How do you reverse fraudulent transactions? What happens if your wallet is stolen? Who do you speak to when you need help setting up an account? On a macroeconomic level, it prevents the government from setting certain types of monetary policy that benefit the economy as a whole (although I may be biased there, as the Australian government bailed out the economy as a whole through economic stimulus in 2008 and prevented the spread of the GFC to here).
This is all assuming it's pegged to a stable asset like the USD. Bitcoin's average annual inflation over the past 5 years is around 3,000%. For comparison, Zimbabwe's inflation rate in the early 00's was around 500%.
How do you reverse paying someone with cash? You don't. You can ask for a refund and hope they give it to you. If you're transacting with a trusted business, you can expect them to adhere to the law and reverse the payment.
In this sense, crypto transactions are no different than how humans have transacted for thousands of years. Chargebacks and reversals are a convenience - they are not necessary.
> What happens if your wallet is stolen?
What happens when your wallet is stolen in real life? You lose the cash inside. So you keep most money secure in a cold wallet, airgapped and password-protected, and some money secure in a hot wallet, PIN-protected. Usually losing a hardware wallet isn't a big deal anyways, since they wipe themselves after a few PIN tries.
The UX around securing wallets will get better over time, but if you pick up a Ledger X today it's actually already quite easy to use.
> Who do you speak to when you need help setting up an account?
Just like using a wallet with cash in a secure manner took time to become cultural knowledge, using a hardware wallet with cryptocurrency will to. Obviously, there are places where it could become easier to use, but using a Ledger these days is already pretty damn easy. You just connect it to your phone via Bluetooth and you're ready to go.
> it prevents the government from setting certain types of monetary policy that benefit the economy as a whole
For some, lowering government control over your finances is a pro, not a con, but I can understand that this is up for debate.
> This is all assuming it's pegged to a stable asset like the USD.
I can agree with this, I think currently the price of cryptocurrency is volatile due to rampant speculation. Eventually it will settle into something stable, and if it doesn't, we can just use alogrithmic stablecoins like DAI that track the value of the dollar to within +/-1% and don't need to be backed by a central institution.
Exactly, that's why centralised systems with moneyback guarantees (PayPal, Stripe) exist for online payments where you can't see the goods in person - online fraud is still a concern in 2021.
>So you keep most money secure in a cold wallet, airgapped and password-protected, and some money secure in a hot wallet, PIN-protected.
I'll admit I'm not super familiar with crypto technology, but this cold wallet basically sounds similar to stashing your life savings under your mattress (or, at least, in a safe in your house). Nobody in their right mind would do this.
>Just like using a wallet with cash in a secure manner took time to become cultural knowledge, using a hardware wallet with cryptocurrency will to
Makes sense, honestly. Everyone understands credit cards/WeChat.
Regardless of the individual arguments, though, I think the overall point is whether or not the risk of being screwed over by the machinations of a giant corporation outweighs the risk of being screwed over in the "wild west" world of crypto. For the average person, I think (well-regulated) central institutions are the lesser of the two evils.
Sure, but this is why you transact with trusted people and businesses, just like you would when using cash.
To be honest, I don't know a single person that relies on PayPal's protection when making a purchase online from an individual or business. Every single person I know that uses PayPal does their due diligence on the seller before buying. None of them assume that PayPal disputes will actually work.
The same would be true with crypto. You'd do your due diligence before buying, just like you do today, if you're buying from a random.
> this cold wallet basically sounds similar to stashing your life savings under your mattress (or, at least, in a safe in your house).
You would use a social recovery wallet, in which, say, your trusted family members could secure your life savings as a group. Vitalik Buterin, the founder of Ethereum, has a great article [1] on this.
Even if you don't trust a multisig/social-recovery wallet, you can store your money on an insured exchange. It still comes out ahead of banks and PayPal in that your transactions themselves are private and cannot be censored.
> I think the overall point is whether or not the risk of being screwed over by the machinations of a giant corporation outweighs the risk of being screwed over in the "wild west" world of crypto.
