Lack of protection: obstacle to use of crypto as money?

[AnotherJohnDoe]

Most commercial transactions in modern societies are based on an explicit or implicit protection of both parties (seller - consumer). The protection may be provided by an intermediary party or ultimately by the law.

When I buy a product or service online with my VISA, I can reverse the transaction if the seller does not deliver according to terms.
For larger purchases (car, home) the transfer of funds is usually through a bank (which can authorise a cheque or provide proof of deposit of the amount).
In case of dispute I can ultimately seek protection from law.

I know that these systems of protection sometimes fail, but this is not the point. Even the implicit sense of protection often facilitates everyday transactions.

On the other hand, transactions with cryptos are based on trust, at least as long as cryptos are not recognised as legal form of payment and remain anonymous.

Do you agree that this lack of protection is an obstacle to the wide-spread use of cryptos as money?
What solutions do you see?

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[LeGaulois]

Not agree with you on this point. Otherwise, let me ask you. When buying something and you pay with coins/banknotes, how are you protected? You can't go to the police and the bank and say my banknote has the number #xxxxx printed on it. As of today, it hasn't been a problem to spread this method of payment. Same thing when gold was used to trade

[AnotherJohnDoe]

Not agree with you on this point. Otherwise, let me ask you. When buying something and you pay with coins/banknotes, how are you protected? You can't go to the police and the bank and say my banknote has the number #xxxxx printed on it. As of today, it hasn't been a problem to spread this method of payment. Same thing when gold was used to trade

Yes, cryptos resemble cash. But:

- You don't use cash (or gold) for large "unattended" transactions. Do you buy with cash a 1000 usd / eur product in a dark alley when nobody else is present? In a transaction with other witnesses where the seller claims "You haven't paid for this" I can ultimately seek protection by law. I cannot say this is my banknote but I can try to prove that I have paid.

- You cannot use cash or gold for not face-to-face transactions.

[krishnapramod]

Most commercial transactions in modern societies are based on an explicit or implicit protection of both parties (seller - consumer). The protection may be provided by an intermediary party or ultimately by the law.

When I buy a product or service online with my VISA, I can reverse the transaction if the seller does not deliver according to terms.
For larger purchases (car, home) the transfer of funds is usually through a bank (which can authorise a cheque or provide proof of deposit of the amount).
In case of dispute I can ultimately seek protection from law.

I know that these systems of protection sometimes fail, but this is not the point. Even the implicit sense of protection often facilitates everyday transactions.

On the other hand, transactions with cryptos are based on trust, at least as long as cryptos are not recognised as legal form of payment and remain anonymous.

Do you agree that this lack of protection is an obstacle to the wide-spread use of cryptos as money?
What solutions do you see?

Bitcoin's base layer transactions on the blockchain are irreversible and final. It's no exaggeration to say that the entirety of bitcoin's system of blockchain, mining, proof of work, difficulty etc, exist to produce this history of transactions that is computationally impractical to modify.

In the literature on electronic cash, this property was often refer to as "solving the double-spending problem".

Bitcoin transactions aren't reversible. Based on your perspective, this might be Bitcoin's flaw or its strength.

Possession of bitcoin is not enforced by business rules and policy, but cryptography and game theory.

Base layer transactions on Blockchain are irreversible, but if I am not technically wrong then second layer solutions can be added to make transactions reversible, but I don't think it is necessary. Bitcoin isn't designed to be reversible.

As far as P2P transactions are concerned one can use an escrow or multisig.

IMO the irreversible aspect of Bitcoin isn't a hindrance to it being used as a medium of exchange.

https://en.bitcoin.it/wiki/Irreversible_Transactions

[stompix]

Not agree with you on this point. Otherwise, let me ask you. When buying something and you pay with coins/banknotes, how are you protected? You can't go to the police and the bank and say my banknote has the number #xxxxx printed on it. As of today, it hasn't been a problem to spread this method of payment. Same thing when gold was used to trade

When you pay in cash you usually get a receipt.
Usually aka 100% times in a civilized country and not in a 3rd world slump.
That is your proof you have paid and this is how things work fine for ages in Europe.

If the cashier is handing you the wrong change and denies taking your money you can of course call the police and have the cash in the machine searched and counted. We have a law in place here that while working as a cashier you are not supposed to have more than the equivalent of 5 euros on you.

[AnotherJohnDoe]

Most commercial transactions in modern societies are based on an explicit or implicit protection of both parties (seller - consumer). The protection may be provided by an intermediary party or ultimately by the law.

When I buy a product or service online with my VISA, I can reverse the transaction if the seller does not deliver according to terms.
For larger purchases (car, home) the transfer of funds is usually through a bank (which can authorise a cheque or provide proof of deposit of the amount).
In case of dispute I can ultimately seek protection from law.

