Getting a Crypto Refund Can Be Very Expensive (bbc.com) 132
Long-time Slashdot reader smooth wombat writes:
Recently, Slashdot posted a story about a group trying to purchase one of the few copies of the U.S. Constitution in the public domain. The idea was to use pool donations by people via Ethereum to get the winning bid. Alas, Citadel CEO Ken Griffin outbid the group and took possession of the copy.
Now the group, ConsitutionDAO, is in the process of refunding the donations, the BBC reports, and the people getting their money back are finding it can be quite expensive...
The BBC writes: That is because the Ethereum network records its transactions on the blockchain, the same basic technology idea that powers other cryptocurrencies such as Bitcoin. And like Bitcoin mining, it requires computational power to run. "Gas" is the fee paid to those who run the computer systems to facilitate transactions. And it changes price based on supply and demand. That means that at times, it can be much more expensive to make any kind of transaction, depending on how busy the Ethereum network is. And the network has recently seen high usage — and high gas prices.
On its official Discord — the chat app which allows anyone to create rooms and discussion channels for enthusiasts on almost any topic — the group said it had 17,437 donors with a median donation of $206.26. High gas fees mean that "small" donations could be severely hit by the transaction charge.
One user on the Discord said that in order to get $400 refunded, they would have to pay $168 in gas. Others complained of the fees being higher than the relatively small amount of their refund.
Now the group, ConsitutionDAO, is in the process of refunding the donations, the BBC reports, and the people getting their money back are finding it can be quite expensive...
The BBC writes: That is because the Ethereum network records its transactions on the blockchain, the same basic technology idea that powers other cryptocurrencies such as Bitcoin. And like Bitcoin mining, it requires computational power to run. "Gas" is the fee paid to those who run the computer systems to facilitate transactions. And it changes price based on supply and demand. That means that at times, it can be much more expensive to make any kind of transaction, depending on how busy the Ethereum network is. And the network has recently seen high usage — and high gas prices.
On its official Discord — the chat app which allows anyone to create rooms and discussion channels for enthusiasts on almost any topic — the group said it had 17,437 donors with a median donation of $206.26. High gas fees mean that "small" donations could be severely hit by the transaction charge.
One user on the Discord said that in order to get $400 refunded, they would have to pay $168 in gas. Others complained of the fees being higher than the relatively small amount of their refund.
Taxes (Score:5, Funny)
Cryptocurrency usage comes with cryptotaxes which need to be paid.
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Its really not about an alternative to banking as much as it is about becoming the banker.
Re:Taxes (Score:5, Insightful)
Bankers would love to be able to charge fees like that.
Re:[Stupidity] Taxes (Score:3)
More Funny mod points needed in the thread, but I think it's more a matter of externalities from stupid levels of greed. Of course "the bank" can't cover the real transaction costs if that would make the bank lose money. Scare quoted because the definition of "bank" has to be seriously stretched to cover these cases where there is no intrinsic value at all for the "assets" being deposited. Since the bank isn't going to pay for the wasted electricity, then you, "the customer", are going to pay for it.
Having
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Yes. It's a slightly different problem than bitcoin uses, chosen to be resistant to ASICs, which is why Ethereum is the favourite of GPU miners.
The innovation behind cryptocurrencies is a distributed trust model. It's not the blockchain, which is just a hash tree with all but one of the branches pruned off. The trust model bitcoin and ethereum use is "proof of work", i.e. whoever can prove that they've (statistically) done a certain am
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Thanks for the details, but mostly I regard it as additional evidence of the insanity of the "crypto bros".
My take (focusing on Bitcoin) remains that it's a kind of lottery. There is no good reason to base the lottery tickets on insane waste such as "proof of work". They could simply pick periodic winners at random from the eligible players and the blockchain would work in exactly the same way--but that would violate the psychological pitch to the gold miners looking for the mother lode. They NEED that fake
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It's sort of like a lottery, aside from the weird moral issues Americans have with gambling. If I buy one lottery ticket and you buy a thousand, you expect your odds of winning are better than mine, right? And if the tickets are free, I can just say "give me one billion googolplex trillion tickets" and win for sure. So you have to keep track of how many tickets each person "buys" and there has to be a cost to prevent someone from just buying them all.