Just like online payments and credit cards had their "wild west" period, crypto has its own. I don't see a big deal here. This is a field in its infancy with staggeringly rapid development. Over time the UX will get better. I'm not expecting your average Joe to move their savings to Monero tomorrow, but I wouldn't be surprised if they did (to whatever Monero-equivalent exists) 10, 20 years down the road, when social recovery wallets are easy to use and crypto prices have algorithmically stabilized itself (ala DAI) or have naturally fallen into an equilibrium.
What, like paypal and ebay?
The problem is that in reality there are (a) small businesses whose trust is difficult to verify and stability may not be guaranteed and (b) large companies who have a proportion of incidents of very bad customer service. For many services there may only be (b).
> do your due diligence before buying
How much do you do exactly? How long does it take, what does it cost (do you pull company financial reports?) and shouldn't the extra time it takes to do this be counted as a transaction fee?
> Just like online payments and credit cards had their "wild west" period
Not really? It's been the same customer-not-present process since the days of export-restricted SSL. In fact that's kind of the problem, it's the same insecure process designed for paper and card transactions. There was certainly never anything comparable to "exchange absconds with customer funds" that happens every few years in crypto.
The "large company payment database was compromised and now all their customers are being defrauded" problem does seem to have improved recently.
I think you meant deflation?
If you held Zimbabwe's currency then you became poor.
If you held BTC over the past 5 years you became rich.
These are two _very_ different scenarios.
How was this bailout done? In the US, the bailout was done primarily by giving funds to over leveraged banks that had every right to collapse. CEOs took home record bonuses, and everyday citizen's lost their homes.
They tried to spin the story in the US as saving the economy too, but most people didn't fall for the obvious wealthy get wealthier, poor get poorer trick.
This actually birthed the Occupy Wall Street movement.
Our economy had one quarter of negative growth but we recovered almost immediately.
The banks didn't get bailed out at all - they didn't need to be because the financial sector had strict regulations that prevented them from engaging in the systemic risk that ruined Europe and the US.
With BTC you don't have to worry about someone siphoning value from your currency. It's not just coincidence that BTC increases in value YOY. Bitcoiners call this 'number go up' technology.
When all central banks are tripping over themselves to devalue their currencies, BTC's value rises.
Unfortunately, at least near term you'll still need fiat-tether "on ramps" to convert your local currency back and forth to tether before you move them to a distributed (or at least a non-KYC) exchange to Monero, then sending to your local wallet, then use online.
The reason PayPal holds funds is that a consumer is allowed to reverse a bank and credit card transaction for a few months after the transaction happened. This ability exists to protect consumers from fraudsters, scammers and bad businesses (ones that don’t provide service etc.) which is much more common than people realize.
With crypto, the ability to reverse a transaction disappears and with that the ability to protect consumers. Now who do you think will thrive in a world where a consumer has no protection? Scammers, bad businesses and criminals..
For thousands of years humans have transacted with physical currency, in which transactions cannot be "reversed" once the payment is made. Even today, many people pay and transact with cash. Second-layer financial institutions provide holds, reversals, and chargebacks but they are by no means necessary for a robust financial system.
Too many times "protecting consumers" turns into "censoring transactions we don't like" and "restricting your financial freedom to maintain our brand image." (Case in point - sex work payments, even in countries where it is legal, can not be processed by any of the major payment processors. Brand image and all.)
Not to mention the privacy concerns that come with a central authority knowing all of your transactions - no thanks, I think I and many others would prefer an electronic cash-equivalent over PayPal.
That is simply not the case. Even in old ancient civilizations and feudal systems you usually had a way to reverse a transaction by going to court (in the old times literal court of the king, nowadays judge). This was and is possible because when you pay in cash you know who you pay to, and authorities (king and/or police) can lay hand on them. So even if you pay cash in brick and mortar shop you can get refunds (usually :) ).
One of the reasons why a lot of people are comfortable buying online is easy refunds. And if crypto can't provide that, I don't ever see it catching on in mainstream.