I know that these systems of protection sometimes fail, but this is not the point. Even the implicit sense of protection often facilitates everyday transactions.

On the other hand, transactions with cryptos are based on trust, at least as long as cryptos are not recognised as legal form of payment and remain anonymous.

Do you agree that this lack of protection is an obstacle to the wide-spread use of cryptos as money?
What solutions do you see?

Bitcoin's base layer transactions on the blockchain are irreversible and final. It's no exaggeration to say that the entirety of bitcoin's system of blockchain, mining, proof of work, difficulty etc, exist to produce this history of transactions that is computationally impractical to modify.

In the literature on electronic cash, this property was often refer to as "solving the double-spending problem".

Bitcoin transactions aren't reversible. Based on your perspective, this might be Bitcoin's flaw or its strength.

Possession of bitcoin is not enforced by business rules and policy, but cryptography and game theory.

Base layer transactions on Blockchain are irreversible, but if I am not technically wrong then second layer solutions can be added to make transactions reversible, but I don't think it is necessary. Bitcoin isn't designed to be reversible.

As far as P2P transactions are concerned one can use an escrow or multisig.

IMO the irreversible aspect of Bitcoin isn't a hindrance to it being used as a medium of exchange.

https://en.bitcoin.it/wiki/Irreversible_Transactions

It's not the technical aspects of irreversability that I'm concerned of. Perhaps it's more the anonymity combined with lack of legal endorcement.

Let's imagine a world where a) bitcoin is legal form of payment and b) Every user can be associated with the addresses he/she owns. Then in a transaction I can ask for legal protection and the law could force the cheating party to send back a payment.

But this is obviously not the vision of bitcoin.

[xBitHodler]

That's the main point of cryptocurrencies. Transactions are irreversible. It has some disadvantages, you won't be able to get your money back after someone scams you but it's your fault then. Maybe more people are going to use common sense. Bitcoin will be regulated in the future and probably as long as you know the identity of scammer, the law will help you.

[AnotherJohnDoe]

Not agree with you on this point. Otherwise, let me ask you. When buying something and you pay with coins/banknotes, how are you protected? You can't go to the police and the bank and say my banknote has the number #xxxxx printed on it. As of today, it hasn't been a problem to spread this method of payment. Same thing when gold was used to trade

When you pay in cash you usually get a receipt.
Usually aka 100% times in a civilized country and not in a 3rd world slump.
That is your proof you have paid and this is how things work fine for ages in Europe.

If the cashier is handing you the wrong change and denies taking your money you can of course call the police and have the cash in the machine searched and counted. We have a law in place here that while working as a cashier you are not supposed to have more than the equivalent of 5 euros on you.

And do you see this "civilized" arrangement easily replicated with anonymous and "illegal" cryptos ?

[Emoclaw]

-snip-
It's not the technical aspects of irreversability that I'm concerned of. Perhaps it's more the anonymity combined with lack of legal endorcement.

Let's imagine a world where a) bitcoin is legal form of payment and b) Every user can be associated with the addresses he/she owns. Then in a transaction I can ask for legal protection and the law could force the cheating party to send back a payment.

But this is obviously not the vision of bitcoin.

It's easy for law enforcement agencies to link Bitcoin addresses to an individual, let alone if said individual is running a business online.
Assuming a platform like Ebay, where they would most likely use BitPay for Bitcoin payments, a seller could be easily identified since he'd be using both of those platforms.

At the end of the day it's up to the user to make safe purchases. Bad customer experiences are reflected upon seller feedback and they're bad for business, so sellers will have to do their best to satisfy their customer.

Think about it another way, how many times have you tried to reverse a transaction through PayPal or bank because of something that was completely beyond your control?

[Gontxi]

all the methods you said starting from the visa have weaknesses at first. first they are looking for the best way for the security and vissi vissi itself, gradually over time legal time also accompany it.

as well as bitcoin, the time will come when bitcoin to recognize the world, because after all we can not leave technological advances.
as well as from the side of the law, there will be in time to accommodate the concerned with the law of bitcoin.

[nidacoinlove]

Not agree with you on this point. Otherwise, let me ask you. When buying something and you pay with coins/banknotes, how are you protected? You can't go to the police and the bank and say my banknote has the number #xxxxx printed on it. As of today, it hasn't been a problem to spread this method of payment. Same thing when gold was used to trade

Come on you duffer OP is not asking for the number of banknotes paid and by the way how did it come to your mind to pay banknotes via visa card? To answer any of the topic it is must to understand it before passing comments.
Lemme explain it to the OP that in bitcoin we have a secure way to buy any services or goods. Escrow services are used for the purpose of security. Where escrow is selected by the mutual consent of both the parties I.e. buyers and seller. The buyer handover the amount to escrow and after the confirmation of buyer for the receiving of goods or services the escrow transfer the amount to seller's wallet. Escrow charge fee for his services just like a guarantor bank.

