bank, but your problem won't be solved through technology, only through policy and regulation updates.

https://www.npr.org/sections/money/2017/02/10/514577243/epis... (Planet Money: Blockchain Gang)

https://cointelegraph.com/news/charges-reduced-charlie-shrem... (Charges Reduced: Charlie Shrem Agrees to Plea Deal)

> Before getting locked up, Shrem had run the company BitInstant. BitInstant made buying Bitcoin as easy as purchasing a money order. By the time he was 22, Shrem had hired dozens of employees, found a brand new office in Manhattan, and was processing a million dollars a day.

> Shrem though ended up helping some of the wrong people trade dollars for Bitcoin: buyers and sellers of illegal drugs on the website Silk Road. As he was getting off a plane from Europe to New York, Shrem was arrested. He was convicted of aiding and abetting an unlicensed money transmitter, and sentenced to two years in federal prison.

Absolutely agree, but what’s exciting about blockchain is that it makes the network accessible across country boundaries by default. Definitely countries can opt out by banning it, but the hope is that this interconnection becomes so valuable that banning it has too many negative consequences, just like with the internet.

You still have to obey the laws of the company you operate in. So if you want to act like a bank, you have to obey banking laws - including all the capital and auditing.

Yes but different countries have different laws. The hope is the technology forces the laws to change eventually.

What happens is that you need to obey both sets of laws. This is both good and bad.

e.g. one country requires you don't allow transactions with terrorists. So neither end can be a terrorist org.

additional e.g. one country says LGBT orgs are illegal so neither end can be an lgbt org.

etc.

Why couldn't you sue to recover the crypto?

Lack of KYC (Know Your Customer [1]) and AML (Anti Money Laundering processes [2]) makes it more difficult to know who to pursue legally. Your US bank account or brokerage account is tied to your social security number and other PII. Who and where to process serve is much more accessible.

[1] https://en.wikipedia.org/wiki/Know_your_customer

[2] https://en.wikipedia.org/wiki/Anti-money_laundering_software

Why would you send currency to an address if you haven’t verified its identity. The tools are young, if there aren’t enough controls for you yet then don’t use them. I don’t, but I respect the power of the technology and it’s future potential.

Because there is no meaningful proof of identity for a bitcoin address? If someone on twitter says “here’s my bitcoin address for donations” they may have been hacked, or they could claim that they were hacked, and you can’t find who controls the recipient account. By design.

What if they are wired to the wrong person outside your jurisdiction?

An international wire transfer requires even more checks than a domestic one, and you can always sue in the recipients jurisdiction.

Don’t do that. If you don’t trust yourself not to make a mistake, use a third party with better controls. If none exist yet, wait.

The fact that those controls haven’t been built yet doesn’t mean the whole idea is flawed.

This wouldn't happen with a bank wire, because you don't set the fee. You choose where to send, and how much to send. And that's it.

Yes, you can send to the wrong place, but for example, in Brazil, to transfer to another person, you have to specify:

- Name

- bank

- bank branch

- bank account

- CPF (government national ID)

if anything doesn't match, the transaction doesn't go through.

Is a bit harder to wire a large amount As bank make it a bit different than sending etransfers, in crypto, there is no limit, all transfer for any amount goes through the same interface.

With a wire transfer you have to provide a swift or such routing number a bank name, an account holder name, and an account#. All of which have to match.

Then there is a processing period during which it can still be cancelled.

Finally the dispute resolution process (the law) can force the transaction to be reversed - taking money back from the recipient account.

None of that exists in bitcoin. Especially given you can’t necessarily identify the miner or recipient to contact to reverse the transaction, even if they wanted to.

We’ll just ignore crypto transactions taking $$$s per transaction, taking minutes to hours to complete, and consume more power than some countries.