The proof of work system proposed by Satoshi uses hashes
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We seem to be in agreement about the technical side, but I feel like you are missing the psychological dimension. But maybe I'm confused by your insertion of "moral" in there?
On the technical side, imagine that the next checksum was simply calculated by any random participant who was qualified. No proof of work would be required, and it would work exactly the same way. There would be one winner who would sign the next block, but with no wasted electricity. (I'm assuming the same communication costs, but tha
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Sure. You defined qualified, which is usually pretty easy. Now define "random."
A lottery (typically) works with this definition:
A set number of draws from the uniform distribution over the tickets sold or printed. Since the distribution is uniform, each *ticket* has an equal chance of winning, but since each *person's* chance of winning is proportional to the number of tickets they hold; i
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I smell a Bitcoin speculator who didn't even read my replies in this thread. And I am not interested in your straw man interpretations. It will suffice to respond "That is NOT what I wrote."
If you cannot understand what I said and want to, then you should ask a question focused on where you lost the thread.
I would apologize for my poor writing, but I am not at all persuaded of your intellectual integrity and sincerity. In that case the apology would be wasted.
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I think you've slammed into a wall and don't want to admit that you're wrong.
To address your ad hominem, you can have a look at my posting history on cryptocurrencies. I don't think they're a good idea, nor viable in the long term. That's because I understand the *unavoidable cost* of having a decentralized trust model and recognize that such a system is not only not worth that cost, but is very likely undesirable at any cost.
You're arguing that proof of work is just some kind of suboptimal algorithm that c
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No. Plenty of things wrong with me, but if anything I'm too quick to admit when I'm wrong. Rather often it later turns out that I was wrong about admitting to being wrong. Ditto the apologies.
Based on your recent comments, notwithstanding traces of reading comprehension, I can't decide if you are proudly ignorant ior sincerely stupid ior love rude flamewars xor are paid to fake it. And I don't care which.
From another perspective, insofar as your UID is low, I could speculate you've gone senile xor it's a do
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PS: there's also the issue of who's doing the drawing. Your solution seems to require some authority to perform the random draw. EVE Online actually had this issue, and the solution was a character who everyone trusted based on reputation who set up a fair random number generator that he vouched for. Lotteries have a lottery authority.
The point of cryptocurrencies is to not have a central authority. Proof of work uses the asymmetry of the hash problem to generate a random selection: you get to write the blo
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I think the natural decider of the next winner is the last winner, with fallback to earlier winners. The "pool of arbiters" I mentioned could be defined or extended in that way. For example, the last winner may go offline or lose connectivity, so you can't just assume that machine is available to pick the next random winner.
However, it can actually become fairly complicated. Are you familiar with the Byzantine Generals' Problem and related algorithms and security protocols? In cases like this, you absolutel
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Ah, excellent. I choose me. Then I choose me again. And again. Also, I don't like shanen, so I will never register any of his transactions. And I *do* like me, and all of the bazillion accounts associated with me, so I will allow them to do things like double spend.
Blockchain with proof of work is a solution to the Byzantine fault problem, yes.
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NAK
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Bankers would love being as unregulated and opaque as crypto exchanges.
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... again.
Re: Taxes (Score:2)
:) LOL
Am noticing that using words is too difficult and such a commitment. When u dont have emojis I mean
Maybe these ascii emojis will work. Routinely see half page ascii art on slashdot so this shouldn't get blocked
â¥.â¥
Â\_(ãf)_/Â
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The difference between cryptotaxes and real taxes is that cyrptotaxes aren't used to drop bombs on children.
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They just go to rich people who campaign for more laws gutting taxes and social infrastructures to ensure the children starve to death, and we move to a Charles Dickens style of rich/poor.
