“From its inception, this technology [cryptocurrency] has been a solution in search of a problem.” –Bruce Schneier (June 24, 2022)
We can stop the search. I may have found the problem:
- Some banks freeze your account if the form of ID they have for you expires before you give them an updated copy. The way you learn this has happened is when the ATM refuses you (which can happen outside of banking hours when you need money for food).
- Some banks refuse to serve Americans.
- The non-US banks willing to accept American customers all voluntarily opt-in to sharing sensitive client data with the US (under FATCA), thus facilitating unwarranted 4th amendment violations/circumventions against their own client. (The banks that respect your privacy are the same banks that refuse to serve Americans because they don’t want the babysitting effort imposed on non-FATCA institutions).
- Some banks block Tor, thus forcing you to reveal to your ISP where you bank while also forcing you to disclose your IP address to the bank.
- Some banks allow Tor just for login form submission, then lock your account after you attempt to login over Tor.
- Some banks admit in their privacy policy that they use your IP to determine your location geographically and log it.
- Some banks close your account if you move out of the country or if you neglect to tell them your new address. They don’t always write this in the ToS because the ToS usually says “we can close your account without warning for any reason and we don’t have to tell you why”.
- Some banks spontaneously ask you (when you call them):
- What is your career industry?
- What is your job?
- Who do you work for?
- How much do you earn annually?
- Where do you live?
Of the banks that do this arbitrary interrogation, some tell you it’s a “US Patriot Act requirement” that you answer. Some banks say it’s a “US Patriot Act requirement” that they ask but answering is voluntary (but if you refuse to answer that goes in the notes). The banks that do not ask these questions are also compliant with the Patriot Act but they lose the opportunity to collect that data for their own surveillance advertising purposes (which is the real reason banks collect this data), thus putting the less intrusive banks at a competitive disadvantage.
- Some banks close your account if they suspect you are in the marijuana trade (federally prohibited despite being locally permitted or tolerated), or if they suspect you’re in the sex trade, and more generally they close your account if your career profile and transactions appear inconsistent.
- Some banks close or freeze your account if they suspect you used it to buy or sell a competing financial instrument like cryptocurrency (e.g. via Bisq), or you bought any other product that’s inconsistent with the bank’s values.
- Some banks are exclusively accessible via their iOS/Android apps which are exclusively distributed by Apple & Google Playstore. No website. No over-the-counter service.
- Some banks (often credit unions) proxy through Cloudflare, thus surreptitiously sharing your plaintext account creds & all banking transactions with Cloudflare Inc. (while you are bound to an agreement that holds you accountable for credential leaking)
- Some banks (often credit unions) surreptitiously outsource everything from web access to statement printing to bill pay. It’s the same few centralized large corps who process this info for all CUs, so clients have the illusion of dealing with a small institution but in fact their sensitive data is still handled by a big corp that sees everyone else’s data. Bigger banks that don’t outsource as much still tend to be sloppy with safeguarding the data they collected.
- Some banks charge a fee for paper statements. Often those same banks force customers to share sensitive data with Cloudflare to obtain their e-statements.
- Some banks directly finance the oil industry & private prisons. Some smaller banks are ethical in this regard but they outsource their investments to the unethical banks.
- Some banks are members of the Better Than Cash Alliance, thus actively promoting the elimination of cash.
- Some banks are cashless. Without a vault, they cannot accept cash deposits. Of those banks, some accept limited amounts of cash deposits at ATMs and some do not.
- Some countries have banned all cash transactions above ~1k or 3k, depending on residency status. If you are selling a used car in these regions in excess of the cash limit, the payer must wire the money in advance and trust the seller to sign over the car at a later time (or the seller must trust the buyer’s printout showing the transfer was sent). In these same regions there is no viable small claims process if one party swindles the other.
- Visa has a webpage where you can enter your card# to opt-out of them selling your data, but that webpage is proxied through Cloudflare.
- Mastercard has a webpage where you can enter your card# to opt-out of them selling your data, but that webpage gives a 403 forbidden to Tor users.
- American Express is an ALEC member, thus financing climate denial along with a long list of policies favoring a pernicious political party.
- Visa, MC, AmEx, & Paypal all collectively blocked donations to Wikileaks, voluntarily. When cash is eliminated, forcing corp-favored politics on consumers will become more regular.
- Citibank blocked insulin to 450,000 Venezuelans.
- Paypal shares customer data with over 600 corporations (I learned that from you in March, 2018, Mr. Schneier!)
Should people be needlessly forced into the private sector marketplace to patronize a corporation for something as basic and essential as money transactions, particularly in light of the landscape above? Mr. Schneier seems to imply banking problems can be solved by regulation, but some of those problems are caused by regulation, and some of them are caused by capitalism (particularly surveillance capitalism). Capitalism has pros & cons. Whether you favor capitalism or not, cryptocurrency clearly avoids many of its shortcomings. The regulatory changes required to fix any of the above problems require politicians who received campaign money from banks to work against banks.
From a security standpoint, the thesis that people should be forced to trust a bank to not be breached is questionable. Forced trust seems like a really bad idea from a security standpoint. A consumer might trust own ability to secure their own wallet more than they trust Capital One to protect customer information from Amazon contractors whilst neglecting to do risk assessment, for example.
(note: Bruce Schneier censored the above post as well as the following post.)
“Someone, please show me an application where blockchain is essential. That is, a problem that could not have been solved without blockchain that can now be solved with it.” –Bruce Schneier (June 24, 2022)
The use case that traditional pre-cryptocurrency mechanisms cannot serve is when Bob needs to pay Alice at a long distance without having to depend on (and trust) a corporate third party actor who has the rights and power to refuse service to either Bob or Alice.
And furthermore, both parties to a traditional long-distance transaction must each mutually depend on (and trust) both corporate third party actors and those two middlemen must have a relationship with each other that does not involve a currency conversion fee that’s intolerable to either Alice or Bob. When any of those factors fail to serve, it’s a problem that can only be solved by cryptocurrency.
“‘…and cash payments aren’t feasible’ does not count.” –Bruce Schneier
This qualifier to your question may or may not blow the proposed answer above. It’s unclear why feasibility of cash transactions would affect the question, but the use case above could be either local or spanning a distance depending on whether you want cash feasibility to be in play.
In the end, conventional bank transactions require existence of a bank who is willing to serve Alice/Bob, and likewise Alice and Bob must be willing to depend on and trust the bank. What bank can be trusted which is also ethical (that is, a bank that does not finance fossil fuels, private prisons, bad politicians, does not force me to run non-free software, etc)? If such a dream bank emerges, the next problem is that the person you transact with most certainly banks at a boycott-worthy bank. Transacting with that person passively supports the unethical bank. So the cryptocurrency-free world that Mr. Schneier proposes is one that forces us into transactions that work against the ethical constitution of many individuals.
Cryptocurrency enables ethical consumers to boycott unethical banks.