And if you want refunds and you are marketplace like eBay , the easiest way to offer refunds is to keep money in escrow which is what is happening here.(Except that their home brew escrow algos seem to not be that great, but crypto won't change that either. )
Bottom line is, crypto either won't go mainstream or will be co-opted by mainstream and will have all of the same problems/features as current currencies.
And it's not because governments. It's because people want and expect their government to be able to protect them.
And government don't censor things because they don't have nothing better to do. At least in democracy's they start censoring, when enough people cry to them to start censoring. Don't expect that to ever change with or without crypto.
If you want privacy there are also Zcash shielded transactions. Or if all you want to do is eliminate central parties then why not just Bitcoin?
My understanding with Monero is if you don't run your own node there's not that much privacy guarantee anyway (otherwise you have to trust the third party node you point to). Someone please correct me if I'm mistaken about that.
The issue with Zcash shielded transactions is that something like 14% of transactions are shielded, but only 1% are truly private. Optionally shielded transactions make chain analysis much easier and immediately make said transaction suspect. So you cannot comfortably use Zcash for private transactions. See the report by Chainalysis [1]:
> 14% of the ZCash transactions use a so-called "shielded pool", but in only 6% of all cases both the sender, recipient and the number of transactions are fully encrypted. The report states: “So even if the concealment on Zcash is stronger due to the zk-SNARK encryption, Chainalysis can still provide the transaction value and at least one address for over 99% of the ZEC activities.”
Clearly, optional privacy is not privacy at all. It needs to be on by default, which is the philosophy behind Monero.
Re. Monero nodes - if you’re using a remote node you can just use Tor, which I believe is soon to be baked in by default. Otherwise, Monero is still quite private. Your transaction history, transaction amounts etc are not revealed to nodes. Some metadata like restore height is, but that’s not a big deal.
[1]: https://www.kryptokumpel.de/en/kryptowaehrungen/chainalysis-...
I'm not saying privacy isn't great, just that even without it, crypto is still useful. Privacy is absolutely an amazing force for freedom.
This is a marketing term without actual meaning. There's a system with some anonymity. Then there's the external world. There's no 'optional' anonymity. The error lies in incorrectly comparing monero to zcash as a whole, instead of shielded transactions themselves. Names themselves are irrelevant. Depositing xmr to an exchange is equivalent to withdrawing from the anonymity pool.
From the design perspective, the mixin model is vulnerable to an active adversary that has spent output data from exchanges and spams the chain to generate recent known outputs when the target makes transactions. Full zk-snark anonymity is fully resistant to this.
A problem of both xmr and zcash is that they have no other use than anonymity, making it easier to ban and impractical for larger amounts and forcing commerce to hedge price risk, generating deanonymizing metadata. For actual commerce anonymous dollar is the ideal, for as long as dollar remains the main unit of account in the world.
https://zk.money supports dai, although it's still in alpha with a limit of $1000 per external deposit.
Also, the ZKSnark method that provides the privacy requires that the devs threw away their initial PKs. If you trust they did, then it's a great option.
Whenever a solution pops up that has a negative impact on the finances of the richest 5%, like cryptocurrency, politics/laws will come up with a new method/law to suppress it.
Most people already acknowledge that the little guy doesn't have the funds to hire the lawyers for a protracted court case.
Nothing stops an exchange refusing to do business with you.
Ideally, in the long run, cryptocurrency takes on a value of its own, reducing the need to use exchanges.
right now, because it's not widely used. If it ever gets mainstream, people will give governments whatever power they need to censor and try to stop things like child pornography. And once they can censor that, they can censor other stuff as well.
And I am sure you can come up with technical reasons why monero can't be censored. But i remember when China started their big firewall of china, people where laughing how trivially easy it was to bypass. And that their strategy will never work. Now 15-20 years later, nobody is laughing anymore. In fact a lot of countries seem to be moving into same direction.
See also: https://geneva.cs.umd.edu/
It’s proof (not that we needed any) that centralized finance does not have your best interests at heart, and they can and will abuse their power.