Given a choice between a government with a military, or being ruled by a kleptocracy/kakistocracy where many people starve to death, I'll take the one that actually does something with terrorists and ensures its citizens have a lifestyle of something other than groaning, brutal poverty.
cyrpto can just dump smog from dirty power (Score:2)
cyrpto can just dump smog from dirty power
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There is no assurance of that. Also no assurance it isn't funding strapping bombs ON children. It's all a matter of what anonymous person or people are running the mining rig that happens to process your transaction.
Of course, considering that banks have been caught (and not really punished) laundering money for terrorists and drug cartels, the same can be said for bank fees.
Re: (Score:3)
True, no bomb dropping on children.
Instead they finance drug cartels' murder of children in various third world countries and the spread of fentanyl
Re: Taxes (Score:3)
Can we please blame the parties that need to be blamed? NFT and decentralized trading dapps. Also, you can set your gas fee to a lower amount. Most people are just idiots who don't know how stuff works. Don't pay over what is fair. Don't pay a high gas fee if you don't care how fast the transaction gets executed.
https://etherscan.io/gastracke... [etherscan.io]
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Oh, these aren't the taxes, you'll pay those too, these are just the processing fees. Makes CCs look better, eh?
Ponzi schemes are hard to get refunded from? (Score:3, Insightful)
Re:Ponzi schemes are hard to get refunded from? (Score:5, Insightful)
Oh I read the article. So please explain to me how this is totally acceptable? To argue that this is just the cost of doing business is nuts.
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To argue that this is just the cost of doing business is nuts.
I feel the same way about inflation. It's crazy having money that slowly burns itself out so you're forced to take increasingly risky investments just to break even.
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take increasingly risky investments
If you're taking increasingly risky investments to break even on a stable low level inflation then I really suggest giving your money to someone who can take care of you since you clearly have no idea what you're doing.
Now if inflation was 40% as would be comparable to the "gas" in the example, you may have a point. If inflation was over 100% as comparable to some other cases in TFA then you'd have a point.
But right now all you have is ignorance.
cryptocurrencies fees are to high for day to day u (Score:2)
cryptocurrencies fees are to high for day to day useage.
Re:cryptocurrencies fees are to high for day to da (Score:4, Insightful)
Don't generalize when speaking about a specific cryptocurrency. Cryptocurrency A != cryptocurrency B.
But in this case, yes... $168 transaction costs for a $400 transfer? That is... a 42% fee? That's INSANE, period. Is that raw transaction fees for this particular cryptocurrency? If so, it's broken. Even if a temporary thing, then that cryptocurrency is broken from time to time. Which imho, also means broken.
Or is there something else going on here? Like the exchange used, or extra fees / conditions the organizers of this action slapped onto it?
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And why does the fee only come up when they need to refund it? Some guy sends them $400, presumably with low fee or no fee (?) and then they need to refund it, suddenly $168 fee to send the same amount the other way? That doesn't sound right.
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And why does the fee only come up when they need to refund it? Some guy sends them $400, presumably with low fee or no fee (?) and then they need to refund it, suddenly $168 fee to send the same amount the other way? That doesn't sound right.
No; in the original story a while back it was mentioned that it was suggested to "donors" to donate more then their actual donation (so say, $150 instead of just $100) to cover the ("gas") fees as the money transacted the various exchanges.
And once there was talk of getting refunds after the failed bid, there were complaints that the extra fees for getting the money refunded back would wipe out the entire donated amount (with some getting effectively negative refunds if they actually went through with it).
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It's a market rate. It is conceivable that it was more expensive at the time for refunds than it was when the donations were made.
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Re:cryptocurrencies fees are to high for day to da (Score:4, Interesting)
Seems really high.
I wrote off BTC a while ago when transactions were in the 2 digit numbers to get closed in a reasonable time.
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That all sounds likely true.
But it doesn't change the fact that I wrote it off a few years ago when it was around the hi side of your range since April.
3 bucks puts it in the range of a $125.00 credit card transaction.
The 2 main "currencies" in my life are cash ($0) and credit card ($0.50 + 2%). Bitcoin is far more, ranging from dramatically higher ($3) than an average transaction to so fucking high it's insane (in April and years ago when I wrote it off).
