I disagree. It's definitely a trade-off, and there are downsides to it (this security breach being a good example), but there are also advantages.
With normal ACH and credit card transactions, the payment never really settles, and can be reverted due to fraud for months. That means I have to slurp up lots of data (privacy?) about my users in order to increase my confidence that they won't try to scam me. And even with that, I end up losing significant amounts of money due to payments with stolen card numbers, etc.
With crypto, I know that any payment I receive is final, and I don't have to build privacy violating systems to avoid losing $$$.
Not saying this is necessarily "better", but there are advantages to it. As a user, I'd be happy to pay with crypto if the merchant passed some of the savings on to me.
The savings associated with transactions fees (reasonable for very large spends - utterly ridiculous for small amounts, even today after the major drops, at more than 1.7 USD/tx)?
The savings associated with double spend fraud that occurs if you don't delay the transaction for 3 to 6 blocks even though you say it's final (hint - that's not true, and waiting is a large downside for prompt processing at a point of sale)
The savings associated with being literally dragged into court because it turns out that fraud is still a thing, and the legal system still matters, and despite you saying that the transaction has settled - the courts can and WILL disagree?
I just don't see it. I see a very nice way to send money to folks who are working dark markets and understand escrow (which re-introduces the risk that your transaction isn't actually settled), and a really shitty transaction method for basically everything else.
> The savings associated with transactions fees (reasonable for very large spends - utterly ridiculous for small amounts, even today after the major drops, at more than 1.7 USD/tx)?
On mainnet ETH, sure, but that arguably shouldn't be used for small payments like you are discussing. There are second layer networks that can do this for pennies on the dollar and make a lot more sense.
And arguably $1.7 USD / tx would compete quite well with credit card transactions. 0.17% vs credit card's 2-3%.
> The savings associated with double spend fraud that occurs if you don't delay the transaction for 3 to 6 blocks even though you say it's final (hint - that's not true, and waiting is a large downside for prompt processing at a point of sale)
Again second layer networks, but even on ETH itself, you're talking 10 - 20 seconds for 1-2 blocks, which is PLENTY. It's not going to be worth carrying out a double spend attack for a few thousand dollar transaction.
I do get that you don't "get" it, but I'll just say - I happily send and receive both BTC and ETH, and it is a night and day difference from sending using traditional bank accounts. I actually feel like I own the money, I can send it to anyone I want at any time, and the transaction settles in seconds. Last time I sent money via ACH, it took a solid 4 days (since I initiated on a Friday). I can deposit money into my crypto backed debit card in under a minute in the middle of a weekend.
> I do get that you don't "get" it, but I'll just say - I happily send and receive both BTC and ETH, and it is a night and day difference from sending using traditional bank accounts. I actually feel like I own the money, I can send it to anyone I want at any time, and the transaction settles in seconds. Last time I sent money via ACH, it took a solid 4 days (since I initiated on a Friday).
This is just a criticism of US banking, not 'TradFi' as a whole. Most countries have let you do the exact same thing for free or at a low cost out of your existing bank account, no overhaul required, for years. The EU has SEPA, the UK has FPS, Canada has Interac e-Transfers, Australia has NPP. I suspect you'd have a hard time finding a country other than America which doesn't support this.
... and the US has RTP for about half the population, and is getting FedNow for everyone next year. Not to mention Cash App and Venmo and so on.
This is a solved problem.
If you can even call it a problem. The thing is, if it were actually a meaningful source of friction instead of a talking point, it would have been resolved years ago.
I get it, moving money is boring unless the money is also a scratch-off lotto ticket.
> I can deposit money into my crypto backed debit card in under a minute in the middle of a weekend.
This is also how Cash App and Venmo support instant transfers/deposits to a dollar-denominated bank account 24/7. You can do this via unlinked refund or whatever the new mechanism is. That's not crypto related, it wasn't developed for crypto but rather coopted (not just by crypto, but by Venmo and Cash App). That's just how debit rails work.
> This is just a criticism of US banking, not 'TradFi' as a whole. Most countries have let you do the exact same thing for free or at a low cost out of your existing bank account, no overhaul required, for years. The EU has SEPA, the UK has FPS, Canada has Interac e-Transfers, Australia has NPP. I suspect you'd have a hard time finding a country other than America which doesn't support this.
But what these services offer is still fundamentally different from what crypto offers. The money shows up in your account instantly, but it doesn't actually settle for weeks afterwards [0]:
> Unlike cards, SEPA does not have an additional authentication layer, such as a CVC check or 3D Secure. Consequently it is important to have good risk management tools in place to offset the threat of fraud.
> A shopper can perform a chargeback online eight weeks after the purchase, with no questions asked.
You're conflating two separate things: bank-to-bank person-to-person transfers and Adyen, which is a merchant acquirer. Merchant acquirers and credit networks operate under different terms. Chargebacks exist because there is a demand for them. They exist because customers want them - and yes, even businesses want them. It gives folks the confidence to buy without having to worry about trusting the merchant (because they trust the network to resolve a dispute). It increases average ticket sizes and payment volume. This is a good thing that crypto lacks. Finality isn't actually what you want in most cases.
However it's irrelevant to this conversation because it also doesn't apply to any of the networks I listed. Adyen != FedNow. The systems I listed actually do provide instant settlements - as the money hits your account it's yours to spend.
If for the bank, settlement isn't instant (and that's an if because again for the services I listed I don't believe it to be the case) they can just do what everyone else does and borrow against it for basically no cost while it settles.
Again, this is a solved problem and broadly not an issue.
[edit] Just as I suspected, FedNow settles instantly. [1] And all for the low, low price of $0.045 per payment, and $0.01 per invoice! I know, its pretty unbelievable they found a way to decrement a number in one database while incrementing it in another database without involving a global network of graphics cards, burning down the rainforest and re-inventing the very concept of money. (that is to say, without "going Rube Goldberg on it").
Unlike cards, SEPA does not have an additional authentication layer, such as a CVC check or 3D Secure. Consequently it is important to have good risk management tools in place to offset the threat of fraud.
And this? Literally describes crypto. Because they both offer instant, final settlements without a second factor like a CVC check or 3DS.
With normal ACH and credit card transactions, the payment never really settles, and can be reverted due to fraud for months. That means I have to slurp up lots of data (privacy?) about my users in order to increase my confidence that they won't try to scam me. And even with that, I end up losing significant amounts of money due to payments with stolen card numbers, etc.
With crypto, I know that any payment I receive is final, and I don't have to build privacy violating systems to avoid losing $$$.
Not saying this is necessarily "better", but there are advantages to it. As a user, I'd be happy to pay with crypto if the merchant passed some of the savings on to me.