> On 02/19/2014 07:27 PM, Benjamin Cordes wrote:> the problem you
> have
here is called the double spending problem. every
> bank transaction is reversible. it clears through institutions
> called central banks. banks and central banks interact through a
> complex inter-banking network. so its quite easy for some authority
> to shut down certain transactions, nodes, etc.


The situation is a little more subtle than that.
First, there do exist irreversible payment methods within the banking
system. At the highest level are RTGS (real time gross settlement)
systems which are intended to allow large banks to clear payments via
central bank ledgers immediately. Similarly but not as absolute (and
no real time) are the netting systems in clearing systems like
Euroclear that allow banks to net out positions with other banks on a
daily basis. These systems are to all intents and purposes
irreversible, and have to be, otherwise banks could not square their
books.

A layer down from that is the SWIFT network, which is accessible to
most people and organizations with a bank account. Settlement in SWIFT
is slower (from a few hours to a few days) but is almost completely
irreversible. To reverse a SWIFT transaction, especially if the
counterparties are in different countries, is basically impossible,
but if the counterparties agree they can execute a reversing
transaction of course.

A layer down from that are the kind of consumer level cheap wire
transfer implementations like SEPA and ACH. These are advertised as
irreversible transfers of cash but they are not cleared immediately.
Banks will reverse them (mostly I think they first freeze the
receiving and sending accounts and then launch an investigation) in
special cases.

Alternatives to wire transfer are interesting - things like OKPay
which try to mimic cash transfer but of course they can at any time be
subject to government sanction. Many such systems have been shut down
over the years.

As to how all this fits in with attempts to do P2P fiat exchange -
there is a positive and a negative. The more completely decentralised
a P2P exchange system is, the more difficult it is for banks to
recognize the nature of the transfer. A transfer of $500 from Bob to
Alice over SEPA cannot be subject to a blanket ban without completely
banning people from sending each other money. If the system is
decentralised, what signals can be used to flag the transaction.
The negative side is that anonymity attracts criminals (as you pointed
out), meaning that such systems could end up with a high percentage of
people trying to launder (let's ignore the problem with that concept
for now).