The speed is stupid long too. I wrote off BTC when I
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The 2 main "currencies" in my life are cash ($0)
For a brick-and-mortar business, cash is not free. You have to deal with armored car companies for safely getting your deposits to the bank, and you have to deal with banks charging you to get change, which the armored car delivers too. And you have to deal with the chance of employee theft. That's why credit card companies can get away with 3% merchant fees.
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Small businesses do NOT use an armored car. They just drop a deposit bag into the night depository or take it to a teller's window during banking hours and just ask the teller for change if needed.
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Sure, when you work in the tax evasion you can save a lot.
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That all sounds likely true.
But it doesn't change the fact that I wrote it off a few years ago when it was around the hi side of your range since April.
3 bucks puts it in the range of a $125.00 credit card transaction.
The 2 main "currencies" in my life are cash ($0) and credit card ($0.50 + 2%). Bitcoin is far more, ranging from dramatically higher ($3) than an average transaction to so fucking high it's insane (in April and years ago when I wrote it off).
The speed is stupid long too. I wrote off BTC when I was using it on grey market. It's not even good for grey market transactions, only black market, your details that it it's still really bad only support my opinion.
I am not a bitcoin bro or anything. Actually I try to make most transactions with cash also. But bitcoin has other properties besides just allowing digital transactions between untrusted parties. It also is intended to serve as a currency that is immune from central bank manipulation. Not saying it will work. I am just saying there is more to it than whether transaction fees are higher or lower than VISA and Mastercard.
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My point is that it doesn't work as a currency at all.
High and highly volatile transaction fees and very long transaction times make calling a currency at all pretty disingenuous.
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$168 transaction costs for a $400 transfer? That is... a 42% fee?
It's in the same region as I would expect the cost of money laundering to be.
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According to the gas tracker, the gas for a transaction (no matter the amount transferred) is about $27 worth of Ether and will complete your transaction in about 3 minutes. That's too expensive and too long for the old saw of buying your coffee using crypto currency.
I don't have a source for historical prices, so I can't say if it was or was not much higher at the time TFA was researched.
Re: cryptocurrencies fees are to high for day to d (Score:2)
A twentieth of a cent is too high to send over lightning network btc? Of a whole blockchain transaction for less than a penny ok litecoin is that too much?
This is an issue with an ethereum smart contract. If you don't like it, definitely avoid using ethereum smart contract crap, or even all of defi. Or even all of ethereum.
But all of crypto is top expensive? Please lol.
You better solve this fast, or it's DOA (Score:4, Insightful)
If refunding money is too expensive, you'll either find that stores don't take the currency unless they are legally required (and I doubt that any country would make accepting cryptocurrencies a necessity) or unless they can shift the cost to the customer, who in turn will not want to use the currency if any kind of refund basically means that they're better off keeping the defective crap because it's more expensive to get rid of it.
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Simple solution, transact the total amount to a currency with low transaction fees and then refund in that currency, I'm kind of surprised no-one else seems to have though of this.
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It is DOA when anybody actually tries to use it like a currency. These people only found out what was amply clear before to anybody bothering to find out.
Wow (Score:5, Insightful)
I was unaware of this. What a stupid system!
Re:Wow (Score:5, Interesting)
I don't know how it works with Eth but with bitcoin you can set the transaction fee yourself. If you set it lower it will take longer to process, maybe days or more.
But yes, it's a stupid system. Then again I just read a Twitter thread by a guy who took a $187,000 loan to buy an NFT for a picture of a monkey, one of thousands of similar ones. He was complaining that is wife was leaving him with the kids because she didn't understand that his monkey picture was going to be worth 500k one day. Which is a long way of saying that crypto dudes do a lot of stupid things and on the scale this barely registers.
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Point taken.
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It's not stupid. It's just the way it works.
In financial transactions, you have a book-keeper. The book-keeper is responsible for keeping the ledger straight. This applies to all financial transactions - regardless of if it's within a bank, between banks via a banking network, between banks and merchants using payment network (e.g., Visa), or between two entities via blockchain.
