Bitcoin transactions can be written to support escrow use cases.
*Edit: Transactions can be sent to a script which requires multiple keys to forward the funds from that script address to a wallet address. https://en.bitcoin.it/wiki/Multi-signature
This is the primary mechanism for escrow services to function. If the need for a CC-like refund feature is important to the user, one could potentially use a service over Bitcoin which is party to a 2-of-3 multisig transaction. The payment may be settled immediately by the buyer and seller. Or either party may dispute with the service provider to settle according to some agreement.
To perform escrow with that technology a trusted third party is required, at which point, you are resolving disputes exactly the same way it works with credit cards: you are convincing some organization that the transaction wasn’t satisfied.
There are a ton of interesting distributed systems problems in cryptocurrency. More generally, open source projects will often share issues for beginners which might be good to start with. Find a project you like and see if there's any way you can help.
Thanks, I'll take a look. I was hoping to try my luck at open source. A few years ago I attempted trying to contribute, since a lot software really fascinated me. However, I always got intimidated by the code bases. Hopefully now I'm more prepared since I've worked with larger codebases.
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.
> It won't. The only "goalpost" I have is: congrats, you've invented banks...
Actually you moved it from "holding your cryptocurrency" to being a bank with safety nets.
If you want someone to hold your funds with guarantees to make sure you don't mishandle them then you use dollars in a bank. But if you want to put anything other than, it will not have those guarantees or protections. Only dollars have been given these privileges. You have none of these privileges on other things like stocks, bonds, property, etc. But you can (and do) still hold them in banks and institutions without the guarantees you're asking for. Cryptocurrency is currently treated as an investment and a property (in the US) and will have the same guarantees available to it as stocks, bonds and other property from traditional institutions because that is the risk profile they have established and understand best.
So, if you want the guarantees associated w US dollars, then you need to use US dollars. But having those guarantees from an institution holding your assets was never a goal of Bitcoin... that is, it intended to be a peer-to-peer electronic cash system. It is to distribute the power we currently give to those who manage monetary policy instead to a network of trust-less actors. It is to enable individuals with the means to accumulate and protect wealth. It provides permission-less commerce between private parties who would otherwise be prevented from using their assets as they choose.
It is up to society how it uses and enables Bitcoin and other cryptocurrencies. If society chooses to treat it in a way that it doesn't deserve the guarantees you seek, then you should seek elsewhere in the market to get the guarantees you desire. And those which are looking for the above value propositions will be able to consider cryptocurrency among their options. Just because cryptocurrency does not do what you're asking, that doesn't make it any less useful to the rest of the market with different needs from yours.
> Actually you moved it from "holding your cryptocurrency" to being a bank with safety nets.
The comment I literally responded to is:
--- start quote ---
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.
--- end quote ---
I didn't read the rest because it ends up in "It is up to society how it uses and enables Bitcoin and other cryptocurrencies." which has moved the goalposts so far, they are now orbiting Jupiter.
I'm not even sure why you replied if you're not going to add anything to the conversation here. You talked about trusting your "bank" with cryptocurrency and I replied that you don't have to....your argument comparing cash to cryptocurrency is like comparing cash to property/stocks.... it was a strawman and doesn't make much sense.
The market (and you) decide to use cryptocurrency however you want, in a bank, in a wallet, or not at all. And that includes whether you think the "bank" holding your funds has enough guarantee that your funds are safe.
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.
> However, I didn’t see any talking points in your list that could not be addressed by building solutions to improve UX.
These things are problem with the protocol specification. I'm curious to know how you can solve things like without reducing the value proposition of Bitcoin being trustless and permissionless and Lightning being a fast settlement layer for daily transactions.
- Removing the pain of settling twice on-chain with an unpredictable cost. The best I can think of is to create some fund which amortizes the channel handling cost across all users. Which means you're sacrificing permissionlessness to whatever is doing the amortization of fees.)
- Fixing routing and the convergence of the network toward a hub-and-spoke shape. (This is bad because Bitcoin is suppose to be trustless/permissionless...if you need to trust a hub node, then you're getting all of the negatives and none of the positives.)
- Fixing the dust attack that HTLCs enables. (Context for others: HTLCs are a critical piece of the Lightning network protocol and is what enables channels to be created/destroyed at all.)
I understand the point you're trying to make but I disagree with your analogy. Linux is not being advertised to the masses as safe and easy to use like LN is.
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.)
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)).
Lightning is worse than that. When you do try to convert from BTC to USD, you pay a transaction fee twice. Once to close the channel, and another to transfer to the party where you want to exchange your BTC.
And further, you can't predict the fee you'll pay. And I hope you aren't in a hurry to settle in those cases.
I'm not really sure how that changes anything I said. You're naïve if you think the service isn't going to pass those costs onto their users.
And if you need to resort to a custodial service, what are you even using BTC for? Using a custodian to give you permission to enter and exit a market is antithetical to everything Bitcoin stands for and exactly what it was created to fix.
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.
The original quote made a comparison between cash and debit/credit cards. Cards are easy to use, too, so clearly "understand" here does not relate to user experience, but to the complexity of the system itself.
That's not true. How to use credit cards very much have an "interface".
- It is open and requires that you protect the numbers on the outside or access to the data on-chip. Many of these security problems have hurt consumers over and over again despite how "easy" cards are to use specifically because those users don't understand the complexity of the card's system.
- It requires you to insert, tap, or swipe it to borrow funds. This interaction is not obvious for a child who has never done this before. It is a learned behavior. And that learned behavior for interfacing with the credit card network with your CC token is complex enough that the US has had significant friction introducing chipped and contactless credit cards over the past years. Because the interface and the UX are there for cards too.
I'm not sure the reason for your distinction between understanding the UX vs the complexity of the system. You can't consider UX without considering complexity... one follows the other necessarily.
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.
I personally can and do use it privately, my point is that it isn't that way for most people and privacy isn't inherent to all or even most crypto, and that's something only being made worse as crypto goes more and more mainstream.
After all, most people trade in public blockchain crypto through CEXs and leave their coins in hot wallets. Effectively the same as using a bank.
To put it differently, crypto _can_ solve many of these problems, but it does not _inherently_ solve them, it takes a skilled and cautious person to use crypto in a way that does not link to their identity.
FWIW, I was speaking about the "collective" you. And of course one does not automatically get the value out of anything without using it properly. If you use something other than how it was intended, you will get something other than advertised.
And I also agree that cryptocurrency is still not easy to use, but I'm not sure why it needs to "inherently" solve something (even though it has intrinsic value in certain dimensions). HTTP was inherently made to transfer structured text. No one was hoping it was going to replace the postal service, and yet the majority of the worlds information is transmitted using the protocol.
And just because you couldn't use "HTTP" when it was being first developed by researchers, it still served a purpose for them at the time and gradually became the invisible technology that it is today. Now replace "HTTP" with "cryptocurrency" and "at the time" with "now".
This is exactly what I meant when I said that maybe cryptocurrency wasn't ready for (collective) you.
I just interpreted the original comment as suggesting that these were inherent features of cryptocurrency. I do entirely agree with your premise about the possibilities enabled by cryptocurrencies when implemented/used properly.
*Edit: Transactions can be sent to a script which requires multiple keys to forward the funds from that script address to a wallet address. https://en.bitcoin.it/wiki/Multi-signature
This is the primary mechanism for escrow services to function. If the need for a CC-like refund feature is important to the user, one could potentially use a service over Bitcoin which is party to a 2-of-3 multisig transaction. The payment may be settled immediately by the buyer and seller. Or either party may dispute with the service provider to settle according to some agreement.