[AnotherJohnDoe]

...
It's easy for law enforcement agencies to link Bitcoin addresses to an individual, let alone if said individual is running a business online.
Assuming a platform like Ebay, where they would most likely use BitPay for Bitcoin payments, a seller could be easily identified since he'd be using both of those platforms.
...

Law enforcement agencies try to identify the owner of an address in case of serious illegal activities. To be "obliged" to examine the small scam where I was a victim, a) crypto must be legal form of payment, and  b) they must be able to easily identify the owner of each address (complete loss of anonymity).

And what about completely anonymous cryptos?

[AnotherJohnDoe]

Not agree with you on this point. Otherwise, let me ask you. When buying something and you pay with coins/banknotes, how are you protected? You can't go to the police and the bank and say my banknote has the number #xxxxx printed on it. As of today, it hasn't been a problem to spread this method of payment. Same thing when gold was used to trade

Come on you duffer OP is not asking for the number of banknotes paid and by the way how did it come to your mind to pay banknotes via visa card? To answer any of the topic it is must to understand it before passing comments.
Lemme explain it to the OP that in bitcoin we have a secure way to buy any services or goods. Escrow services are used for the purpose of security. Where escrow is selected by the mutual consent of both the parties I.e. buyers and seller. The buyer handover the amount to escrow and after the confirmation of buyer for the receiving of goods or services the escrow transfer the amount to seller's wallet. Escrow charge fee for his services just like a guarantor bank.

OK, escrow may be an answer to the problem in many cases. I'll try to investigate this path more. Thank you!

[Irvinn]

The lack of legal protection, that is, the protection of the state, can indeed serve as a fairly powerful obstacle to the spread of crypto currency as a means of payment. The protection of the state consists in the fact that any person can apply to the court, police or other state body for the protection of his rights when making various transactions using crypto currency. If the crypto currency is not recognized by the state as a means of payment, the state authorities can not recognize the commission of such a transaction and therefore can not apply coercive measures to the offender.

[buwaytress]

I think discussing Bitcoin's irreversibility is sidetracking from the original issue: lack of protection (either from buyer or seller). Besides, people can argue that with such things as Replace By Fee payments, you are in effect, reversing payments (or replacing them with another). I've also experienced enough double spend tx that never confirmed!

@OP it's just a question of the technology's maturity. I imagine when credit cards first came out, people didn't have insurance or fraud protections that almost any card today has by default. I'm sure when the first bank in the world was robbed or absconded, their account holders weren't protected. There are some examples mentioned here that do provide some degree of protection. For sellers, setting a min number of network confirmations can be one way to protect themselves against double spends. For buyers, the use of smart contract escrow (which one day might be a standard in some crypto wallets) is another.

If you're looking for more conventional forms of protection: see Japan. From now on, when you use exchanges, you are partially insured from losses and hacks thanks to a framework of regulation.

[2fresh]

Protection can go only so far, the network will remain decentralized. I do think it plays a role yes, some people associate bitcoin with hacking and criminal stuff already.
I imagine it keeps some people at bay.

[LeGaulois]

When you pay in cash you usually get a receipt.
Usually aka 100% times in a civilized country and not in a 3rd world slump.
That is your proof you have paid and this is how things work fine for ages in Europe.

If the cashier is handing you the wrong change and denies taking your money you can of course call the police and have the cash in the machine searched and counted. We have a law in place here that while working as a cashier you are not supposed to have more than the equivalent of 5 euros on you.

I live in what you call a civilized country and not from Tier 3. And you don't get a receipt everywhere, today I bought cigarettes no receipt, then I've been to the bakery and butchery still no receipt. In the daily routine, I get a receipt at the supermarket only.
If you think the police will come to the supermarket because the cashier did an error or something like that then the police has maybe nothing to do in their office, because so far if you try here they will just laugh at you.

Yes, cryptos resemble cash. But:

- You don't use cash (or gold) for large "unattended" transactions. Do you buy with cash a 1000 usd / eur product in a dark alley when nobody else is present? In a transaction with other witnesses where the seller claims "You haven't paid for this" I can ultimately seek protection by law. I cannot say this is my banknote but I can try to prove that I have paid.

- You cannot use cash or gold for not face-to-face transactions.

You don't use gold to pay a transaction, I was referring to the old time when money didn't exist.
Why couldn't I pay a $1000 product if nobody is present, I don't need a witness. I make a deal with someone the person sign a letter confirming he sells me this and that and that's it.

[Bruce Wayne]

Do you think this will be an issue for cryptocurrency? Do you think it will be addressed?