US Advisory on Payment App Risks and Bitcoin’s Position as a Secure Alternative

[tabas]

It's true that we shouldn't leave big funds on these payment apps no matter how long they've been here and how trustworthy they are. People are learning everyday and come to understood that these custodial services have the control over our funds and that's why you don't keep huge amounts there.

I know asset diversification is a smart option - but banks are becoming less and less trusted as safe depositories for much of our money over the long term. You know that the bank gets very suspicious when we want to withdraw all the funds from the account - so they're bound to ask us a few questions where we want to spend it.

That is if you have a lot of money in the bank. Tens of thousands of dollars at least. Amounts like $5K you can have in the bank and you won't have any problems withdrawing it and much more depending on the country.

That's right and another reason why we shouldn't keep big amounts there is, what we've seen from some bank customers in China and I think in Lebanon too when they've got funds deposited on their bank accounts yet the bank won't allow them to withdraw due to government intervention and command.

[joniboini]

That's right and another reason why we shouldn't keep big amounts there is, what we've seen from some bank customers in China and I think in Lebanon too when they've got funds deposited on their bank accounts yet the bank won't allow them to withdraw due to government intervention and command.

What is the reason for that? While it is possible that a government freeze any account for a made-up reason, I think the chance is quite small unless some economic uncertainty happens in that country. I've seen a few cases where banks failed to get the capital to get their operation going, and then they stop the withdrawal process but they still need to pay their users by selling their assets or getting a bailout. Using Bitcoin to store your wealth is definitely an alternative if you don't mind the volatility.

[killerfrost]

We can see warnings about the risks of storing money in payment apps like PayPal, Venmo, Zelle and Payoneer. These apps lack the same level of protection as traditional banks and credit unions, leaving consumers vulnerable to financial instability in the event of an app failure or bankruptcy. Bitcoin, with its decentralized nature, has emerged as a potential safe alternative, providing users with sole ownership and control over their funds. Despite Bitcoin's price volatility, its not reliant on third-party involvement in financial transactions gives users safety from account freezing or bankruptcy compared to other applications. payment use. Its decentralized and independent nature has made Bitcoin an attractive alternative to traditional financial systems and the increasing adoption by financial institutions and notable individuals alike. it highlights its potential. However, users still have to be wary of price fluctuations as Bitcoin is not exempt.

[yhiaali3]

I am happy to read such news that warns of centralized payment services and bank-like services that can easily make people lose their money, this clearly highlights the advantage of Bitcoin and decentralization.

Paypal and other similar payment services are no different than banks and could be worse. In addition to not providing the same level of protection as traditional banks or credit unions, there is also the possibility of them going bankrupt or banning users for unclear reasons.

Bitcoin cannot be compared to these services and despite all these risks, the government supports them and bans Bitcoin.

[woez]

Using a non-custodial wallet I feel is a perfect solution whereby individuals can ensure that they are the only custodians of their private keys, reducing the risk of unauthorized access or loss of funds. However, it is very important to follow best practices in securing and managing these wallets, including using a strong password, enabling two-factor authentication, and backing up your private key or recovery phrase regularly as there is an inherent risk of custodial risk.

[dansus021]

I know it's not safe - but sometimes I also think all options have their own risks. For me it's safer to keep some money in a personal safe than in a bank account for whatever reason - but of course some people are more comfortable saving it in a bank account. After all I don't live in any European countries, so paying for something in cash in any amount is fine on my part.

For my perspective prefer cash and using it daily is safer, bank can also collapse tho the case is extremely rare. and usually, happen when there is something people inside who are corrupt or there is a major economic turn.

and also paying in cash maybe still be preferred in any nation.


Tho everything has its own risk including storing money with bitcoin ex. volatility maybe we can make the risk even smaller the example is like diversify the money or we can use the bank but only FDIC can handle the limit after quick google search i found that FDIC has rule "$250,000 per
The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category" - https://www.fdic.gov/resources/deposit-insurance/faq

theoretically, we can deposit in the bank 250K per bank so just open multiple accounts and deposit that FDIC can handle that is 250K per bank.

