The easy way out

Posted Nov 7, 2012 22:15 UTC (Wed) by nix (subscriber, #2304)
In reply to: The easy way out by Cyberax
Parent article: Let’s Limit the Effect of Software Patents, Since We Can’t Eliminate Them (Wired)

Not quite. Central banks are not universal transaction stores: they can't roll back arbitrary fraudulent transactions on demand, because they don't know about them. Generally, the fraudster gets away with frauds in the sense that the money is gone -- and too often gets away with it in the sense that the fraudster is never prosecuted -- and insurance, reimbursement schemes, or in extremis the taxpayer repays it or part of it (particularly if this is a massive thing affecting individual depositors). Fraudulent transactions in stock markets are rather different because the stock market *is* a transaction store, and there if detected early enough such transactions can be rolled back as you describe.

In the fraud you mention, the reason the central bank got involved was surely because they were acting as a clearinghouse in that instance, but they certainly do not in general. (Most ECB transactions are with central banks in member states: its recently-gained ability to recapitalize banks directly in extremis was extremely contentious.)

-- N., knew way too much about this stuff once and it was far too complicated to be believed, far more complicated than necessary. Now I work on dtrace which is ever so much simpler: all its complexity has a reason to exist, while banking complexity is mostly NIH and historical contingency :(

The easy way out

Posted Nov 7, 2012 22:52 UTC (Wed) by dlang (guest, #313) [Link]

at the risk of continuing the offtopic discussion.

Most countries don't have a 'central bank' in the way that some people in this thread are talking about.

In the US, there is one entity that is allowed to create money, but all the banks do their own thing and interact with each other without involving this central entity, except in unusual situations. There is a Government entity that does audits of Banks to see if they are being run in what are considered 'sane' ways by the current policies (and a different Government entity that does audits of Credit Unions)

Backups and records that the other entities keep can do a lot to track down fraudulent transactions, but that is a matter of enlightend self interest (if an entity can't prove what happened, they are liable)

As for bitcoins maintaining a history of transactions forever, that seems to me like a very bad thing.

Imagine that a bitcoin that you get paid was used at some point in the past by a terrorist or druglord. The "asset forfeiture" laws say that governments (not just in the US) can grab any assets that they had. Now you can loose the bitcoin because it can be proved that it went through their hands X years and Y transactions ago.