Blockchain's contribution to the world is the distributed ledger system - where transactions are recorded and added to the master
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Then the way it works is stupid.
Maybe it's just me (Score:2, Insightful)
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It's like the processing fees that banks charge, so yes it is a scam.
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the fees were small until june. if you waited until midnight, your fee could be less than a dollar.
then shiba enu got released and appeared on major exchanges, and that got eth fees in the $300 range
other blockchains like polygon had insanely low (1/10 of a penny) fees. they had to increase fees 30 times a couple of months ago. still very cheap compared to the rest
Re: Maybe it's just me (Score:2)
Other blockchains don't have lots of miners securing it and can be easily doublespent on.
Summary missed the best part of the article (Score:1)
The last paragraph of the article says :
Signing off, the group said: "The project was a landmark event that showed the entire world that a group of internet friends can use the power of Web3 to face a seemingly insurmountable goal and achieve incredible results on an impossible timeline."
Hilarious.
So sell the whole lot? (Score:1)
Can't they just sell the whole lot of the 'coins' and transfer the cash to each person? Or does even selling the whole lot involve this sort of absurd charge? Bank transfer fees couldn't possibly be this high. Or are there charges on this scale every time someone cashes out?
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gas is charged for any transaction, but high fees hit small amounts harder.
if they had sold the 40mil of eth for 40mil of fiat, then there wouldn't be much gas charged (as a %), assuming they could even find a buyer.
But then you are stuck with trying to find some kind of payment method to refund all that fiat, which comes with its own set of challenges, you would have to gather everyones paypal address or something.
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Wire transfers. Those are like $10/pop bank-to-bank. They can take around 4 business days though.
Re: So sell the whole lot? (Score:2)
Holy jesus, is that what it costs stateside? In my country i can transfer to anyone in EU via bank transfer for free. Some banks still charge their clients a fee for a transfer, but it is 0.16â.
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ACH is free
But non-ACH is going to cost you. Western Union can take over $40 for a transfer.
Re: So sell the whole lot? (Score:2)
In Europe its not even inside one country. I can do a free bank transfer that arrives in seconds to any country in EU (if both banks support it).
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Any country in the Eurozone, more precisely. Or Euro accounts in non-Euro countries, but most won't have one.
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No, any country using SEPA. Among others, these include the entirety of the EU, Iceland, Norway, Switzerland and the UK.
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You are technically correct, which is the best kind of correct.
You can do free SEPA transfers to Denmark, but they are generally useless, because the person you transfer to won't have a Euro account and therefore the transfer will not be free.
In theory, SEPA covers all the countries you mention. In practice, SEPA is only useful in the Eurozone.
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Not quite sure how it works within Denmark, but i know for a fact i've made transfers between CHF (Swiss) and EUR (Germany) accounts, without any fees applied.
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I do SEPA payments to euro accounts in non-euro country regurarly.
In the other direction, my bank keeps different currencies on my account and any money arriving in a foreign currency will remain in that currency until I convert it. Probably not all banks are this good, but I like it. When I receive GBP or USD, I do not necessarily want it to be automatically converted (with the associated overhead) only to be converted back later. Or to a different currency. So if my native currency wasn't Euro and someone
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The fee is hidden in the conversion rate.
doing it to themselves? (Score:3)
Perhaps if they weren't trying to refund $40m worth of ETH then they wouldn't have driven the gas prices up?
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I'm curious though, somehow they got the money in the first place? Why is the transaction cost higher on the refund than on the initial purchase?
Is it because they did them all at once (in which case crypto is wholly unusable as a currency if it can't even handle a tiny transaction such as this)? Or is it because the miners can set the fee?
Re: doing it to themselves? (Score:2)
The FOMO made paying any fee easier. Then people are too stupid to lower the gas fee, and make a news story about it.
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That's my question, who set the fee? Is the fee high because the refund is urgent? What is going on here that the refund is different to the initial transaction?
Many Questions unanswered (Score:2)
Are gas fees just high at the moment, ie, can't they wait a few weeks and get a refund for cheaper?
What about when they first signed on? Did the gas fees go up that much or is a refund more expensive for some reason?
