You assert this but don't offer proof. The cost of fraud is baked into all areas of our economic system to the point where it's very difficult to establish how much it is costing society. Arguably the massive innovations in counterfeiting prevention in the past decades indicate that counterfeiting is a major problem. Money laundering and tax evasion are the other big crimes that impose significant social cost which public blockchain systems solve beautifully.

The larger a percentage of the economy that is transacted via a public blockchain, the less opportunity for all sorts of crime. The existence of the "trusted intermediaries and legal authorities" as well as the elaborate enforcement mechanisms that accompany them, are themselves a cost.

> This is part of the reason Bitcoin never took off as an alternative to credit cards

This does not make sense as Bitcoin is not a mechanism for extending consumer credit.

> Consumer protections are much more expensive to wrap around immutable transactions

Protections against what? Confusing interest rate terms or cards sold to college students? Bankruptcy or minimum payment rules? All these sorts of things would apply equally to a credit card denominated in BTC so I'm not sure what you mean.

Fraud is a function of humans not the currency. The reason large systems to protect from fraud are baked in, is because there are a lot of humans that commit fraud. The blockchain would only provide a well documented account of the fraud, with no tooling to remove the assets from the fraudster. Chargebacks are a blessing when you need them and a curse when you receive them, but something that the economy has deemed a necessary evil mostly because there are a lot of fraudsters in the world.

This is an excellent point, and I think it's an example of how an institutional mechanism evolved to help address fraud.

There's absolutely no reason to think chargebacks would not come to exist if commerce were dominated by ETH or BTC transactions.

The difference is that the infrastructure to do chargebacks, merchant account underwriting, etc., can be built very easily with relatively few lines of code.

This is exactly right. Once you empower trusted intermediaries to police and reverse transactions, you lose cryptocurrency's primary raison d'être.

I don't think this is accurate.

Let's talk about intermediaries:

I buy a shirt online using cryptocurrency. The merchant teams up with an intermediary to ship it to me.

I buy a shirt online. I team up with an intermediary to verify that the merchant ships the product as promised in exchange for a small fee.

I buy an electric skateboard online. I view reviews written by intermediaries about their experiences and watch some videos those intermediaries have posted of them riding the boards over various terrain.

I make a transaction where I am asked to commit money upfront without receipt of any goods. I use an intermediary (escrow service) to hold the funds in a specifically sanctioned way, to avoid the risk that my counter-party is dishonest.

None of these things are replaced by the core mechanisms of a cryptocurrency. Cryptocurrencies just make some kinds of trust more efficient to establish, but it still must be established and in most cases cryptocurrencies don't offer mechanisms for it. Ethereum does, but in a way that necessitates trusting the behavior of smart contracts, so it's a building block for efficiency and scale, but not a replacement to the core human institutions that involve intermediaries.

I take note that you have reduced the claimed value of cryptocurrency from decentralization and immutability to mere "efficient trust establishment". However you are still making a totally unsupported claim that it is more efficient that existing methods (e.g. getting a credit card or payment processor). Considering the enormous energy cost of mining you will need to offer some support for that. Otherwise it's just frothy hype.

I'd argue that rarely in meatspace finance is the consensus mechanism considered separately from the other aspects of a currency that matter. Consensus at changing aspects of a currency typically fall upon a government organization which has its own politically-driven, non-transparent consensus mechanism.

In meatspace, we have things like bankruptcy law and its derivatives to help preserve order when contracts unwind.

Of course, provisions for unwinding an agreement in an orderly way are part of any sophisticated financial deal. Meatspace contracts bootstrap on existing legal interpretations and regulations, but those things mainly add convention, repeatability, and predictability to the behavior of the contract.

So when (if ever) does the consensus mechanism in a fiat currency actually matter? I'd argue that it matters when the sh*t hits the fan, when there is an economic shock and widespread demand for action. This is when the stupidest decisions get made and the rule of law is the weakest.

Hedging against these stupid decisions adds tremendous cost and friction to meatspace financial deals. While it may feel right for regulators to "make whole" certain parties, that is not necessarily in the interest of the rule of law. It's far better if the various contingencies are addressed before the fact so that they can be priced in accurately.

Systems like Ethereum have the potential to create (over time) a set of useful and inviolable rules that can allow transactions to take place without the costly hedging against stupid, knee-jerk decisions by regulators.

In order for parties to willingly enter into contracts, the desirable state is not that later some wise overlords will take a look at the contract and make a fair decision about some yet-to-be-determined aspect of it. The desirable state is for the contract itself to be 100% trustworthy.

Of course, with the infamous hard fork, Ethereum failed at this once, but ETC exists now in tandem, so the two governance approaches can compete on their merits.

Distributed blockchain consensus give us a more transparent consensus mechanism than ever before, which is crucial to democracy. On this bedrock, it will likely be possible to create a world where we truly have the rule of law, not the rule of men.

The point here is not that smart contracts are "law", it's that the execution of a contract should take place in an unbiased VM, and the transparency and consensus mechanism of ETH ensures that.

Talk about unsupported assertions. You do realize the article you're commenting on is titled 153K Ether Stolen in Parity Multi-Sig Attack.

Others have noted your confusion about what "consumer protections" means. It is patently obvious that paying out $153,000 in insurance claims would be more expensive than reversing the fraudulent transactions.

I think if you examine all the assumptions leading up to your conclusion you may find that it is erroneous.

You simply believe that we "should" not trust intermediaries, which is fine, but you must accept the consequence that consumer protections will be weaker and/or costlier to implement. This is why Bitcoin was for the most part never more attractive to consumers than cards.