The reason we are using app like Venmo or PayPal it is because some people think is convenient to do transaction with the app, to reduce the risk that we only deposit a little only for daily transaction and not hold it for long period of time.

[franky1]

What's the point of storing funds in a payment app? Payment apps should be used only for payments. They aren't banks or investment funds.

convenience

for instance instead of wire transfering $20 each day to paypal to then buy your $20 train ticket via paypal to avoid "storing". you might aswell just do a $20 bank wire transfer direct to the train operator and just not use paypal. if you were to follow the "do not store" advice.. or even pay via wire transfer $100 for a 5 day ticket to also avoid the daily hassle of wires by only needing to do it each week

most people use payment apps to store because they dont wont the daily hassle of depositing/withdrawing. where they would need to put-in, use, withdraw each day. instead they simply keep the 'change' they didnt spend in the system to use the 'change' tomorrow.. or more precisely they do one deposit a month into a system and then play within the system for a month until nothing is left and then deposit more

the best advice is to not store more then what you wish to spend within a short period(no more then you can risk to lose in a week/month) and to never use a custodial system thats not insured for life savings/long term

bitcoin has become more of a system for the long term hoarding,. with the added benefits of hedging against inflation. however advice should also be given about avoiding custodial use wallets. and also securing the keys. becasue there is no insurance/refund mechanism should a hacker get your keys

[kryptqnick]

Whenever I get money via PayPal, I just transfer it to my bank account, and I never use any other of the mentioned services. If they aren't well-insured, why not make laws that would require such an insurance?
Bitcoin is great and very secure in this regard, as nobody else is truly keeping the funds and thus can't mismanage them. But it seems to me that the article mixes the position against PayPal with a pro-Bitcoin position, as if the US advisory is actually considering Bitcoin as a safer option, even though it's not the case at all. The arguments for Bitcoin can make sense, but it doesn't mean that an authority like CFPB is endorsing Bitcoin (at least, I haven't found anything but cases where this authority links cryptos to fraud and stuff).

[tabas]

That's right and another reason why we shouldn't keep big amounts there is, what we've seen from some bank customers in China and I think in Lebanon too when they've got funds deposited on their bank accounts yet the bank won't allow them to withdraw due to government intervention and command.

What is the reason for that? While it is possible that a government freeze any account for a made-up reason, I think the chance is quite small unless some economic uncertainty happens in that country. I've seen a few cases where banks failed to get the capital to get their operation going, and then they stop the withdrawal process but they still need to pay their users by selling their assets or getting a bailout.

IIRC, that's for economic purposes.

• People in Lebanon are holding up banks to withdraw their own money amid the country's financial crisis
• Unrest, Protests In China As Banks Stop Customers From Withdrawing Money From Their Accounts

These was like last year's news.

Using Bitcoin to store your wealth is definitely an alternative if you don't mind the volatility.

I couldn't agree more. This is the best way to store wealth and no one can freeze your assets unless you allowed it to stay on exchanges but as usual, it's best to keep it to ourselves with desktop wallets, hardware wallets or any cold storage.

[dothebeats]

I'd stick with non-custodial wallets for myself, and only keep some in the banks. I believe in bitcoin and its ability to store value for a long period of time, though I don't want to lose my footing on fiat currency as well, so I still keep some fiat on banks just in case. It's better to keep those savings in half so when the other one fails, I still have the other one to use and continue building again from there. Even the governments knew that money apps like Venmo and Paypal are at risk of disappearing in a blink of an eye given how they are not recognized as banks hence they cannot really function like one.

It's surprising to see that they recognized bitcoin as more secure alternative in the first place. The US has a long-standing inconsistency in supporting bitcoin, so them mentioning bitcoin in a positive light is nothing new, although somewhat refreshing still.