Why was everyone surprised? Did something change radically over the course of the bid to make the refund more expensive?
First Rule of Acquisition (Score:4, Insightful)
"Once you have their money, you never give it back."
In other words (Score:3)
patience, Grasshopper (Score:4, Insightful)
Re: patience, Grasshopper (Score:3)
You could set the gas fee lower and just wait a bit longer for your transaction to go through. But then it wouldn't be a sensational news story!
Isn't this what multi-sigs should be used for? (Score:3)
For this type of stuff, this is what multi-sigs are best at. Say people are bidding for a NFT. It takes the bidder, plus an escrow party to sign the transaction for it to go to the auction house. The winning party has the escrow party "turn their key", completing the transaction. Everyone else, the escrow party rejects the transaction, causing the currency to go back to the owner's wallets. No "gas", no transaction costs, just a simple transaction not completed.
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What they should have done (Score:2)
May be a smart contract issue (Score:2)
Gas fees for moving ETH over the blockchain are typically much lower than the same gas fees for executing a smart contract. That may be one of the reasons why ConstitutionDAO is charging so much to issue refunds. Just guessing since the article is so light on actual information. Examples:
https://crypto.com/defi/dashbo... [crypto.com]
Some of these swap contracts are getting stupid-expensive. If ConstitutionDAO has a fee structure similar to these other DeFi contracts, then it should be obvious why the prices are gett
HAHA (Score:2)
Your money system is broken.
Trust (Score:2)
And to think, if those people trusted each other, or could agree on a person they could trust, or even a big group of unreliable people they could trust to not all work together to screw them...
Then they could have had their refund without asking thousands of computers to compete to redundantly do the same calculations. Which understandably costs a lot of money.
But no, they wanted "Byzantine fault tolerance", even though by the nature of the venture (buying a physical object) some people would already have
It's not a bug, it's a feature! (Score:2)
Don't care (Score:2)
Play with crypto, get burned by crypto. I don't feel bad.
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this is slashdot with the biggest hateboner on the internet for crypto.
If anything, /. keeps posting crypto stories because they clearly have a vested interested [slashdot.org] in seeing it succeed.
We've all been asking for a 'crypto story filter' to avoid getting them showing up, but they ostensibly refuse to implement one.
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that comes out to roughly 3.5%, less than the transaction cost of paypal, mastercard, or visa.
Actually, PayPal is roughly the same (they recently raised their fee to 3.49%, which does suck). Sending to friends/family is still free, as are transfers using Zelle and Apple Cash.
Considering most people don’t get paid in crypto, you’ve also gotta factor in exchange commission fees when buying/selling, so it’s rare that crypto ever ends up being a less expensive way of sending money. (At least inside the USA, I have no idea what the situation is internationally) The shit is primarily
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The article is short on details. Remember though that the contributors likely had to activate a smart contract owned by ConstitutionDAO in order to make contributions. Operating a smart contract sometimes brings with it higher gas fees than simple ETH transactions between addresses. How much of the contract need the donors execute in order to receive refunds from the contract address? You would think at this point it would be a simple send operation.
Also kinda makes you wonder why they aren't exploring P
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Look, i said "CURRENT GAS FEES". etherscan has the price change every 10 seconds. whats wild is that your summary of the article uses some super insanely high price fee as your "omg look at how high the fees are!" without any mention that 1) they're fixing it and 2) it never really gets that high. You lie by omission all the time, every single /. article about crypto is this shit over and over. You're the fucking cult buddy. Hate boners for days. All i wanted to do was correct some problems with the article
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It's pretty short on data. There are plenty of people moving ETH and ERC20 tokens on the Ethereum blockchain at much lower gas prices than that. It's unclear why the ConstitutionDAO contract is requiring such high fees to execute a refund. The article doesn't say. But it really may be down to the contract itself rather than the actual transfer of tokens. Executing a contract is getting really expensive. Look at how much it costs to mint an NFT!
Re: Not (Score:2)
If you'd like a lottery, try mining a crypto without a pool. You might win big!